Investing in entrepreneurs

ensures sustained economic growth

annual report 2007

 CONTENTS
2006/2007 Highlights 1
Vision, Mission and Values 2
2007/2008 Strategic Focus 3

OPERATIONAL REVIEW 4
Five Year Summary 5
Directors 6
Executive Management 8

Management Review 10
Business Investments 11
Property Management Services 22
Technical Assistance, Mentorship
and Consulting Services 25
Operational Support Services 28
Marketing 29
Human Resources 31

CORPORATE AND SHAREHOLDER

INFORMATION 33
Shareholder Information 34
Corporate Governance 35
Enterprise Risk Management 40
Environmental and Social Management 42
Business Partners Limited is a specialist investment Broad-Based Economic Empowerment 44
Value added Statement 45
company, providing customised and integrated investment,
mentorship and property management services for FINANCIAL STATEMENTS 46

small and medium enterprises in South Africa.

Corporate sustainability is very important to Business Partners and the
issue is covered throughout the Annual Report. This symbol indicates
ISO 9001:2000 certified the sections that deal with the various aspects of this important subject.
 2006/2007 HIGHLIGHTS

Operations Financial and Corporate

2007
536,1
• The investment portfolio under management increased • Net profit for the year is R160,8 million, an increase
by R268,3 million to R1 497,7 million – an increase of of 23,3 percent from R130,4 million reported in

440,5
405,2

annual report
21,8 percent (2006: R1 229,4 million) March 2006

385,4

360,5
• During the year, 664 investments to the value of R876,6 • Earnings per share increased by 22,8 percent from
million were approved – an improvement of 18,5 percent 81,0 cents per share to 99,5 cents per share
(2006: 633 investments to the value of R740,0 million).

BUSINESS PARTNERS
Of these, • Dividends per share increased by 11,1 percent to
- 296 investments to the value of R345,1 million were 20 cents per share
approved for black entrepreneurs (2006: 262 03 04 05 06 07
investments to the value of R271,7 million) • Profit per employee improved by 21,7 percent to
- 247 investments to the value of R281,3 million were R536 100 per employee. Net profit
approved for businesses owned and run by women per employee
(2006: 198 investments to the value of R178,5 million) (R’000)
- 58 investments to the value of R53,6 million were
approved on behalf of the UYF Business Partners

99,5
95,4
Franchise Fund, launched in 2003 as a R125 million

81,0

876,6

6 988
78,4
fund for investment in historically-disadvantaged

73,7
73,2

6 184
72,5

70,9
youth in the franchising sector

740,0
62,5

5 632
5 041
- 48 investments to the value of R21,8 million were

57,7

660,5
approved on behalf of the Business Partners-Khula
Start-up Fund, launched in 2006 as a R150 million

20,0

3 798
18,0
fund for investment in start-up businesses by

448,9
16,0

16,0
16,0

400,0
historically disadvantaged individuals

• Properties under management at the end of the financial

year comprised more than 682 000m2 of lettable space
and are occupied by 3 475 tenants

• More than 7 780 employment opportunities were 03 04 05 06 07 03 04 05 06 07 03 04 05 06 07

facilitated through our investment activities
Share performance Business investment Assets per
• 521 mentors are available to provide technical Dividends per ordinary share (cents)
approvals employee
assistance, mentorship and consulting services to Headline earnings per share (cents) (R’million) (R’000)
clients Earnings per share (cents)

01
 VISION, MISSION, GOALS AND VALUES

Our vision is to be a world-class, added-value Our mission is to fulfil our vision by

investor in small and medium enterprises, thereby investing capital, skill and knowledge into
facilitating wealth generation, job creation and viable entrepreneurial enterprises.
economic development in South Africa.

Our goal is to be one of the most internationally Our values are:

respected, successful and profitable investors
Business and Personal Integrity
in small and medium enterprises. Everything we do, in both the running of our business and in our personal conduct, is
guided first and foremost by honesty, integrity and respect for human dignity.

Superior Client Service

We exist for our clients, we enjoy serving them and aim to delight them with our products
and the quality of our service.

Economic Merit
All of our investments are founded on economic merit, ensuring broad access to
investment finance and added-value services for all communities and optimal
effectiveness for our clients and our shareholders. It is our aim to be frugal in all aspects
of expenditure in our business so that we ensure long-term sustainability and deliver
optimal value for our clients and shareholders.

