Annual Report and Accounts 2014 - London Stock Exchange · Annual Report and Accounts 2013 ANNUAL REPORT AND ACCOUNTS 2014 Annual Report and Accounts 2014. Contents ... owners of

Annual Report and Accounts 2013AN

NU

AL R

EPORT A

ND

ACCO

UN

TS 2014

Annual Report and Accounts2014

Contents

• Highlights 2014 1

• Directors & Advisers 2

• Chairman’s Statement 3

• Strategic Report 4

• Notice of Meeting 18

• Report of the Directors 20

• Corporate Governance Statement 34

• Independent Auditors’ Report on the Financial Statements 48

• Consolidated Income Statement 54

• Consolidated Statement of Comprehensive Income 55

• Consolidated Balance Sheet 56

• Consolidated Cash Flow Statement 57

• Consolidated Statement of Changes in Equity 58

• Notes to the Group Financial Statements 59

• Company Balance Sheet - Irish GAAP 107

• Accounting Policies for the Company - Irish GAAP 108

• Notes to the Company Balance Sheet - Irish GAAP 110

Calendar

Annual General Meeting - 12 May 2015

Dividends

Interim 2014 - paid 28 November 2014

Final 2014 - payable 8 June 2015

1

ANNUAL REPORT & ACCOUNTS 2014

Business Highlights

• Group restructured with sale of five businesses including the Irish pension and advisory business

• Business is now focussed on the UK wealth platform and high net worth advice markets, with strong growth momentum and an enhanced capital position

• Assets under advice and administration at year end up 9% to £20.1 billion compared to £18.5 billion at year end 2013

• James Hay achieved net inflows of £1.0 billion, up 67% year on year, with assets under administration now reaching £16.4 billion. New SIPP sales up 24% to 6,303 (2013: 5,071) driving a 9% increase in total schemes to 47,079 at year end (2013: 43,154)

• Saunderson House added 247 new clients, up 60% on 154 added in 2013. Revenue grew by 18% and assets under advice grew by 16% to £3.7 billion at year end (2013: £3.2 billion)

Financial Highlights

• Sale of businesses generated £19.8 million, including £7.3 million in contingent consideration

• Revenue from James Hay and Saunderson House combined increased 6% to £61.2 million (2013: £57.7 million)

• Adjusted operating profit from continuing businesses of £7.9 million compared to £9.2 million in 2013

• Profit before tax from continuing operations of £4.6 million (2013: £5.0 million)

• Adjusted EPS of 5.40 pence (2013 re-presented: 6.82 pence); basic EPS of 0.64 pence (2013 re-presented: 4.69 pence) with the decrease due to tax write-offs on restructuring

• Final dividend proposed of 2.73 pence per share, maintaining Sterling dividend pay-out

• Balance sheet strengthened with net cash of £22.7 million (2013: £17.0 million)

Adjusted* Adjusted* IFRS IFRS2014 2013 2014 2013

Re-presented Re-presented£’000 £’000 £’000 £’000

Revenue 65,096 63,312 65,096 63,312Operating profit 7,882 9,152 4,828 5,404Earnings 5,652 7,081 667 4,874EPS - earnings per share 5.40 6.82 0.64 4.69Dividend per ordinary share - - 4.04 4.04

*The above results presented under “adjusted” reflect the continuing business and are stated excluding amortisation of acquisition related intangible assets, exceptional items, discontinued operations and unwinding of discount applicable to contingent consideration. For a reconciliation of profit attributable to owners of the parent company to adjusted earnings and for an explanation on the re-presentation of comparatives, see note 2.1.

Highlights 2014


2

Directors

Colm Barrington(Non-Executive)

Evelyn Bourke(Non-Executive)

John Cotter(Group Finance Director)

John Gallagher(Non-Executive Chairman)

Paul McNamara(Group Chief Executive - co-opted 29 July 2014)

David Paige(Non-Executive)

Robin Phipps(Non-Executive)

Peter Priestley (Non-Executive)

Cara Ryan(Non-Executive)

Company secretary

Conleth O’Reilly

Trading address

The OvalShelbourne RoadBallsbridgeDublin 4

Telephone (353-1) 632 4800Fax (353-1) 632 4801E-Mail: [email protected]

Principal bankers

Barclays Bank Ireland plc2 Park PlaceHatch StreetDublin 2

Corporate brokers

DavyDavy House49 Dawson StreetDublin 2

MacquarieRopemaker Place28 Ropemaker StreetLondon EC2Y 9HD

Group auditors

PricewaterhouseCoopersOne Spencer DockNorth Wall QuayDublin 1

Principal subsidiary company auditors

PricewaterhouseCoopersOne Spencer DockNorth Wall QuayDublin 1

Registered office

IFG Group plcThe OvalShelbourne RoadBallsbridgeDublin 4

Website

www.ifggroup.com

Solicitors

Matheson70 Sir John Rogerson’s QuayDublin 2

Eversheds O’Donnell Sweeney One Earlsfort CentreEarlsfort TerraceDublin 2

Registered in Ireland

No. 21010

Registrars

Computershare Investor Services (Ireland) LimitedHeron HouseCorrig RoadSandyford Industrial EstateDublin 18

Directors & Advisers

3


IFG Group plc (“IFG” or “the Group”) is pleased to announce its results for the year ended 31 December 2014.

IFG set out a plan for 2014 to divest non-core activities, to build a new management team and, in line with our clear strategic direction, to re-position the Group to focus on our two core UK businesses, James Hay and Saunderson House.

These objectives were achieved in 2014. The sales of IFG UK Financial Services in the UK, the Irish pension and advisory businesses and other smaller advisory and administration businesses in Ireland, France and Asia were completed. The proceeds from those sales have strengthened our balance sheet and provided financial flexibility for the Group. We have also changed the reporting structure so that our individual businesses are standalone and there is clarity as to the central Group function, which will be responsible for growth and identifying potential new opportunities. The Group now has a clearly defined structure and is focused on our core markets in the UK.

The presentation of these results reflects the revised reporting structure. In our continuing businesses, assets under advice and administration have grown by 9% from £18.5 billion to £20.1 billion and revenue for the year increased 3% to £65.1 million, compared to £63.3 million in the prior year. Operating profit from continuing businesses for the year was £4.8 million compared to £5.4 million in 2013, with short-term profitability impacted by continued investment in building our core businesses, lower margins on new business and lower interest income in James Hay. After allowing for the effects of the divestments, including the materially higher effective tax rate that resulted, profit attributable to the owners of the parent company was £0.7 million in 2014 (2013: £4.9 million).

The Group delivered basic earnings per share of 0.64 pence in 2014 compared to 4.69 pence in 2013. On an adjusted basis, which better reflects the underlying performance of the core businesses, the earnings per share were 5.40 pence (2013 re-presented: 6.82 pence).

RETURNS TO SHAREHOLDERS

Following the restructuring of the Group in 2014, the Board have confirmed it will adopt a more progressive approach to dividends and will recommend dividends in Sterling, in line with the functional currency of the Group. The Board is recommending a final dividend of 2.73 pence per share. This final dividend, when added to the interim dividend of 1.31 pence paid on 28 November 2014, makes a total dividend of 4.04 pence per share. Shareholders may elect to receive dividends in a Euro equivalent.

Subject to Shareholder approval, the final dividend will be paid on 8 June 2015 to Shareholders on the register on 8 May 2015.

GROUP STRATEGY

The Group is now redefined with two standalone businesses and with the central Group function clearly identified. This places the Group in a position for future growth and at the same time provides a clear line of sight to the underlying value of the two businesses James Hay and Saunderson House.

We have invested in James Hay to be a full service platform. It is now well positioned as a retirement planning specialist to support clients with a broader choice of investment options following the reforms to private pensions in the UK this year. Saunderson House continues to increase client numbers, reflecting the investment in the business, a relentless adherence to its core client-focused principles and also its robust investment process for asset allocation recommendations.

IFG Group is now in a position to further invest for growth in our chosen markets, positioning its two core businesses as market leaders. We have an experienced management team focused on driving growth, with a strengthened balance sheet. I believe the Group will deliver medium and long-term growth and value following the significant restructuring in 2014.

GOVERNANCE AND MANAGEMENT

The Group has strengthened its executive management team, having appointed John Cotter as Group Finance Director in December 2013 and Paul McNamara as Group Chief Executive in July 2014, replacing Mark Bourke who left the Group in April 2014. The ongoing investment in people is supported by strong governance.

Gary Owens resigned from the Board on 28 August 2014. This was in line with the agreed sale of the Irish pension and advisory business to Willis Ireland.

I would like to thank all of our people in IFG for their hard work and their commitment to our business and to clients in a year of significant change for the Group and I look forward to continued growth and progress in 2015.

John GallagherChairman

Chairman’s Statement


4

GROUP STRATEGY AND BUSINESS MODEL

IFG Group plc is headquartered in Dublin with full market listings on the London and Irish stock exchanges. IFG’s strategy is to develop a focused market leading financial services firm, offering multi-class asset administration and Independent Financial Advisory (IFA) services. We are well positioned in attractive segments of the UK wealth management market. Our core businesses are James Hay, a full-service platform with a specialism in retirement planning, and Saunderson House, a provider of financial advice and investment planning services for high net worth clients. The Group has evolved in 2014, with a significant reorganisation of the business portfolio leading to sharper strategic focus on the two core businesses.

The sale of the Irish pension and advisory businesses to Willis Ireland for a consideration of £10.8 million (€13.5 million) was completed on 11 December 2014. The sale of the traditional UK IFA business, IFG UK Financial Services (IFGFS), to Ascot Lloyd Financial Services for a consideration of up to £8.0 million was completed on 8 September 2014. Additionally, we divested of Siddalls France (a French-based IFA) to Blevins Franks, One Network (an Irish broker) and IFG Asia (a Japanese-based IFA), to their respective management teams.

Ireland IFGFS Other Total

£’m £’m £’m £’m

Initial consideration 9.2 2.5 0.8 12.5

Contingent consideration 1.6 5.5 0.2 7.3

Total Consideration 10.8 8.0 1.0 19.8

The contingent consideration is dependent on the future revenues of the businesses sold. We have recognised £5.3 million of the total of £7.3 million in the 2014 results.

These disposals have streamlined the Group, enhanced our capital position by converting goodwill to cash and delivered a group which is focused on its core propositions, with growing and profitable businesses in attractive parts of the UK financial services market.

Following these disposals, it was determined that our financial reporting structure has two segments: our Platform business James Hay and our Independent wealth management business Saunderson House.

Operating independently, James Hay and Saunderson House are each recognised as market leaders in their chosen segments. Both businesses reflect the overall IFG proposition and are based on:

• long-term relationships with clients and intermediaries;

• un-conflicted high quality advice and administrative services;

• growing recurring revenue streams; and

• scalable businesses, growing both organically and by acquisition.

Our strategy in James Hay is to expand and develop the business from being a focused SIPP provider to being a full service platform with a broader capability in retirement wealth investment administration. From a position of financial strength, our growth strategy will be delivered through an enhanced product proposition, an efficient operating model and high quality service delivered by technology-enabled solutions. Our marketing and distribution resources adopt a segmented approach utilising key account management and relationship-based teams. Our focus will remain on financial advisers as the primary distribution channel. We remain accessible for direct to consumer business and continue to develop our technological capability to widen our target market and drive efficiencies. In 2015 we expect to rebuild profitability as the benefits of our investment programme take hold.

Saunderson House provides financial and investment planning to high net-worth individuals and an investment proposition based on macroeconomic research and active asset allocation, with an emphasis on transparency of process and pricing. Our strategy is to continue to grow the business by increasing the number of clients and the value of assets under advice. This is yielding results, with increased revenues and operating profit. We will build on this momentum through a combination of broadening our market offering, raising brand awareness and increasing the number of client-winning executives. The Group has a proven team-based operating model with best-in-class client service delivered by high quality professionals. Client service will be further enhanced through greater use of client-facing technology.

The Group has a robust process for the identification and management of risk across the business. We monitor four main risk areas: strategic risk, operational risk, regulatory risk and financial risk. See pages 21 to 23 for a detailed review of the principal risks and uncertainties.

Operationally, the Group deploys a decentralised business model with strong management, functional capability and infrastructure within each core business. Strong central oversight is exercised by Group management. This structure facilitates effective performance management, strong governance, focused strategy formulation and discrete capital and investment allocation.

Strategic Report

5


BUSINESS OVERVIEW

The Group set out its strategic intent to simplify its structure following the sale of the International segment in 2012. During 2014, we disposed of our IFG UK Financial Services and Irish pension and advisory business and a number of other non-core businesses and continued our investment in James Hay and Saunderson House. At the end of 2014, IFG Group is a simpler and more sharply focused business.

The benefits from the disposals include the conversion of goodwill to cash, a more concentrated geographical presence and a sharper focus on the remaining businesses. In the short-term, our financial performance has been impacted by investment in the ongoing businesses, lower interest income, lower margins on new products in James Hay and costs associated with the reorganisation of the Group, particularly on the tax line. The Group’s remaining businesses are profitable, well-positioned for growth in attractive market segments and supported by a strong and liquid balance sheet. Our primary growth strategy remains organic, but we are open to selective acquisitions or strategic alliances which can accelerate and enhance the development of those businesses.

During 2014, James Hay and Saunderson House have both maintained their growth trajectory, increasing their client and asset bases. In James Hay, we added 6,303 new SIPPs in 2014 (2013: 5,071). Net inflows of assets of £1.0 billion were up 67% on the previous year. In Saunderson House, the number of new client wins of 247 represented an increase of 60% year on year and follows a 54% increase in 2013.

GROUP PERFORMANCE

2014 2013Re-presented

Revenue £’000 £’000

Platform - James Hay Partnership 36,714 36,964Independent wealth management 28,382 26,348Total 65,096 63,312


Adjusted operating profit £’000 £’000

Platform - James Hay Partnership 5,808 7,960Independent wealth management 5,883 5,284Group/Other (3,809) (4,092)Total 7,882 9,152

Strategic Report


6

Revenue from James Hay and Saunderson House, increased 6% to £61.2 million in 2014. Total revenue was £65.1 million, compared to £63.3 million in the prior year. The growth was driven by Saunderson House which recorded an 18% increase in revenue while James Hay’s revenue was broadly consistent with 2013. Revenue of £3.9 million from IFG UK Financial Services and Siddalls France is included in reported continuing revenue to the point of sale, while a full year’s contribution is included in 2013.

Operating profit of £4.8 million (2013: £5.4 million) was lower and impacted by a challenging environment for revenue and interest margins in James Hay as well as investments in people and technology, as we build sustainable and scalable businesses.

On an adjusted basis, which we believe more accurately reflects the performance of the Group, operating profit of £7.9 million compared to £9.2 million in 2013 (see note 5) and adjusted earnings were £5.7 million (2013 re-presented: £7.1 million). In 2014, the Group incurred exceptional charges of £1.4 million (2013: £2.0 million). These consist of restructuring costs associated with the divestments and termination costs related to senior staff departures, including the former Group CEO.

The release of the fair value provision on finalisation of the completion of the International segment disposal of £0.5 million and a small book loss on the sale of the Irish pension and advisory businesses, were recorded in the discontinued line. See note 13 for further details.

The tax charge in 2014, at a headline rate of 72%, is particularly high and relates to non-deductible restructuring costs associated with the divestments as well as the write-off of substantial deferred tax assets in the businesses sold. A more normalised tax rate, in line with the UK corporate tax rate, is expected going forward.

The loss after tax from discontinued operations was £0.5 million compared to a profit of £0.5 million in 2013.

Profit for the year was £0.8 million (2013: £5.0 million).

In 2014, the Group delivered basic earnings per share (EPS) of 0.64 pence which compares to a re-presented 4.69 pence in 2013. The costs of restructuring the Group, particularly the tax impact of divestments, impacted EPS. On an adjusted basis, EPS decreased to 5.40 pence compared to a re-presented 6.82 pence in the previous year.

The Group Balance Sheet has been strengthened by the disposals with increased cash, lower goodwill and an improved capital position.

Market overviewWith ageing demographics, extended life expectancy, supportive fiscal incentives and increased consumer demands, the fundamentals of the UK wealth management and retirement planning market are favourable. However,

change continues to be a feature. From a regulatory and legislative perspective, we see the drivers of change and their impact as follows:

The Retail Distribution Review (“RDR”): based on the principles of separation of advice, product manufacture/platform and investments, the RDR set about to remove commission bias, increase price transparency and raise the level of professionalism within the financial advisory industry. While other players have had to re-engineer their business models, the impact on our businesses was minimal. James Hay ensured its clients and their advisers were prepared for RDR by providing RDR-compliant products well in advance of the new regulation and continues to facilitate flexible and competitive charging structures. Saunderson House, a fee-based adviser, has always operated with transparency, independence and putting the client at the heart of the business.

Budget 2014 changes include: • annuity reforms: removing the annuity compulsory

purchase requirement will lead to a greater need for advice and flexibility;

• pension taxation: changes to taxation limits will require more proactive monitoring and advice; and

• NISA regime: changes to limits and allowable assets will increase the attractiveness of NISAs which are increasingly being used for retirement planning.

Overall, we believe the changes are a positive development in terms of increasing market access and demand as well as providing greater flexibility to clients. Our investment in technology has strongly positioned the Group ahead of these impending changes to pension legislation in April 2015, and we are already fully prepared for those changes. As advisers and administrators, our objective remains to service our clients in a way that optimises their choices in wealth and retirement planning.

Other themes reflective of the ongoing change in wealth management markets include: • a stronger code for conduct: end client interests and

their outcomes must be at the forefront of business strategy;

• globalising capital markets: wealthy clients need access to global asset classes for diversification and performance;

• adoption of technology: change in hardware, software, information transmission, consumer devices and behaviours is accelerating fast; and

• industry consolidation: industry players are seeking returns through scale and/or scope, and the consolidation of legacy products.

Strategic Report

7


We have invested in our core businesses over the last few years mindful of these changes and believe our businesses are well positioned to benefit from changes in the competitive landscape.

With increased transparency and enhanced technology, consumer behaviour and attitudes to wealth management and retirement planning will change. However, the underlying demand for financial planning, investment management and asset administration continues to grow. Market forecasts predict an increase in assets on platforms to circa £900 billion by 2019. Through organic growth and, where appropriate, acquisitions, we plan to be a major participant in this growth.

Platform - James Hay Partnership


£’000 £’000

Revenue 36,714 36,964Adjusted operating profit 5,808 7,960

James Hay delivered £5.8 million adjusted operating profit (re-presented 2013: £8.0 million). The 2013 re-presented basis excludes the allocation of £1.2 million of overheads, which is now included in Group/Other, and so reflects the underlying business performance. The business has continued to evolve from being solely a SIPP provider to become a retirement wealth platform as evidenced by the launch of the new Modular iPlan in 2014. Despite volume and asset growth, revenue was marginally down on the previous year. This was due to a number of factors:• Interest income: revenue includes interest margin earned on client

funds held. A regulatory change affecting the rates which banks pay for deposits reduced revenue by £1.0 million. While this had an industry-wide impact we have made changes to our banking arrangements which substantially mitigate any further near-term reductions.

• Timing lag of new business: following the initial setting-up of a new scheme, there is a timing delay until the scheme becomes fully fee generating.

• Modular approach: our fair and flexible modular approach to pricing means that customers only pay for the services when they use them. This has led to lower income on new schemes as more complex modules, such as property, experienced lower take-up. We continue to review our pricing model but believe transparent, unbundled pricing is in the best interests of the clients and is a competitive differentiator.

Adjusted operating profit has been impacted by continued investment in the business as we developed the infrastructure, digital capability, product range and distribution to support our strategy of becoming a full service platform provider. Headcount in the business increased by 8%, and we invested circa £4.0 million in platform developments as well as our digital capability and processes. The full year impact of prior year investments, particularly in people, also impacted current year financial performance. Whilst we will continue to invest in the business, the level of investment has peaked, as we near the end of a three year investment programme.

Strategic Report


8

2014 2013

Number of SIPPs SIPPs SIPPs

Opening 39,505 37,342

Additions 6,303 5,071

Attritions (2,460) (2,908)

Closing 43,348 39,505

2014 2013AUA AUA £Bn AUA £Bn

Opening 15.3 14.1

Net inflow 1.0 0.6

Market Movement 0.1 0.6

Closing 16.4 15.3

Growth momentum has been maintained with total new SIPP sales of 6,303 (2013: 5,071) including 878 from the Capita transaction. On a MiSIPP equivalent basis (recognising the diverse product and pricing range), total scheme numbers increased 12% with 4,951 equivalent MiSIPP versus 4,406 in the previous year. This improved profile of new business reflects our decision to balance the need for volume growth with focus on individual asset levels and margin management.

Attrition remains at historically low rates at 6% across the book and this combined with new business contributed to 9% net book growth (2013: 5%). Our objective is to accelerate the growth trajectory, maintain reduced attrition levels and focus on achieving good quality margin and average asset values. In 2014 net inflows were £1.0 billion, up 67% on the previous year, with assets under administration of £16.4 billion at the end of December 2014. This ranks James Hay as the 7th largest platform in the UK, according to Platforum’s Q1 2015 Adviser Platform report.

Supported by our investment programme, the development of the James Hay proposition continued in 2014 with some key highlights below:

• Provision of a broader product range, beyond solely pensions to include Individual Savings Account (ISA) and General Investment Account (GIA) with the launch of Modular iPlan, a New ISA (NISA) and cash panel and development of an investment manager models proposition.

• Systems development and preparation for the April 2015 pension legislative changes. Our clients will be able to enjoy the full breadth of new pension freedoms from the start of the new tax year.

• Selected by Capita as their preferred partner to take over their SIPP books. Investment in automating our on-boarding capability will support similar opportunities in the future.

• 1,395 new funds added to the James Hay Investment Centre, bringing the total to 3,500. Research shows that investment choice is a key criteria for platform selection by IFAs.

• Increased digital capability and improved processes, including greater use of automation, to enhance the adviser/client experience and drive operational efficiency. For example, 40% of new applications are now accepted online with electronic signatures.

Strategic Report

Left to right: John Cotter, John Gallagher and Paul McNamara

9


Key performance indicators

The Group uses a variety of performance measures which are detailed below in its review of our Platform business, James Hay.

Key performance indicators (KPIs) Result Why considered key

1. Net asset flows Net inflows of £1.0bn up 67% on the prior year.

Monitors the flow of assets into and out of the business indicating new business and attrition trends.

2. Assets under administration Assets under administration at the end of December were £16.4bn (2013: £15.3bn).

AUA increased 7% reflecting the growth in new schemes, additional assets from existing clients and market performance.

Revenue is derived from a number of components, including asset values.

3. New business 6,627 new schemes added in 2014 (2013: 5,412).

Excluding Capita total scheme MiSIPPs equivalent of 4,951 (2013: 4,406), up 12%.

Revenues are a function of the number of schemes.

Using an equivalent MiSIPP basis allows us to reflect a diverse product range and varied pricing model.

4. Total number of schemes At the end of December, there were 47,079 schemes under administration (2013: 43,154), up 9%.

Demonstrates the size and growth dynamics across the book which facilitates planning and management thereof.

5. Attrition levels Attrition in 2014 at 6% (2013: 7%) was lower than budgeted and significantly beat our assumptions at acquisition.

Measure the rate at which schemes are lost due to annuity purchase, death or other reasons to allow us to understand and manage the impact to revenue.

6. Adjusted operating profit £5.8m adjusted operating profit (2013: £8.0m). 2014 results were impacted by some revenue pressure and the investment in the business.

Validates performance of business against budget and strategic goals and expected operating characteristics.

Strategic Report


10

Strategy

Having evolved from being solely a SIPP provider, our goal in James Hay is to build on our heritage as a complex pensions’ administrator and develop our proposition and position as a market leading platform in the UK wealth management market. Our investment programme, which peaked in 2014, is delivering results and while we continue to advance our strategy, the fundamentals remain consistent with those already communicated with the primary areas of focus for investment and development in:

• distribution and marketing - focus on key financial adviser relationships - ensuring ‘strategic fit’ with James Hay Partnership

- targeted marketing and promotion of platform proposition

• efficiency - streamlined processes - enhanced automation

- extend online access

• platform development - extend functionality and platform - digital capability - enhanced product offering

- direct to customer (D2C) capability

Future development

2015 will be a year of significant change for the UK wealth management market, particularly in the pensions’ arena. Having further developed our operational capability in 2014, James Hay is ready for the introduction of new pension changes such as the removal of compulsory annuity purchase, increased flexibility on drawdown and the transfer of pension assets across generations.

Overall, the changes represent an opportunity for our business with increased longevity predicted and increased client service expectations playing to the strengths of our service and product offering. We look forward to providing our clients and their advisers with the full breadth of new pension freedoms and flexibility on day one of the new rules taking effect.

Underpinning all of this is our modular product structure, a fair and flexible approach for clients. We believe that an unbundled approach is the fairest and most appropriate charging basis for clients both from a regulatory and competitive perspective.

In 2014 we expanded the product range to include non-pension specific tax wrappers and we intend to further promote products such as NISAs and GIAs as part of our wider marketing programme, raising the profile of James Hay as a full service platform.

Our marketing strategy will be more focused on increased penetration of targeted advisers, including the development of key strategic partnerships. In doing so, we believe we will achieve increased sales of higher margin products.

To build and embed these relationships, we will continue to invest in our platform technology and operational capability while simultaneously driving efficiencies and lower unit servicing costs in the business.

The investments we have made in James Hay position it very well for sustainable growth in its core market. We see potential for accelerated organic growth but will also look at acquisitions and strategic alliances where we believe there is value-enhancing opportunities.

Strategic Report

11


Strategic Report

Awards

• Gold Service Rating from Money Marketing• 5 star rating from Defaqto• ‘Excellent’ rating for Platform Profitability from FinalytiQ• Highly Commended from Investment Life & Pensions Moneyfacts awards

Our ground-breaking modular approach to retirement wealth planning has garnered industry awards, as we continue to recognise the need for innovation in the platform market. It is designed to be fair and flexible. The Modular iPlan (MiPlan) offers greater control to advisers and their clients by structuring different investment elements in such a way that they can be 'switched on or off' as needed. Investors only pay for what they use when they use it.

With great flexibility and transparent pricing, the James Hay Modular iPlan encompasses a comprehensive range of investment opportunities built around the Modular iSIPP but with the option to add ISA and GIA accounts. It gives clients access to an even wider range of investment options to suit their needs throughout the cycle of retirement wealth planning and drawing income all underpinned by the online functionality of James Hay Online.

Ser

vice

and E

xpertise

Cash

Panel

Panels

Cashacco

unt

ModulariPlan

Mo

du

lar

iSIP

P

Modular GIA

Cas

hacco

unt

Fun

ds

Cas

h

Sto

cks

&S

hare

s

Modular ISA

Pan

els

Above: Alastair Conway (James Hay CEO) presents at a recent seminar for advisers.

James Hay Partnership: Our Modular Approach


12

Independent wealth management


£’000 £’000

Revenue

Saunderson House 24,502 20,700Other independent financial advisory (sold) 3,880 5,648

28,382 26,348


£’000 £’000Adjusted operating profit

Saunderson House 5,369 4,760Other independent financial advisory (sold) 514 524

5,883 5,284

Our independent wealth management business now consists solely of Saunderson House following the divestments of our IFG UK Financial Services and Siddalls France businesses. The sold businesses were included in the Group’s financial performance up to the point of their disposal in Q3 2014 while the comparative period is on a full year basis. The disposed-of businesses delivered credible performances in 2014 and we wish our former colleagues and the new owners every success for the future.

Saunderson House delivered a 13% increase in adjusted operating profit to £5.4 million (re-presented 2013: £4.8 million). The 2013 re-presented basis excludes an allocation of £1.1 million of overheads, which is now included in Group/Other, and so reflects the underlying performance of the business. Revenue growth of 18% was achieved with a broadly stable operating margin of 22% notwithstanding further investment in the business.

The business is essentially activity-based around the number of new and existing clients. Our growth strategy, predicated on excellent client service and investment proposition coupled with focused client recruitment, is yielding results with 247 new clients in 2014. This 60% increase year on year compares to 154 in 2013 and 100 in 2012. The positive momentum has been driven by:

• increasing the number of client-winners to 27 from 7 in 2011;

• referrals from existing clients;

• more focused targeting of prospective clients in traditional core legal and accounting segments; and

• expansion into new/adjacent segments which exhibit similar characteristics to our core segments.

