Preliminary Results

IFG Group plc

Preliminary statement of results for the year ended 31 December 2012

Highlights

IFG Group plc today (27 March 2013) released its preliminary statement of results for the year to 31 December 2012. Key highlights include:

Financial Highlights

·; Revenue of £76.2 million (2011 re-presented: £77.3 million)

·; Operating profit of £6.2 million (2011 re-presented: £8.0 million)

·; Adjusted EPS in pence per share of 6.70 (2011 re-presented: 8.32)

·; EPS in pence per share of 17.22 (2011: 8.38)

·; Sale of International Segment for £70.0 million; debt facility refinanced competitively

·; £30.0 million capital returned to shareholders; dividend increased 10% to 4.84 cent per share (2011: 4.40)

·; Strong Balance Sheet with net cash of £20.6 million at 31 December 2012 (2011: net debt £9.1 million)

·; Total assets under administration and advice of circa £18 billion including circa £14 billion in James Hay Partnership, circa £3billion in Saunderson House and circa €1.2 billion in Ireland

Business Highlights

·; James Hay Partnership now in net book growth

·; New SIPPs in 2012 of 2,469; total SIPPs under administration of 37,342 at year end

·; Excellent momentum in new business; Q4 2012 new SIPPs up 91% on previous year and Q1 2013 showing further increase

·; Saunderson House investing in its business and people; 100 new client wins in 2012

·; Irish Corporate Pensions delivers strong performance with 51 new corporate client wins in 2012

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

"In 2012 we disposed of our International business for £70 million achieving several objectives, including further concentration on our core business, a significant strengthening of our balance sheet and a substantial return of capital to shareholders. Our strengthened balance sheet will enable us to offer attractive shareholder returns, allowing us to invest in the business and take advantage of growth opportunities as they arise. Business momentum has continued into 2013. Against challenging market conditions, the Group continues to deliver solid financial performance."

-ends-

For reference:

Mark Bourke Niamh Hore

Group CEO Investor Relations & Corporate Development

IFG Group plc IFG Group plc

Tel: 01 275 2800 Tel: 01 275 2866

Financial Highlights

Notes:

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

Reconciliation of adjusted earnings per ordinary share:

2. Dividend per ordinary share is calculated as the sum of the interim dividend per share of 1.65 cent and the 3.19 cent per share to be proposed at the forthcoming Annual General Meeting. The above dividend per ordinary share of 4.84 cent and the comparative have been translated into the current pence equivalent at the 2012 closing EUR:GBP exchange rate of 0.8161 for disclosure purposes. The dividend will be declared in Euro with the option for payment in Euro or GBP net of Irish withholding tax.

GROUP PERFORMANCE

Overview

The Group continues to make good progress towards our strategic goals. 2012 was a year where the shape and strength of the Group advanced significantly.

James Hay Partnership reached its three year target of net growth in its SIPP book. We achieved our monthly SIPP sales target during the course of 2012 and have maintained this momentum. Saunderson House continues to grow its client book, building on the momentum created under new management.

The Irish Financial services business has had a strong year with new business and assets under management showing growth. We have stabilised and continued to reposition our other Irish businesses.

The sale of the International Segment enabled us to deleverage and return £30.0 million of capital to shareholders. The disposal, together with the cash generative features of the businesses ensures that the Group is financially strong with net cash of £20.6 million.

Revenue for the year was £76.2 million, which compares to £77.3 million in the prior year after adjusting for the disposal of the International Segment.

Operating profit for the year was £6.2 million (2011 re-presented: £8.0 million). Profit attributable to the owners of the parent company including the profit from Discontinued Operations (International Segment) was £21.6 million in 2012, which is significantly up on the previous year figure of £10.5 million.

On an adjusted basis, which we believe more accurately reflects the performance of the Group, adjusted earnings of £8.4 million (2011: £10.4 million) and adjusted operating profit of £11.8 million was recorded versus £13.9 million in the previous year as shown below;

The decrease in adjusted operating profit reflects our investment in further developing the technology platforms, sales organisation and administration as well as compliance capability of the Group.