Entrepreneurship
We seek to live the name of our organisation by becoming true partners with our
clients in the success of their businesses and by ourselves being entrepreneurial in
our approach to doing business.

Overview
Business Partners is committed to investing capital, skill and
knowledge in entrepreneurs and, in line with this, has defined
its core strategic focus for the 2007/2008 financial year as
being the extension and enrichment of its services to
entrepreneurs. The Company’s focus for 2007/2008 will
remain on:
• reaching more entrepreneurs through the Company’s
enlarged footprint
• successfully managing the specialist funds, thereby
extending the company’s focus on Black Economic
Empowerment
• ensuring that operating efficiencies remain world-class
• attracting, training and retaining staff by way of the
company’s “Employer of Choice” initiative
Business Partners will continue to ensure that it exercises
sound business practices in all areas and aspects of its
business and that it remains a stable, competitive, financially-
viable and profitable business.
The Company’s envisioned expanding footprint is continuing
with the launch of the Business Partners International Kenya
Fund, which was launched in March 2007 and the launch of
the Business Partners’ Women’s Fund in May 2007.
Organisational Structure
As of 1 April 2006, Business Partners has been structured
as follows:
iKapa Business Unit, under the leadership of Deputy
Managing Director, Nazeem Martin. iKapa comprises:
• The Coastal Western Cape Investment Unit, under the
leadership of Chief Operating Officer, Anton Roelofse
• The Inland Western Cape Investment Unit, under the
leadership of Chief Operating Officer, Dewald Gaigher
• The Eastern Cape Investment Unit, under the leadership
of Chief Operating Officer, Lionel Billings
• The Tourism Fund, under the leadership of Chief
Operating Officer, Nikita Mfenyana
e’Thekwini Business Unit, under the leadership of Executive
Director, Gerrie van Biljon. e’Thekwini comprises:
• The Greater Durban Investment Unit, under the
2007/2008 STRATEGIC FOCUS
leadership of Chief Operating Officer, Byron Jeacocks
• The Zulma Investment Unit, under the leadership of a
Chief Operating Officer to be appointed
• The Property Investment Unit, under the leadership of
Chief Operating Officer, Owen Holland
• The Business Partners Umsobomvu Franchise Fund,
under the leadership of Chief Operating Officer,
Eric Rosen
• The Business Partners-Khula Start-Up Fund, under the
leadership of Chief Operating Officer, Xolani Meva
Egoli Business Unit, under the leadership of Executive
Director, Christo Botes. Egoli comprises:
• The Gauteng South Investment Unit, under the
leadership of Chief Operating Officer, Freddie Bruintjies
• The Free State, Northern Cape and North West Province
Investment Unit, under the leadership of Chief Operating
Officer, Chris Koen
• The Gauteng North and Limpopo Investment Unit,
under the leadership of a Chief Operating Officer to be
appointed
• The Empowerment Fund, under the leadership of Chief
Operating Officer, Willie Nortier
• The Women’s Fund, under the leadership of Fund
Manager, Katja Naumann
Business Partners International Business Unit, under the
leadership of Chief Operating Officer, Mark Paper.
Business Partners Property Management Business Unit,
under the leadership of Chief Operating Officer,
Willem Bosch.
Business Partners Mentorship and Consulting Services,
under the leadership of Chief Operating Officer,
Paul Malherbe.
The Corporate Structures are:
• Management Services, under the leadership of
Chief Financial Officer, Ben Bierman
• Support Services, under the leadership of Executive
General Manager, Pierre Mey
• Systems Quality, under the leadership of Executive
General Manager, Lorraine Nakene
• Human Resources, under the Leadership of Executive
General Manager, JM Smith
• Company Secretarial and Legal Services, under the
2007
leadership of Company Secretary, Marjan Gerbrands
• Marketing Co-Ordination, under the leadership of
Manager, Petro Bothma
annual report
Employer of Choice Initiative
The “Employer of Choice” initiative includes (but is not limited
to) the following facets:
BUSINESS PARTNERS
• A Diversity Audit was conducted by specialist company
Mandate Molefi, to compare Business Partners with
other South African organisations with regard to diversity
management. Results will be used to influence policies
and actions to ensure Business Partners is an excellent
performer in managing diversity
• Career planning and development is important to
address the concerns and expectations of employees
and Talent Management will receive specific attention
• Business Partners is in the process of developing a
formal training academy for operational staff. Training
will continue to be a priority on all levels – internal
and external
• The IT systems are being upgraded to improve effective
use of technology
• The recruitment screening processes are being
improved to ensure that new employees have the
necessary skills and passion for our mission and vision
Impact
South Africa’s economy is experiencing the longest economic
upswing in the country’s history, and the trend is expected
to continue due to increased government and parastatal
spend on infrastructure, and increasing investment by South
African entrepreneurs and foreign investors.
These major “drivers” should enable small and medium
enterprises to grow and become the “middle class” of the
business community, thus playing the vital role of wealth
and employment creation in South Africa, thereby assisting
in promoting socio-political stability.
03
 OPERATIONAL REVIEW
2007
annual report
BUSINESS PARTNERS