Client attrition remains at de minimus levels of less than 1%. With strong retention and positive new client recruitment, the client base has grown to over 1,600. Assets under advice have increased by 16% to £3.7 billion at the end of 2014 compared to £3.2 billion in 2013. The increase is evenly driven by new assets and investment returns.

Strategic Report

13


Saunderson House’s success is built on its team-based business model, first class advisory capability and an adherence to its core values of being client-centric. Its investment proposition is based on macroeconomic research and active asset allocation with an emphasis on transparency of process. We have continued to deliver benchmark-beating returns to our clients, outperforming comparative portfolios with lower levels of volatility. The continued success of the investment proposition and performance track record is a key competitive advantage.

With a strengthened management team and clear strategic direction, Saunderson House is delivering results.

It continues to build on its achievements with some key highlights of 2014 below: • top quartile investment performance over a 3 and 5

year timeframe. In 2014 Saunderson House became an associate member of Asset Risk Consultants Private Client Indices underlining the credibility of our investment proposition by providing authoritative, third party performance data for clients, prospects and peers;

• 60% growth in client wins to 247 bringing total clients to over 1,600;

• investment in technology to deliver a new online client proposition in 2015;

• development of a new discretionary management offering with a launch of a pilot programme in 2015;

• implementation of a focused marketing strategy to drive increased brand recognition: - Brand refresh successfully rolled out, enhanced

marketing and on-line toolkit to assist business development.

- External communications have included high profile sponsorship such as the FT’s Innovative Lawyer, top events such as the Global Law Summit and links with key business associations, such as the Management Consultancies Association.

- Formalising our corporate and social responsibility agenda with the setting up of a ‘Make a difference’ committee and partnering with the charity ‘Action for Children’.

Strategic Report

Left to right: Tony Overy (Saunderson House CEO), Christopher Sexton (Saunderson House Investment Director) and Paul McNamara (Group CEO)


14

Key performance indicators

The Group uses a variety of performance measures, which are detailed below, in its review of independent wealth management.

Key performance indicators (KPIs) Result Why considered key

1. New client wins Added 247 clients in 2014 (2013: 154).

Measuring the number of new clients shows new business momentum and demonstrates business expansion.

2. Total number of clients Currently we have over 1,600 clients (2013: 1,400).

Understanding client numbers allows us to manage the business, allocate resources and plan for growth.

3. Assets under advice Assets under advice at the end of December were circa £3.7bn (2013: £3.2bn).

The value of assets under advice has increased reflecting the growth in new clients and additional assets from exisiting clients as well as market performance.

While not a direct driver of revenues, it is useful to measure the value of assets for market and pricing positioning, promotional purposes as well as operational planning and management.

4. Billable hours and recovery rate 2014: 88% (2013: 87%)

High efficiency rates were recorded in 2014, comfortably exceeding the 80% target rate.

We track the number of hours billed and the rates at which fees are recovered as a measure of efficiency.

5. Number of client-winners and chartered financial planners

Following the investment in people and business development coaching, the number of client-winners has increased to 27 from a base of 7 in 2011.

There are now 39 chartered financial planners.

Increasing the number of individuals capable of business development directly impacts the number of new clients recruited.

Saunderson House recognises the importance of academic qualifications and encourages advisers to reach the highest level of qualification as a measure of our professionalism.

6. Adjusted operating profit Adjusted operating profit of £5.4m achieved, up 13% on £4.8m in 2013.

Validates performance of business against budget and strategic goals and expected operating characteristics.

Strategic Report

15


Strategy

Saunderson House has a premium offering that is competitively and transparently priced and provided by qualified, trained advisers and investment professionals operating in a client-focused culture. Our goal is to nurture these qualities while investing in the business so that it can achieve its growth ambitions. The growth strategy, as previously outlined, is focused on expanding the client and asset base, which will increase profitability, and is supported by investment in three key areas:

• people - strengthen business development capability - achieve industry leading professional qualifications - continuous talent development

• efficiency and client service - develop digital capability in client reporting - automate and streamline processes - enhanced investment proposition

• marketing - build corporate brand awareness - demonstrate our capability through marketing initiatives and activities - use all client contact to promote the proposition

Future development

The quality of our people is key to the delivery of a first class service to clients and sets Saunderson House apart from its competitors. Continuing to develop our people, maintaining our excellent investment process and proposition and enhancing the client experience will deliver continued growth for Saunderson House.

In 2015 we intend to deliver further enhancements to our operating capabilities and streamline processes and operations. This will include simplification and greater integration of the technologies and platforms that the business depends on to deliver its services to clients. We expect to launch an online client reporting portal later this year.

The Saunderson House investment process and proposition have delivered an impressive performance track record due to its research-driven approach to client asset allocation, backed by a rigorous and independent fund selection and review process. We believe this is a competitive differentiator which will be further enhanced by the development of a discretionary managed offering which will be progressively rolled out in 2015.

Our marketing strategy is focused on our core and adjacent markets where significant potential for new client recruitment exists. While we have deep penetration in

Strategic Report

Our philosophy is value driven and long term, based on risk-control and active fund selection where possible. We do not believe in investing in any product we cannot conduct due diligence on nor understand how the investment returns are generated.Our team is comprised of highly qualified individuals, all with relevant up-to-date knowledge who all specialise in particular asset classes and markets.

On the basis of rigorous research into the global macroeconomic environment and careful scrutiny of asset valuations, the team proposes asset allocations and funds for client portfolios. These recommendations are intensively reviewed by our Investment Committee, which meets each month before a decision is taken on whether to implement them.

Above: Christopher Sexton, Investment Director and the award winning investment team.

Saunderson House: Our investment philosophy


16

some of the top legal and accountancy firms, there is still substantial opportunity for growth in this space. We also see opportunity in adjacent markets where client characteristics are similar. The increased profile of Saunderson House will, we believe, support our initiatives in these adjacent markets.

The focus for Saunderson House is to continue to grow organically, however, we will continue to monitor opportunities for acquisitions or strategic alliances but only where there is a clear and compelling cultural fit with Saunderson House.

Awards

• Awarded the Gold Standard Award for independent financial advice• Named best City Firm for Complex Wealth Management in the Wealth & Money Management Awards• Won Adviser Firm of the Year 2014 at the Money Marketing Awards• Won Best Advisory Service 2014 at the City of London Wealth Management Awards• In 2014, 2013 and 2012, Saunderson House was a finalist at the Chartered Financial Planners of the Year Awards• Named one of Top 25 IFA Companies by Private Client Practitioner for the last five years

Group/Other

Following the sale of the Irish pension and advisory businesses to Willis Ireland, the Group retains its majority 70% shareholding in ARB Underwriting Limited and A.R. Brassington & Co Limited (ARB), an Irish general insurance business which provides agency underwriting, retail brokerage services and a low-cost online direct offering. We have been clear that this business is not part of our core strategy and we continue to explore opportunities to divest. Therefore the business is treated as discontinued and held for sale in the financial statements. The business performed well in 2014 and is profitable.


Adjusted operating loss £’000 £’000

Group/Other costs (3,809) (4,092)

Group costs include costs associated with our Dublin head office, the Board of Directors and other costs associated with being a publicly listed company.

GROUP FINANCING

Group net cash/(debt) is summarised and compared to 2013 year end below.

2014 2013£’000 £’000

Debt (6,641) (6,495)Cash* 29,326 23,469

Net cash 22,685 16,974

*excludes cash held in disposal group

The Group is in a strong financial position with net cash of £22.7 million (excluding £0.7 million cash classified within the disposal group held for sale). During 2014 the businesses generated £5.9 million of operating cash flow which was utilised to fund finance and investing activities of £9.5 million. The businesses sold generated initial cash consideration of £8.6 million, net of costs.

The principal elements of finance and investments outgoings were tax, dividend payments, termination payments and platform related capital expenditure, predominantly in James Hay Partnership.

Strategic Report

17


DIVIDENDDividend

SHARE:I:IFG:IFG Annual Report 2014:Data for charts in IFG Annual Report 2014 for Cindy3.xls10/04/201514:58

DPS2010 2011 2012 2013 2014

Interim 1.15 1.26 1.33 1.31 1.31Final 2.33 2.28 2.75 2.73 2.73Total 3.47 3.54 4.08 4.04 4.04 Eugene, this one -‐>

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50

2010 2011 2012 2013 2014

Dividend per share in pence

Interim Final

The Board is recommending a final dividend of 2.73 pence per share. This final dividend, when added to the interim dividend of 1.31 pence paid on 28 November 2014, makes a total of 4.04 pence per share. The last few years have seen significant changes to the Group, notably in 2014. We have invested considerably in growing our capability, and positioning the Group for growth. Going forward, we expect to adopt a progressive dividend policy that will reflect the earnings and cash flow potential of the Group, as well as the Group’s investment and capital requirements.

BOARD CHANGES

The former Group Chief Executive, Mark Bourke, left the Group in April 2014. He was replaced on an interim basis by John Cotter, Group Finance Director, until the appointment of Paul McNamara as Group Chief Executive on 29 July 2014. Gary Owens resigned from the Board after the agreement was reached on 28 August 2014 for the sale of the Irish pension and advisory business to Willis Ireland.

STAFF

The staff who work at IFG Group plc are key to its continued success. The gender of our staff at 31 December 2014 was as follows:

Male Female Total

Non-Executive Directors 5 2 7

Executive Directors 2 - 2

Senior managers 39 9 48

Other employees 353 418 771

Total 399 429 828

OUTLOOK

The Group is strongly positioned with profitable businesses in attractive markets and has a clear strategy to grow and develop its capability and offering. We continue to invest in the business in terms of technology and people, and the momentum being achieved, as a result of the investments we have made, will support continued growth of revenues and meaningful growth in Group profitability.

Paul McNamara

Group Chief Executive

25 March 2015

Strategic Report


18

Notice is hereby given that the fifty first Annual General Meeting (“AGM”) of IFG Group plc will be held at Herbert Park Hotel, Ballsbridge, Dublin 4, on 12 May 2015 at 12.00 noon for the following purposes:

Ordinary business

1. To receive and consider the Report of the Directors, Financial Statements and the Independent Auditor’s Report thereon for the year ended 31 December 2014.

2. To declare the dividend recommended by the Directors.

3. To elect as a Director Paul McNamara who was co-opted on 29 July 2014 and so seeks election in accordance with the Company’s Articles of Association.

4. To re-elect as a Director Colm Barrington who retires in accordance with best practice under the UK Corporate Governance Code.

5. To re-elect as a Director Peter Priestley who retires in accordance with best practice under the UK Corporate Governance Code.

6. To authorise the Directors to agree the remuneration of the auditors.

Special business

7. As an Ordinary Resolution

“that the Directors of the Company be and they are generally and unconditionally authorised to exercise all powers of the Company to allot relevant securities (within the meaning of Section 20 of the Companies (Amendment) Act, 1983) up to an aggregate nominal amount not exceeding the present authorised but unissued capital of the Company; provided that this authority shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this Resolution or 6 August 2016 (if earlier) unless previously renewed, varied or revoked by the Company, save that the Company may before such expiry make an offer or agreement which would or might require relevant securities to be allotted after such expiry and the Directors may allot relevant securities pursuant to such an offer or agreement as if the authority conferred hereby had not expired”.

8. As a Special Resolution

“that the Directors be and they are hereby empowered pursuant to Section 23 and Section 24 (1) of the Companies (Amendment) Act, 1983 to allot equity securities (within the meaning of Section 23 of the said Act) for cash pursuant to the authority conferred by Resolution 7 above as if Section 23 (1) of the

Companies (Amendment) Act, 1983 did not apply to such allotment provided that this power shall be limited:

a. to the allotment of equity securities in connection with a rights issue in favour of Shareholders where the equity securities respectively attributable to the interests of all Shareholders are proportionate (as nearly as may be) to the respective number of ordinary shares held by them; and

b. to the allotment (otherwise than pursuant to sub-paragraph a above) of equity securities up to an aggregate nominal value of €628,876 (representing five per cent of the issued share capital of the Company) at 31 December 2014.

The power hereby conferred shall expire at the conclusion of the next AGM of the Company after the passing of this Resolution or 6 August 2016 (if earlier) unless such power shall be renewed in accordance with and subject to the provisions of the said Section 24 save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities pursuant to such an offer or agreement as if the authority conferred hereby had not expired”.


“that the Company be and is hereby generally and unconditionally authorised to make one or more market purchases (within the meaning of Section 212 of the Companies Act, 1990) on The London Stock Exchange and/or The Irish Stock Exchange of ordinary shares of €0.12 each in the capital of the Company (“ordinary shares”) provided that:

a. the maximum aggregate number of ordinary shares hereby authorised to be purchased is 10,481,267 (representing ten per cent of the issued ordinary share capital at 31 December 2014);

b. the minimum price (exclusive of expenses), which may be paid for an ordinary share, is €0.12 being the nominal value of an ordinary share;

c. the maximum price (exclusive of expenses), which may be paid for an ordinary share, is not more than five per cent above the average of the bid and offer price for an ordinary share for the ten business days immediately preceding the day on which the ordinary shares are purchased;

d. unless previously revoked or varied, the authority hereby conferred shall expire at the close of business on 31 December 2016; and

Notice of Meeting

19


Notice of Meeting

e. the Company may make a contract or contracts to purchase ordinary shares under the authority hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiry of such authority and may make a purchase of ordinary shares in pursuance of such a contract or contracts, notwithstanding that this authority has otherwise expired”.


“that for the purposes of Section 209 of the Companies Act, 1990, the re issue price range at which any treasury shares (as defined by the said Section 209) for the time being held by the Company may be re-issued off-market shall be as follows:

a. the maximum price at which a treasury share may be re-issued off-market, shall not be more than five per cent above the average of the bid and offer price for an ordinary share for the ten business days immediately preceding the day on which the treasury Share is reissued and

b. the minimum price at which a treasury Share may be re-issued off-market shall not be less than ten per cent below the average of the bid and offer price for an ordinary share for the ten business days immediately preceding the day on which the treasury Share is re-issued.

Unless previously revoked or varied, the authority hereby conferred shall expire at the close of business on 31 December 2016”.


“that, in accordance with the Shareholder Rights (Directive 2007/36/EC) Regulations 2009, the provisions of Article 59 of the Articles of Association of the Company allowing for the convening of an Extraordinary General Meeting (“EGM”) of the Company on giving 14 days’ notice in writing at the least (where such meeting is not an AGM or a general meeting for the passing of a Special Resolution) shall continue to be effective”.

By order of the Board:Conleth O’ReillyCompany Secretary

The OvalShelbourne RoadBallsbridgeDublin 4

25 March 2015


20

The Directors of IFG Group plc present their report and the audited financial statements for the year ended 31 December 2014.

Principal activities

The Group is organised into two segments; our Platform business James Hay Partnership and our Independent wealth management business Saunderson House. These segments differ from 2013, due to the significant restructuring of the business in 2014, and reflect how the Group is managed and directed.

The principal products and services offered by the Group are the intermediation and administration of financial service products.

Results

The profit for the year attributable to the owners of the parent Company was £0.7 million (2013: £4.9 million).

Dividends

An interim dividend of 1.31 pence per ordinary share, subject to withholding tax at 20% (2013: 1.37 pence), was paid on 28 November 2014 and a final dividend of 2.73 pence per ordinary share, which may be subject to withholding tax at 20% (2013: 2.59 pence subject to withholding tax at 20%), will, subject to Shareholder approval, be paid on 8 June 2015 to qualifying Shareholders on the register on 8 May 2015. The dividend will be declared in Sterling with the option for payment in Sterling or Euro (net of Irish withholding tax).

Business review

A detailed commentary and review of the strategy, business model and performance of the Group is contained in the Chairman’s Statement and the Strategic Report on pages 3 to 17 of the Annual Report.

The Group has clear strategic direction and ambition to grow its core businesses, which are UK based. Supported by a strong balance sheet, we will continue to invest in the businesses to deliver sustainable growth.

A description of the principal risks and uncertainties facing the Group is set out on pages 21 to 23.

Going concern

After making enquiries, considering the cash available at the reporting date, the Group’s significant risks and considering the projections in the Group’s strategic plan,

the Directors consider that the Company has adequate resources to continue operating for the foreseeable future. For this reason they have continued to adopt the going concern basis in preparing the financial statements.

Research and development

The Group continues to research and develop new financial services products and to enhance existing products. Research and development costs of £444,000 (2013: £611,000) were expensed during the year.

Political and charitable donations

The Group made no political donations in 2014 (2013: £nil), but made charitable donations of £8,000 (2013: £10,000).

Events since the year end

There have been no significant events since year end.

Amendment of Articles of Association

The Company’s Articles of Association may only be amended with the approval of a special resolution of the Shareholders.

Principal risks and uncertainties

The markets, in which the Group operates, may be affected by numerous factors, many of which are outside the Group’s control and the impact of which cannot be accurately predicted. The Board is responsible for the Group’s risk management systems, which are designed to identify, manage and mitigate potential material risks to the achievement of the Group’s strategic and business objectives.

Report of the Directors

IFG Group plc Board of Directors

21


In accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the Directors note that the principal risks and uncertainties facing the Group include the following areas:

Strategic risks Description of risks Measures to reduce risk

Environment and market conditions The economic, technological and other macro factors affecting demand for the Group’s services.

The Group has operations across two businesses in the UK. Whilst the current economic climate will affect all business, the impact will vary according to the markets in which they operate. The Group continues to focus on operating efficiencies and business model changes to ensure it remains competitive.

Competitor activity The Group faces competition in its various markets and if it fails to compete successfully, market share and operating performance may decline.

Competitor activity is monitored by the Board, Group and subsidiary management and is focused on market developments and assessing the quality of our offering in terms of:

- technology solutions;- quality of service; - pricing to meet the demands of customers; - appropriate governance and cost structures; and- growth.

Acquisitions The risks associated with selecting appropriate investment targets, integrating them into the business and successfully realising the growth expected from such transactions.

The Group conducts stringent internal due diligence processes prior to completing any transaction. Group and subsidiary management have significant experience and expertise in acquisition and integration management.

Disposals The financial and strategic risks associated with a significant business disposal and the risk of material warranty and indemnity claims.

The Group sets very clear limits in terms of warranty and indemnity risks that are accepted in any sale agreements.

Together with historically low claim levels - these risks are further mitigated by the maintenance of professional indemnity insurance policies.



22

Operational risks Description of risks Measures to reduce risk

Loss of key customers/intermediaries

The risks associated with maintaining relationships with key customers and intermediaries and their financial impact on the business.

The Group invests significant resources to maintain strong relationships with its key customers and intermediaries.

Loss of key management resources and sales

Strong and effective management has been fundamental to the Group’s success. The ability to attract and retain highly skilled employees and executives is critical to this continued success.

The Group maintains a focus on succession planning, strong recruitment processes, long-term management incentive programmes and management development.

Customer claims experience The ability to contain the level of loss arising from complaints from customers who may have suffered losses as a result of the mis-selling of financial products or administration errors, coupled with potential regulatory action.

Detailed compliance monitoring controls and procedures and complaints monitoring processes are in place across all subsidiary companies. The Group maintains appropriate professional indemnity insurance policies.

Information technology systems The ability of the Group to avoid disruption to its key information technology systems.

The Group employs a range of information technology and support system solutions across its businesses, focusing on efficient client administration, comprehensive control procedures and careful financial management.

Business continuity and disaster recovery planning is regularly assessed and tested to ensure the businesses are appropriately resourced and the Group maintains a robust control environment.

All key IT systems are continuously reviewed and updated to meet the needs of the Group.

Compliance / regulatory risks Description of risks Measures to reduce risk

Regulation and tax, including conduct considerations

Changes to regulation, taxation or legislative environment applicable to the Group’s activities.

Risks of regulatory actions and fines.

All regulatory, taxation and legislative requirements are managed locally by compliance, risk managers and finance managers. The Group also reviews and monitors regulation and legislative developments centrally.

Fraud Technological advances and austerity measures have increased the risk of fraud and cybercrime fraud in particular.

IT and banking system security measures are subject to both external and internal review and are continuously updated and improved. Full and detailed adherence to Anti Money Laundering processes and procedures is monitored and tested. The Group has preventative controls on cybercrime.


23


Financial risks * Description of risks Measures to reduce risk

Capital markets, interest rates and treasury

The ability to arrange financing having regard to capital market conditions. Exposure to fluctuations in both foreign exchange rates and interest rate movements including the impact on client account interest earned.

Treasury risks are actively managed by the Group in adherence to Board approved policies and procedures.

The Group has in place committed funding lines.

The Group actively monitors and negotiates interest rate arrangements relating to its business.

Credit risk The exposure to a financial loss as a result of a default by customers or counterparties with which the Group transacts business.

The failure to receive contingent consideration on the businesses sold.

The Group has a credit policy in place and monitors credit risk on an on-going basis.

Customers and counterparties are subject to prior credit evaluations and are subject to continuous monitoring at an operating company level.

We continue to monitor the performance of the businesses sold, and retain access to information under the terms of the sale agreements.


* Financial risk management objectives and policies, which have been implemented by executive management, are set out in note 3 to the Group Financial Statements.


24

John Gallagher Non-Executive Chairman Age: 55

Tenure: 2 years (appointed 5 February 2013)

Committee membership: Finance (chairman) (2 years)Executive (chairman) (2 years)

Current and past appointments/experience:

John is the executive chairman of Crownway Capital, a private investment company and director of the Doyle Collection Hotel Group.

Paul McNamara Group Chief Executive Age: 48

Tenure: < 1 year (appointed 29 July 2014)

Committee membership: Executive (<1 year)


Paul is a fellow of the Institute and Faculty of Actuaries in the UK and of the Society of Actuaries in Ireland. He also holds an MBA from CASS Business School at City University in London. He was Managing Director of Investments and Insurance in Barclays and he previously held senior roles at Standard Life Group, HBOS (now Lloyds Banking Group), AXA UK, McKinsey & Company and Bank of Ireland Group.

John Cotter Group Finance Director Age: 48

Tenure: 1 year (appointed 10 December 2013)

Committee membership: Executive (1 year)


John is a chartered accountant with significant experience of the UK financial services industry. He was group finance director & chief risk officer at Collins Stewart Hawkpoint plc and chief operating officer (Global Business Unit Control) at the Royal Bank of Scotland. John was also chief operating officer and chief financial officer at Morgan Stanley Bank International Limited.


25


Colm Barrington Non-Executive Director Age: 69

Tenure: 9 years (appointed 28 June 2005)

Committee membership: Remuneration (chairman) (9 years) Nomination (chairman) (8 years)Audit (9 years)Executive (2 years)


Since 2007 Colm has been the chief executive of FLY Leasing Limited, a NYSE listed aircraft leasing company based in Ireland. He is also the non-executive chairman of Aer Lingus plc. Colm is a graduate of UCD and prior to his present position held several senior positions in the international aircraft leasing sector, including managing director of Babcock & Brown Ireland Limited, president of GE Capital Aviation Services Limited, chief operating officer of GPA Group plc and chief executive of GPA Capital.

Evelyn Bourke Non-Executive Director Age: 50

Tenure: 3 years (appointed 25 August 2011)Committee membership: Risk (chairman) (3 years)

UK operations (3 years)Remuneration (2 years)Executive (2 years)


Evelyn joined Bupa in September 2012 as chief financial officer. Previously she was appointed CFO of Friends Provident/Life plc in 2009 and, in 2011, she was appointed chief commercial officer of Friends Life Group with responsibility for Group Strategy & Capital. From 2005 to 2009, Evelyn worked for Standard Life initially as group strategy & planning director and then finance director of Standard Life UK Financial Services in 2006. A qualified actuary with an MBA from London Business School, she has significant experience in financial services having held senior roles at Chase de Vere Investments plc and Tillinghast-Towers Perrin.

David Paige Senior Independent Non-Executive Director Age: 63

Tenure: 2 years (appointed 12 July 2012)

Committee membership: Audit (chairman) (2 years)Risk (1 year)UK Operations (2 years)Finance (2 years)Executive (2 years)


David was a partner in Coopers & Lybrand financial services division before moving into senior executive positions with NatWest Bank, Zurich Financial Services, Aviva plc and Royal & Sun Alliance Insurance Group where he was executive director, Risk. He was a non-executive director of several of Aegon’s UK businesses from 2006 until 2012 and is currently a non-executive director at Willis Limited and Yorkshire Building Society.



26

Peter Priestley Non-Executive Director Age: 47

Tenure: 5 years (appointed 30 March 2010)

Committee membership: UK Operations (3 years) Risk (3 years)Remuneration (3 years) Nomination (3 years)Finance (2 years)Executive (2 years)


Peter was involved in the foundation of Pension Insurance Corporation, a leading UK Life Insurer and was a co-founder of Celtic Utilities Limited and Greenstar Limited. A qualified lawyer, with an MBA from University of Michigan, he is an experienced corporate finance adviser having spent his early career at Williams Holdings plc. Peter is a non-executive director of Continental Farmers Group plc.

Robin Phipps Non-Executive Director Age: 64

Tenure: 3 years (appointed 23 March 2012)

Committee membership: UK Operations (chairman) (3 years)Risk (3 years)Executive (2 years)


Robin joined Friends Life Group (formerly Friends Provident plc) in November 2008 as a non-executive director and is a member of the audit, risk and compliance committee and chairman of the with profits committee. Robin has significant experience in financial services having been a group director of Legal & General Group plc, a non-executive director of GE Money Credit Cards and a senior adviser (Financial Services) of Ernst & Young.

Cara Ryan Non-Executive Director Age: 42

Tenure: 2 years (appointed 5 February 2013)

Committee membership: Audit (2 years)Nomination (2 years)Executive (2 years)


Cara holds a Masters in Investment & Treasury and worked as an economist for Ulster Bank and then moved to IWP plc as a corporate finance executive. She moved to IFG Group in 1999 and was appointed managing director of IFG Investment Managers in May 2001 until September 2006 when the business was sold. Over the period 2003-2009, she held board positions on numerous investment funds. Cara was an executive director of Manor Park Homebuilders dealing with Financial and Legal matters of the Group until May 2012 and has strong experience in corporate finance and financial services.


27


In accordance with best practice under UK Corporate Governance Code, Colm Barrington and Peter Priestley both retire and being eligible, both are offered for re-election to the Board. Paul McNamara, who was co-opted to the Board on 29 July 2014, is also offered for election to the Board.

The Directors believe that each of the retiring Directors should be re-elected on the basis that they bring the necessary and appropriate balance of skills and experience within the Company and on the Board.

Service agreements and contracts are dealt with later in this report.

Directors’ remuneration - audited

The remuneration of the Directors for the year ended 31 December 2014 is noted below:

Salary

£’000

Fees

£’000

Bonus

£’000

Other

£’000

Pension

£’000

Termination

£’000

Total

£’000

Executive Directors

Mark Bourke (a) 98 - - 18 31 974 1,121

John Cotter 207 - 121 3 42 - 373

Paul McNamara (b) 143 - - 22 28 - 193

Gary Owens (c) 134 - 81 16 32 - 263

582 - 202 59 133 974 1,950

Non-Executive Directors

John Gallagher - 102 - - - - 102Colm Barrington - 36 - - - - 36Evelyn Bourke - 36 - - - - 36David Paige - 36 - - - - 36Robin Phipps - 36 - - - - 36Peter Priestley - 36 - - - - 36Cara Ryan - 36 - - - - 36

- 318 - - - - 318

Sub-total 582 318 202 59 133 974 2,268

Share based compensation 12

Total 2,280

(a) Mark Bourke ceased to be a Director on 25 April 2014(b) Paul McNamara was co-opted to the Board on 29 July 2014(c) Gary Owens ceased to be a Director on 28 August 2014



28


The remuneration of the Directors for the year ended 31 December 2013 is noted below:

Salary

£’000

Fees

£’000

Bonus

£’000

Other

£’000

Pension

£’000

Termination

£’000

Total

£’000

Executive Directors

Mark Bourke 379 - 165 46 123 - 713

John Cotter (a) 17 - - 4 3 - 24

Gary Owens 183 - 60 24 49 - 316

Aidan Comerford (b) 85 - - 12 15 282 394

664 - 225 86 190 282 1,447

Non-Executive Directors

John Gallagher (c) - 94 - - - - 94Colm Barrington - 37 - - - - 37Evelyn Bourke - 37 - - - - 37David Paige - 37 - - - - 37Robin Phipps - 37 - - - - 37Peter Priestley - 37 - - - - 37Cara Ryan (d) - 34 - - - - 34Patrick Joseph Moran (e) - 5 - - - - 5

- 318 - - - - 318

Sub-total 664 318 225 86 190 282 1,765

Share based compensation 57

Total 1,822

(a) John Cotter was co-opted to the Board on 10 December 2013 and elected to the Board on 7 May 2014(b) Aidan Comerford ceased to be a Director on 31 July 2013(c) John Gallagher was co-opted to the Board on 5 February 2013 and elected to the Board on 26 June 2013(d) Cara Ryan was co-opted to the Board on 5 February 2013 and elected to the Board on 26 June 2013(e) Patrick Joseph Moran retired as Director and Chairman of the Board on 5 February 2013

The salaries for Executive Directors are reviewed annually. Benefits to Executive Directors may include pension and health benefits. Fees to Non-Executive Directors are reviewed annually.

