BASIS OF PREPARATION OF RESULTS

The accompanying summarised financial results for the year ended 30 June 2012 reflect:

The annual financial statements for the year ended 30 June 2012, to which this summarised results announcement relates, were prepared in accordance with:

Peter Cooper CA(SA) supervised the preparation of the annual financial statements, which were audited by PricewaterhouseCoopers Inc. A copy of their unqualified audit opinion is available for inspection at RMI’s registered office.

The accounting policies applied in the preparation of the annual financial statements for the year ended 30 June 2012 are consistent with those applied in the previous financial reporting period ended 30 June 2011, with the exception of the change in accounting policy applied by OUTsurance in respect of the provision for non-claims bonuses. The previous accounting policy used the historic and expected claims frequencies in deriving the best estimate for the non-claim bonus provision. Due to the fact that OUTsurance has now built up a sufficient track record of client cancellation and behavioural data, an analysis was performed to determine the impact of client cancellations on the measurement of the non-claims bonus provision. However, it was also considered appropriate to incorporate a risk margin into the provision estimate to allow for the inherent uncertainty of a provision of this nature. As a result of incorporating the client cancellation experience and the addition of a risk margin, it was considered appropriate to treat this as a change of the accounting policy for non-claims bonuses.

The effective date for the transfer of RMI’s investments from RMBH was 1 March 2011. Therefore the information provided for the period ended 30 June 2011 effectively includes income from the underlying investments for the four months ended 30 June 2011, which represented the first financial reporting period of RMI.

RMI’s effective interest in the group entities is different from the actual holdings as a result of the following consolidation adjustments:

At 30 June 2012 the effective interest held by RMI can be compared to the actual interest in the statutory issued share capital of the companies as follows:

  30 June 2012 30 June 2011
  Effective   Actual   Effective   Actual  
  Audited   Audited   Audited   Audited  
Discovery   26.7%   25.0%   26.7%   25.0%  
MMI   25.1%   24.9%   26.3%   26.0%  
OUTsurance   85.6%   83.4%   92.8%   90.1%  
RMBSI   80.5%   76.4%   80.5%   76.4%