Expanding our investment in

innovative entrepreneurs

04
 FIVE YEAR SUMMARY

2007/2006

2007
Increase/(decrease) 2007 2006 2005 2004 2003

annual report
Consolidated Balance Sheet (R000)
Business investment approvals 18,5% 876 569 740 011 660 464 448 868 399 978
Capital and reserves 13,3% 1 942 977 1 714 395 1 605 711 1 528 933 1 439 687
Total assets 14,5% 2 096 253 1 830 339 1 729 567 1 650 193 1 542 486

BUSINESS PARTNERS
Deposits and bank balances -27,5% 280 615 386 847 469 655 490 484 356 020
Consolidated Income Statement (R000)
Net profit 160 821 130 398 100 588 118 715 117 927
Adjustments (6 614) (4 086) (7 729) (4 508) (1 132)
Headline earnings 154 207 126 312 92 859 114 207 116 795
Change in net profit 23,3% 29,6% -15,3% 0,7% 31,3%
Change in headline earnings 22,1% 36,0% -18,7% -2,2% 33,3%
Share Statistics
Earnings per share (cents) 22,8% 99,5 81,0 62,5 73,7 73,2
Headline earnings per share (cents) 21,7% 95,4 78,4 57,7 70,9 72,5
Dividends per ordinary share (cents) 11,1% 20 18 16 16 16
Dividend cover (times) 11,1% 5,0 4,5 3,9 4,6 4,6
Net asset value per share (cents) 13,3% 1 206,6 1 064,6 997,1 949,5 894,0
Ratios
Effective tax rate 4,6% 25,1% 24,0% 26,6% 31,1% 28,8%
Return on opening shareholders’ interest 10,6% 9,4% 8,5% 6,6% 8,2% 8,5%
Return on average assets 9,3% 8,2% 7,5% 6,0% 7,4% 7,8%
Operating expenditure/total income -3,4% 48,8% 50,5% 55,6% 52,0% 46,6%
Net profit per employee (R000) 21,7% 536,1 440,5 360,5 405,2 385,4
Net profit/employee cost 22,2% 2,2 1,8 1,4 1,8 1,8

05
 DIRECTORS
2007
annual report
BUSINESS PARTNERS

Mr Johann Rupert 1,4
Chairman
Chairman: Personnel Committee
Chairman: Nominations Committee
Appointed: 31 August 1993
Chairman: Compagnie Financiére
Richemont SA, Remgro Limited and
Venfin Limited
Mr Theo van Wyk 1,2,3,4,5,6
Deputy Chairman
Alternate Chairman: Personnel
Committee
Alternate Chairman: Nominations
Committee
Chairman: Footprint Committee
Appointed: 18 August 1998
Executive Director: Remgro Limited
Mr Jo’ Schwenke 1,2,3,4,5,6
Managing Director
Appointed: 1 January 1996
Mr Nazeem Martin 6
Deputy Managing Director:
iKapa Business Unit
Appointed: 6 November 2002
Mr Philip Baum
Served: 3 March 1994 until
30 August 2001
Re-appointed: 15 January 2002
Chairman and Chief Executive
Officer: Anglo Ferrous Metals
and Industries
Acting Chief Executive Officer:
Anglo American South Africa