The Group delivered basic earnings per share of 17.22 pence in 2012 (including the gain on the disposal of the International Segment) compared to 8.38 pence in 2011. On an adjusted basis, the earnings per share was 6.70 pence (2011 re-presented: 8.32 pence).

UNITED KINGDOM

SIPP Market

The UK SIPP market has expanded rapidly over the past eight years from a very small base to over 1 million SIPPs. It is converging with the more widely defined platform market, which includes non pension assets.

The platform market is expected to grow from £200 billion to £500 billion in assets under administration over the next three years. Industry estimates of new business SIPP inflows forecast growth from £10 billion a year to £13 billion a year over the same period.

Platform and SIPP providers are converging in this market. James Hay is the second largest independent SIPP provider and ranked fifth as a platform provider with £14 billion of assets under administration.

The Retail Distribution Review (RDR) has also impacted the sector as many platform models require change in order to be compliant. For its part, James Hay Partnership has provided RDR-ready products well in advance of the effective date of RDR and now offers flexible advisor charging options. We recently launched our MiSIPP which provides one of the most competitive unbundled pricing propositions for assets held on our fund platform.

Independent Financial Advisor (IFA) Market

For IFAs in the UK, the introduction of the RDR on 31 December 2012 has been the most significant industry development in recent years. It has affected business models and is causing many advisors to exit the market. According to research by Matrix Solutions, an estimated 4,600 advisors left the industry from October 2012 to February 2013.

The RDR has had minimal impact on Saunderson House. By placing clients at the heart of everything it does, the business has consistently been ahead of the regulatory curve with transparency of pricing, unbiased advice, superior investment proposition and performance.

RDR has impacted our small traditional IFA business and we have undertaken a restructuring of the business to ensure it is fit for purposes in the post RDR world.

Pension administration

James Hay Partnership delivered significant progress with £10.3 million adjusted operating profit.

Revenue in the business was up 3% on the previous year. Operating profit has been impacted, primarily by continued investment in the platform and business, while re-building the distribution network to achieve net growth.

The immediate tasks at the time of the acquisition of James Hay (March 2010) were achieved within targeted timeframes and cost. These included IT decoupling, restructuring the cost and a re-engineering the business model to facilitate an IFA/client focussed team-based structure.

At the time of the acquisition of James Hay (March 2010) we set ourselves a number of targets. These included:

1. IT decoupling from Santander- completed within six month timeframe with minimal disruption.

2. Cost base restructuring- completed within nine months, three months ahead of target involving the reduction of headcount from 520 to 348.

3. Re-engineered business model- introduced team-based structure with dedicated client point of contact which has resulted in improved customer satisfaction, better service delivery and operating efficiency.

4. Sales, marketing and distribution- a coordinated PR/marketing campaign to revive the brand and support the launch of new products together with improved sales management and a widening of our distribution network. The firm targeted to reach the cross-over point (i.e. when new business exceeded the natural attrition on an annualised basis) which required a new business run-rate of 3,000 SIPPs per annum or 250 SIPPs per month by Q3 of 2012. This has been achieved since October 2012.

This trend continued for the remainder of the year with each successive month exceeding the previous month and Q4 of 2012 showing a 91% increase on the previous year. The improved sales momentum has continued into 2013 with a further increase in new business. With monthly sales in excess of 300 SIPPs, the first quarter sales are expected to show year on year growth of over 100%.

5. Attrition - our business plan included an attrition rate of 10%, which is predominantly driven by the older age profile of the James Hay book. Since acquisition, attrition on the James Hay back book has been at or below this planned level of 10%.

Investment in business

In James Hay Partnership, we are investing to build a business of scale.

IT

We continue to invest significantly in our IT resources, improving the capability of our platform and ensuring our clients and IFA partners have access to the latest back office and front-end technology. Notable extensions to our online functionality in 2012 included online applications, quotations, advisor registration and charges along with online performance reporting and client notifications. In parallel, we have also made our client portfolio data electronically available on the two leading IFA back office CRM systems, namely 'Avelo Advisor Office' and 'Intelligent Office' from 'Intelliflo'.