Pension payments in respect of Executive Directors are calculated on basic salary only and no incentives or benefits are included.

All Directors’ pension contributions are paid to defined contribution schemes.

Directors’ interest in Long Term Incentive Plans (LTIP) - audited

The LTIP was introduced in 2011 and approved at the EGM following the AGM on 29 June 2011. The LTIP performance period for the plan expired on 31 January 2014. No awards were made under the plan.

29


Directors’ interests in shares

The interests of the Directors in office and their families, all of which were beneficial, in the €0.12 ordinary shares of the Company at 31 December 2014 and 31 December 2013, or date of appointment, if later, are noted below:

At 31 December 2014 At 31 December 2013

Shares under option Share holding Shares under option Share holding

Colm Barrington - 506,578 - 506,578

Evelyn Bourke - - - -

John Cotter - 50,000 - -

John Gallagher - 10,166,819 - 6,541,967

David Paige - - - -

Robin Phipps - - - -

Peter Priestley - 722,399 - 722,399

Cara Ryan - 15,712 - 15,712

Paul McNamara - 100,000 - -

Directors’ interest in share options - audited

No Directors held any share options as at 31 December 2014.

The market price of the Company’s ordinary shares at the beginning and at the end of the year, on the Irish Stock Exchange was €1.76 per share and €1.55 per share respectively. During the year the market price per share ranged from €1.46 to €1.85.

The accounting charge calculated in line with the Group’s accounting policy in respect of the Directors’ share options for the year was £12,000 (2013: £57,000).

Directors’ service agreements and contracts

There are no contracts of service terminable on more than one year’s notice existing or proposed between IFG Group plc and any Director of IFG Group plc. Executive Directors Paul McNamara and John Cotter have each entered into service agreements and contracts of employment with the Group on terms which inter alia, provide for salaries, pension contributions and notice periods not exceeding one year.

Other than as disclosed in note 35 ‘Related party transactions’, there has not been any contract or arrangement with the Company or any subsidiary during the year in which a Director of the Company was materially interested and which was significant in relation to the Company’s business.



30


25 March 2015 31 December 2014

Number of shares

% of issued share capital

Number of shares

% of issued share capital

Kabouter Management LLC 8,596,005 8.17 6,285,045 6.00Mawer Investment Management Limited 8,121,250 7.72 8,121,250 7.75F&C Asset Management plc 7,240,403 6.88 7,240,403 6.91Farringdon Capital Management SA 5,750,330 5.47 5,200,314 4.96Pageant Holdings Limited 5,247,170 4.99 5,247,170 5.01Patrick Joseph Moran 4,446,067 4.23 4,446,067 4.24Schroders plc 4,206,207 4.00 4,206,207 4.01MSD European Opportunity Master Fund LP 4,171,300 3.97 4,171,300 3.98Vanguard International Explorer Fund 3,154,238 3.00 3,660,000 3.49

Annual General Meeting

Notice of the Company’s Fifty First Annual General Meeting (“AGM”) is set out on pages 18 to 19.

The Directors believe that the resolutions to be proposed at the AGM are in the best interest of the Company and its Shareholders. They intend to vote in favour of each of the resolutions and recommend that Shareholders also vote in favour of such resolutions.

The resolutions to be proposed as special business at the meeting are explained below.

Allotment of shares

At the Company’s AGM held on 7 May 2014, the Directors were authorised to allot relevant securities up to an aggregate nominal amount not exceeding the then authorised but unissued share capital of the Company. This authority expires at the conclusion of this year’s AGM. In resolution number 7, the Directors are requesting renewal of authority in respect of the current authorised unissued share capital of the Company.

Also at the Company’s last AGM the Directors were authorised to allot shares in the Company for cash up to a nominal value of €625,366 as if the provisions of Section 23(1) of the Companies (Amendment) Act, 1983 did not apply. This authority expires at the conclusion of this year’s AGM. Under the Companies (Amendment) Act, 1983, any ordinary shares issued for cash must first be offered to existing Shareholders unless approval of the ordinary Shareholders is obtained that these provisions should not be applied. Your Directors consider it desirable that this authority should be renewed, thereby enabling them to retain the ability to make allotments of ordinary shares for cash, other than by way of rights issues to existing ordinary Shareholders. Your Directors believe it appropriate that the authority should be sought for an amount of €628,876 being five per cent of the nominal amount of the Company’s issued share capital at 31 December 2014, to enable it, should the opportunity present itself, to increase the capital base of the Company. The Directors are making the proposal in resolution number 8 which is a special resolution. However, it is not the Directors current intention to use this authority. Approval for this authority is sought until 5 August 2016.

Substantial shareholdings

So far as the Board is aware, the following are the holdings (other than Directors) of more than 3% of the issued share capital of the Company at 31 December 2014 and 25 March 2015.

31


Authority to purchase own shares

At the Company’s AGM held on 7 May 2014, the Directors were granted authority to make market purchases (within the meaning of Section 212 of the Companies Act, 1990) up to a maximum aggregate number of 10,422,767 ordinary shares, representing ten per cent of the issued ordinary share capital net of repurchases. The Directors were also authorised to re-issue off-market treasury shares within defined price ranges. In resolution numbers 9 and 10, which are special resolutions, the Directors are seeking approval for renewal of these authorities for 10,481,267 ordinary shares representing ten per cent of the issued share capital of the Company as at 31 December 2014. The Directors are seeking approval for renewal of this authority until 31 December 2016.

Shareholders’ rights regulation

The Shareholders’ Rights (Directive 2007/36/EC) 2009 Regulations provide that Extraordinary General Meetings (“EGM”) of the Company (except those convened for the purpose of passing special resolutions) may now be held on giving (at least) 14 days’ notice only where (a) the Company has passed a special resolution at its next General Meeting (and each subsequent AGM) approving the holding of EGM on giving (at least) 14 days’ notice; and (b) the Company offers a facility to vote electronically (which the Articles already provide for through the appointment of proxies electronically).

The Directors consider that it is in the interest of the Company to retain the flexibility to call an EGM (except those convened for the purpose of passing special resolutions) on giving (at least) 14 days’ notice. Resolution number 11 is a special resolution permitting the Company to call an EGM on giving (at least) 14 days’ notice. Subject to the passing of the said special resolution, the approval will be effective until the Company’s next AGM.

Regulation 21 of SI 255/2006 ‘European Communities (Takeover Bids Directive (2004/25/EC)) Regulations 2006’

For the purpose of Regulation 21 of Statutory Instruments 255/2006 ‘European Communities (Takeover Bids Directive (2004/25/EC)) Regulations 2006’, the information given under the following headings on pages 99 to 100 (share capital and share premium), pages 24 to 26 (Board of Directors), page 28 (performance bonus and Long-Term Incentive Plan), page 29 (share options), page 29 (Directors service agreements and contracts) is deemed to be incorporated in the Report of the Directors.

Environmental disclosures - carbon footprint

Reducing emissions is the right thing to do for a responsible business seeking sustainable profits. It conserves energy, saves money and helps deliver energy security and better resource efficiency.

Our gross greenhouse gas (GHG) emissions for the year ended 31 December 2014 totalled 777 tonnes of CO2e.

We break down our emissions into three categories which can be seen in the table below.

We have used emission factors from Defra/DECC’s GHG Conversion Factors for Company Reporting.

Our carbon data is collected by managers in each of the countries in which we operate and entered into a reporting tool that has been designed specifically for our carbon footprint process. This tool has been developed to reflect the requirements of the GHG protocol. The tool calculates CO2e emissions.

The year ended 31 December 2011 was set as the base year. The appropriateness of the base year will be reviewed on an annual basis.



32

Description

GHG emissions (tonnes CO2e)

2011


2012


2013


2014

Scope 1 Emissions arise directly from our operations and comprise fuel used in our vehicles 1 3 3 3

Scope 2 Indirect emissions that come from our use of electricity, gas and water 457 464 454 385

Scope 3 Emissions that are other indirect emissions, such as business travel 444 460 446 389

Total 902 927 903 777

Subsidiary undertakings

The Group’s principal subsidiaries, associated undertakings and joint arrangements, as at the date of this document, are listed in note 38 to the Group Financial Statements.

Statement of Directors’ responsibilities

The Directors are responsible for preparing this report and the financial statements in accordance with Irish law.

Irish law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group Financial Statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU). The Directors have elected to prepare the Company financial statements in accordance with Generally Accepted Accounting Practice in Ireland (accounting standards issued by the Financial Reporting Council and promulgated by the Institute of Chartered Accountants in Ireland). The financial statements are required by law to give a true and fair view of the state of affairs of the Company and Group and of the profit or loss of the Group for that year.

In preparing these financial statements the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state that the Group Financial Statements comply with IFRS as adopted by the EU; and

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

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

The Directors are required by Irish law and the listing rules issued by the Irish Stock Exchange, to prepare a Directors’ Report and reports relating to Directors’ remuneration and corporate governance. In accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 (“the Transparency Regulations”), as amended by Transparency (Directive 2004/109/EC) (Amendment) Regulations 2013, the Directors are required to include a management report containing a fair, balanced and understandable review of the business and a description of the principal risks and uncertainties facing the Group.

The Directors are responsible for keeping proper books of account, which disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements have been properly prepared in accordance with the requirements of the Companies Act 1963 to 2013. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The measures taken by the Directors to secure compliance with the Company’s obligation to keep proper books of account are the use of the appropriate systems and procedures and the employment of competent persons. The books of account are kept at the registered office of the Company.


33



A copy of these financial statements will be published on the Company’s website at www.ifggroup.com. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the parent Company’s website. Legislation in the Republic of Ireland concerning the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors are satisfied that the annual report and accounts, when taken as a whole is fair, balanced and understandable, provides the information necessary for Shareholders to assess the performance of the Group, along with its business risks and strategy, and continues to evolve in line with regulatory and best practice guidance.

Directors’ statements pursuant to the Transparency Regulations

Each of the Directors, whose names and functions are listed on pages 24 to 26 of the Report of the Directors, confirm that to the best of each person’s knowledge and belief:

• the Group Financial Statements, prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

• the Company financial statements, prepared in accordance with Generally Accepted Accounting Principles in Ireland, give a true and fair view of the assets, liabilities and financial position of the Company.

Other Directors’ statements

The Report of the Directors contained in the Annual Report includes a fair, balanced and understandable review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that they face.

Corporate Governance Statement

The Corporate Governance Statement on pages 34 to 47 is part of the Report of the Directors.

Auditors

In accordance with Section 160 of the Companies Act, 1963, PricewaterhouseCoopers, Dublin, have indicated their willingness to continue in office.

On behalf of the Board:

P McNamara J A Cotter

(Group Chief Executive) (Group Finance Director)

25 March 2015


34

The Board of IFG Group plc is committed to maintaining the highest standards of corporate governance throughout the Group.

The Company therefore adopts the UK Corporate Governance Code (September 2012) published by the Financial Reporting Council in the UK and the Irish Corporate Governance Annex published by the Irish Stock Exchange (together the “Codes”) in respect of its corporate governance practices.

This statement sets out in detail how IFG Group plc has applied the principles set out in section 1 of the UK Corporate Governance Code, which was published by the Financial Reporting Council in the UK and adopted by the Irish Stock Exchange. The UK Corporate Governance Code is publicly available on the FRC website, www.frc.gov.uk. A copy of the Irish Corporate Governance Annex can be obtained from the ISE’s website, www.ise.ie.

The Board of Directors

The Board provides leadership and maintains effective control over the activities of IFG. The Board meets on a regular basis and has a formal schedule of matters reserved to it. The Board sets the Group’s strategic aims and specifies key developments towards the strategic objectives that are to be achieved by management within an agreed budget.

The Board considers that its composition is appropriate to oversee the Group’s businesses and is suitably diverse in background to address the challenges of the areas in which IFG operates. The current Directors on the Board have extensive business experience which they use effectively in governing the Company. Subject to the matters reserved to it, the Board have delegated responsibility for the operational management of the Group to the Group Chief Executive and, through him, to Executive Directors and senior management. The Board have also delegated some additional responsibilities to Board Committees whose powers, obligations and responsibilities are set out in written terms of reference and approved by the Board.

Matters reserved for the Board

The Board have a formal schedule of matters reserved for its decision and these include:

• approval of the strategic plans of the Group, including approval of yearly budgets;

• approval of the annual and half year financial results;

• review of the Group’s dividend policy and declaration of the interim dividend and recommendation of the final dividend;

• approval of resolutions and related documentation put before Shareholders at general meetings;

• review of financial reporting and control structure;

• review and approval of acquisitions, disposals and capital expenditure;

• ensuring the effectiveness of and reporting on the system of corporate governance; and

• share issuance and financing.


35



Board composition at 25 March 2015

On 25 March 2015, the Board consisted of two Executive Directors and seven Non-Executive Directors who are listed below. There have been no changes since the year end.

Director Tenure (in years) Executive/Non-Executive Independent/Non-independent

Colm Barrington 9 years Non-Executive

Evelyn Bourke 3 years Non-Executive Independent

John Cotter 1 year Executive

John Gallagher 2 years Non-Executive Independent

Paul McNamara < 1 year Executive

David Paige 2 years Non-Executive Independent

Robin Phipps 3 years Non-Executive Independent

Peter Priestley 5 years Non-Executive Independent

Cara Ryan 2 years Non-Executive Independent

The Board, either directly or indirectly through the operation of Committees of the Board and delegated authorities, brings an independent judgement on issues of strategy, resources and standards of conduct.

The Board comprises a Chairman with extensive business experience in the areas of creation, building and maximising return from companies, a Non-Executive Director who is a Chairman of an Irish plc, three Non-Executive Directors who have significant experience and knowledge of the UK Financial Services Industry, a Non-Executive Director with extensive experience of corporate finance and acquisitions and disposals and a Non-Executive Director who has significant corporate finance and Irish financial services experience. The Board composition has changed over the last number of years to align its collective experience and talent towards the principal market segments the Company operates within. The Board is satisfied that it is well positioned to address risks and uncertainties faced by the Group as outlined on pages 21 and 23 through the combined specialist financial industry expertise and business skills of Non-Executive and Executive Directors.

The Executive Directors have extensive experience of the financial services business and are responsible for the operational management of the Group’s businesses. This specialist knowledge is backed up by the general business skills of each of the individual Directors involved and by the broad based skills and knowledge of each of the Non-Executive Directors. The collective skills of the Board are varied and provide extensive capability in general business and specifically in the areas of operation of the Company.

Neither of the Executive Directors have directorships with a FTSE 100 company. In accordance with good practice should any such directorships arise they would be limited to one FTSE company per Executive Director.

All Non-Executive Directors are engaged under service agreements. A copy of the service agreement applied for Non-Executive Directors is available on request from the Company Secretary. It is Board policy that Non-Executive Directors are normally appointed for an initial term of three years. Non-Executive Directors are typically expected to serve two three year terms; however, the Board may invite them to serve longer. Directors serve for a term of three years expiring at the AGM in the third year following their election at the AGM, or as the case may be, their re-election at the AGM. All Directors are submitted regularly for re-election at least every three years and in cases where the Common Code requires, annually. Directors joining are initially co-opted to the Board by vote of the existing Board. Elections of Directors by the Shareholders at an AGM take place at the AGM immediately after co-option and at subsequent periodic intervals of service. On appointment, and regularly thereafter, the Directors are briefed in writing and orally by the executive team. Papers are sent to each Director in sufficient time before Board meetings. The Board is supplied on a timely basis with information in a form and of a quality that enables it to discharge its duties.


36

Independence of Non-Executive Directors

The UK Corporate Governance Code defines “an independent Director” as one who is “independent in character and judgement, and whether there are relationships or circumstances which are likely to affect, or could appear to affect the Director’s judgement”.

Under the provisions of the UK Corporate Governance Code, John Gallagher, Evelyn Bourke, David Paige, Robin Phipps, Peter Priestley and Cara Ryan are deemed independent Directors by the Board. Colm Barrington, by virtue of holding tenure in excess of 9 years, is deemed not to be independent under the combined code.

The Articles of Association of the Company currently provide that all Directors are subject to retirement by rotation on the basis that one-third, or the number nearest one-third of their number, retire at each AGM.

Board Operation

The Chairman and Board have provided profiles of the Directors being presented for election or re-election to the Board. All Non-Executive Directors serving in the course of 2013 and 2014 have been subject to performance evaluation. This has been carried out by the Chairman. All Non-Executive Directors seeking re-election, have been subject to performance evaluation, which established that they are effective Directors and they have confirmed to the Chairman that they are committed to the role of Director. Director assessment is centred on participation, preparation, experience, skill, judgment and relationships with the Board in its entirety. The Board reviews this through the Chairman. A comprehensive external evaluation was completed in 2012 by Egon Zehnder. A further external review will be considered.

A Director may take independent professional advice at the Company’s expense. The Group maintains appropriate insurance cover for its Directors, officers and employees, including cover in respect of legal action against its Directors. The Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. Both the appointment and the removal of the Company Secretary is a matter for the Board as a whole, operating primarily through the Nomination Committee.

The full Board meets at least every two months. In addition, the Board Committees established for specific purposes, being Audit, Remuneration, Risk, Nomination, Executive and Finance meet as required. All Directors allocate sufficient time to the Company to discharge their responsibilities effectively as identified in the following table. Board meetings are held with a pre published structured agenda. Minutes of the meetings are completed, agreed and signed at the next Board Meeting. Any concerns or issues of any individual Directors are noted and recorded in the minutes. The Chairman also meets Non-Executive Directors during the course of the year without Executive Directors being present.

The following table sets out the attendance by Directors at meetings during the year ended 31 December 2014:

Director Board Audit Remuneration Risk Nomination UK Operations Finance Executive

John Gallagher 7 - - - - - 4 4Colm Barrington 5 6 2 - 1 - - -Evelyn Bourke 7 - 2 4 - 2 - -Mark Bourke1 2 - - - - - - -John Cotter 7 - - - - - - 4Gary Owens 2 5 - - - - - - -Paul McNamara 3 3 - - - - - - -David Paige 7 6 - 4 - 2 4 1Robin Phipps 6 - - 4 - 2 - -Peter Priestley 7 - 2 4 1 2 4 -Cara Ryan 6 6 - - 1 - - -Total meetings held 7 6 2 4 1 2 4 4

1 Mark Bourke retired from the Board on 25 April 2014 2 Gary Owens ceased to be a Director on 28 August 2014 3 Paul McNamara was co-opted to the Board on 29 July 2014


37



Board Committees

The Board have the following Committees to assist in the execution of its responsibilities:

• the Audit Committee;

• the Remuneration Committee;

• the Risk Committee;

• the Nomination Committee;

• the UK Operations Committee;

• the Finance Committee; and

• the Executive Committee.

Each of the Committees has written terms of reference that have been approved by the Board which set out the Committee’s powers, responsibilities and obligations. The terms of reference are regularly reviewed and have been constructed using external advice and reflect best practice.

The Group Company Secretary acts as secretary to each of the Board Committees. In the view of the Board, the Committees have been provided with sufficient resources to undertake their duties and may, where necessary, engage external advisers to support their activities.

Audit Committee

Purpose

The role, responsibilities, authority and duties of the Audit Committee (“the Committee”) are set out in our written terms of reference which have been updated to take into account the revisions to the UK Corporate Governance Code (“the Code”).

The terms of reference are available on our website at www.ifggroup.com. The Committee oversees the Group’s financial reporting and internal controls, the latter in conjunction with the Risk Committee, and provides a formal reporting link with the external auditors.

Membership

The Committee is comprised solely of Non-Executive Directors. The Committee consists of:

• David Paige (Chairman)

• Colm Barrington

• Cara Ryan

The Board have determined that all members of the Committee have recent and relevant financial experience

and satisfy the requirements of the Code. The Board have determined that David Paige, the Chairman of the Committee, is the Committee’s designated financial expert.

The Group Chief Executive, the Group Finance Director, the Head of Internal Audit and the external auditors normally attend meetings of the Committee.

The Head of Internal Audit and the external auditors have unrestricted access to the Committee Chairman at all times. They have the opportunity to meet with members of the Committee without the presence of the Executive Directors, at least, once a year.

In the year under review, the Committee held six scheduled meetings, details of the attendances at these meetings are set out on page 36.

How the Committee discharged its responsibilities

During the year and up to the date of approval of the Annual Accounts, the Committee fulfilled its responsibilities by working to a structured agenda of matters focused to coincide with key events of the Group’s financial reporting cycle, together with standing items that the Committee is required to consider at each meeting.

The Committee has made arrangements by which the Group’s staff may, in confidence, raise concerns about possible improprieties in the matters of financial reporting and other matters.

The Committee, operating under its terms of reference, discharges its responsibilities by reviewing:

• the integrity and presentation of the financial statements and any announcements or judgements they contain, including the 2014 interim results announcement and the 2014 preliminary announcement and Annual Report, in each case recommending that these be approved by the Board. In addition the Committee formally considers whether the annual financial statements as presented are fair, balanced and understandable;

• the appropriateness of the Group’s accounting policies and compliance with relevant accounting standards;

• management’s report of related party matters;

• in conjunction with the Risk Committee, reports from Group personnel relating to compliance, internal control and internal audit. Such reports provide the Committee with the information required to oversee the Group’s systems of internal financial control, internal control policies, corporate governance procedures and the overall system of risk management and control;


38

• the external auditors’ terms of engagement including the scope of the audit and fee proposal. The Committee also annually assesses external auditor objectivity and independence taking into account relevant professional and regulatory requirements and the relationship with the audit firm as a whole, including the provision of non-audit services;

• the internal audit function’s terms of reference, resources, its audit plan and reports on its work during the year;

• the arrangements by which staff may, in confidence, raise concerns about possible fraud; and

• the Committees performance including a self-evaluation.

Main activities of the Committee during 2014

Following the publication of the revised version of the UK Corporate Governance Code, which applies to financial years commencing on or after 1 October 2013, the Board have extended the Committee’s remit such that the Committee must now formally advise the Board on whether the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the performance of the Group, along with its business model and strategy. The Committee is satisfied that the annual report and accounts, when taken as a whole is fair, balanced and understandable, provides the information necessary for Shareholders to assess the performance of the Group, along with its business risks and strategy, and continues to evolve in line with regulatory and best practice guidance.

During 2014, the Committee considered the following to be the significant financial reporting issues facing the Company:

Financial reporting

The Committee considered the quality and appropriateness of the accounting policies and practices. For the review of the half year results for 2014, the Committee met with both management and the external auditor to review and discuss the results, disclosures and the interim announcement. For the year end results for 2014, the Committee, prior to making any recommendations to the Board, discussed with management and the external auditors as required the matters of going concern, critical accounting policies and judgements, disclosures and the draft preliminary announcement. The main areas of judgement considered by the Committee in relation to the 2014 financial statements were:

• Goodwill and intangible assets

In order to conclude that the goodwill and intangible

assets carrying value at 31 December 2014 were appropriately stated, the Committee considered the impairment reviews carried out by management. The judgements in relation to these reviews related to the assumptions underlying the calculation of the value in use of the business tested for impairment. The main assumptions reviewed by the Committee were the achievability of long-term business plans and discount rates used by the different segments which are outlined in note 19. These assumptions were subject to sensitivity analysis by management which were also reviewed by the Committee. The Committee concluded that the carrying values of goodwill and intangibles included in the financial statements are appropriate.

• Accounting for disposals

In 2014 the Group disposed of five businesses, including the Irish pension and advisory business and the UK IFA business, IFG UK Financial Services, which were material transactions. The sale of the Irish segment is accounted for in the discontinued line in the Income Statement which shows the loss after tax and the related exceptional loss on sale. The sale of IFGFS is accounted for as part of continuing activities. The only assets or liabilities that are now classified as held for sale relate to ARB and ‘Insure4less’.

The Committee reviewed in detail the accounting for the disposals, their treatment in the financial statements and related disclosure. In particular the Committee reviewed assumptions on the recognition of contingent consideration, adjustments to remaining assets and liabilities, particularly deferred tax, and the consequent changes of the presentation of the segments in the annual report which results from those transactions.

• Liability provisioning Provisions are by their nature uncertain and

judgemental. The Committee discussed with management the nature of the provisions, any developments relating to claims and whether the level of provisioning was appropriate. In particular, the Committee considered the release of provisions related to the sale of the International segment in 2012 and provisions for claims made by customers, including their disclosure. The Committee concluded that the level of provisioning was adequate and appropriate.

• Exceptional items

Judgement is used by the Group in assessing the particular items, which by virtue of their scale and nature, should be disclosed in the Consolidated Income Statement and/or notes as exceptional


39



items. These items require separate disclosure in the financial statements to enable a better understanding of the Group’s financial performance. The Committee reviewed in detail the accounting for exceptional items and the related disclosure.

• Taxation The level of deferred tax asset recognition in relation

to accumulated tax losses is underpinned by a range of assumptions. In 2014 the disposals of five businesses results in material changes to the carrying value of deferred tax assets. Reports were provided by management to the Committee during the year which addressed and outlined management’s views on the recognition and recoverability of such deferred tax assets. The Committee, in their discussions with management, challenged the judgements made by management and concluded that the judgements made were appropriate.

Going concern

The committee reviewed a documented assessment by management supporting the going concern basis of presentation for the Company and Group 2014 financial statements. The assessment included: • an analysis of the Group’s solvency and liquidity

position and of budget information for a period not less than 12 months;

• consideration of the medium term plans taking into account the cash flow implications of the plans, which include a sensitivity analysis based on the key business risks identified by the Group; and

• an analysis of surplus cash available to the Group, the availability of credit facilities, the Group’s committed borrowing facilities and the relevant banking covenants.

The Committee reviewed the above assessments and was satisifed that the business is viable and that adopting the going concern basis for the preparation of the annual financial statements is appropriate.

Internal auditDuring 2014 the Committee reviewed and monitored the progress of the internal audit function. Throughout the year, the Committee were provided with reports from the Head of Internal Audit as outlined in the annual work programme, approved by the Committee. The Committee considered the appropriateness and status of the management actions to address issues raised in internal audit reports. The Committee ensured that the internal audit and external audit teams met, which facilitated co-ordination between the two teams. The Committee also ensured that the internal audit function was adequately and appropriately resourced.

External audit and non-audit servicesDuring 2014, the Committee received a detailed audit plan from the external auditors, identifying their assessment of key audit risks and planned audit approach. This plan was reviewed by the Committee to ensure that there was sufficient audit focus on the key financial statement and audit risks. After review and discussions, the Committee was satisfied that there had been appropriate focus and challenge on the key areas of financial statement and audit risk. PricewaterhouseCoopers (“PwC”) have been auditors since 1997.

It is the Group’s current policy that where it is deemed to be in the best interests of the Group, alternative professional advisers, beyond the incumbent external auditor, are engaged to provide non-audit services. Four key principles underpin the provision of non-audit services by the external auditor. The auditor shall not:

• audit its own firm’s work;

• conduct activities that would normally be undertaken by management;

• have a mutuality of financial interest with the Group; or

• act in an advocacy role for the Group.

