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2015

RCS GROUP CONSOLIDATED FINANCIAL STATEMENTS

49

30.

Risk management (continued)

Cash flow sensitivity analysis for variable rate instruments

A change of 100basis points in interest rates for the duration of the financial periodwould have increased/(decreased) equity and the income

statement by the amounts shown below. This analysis assumes that all other variables remain constant. The sensitivity analysis reflects the

impact of a rate change immediately following the reporting date for all assets and liabilities accounted for at the reporting date. The analysis

is performed on the same basis as for the comparative period.

Profit or (loss)

100 bp increase

R’000

31 December 2015

Variable rate financial assets

46 791

Variable rate financial liabilities

(39 264)

Cash flow sensitivity net

7 527

31 March 2015

Variable rate financial assets

39 778

Variable rate financial liabilities

(35 431)

Interest rate swaps

(1 018)

Cash flow sensitivity net

3 329

A decrease of 100 basis points in interest rates for the duration of the financial period would have the equal but opposite effect

to the amounts shown above, on the basis that all other variables remain constant.

Capital management

Capital management is performed at a group level for RCSGroup and its subsidiaries. The objective is tomaintain sufficient levels of capital to

support the ongoing sustainability and viability of the business. Capital is retained in the business for the followingmain objectives:

(a) to provide a certain amount of cover or buffer should unexpected losses take place either due tomarket or operational risks,

(b) to provide a certain amount of cover or buffer should unexpected losses take place due to credit risks,

(c) to support the level of debt in the business as a first loss position and thereby to achieve a particular credit rating on the debt in the

business,

(d) as a tool that could be increased or decreased to ensuremaintenance of an appropriate credit rating level in the future, and

(e) to facilitate the necessary asset growth objectives in the business.

It is the responsibility of the ALCO and the board to determine the appropriate level of capital taking into account the risks within the various

lines of business and the types of assets held within these business areas.

The board considers, amongst others, the following factors when determining the level of capital required to be held within a division and

against a particular class of assets:

(a) the historical losses that have taken place on the disposal of assets, bad debt write off and other operational losses,

(b) a view on factors going forward that could cause an asset or category of assets to be obsolete or have a reduction in value,

NotestotheConsolidatedFinancialStatements

(continued)

for the period ended 31 December 2015