Mr Christo Botes 5
Executive Director: Egoli
Business Unit
Appointed: 6 November 2002
Mr Div Geeringh 1,2,3,4
Chairman: Audit and Risk Committee
Appointed: 29 August 1989
Director of Companies
Alternate: Mr Themba Ngcobo
Dr Paula Huysamer 1,4,5,6 Dr Eltie Links 2
Appointed: 14 February 2002 Appointed: 14 February 2002
Executive Director: Vuya Investments Professor at the University of
(Pty) Limited Stellenbosch Business School

06
 DIRECTORS

Mr Friedel Meisenholl 2,3
Deputy Chairman: Audit and Risk
Committee
Appointed: 23 February 2000
Chief Internal Auditor: ABSA Bank
Limited
Mr David Moshapalo 3,4
Served: 23 January 1996 until
30 August 2001
Re-appointed: 14 February 2002
Deputy Chairman: Strategic
Partners Group
BEE Partner in Gautrain Project
Mr Themba Ngcobo 3,5,6
Alternate to Mr Div Geeringh
Appointed: 20 February 2002
Deputy Chairman: Ushaka Marine
Management Company
President: Durban Chamber of
Commerce and Industry
Entrepreneur and Director of
Companies
2007
annual report
BUSINESS PARTNERS
Dr Mamphela Ramphele1,4,5,6 Dr Zavareh Rustomjee 1,2,4,5,6
Chairperson: B-BBEE Strategy Appointed: 23 January 1996
Committee Independent Consultant
Appointed: 26 July 2005
Chairperson: Circle Capital
Ventures (Pty) Limited

Regional Committees
Egoli Business Unit (Johannesburg)
Mr David Moshapalo (Chairman) 3,4, Ms Buhle Mthethwa,
Mr Lemmy Mule, Dr Jurgen Smith, Mr Andrew Siebrits,
Mr Phillip Thobela, Mr Jo’ Schwenke (Ex-Officio),
Mr Christo Botes (Ex-Officio)

e’Thekwini Business Unit (Durban)

Mr Themba Ngcobo (Chairman) 3,5,6, Mr Johan de Jager
Prof Dilip Garach, Ms Londiwe Mthembu,
Mr Jo’ Schwenke (Ex-Officio),
Mr Gerrie van Biljon (Ex-Officio)
Mr Xola Sithole 1,2,4 Dr Jurgen Smith 1 Mr Gerrie van Biljon
iKapa Business Unit (Cape Town) Appointed: 18 February 2004 Executive Director:
Served: 1 August 1987 until
Dr Carel Stander (Chairman) 3, Mr Richard Ball, Managing Director: Khula Enterprise 30 August 2001 e’Thekwini Business Unit
Ms Debbie Bruce, Dr Pat Gorvalla, Mr Peter Matshitse, Finance Limited Re-appointed: 14 February 2002
Appointed: 6 November 2002
Business Consultant and Director
Mr Yusuf Pahad, Mr Themba Pasiwe, Mr Jack Patel, of Companies
Mr Jo’ Schwenke (Ex-Officio), Mr Nazeem Martin (Ex-Officio)

1 Personnel Committee 2 Audit and Risk Committee 3 National Investment Committee 4 Nominations Committee
5 Footprint Committee: Women’s Fund 6 B-BBEE Strategy Committee

07
 EXECUTIVE MANAGEMENT
2007
annual report
BUSINESS PARTNERS

Mr Jo’ Schwenke (55) Mr Nazeem Martin (45) Mr Ben Bierman (41) Mr Christo Botes (46) Mr Pierre Mey (46)
Managing Director Deputy Managing Director: Chief Financial Officer Executive Director: Egoli Executive General
B Com, CA (SA), B luris iKapa Business Unit B Com, B Com (Hons), ACMA, Business Unit Manager: Support Services
17 years’ service BA, HDE, M Urban Planning H Dip Tax B Acc, B Compt Hons, CTA B Com
9 years’ service 17 years’ service 21 years’ service 20 years’ service

Ms Lorraine Nakene (31) Mr JM Smith (43) Mr Gerrie van Biljon (49)

Executive General Manager: Executive General Manager: Executive Director: e’Thekwini
Systems Quality Human Resources Business Unit
B Com (cum laude), CA (SA) B Soc Sc (cum laude), B Com (Hons) B Com, MBA
1 year’s service (cum laude), M Com 21 years’ service
15 years’ service