During the year ended 31 December 2014 remuneration for non-audit related services to the Company’s external auditor PwC in Ireland, totalled £186,000 (2013: £288,000) and to PwC in other countries £116,000 (2013: £171,000).

The Committee has a process in place to ensure that the independence of the audit is not compromised. This includes monitoring the nature and extent of services provided by the external auditors through its annual review of fees paid to the external auditors for audit and non-audit work. The Committee also obtains confirmation from the external auditors that in their professional judgement they are independent from the Group.

The Committee has the primary responsibility for making recommendations on the appointment, reappointment and removal of the external auditors. In early 2015 the Committee, having carefully considered the matter, recommended to the Board that the Group should undertake an audit tender with three firms, including the incumbent PwC, in respect of the appointment of Group auditor’s for 2015. This was deemed an appropriate time to consider the auditor appointment given the significant change to the business in 2014, and the changed shape of the business going forward. This process will conclude in advance of the AGM in May.


40

Review of the Committee performance

The effectiveness of the Committee is self-assessed annually by the Committee, and also by the Board, in terms of its performance, independence, challenging of critical accounting judgements and interaction with internal and external audit and management. The Committee’s effectiveness is reviewed as part of the Board evaluation process, see page 45 for details on this process. The Committee and the Board are satisfied that it is operating effectively.

Remuneration Committee

Purpose

The Remuneration Committee (“the Committee”) is the Committee of the Board responsible for ensuring that the Company’s overall reward philosophy is consistent with achievement of the Company’s strategic objectives and with the Company’s values.

It is responsible for considering and making recommendations to the Board in respect of the remuneration policy for the Chairman, the Executive and Non-Executive Directors and the Executive Committee. The Committee also oversees and approves the Group’s overall remuneration policy with particular focus on the remuneration arrangements for senior management.

Membership

The Committee is comprised to exercise independent judgement and consists only of Non-Executive Directors. The Committee consists of:

• Colm Barrington (Chairman)

• Evelyn Bourke

• Peter Priestley

All three members of the Committee have extensive experience of remuneration practices and policies in existence in other companies and industries.

The Group Chairman and Group Chief Executive attend on the invitation of the Chairman.

The Committee determines the remuneration of the Chairman and the Non-Executive Directors. The Committee also makes recommendations to the Board in relation to remuneration for Executive Directors and senior management.

The disclosure of directors’ remuneration is set out in the Report of the Directors in accordance of the requirements of the Irish Companies Acts 1963 to 2013, and the listing rules of the Irish Stock Exchange.

In the year under review, the Committee held two scheduled meetings, details of the attendances at these meetings are set out on page 36.

The Committee also obtained external advice from Deloitte relating to remuneration practices, policies, salaries and overall compensation amounts payable to comparative Executive Directors and Chief Executive Officers in the financial services industry and other industries. Deloitte have provided consultancy services on compliance and risk matters and have no other connections.

Main activities of the Committee during 2014During the year, the Committee approved the remuneration of all Executive Directors, including hires and departures and reviewed the share option schemes which the Company has in place. The Committee also reviewed bonus provisions for Executives, made recommendations in relation to certain bonus proposals and considered the fees payable to Non-Executive Directors. Details of the overall Directors’ remuneration charged to the Group Income Statement and individual Directors’ remuneration and pension benefits for the year ended 31 December 2014 are given on page 27.

Directors’ remuneration policy

Non-Executive Directors are paid Directors’ fees only. Fees for the Non-Executive Directors are determined by the Board, having regard to fees paid to non-executive directors in other quoted companies, and the time commitment and responsibilities of the role. Individuals cannot vote on their own remuneration. Non-Executive Directors do not receive bonuses or share entitlements.

Remuneration for Executive Directors is comprised of salary, bonus, pension, share based compensation and other benefits which may include company car, car allowance and health benefits. The policy of the Remuneration Committee is to set basic salaries at levels which are competitive with those of comparable businesses, with a substantial proportion of the overall performance package being linked to performance through participation in short term and long term incentive schemes. The overall remuneration package should be sufficiently competitive to attract, retain and motivate high quality executives capable of achieving the Group’s objectives and thereby enhance shareholder value.

For the year ended 31st December 2014 the short term annual bonuses of the Executive Directors were determined by the Committee based on a range of metrics including the restructuring goals achieved during the year, the overall financial outcome and individual performances. 2014 was a year of change for the Group and annual bonuses have been awarded within that context.

In the last six months the Committee has reviewed the metrics for annual bonus awards and for 2015 the Group is moving to a more formulaic approach for Executive


41



Directors. For the year ending 31st December 2015 the annual bonus awards will comprise two elements:

• A corporate award based on an actual EBITDA target agreed by the Group Board. The payment of the corporate award at its maximum level is dependent on outperformance of the Board’s approved internal forecast EBITDA for the period.

• A personal award based on the achievement of personal objectives assessed on a discretionary basis, considering each executive’s performance against their key objectives.

For Paul McNamara (Group Chief Executive) and John Cotter (Group Finance Director) the proportion of potential bonus linked to financial outcomes will be 75%, with the remaining 25% linked to individual objectives.

In line with recommended good practice a proportion of annual bonuses paid to Executive Directors and certain other key management which are greater than £50,000 will be deferred. The deferred element will be 50% of any bonus above £50,000. 50% of any amount deferred will be held as a cash deferral, payable out in two tranches at the end of the first and second year following deferral. The other 50% will be deferred into shares for a three year holding period to be released in equal thirds at the end of each year following deferral.

The Remuneration Committee will retain discretion to vary or claw back deferred awards in exceptional circumstances.

Long Term Incentives

The Group’s previous Long Term Incentive Plan (“LTIP”) approved in June 2011 expired at the end of 2014. The company is considering a new long term incentive plan to incentivise, motivate and retain key personnel and the proposed plan will be put forward for approval by the shareholders at an EGM.

When share options are granted it is the policy of the Company to grant them under the terms of the Group’s share option schemes to Executive Directors and employees of the Group to encourage alignment with Shareholders’ interests in general.

The number of shares over which options may be granted under these schemes or any other share option scheme during the period of ten years ending on the relevant date of grant, whether exercised or not, is limited to 10% of the number of shares in issue on the relevant date of grant. Options granted are entirely consistent with the share option scheme rules approved by Shareholders. There was no departure from the Company’s policy in the period under review and no change in the policy from the previous year.

As at 31 December 2014, the number of shares subject to options which have been granted by the Company, but not exercised by the recipient, is over 3,448,000. As at 31 December 2014, the number of shares earned under the Company’s LTIP, which ceased on 31 December 2013, is zero. The total of these two amounts represents 3.29% of the total issued share capital of the Company. As at 31 December 2014, none of the Directors had any outstanding awards under the share option plan.

Risk Committee

Purpose

The Risk Committee’s (“the Committee”) main duties are to assist the Board in assessing and managing the risks to which the Group is exposed, as well as overseeing its risk management structure, organisation and processes.

The terms of reference are available on the Company website.

Membership


• Evelyn Bourke (Chairman)

• David Paige

• Robin Phipps

• Peter Priestley

In accordance with good corporate governance recommendations the Chairman of the Audit Committee, David Paige, sits on the Risk Committee. The Committee holds at least four meetings a year. In addition, the Committee convenes additional meetings throughout the year as necessary in order to appropriately discharge its responsibilities. The Chairman of the Committee invites members of management or others to attend the Committee meetings, as appropriate. The Group Chief Executive, the Group Finance Director, the Chief Risk Officer and the Head of Internal Audit frequently attend meetings of the Committee.

Main activities of the Committee during 2014

The Committee met on four occasions during the course of 2014. Attendance is as detailed at page 36. During the year the Committee reviewed and recommended on the risk appetite of the Company. It also assessed the risk profile of each of the individual businesses and the overall risk profile of the Group. Individual reports on particular areas of the business were commissioned and assessed. The Committee also undertook an assessment of the conduct risk framework.


42

The Committee assisted the Board in fulfilling its oversight responsibilities for corporate governance, evaluating business and reputational risks and reviewing the Company’s processes for monitoring compliance with laws, regulations and codes of conduct. The Committee liaises with the Audit Committee as appropriate.

The evaluation of business risk is conducted through a formal risk control assessment review of each trading subsidiary company in each of the operating segments under risk headings including, inter alia, strategic, regulatory, conduct, tax, legal, financial, business processes, technology and management information systems.

The Committee’s terms of reference requires it to advise the Board on the Company’s overall risk appetite, tolerance and strategy, taking account of the current and prospective macroeconomic and financial environment and authoritative sources that may be relevant for the Company’s risk policies. The Committee is also required to oversee and advise the Board on the current risk exposures of the Company and future risk strategy. In addition, it reviews the Company’s overall risk assessment processes that inform the Board’s decision making, ensuring both qualitative and quantitative metrics are used. The Committee provides input to the Board on proposed strategic transactions including acquisitions or disposals, ensuring that a due diligence appraisal of the proposition is undertaken, focusing in particular on risk aspects and implications for the risk appetite and tolerance of the Company, and taking independent external advice, where appropriate and available.

A Group risk management policy was approved by the Committee on 23 March 2013. The policy explains the Group’s underlying approach to risk management. It also outlines key aspects of the risk management process and identifies the main reporting procedures. The Group risk management structure operates within a framework of defined organisation structure, mandated policies and processes and delegated authority to key personnel. The Groups’ principal risks and uncertainties have been outlined on pages 21 to 23.

Risks are analysed for impact and probability to determine the exposure and action plans are identified to manage key risks. The risk exposure, risk probability, impact and mitigation are reviewed by the Committee and the Board.

Nomination Committee

Purpose

The purpose of the Nomination Committee (“the Committee”) is to make recommendations to the Board on the appointment and re-appointment of Directors. It carries out a formal selection process of candidates and makes recommendations to the Board on all new Board appointments (having due regard to the provisions of

the Articles of Association of the Company regarding the appointment of Directors and the Company Secretary). The principal responsibilities of the Committee in relation to the composition of the Board are to keep Board renewal, structure, size and composition under constant review, including the skills, knowledge and experience required, taking account of the Group’s businesses, strategic direction and objectives. It also ensures that succession plans are in place for the Directors and reviews leadership needs of the Group Executive and Non-Executive Directors. The Committee also provides input in relation to senior appointments to the Company.

The role and responsibilities of the Committee are set out in its written terms of reference, which are reviewed annually and are available at the registered address of the Company.

Membership


• Colm Barrington (Chairman)• Peter Priestley• Cara Ryan

The Committee is appointed by the Board and consists of not less than three members. The Chairman should not chair the Committee when it is dealing with the appointment of a successor to the chairmanship. The Committee meets as required. The Group Chairman and Group Chief Executive (“CEO”) attend on the invitation of the Chairman.

Nomination processThere is a formal and transparent procedure for the appointment of new directors to the Board. All candidates identified for the selection process are selected on merit against pre-defined selection criteria. The Board endorses the Company policy to attract and develop a highly qualified and diverse workforce. All recruitment activities are fair and non-discriminatory.

The gender split for Board directors is 7:2 male to female. Specific goals for the number of female directors on the Board are not set; however, female representation is considered when all appointments are being made. The Board acknowledges the importance of diversity and specifically the benefits gender diversity may bring to it. The Committee strives to provide the Board with Directors who bring the necessary mix of business skill and experience to ensure that the Group’s objectives and strategies are met.

The Committee is authorised by the Board to obtain independent professional advice, if it considers it necessary.


43



Main activities of the Committee during 2014The Committee considered the overall structure, size and composition of the Board, together with the structure and the composition of the Committees.

Appointment of Paul McNamara to the Board

When it was announced that Mark Bourke, former Group Chief Executive Officer and Director, was stepping down from his role, the Board commenced a search to obtain a replacement Group Chief Executive Officer for the Company. The Committee met during the course of 2014 in relation to the appointment of a new CEO. External recruitment specialists were considered by the Committee and after a selection process two agencies one based in the UK and one based in Ireland were appointed. A long list of candidates was obtained through recruitment specialists. After interview processes involving the agencies and the members of the Committee a shortlist of candidates was established. Further interviews and assessments with the Committee and other members of the Board were then carried out. Ultimately the Committee met to nominate Paul McNamara to be appointed to the Board and to become Chief Executive Officer. This nomination was then accepted and resolved by the full Board.

Review of the Committee performanceThe Committee has assessed its performance during the year, covering appointments and recommendations made in the year and is satisfied that the Committee is working effectively and has met its terms of reference.

UK Operations Committee

In 2013, the Company had a range of businesses in the UK and France. The UK Operations Committee (“the Committee”) comprised four Non-Executive Directors, as a formal sub-committee of the Board, considered and reviewed the performance of the UK segment of the Group. The Committee had specific responsibilities for overseeing the operations of the UK segment on behalf of the Board including strategic initiatives, regulatory relationships, risk and compliance. The Committee met on two occasions during the course of 2014.

It reviewed the business performance of the UK businesses, assessed strategic capital investments and reviewed the specific risks of the businesses. It also provided an assessment of business capability and readiness to the Board in relation to the acquisition of the Capita books by James Hay.

During 2014 the Group divested non-core businesses including the Irish pension and advisory businesses, resulting in a re-defined segmental business structure. In addition a new Executive Committee, with oversight of all the Group’s businesses was formed, and came into being

on 1 January 2015. Accordingly the Board deemed that the Committee was no longer required. This Committee was dissolved in December 2014.

Finance Committee

PurposeThe Finance Committee (“the Committee”) was established in March 2013. Its primary remit is to consider and review the appropriateness and strategic fit of potential acquisitions or disposals to be made by the Group, consider high level governance arrangements over subsidiaries and associates, assess and review funding or banking requirements arising and to make recommendations to the Board in relation to financial matters.

The Group Chief Executive, the Group Finance Director, the Chief Risk Officer and relevant members of the senior management team attend meetings as necessary. Other Non-Executive Directors, at the invitation of the Chairman and the Committee, have assisted with its analysis and deliberations, as required.

MembershipThe Committee consists of:• John Gallagher (Chairman)

• David Paige

• Peter Priestley

Main activities of the Committee during 2014The Committee met on four occasions during the course of the year. It also held a number of conference calls in preparation for and arising from those meetings. Its principal focus was on disposals and acquisitions/investments. In particular it considered in detail the contractual aspects of transactions, and made recommendations on the disposals and investments to the Board. The Committee also considered proposals for the simplification of the Group’s corporate structure and the banking and financial facilities of the Group. The Committee met and recommended to the Board on the disposal of IFG UK Financial Services, the Irish pension and advisory businesses and other subsidiary businesses. It considered changes in the Group’s client money banking arrangements particularly within James Hay and provided recommendations to the Board on these. The Committee also considered and provided recommendations to the Board on the acquisition of the Capita SIPP books by James Hay.


44

Executive Committee

PurposeThe Executive Committee’s (“the Committee”) remit is to facilitate the execution of documents by seal or by authorised signatory, the issuing of shares, the completion of share certificates and any other administrative functions necessary for the execution of pre-approved Board decisions. Execution of documents, issuance of shares or any of its administrative functions by the Committee is subject to full Board approval in advance.

MembershipAll Directors of the Board are members of the Executive Committee.

Main activities of the Committee during 2014During 2014, the Committee met to execute a number of documents that had been pre-approved by the Board.

Relations with Shareholders

The Company places considerable importance and puts significant effort into communications with Shareholders. The Group Chief Executive and Group Finance Director meet regularly with institutional Shareholders and brokers catering for private Shareholders. This ongoing programme of dialogue and meetings deals with a wide range of relevant matters including strategy, performance, management and governance. The UK Corporate Governance Code suggests that the Senior Independent Non-Executive Director should attend meetings with major Shareholders, and that major Shareholders should be offered the opportunity to meet with new Non-Executive Directors in order to develop a balanced understanding of their issues and concerns. The Group does not believe that, given its size, it is necessary to implement these code provisions on an ongoing basis. Instead, the Group Chief Executive reports to the Board on meetings with Shareholders and brokers. The Chairman or the Senior Independent Director are available to Shareholders, should contact through the normal communication channels not be available or appropriate. The Board is briefed regularly on the views and concerns of Shareholders.

At its AGM, the Company complies with the provisions of the UK Corporate Governance Code relating to the disclosure of proxy votes and the separation of resolutions. The outcome of General Meetings of the Company, including voting results, is published on the Company’s website and to the stock exchange following conclusion of the meeting.

The Directors believe the annual report and accounts, interim report and business review, and other Shareholder communications, provide a fair, balanced and understandable assessment of the Company’s financial position and prospects.

Senior Independent Director

Colm Barrington has served as the Senior Independent Director (“SID”) for 2 years since 27 June 2012. He will retire as the SID early in 2015 and will be replaced in this role by David Paige. The SID is available to the Chairman for separate consultation and is also available as an intermediary for other Directors should they require, in liaison with the Chairman. The Company has an approved process for feedback and review of the Chairman’s performance in the Company. This process is managed by the SID.

Description of the operation of the Shareholders’ Meeting

The Board of Directors use the AGM to communicate with Shareholders and to provide the Shareholders with a mechanism for participation. Directors of the Company, including the Chairman, the Group CEO and the Group Finance Director, attend the AGM and address questions raised by the Shareholders.

The powers and rights of the Shareholders at the AGM include: • receipt of the annual accounts; • approval of the annual dividend recommended by the

Directors;• authorisation of the Directors to agree the

remuneration of the auditors; • election of candidates to the Board of Directors; and • approval of special and ordinary resolutions tabled by

the Directors.


45



Board performance evaluation

In addition to their statutory responsibilities, all Non-Executive Directors have specific responsibility for attending the Board meetings and the relevant Board sub-Committee, where a member. Active participation and contribution at Board meetings is required.

The Chairman is a Non-Executive Director and carries the same responsibilities as all his Non-Executives colleagues. He is responsible for the leadership of the Board and ensuring its continued effectiveness in carrying out its duties and setting its agenda. He is also responsible for ensuring that all Directors receive accurate, timely and clear information. He ensures that new Directors receive appropriate induction on joining the Board. He facilitates the effective contribution of his Non-Executive colleagues and ensures constructive relationships exist between Executive and Non-Executive Directors.

On appointment Directors receive induction materials and meet with key Executives, with a particular focus on ensuring Non-Executive Directors are fully informed on issues of relevance to the Company and its operations. Directors are provided with opportunities to update their skills and knowledge through participation in operational reviews and presentation sessions.

The Chairman and Company Secretary review Directors’ training needs, in conjunction with individual Directors, and match those needs appropriately. Training and education of Directors is fulfilled by in-house presentations by various executives and employees with specific operational responsibilities and presentations and updates from external experts and consultants where appropriate. This takes the form of presentations on products focusing on functionality, price and service offerings. Some Directors also attend investor meetings and seminars on the business provided by the Group CEO and senior management.

In 2014, a process was implemented for Director performance evaluation providing for feedback from each individual Director on the Board, functioning of the Board and assessment of each Director by the Chairman. This review process has taken place in 2014 involving all the Non-Executive Directors in office on 31 December 2013 and again in 2015 involving all the Non-Executive Directors in office on 31 December 2014. The process involves the completion of rated assessments on each of the Directors by the Chairman. These ratings are provided to the Directors individually and each Director completed their rated assessment on the Board together with the functioning and operations of the Board. The Board also carries out an assessment process for the Chairman. This is led by the SID. The evaluation process covers a broad range of areas including preparation for meetings, participation in meetings, time commitments and interaction with the other members of the Board. Consultants external to the Company may be used if deemed necessary.

Internal control

The Board have established procedures necessary to implement the requirements of the UK Corporate Governance Code relating to internal control as reflected in the updated Turnbull guidance (Internal Control: Revised Guidance for Directors on the Combined Code) published in October 2005, including updates to the code up to and including 2013.

The Board have overall responsibility for the Group’s system of internal control. The system is designed to provide reasonable assurance of the safeguarding of assets and of Shareholders’ investment and the reliability of financial information.

The Board is responsible for the risk management framework and has delegated to the Risk Committee, in conjunction with the Group Chief Executive, the Group Finance Director and the senior management, the authority to approve the risk framework of the operating subsidiaries.


46

The principal components of the internal control and risk management process are:

• skilled and experienced management and staff;

• the operation of the “Three Lines of Defence Model” of risk management, with clearly defined roles and responsibilities for committees and individuals;

• a comprehensive system of financial control incorporating budgeting, periodic financial reporting and variance analysis;

• a Risk Committee of the Board of IFG Group plc and a risk management framework comprising of segmental risk functions, with clearly stated risk appetite and risk strategy supported by approved risk management policies and processes;

• a central internal audit function which carries out internal audit activities across the Group; and

• an Audit Committee whose formal terms of reference include responsibility for assessing the significant risks facing the Group in the achievement of its objectives and the controls in place to mitigate those risks.

The Group has an established system of internal control and risk management systems in relation to its financial reporting process and the process for preparation of consolidated accounts. These systems:

• include policies and procedures to facilitate the maintenance of records that accurately and fairly reflect transactions;

• provide reasonable assurance that transactions are recorded, as necessary, to permit the preparation of financial statements in accordance with International Financial Reporting Standards (IFRS); and

• require reported data to be reviewed and reconciled.


The Group has a risk management objective to develop systems and controls to mitigate risks to within its risk appetite.

Risk Management Framework

Dimensions

Group Strategy & Capital Planning

• Group, Segmental and Divisional Risk Appetite

• Business Objectives

• Independent Oversight, Challenge and Escalation (Risk and Compliance Monitoring Programmes)

• Enterprise Wide Risk Assessment/ Mitigation

• Risk based Management reporting (including dashboard and registers)

• Incident Management

• PLC Board, Group Risk Committee, Executive Committee and entity Boards

• Group Risk and Compliance Functions/Group Risk Committee

• Entity Boards/First Line management functions

Accountabilities

PLC Board

Internal Control Policy Framew

ork

Ove

rsig

ht &

Chal

leng

e

Risk

M

anag

emen

t Pr

oces

s

Stra

tegy

Se

tting

and

Risk

Ap

petit

eG

roup Internal Audit Programm

e - Third Line

Sec

ond

Line

Firs

t Lin

e

47



The Group Finance department manages the financial reporting processes to ensure the information which enables the Board to discharge its responsibilities, including the production of interim and annual accounts, is provided on a timely basis. It is supported by a network of finance managers throughout the Group who have the responsibility and accountability to provide information in line with the Group policies, procedures and internal best practice. Throughout the year the Group produces latest estimates to predict the likely year end position. The latest estimates are compared with the annual budget and enable the Board to assess and, where appropriate, to challenge sections of the business if actual or anticipated performance varies significantly from the annual budget.

The Audit Committee conducts, on behalf of the Board, an annual assessment of the operation of the Group’s system of risk management and internal control. This assessment was based on a detailed review carried out by Group Internal Audit. Where areas for improvement have been identified the necessary actions in respect of the relevant control procedures have been or are being taken. This review took account of the principal business risks facing the Group, the controls in place to manage those risks (including financial, operational and compliance controls) and the procedures in place to monitor them.

In accordance with the guidance laid down by the Financial Reporting Council, there is ongoing review of the processes of identification, evaluation and management of the significant risks faced by the Group. Such risk processes were in place throughout the year 2014 and up to 25 March 2015, the approval date of the financial statements.

Going concern

The Directors statement regarding going concern has been included in note 2.1 to the Group Financial Statements.

Compliance with Code

The Directors confirm that the Company has reviewed the provisions of the UK Corporate Governance Code published by The Directors confirm that the Company has reviewed the provisions of the UK Corporate Governance Code published by the UK Financial Reporting Council in September 2012 and the Irish Corporate Governance Annex and is in compliance throughout the year ended 31 December 2014 therewith save for meetings with major Shareholders have not been held with the senior Non-Executive Director present, such meetings being held with the Group Chief Executive, Group Finance Director and, to a limited extent, with the Chairman present, as explained above.

The Company considers this exception as acceptable, given the size of the Company and the composition of the Board as a whole.

This Corporate Governance statement forms part of the Report of the Directors.


48

Report on the financial statements

Our opinion

In our opinion:• the Group Financial Statements give a true and fair view, in accordance with International Financial Reporting

Standards (“IFRSs”) as adopted by the European Union, of the state of the Group’s affairs as at 31 December 2014 and of its profit and cash flows for the year then ended;

• the Company financial statements give a true and fair view in accordance with Generally Accepted Accounting Practice in Ireland of the state of the Company’s affairs as at 31 December 2014; and

• the Group and company financial statements have been properly prepared in accordance with the requirements of the Companies Acts, 1963 to 2013 and, as regards the Group Financial Statements, Article 4 of the IAS Regulation.

What we have audited

• IFG Group plc’s financial statements comprise:• the Consolidated and Company Balance Sheets as at 31 December 2014;• the Consolidated Income Statement and Consolidated Statement of Comprehensive Income for the year then

ended;• the Consolidated Statement of Changes in Equity for the year then ended;• the Consolidated Cash Flow Statement for the year then ended;• the Notes to the Group Financial Statements, which include a summary of significant accounting policies and other

explanatory information; and• the Accounting Policies of the Company and Notes to the Company Balance Sheet, which includes other explanatory

information.

Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the financial statements. These are cross-referenced from the financial statements and are identified as audited.

The financial reporting framework that has been applied in the preparation of the Group Financial Statements is Irish law and IFRSs as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the Company financial statements is Irish law and accounting standards issued by the Financial Reporting Council and promulgated by the Institute of Chartered Accountants in Ireland (“Generally Accepted Accounting Practice in Ireland”).

Independent Auditors’ Report to the Members of IFG Group plc

49


Our audit approach

Overview

Materiality

• Overall group materiality: GBP300,000 (2013: GBP340,000) which represents approximately 5% of profit before tax and exceptional items from continuing operations.

Audit scope

• We conducted audit work in 19 individual entities, paying particular attention to those entities generating revenue and profits/losses.

• Taken together, the entities where we performed our audit work accounted for 95% of group revenues and 91% of group profit before tax.

Areas of focus• Intangible assets.• Contingent consideration assets relating to business disposals.• Valuation of provisions.• Deferred income taxes.

The scope of our audit and our areas of focus

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”).

We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that may represent a risk of material misstatement due to fraud.

The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort, are identified as “areas of focus” in the table below together with an explanation of how we tailored our audit to address these specific areas. This is not a complete list of all risks identified by our audit.



50

Area of focus How our audit addressed the area of focus

Intangible assets

The Group has significant intangible assets consisting of goodwill, customer relationship brands and computer software (see note 19).

Following the business disposals and consequent group restructuring during 2014, management have determined that there are two CGUs, James Hay Partnership (Platform segment) and Saunderson House (Independent Wealth Management segment).

We focused on this area because of the size of the balances at the year end and the judgement applied in the assumptions used (primarily the assumed growth rates and the discount rate applied to the future cash flow forecasts) in the directors’ assessment of the recoverable amount of the Group’s cash generating units (“CGUs”).

We evaluated and assessed the appropriateness of the directors’ key assumptions within the future cash flow forecasts, the process by which they were drawn up, including comparing them to the latest Board approved budgets, and tested the underlying calculations therein.

We also challenged the directors’ short and long-term growth rates used within the forecasts, as summarised in note 19, by comparing them to recent performance, budgets and plans and external economic forecasts. With the assistance of our valuation specialists, we assessed the appropriateness of the discount rate used in the impairment model by assessing the cost of capital for the Company and comparable organisations.

In addition, we performed a sensitivity analysis on the cash flows for both CGUs. Having ascertained the extent of change in those assumptions that either individually or collectively would be required for the related assets to be impaired, we considered the likelihood of such change in those key assumptions arising.

Contingent consideration assets relating to business disposals

The financial statements include contingent consideration assets of GBP5.3 million relating to the disposals of the Irish pension and advisory businesses, IFG UK Financial Services and Siddalls France which were sold during the year (see note 22). We focused on this area because of the judgement applied and assumptions used in the determination of the amount booked, primarily in relation to the likelihood of the purchasers attaining specified revenue targets and the discount rate applied.