New product development

Since acquisition we have re-launched the product range and implemented a more coordinated marketing and PR programme. Modular iSIPP (MiSIPP) serves the full breadth of the market by catering for each of the full, mid and simple SIPP product needs. The product is based on a core cost effective SIPP where additional modules can be added on and paid for, as required, thereby ensuring the full flexibility of a SIPP and only paying for the functionality that is required.

Within a regulatory context, the MiSIPP, like all James Hay Partnership's products, is RDR compliant. It allows clients, with their IFA, to tailor their product to best suit their needs at a competitive price with a high level of service and superior online functionality.

People

James Hay Partnership is a recognised pensions industry expert. We continue to invest and develop this expertise. We have also strengthened management within the business with internal promotions. In March 2013 we appointed Alastair Conway as CEO.

Regulatory & Capital Adequacy

We have invested in our compliance, risk and internal audit functions. From a capital perspective, the business is well-positioned in light of the FSA's consultancy paper on capital requirements for SIPP providers. Based on proposed rules, if implemented in full and with immediate effect, the IFG pension administration companies on a combined basis would have substantial capital in excess of the new requirements. The financial strength and risk management of James Hay Partnership is a key competitive differentiator, which provides clients/IFAs with assurance in an uncertain marketplace.

Our performance in Q4 of 2012 is indicative of the potential we believe exists in the James Hay Partnership. Our strategic work ensures that we are well positioned in a growing but evolving market.

While consolidation has yet to materialise in the UK SIPP market, we are positioned for such corporate activity where it makes financial, regulatory and strategic sense. Our principal aim is to grow James Hay Partnership organically through partnering with IFAs and other service providers.

Awards

James Hay won the 'Best SIPP Provider' in the Investment Life and Pensions Moneyfacts Awards 2012.

Independent financial advisory

Our independent financial advisory business consists principally of Saunderson House, a fee based whole of market advisor and also the IFA business of IFG Financial Services. In the year leading to RDR, revenue across the entire independent financial advisory business in the Group was down 5% although a focus on cost and efficiency delivered a 5% increase in profitability.

In Saunderson House the departure of two Directors has afforded the opportunity to strengthen management and invest in the business while maintaining profitability. Saunderson House offers 'full service' financial planning and investment advice. Its investment performance has historically surpassed most competition.

The business continues to perform and win new clients. In 2012, 100 new clients were recruited bringing total clients to 1,300. Client attrition was negligible driven by excellent client service and relationship management. Generating revenue on a pure time-charge basis, the business met its target billable hours recovery rate of in excess of 80%.

The performance of the firm is due to its team-based business model, outstanding advisors and staff as well as an adherence to its core values of being client-driven, combined with an investment proposition based on macroeconomic research and active asset allocation with an emphasis on transparency of process.

Investment in the business

People

The provision of financial advice in a people-driven business depends on the successful relationship between a client and the firm. The team-based business model in Saunderson House has proven its success.

We are investing in our people. The training of an advisor involves achieving the highest level of formal industry qualifications, management coaching and developing the appropriate skills to win clients. Increasing the number of client facing advisors is the key to growing the business.

IT & Operations: Utilisation of technology

Through the implementation of our IT and Operations strategy we administer client portfolios more efficiently and Saunderson House improves its client offering and experience. The greater utilisation of technology is the second leg of our strategy to scale our business. .

Marketing the proposition- why Saunderson House wins clients

Saunderson House's offering is based on excellent personal service, competitive fees and a best in class investment process, bringing an institutional investment approach to the private investor. We combine a value and fundamental analysis driven approach to client asset allocation with a rigorous, fully independent fund selection process. This has given us a track record, which puts us in the top decile when compared with our competitors.

Source: Financial Express

ARC PCI: A set of private client indices (PCI) designed by Asset Risk Consultants (ARC). These returns are net of all fees. SHL Model returns are net of fund management charges and gross of levied advisory fees.

Regulatory

From a regulatory perspective Saunderson House led the market and has always been RDR compliant.

We believe we will deliver growth in profitability through a combination of:

·; Increasing the number of client winning resources; and

·; Generating margin improvement through efficiency gains and the use of technology.

Separately, our other IFA businesses delivered a credible breakeven performance in 2012. The business, having reviewed its operating model, is now RDR compliant and ready for reorganisation and growth under the management of Tim Sargisson.

