Advice on this Serious fault

Hi,

Can anyone please clear up why this was deemed as a serious fault please.

Approached a roundabout on a single carriageway road that split at the end with both straight and right turn arrows.

1st exit joins a dual carriageway.
2nd exit continues on the single carriageway road
3rd exit joins the dual carriageway also.

The instructor asks to take the 3rd exit at the roundabout.

We approach the roundabout by staying on the right hand side of the single carriageway (marked with a right arrow)
We wait to join when safe indicating right
We pass the first exit
We pass the second exit (after passing we begin to indicate left)
We are still on the inside of the roundabout and begin to join the dual carriageways outside lane.
We join the dual carriageway (outside lane, indicating left)
We continue on the outside lane a little and join the inside lane (normal driving)
Indicator off.

The instructor said that this could have been confusing to those on the outside of the roundabout joining the dual carriageway also?

Can anyone please advise what should have occurred?

Thanks
D4