Our audit procedures included consideration of the nature of the contingent consideration recorded and the assessment of the potential revenue outcomes. This included obtaining an understanding of the agreements and an evaluation of the appropriateness of the directors’ key assumptions, range of outcomes and the discount rate applied in relation to the amounts recognised. We also assessed the relevant financial framework disclosures.

We challenged management’s assumptions used in determining the amounts recorded, which included comparing actual revenues in the periods since the disposals with those assumed. We also assessed the appropriateness of the discount rate used in the calculations.

Valuation of provisions

The financial statements include a number of different provisions, both historic and those relating to the disposals and consequent restructuring that took place in 2014 (see note 26). The provisions cover certain legal claims including claims arising from the disposal of the International division and claims made by customers. We focused on this area, including releases during the year, because these provisions are by their nature uncertain and judgemental.

Our audit procedures included consideration of the nature of the provisions and the range of potential outcomes. In relation to the provisions for costs in respect of the disposals that took place in 2014 and the International division (disposed in 2012), we reviewed correspondence with both the acquirer and legal counsel in assessing the appropriateness of the amount provided.

For provisions for claims from clients, we challenged management’s estimations by looking at claims history and the group’s record of defending these claims, legal correspondence and correspondence with the clients.

Deferred income taxes

Deferred tax assets are recognised for any unused tax losses to the extent that it is probable that future taxable profits will be available against which the losses can be utilised.

We focused on this financial statement area due to the judgement required in the estimation of future taxable profits.

We assessed the appropriateness of the amount of deferred tax assets recognised by challenging the assumptions used by management in the estimation of future taxable profits in both the UK and Ireland using recent year’s results and approved budgets.


51



How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the geographic structure of the Group, the accounting processes and controls and the industry in which the Group operates.

The Group has two operating segments, its Platform business (primarily James Hay Partnership entities) and its Independent Wealth Management business (primarily Saunderson House). The Group Financial Statements are a consolidation of individual reporting entities within these segments, comprising its operating businesses, group and centralised functions and the businesses disposed of during the year up to the dates of disposal.

In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed at each reporting entity by us, as the Group engagement team, or component auditors operating under our instruction.

Where the work was performed by component auditors, we determined the level of involvement we needed to have in the audit work at those reporting units to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the group financial statements as a whole.

James Hay Partnership and Saunderson House, both in the UK, make up more than 71% of the Group’s revenue (including revenue from discontinued operations) and accordingly we performed an audit of the complete financial information for these entities. In addition to this, due to the structure of the Group, we included an additional 14 entities which, in our view, and based on the Group materiality threshold set, required an audit of their complete financial information to ensure adequate coverage of the Group’s financial statement line items and disclosures, focusing primarily on revenue, expenses, profit before tax and total assets. Specific audit procedures on provisions were performed at 3 remaining entities. This, together with additional procedures performed at the Group level, gave us coverage over 93% of the Group’s revenue, 91% of the Group’s profit before tax and [95%] of the Group’s total assets.

Materiality

The scope of our audit is influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Overall group materiality GBP300,000 (2013: GBP340,000)

How we determined it 5% of profit before tax and exceptional items from continuing operations

Rationale for benchmark applied Profit before tax and exceptional items as this is considered to be the best measure of recurring performance of the Group

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above GBP15,000 (2013: GBP17,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Going concern

Under the Listing Rules of the Irish Stock Exchange we are required to review the directors’ statement, set out on page 20, in relation to going concern. We have nothing to report having performed our review.

As noted in the directors’ statement, the directors have concluded that it is appropriate to prepare the Group and company financial statements using the going concern basis of accounting. The going concern basis presumes that the Group and company have adequate resources to remain in operation, and that the directors intend them to do so, for at least one year from the date the financial statements were signed. As part of our audit we have concluded that the directors’ use of the going concern basis is appropriate.However, because not all future events or conditions can be predicted, these statements are not a guarantee as to the Group’s and the parent company’s ability to continue as a going concern.


52

Other required reporting

Consistency of other information

Companies Acts, 1963 to 2013 opinions

In our opinion the information given in the Report of the Directors is consistent with the financial statements and the description in the Corporate Governance Statement of the main features of the internal control and risk management systems in relation to the process for preparing the Group Financial Statements is consistent with the group financial statements.

ISAs (UK & Ireland) reporting

Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:• information in the Annual Report is:

− materially inconsistent with the information in the audited financial statements; or

− apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group and company acquired in the course of performing our audit; or

− is otherwise misleading.

We have no exceptions to report arising from this responsibility.

• the statement given by the directors on pages 32 to 33, in accordance with provision C.1.1 of the UK Corporate Governance Code (the “Code”), that they consider the Annual Report taken as a whole to be fair, balanced and understandable and provides the information necessary for members to assess the Group’s performance, business model and strategy is materially inconsistent with our knowledge of the Group acquired in the course of performing our audit.


• the section of the Annual Report on pages 37 to 40, as required by provision C.3.8 of the Code, describing the work of the Audit Committee does not appropriately address matters communicated by us to the Audit Committee.


Directors’ remuneration and transactions

Under the Companies Acts, 1963 to 2013 we are required to report to you if, in our opinion, the disclosure of directors’ remuneration and transactions specified by law have not been made, and under the Listing Rules of the Irish Stock Exchange we are required to review the six specified elements of disclosures in the report to shareholders by the Board on directors’ remuneration. We have no exceptions to report arising from these responsibilities.

Corporate governance statement

Under the Listing Rules of the Irish Stock Exchange, we are required to review the part of the Corporate Governance Statement relating to the company’s compliance with nine provisions of the UK Corporate Governance Code and the two provisions of the Irish Corporate Governance Annex specified for our review. We have nothing to report having performed our review.

Other matters on which we are required to report by the Companies Acts, 1963 to 2013

• We have obtained all the information and explanations which we consider necessary for the purposes of our audit.• In our opinion proper books of account have been kept by the Company.• The Company Balance Sheet is in agreement with the books of account.• The net assets of the Company, as stated in the Company Balance Sheet, are more than half of the amount of

its called-up share capital and, in our opinion, on that basis there did not exist at 31 December 2014 a financial situation which under Section 40 (1) of the Companies (Amendment) Act, 1983 would require the convening of an extraordinary general meeting of the Company.


53



Responsibilities for the financial statements and the audit

Our responsibilities and those of the directors

As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the Group and company financial statements giving a true and fair view.

Our responsibility is to audit and express an opinion on the Group and company financial statements in accordance with Irish law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Section 193 of the Companies Act, 1990 and for no other purpose. We do not, in giving these opinions, 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.

What an audit of financial statements involves

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:

• whether the accounting policies are appropriate to the Group’s and company’s circumstances and have been consistently applied and adequately disclosed;

• the reasonableness of significant accounting estimates made by the directors; and

• the overall presentation of the financial statements.

We primarily focus our work in these areas by assessing the directors’ judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements.

We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.

In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

pwc

Paraic Joycefor and on behalf of PricewaterhouseCoopersChartered Accountants and Statutory Audit FirmDublin

25 March 2015


54

Notes 2014 2013Re-presented

£’000 £’000Continuing operations

Revenue 5 65,096 63,312Cost of sales (54,459) (52,298)

Gross profit 10,637 11,014

Administrative expenses (5,746) (4,466)

Other gains 6 519 -Other expenses 6 (582) (1,144)

Operating profit 4,828 5,404

Analysed as:Operating profit before exceptional items 6,181 7,452

Exceptional items 6 (1,353) (2,048)

Operating profit 4,828 5,404

Finance income 10 284 128Finance costs 10 (504) (520)

Profit before income tax 4,608 5,012

Income tax expense 12 (3,310) (536)

Profit for the year from continuing operations 1,298 4,476

Discontinued operations(Loss)/profit from discontinued operations (net of income tax) 13 (497) 529

Profit for the year 801 5,005

Profit for year attributable to:Owners of the parent company 667 4,874

Non-controlling interest 134 131


Earnings per share from continuing and discontinued operations attributable to the owners of the Company during the year:

2014 2013Basic earnings per ordinary share (pence) Re-presented

From continuing operations 1.11 4.18

From discontinued operations (0.47) 0.51

From profit for the year 16 0.64 4.69

Diluted earnings per ordinary share (pence)

From continuing operations 1.11 4.17

From discontinued operations (0.47) 0.51

From profit for the year 16 0.64 4.68


P McNamara J A Cotter (Group Chief Executive) (Group Finance Director)

Consolidated Income StatementYear Ended 31 December 2014

55


Consolidated Statement of Comprehensive IncomeYear Ended 31 December 2014


£’000 £’000


Other comprehensive loss:

Items that may be subsequently reclassified to profit or loss

Currency translation:

- Arising in the year (1,037) 335

- Recycled to the Income Statement on disposal of subsidiaries (1,790) -

Other comprehensive (loss)/income for the year (2,827) 335

Total comprehensive (loss)/income for the year (2,026) 5,340

Total comprehensive (loss)/income attributable to:

- Owners of the Company (2,084) 5,218

- Non-controlling interest 58 122

Total comprehensive (loss)/income for the year (2,026) 5,340

Total comprehensive income attributable to owners of the Company:

- Continuing operations (1,587) 4,689

- Discontinued operations (497) 529

Total comprehensive income attributable to owners of the Company (2,084) 5,218


56

Notes 2014 2013£’000 £’000

ASSETSNon-current assetsProperty plant and equipment 18 2,491 2,725Intangible assets 19 54,398 62,865Deferred income tax asset 25 49 838Other receivables 22 3,034 -Total non-current assets 59,972 66,428

Current assetsTrade and other receivables 22 19,079 22,419Cash and cash equivalents 23 29,326 23,469Total current assets 48,405 45,888Assets of disposal group classified as held for sale 14 3,544 7,177

51,949 53,065Total assets 111,921 119,493

LIABILITIES

Non-current liabilitiesBorrowings 24 6,639 6,486Deferred income tax liabilities 25 3,025 2,305Provisions for other liabilities 26 1,726 1,564Total non-current liabilities 11,390 10,355

Current liabilitiesTrade and other payables 27 20,741 24,493Current income tax liabilities 151 848Borrowings 24 2 9Provisions for other liabilities 26 1,015 1,519Total current liabilities 21,909 26,869Liabilities of disposal group classified as held for sale 14 1,908 800

23,817 27,669

Total liabilities 35,207 38,024Net assets 76,714 81,469

EQUITYShare capital 28 10,039 9,982Share premium 28 81,872 81,399Other reserves 29 (13,446) (10,831)Retained earnings (1,747) 1,502

76,718 82,052Non-controlling interest 30 (4) (583)

Total equity 76,714 81,469


P McNamara J A Cotter (Group Chief Executive) (Group Finance Director)

Consolidated Balance SheetYear Ended 31 December 2014

57


Consolidated Cash Flow StatementYear Ended 31 December 2014

Notes 2014 2013

£’000 £’000

Cash flows from operating activities

Cash generated from operations 33 8,091 7,846

Interest received 168 132

Income taxes paid (2,331) (1,979)

Net cash generated from operating activities 5,928 5,999

Cash flows from investing activities

Purchase of property, plant and equipment (1,246) (1,782)

Sale of property, plant and equipment 8 -

Disposal of subsidiaries 8,602 -

Purchase of intangible assets (3,841) (1,901)

Net cash generated/(used) in investing activities 3,523 (3,683)

Cash flows from financing activities

Dividends paid (4,068) (4,553)

Interest paid (356) (487)

Bank facility costs (36) -

Proceeds from issue of share capital 529 291

Net cash used in financing activities (3,931) (4,749)

Net increase/(decrease) in cash and cash equivalents 5,520 (2,433)

Cash and cash equivalents at the beginning of the year 24,742 27,182

Effect of foreign exchange rate changes (222) (7)

Cash and cash equivalents at end of year 34 30,040 24,742

2014 2013

£’000 £’000

Cash and short-term deposits

- as disclosed on the balance sheet 29,326 23,469

- cash held in disposal group 716 1,282

Bank overdrafts (2) (9)

Cash and cash equivalents at end of year 34 30,040 24,742


58

Attributable Non-Share Share Other Retained to owners controlling Total

capital premium reserves earnings of the parent interest equity£’000 £’000 £’000 £’000 £’000 £’000 £’000

At 1 January 2013 9,949 81,141 (3,950) (6,651) 80,489 9 80,498Total comprehensive income for 2013Profit for year - - - 4,874 4,874 131 5,005

Other comprehensive incomeCurrency translation - - 344 - 344 (9) 335Other comprehensive income/(loss) - - 344 - 344 (9) 335Total comprehensive income for the year - - 344 4,874 5,218 122 5,340

Dividends - - - (4,553) (4,553) - (4,553)Issue of share capital 33 265 - - 298 - 298Transaction costs - (7) - - (7) - (7)Share buy-back - - - 6 6 - 6Non-controlling interest transfer to retained earnings - - - 258 258 (258) -Non-controlling interest purchase of option - - - - - (629) (629)

Transfer of vested share based payment - (7,568) 7,568 - - -

Share based payment compensation- Value of employee services -

share options - - 343 - 343 - 343

Investment by non-controlling interest - - - - - 173 173

Transaction with owners 33 258 (7,225) 3,279 (3,655) (714) (4,369)

At 31 December 2013 9,982 81,399 (10,831) 1,502 82,052 (583) 81,469

Total comprehensive income for 2014Profit for year - - - 667 667 134 801Other comprehensive income

Currency translation - 344 - 344 (9) 335- Arising in the year - - (961) - (961) (76) (1,037)- Recycled to the Consolidated IncomeStatement on disposal of subsidiaries - (1,790) - (1,790) - (1,790)

Total comprehensive income for the year - - (2,751) 667 (2,084) 58 (2,026)Dividends - - - (4,068) (4,068) - (4,068)Issue of share capital 57 487 - - 544 - 544

Transaction costs - (14) - - (14) - (14)

Gain on purchase of associate - - - 1 1 - 1Non-controlling interest dividend - - - - - (164) (164)Transfer of vested share based payment - - (151) 151 - - -

Share based payment compensation

- Value of employee services - share options - - 287 - 287 - 287

Disposal of subsidiaries - - - - - 685 685

Transaction with owners 57 473 136 (3,916) (3,250) 521 (2,729)

At 31 December 2014 10,039 81,872 (13,446) (1,747) 76,718 (4) 76,714

Consolidated Statement of Changes in Equity

59


Notes to the Group Financial Statements

1. General information

IFG Group plc provides a range of financial solutions including pensions administration and independent financial advice. 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 The Oval, Shelbourne Road, Ballsbridge, Dublin 4, Ireland.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these Group Financial Statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

The Group Financial Statements of IFG Group plc, for the year ended 31 December 2014, have been prepared in accordance with International Financial Reporting Standards as adopted by the EU (IFRS), IFRIC interpretations and those parts of the Companies Acts 1963 to 2013 applicable to companies reporting under IFRS. The Group Financial Statements are prepared under the historical cost convention, as modified by fair value accounting for certain available-for-sale financial assets and derivative instruments at fair value through profit or loss. The financial statements are presented in Sterling, the most representative currency of the Group’s operations and rounded to the nearest thousand.

The preparation of financial statements, in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group Financial Statements, are disclosed in note 4.

Use of non-GAAP measures in the Group Financial Statements

The Group has identified certain measures that it believes will assist in the understanding of the performance of the business. These measures are not defined under IFRS and they may not be directly comparable with other companies’ adjusted measures. These non-GAAP measures are not intended to be a substitute for, or superior to, any IFRS measures of performance but management have included them as they

consider them to be important comparables and key measures used within the business for assessing performance.

The following are key non-GAAP measures identified by the Group and used in the Group Financial Statements and in the financial information presented herein.

• Adjusted operating profit

Adjusted operating profit is defined as operating profit, excluding acquisition related amortisation, exceptional items and discontinued operations. Management believes excluding acquisition related amortisation expense, exceptional items and discontinued operations from the calculation of operating profit, on a non-GAAP basis, is useful because management excludes items that are not comparable when measuring operating profitability, evaluating performance trends, and setting performance objectives. It allows investors to evaluate the Group’s performance for different periods on a more comparable basis by excluding items that impact comparability.

The reconciliation of adjusted operating profit to profit before income tax has been disclosed in the segmental note, set out on pages 76 to 78.

• Adjusted earnings and adjusted earnings per share

Adjusted earnings is defined as profit attributable to owners of the parent company before amortisation of acquisition related intangible assets, exceptional items, discontinued operations and unwinding of discount applicable to contingent consideration.

Adjusted earnings per share (“EPS”) is defined as the continuing basic earnings per ordinary share adjusted for amortisation of acquisition related intangible assets, exceptional items, discontinued operations and unwinding of discount applicable to contingent consideration, net of tax where applicable.

As in previous years, we have amended our definition of adjusted earnings and adjusted EPS so that only amortisation of acquisition related intangible assets, exceptional items, discontinued operations and unwinding of discount applicable to contingent consideration, if applicable, are added back. The prior period comparatives have been adjusted to reflect this change in adjusted operating profit, adjusted earnings and adjusted EPS.


60

Included in the table below are:

• a reconciliation between basic continuing EPS to adjusted EPS; and• a reconciliation between profit attributable to owners of the parent company to adjusted earnings.

Year ended Year ended31 December 2014 31 December 2013

Re-presented

Per share pence

Earnings£’000

Per sharepence

Earnings£’000

Profit attributable to owners of the parent company 0.64 667 4.69 4,874

Amortisation of acquisition related intangible assets 1.30 1,361 0.72 753

Exceptional tax 1.71 1,790 - -

Exceptional items 1.27 1,327 1.79 1,852

Discontinued operations 0.60 631 (0.38) (398)

Unwinding of discount applicable to contingent consideration (0.12) (124) - -

Adjusted earnings 5.40 5,652 6.82 7,081

The Group uses adjusted operating profit and adjusted earnings as measures of performance to eliminate the impact of items it does not consider indicative of ongoing operating performance due to their inherent unusual, exceptional, or non-recurring nature or because they result from an event of a similar nature.

• Net cash/(debt)

Net cash/(debt) is calculated as cash and cash equivalents less total debt. Total debt includes loans and borrowings, overdrafts and obligations under finance leases. The Group believes that the presentation of net cash/(debt) provides useful information to investors because management reviews net cash/(debt) as part of the management of overall liquidity, financial flexibility, capital structure and leverage (see note 3).

Except as indicated above, the Group Financial Statements have been prepared on a basis consistent with that reported for the year ended 31 December 2013.

Going concern

The Directors report that they have satisfied themselves that the Group is a going concern, having adequate resources to continue in operational existence for the foreseeable future.

In forming this view, the Directors have reviewed the Group’s solvency and liquidity position by reviewing the 2015 budget, the medium term plans as set out in the strategic plan approved by the Board in December 2014 and have taken into account the cash flow implications of the plan, which include a sensitivity analysis based on the key business risks identified by the Group. They have also considered surplus cash available to the Group, the availability of credit facilities, the review of the Group’s committed borrowing facilities and the forecasted banking covenants.

Having assessed the company’s relevant business risks, the Directors believe that the Group is well-placed to manage these risks successfully and have a reasonable expectation that the Company and the Group, as a whole, have adequate resources to continue in operational existence for the foreseeable future.

For these reasons, the Directors continue to adopt the going concern basis in preparing the Consolidated Financial Statements.


61



2.2 Consolidation

These financial statements are the Group Financial Statements of IFG Group plc, a company registered in the Republic of Ireland and its subsidiaries.

Subsidiaries

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination, are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets. Acquisition and disposal related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquired, is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration, which is estimated to be owed to the Group, is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration are recognised in accordance with IAS 39, either in the Consolidated Income Statement or as a change to the Consolidated Statement of Comprehensive Income. Contingent consideration, that is classified as equity is not remeasured and its subsequent settlement is accounted for within equity.

For all business combinations since the date of transition to IFRS completed before the adoption of IFRS 3 (revised) ‘Business combinations’ adjustments, to the present value of the obligation arising from changes in estimates, are accounted for as changes to the cost of the acquisition and goodwill.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

Intercompany transactions, balances, income and expenses on transactions between Group companies are eliminated. Profits and losses resulting from intercompany transactions, that are recognised in assets, are also eliminated. Accounting policies of subsidiaries have been changed, where necessary, to ensure consistency with the policies adopted by the Group.

Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions, that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Disposal of subsidiaries

When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in the Consolidated Income Statement. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint arrangement or financial asset. In addition, any amounts previously recognised in Other Comprehensive Income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in Other Comprehensive Income are reclassified to the Consolidated Income Statement.

Contingent consideration, which may be received in the future, in relation to businesses sold is partially recognised based on management assessment of the likely amount to be received, discounted to net present value. The amount estimated is included in other receivables (see note 22). Such amounts are reassessed on an annual basis.


62

Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The Group’s investment in associates includes goodwill identified on acquisition.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in Other Comprehensive Income is reclassified to profit or loss, where appropriate. The Group’s share of post-acquisition profit or loss is recognised in the Consolidated Income Statement with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines, at each reporting date, whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to ‘share of profit/(loss) of an associate’ in the Consolidated Income Statement.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the Group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses are eliminated, unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed, where necessary, to ensure consistency with the policies adopted by the Group.

Dilution gains and losses arising from investments in associates are recognised in the Consolidated Income Statement.

Joint Arrangements

The Group applies IFRS 11 to all joint arrangements. Under IFRS 11 investments in joint arrangements are classified as either joint operations or joint arrangements depending on the contractual rights and obligations of each investor. Joint arrangements are accounted for using the equity method. Under the equity method of accounting, interests in joint arrangements are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in Other Comprehensive Income. When the Group’s share of losses in a joint arrangement equals or exceeds its interests in the joint arrangements (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint arrangements), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint arrangements

2.3 Segmental reporting

A segment is a distinguishable component of the Group that is engaged in provision of services to earn revenue and incur expenses. Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (“CODM”). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Group Chief Executive Officer. It was determined that following the restructuring of the Group, in 2014, and the sale of five businesses, a revised segmental structure as outlined in this report is more appropriate. See note 5 for further details.

2.4 Foreign currency translation

Items recorded in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The Group Financial Statements are presented in pounds Sterling (“GBP” or “£”), which is the Company’s functional and presentation currency rounded to the nearest thousand.

Transactions denominated in foreign currencies are translated into the functional currency at the rate of exchange ruling at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting


63



period. All translation differences are taken to the Consolidated Income Statement, with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity, together with the exchange difference on the net investment in the foreign entity, until the disposal of the net investment, at which time they are recognised in the Consolidated Income Statement.

Results of subsidiary undertakings, with different functional currency to the parent, are translated into Sterling using the rates prevailing on the transaction dates. The related balance sheets have been translated using the rates of exchange ruling at the end of the reporting period. Adjustments arising on translation of the results of subsidiary undertakings with different functional currency to the parent at transaction rates, and on the restatement of the opening net assets at closing rates, are recorded in Consolidated Statement of Comprehensive Income.

The cumulative currency translation differences arising prior to transition to IFRS have been set to zero for the purposes of ascertaining the gain or loss on disposal of a foreign operation. This was achieved by the Group electing to avail of the IFRS transitional exemption. On disposal of a foreign operation, accumulated currency translation differences are recognised in the Consolidated Income Statement, as part of the overall gain or loss on disposal.

Goodwill and fair value adjustments, arising on acquisition of a foreign operation, are regarded as assets and liabilities of the foreign operation, are expressed in the functional currency of the foreign operation, are recorded at the exchange rate at the date of the transaction and subsequently retranslated at the applicable closing rates.

2.5 Property, plant and equipment

Property, plant and equipment is stated at cost or deemed cost less accumulated depreciation and impairment losses. At the date of transition to IFRS the Group availed of the exemption in IFRS 1 and elected to use previous revaluations of property as deemed cost, given that they were broadly comparable to fair value.

Subsequent costs are included in an asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of

the replaced item can be measured reliably. The carrying amount of the replaced part is derecognised. All repair and maintenance costs are charged to the Consolidated Income Statement during the financial period in which they are incurred.

Property, plant and equipment are depreciated over their useful economic life on a straight line basis at the following rates:

Buildings 2%Fixtures & Fittings 10-25%Motor vehicles 20-25% Computer equipment 20-33% Leasehold improvements Lower of useful life and lease period

The residual value and useful life of property, plant and equipment are reviewed and adjusted, if appropriate, at the end of each reporting period.

On disposal of property, plant and equipment, the cost and related accumulated depreciation and impairments are removed from the financial statements and the net amount, less any proceeds, is taken to the Consolidated Income Statement.

2.6 Intangible assets

Goodwill

Goodwill on acquisitions prior to the date of transition to IFRS has been retained at the previous Irish GAAP amount, being its deemed cost subject to being tested for impairment. Goodwill written-off to reserves under Irish GAAP prior to 1998 has not been reinstated and is not included in determining any subsequent gain or loss on disposal.

Goodwill arises on the acquisition of subsidiaries, associates and joint arrangements and represents the excess of the consideration transferred over the Group’s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquire and the fair value of the non-controlling interest in the acquiree.

For the purposes of impairment testing, any goodwill acquired is allocated to the Group of cash generating units expected to benefit from the business combination. Following initial recognition, goodwill is measured at cost, less any accumulated impairment losses. Goodwill is reviewed for impairment, bi-annually or more frequently, if events or changes in circumstances


64

indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of the cash generating unit or group of cash generating units, to which the goodwill relates. Impairment losses on goodwill are not reversed. Goodwill is monitored at the operating segment level.

Where goodwill forms part of a cash generating unit or group of cash generating units and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation.

Goodwill disposed of, in this circumstance, is measured on the basis of the relative values of the operation disposed of and the proportion of the cash generating unit retained.

Computer software

Computer software is stated at cost, less provisions for amortisation and provisions for impairment, if any. Costs incurred on acquisition of computer software are capitalised, as are costs directly related to developing the programs where the software supports a business system and the expenditure leads to the creation of a durable asset. Costs associated with maintaining software are recognised as an expense when incurred. Capitalised computer software is amortised over three to eight years. The residual value and useful life of computer software are reviewed and adjusted, if appropriate, at the end of each reporting period.

Research expenditure is recognised as an expense as incurred. Costs incurred on development projects are recognised as intangible assets when the following criteria are fulfilled:• it is technically feasible to complete the

intangible asset so that it will be available for use;

• management intends to complete the intangible asset to use it;

• there is an ability to use the asset;• it can be demonstrated how the intangible

assets will generate future economic benefits;

• adequate technical, financial and other resources to complete the development are available; and

• the expenditure attributable to the intangible asset during its development can be reliably measured.

Other development expenditure, that does not

meet these criteria, are recognised as an expense as incurred. Development costs, previously recognised as an expense, are not recognised as an asset in a subsequent period. Capitalised development costs are recognised as intangible assets and are amortised from the point at which the assets are ready for use on a straight-line basis over their useful lives, and not to exceed five years. Development assets are tested annually for impairment.

Other intangible assets

Other intangible assets are stated at cost less provisions for amortisation and impairment. Customer relationships acquired as part of a business combination are amortised over their estimated useful lives from the time they are first available for use. The estimated useful lives are determined at acquisition date and currently range from seven to fifteen years. The residual value and useful lives of other intangible assets are reviewed and adjusted at the end of each reporting period, if appropriate.

2.7 Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment when events or circumstances indicate that the carrying value may be impaired or may not be recoverable. An impairment loss is recognised to the extent that the carrying value of the assets exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

2.8 Non-current assets (or disposal groups) held for sale

Non-current assets (or disposal group) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell if their carrying amount is to be recovered principally through a sale transaction rather than through continuing use.

2.9 Financial assets - classification

The Group classifies its financial assets in the following categories: loans and other receivables, held-to-maturity financial assets, available-for-sale financial assets and financial assets at fair value through the profit or loss (usually derivatives not designated as hedges). The classification depends on the purpose for which the financial


65



assets were acquired. Management determines the classification of its financial assets at initial recognition.

Loans and other receivables

Loans and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They normally arise due to contingent consideration receivable or when the Group provides services directly to a customer with no intention of trading the receivable. They are included in current assets, except for maturities greater than twelve months after the end of the reporting period. These are classified as non-current assets. The Group’s loans and other receivables comprise ‘trade and other receivables’ and ‘cash and cash equivalents’ in the Consolidated Balance Sheet.