Awards

Saunderson House won the 'Fund Manager of the Year' award for 2012 advisory category.

IRELAND

We are well positioned to take advantage of market developments in the pensions area and the change from defined benefit to defined contribution. The investment proposition using global research partners is unique in Ireland. This investment approach won the award for Innovation at the 2012 Irish Pension's Industry awards.

In 2012 IFG Corporate Pensions achieved 51 new client wins (2011: 36) and a 30% increase in its funds under management to €725m.

There are a number of non-core activities which are subject to strategic review and we have taken appropriate provisions against these.

INTERNATIONAL (DISCONTINUED)

The executive management team and Board develop the strategy of the Group with the purpose of delivering long term sustainable profits and returns. Within these parameters and examining the risk-adjusted return on capital, the decision to sell the International Segment was reached. This decision, effectively 'Build versus Divest', was based on the substantial investment that would have been required to build the necessary scale. Therefore the approach from AnaCap Financial Partners II LP was timely and well-priced at £70.0 million consideration.

GROUP FINANCING

Group net cash/(debt) is summarised and compared to 2011 year end below.

Following the sale of the International Segment, the Group repaid its debt and restructured its finance so that at 31 December 2012, the net cash position was £20.6 million. This puts the Group in a very strong and flexible position.

The Group used part of the proceeds from the sale of the International Segment to repay its debt facilities. The opportunity was also taken to refinance the Group's facility with Barclays Bank for a £25.0 million facility of which £7.0 million has been drawn down at the year end. Features of the facility include a 5 year term, a margin of 2% and improved operational covenants. This provides the Group with greater flexibility and sufficient access to funding.

RETURNS TO SHAREHOLDERS

On 5 November 2012, the Group announced its proposal to return circa £30.0 million of capital to shareholders by way of a tender offer. The tender offer price of €1.65 represented a premium of 17.9 per cent to the closing price of €1.40 per ordinary share on 1 November 2012, being the latest practicable date. It represented a premium of 13.9 per cent to the volume weighted average price per ordinary share over the three month period to 1 November 2012. Following shareholder approval and a successful oversubscribed tender process, 22,603,636 shares or 17.87% of the ordinary shares in issue were repurchased and cancelled for a total consideration before expenses, of approximately €37.3 million.

Having returned £30.0 million to shareholders in 2012, the Board proposes to increase the dividend per share by 10%. The Board is recommending a final dividend of 3.19 cent per share (current GBP equivalent of 2.60 pence per share). This final dividend, when added to the interim dividend of 1.65 cent paid on 11 December 2012 (current GBP equivalent of 1.35 pence per share), makes a total of 4.84 cent per share (current GBP equivalent of 3.95 pence per share).

GOVERNANCE AND MANAGEMENT

The process of Board renewal continued in 2012 with Robin Phipps and David Paige appointed as Non-Executive Directors, both bringing significant UK financial services experience. Also, during 2012 our Chairman Patrick Joseph Moran signalled his intent to step down from the Board. The role of Chairman was assumed by John Gallagher on 5 February this year and the Board also welcomed Cara Ryan as a Non-Executive Director in February 2013.

In the UK the management team has been reorganised and expanded with Alastair Conway appointed as CEO of James Hay. He joins us from CoFunds and brings a wealth of experience, particularly in the platform arena. Tim Sargisson has moved to the new role of CEO of IFG Financial Services where his focus will be to grow the businesses in a post-RDR world. Tony Overy, CEO of Saunderson House, continues to lead that business forward.

OUTLOOK

The fundamentals of our core businesses are sound and we now have a strong platform for growth within the SIPP market with James Hay Partnership and the wealth advisory sector with Saunderson House.

We have a strong balance sheet allowing us to invest in the business. We believe we will deliver significant growth in the medium term.

Consolidated Income Statement

Year Ended 31 December 2012

Consolidated Statement of Comprehensive Income

Year Ended 31 December 2012

Consolidated Balance Sheet

As at 31 December 2012

Consolidated Cash Flow Statement

Year Ended 31 December 2012

Consolidated Statement of Changes in Equity

Notes to the financial information

1. General information

IFG Group plc and its subsidiaries (together 'the Group') are engaged in the provision of financial services 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 IFG House, Booterstown Hall, Booterstown, County Dublin, Ireland.