08
 EXECUTIVE MANAGEMENT

2007
annual report
BUSINESS PARTNERS
Mr Willem Bosch (52) Ms Petro Bothma (48) Ms Marjan Gerbrands (33)
Chief Operating Officer: Manager: Marketing Company Secretary
Property Management Coordination Corporate Legal Adviser
Services 21 years’ service BLC, LLB (cum laude), LLM
B Com Acct, CPA 6 years’ service
15 years’ service

On-going business support

from a committed
management team
for the challenges
of today’s business
environment
Mr Paul Malherbe (36) Mr Mark Paper (41)
Chief Operating Officer: Chief Operating Officer:
Technical Assistance, Business Partners
Mentorship and Consulting International
Services 15 years’ service
B Compt, MBL
12 years’ service

09
 MANAGEMENT REVIEW
2007
annual report
BUSINESS PARTNERS

Complete business solutions

tailored to meet the
specific needs of clients

10
 MANAGEMENT REVIEW
Business Partners Limited is South Africa’s leading specialist investment company for small and medium enterprises.

2007
It provides a full-service offering for entrepreneurs, which includes customised investment solutions, property broking,
property management, technical assistance, mentorship, consulting and ongoing business support through industry-

annual report
specific units. Integrated business solutions are individually structured to meet the specific needs of a wide range of
entrepreneurs, from single-owner private practices to multi-owner management buy-outs or buy-ins.

The Company invests in independent enterprises in the commercial,
manufacturing and services sectors of the economy, with the
exception of on-lending activities, farming operations and non-
profit organisations. Added-value services are offered on an
independent basis, both pre- and post-investment.
In addition, Business Partners has unique competencies for
assessing the viability of entrepreneurial enterprises and for
minimising risk to both business owners and the Company. It is
on these competencies that the products and services portfolio is
based, as are the Company’s unique risk management, quality
control and management information systems.
BUSINESS PARTNERS
Business Partners Limited (South Africa)
Business Partners Limited has been investing in entrepreneurs for
over 26 years.
The core of the Company’s business is conducted through Business
Partners Investments, the largest of its divisions, which houses its
business units and investment funds. These comprise three
geographically-defined business units, Egoli, e’Thekwini and iKapa,
and five specialist investment funds, the Business Partners
Umsobomvu Franchise Fund, the Business Partners-Khula Start-
Up Fund, the Tourism Fund, the Empowerment Fund and the
Property Investment Fund.

During the past financial year, Business Partners has successfully
been growing its business in South Africa, and has also undertaken
the roll-out of its internationally-recognised investment model into
Africa through wholly-owned subsidiary, Business Partners
International (Pty) Limited.
At Business Partners, we believe that people are our real business.
We aim to deliver exactly what each client needs, every time. We
do this by using our innovative range of products and services
to develop complete business solutions, using debt, royalty and
equity financing, as well as our range of added-value services.
Solutions are tailored for each client company, and are delivered
by experienced, committed people through a well-structured
organisation that prides itself on ISO certification for its systems
and procedures.
Property management, technical advice, mentorship, consulting
and operational support services are provided through other
dedicated divisions.
Entrepreneurship continues to be a key focus in South Africa,
ensuring that Business Partners is well positioned for sustainable
success. This is especially so as government has identified small
and medium enterprise as essential to socio-economic growth,
national development, political stability and sustainability.
Business Partners actively supports entrepreneurial growth by
providing investment financing, specialist sectoral knowledge and
added-value services for viable small and medium enterprises.

11
MANAGEMENT REVIEW
Despite intensive competitive activity, especially by commercial
banks, strategic developments at Business Partners during the
past year have enabled the company to further secure its specialised
niche positioning in the financial services market.

This has been done by:

• developing specialist funds to cater for the needs of specific
groups of entrepreneurs
• expanding its focus on true and measurable broad-based black
economic empowerment
Distribution of investment
• maintaining a constant flow of high-quality deals
by product
Investment advanced for year • pre-qualifying potential clients as soon as possible
ending 31 March 2007 • maintaining robust networks with intermediaries such as
4,2% Equity Partner accountants, lawyers, architects and engineers
5,7% Property Equity Partner • maintaining a strong marketing and communications presence
3,0% Risk Partner
6,1% Royalty Risk Partner in the media and amongst target markets
14,7% Property Risk Partner • developing and strengthening management systems in line
36,6% Royalty Partner with growth
29,7% Loan Partner
• employing and training appropriately qualified staff in line with
the Company’s overall niche positioning
• maintaining and strengthening value-added services such as
mentorship and consulting services, and property management
and broking services