Held-to-maturity financial assets

Restricted cash comprises cash held by the Group but which is ring-fenced or used as security for specific arrangements, and to which the Group does not have unfettered access. Restricted cash is classified as held-to-maturity.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either classified in this category or not classified in any other category. They are included in non-current assets, unless management intends to dispose of the investment within twelve months of the end of the reporting period.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within twelve months, otherwise they are classified as non-current.

Derivative financial instruments

The Group designates certain derivatives as either:

(a) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge);

(b) hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge); or

(c) hedges of a net investment in a foreign operation (net investment hedge).

Where derivatives are not designated as hedges they are classified as held for trading.

Options to acquire interests in other entities

The Group assesses all options to acquire interests in an entity that, if exercisable, would give control of the entity to the Group. Where such options are exercisable the Group consolidates the entity.

2.10 Financial assets - recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade date (the date on which the Group commits to purchase or sell the asset). Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value. Transaction costs are expensed in the Consolidated Income Statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains and losses arising from changes in the fair value of available-for-sale financial assets are recorded in equity.

Held-to-maturity financial assets, loans and other receivables are subsequently carried at amortised cost using the effective interest method. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the Consolidated Income Statement in the period in which they arise.

Dividend income from financial assets at fair value through profit or loss is recognised in the Consolidated Income Statement as part of other income when the Group’s right to receive payments is established.

When available-for-sale financial assets are sold or impaired, the accumulated fair value adjustments are included in the Consolidated Income Statement as other gains and losses.


66

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged.

Options to acquire an interest in an entity which are not currently exercisable are accounted for at fair value.

2.11 Impairment of financial assets

At each reporting date, the Group assesses whether there is objective evidence that a financial asset or a group of financial assets is impaired.

A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the counterparty and delinquency in payments are considered to be indicators of a receivable being impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the Consolidated Income Statement. When a trade receivable is uncollectible it is written-off against the provision for trade receivables. Subsequent recoveries of amounts previously written-off are credited against Cost of Sales in the Consolidated Income Statement.

In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss is measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the Consolidated Income Statement. It is removed from equity and recognised in the Consolidated Income Statement. Impairment losses recognised in the Consolidated Income Statement on equity instruments are not reversed through the Consolidated Income Statement.

In relation to contingent consideration receivable, the management assess the likelihood of recovery of the amount estimated to determine if a provision is required.

2.12 Accounting for hedging activities

Hedging

At the inception of the hedging transaction, the Group documents the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessments, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair value of hedged items.

The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than twelve months and, as a current asset or liability when the remaining maturity of the hedged item is less than twelve months. Trading derivatives are classified as a current asset or liability. At the year end, no derivatives were designated as a hedging instrument.

Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Consolidated Income Statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The Group only applies fair value hedge accounting for hedging fixed interest risk on borrowings. The gain or loss relating to the effective portion of interest rate swaps hedging fixed rate borrowings is recognised in the Consolidated Income Statement within ‘finance costs’. The gain or loss relating to the ineffective portion is recognised in the Consolidated Income Statement within ‘other gains’ or ‘other expenses’ where appropriate. Changes in the fair value of the hedged fixed rate borrowings attributable to interest rate risk are recognised in the Consolidated Income Statement within ‘finance costs’. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item, for which the effective interest method is used, is amortised to profit or loss over the period to maturity.

Cash flow hedge

The effective portion of changes in the fair value of derivatives, that are designated and qualify as cash flow hedges, is recognised in Other Comprehensive Income. The gain or loss relating to the ineffective portion is recognised immediately in the Consolidated Income Statement within ‘other gains’ or ‘other expenses’, where appropriate. Amounts accumulated in


67



equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, for example, when the forecast sale that is hedged takes place. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the Consolidated Income Statement. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset, for example a fixed asset, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset. The deferred amounts are ultimately recognised in depreciation in the case of fixed assets. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity, at that time, remains in equity and is recognised when the forecast transaction is ultimately recognised in the Consolidated Income Statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the Consolidated Income Statement within ‘other gains’ or ‘other expenses’ where appropriate.

Net investment hedges

Where foreign currency borrowings are designated as a hedge instrument and provide an effective hedge against a net investment in a foreign operation, any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the Consolidated Income Statement. Cumulative gains and losses remain in equity until disposal of the net investment in the foreign operation, at which point the related differences are transferred to the Consolidated Income Statement as part of the overall gain or loss on disposal.

2.13 Cash and cash equivalents

Cash and cash equivalents in the Consolidated Balance Sheet comprise cash at bank and in hand as well as short-term deposits with an original maturity of three months or less. Bank overdrafts that are repayable on demand and form part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. They are, however, shown as part of borrowings in current liabilities on the Consolidated Balance Sheet.

2.14 Leases

Finance leases, which transfer substantially all the risks and benefits to ownership of the leased asset to the Group, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the minimum lease payments. The corresponding liability, net of interest charges to the lessor, is included in the Consolidated Balance Sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation. Finance charges are charged to the Consolidated Income Statement as part of finance costs over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. Leases where the lessor retains substantially all the risks and benefits of ownership of the assets are classified as operating leases. Operating lease payments are recognised as an expense in the Consolidated Income Statement on a straight line basis over the lease term.

2.15 Borrowings

All borrowings are initially recognised at fair value, net of transaction costs incurred.

After initial recognition, borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any transaction costs and any discount or premium on settlement. Gains and losses are recognised in the Consolidated Income Statement when the liabilities are derecognised or impaired, as well as through the amortisation process.

Borrowings are classified as current unless there is an enforceable entitlement to repay balances more than twelve months after the end of the reporting period in which case they are classified as non-current.

2.16 Current and deferred income tax

The income tax expense, in the Consolidated Income Statement, represents the sum of the tax chargeable on profits for the year and deferred tax.

Current tax payable is based on taxable profit for the year. Taxable profit differs from profit before


68

income tax as reported in the Consolidated Income Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or deductible. The Group’s liability for current tax is calculated using rates that have been enacted or substantially enacted at the end of the reporting period. Any taxation not payable within twelve months is disclosed as a non-current liability.

Deferred income tax is provided in full, using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination that at the time of the transaction affects neither the accounting nor the taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply in the year when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, joint arrangements and associates except to the extent that the timing of the reversal is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit would be available to allow all or part of the deferred income tax asset to be utilised.

2.17 Employee benefits

(a) Pension assets/obligations

The Group companies operate various pension schemes. The schemes are generally funded through payments to insurance companies or trustee-administered funds, determined by periodic actuarial calculations.

Defined contribution plans

A defined contribution plan is a pension plan where the Group pays a fixed amount to a separate entity. The Group has no further legal or constructive obligations to pay further contributions once the fixed contributions have been paid.

Obligations to the defined contribution pension plans are recognised as an expense in the Consolidated Income Statement as incurred.

Defined benefit plan

A defined benefit plan is a pension plan that is not a defined contribution plan. Defined benefit plans typically define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

Until 5 July 2012, the Group operated a defined benefit pension scheme via its subsidiary IFG Management Limited for eligible employees which require contributions to be made to separately administered funds. This subsidiary was sold as part of the disposal of the International segment.

(b) Share based payment compensation

In line with the transitional arrangements set out in IFRS 2 ‘Share Based Payment’, the recognition and measurement principles of this standard have been applied only in respect of share entitlements granted after 7 November 2002 and not vested by 1 January 2005.

The Group operates a number of equity-settled, share based compensation plans. The fair value of the employee services received in exchange for the equity instrument granted is recognised as an employee expense in the Consolidated Income Statement with a corresponding increase in equity. The fair value of share options is determined using the Black-Scholes model while the fair value of shares awarded is estimated as the market price of the shares at the grant date. The total amount to be expensed over the vesting period is determined by reference to the fair value of the equity instrument granted, excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of equity instruments that are expected to vest. At each end of the reporting period, the entity revises its estimates of the number of equity instruments that are


69



expected to vest. It recognises the impact of the revision to original estimates, if any, in the Consolidated Income Statement, with a corresponding adjustment to equity over the remainder of the vesting period.

The proceeds received by the Company, when share options are exercised, are credited to share capital at nominal value and share premium. In instances where shares are issued under the LTIP, the difference between the proceeds received and the nominal value of the shares is credited to other reserves.

The Group does not operate any cash-settled share based payment schemes or share based payment transactions with cash alternatives as defined in IFRS 2.

(c) Termination benefits

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates: (i) when the Group can no longer withdraw the offer of those benefits; and (ii) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of termination benefits.

2.18 Provisions

A provision is recognised in the Consolidated Balance Sheet when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits would be required to settle the obligation and the amount has been reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. An increase in provision due to passage of time is recognised as an interest expense. In the instance where it is no longer probable that an outflow of resources will be acquired to settle the obligation, the provision is reversed.

2.19 Revenue recognition

Revenue comprises fees from the provision of services, commissions earned in the intermediation of financial service products and interest. Revenue is recognised when, and to the extent that, the Group has obtained the right to consideration in exchange for the services that it provides.

Accordingly, initial commissions from the intermediation of financial services are recognised as revenue on the effective inception date of the product or service, subject to a reduction for expected claw-back where commission is earned on an indemnity basis. Renewal or trail commissions are recognised as revenue when the contingent events, which give rise to the right to receive those commissions typically renewal or persistency, have occurred. Interest income is accrued on a time basis.

Where the Group receives payment from customers in advance of the performance of its contractual obligations, a liability equal to the amount received is recognised as deferred income. That liability is reduced and the amount of the reduction is recognised as revenue when, and as, the Group obtains the right to consideration in exchange for the contracted service it provides.

2.20 Finance cost and finance income Finance cost comprises interest payable on borrowings calculated using the effective interest rate method. The interest expense component of finance lease payments is recognised in the Consolidated Income Statement using the effective interest rate method.

Finance income includes interest receivable on funds invested and is recognised in the Consolidated Income Statement on a time proportion basis, using the effective interest method. The unwinding of the discount on contingent consideration is included as finance income.

2.21 Share capital

Ordinary shares that have been issued are classified as equity and confer on the holder a residual interest in the assets of the Group after deducting all of its liabilities. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs, is deducted from equity attributable to the Company’s owners until such shares are cancelled, reissued or disposed. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s owners.


70

2.22 Dividends

Dividends on ordinary shares are recognised as a liability in the Group’s Financial Statements in the period in which the dividends are approved by the Company’s Shareholders. Dividends declared after the end of the reporting period, but not yet approved by Shareholders, are disclosed in note 17 in the financial statements.

2.23 Offset

Financial assets and liabilities are offset and the net amount reported in the Consolidated Balance Sheet if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise an asset and settle the liability simultaneously.

2.24 Exceptional items

The Group has adopted an income statement format, which seeks to highlight significant items within the Group results for the year. Such items include restructuring, impairment of assets, profit or loss on disposal or termination of operations, litigation settlements, profit or loss on disposal of investments and the acquisition and integration costs relating to major acquisitions. Judgement is used by the Group in assessing the particular items, which by virtue of their scale and nature, should be disclosed in the Consolidated Income Statement and/or notes as exceptional items. These items require separate disclosure in the financial statements to enable a better understanding of the Group’s financial performance.

2.25 Discontinued operations

A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale, and represents either a separate major line of business or a geographical area of operations, is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively with a view to resale and the disposal involves loss of control. Discontinued operations are treated separately on one line in the profit and loss account, in the year of disposal.

2.26 Updates to technical pronouncements

(a) New standards, amendments and

interpretations effective for years ending 31 December 2014

The following standards and interpretations issued by the International Accounting Standards Board (“IASB”) and the International Financial Reporting Interpretations Committee (“IFRIC”) are effective, for the first time in the current financial year, and have been adopted with no significant impact on the Group’s result for the period or financial position:

IFRS 10 ‘Consolidated Financial Statements’

IFRS 10 replaces all of the guidance on control and consolidation in IAS 27 and SIC 12. IFRS 10 outlines the requirements for the preparation and presentation of Consolidated Financial Statements, requiring entities to consolidate entities it controls. Control requires exposure or rights to variable returns and the ability to affect those returns through power over an investee. This standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the Consolidated Financial Statements. The standard provides additional guidance to assist in determining control where this is difficult to assess. IAS 27 is renamed ‘Separate financial statements’ and is now a standard dealing solely with separate financial statements. The application of IFRS 10 has no material impact on the Group.

IFRS 11 ‘Joint Arrangements’

IFRS 11 focuses on the rights and obligations of the parties to the arrangement rather than its legal form. There are two types of joint arrangements: joint operations and joint arrangements. IFRS 11 requires the use of the equity method of accounting for joint arrangements by eliminating the option to use the proportionate consolidation method. IFRS 11 also made a number of consequential amendments to IAS 28 ‘Investments in associates and joint ventures’. The standard does not have an impact on the Group.

IFRS 12 ‘Disclosure of Interests in Other Entities’

IFRS 12 establishes the provision of information on the nature, associated risks and financial effects of interests in subsidiaries, joint arrangements, associates, and structured entities, as disclosed objectives. The Group have made the relevant disclosures as required.


71



Several other new standards and amendments apply for the first time in 2014. During the period ended 31 December 2014, the Group reviewed the following standards and amendments to standards and concluded that they do not impact the annual Consolidated Financial Statements. They are as follows:

• IAS 27 (revised 2011) ‘Separate financial statements’

• IAS 28 (revised) ‘Investments in Associates and Joint Ventures’

• IAS 32 ‘Financial instruments: Presentation’, offsetting financial assets and financial liabilities

• Amendments to IAS 36 ‘Impairment of assets’ on the recoverable amounts disclosures for non-financial assets

• Amendments to IAS 39 ‘Financial Instruments: Recognition and Measurement’

• IFRIC 21 ‘Levies’

(b) New standards, amendments and interpretations issued but not yet effective

The following standards, amendments and interpretations have been issued but are not yet effective for the Group. The Group will apply the relevant standards from their EU effective dates and is currently assessing their impact on its financial statements.

IFRS 9 ‘Financial Instruments’

IFRS 9 ‘Financial instruments’ (effective for financial periods beginning on or after 1 January 2018). The standard addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. The Group is yet to assess the full impact of IFRS 9.

IFRS 15 ‘Revenue from contracts with customer’

IFRS 15 ‘Revenue from contracts with customers’, deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is permitted subject to EU endorsement. The

Group is assessing the impact of IFRS 15.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

3. Financial and capital risk management

Financial risk management

The Group’s activities expose it to a number of financial risks: market risk (including interest rate risk and foreign exchange risk), credit risk and liquidity risk. The Group’s finance function seeks to reduce its exposure to these risks. It also ensures surplus funds are managed and controlled in a manner which will protect capital sums invested and ensures adequate short-term liquidity, whilst maximising returns. It does not operate as a profit centre and transacts only in relation to underlying business requirements. It operates policies and procedures which are periodically reviewed and approved by the Board of Directors. The Board provides written policies for overall risk management.

(a) Market risk

Interest rate riskThe Group has no significant interest bearing exposures other than bank balances and borrowings. Interest rate risk arising from the Group’s borrowings is managed through the utilisation of interest rate swaps when conditions are favourable. The Group centrally manages the short-term cash surpluses or borrowing requirements of subsidiary companies. The Group’s borrowings, which were drawn down at variable rate, are denominated in Sterling. At 31 December 2014, if interest rates had increased/decreased by 1% with all other variables held constant, pre-tax profit for the year would have been £70,000 (2013: £70,000) lower/higher.

Foreign exchange riskThe Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to Euro (€). Foreign exchange transaction exposure in the Group is mitigated by the fact that trading entities in the Group tend to have the majority of their revenues and expenses denominated in their functional currencies. Although the Group has extensive UK operations, it also has investments outside the UK. As a result, currency movements, particularly movements in the Sterling/Euro exchange rate, can affect the Group’s Consolidated Balance Sheet and Consolidated Income Statement. The Group also has transactional currency


72

exposures arising from sales and purchases by subsidiaries in currencies other than the subsidiaries’ operating functional currency.

The Group’s policy in regard to foreign exchange translation exposure is to, on occasion, use foreign currency borrowings to hedge the impact of exchange rate movements on the Group’s Consolidated Balance Sheet and to use forward foreign exchange contracts to mitigate the impact of exchange rate movements on the Group’s Consolidated Income Statement, when the Group considers it economically viable to do so. In order to achieve this objective, the Group uses its borrowings, where practicable and cost effective, partially to hedge its foreign currency denominated assets. At the end of 2014, no foreign borrowings were used as a hedge of the Group’s net investments in its subsidiaries.

At 31 December 2014, if Euro had weakened/strengthened by 10% against Sterling with all other variables held constant, post-tax profit for the year would have been £135,000 (2013: £11,000) higher/lower mainly as a result of foreign exchange gains/losses on translation of Euro denominated assets.

(b) Credit risk

The Group has a credit policy in place and monitors credit risk on an ongoing basis. Credit risk is managed at both the Group level and the subsidiary level. It largely arises from exposures in respect of cash and short-term deposits with banks, contingent consideration of disposals as well as credit exposures to customers.

Credit risk is managed by limiting the aggregate amount and duration of exposure to counterparties. These judgements are made after taking into account the counterparty’s credit rating and by regular monitoring of these ratings. Acceptable credit ratings are medium-to-high investment grade ratings for cash and cash equivalents. Customers who wish to avail of credit terms with the Group are subject to credit evaluations prior to credit being advanced and are subject to continued monitoring at operating company level. The Group does not hold collateral in respect of amounts receivable from customers.

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also

considers the demographics of the Group’s customer base as these factors may have an influence on credit risk. At the end of the reporting period, management believes that there were no concentrations of credit risk in respect of trade receivables due to the large number of customers spread across the Group’s activities and areas of operation. An impairment provision amounting to 3% of the trade and other receivables (2013: 4%) has been made at year end. At year end 82% of the trade and other receivables balances were classified as neither past due nor impaired (2013: 79%). The maximum exposure to credit risk is represented by the carrying value of each receivable in the balance sheet.

Management monitors credit ratings of banks and financial institutions to which the Group has exposure and where necessary addresses concentration risk by reducing its exposure to individual banks. Cash, cash equivalents and borrowings are held with acceptable banks, as required by the banking facility agreement.

At 31 December 2014, the Group had 64% (2013: 80%) of its cash and cash equivalents and borrowings held with institutions with Standard & Poor’s rating of equal to or greater than an ‘A’ rating.

The Group’s maximum exposure to credit risk in respect of cash and cash equivalents, during the year end, is the carrying value of the balance.

(c) Liquidity risk

Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group finance. Group finance monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities (note 23), at all times so that the Group does not breach borrowing limits or covenants, where applicable, on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable, external regulatory or legal requirements,for example: currency restrictions. The Group maintains long-term committed facilities that are managed to ensure it has sufficient available funds for operations and planned expansions.


73



The principal liquidity risks faced by the Group relate to the maturity profile of debt obligations. The Group’s finance function ensures that sufficient resources are available to meet such liabilities as they fall due through a combination of liquid investments, cash and cash equivalents, cash flows and undrawn committed bank facilities. Flexibility in funding sources is achieved through a variety of means including (i) maintaining cash and cash equivalents with a range of highly-rated counterparties; (ii) limiting the maturity of such balances; (iii) borrowing the bulk of the Group’s debt requirements under committed bank lines; and (iv) having surplus committed lines of credit.

The undrawn committed facilities available to the Group, as at the end of the reporting period, are quantified in note 24.

On 29 November 2012, the Group entered into a facility agreement with Barclays Bank Ireland plc for a facility of £25.0 million. An amount of £7.0 million is to be repaid in December 2016.

These facilities are available to meet current foreseeable borrowing requirements.

The following is an analysis of the anticipated contractual cash flows including interest payable for the Group’s non-derivative financial liabilities and derivative financial liabilities on an undiscounted basis. Derivative financial liabilities are included in the analysis if their contractual maturities are essential for an understanding of the timing of the cash flows. For the purpose of this table, debt is defined as all classes of borrowing except for obligations under finance leases. Interest is calculated based on debt held at 31 December without taking account of future issuance. Floating rate interest is estimated using the prevailing rate at the end of the reporting period. Cash flows in foreign currencies are translated using the exchange rates at 31 December 2014.

Debt Interest Trade Totalon debt payables1

& accrualsAt 31 December 2014 £’000 £’000 £’000 £’000

Due less than one year 2 210 12,231 12,443Between one and two years 7,000 193 - 7,193Total 7,002 403 12,231 19,636

At 31 December 2013

Due less than one year 9 210 14,456 14,675

Between one and two years - 420 - 420

Between two and five years 7,000 193 - 7,193

Total 7,009 823 14,456 22,288

Capital risk management

The Group’s primary objective, in respect of capital risk management, is to safeguard its ability to continue as a going concern in order to provide returns for its members and meet regulatory requirements.

The Group may, on occasion, adjust the amount of dividends paid out to its Shareholders, return capital to Shareholders and issue new shares or buy back shares as the need arises.

Capital is monitored on the basis of the gearing ratio which is calculated as net commitment divided by total capital. Net commitment is calculated as the sum of total borrowings and contingent consideration on acquisitions less cash and cash equivalents. Total capital is calculated as equity in the Consolidated Balance Sheet, plus net debt.

1 The maturity analysis applies to financial instruments only and therefore non-financial liabilities are not included.


74

The Group’s bank facilities require the Group to maintain its consolidated EBITDA/net debt (excluding share of joint arrangements) at no lower than 2.5 times for twelve month periods ending 30 June and 31 December. Non-compliance with financial covenants would give the relevant lenders the right to terminate facilities and demand early repayment of any sums due under such facilities thus altering the maturity profile of the Group’s debt and liquidity. The Group monitors compliance with financial covenants on a monthly basis and the consolidated net cash position is reviewed regularly by the Board of Directors. At the balance sheet date, the Group is in compliance with its financial covenants and expects to be so for the foreseeable future based on current budgets and forecasts.

Fair value estimationThe disclosure of fair value measurements by valuation method has been done using the following fair value measurement hierarchy:

• quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);

• inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and

• inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

Level 1 Level 2 Level 3 Total

£'000 £'000 £'000 £'000

Assets

Contingent consideration - - 5,277 5,277

The following table presents the movement in the level 3 assets during the year.

Level 3

£’000

At 1 January -

Additions 5,181

Movements recognised in the Consolidated Income Statement 124

Exchange Adjustments (28)

At 31 December 5,277

At the year end, there were no financial instrument liabilities measured at fair value (2013: £nil).

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data, where it is available, and rely, as little as possible, on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. The Group uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period.

The Group has used discounted cash flow analysis for various available-for-sale financial assets that are not traded in active markets.


75



4. Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities, within the next financial year are discussed below.

a. Goodwill impairment

In accordance with the accounting policy stated in note 2.6 the Group tests annually whether goodwill has been impaired. The recoverable amounts of groups of cash generating units have been determined based on value-in-use calculations. These calculations require the use of significant estimates with regards to discount rates, long-term growth rates and the estimated cash flows for the four year period 2015 to 2018, as stated in note 19.

b. Non goodwill intangible assets

The estimated useful lives of intangibles are determined at acquisition date and reviewed at each balance sheet date. The estimated useful lives currently range from three to fifteen years. Intangibles are tested for impairment if impairment indicators are identified. In 2014, the amortisation charge was £3,011,000 (2013: £3,086,000). If, in 2014, the amortisation period was shortened by one year for all categories of intangibles, other than goodwill, it would have resulted in an additional continuing amortisation charge in the year of £613,000 (2013: £385,000).

c. Provision for impairment of trade and other receivables

Management reviews the recoverability of receivables taking into account objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivable. At 31 December 2014, a provision of £585,000 (2013: £809,000) was held. See note 22 for further details.

d. Provision for legal and other claims

The financial statements include provisions to cover certain legal and other claims brought against some subsidiaries of the Group. The provisions recorded represent management’s best estimate of the exposures based on information available at the time of the approval of the accounts. These estimates will, by definition, differ from the related actual outturn. See note 26 for more details.

e. Working capital adjustment on International segment disposal

The terms of the International segment sale agreement provided, for a working capital adjustment to the £70.0 million disposal consideration received, is based on a completion balance sheet. The valuation of the completion balance sheet has been agreed and settled as at the date of the approval of the financial statements. Residual risk under the terms of the sale remains until July 2015, and £0.4 million of the initial provision of £3.5 million has therefore been retained. This is management’s best estimate of the adjustment that may be required in order to finalise the process with regards to the disposal of the segment. See note 26 for further details.

f. Exceptional Items

Management also exercises judgment in determining the revenue and expenses disclosed as exceptional items. Note 6 of the financial statements include a table outlining details of the items classified as exceptional for the current and prior year.

g. Deferred tax

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that future taxable profits will be available, against which the losses can be utilised. Judgement is required to determine the value of the deferred tax asset, based upon the timing and level of future taxable profits. The quality of these estimates is highly dependent upon management’s ability to properly project future earnings from activities that may apply loss carry forward positions against future income taxes.

h. Contingent consideration

Certain disposals involve the receipt of contingent consideration. Such contingent consideration is usually based on the future revenue performance of the businesses sold. At the reporting date immediately after


76

disposal, management make estimates of the likely amount of contingent consideration to be received based on the known performance of those businesses at the time of approving the financial statements, together with an estimate of the likely future performance of those businesses. The contingent consideration is then discounted using a rate applicable to the risk associated with the receivable and recognised in the profit and loss account and treated as an exceptional item or through the discontinued line. To the extent that in subsequent accounting periods the actual performance differs from the estimates, or estimates are revised based on more current information, any adjustment will be dealt with through the profit and loss account of the relevant period, and treated as an exceptional item or through the discontinued line, consistent with the original treatment of the relevant transaction.

5. 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 Group Chief Executive Officer (Group CEO) of the Company as its CODM. The Group 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.

At the start of the year, the Group CEO considered the business from a largely geographic perspective, based on two reporting segments: UK and Ireland. The segments were managed by Executive Directors who reported to the Group CEO and the Board of Directors. The Group CEO had responsibility for the UK segment.

Following the significant restructuring of the Group in 2014 including the sale of five businesses, the internal reporting of financial performance was amended to reflect the new structure of the business. As a result, it was decided that in the future the business should be reported in two segments: the Platform business James Hay and the Independent wealth management business Saunderson House.

The Group CEO assesses the performance of the segments based on a measure of adjusted earnings. He reviews working capital and overall balance sheet performance on a Group wide basis.

The Group earns its revenues in these segments by way of fees from the provision of services and commissions earned in the intermediation of financial service products.

Goodwill is allocated to cash generating units on a reporting segment level and that is the level at which it is assessed for impairment.

The information provided to the Group CEO for the reportable segments, for the year ended 31 December 2014, is as follows:

Platform Independentwealth

management

Total

£’000 £’000 £’000

Revenue 36,714 28,382 65,096

Adjusted operating profit 5,808 5,883 11,691

Group/Other (3,809)

Amortisation of intangibles (1,701)

Exceptional costs (1,353)

Operating profit 4,828

Finance income 284Finance costs (504)

Profit before income tax 4,608Income tax expense (3,310)

Profit for the year from continuing operations 1,298


77



The re-presented 2013 comparatives, excluding discontinued operations, are as follows:

Platform Independentwealth

management

Total

£’000 £’000 £’000

Revenue 36,964 26,348 63,312

Adjusted operating profit 7,960 5,284 13,244

Group/Other (4,092)

Amortisation of intangibles (1,701)

Exceptional costs (2,047)

Operating profit 5,404

Finance income 128

Finance costs (520)

Profit before income tax 5,012

Income tax expense (536)

Profit for the year from continuing operations 4,476

The home country of IFG Group plc is Ireland. The Group’s continuing revenues are derived from the following countries:


£’000 £’000

United Kingdom 64,359 62,636

Other 737 676

Total 65,096 63,312

Revenue in the table above has been allocated based on the country where the customer is located.

Analysis of revenue by category


£’000 £’000

Platform 36,714 36,964

Independent wealth management 28,382 26,348

Total 65,096 63,312

During the year there were no revenues derived from a single customer that represent 10% or more of total revenues.