2. Basis of preparation

The consolidated financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), adopted by the European Union ('EU') and in accordance with Irish law.

The financial information in this report has been prepared in accordance with the Listing Rules of the Irish Stock Exchange and in accordance with Group accounting policies. Full details of the accounting policies adopted by the Group are contained in the consolidated financial statements included in the Company's annual report for the year ended 31 December 2011, which is available on the Group's website; www.ifggroup.com.

The accounting policies and methods of computation and presentation adopted in the preparation of the Group financial information are consistent with those described and applied in the annual report for the year ended 31 December 2011. No new standards, amendments or interpretations, which became effective in 2012, have had a material effect on the Group financial statements.

On 5 July 2012, IFG Group plc sold the International Segment to AnaCap Financial Partners II LP. This is consistent with the Group's long-term strategic priority to drive growth and improve returns by focusing on its remaining pension administration and financial services business. For the purpose of the financial information and in accordance with the requirements of IFRS 5, the results and cashflows of the International Segment have been classified as 'Discontinued operations' in the Consolidated Income Statement (for which the comparatives have been re-presented). See note 7 for further details.

During the year final accounting for the acquisition of A.R.B. Underwriting Limited and its subsidiary A.R. Brassington & Co Limited (ARB) was completed, as a result, the 2011 comparative information has been revised to include the effects of measurement period adjustments as if the accounting for the business combination had been completed on the acquisition date. See note 12 for further details.

The financial information presented in this preliminary release does not constitute 'full group accounts' under Regulation 40(1) of the European Communities (Companies: Group Accounts) Regulations, 1992 of Ireland insofar as such group accounts would have to comply with all of the disclosure and other requirements of those regulations. The preliminary release was approved by the Board of Directors. The annual report and accounts will be approved by the Board of Directors and reported on by the auditors in due course.

Accordingly, the financial information is unaudited. Full Group accounts for the year ended 31 December 2011 received an unqualified audit report and has been filed with the Irish Registrar of Companies.

Going concern

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Therefore the Group continues to adopt the going concern basis in preparing its financial statements. In arriving at this conclusion the Board took account of:

·; The Group's business activities, together with the factors likely to affect future development, performance and position which are outlined in the 'Group Performance' section;

·; The financial position of the Group, its cashflows, liquidity position and borrowing facilities which are outlined in the 'Group Financing' section; and

·; The Group's exposures and management of financial risks which are outlined in the 'Principal Risks and Uncertainties' section.

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 listed below:

·; Cashflows and discount rates used in goodwill impairment reviews performed by management;

·; Estimate of provision for aged receivables;

·; Working capital adjustment regarding the International Segment sale;

·; Estimate of useful lives of non goodwill intangible assets; and

·; Provisions based on management's estimates in respect of claims against subsidiaries of the Group.

Management also exercise judgement in determining the revenue and expenses disclosed as exceptional items.

3. Principal Risks and Uncertainties

The markets, in which the Group operates, may be affected by numerous factors, many of which are beyond the Group's control and the exact effect 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.

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:

4. Segmental information

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

During the year, the CEO considered the business from a largely geographic perspective, based on three reporting Segments: UK, International and Ireland. The International and Ireland Segments were managed by Executive Directors who reported to the CEO and the Board of Directors. The Group CEO has responsibility for the UK Segment. 

Following the sale of the International Segment on 5 July 2012, the performance for the period to the date of the disposal, along with the gain made on the disposal, have been included as a single line 'Discontinued operations' on the face of the Consolidated Income Statement and is outlined in note 7.

The 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 segment information provided to the CEO for the reportable segments for the year ended 31 December 2012 is as follows:

The 2011 comparatives are as follows:

Breakdown of revenue by country of operation is as follows:

The home country of IFG Group plc is Ireland. The Group's revenues are derived from the following countries:

Revenue in the table above has been allocated based on the country where the customer is located.

Analysis of revenue by category:

During the year there were no revenues derived from a single customer that represented 10% or more of total revenues.

