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  Notes to the Annual Financial Statements   

for the year ended 31 December 2006

32. Impact of Application of IFRIC 8 1. Accounting Policies 2.Segmental Analysis 3.Insurance Risk Management 4. Earnings Per Share 5. Property and Equipment 6. Investments 7. Loans and Receivables 8. Employee Benefits Costs 9. Risks Relating to Financial Assets 10. Insurance Contract Provisions 11. Insurance Liabilities and Reinsurance Assets 12. Intangible Insurance Assets 13. Cash and Cash Equivalents 14. Share Capital 15. Share Premium 16. Deferred Taxation 17. Trade and Other Payables 18. Investment Income 19. Net Fair Value (Losses)/Gains on Assets Held at Fair Value through Income 20. Net Realised Gains 21. Claims Handling Expenses Included in Net Claims 22. Profit Before Tax 23. Income Tax Expense 24. Cash Generated from Operations 25. Net Increase/(Decrease) in Working Capital 26. Taxation Paid 27. Solvency Margin 28. Related Party Transactions 29. Directors’ Emoluments 30. Capital Commitments 31. Operating Lease Commitments 33. Post Balance Sheet Events

32

Impact of Application of IFRIC 8

The Group has not yet adopted IFRIC 8, Scope of IFRS 2. This interpretation is applicable to the Group for the year ending 31 December 2007 and has the effect of making the BEE transaction discussed in the Chairman's and Managing Director's Report subject to IFRS 2. The effect of this is to push down the accounting for the transaction in the Company’s holding company to the Group. This will result in a BEE cost of R94,500,000 being accounted for in the financial statements for the year ending 31 December 2007. The transaction will result in a charge against retained income and a credit to equity. As a result, reported income and net asset value will be unaffected. The Company’s holding company has also granted an option to the BEE partners to acquire a further 14.9% on favourable terms. This option is exercisable by the BEE partner between 27 April 2008 and 27 October 2008. The financial effect of this transaction has not been calculated.