78

Analysis of total non-current assets at the year-end by geographical region

The total non-current assets (excluding deferred tax assets and available for sale assets), at the year end, split by geographical region are as follows:

2014 2013

£’000 £’000

Ireland 1,512 9,900

United Kingdom 58,411 55,676

Other - 14

Total 59,923 65,590

6. Exceptional items


£’000 £’000

Redundancy and restructuring related costs 1,290 904

Loss on disposal of IFG UK Financial Services 582 -

Gain on disposal of Siddalls France (519) -

Provision against receivable from associate - 1,144

Total 1,353 2,048

2014 Restructuring costs

During the year, £1.3 million of costs were incurred in relation to redundancy and termination related costs, of which £0.5 million related to the UK and £0.8 million related to Group/Other.

The prior year redundancy and restructuring costs were £0.9 million, of which £0.6 million related to the UK and £0.3 million related to Group/Other.

Loss on disposal of IFG UK Financial Services

On 12 March 2014, we announced the sale of our traditional UK IFA business (IFG UK Financial Services) to Ascot Lloyd Financial Services Ltd for an initial consideration of £2.5 million, which was paid on completion on 8 September 2014, and additional consideration of up to a maximum of £5.5 million in contingent consideration, dependent upon future revenue targets. See note 15 for more details.

Gain on disposal of Siddalls France

On 31 October 2014, the Group completed the sale of Siddalls France to Blevins Franks. The gain on this transaction was £0.5 million. See note 15 for further details.

2013 Provision against receivable from associate

In assessing the carrying value of a £1.1 million receivable due from Rayband (an associate of the Group) in 2013, management reassessed the value of the underlying assets, primarily land, owing to the land not being designated as development land as previously expected. This resulted in an impairment provision of £1.1 million against the full value of the receivable.


79



7. Expenses


£’000 £’000

Depreciation and amortisation 3,801 3,506

Establishment and related costs 2,925 2,785

Employee benefit expense 41,170 37,027

Other staff related costs 1,851 2,161

Advertising & marketing costs 1,623 1,654

Operating lease rentals 1,437 1,423

Professional fees 1,754 2,352

Software support 572 637

Other IT costs 2,335 1,919

Commissions 90 678

Property SIPP administration fees 1,135 1,166

Insurance costs 315 337

Foreign exchange gain (131) (72)

Other expenses 1,391 2,335

Total relating to continuing operations 60,268 57,908

Relating to discontinued operations 16,970 17,098

Total cost of sales, administrative expenses and other expenses/(gains) 77,238 75,006

The above comparatives have been re-analysed into more relevant categories. No other expenses classified by nature exceed £1.0 million in total and so have not been disclosed.

8. Directors’ remuneration

2014 2013

£’000 £’000

Emoluments: For services as Non-Executive Directors 318 318

For services as Executive Directors 976 1,165

For loss of office - termination payments 974 282

2,268 1,765

The amounts above do not include charges in respect of the share based compensation payments of £12,000 (2013: £57,000). In addition, the amounts do not include a contingent payment of up to £130,000, which may become payable to a former director, if certain financial outcomes are met.


80

9. Employee benefit expense

The average number of persons employed by the Group during the year was 937 (2013: 894). The actual number of persons employed by the Group as at 31 December 2014 was 828 (2013: 944).

The average number of persons employed by the Group, including Non-Executive Directors, during the year, analysed by category, was as follows:

2014 2013

UK 754 721

Ireland 162 151

Head office 14 15

Non-Executive Directors 7 7

937 894

The aggregate remuneration costs of these employees can be analysed as follows:


£’000 £’000

Wages and salaries 35,080 31,944

Social welfare costs 2,954 2,558

Redundancy and related costs 1,317 801

Pension costs - defined contribution plans 1,532 1,409

Share based payment compensation - share options 287 315

Total 41,170 37,027

Relating to discontinued operations 7,823 9,372

Total remuneration costs 48,993 46,399

10. Finance income and costs


£’000 £’000

Finance costs

Interest expense - bank borrowings (504) (520)

Relating to discontinued operations (24) (50)

Total finance costs (528) (570)

Finance income

Interest income on short-term bank deposits 160 128

Unwinding of discount applicable to contingent consideration 124 -

Relating to discontinued operations 11 4

Total finance income 295 132

Net finance costs (233) (438)


81



11. Operating profit

The following items have been charged in the operating profit:


£’000 £’000

Depreciation 1,150 1,156

Amortisation of intangible assets 2,651 2,350

Operating lease rentals 1,437 1,423

Net foreign exchange gain (131) (72)

Employee costs (note 9) 41,170 37,027

During the year, the Group obtained the following services from the Group’s auditors (PwC in Ireland):

2014 2013

Auditors’ remuneration - Group £’000 £’000

Statutory audit of the Group accounts 127 141

Other assurance services 178 177

Tax advisory services 8 51

Other non-audit services - 60

Total remuneration 313 429

12. Income tax expense/(credit) 2014 2013

Re-presented

£’000 £’000Current taxIreland (at 12.5%):

- current year 13 20- prior year (16) (1)

UK and other (primarily at 21.5%):- current year 1,871 1,846- prior year (240) (251)

1,628 1,614

Deferred taxIreland:

- current year 655 (43)- prior year 26 -

UK and other:- current year 608 (847)- prior year 393 (188)

1,682 (1,078)Income tax expense 3,310 536


82

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the profits of the consolidated entities as follows:


£’000 £’000


Tax calculated at domestic tax rates applicable to results in the respective country 1,394 1,468

Adjustment in respect of prior years (256) (252)

Write-off of deferred tax following disposal 1,938 -

Re-measurement of deferred tax - impact of change in UK tax rate - (585)

Non-taxable gain 12 -

Current year losses for which no deferred tax asset was recognised 105 78

Utilisation of previous unrecognised tax losses (91) (340)

Others including expenses not deductible for tax purposes 208 167

Income tax expense 3,310 536

The weighted average applicable tax rate for the year was 30% (2013: 29%). During 2013, the Company re-measured relevant deferred tax balances that were impacted by the change in the UK tax rate substantively enacted at the balance sheet date.

In accordance with the IFRS provisions, the rate of 20% is used as a basis for the calculation of the UK deferred taxes.

13. (Loss)/profit from discontinued operations (net of income tax)

On 28 August 2014, the Board announced that it had signed an agreement for the sale of its Irish pension and advisory businesses to Willis Ireland for a maximum cash consideration of £10.8 million (€13.5 million) to be adjusted by a working capital adjustment on finalisation of the completion accounts. This transaction closed on 11 December 2014. £1.5 million (€2.0 million) of the consideration is deferred for two years. In the 2014 financial statements we have recognised £1.3 million (€1.6 million) of this consideration reflecting the contingent consideration discounted using a rate applicable to the risk associated with the receivable.

For the purpose of the financial information, management has classified the Irish segment as discontinued as it:

• represents a separate major line of business and geographical area of operations; and

• is part of a single co-ordinated plan to dispose of a separate major line of business and geographical area of operations.

The results of the Irish segment are presented in the financial information as discontinued operations. The Consolidated Income Statement distinguishes discontinued operations from continuing operations.


83



Financial information relating to the discontinued operations is set out below:

Income statement

2014

£’000

2013Re-presented

£’000

Revenue 16,865 16,323

Cost of sales (15,999) (15,905)

Gross profit 866 418

Administrative expenses (971) (580)

Exceptional expenses - (613)

Operating loss (105) (775)

Finance income 11 4

Finance costs (24) (50)

Loss before income tax (118) (821)

Income tax expense (51) (54)

Loss after income tax of discontinued operations (169) (875)

Working capital adjustment on International segment disposal 500 1,404

Loss on sale of the Irish segment (828) -

(Loss)/profit for the year (497) 529

(Loss)/profit for year attributable to:

Owners of the parent company (631) 398

Non-controlling interest 134 131

(Loss)/profit for the year (497) 529

Cash flow

2014

£’000

2013Re-presented

£’000

Operating activities 129 943

Investing activities (185) (140)

Financing activities (24) (77)

Net movement in cash and cash equivalents from discontinued operations (80) 726


84

Details on the loss on sale of the Irish segment

The loss on sale of the Irish segment has been calculated as follows:

£’000

Cash consideration received 9,116

Contingent consideration 1,486

Carrying amounts of net assets disposed (including goodwill of £8.0 million) (11,550)

Costs of disposal (1,316)

Non-controlling interest (366)

Currency translation differences recycled to the Consolidated Income Statement on disposal 1,802

Loss on sale relating to discontinued operations (828)

Net cash flow on disposal, exclusive of disposal costs

£’000

Cash consideration 9,116

Cash and cash equivalents disposed of (1,124)

7,992

Effect of disposal on the financial position of the Group

£’000

Property, plant and equipment 602

Intangible assets including goodwill 7,984

Trade and other receivables 3,715

Cash and cash equivalents 1,124

Trade and other payables (2,010)

Deferred income tax assets 135

Carrying amounts of Irish segment net assets disposed of 11,550

Release of working capital provision - International segment disposal 2012

During 2013, a settlement was made to AnaCap Financial Partners II LP as required by the completion accounts related deed. This was the final settlement with regards to the net asset delivery on the sale of the International segment. Management also released an amount of £1.4 million of the working capital provision in 2013 as the completion deed has been agreed and settled and therefore this component of the provision was no longer required.

During 2014, an additional £0.5 million was released and is recorded in discontinued operations in the Consolidated Income Statement. The remaining provision is £0.4 million after further insurance costs of £0.2 million were paid as agreed as part of the sale agreement.


85



14. Disposal groups held for sale

On 31 December 2013, the assets and liabilities of the entities listed below were classified as held for sale. These entities were subsequently disposed of during 2014.

• One Network (Irish segment)

• IFG Asia (Irish segment)

• IFG UK Financial Services (UK segment)

The assets and liabilities related to the following entities have been presented as held for sale following the approval of the Board to sell the entities:

• ARB Underwriting Limited

• A.R. Brassington & Co Limited

• IFG McGivern Flynn Teoranta t/a Insure4Less

These businesses are regarded as non-core and the Board have determined that they will, in the appropriate circumstances, be disposed of. The Board continues to explore options to sell these businesses.

Assets of disposal group classified as held for sale £’000


Goodwill 714


Cash and cash equivalent 716

Total 3,544

Liabilities of disposal group classified as held for sale £’000

Deferred income tax liabilities (41)

Trade and other payables (1,837)

Current income tax liabilities (30)

Total (1,908)


86

15. Business combinations/disposals – continuing operations

Business combinations

IFG McGivern Flynn Teoranta, an Irish entity trading as ‘Insure4Less’, was classified as a joint arrangement on 31 December 2013. On 31 December 2014, IFG Group acquired the remaining 50% of ‘Insure4Less’, and subsequently reclassified as disposal group held for sale (note 14) as the Board have determined that they will dispose of the business in the appropriate circumstances.

Business disposals

During 2014, the Group sold its UK traditional IFA business (IFG UK Financial Services) to Ascot Lloyd Financial Services Ltd for an initial consideration of £2.5 million and additional consideration of up to a maximum of £5.5 million in contingent consideration, dependent upon future revenue targets. In the 2014 financial statements the Group has recognised £3.5 million of this consideration. The Group also sold Siddalls France and the 2014 financial statements include £0.2 million of related contingent consideration. Refer to note 6 for further details.

The loss on sale of IFG UK Financial Services and Siddalls France has been calculated as follows:

£’000

Cash consideration received 3,300

Contingent consideration 3,695

Carrying amounts of net assets disposed of (4,686)

Costs of disposal (2,360)

Currency translation differences recycled to the Consolidated Income Statement on disposal (12)

Loss on sale (63)

Net cash flow on disposal, exclusive of disposal costs £’000

Cash consideration 3,300

Cash and cash equivalents disposed of (213)

3,087

Effect of disposal on the financial position of the Group £’000


Intangible assets including goodwill 4,327

Trade and other receivables 273

Cash and cash equivalents 213

Trade and other payables (122)

Income tax liabilities (13)

Carrying amounts of net assets disposed of 4,686


87



16. Earnings per ordinary share


Basic

Profit/(loss) after income tax and non-controlling interest (£’000)

Continuing operations 1,164 4,345

Discontinued operations (497) 529

Total 667 4,874

Weighted average number of ordinary shares in issue for thecalculation of earnings per share 104,643,665 103,998,107

Basic earnings per share (pence)

Continuing operations 1.11 4.18

Discontinued operations (0.47) 0.51

From profits for the year 0.64 4.69

Diluted

Profit after income tax and non-controlling interest (£’000)

Continuing operations 1,164 4,345

Discontinued operations (497) 529

Total 667 4,874

Weighted average number of ordinary shares in issue for thecalculation of earnings per share 104,643,665 103,998,107

Dilutive effect of share options 323,508 228,963

Weighted average number of ordinary shares for the calculation ofdiluted earnings per share 104,967,173 104,227,070

Diluted earnings per share (pence)

Continuing operations 1.11 4.17

Discontinued operations (0.47) 0.51

From profits for the year 0.64 4.68


88

The number of shares used in the calculation of basic earnings per share and diluted earnings per share has been calculated in accordance with International Accounting Standard No. 33.

Diluted EPS is based on the weighted average number of ordinary shares used in the basic EPS calculation, with an adjustment to reflect the bonus element of the average number of options outstanding during the year. The bonus element arises when the exercise price is lower than the average market price during the year.

At 31 December 2014, there were no shares earned by participants but not yet issued under the 2011 LTIP.

17. Dividends paid on ordinary shares

2014 2013£’000 £’000

Ordinary Shares:

Final 2013 paid of 2.59 pence per share 2,700 -

Interim 2014 paid of 1.31 pence per share 1,368 -

Dividend withholding tax on 2012 interim dividend - 256

Final 2012 paid of 2.75 pence per share - 2,857

Interim 2013 paid of 1.37 pence per share - 1,440

Total 4,068 4,553

A final dividend in respect of 2014 of 2.73 pence per share is to be proposed at the AGM on 12 May 2015.


89



18. Property, plant and equipment

Buildings & Computer Fixtures & Motor Totalleasehold equipment fittings vehicles

improvements£’000 £’000 £’000 £’000 £’000

Cost

At 31 December 2012 2,576 4,983 862 71 8,492

Additions 139 1,557 86 - 1,782

Disposals (6) (338) (18) - (362)

Transfer to disposal group (244) (1,027) (546) - (1,817)

Exchange adjustment 18 60 7 2 87

At 31 December 2013 2,483 5,235 391 73 8,182

Transfer from disposal group 244 1,027 546 - 1,817

Additions 751 434 61 - 1,246

Disposal of subsidiaries (272) (1,194) (28) (38) (1,532)

Disposals (92) (78) (30) (27) (227)

Transfer to disposal group - (341) (10) - (351)

Business combinations - 11 4 - 15

Exchange adjustment (59) (170) (24) (8) (261)

At 31 December 2014 3,055 4,924 910 - 8,889

Accumulated depreciation

At 31 December 2012 (1,652) (3,794) (167) (13) (5,626)

Charge for year (396) (918) (85) (17) (1,416)

Disposals 3 338 7 - 348

Transfer to disposal group 195 1,022 90 - 1,307

Exchange adjustment (10) (53) (7) - (70)

At 31 December 2013 (1,860) (3,405) (162) (30) (5,457)

Transfer to disposal group (195) (1,022) (90) - (1,307)Charge for year (285) (421) (472) (12) (1,190) Disposals of subsidiaries 20 850 21 31 922Disposals 92 78 16 4 190Transfer to disposal group - 213 7 - 220Exchange adjustment 42 149 26 7 224At 31 December 2014 (2,186) (3,558) (654) - (6,398)

Net book amounts

At 31 December 2012 924 1,189 695 58 2,866

At 31 December 2013 623 1,830 229 43 2,725

At 31 December 2014

- cost 3,055 4,924 910 - 8,889

- accumulated depreciation (2,186) (3,558) (654) - (6,398)

869 1,366 256 - 2,491

The depreciation charge for the year of £1,190,000 (2013: £1,416,000) is included in the Consolidated Income Statement.


90


Capital commitmentsAt 31 December 2014 amounts authorised by the Directors, but not contracted for, were £6,617,000 (2013: £4,036,000). Capital commitments contracted for were £nil (2013: £nil).

19. Intangible assets

Goodwill Customer Computer Totalrelationship software

brands¹

£’000 £’000 £’000 £’000

Year ended 31 December 2013

Opening net book amount 43,803 22,478 1,873 68,154

Additions - - 1,901 1,901

Transfer to disposal group (4,328) - - (4,328)

Amortisation charge - acquired - (2,008) (282) (2,290)

Amortisation charge - - (796) (796)

Exchange adjustment 156 40 28 224

Closing net book amount 2013 39,631 20,510 2,724 62,865

At 31 December 2013

Cost 49,954 42,871 12,358 105,183

Accumulated amortisation/impairment (10,323) (22,361) (9,634) (42,318)

Net book amount 39,631 20,510 2,724 62,865

Year ended 31 December 2014

Opening net book amount 39,631 20,510 2,724 62,865

Additions - - 3,841 3,841

Disposal of subsidiaries (6,700) (978) (310) (7,988)

Transfer to disposal group (390) (324) - (714)

Amortisation charge acquired - continuing - (1,701) - (1,701)

Amortisation charge acquired - discontinued - (125) (115) (240)

Amortisation charge - continuing - - (950) (950)

Amortisation charge - discontinued - - (120) (120)

Exchange adjustment (478) (87) (30) (595)

Closing net book amount 2014 32,063 17,295 5,040 54,398

At 31 December 2014

Cost 32,063 25,517 9,270 66,850

Accumulated amortisation/impairment - (8,222) (4,230) (12,452)

Net book amount 32,063 17,295 5,040 54,398

¹ Includes the cost of intangibles that were identified and valued as part of the purchase price allocation that resulted from business combinations. These intangibles are primarily customer relationships acquired as part of recent business combinations of the Group. Useful lives range from seven to fifteen years. Management estimates that the James Hay brand and customer relationship intangibles acquired during 2010 (net book value of £17,295,000) have approximately ten years and two months left in their useful lives as of 31 December 2014.

91



Computer software is amortised over three to eight years.

The amortisation charge for 2014 was £3,011,000. The 2013 amount of £3,086,000 includes the continuing charge of £2,350,000 and discontinued charge of £736,000. The continuing charge is included in the Consolidated Income Statement within ‘Cost of Sales’.

Goodwill as allocated to segments - group of cash generating units (“CGU”)At 31 December At 31 December

2014 2013£’000 £’000

Platform 26,771 26,771

Independent wealth management 5,292 5,292

Ireland (segment disposed in 2014 - see note 13) - 7,568

Total goodwill 32,063 39,631

Impairment tests for goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s segments which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes.

Value-in-use calculations are utilised to calculate recoverable amounts of a CGU. Value-in-use is calculated as the net present value of the projected risk-adjusted pre-tax cash flows of the Group of CGU, in which the goodwill is contained. Net present value of cash flows is achieved by applying a discount rate based on the Group pre-tax Weighted Average Cost of Capital (“WACC”) as outlined below. These cash flows are based on budgets approved by the Board covering a one year budget together with a two year forecast. Cash flows beyond the four year period are extrapolated using the estimated long-term growth rates as stated below. Forecasts are based on historical performance together with management’s expectation of future trends affecting the industry and other developments and initiatives in the business.

The key assumptions include the long-term growth rates, discount rates and management’s estimates of future profitability based on sales growth, inflation and movement in estimated cost expectations. The prior year assumptions were prepared on the same basis. The values applied to the key assumptions are derived from a combination of external and internal factors based on historical experience and take into account management’s expectation of future trends affecting the industry and other developments and initiatives in the business.

The key assumptions used for the value-in-use calculations in 2014 and 2013 are as follows:

2014 2013United Kingdom

Long-term growth rate 2.0% 2.0%

Discount rate 9.1% 9.5%

4 year revenue growth rate (2013: 5 years) 12.6% 13.8%

IrelandLong-term growth rate 1.0% 1.0%

Discount rate 9.1% 10.1%

5 year revenue growth rate - 8.4%

In the prior year, the Group included a risk factor on the Group WACC in order to arrive at the discount rate to be used for Ireland, given the different risk profile for the cash flows for Ireland.

If the estimated long-term growth rates for all businesses were lowered by 1% from management’s estimate at 31 December 2014, the Group would have recorded an impairment charge of £nil against goodwill. If the discount rate used increased by 1%, an impairment charge of £nil would have been recorded at 31 December 2014. If the estimated cash flows for the three-year period 2015-2017 reduced by 3%, then an impairment charge of £nil would have been recorded at 31 December 2014.


92

20. Investments in associate and joint arrangement

In 2010, the Group acquired a 50% interest in IFG McGivern Flynn Teoranta, an Irish entity trading as ‘Insure4Less’. On 31 December 2014, the Group acquired the remaining 50% of ‘Insure4Less’, and subsequently reclassified as ‘assets held for sale’ (note 14) as the Board determined that they will dispose of the business in the appropriate circumstances.

The Group’s investment in associate comprises its shareholdings in Rayband Limited (shareholding 35% (2013: 35%)). The Group has not recognised a profit of £27,000 (2013: loss of £9,000) for Rayband Limited as the carrying value of its investment in the associate is £nil.

The Group’s share of the results of its principal associate and joint arrangement, all of which are unlisted, and its aggregated assets and liabilities are as follows:

Assets Liabilities Revenues Profit/(loss) Share of profit/(loss) recognised by IFG

£’000 £’000 £’000 £’000 £’000

2014 343 (373) 277 42 -

2013 716 (1,182) 158 (222) -

There were no capital commitments as at 31 December 2014 associated with Rayband Limited.

21. Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below:

Loans and

31 December 2014 receivables

Assets as per balance sheet £’000


Contingent consideration on disposals 5,277


Total 49,806

31 December 2013 Loans and

Assets as per balance sheet receivables

£’000


Loans to associates and joint arrangement 125


Total 43,382


93



31 December 2014 Other financial liabilities

Liabilities as per balance sheet £’000

Borrowings 6,641

Trade and other payables 1,419

Accruals 10,811

Total 18,871

31 December 2013 Other financial liabilities

Liabilities as per balance sheet £’000

Borrowings 6,495

Trade and other payables 2,504

Accruals 11,952

Total 20,951

See note 22 commentary on the credit quality of trade and other receivables.

22. Trade and other receivables

2014 2013

£’000 £’000

Current - trade and other receivables

Trade receivables and other receivables 15,788 20,597

Less provision for impairment (585) (809)

Trade receivables and other receivables - net 15,203 19,788

Prepayments 1,633 2,506

Receivables from joint arrangement - 125

Contingent consideration on disposals 2,243 -

19,079 22,419

Non-current - other receivables 3,034 -

Contingent consideration on disposals 3,034 -

The carrying value less impairment provision of trade and other receivables approximates fair value.

The Group’s exposure to concentration risk in respect of its trade receivables is assessed as low given the large number of customers and the absence of any significant exposure to one customer.

As of 31 December 2014, trade and other receivables of £12.9 million (2013: £16.3 million) were fully performing. There is no history of default with any of these clients.

Trade and other receivables that are less than three months past due have been reviewed and are not considered impaired. As of 31 December 2014, trade and other receivables of £2.0 million (2013: £2.4 million) were past due but not impaired.


94


The ageing analysis of these trade and other receivables is as follows:

2014 2013£’000 £’000

Less than 3 months 1,816 2,252

3 to 6 months 243 111

2,059 2,363

As of 31 December 2014, trade and other receivables of £0.9 million (2013: £1.9 million) were impaired and provided for, where required. The amount of the provision was £0.6 million (2013: £0.8 million). Management assesses that at least the receivable amount net of provision will be recovered. The ageing of these receivables is as follows:

2014 2013£’000 £’000

6 months to one year 309 573

More than one year 615 1,339

924 1,912

The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies:

2014 2013£’000 £’000

Euro 51 6,059

Sterling 15,737 14,538

15,788 20,597

Contingent consideration, relating to businesses sold, is recorded at the expected level of receipt, discounted using a rate applicable to the risk associated with the receivable. The amount ultimately received may vary depending on the future performance of those businesses, but represents management’s best estimate, based on current information, of the likely amount to be received. The amount ultimately received may be higher or lower than the amount currently recognised.

Movements on the Group provision for impairment of trade and other receivables are as follows:

2014 2013£’000 £’000

At 1 January 809 1,863

Provision for receivables impairment 283 362

Disposal of subsidiaries (52) -

Transfer to disposal group 10 (123)

Receivables written off during year as uncollectible (373) (813)Unused provision released (89) (395)

Exchange adjustment (3) (85)

At 31 December 585 809

95



The creation and release of the provision for impaired trade receivables has been included within ‘Cost of Sales’ in the Consolidated Income Statement.

Other than as outlined earlier, the other classes within trade and other receivables do not contain any impaired assets. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security.

The receivables from the joint arrangement is denominated are Euro.

23. Cash and cash equivalents

2014 2013

£’000 £’000

Cash at bank and in hand 23,406 18,073

Short-term bank deposits 5,920 5,396

29,326 23,469

Total allocated to disposal group 716 1,282

Total cash and cash equivalents 30,042 24,751

Cash and cash equivalents are reported at amortised cost which approximates fair value. Cash at bank and in hand earns interest at floating rates based on daily deposit bank rates. Short-term deposits are made for varying periods depending on the immediate cash requirements of the Group and earn interest at the respective short-term deposit rates.

Currency rate profile of cash and cash equivalents

2014 2013Cash at Short term Total Cash at Short term Total

bank and in deposits bank and in depositshand hand

£’000 £’000 £’000 £’000 £’000 £’000

Euro 1,879 1 1,880 3,613 2 3,615

Sterling 21,527 5,919 27,446 14,460 5,394 19,854

At 31 December 23,406 5,920 29,326 18,073 5,396 23,469

24. Borrowings

2014 2013

£’000 £’000

Non-current

Bank borrowings 6,639 6,486

6,639 6,486

Current

Bank overdrafts 2 9

2 9

Total borrowings 6,641 6,495


96


Bank borrowings at 31 December 2014 mature in 2016 and bear average coupons of 2.54% annually (2013: 2.46% annually), a level 2 fair value technique.

The carrying amounts and fair values of the non-current borrowings are as follows:

Carrying amount Fair value

2014 2013 2014 2013

£’000 £’000 £’000 £’000

Bank borrowings 6,641 6,495 6,641 6,495

6,641 6,495 6,641 6,495

The fair values are based on cash flows discounted using a rate based on the borrowing rate of 2.54% (2013: 2.46%).

The carrying amounts of the Group’s borrowings are denominated in the following currencies:

2014 2013

£’000 £’000

Sterling 6,641 6,495

6,641 6,495

The Group has the following undrawn committed borrowing facilities available:

2014 2013

£’000 £’000

Expiring between two and five years 13,000 15,500

13,000 15,500

These facilities are at floating interest rates which include short-term working capital facilities providing the Group with the necessary funding for short and long-term objectives.

The Company, along with some of its subsidiaries, has guaranteed Group borrowings and guarantees totalling £7,000,000 (2013: £7,000,000). There are certain share pledges for some subsidiary companies under the bank facility agreement.

25. Deferred income tax

Deferred income tax assets and liabilities are offset if, and only if, there is a legally enforceable right to set off the recognised amounts and there is an intention to either settle on a net basis or to realise the asset and settle the liability simultaneously.

2014 2013

£’000 £’000

Deferred tax asset 49 838

Deferred tax liability (3,025) (2,305)

(2,976) (1,467)

97



The gross movement on the deferred income tax account is as follows:2014 2013

£’000 £’000

At beginning of the year (1,467) (2,317)

Exchange movement (64) 11

Consolidated Income Statement (charge)/credit (1,682) 1,161

Credit to discontinued operations 9 -

Disposal of subsidiaries (135) -

Assets classified as held for sale 363 (322)

At end of the year (2,976) (1,467)

No deferred income tax is recognised on the unremitted earnings of overseas subsidiaries and joint arrangements as the Group does not anticipate additional tax in Ireland on dividends received from overseas subsidiaries.