Analysis of total non-current assets at the year-end by geographical region:

The total non-current assets (excluding deferred tax assets, available for sale assets and other financial instruments) at the year end, split by geographical region, are as follows:

5. Exceptional items

Exceptional items charged against operating profit

Provision against receivable from joint venture

During the year an impairment review was carried out on the recoverability of the balance due from IFG McGivernFlynn Teoranta (trading as Insure4less). On review of the recoverable amount, an impairment provision of £800,000 was recorded.

Redundancy and related costs

In the current year redundancy and related costs relate to a charge of £301,000 (2011: £774,000) in the UK segment.

The other prior year exceptional items related to:

·; An exceptional gain of £596,000 in respect of foreign currency gain on unhedged Euro borrowings;

·; An impairment charge of £318,000 taken on the assets of Foster & Cranfield Limited, a subsidiary that formed part of the non-core business, which was sold for a nominal amount in 2011. The impairment charge arose as the fair value less costs to sell of the net assets of the subsidiary was lower than the carrying amount of those assets; and

·; Once-off costs of £922,000 incurred in association with reviews performed following the completion of an ARROW visit to some of the subsidiaries in the UK segment.

Exceptional finance costs

Early write off of unamortised transaction costs

The sale of the International Segment offered the Group the opportunity to repay and refinance our net debt during the year. As a result of the surplus cash received in November 2012, the Group refinanced its borrowing facility. The unamortised costs of £867,000 which related to the previous facility were written off during the year. The tax associated with these exceptional finance costs was £nil.

6. Income tax expense

7. Discontinued operations

On 29 March 2012, the Board announced that it had signed an agreement for the sale of its entire International Segment ('IFG International') to AnaCap Financial Partners II LP (the 'AnaCap Fund') for a cash consideration of £70.0 million to be adjusted by a working capital adjustment on finalisation of completion accounts. The sale was approved by the Board of Directors in early March 2012 and the assets and liabilities relating to the Segment were classified as held for sale from 1 March 2012. The sale was approved by shareholders at an EGM on 18 June 2012 and completed on 5 July 2012 as part of a plan to focus on the core businesses within the UK and Ireland segments.

For the purpose of the financial statements, management has classified the International Segment as discontinued as it;

·; Represented a separate major line of business and geographical area of operations; and

·; Was 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 International Segment are to be presented in the financial statements as discontinued operations. The Consolidated Income Statement distinguishes the discontinued operations from continuing operations.

 Financial information relating to this discontinued operation is set out below.

Details on the sale of operation

The gain on sale of the International Segment has been arrived at as following:

Effect of disposal on the financial position of the Group

8. Earnings per ordinary share

The number of shares used in the calculation of basic earnings per share and diluted earnings per share have been calculated in accordance with International Accounting Standard No.33.

Diluted earnings per share are based on the weighted average number of ordinary shares used in the basic earnings per share calculation, with an adjustment to reflect:

·; The bonus element of the average number of options and warrants outstanding during the year. The bonus element arises when the exercise price is lower than the average market price during the year; and

·; The number of shares earned under the Long Term Incentive Plan (LTIP) which have not been issued.

At 31 December 2012 there were no shares earned by participantsbut not yet issuedunder the LTIP.

9. Commitments and contingencies

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 and guarantees totalling £8,600,000 (2011: £42,814,000). There are certain share pledges for some subsidiary companies under the Bank facility agreement.

The Company has provided rent guarantees totalling £2,547,000 over the period to 2017 (2011: £3,529,000).

The sale agreement for the sale of the International Segment contains certain limitations on the ability of the purchaser 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 agreement (other than certain fundamental warranties) will not exceed the net consideration.

The Company will not be liable for any warranty or indemnity claim unless it exceeds £500,000. The Company will also have no liability for any warranty claim unless and until warranty claims exceed £1,350,000 in aggregate (in which case the Company will be liable for the full amount and not just the excess over £1,350,000). In addition, claims in respect of non-tax warranties claims or indemnities must be brought within twenty four months of the date of completion. Tax warranty and/or tax indemnity claims must be brought within seven years of the date on which completion occurs.

10. Cash generated from operations