The movement in deferred tax assets and liabilities during the year are as follows:

Accelerated Intangibles Tax Other Totalcapital assets losses temporary

allowances differences£’000 £’000 £’000 £’000 £’000

Deferred tax assets at 31 December 2012 283 - 2,068 375 2,726

Deferred tax liabilities at 31 December 2012 - (5,043) - - (5,043)

Net deferred tax balances at 31 December 2012 283 (5,043) 2,068 375 (2,317)

At 1 January 2013 283 (5,043) 2,068 375 (2,317)

Exchange movement - (7) 18 - 11

(Charge)/credit to Consolidated Income Statement (51) 1,028 31 153 1,161

Assets classified as held for sale (6) - (309) (7) (322)


Deferred tax assets at 31 December 2013 15 (204) 772 255 838

Deferred tax liabilities at 31 December 2013 211 (3,818) 1,036 266 (2,305)


At 1 January 2014 226 (4,022) 1,808 521 (1,467)

Exchange movement (1) 14 (74) (3) (64)

(Charge)/credit to Consolidated Income Statement (173) 340 (1,382) (467) (1,682)

Credit/(charge) to discontinued operations - 29 - (20) 9

Disposal of subsidiaries - 139 (269) (5) (135)

Assets classified as held for sale movement 4 40 309 10 363

Net deferred tax balances at 31 December 2014 56 (3,460) 392 36 (2,976)

Deferred tax assets at 31 December 2014 2 - 39 8 49

Deferred tax liabilities at 31 December 2014 54 (3,460) 353 28 (3,025)

Net deferred tax balances at 31 December 2014 56 (3,460) 392 36 (2,976)

Deferred tax assets of £425,000 (2013: £1,578,000) in respect of tax losses of £1,895,000 (2013: £9,246,000) have not been recognised. These losses have no expiration date and can be carried forward indefinitely. Deferred tax assets


98


are recognised where it is probable that future taxable profit will be available to utilise losses.

26. Provisions for other liabilities

International Complaints Dilapidations Total segment & legal & leasesdisposal

£’000 £’000 £’000 £’000

At 1 January 1,139 1,748 196 3,083

Transfer from disposal group - 350 - 350

Additions - 333 411 744

Unused amount released (500) (239) - (739)

Utilised during the year (229) (457) - (686)

Exchange adjustments - - (11) (11)

At 31 December 410 1,735 596 2,741

Analysis of provisions:2014 2013

£’000 £’000

Current 1,015 1,519

Non-current 1,726 1,564

2,741 3,083

International segment disposal

The terms of the International segment sale agreement provided for a working capital adjustment to the £70.0 million disposal consideration received based on a completion balance sheet. During 2014, £0.2 million was paid in relation to the insurance cover for the International business as agreed as part of the sale agreement. There was a settlement made to Anacap of £0.7 million in 2013 as required by the completion accounts related deed. This was the final settlement with regards to the net asset delivery on the sale of the International segment.

Management have reviewed the remaining provision and released an amount of £0.5 million as the completion deed has been agreed and settled and therefore the provision is no longer required. The release of this provision has been recorded as a discontinued operations line item as the original booking was through that line in the Consolidated Income Statement.

The remaining provision of £0.4 million relates to indemnities and contingencies which will be held until the end of July 2015. Claims in respect of non-tax warranty claims or indemnities must be brought within 30 months of the date of completion as outlined in the purchase agreement.

Complaints and legal

The provisions recorded represent management’s best estimate of the exposures relating to complaints and legal claims against Group companies based on information available at the time of the approval of the accounts. This includes provisions made to cover existing and incurred but not reported complaints and legal claims against the Group. These provisions represent managament’s best estimate of the costs of settling these matters.

The transfer from disposal group relates to provisions which were originally assumed to be disposed of with the related entities, but for which risks have been retained.

Dilapidations

A provision reflecting management’s best estimate of the dilapidation and lease related costs for premises currently leased by Group companies has been recognised.

99



Current provisions

Although these provisions are uncertain in terms of timing and/or amount, it is expected that £1,015,000 of the provision will be utilised in 2015.

27. Trade and other payables (amounts falling due within one year)

2014 2013

£’000 £’000

Trade and other payables 1,419 2,504

Accruals and deferred income 17,561 19,225

PAYE and social welfare 860 1,791

Value added tax 262 347

Other payables 639 626

20,741 24,493

Creditors for taxation and social welfare included above 1,121 2,138

The carrying value of trade and other payables approximates fair value.

28. Share capital and share premium

2014 2014 2014 2013 2013 2013Authorised No. of No. of

shares £’000 €’000 shares £’000 €’000

Ordinary shares of 12c each 140,187,210 13,095 16,822 140,187,210 13,095 16,822

“A” Ordinary shares of €1.27 each 8,200 7 10 8,200 7 10

13,102 16,832 13,102 16,832

Allotted and fully paid up No. of shares

Ordinary shares £’000

Share premium £’000

At 1 January 2013 103,898,165 9,949 81,141

Share options exercised 329,500 33 265

Other - - (7)

At 31 December 2013 104,227,665 9,982 81,399

Share options exercised 585,000 57 487

Other - - (14)

At 31 December 2014 104,812,665 10,039 81,872

Share options

The Group operates share option schemes whereby options are granted to employees to acquire shares in IFG Group plc. The exercise price of the granted options is equal to the market price of the shares on the date of grant. Options are conditional on the employee remaining in service for a period of three years (vesting period) and are exercisable between three and ten years from the date of grant. The Group has no legal or constructive obligation to repurchase or settle the options in cash.

At 31 December 2014 share options were outstanding over 3,448,000 (2013: 3,427,000) ordinary shares under the Company’s share option schemes. None of the options relate to Directors.


100


Movements in the number of share options outstanding and their related average exercise prices are as follows:

2014 2014 2013 2013

Weighted exercise Options Weighted exercise Options

price in € per share no. ’000 price in € per share no. ’000

At 1 January 1.37 3,427 1.37 2,824

Granted 1.70 626 1.32 1,000

Expired/cancelled 1.42 (20) 1.51 (67)

Exercised 1.24 (585) 1.08 (330)

At 31 December 1.59 3,448 1.37 3,427

Options exercisable 1.57 1,187 1.37 1,537

The weighted average share price at the date of exercise for options exercised during the year was €1.65 (2013: €1.45).

Options outstanding at the end of the year entitle holders to purchase ordinary shares as follows:

Options Exercise Price in € Period normally exercisable

no. ‘000 per share From To

23 0.99 16.04.2008 15.04.2015

107 2.05 10.05.2009 09.05.2016

120 2.08 12.04.2010 11.04.2017

295 1.97 14.04.2011 11.04.2018

25 0.65 06.05.2013 05.05.2019

260 1.30 07.09.2013 08.09.2019

177 1.15 31.08.2013 30.08.2020

175 1.26 11.10.2013 10.10.2020

800 1.53 27.04.2015 26.04.2022

840 1.58 26.04.2016 25.04.2023

626 1.70 27.04.2017 26.04.2024

Option pricing

The fair value of options granted was determined using the Black-Scholes valuation model. The significant inputs into the model were share price and exercise price of €1.70 and €1.70 respectively in 2014, (2013: €1.39 and €1.57) at the grant dates, standard deviation of expected share price returns of 24.2% (2013: 34.0%) and annual risk-free rate of 2.3%. The volatility measured at the standard deviation of expected share price returns is based on statistical analysis of daily share prices over a seven year period as this represents the historical experience of grant date to exercise date. The expected dividend yield input assumption for all years was zero. The fair value of share options granted in the year was €0.33 (2013: €0.42).

101



29. Other reserves

Capital Convertible Equity Capital Translation Translation Total

conversion bond settled share redemption reserve FX

reserve transactions reserve reserve

£’000 £’000 £’000 £’000 £’000 £’000 £’000

At 31 December 2012 292 238 7,678 1,913 3,795 (17,866) (3,950)

Currency translation difference - - - - 344 - 344


- Value of employee services - share options - - 343 - - - 343

Transfer of vested share based payment - - (7,568) - - - (7,568)

At 31 December 2013 292 238 453 1,913 4,139 (17,866) (10,831)

Currency translation difference - - - - (2,751) - (2,751)


- Value of employee services - share options - - 287 - - - 287

Transfer of vested share base payment - - (151) - - - (151)

At 31 December 2014 292 238 589 1,913 1,388 (17,866) (13,446)

The capital conversion reserve arose on the redenomination of the shares from Irish pounds to Euro in 2001 and the re-nominalisation of the share capital.The convertible bond reserve was created on the transition to IFRS and the recognition of the senior unsecured notes as a compound financial instrument. The existence of warrants required the separation of debt from equity.Equity settled share transactions reserve records all entries that result in the Group’s requirement to settle its obligations in the form of the issue of shares. The transfers of amounts from the equity settled share transaction reserve to revenue reserves in 2014 represents the cumulative amount of vested shares at 31 December 2014.The capital redemption reserve arose due to the Group’s buy-back of shares in 2012.Translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations, which have been included in Consolidated Statement of Comprehensive Income and will be recycled to the profit and loss accounts if they are disposed of.Other foreign exchange reserve comprises differences on translation of certain capital balances at historic rates, on change of functional and presentation currencies in 2011.


102


30. Equity non-controlling interestsAt 31 December 2014, equity non-controlling interest is represented by the non-controlling interest in ARB Underwriting Limited. This interest is held by management of ARB.During 2014, a capital contribution of £704,000 (2013: £173,000) was made to IFG Investment and Mortgages Services Limited. An equivalent amount was contributed by the non-controlling interest, GE Capital Woodchester Limited. This amount has been reflected within the non-controlling interests in the Consolidated Statement of Changes in Equity and dealt with as part of the disposal of the business.

31. Operating lease commitments

The Group leases various properties and equipment under non-cancellable operating lease agreements. The lease terms are between one and fourteen years and the majority of lease agreements are renewable at the end of the lease period at market rate. The lease expenditure, for continuing operations, charged to the Consolidated Income Statement during the year is disclosed in note 7. The leases have varying conditions and terms.

The future aggregate minimum lease payments under the non-cancellable operating leases are as follows:

2014 2013

£’000 £’000

- within one year 1,430 1,604

- in the second to fifth year 1,501 2,924

- over five years 775 1,132

3,706 5,660

32. Commitments, contingencies and guarantees

Given the nature of the business, the Group has a number of claims against it. 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 exposure in respect of these matters.

The Company, along with some of its subsidiaries, has guaranteed Group borrowings of £7,000,000 (2013: £7,000,000). There are certain share pledges for some subsidiary companies under the bank facility agreement.

The Company has provided rent guarantees totalling £1,234,000 over the period to 2017 (2013: £1,912,000).

The agreements for the sale of the business contain certain limitations on the ability of the purchasers to claim against the Company for breach of warranty and under indemnities. In particular, the aggregate liability of the Company for all claims under the sale agreements (other than certain fundamental warranties) will not exceed the net consideration.

103



33. Cash generated from operations2014 2013

Re-presented£’000 £’000

Continuing operations


Depreciation and amortisation 3,801 3,506

Receivable from associate provision - 1,144

Disposal of subsidiaries 63 -

Loss on sale of property, plant and equipment 6 14

Finance costs 504 520

Finance income (284) (128)

Foreign exchange movement (131) (72)

Non-cash share based payment compensation charges 287 315

Increase in trade and other receivables (620) (2,277)

Movement on loan and other payments to associates 9 (74)

Decrease in current and non-current liabilities (372) (1,032)

Cash generated from continuing operations 7,871 6,928

Discontinued operations

Loss before income tax (118) (821)

Depreciation and amortisation 400 996

Finance costs 24 50

Finance income (11) (4)

Foreign exchange movement 69 66

Non-cash share based payment compensation charges - 28

Decrease in trade and other receivables 529 692

Movement on loan and other payments to associates 24 (48)

Decrease in current and non-current liabilities (697) (41)

Cash generated from discontinued operations 220 918

Cash generated from operations - net 8,091 7,846


104


34. Analysis of net debtOpening Cash Other Closingbalance flow movements balance

£’000 £’000 £’000 £’000

Cash and short-term deposits 24,751 5,514 (223) 30,042

Overdrafts (9) 6 1 (2)

24,742 5,520 (222) 30,040

Bank loans due after one year (6,486) 36 (189) (6,639)

Total 18,256 5,556 (411) 23,401

Other movements

Other movements of £411,000 include the impact of exchange rate movements of £238,000 arising on balances denominated in currencies other than Sterling and the non-cash impact of unamortised borrowing transaction costs of £173,000.

35. Related party transactions

Key management personnel compensation

For the purposes of the disclosure requirements of IAS 24, IFG Group has defined the term ‘key management personnel’ as its Directors. In addition to their salaries, the Group also provides non-cash benefits to Directors and contributes to post-employment plans on behalf of certain Directors.

2014 2013

£’000 £’000

Salaries and other short term benefits 1,161 1,293

Post-employment benefit 133 190

Share based payment compensation 12 57

Termination benefits 974 282

Charged to Consolidated Income Statement 2,280 1,822

Ultimate controlling party

The Group’s ultimate parent is IFG Group plc (incorporated in Ireland) and there is no ultimate controlling party.

Transactions and balances with joint arrangement and associates

At 31 December 2014, Group companies were owed £407,000 (2013: £1,113,000) by Rayband Limited, an Irish unlisted company and an associate of the Group. During the year the Group paid £nil (2013: £2,000) in expenses on behalf of Rayband Limited. These advances are unsecured, interest free and have no fixed repayment date. During the year, £700,000 was written-off. Management have reviewed the recoverability of the balance and a provision for the full amount has been recorded.

105



Transactions involving entities in which key management have an interest

During 2014, Group companies earned £51,000 (2013: £66,000) from key management for services provided. All fees were charged on an arms-length basis with our normal terms and conditions. At the year end, Group companies were owed £17,000 (2013: £24,000).

During 2014, Group companies earned £nil (2013: £nil) from Peajmor Limited, a legal entity which Patrick Joseph Moran, a former Director, controls. Cara Ryan who was elected to the Board on 26 June 2013 is also a director of this entity and has a beneficial interest of 5%. At the year end, Group companies were owed £50,000 (2013: £50,000) for services provided to Peajmor Limited. This amount, in line with the treatment of other investors who received similar services as Peajmor Limited, was provided for.

36. Events since the year end

The Board is recommending a final dividend of 2.73 pence per share which will be considered by the Shareholders at the AGM.

There were no other significant events since year end.

37. Profit for the financial year

In accordance with section 148(8) of the Companies Act, 1963 and section 7 (1A) of the Companies (Amendment) Act, 1986, the Company is availing of the exemption from presenting its individual profit and loss account to the AGM and from filing it with the Registrar of Companies. The Company’s profit for the year determined in accordance with Irish GAAP is £1,491,000 (2013 loss: £5,723,000).


106


38. Principal operating subsidiaries and associate

COMPANY PRINCIPAL ACTIVITIES SHAREHOLDING AND VOTING RIGHTS %

PRINCIPAL OPERATING SUBSIDIARIES

Incorporated in IrelandIFG Securities Limited Group administration services 100The Oval, Shelbourne Road, Ballsbridge, Dublin 4, telephone (+353-1) 6324800 fax (+353-1) 6324801

ARB Underwriting Limited Wholesale insurance broker 70IFG House, Booterstown Hall, Booterstown, Co Dublin, telephone (+353-1) 2752800 fax (+353-1) 2752801

Incorporated in JerseyIFG UK Finance Limited Provision of loan finance to Group companies 100

James Hay Insurance Company Limited Provision of SIPPS 100Wellington House, 15 Union Street, St Helier, telephone (+44 1534) 714 500, fax (+44 1534) 767 787

Incorporated in UK

IFG UK Holdings Limited Holding company 100

The IPS Partnership plc Pensions administration and pension scheme administrators 100

IPS Pensions Limited Actuarial and pension administration services 100

James Hay Pension Trustees Limited Pension Trustee services 100

James Hay Wrap Managers Limited Portfolio administrative services 100All at Trinity House, Anderson Road, Swavesey, Cambridgeshire, telephone (+44 1954) 233 555, fax (+44 1954) 233 500

Saunderson House Limited Independent financial adviser 1001 Long Lane, London, EC1A 9HA, telephone (+44 207) 315 6500, fax (+44 207) 315 6550

James Hay Holdings Limited Holding company 100

James Hay Administration Company Limited Provider of SIPPs 100Dunn’s House, St Paul’s Road, Salisbury, SP2 7BF, telephone (+44 845) 850 4455, fax (+44 845) 850 4466

PRINCIPAL ASSOCIATE

Incorporated in Ireland Rayband Limited Property development 35The Oval, Shelbourne Road, Ballsbridge, Dublin 4, telephone (+353-1) 6324800 fax (+353-1) 6324801

Notes1. The companies operate principally in their countries of incorporation. 2. Pursuant to Section 16 of the Companies Act, 1986, a full list of subsidiaries and associates will be annexed to the Company’s Annual

Return to be filed in the Companies Registration Office in Ireland.

39. Approval of financial statements

The Directors approved the financial statements on 25 March 2015.

107


Notes 2014 2013

£’000 £’000

Financial assets

Investments in subsidiaries 1 163,489 2,350

Current assets

Trade and other receivables 2 4,442 218,132

Cash at bank and in hand 7,819 648

12,261 218,780

Creditors (amounts falling due within one year) 3 (12,337) (56,110)

Net current assets (76) 162,670

Creditors (amounts falling due after one year) 4 (6,639) (6,486)

Net assets 156,774 158,534

Capital and reserves

Share capital 5 10,039 9,982

Share premium 6 81,872 81,399

Capital conversion reserve fund 6 292 292

Other reserves 6 589 453

Capital redemption reserve 6 1,913 1,913

Retained earnings 6 62,069 64,495

Total shareholders’ funds 7 156,774 158,534


P McNamara J A Cotter

(Group Chief Executive) (Group Finance Director)

Company Balance Sheet - Irish GAAPAs at 31 December 2014


108

The principal accounting policies of the Company are listed below:

Basis of preparationThe financial statements have been prepared on a going concern basis and in accordance with the Companies Acts, 1963 to 2014 and Generally Accepted Accounting Practice in Ireland (accounting standards issued by the Financial Reporting Council and promulgated by the Institute of Chartered Accountants in Ireland). The financial statements are prepared in Sterling, denoted by the symbol £’000.

In accordance with section 148(8) of the Companies Act, 1963 and section 7(1A) of the Companies (Amendment) Act, 1986, the Company is availing of the exemption from presenting its individual profit and loss account to the AGM and from filing it with the Registrar of Companies. The Company’s profit for the year determined, in accordance with Irish GAAP, is £1,491,000 (2013 loss: £5,723,000).

Basis of accountingThe financial statements are prepared under the historical cost convention.

Financial assetsThe Company classifies its financial assets in the following categories: loans and receivables and available-for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Loans and receivablesLoans and receivables are non-derivative financial assets, with fixed or determinable payments, that are not quoted in an active market. They arise when the Company provides services with no intention of trading the receivable. They are included in current assets, except for maturities greater than twelve months after the balance sheet date. These are classified as non-current assets. Loans and receivables are included in debtors in the balance sheet and are recognised initially at fair value and, subsequently, carried at amortised cost using the effective interest method less provision for impairment. A provision for impairment of receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties

of the debtor delinquency in payments are considered to be indicators of a receivable being impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in administrative expenses. When a receivable is uncollectible, it is written-off against the allowance account. Subsequent recoveries of amounts, previously written-off, are credited against administrative expenses.

Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivatives that are either classified in this category or not classified in any other category. They are included in non-current assets unless management intends to dispose of the investment within twelve months of the end of the balance sheet date.

All financial assets are initially recorded at fair value, including transaction costs. All purchases and sales are recognised on the settlement date. Available-for-sale financial assets are subsequently carried at fair value. Gains and losses arising from changes in the fair value of available-for-sale financial assets are recorded in equity. When available-for-sale financial assets are sold or impaired, the accumulated fair value adjustments are included in the profit and loss as gains and losses from investment securities. Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risk and rewards of ownership.

Financial assets are assessed for impairment at each balance sheet date. In the case of equity securities, classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. For such assets, any impairment charge is the amount currently carried in equity for the difference between the original cost, net of any previous impairment, and the fair value.

Investments in subsidiaries are stated in the Balance Sheet at cost unless they have been impaired, in which case they are carried at net realisable value or value in use as appropriate. In situations where the event that caused the original impairment loss has reversed in a way not foreseen in the original impairment assessment, the impairment loss is reversed.

Accounting Policies for the Company - Irish GAAP

109


Accounting Policies for the Company - Irish GAAP

Deferred taxation

Deferred tax is provided on all material timing differences that have originated, but not reversed, at the balance sheet date where transactions or events, that result in an obligation to pay more tax in the future or a right to pay less tax in the future, have occurred at the balance sheet date.

Timing differences are differences between profits/(losses) computed for tax purposes and profits/(losses) as stated in the financial statements, dealt with in different years for tax purposes.

Foreign currencies

Transactions denominated in foreign currencies are translated into Sterling at the rate of exchange ruling at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. All translation differences are taken to the profit and loss.

Dividends

Dividends on ordinary shares are recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the Company’s Shareholders. Dividends declared after the end of the reporting period are disclosed in note 17 in the Group Financial Statements.


The Company operates a number of equity-settled, share based compensation plans for employees of some of its subsidiaries. The fair value of the employee services, received in exchange for the equity instruments granted in each of the investments held by the Company, is recognised as an addition to the investment with a corresponding increase in equity. The fair value of share options is determined using the Black-Scholes model while the fair value of shares awarded is estimated as the market price of the shares at the grant date. The proceeds received by the Company when share options are exercised are credited to share capital at nominal value and to share premium.

In line with the transitional arrangements set out in FRS 20, “Share Based Payment”, the recognition and measurement principles of this standard have been applied only in respect of share entitlements granted after 7 November 2002 and not vested by 1 January 2005.

The Company does not operate any cash-settled share based payment schemes or share based payment transactions with cash alternatives as defined in FRS 20.

Borrowings All borrowings are initially recognised at fair value, net of transaction costs incurred. After initial recognition, borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any transaction costs and any discount or premium on settlement. Gains and losses are recognised in the profit and loss when the liabilities are derecognised or impaired, as well as through the amortisation process.

Borrowings are classified as current unless there is an enforceable entitlement to repay balances more than twelve months after the balance sheet date, in which case they are classified as non-current.


110

1. Investments in subsidiaries

£’000

Cost

At 1 January 2014 7,798

Additions 161,666

Disposals (4,638)

Capital contribution in respect of share based payment compensation 287

At 31 December 2014 165,113

Impairment provision

At 1 January 2014 (5,448)

Release for the year 3,824

At 31 December 2014 (1,624)

Net book amount

At 31 December 2013 2,350

At 31 December 2014 163,489

Principal subsidiaries are listed in note 38 of the Consolidated Financial Statements.

The investment in subsidiaries’ additions relates to an intercompany restructuring during 2014.

2. Trade and other receivables

2014 2013

£’000 £’000

Amounts receivable within one year

Amounts due from subsidiaries 465 3,481

Other debtors 1,730 1,547

Prepayments 34 137

2,229 5,165

Amounts receivable after one year

Other receivables 2,213 212,967

4,442 218,132

The carrying value, less impairment provision of debtors and other receivables, approximates fair value.

Notes to the Company Balance Sheet - Irish GAAP

111



3. Creditors (amounts falling due within one year)

2014 2013

£’000 £’000

Trade and other creditors 131 106

Accruals 599 714

Amounts due to subsidiaries 11,607 55,290

12,337 56,110

Creditors for taxation and social welfare included above 35 25

The carrying amount of creditors approximates fair value.

4. Creditors (amounts falling due after one year)

2014 2013£’000 £’000

Borrowings 6,639 6,486

6,639 6,486

On 29 November 2012, the Company entered into a facility agreement with Barclays Bank Ireland plc for an amount of £25.0 million, of which £7.0 million is drawn. The amount of £7.0 million is to be repaid in November 2016.

5. Share capital

2014 2014 2014 2013 2013 2013Authorised No. of £’000 €’000 No. of £’000 €’000

shares Shares

Ordinary shares of 12c each 140,187,210 13,095 16,822 140,187,210 13,095 16,822

“A” ordinary shares of €1.27 each 8,200 7 10 8,200 7 10

13,102 16,832 13,102 16,832

Allotted and fully paid up No. of shares £’000

At 1 January 2013 103,898,165 9,949

Share options exercised during year 329,500 33

At 31 December 2013 104,227,665 9,982

Share options exercised during year 585,000 57

At 31 December 2014 104,812,665 10,039


112

6. Retained earnings and other reserves

Share Capital Other Capital Retained Totalpremium conversion reserves redemption earnings

reserve fund reserve£’000 £’000 £’000 £’000 £’000 £’000

At 31 December 2012 81,141 292 2,639 1,913 72,212 158,197

Loss for the year - - - - (5,723) (5,723)

Unrealised gain for the year - - - - 27 27

Dividends - - - - (4,553) (4,553)

Share buy-back - - - - 3 3

Transfer on exercise, vesting or expiry of share based payments - - (2,529) - 2,529 -

Other (7) - - - - (7)

Exercise of equity share options 265 - - - - 265

Value of employee services

- Share options - - 343 - - 343

At 31 December 2013 81,399 292 453 1,913 64,495 148,552

Profit for the year - - - - 1,491 1,491

Dividends - - - - (4,068) (4,068)

Transfer on exercise, vesting or expiry of share based payments - - (151) - 151 -

Other (14) - - - - (14)

Exercise of equity share options 487 - - - - 487

Value of employee services

- Share options - - 287 - - 287

At 31 December 2014 81,872 292 589 1,913 62,069 146,735

The net movement in retained earnings was a decrease of £2,426,000 in the year ended 31 December 2014 (2013: decrease of £7,717,000).


113


7. Reconciliation of movements in Shareholders’ funds

2014 2013

£’000 £’000

Profit/(loss) for the year 1,491 (5,723)

Unrealised gain for the year - 27

Dividends (4,068) (4,553)

Other (14) (7)

Share buy-back - 3

Exercise of equity share options 544 298

Value of employee services - share options 287 343

Net reduction to Shareholders’ funds in the year (1,760) (9,612)Shareholders’ funds at 1 January 158,534 168,146

Shareholders’ funds at 31 December 156,774 158,534

During the year, a gain of £nil was made on the sale of some subsidiaries to other group companies (2013: £27,000). As the consideration on the gain on disposal is not qualifying consideration, the gain is considered an unrealised profit and does not form part of the realised profits of the Company.

8. Related party transactions

Transactions with entities that are 100% owned by Group or investees of the Group qualifying as related parties are not disclosed as the Company is exempt from such disclosures under Paragraph 3(c) of FRS 8 ‘Related Party Disclosures’.

9. Statement of cash flows The Company has taken advantage of the exemption from preparing a statement of cash flows under the terms of

Financial Reporting Standard number 1 (as 1996 revised), on the grounds that a Group statement of cash flows is included in the Group financial statements which are publicly available and include the results of the Company.

10. Guarantees The Company, along with some of its subsidiaries, has guaranteed Group borrowings of £7,000,000 (2013: £7,000,000).

There are certain share pledges for some subsidiary companies under the bank facility agreement. Pursuant to the provisions of Section 17, Companies (Amendment) Act, 1986, the Company has guaranteed the

liabilities of its wholly-owned subsidiary undertakings in the Republic of Ireland for the financial year ended 31 December 2014 and, as a result, such subsidiary undertakings have been exempted from the filing provisions of Section 7, Companies (Amendment) Act, 1986 and Regulation 20 of the European Communities (Accounts Regulations) 1993, respectively.

11. Auditors’ remuneration

2014 2013

£’000 £’000

Statutory audit of parent entity accounts 8 8

12. Approval of financial statements

The Directors approved the financial statements on 25 March 2015.



114

Notes

115


Notes


116

Notes

IFG Group plc

The Oval, Shelbourne Road, Ballsbridge, Dublin 4

Tel: +353 (0)1 632 4800 Fax: +353 (0)1 632 4801

Email: [email protected]

Annual Report and Accounts 2013AN

NU

AL R

EPORT A

ND

ACCO

UN

TS 2014

Annual Report and Accounts 2014 - London Stock Exchange · Annual Report and Accounts 2013 ANNUAL REPORT AND ACCOUNTS 2014 Annual Report and Accounts 2014. Contents ... owners of

Documents