Dedicated to advancing South Africa’s entrepreneurs

 MANAGEMENT REVIEW
Product Portfolio Royalty Partner

2007
The Business Partners’ product portfolio has been conceptualised Royalty Partner is designed to meet the needs of smaller, high-risk
to provide for entrepreneurs with widely differing needs, and is ventures, where the cost of converting to equity participation is

annual report
used as the basis for developing customised solutions for each not practical or justified. It provides for the investment to be
client or client company. The portfolio comprises: structured as a loan with a risk portion, and for this portion to be
covered by a royalty fee.
Equity Partner
Equity Partner is designed for the entrepreneur who has an Property Risk Partner

BUSINESS PARTNERS
exceedingly profitable venture, has own capital to contribute to Property Risk Partner is designed for the entrepreneur who wishes
the venture and requires additional capital for expansion. to purchase business premises, but who either wishes to protect Distribution of investment
cash resources or has a limited own contribution to make, and is by product
Investment portfolio composition
Risk Partner therefore unable to raise the normal deposit required by other
as at 31 March 2007
Risk Partner caters for the needs of the entrepreneur with a viable financial institutions.
4,3% Equity Partner
lifestyle business, who has limited capital and limited security to 7,0% Property Equity Partner
contribute, but whose business is able to generate sufficient cash Property Equity Partner 2,9% Risk Partner
Property Equity Partner is designed for the entrepreneur with an 7,2% Royalty Risk Partner
flow to afford regular loan repayments.
19,5% Property Risk Partner
exceptionally viable multi-tenant property investment opportunity, 30,5% Royalty Partner
providing an above-average return on investment. 28,6% Loan Partner

Distribution of investment
by product
Investment portfolio composition
as at 31 March 2006
3,9% Equity Partner
6,5% Property Equity Partner
2,6% Risk Partner
7,6% Royalty Risk Partner
20,6% Property Risk Partner
29,0% Royalty Partner
29,8% Loan Partner

13
 MANAGEMENT REVIEW
Geographically-defined business units
2007

Business Partners’ three geographically-defined business units

cater for social and economic variations that have an influence on
annual report

entrepreneurial requirements in the country’s different regions.

The Egoli Business Unit, for example, caters for a developed

geographic area that is largely focused on manufacturing and
services industries. e’Thekwini, on the other hand, caters for a Egoli
BUSINESS PARTNERS

region with a more mixed range of business, tourism and agricultural-

Distribution of investment support enterprises, while iKapa serves the country’s marine fishing e’Thekwini
by province
industry, in addition to the more usual range of enterprises.
Investment portfolio composition
as at 31 March 2007
13,1% Eastern Cape
The challenges facing the entrepreneurs served by each unit vary
5,1% Free State widely, as do the solutions provided for them by the experienced
25,2% Gauteng staff situated in Business Partners’ offices across the country.
22,8% KwaZulu-Natal
3,1% Limpopo Province
Egoli Business Unit iKapa
4,2% Mpumalanga
2,8% North West The Egoli Business Unit serves the country’s inland provinces,
2,5% Northern Cape Gauteng, Free State, Limpopo, North West and the eastern part of
21,2% Western Cape the Northern Cape. It has offices situated in Industria and Jet Park influence on small and medium enterprise in the short- to medium-
in Johannesburg, as well as in Centurion, Polokwane, Bloemfontein, term. Entrepreneurs will find business opportunities in providing
Kimberley and Bethlehem. products and services for these projects, as well as for the people
working on them. The immediate challenge for Egoli will be to
Gauteng is South Africa’s business and manufacturing hub, identify and empower entrepreneurs in line with this large-scale
accounting for 40 percent of the country’s GDP (Gross Domestic socio-economic development.
Product) and 9 percent of the African continent’s GDP. Source:
GCIS (Government Communication and Information System). During the 2007 financial year, investment approvals through Egoli
Gauteng’s “smart province” initiative is one of the major business increased by 28,5 percent, while advances were up 20 percent on
drivers in this region, as is the rapidly-growing urban population. the previous year. Most noteworthy is that investment approvals
Economic activity in the other provinces is also on the increase, for women-owned businesses increased by 20 percent, while those
with mining being the primary driver of development in some of for black-owned businesses increased by 28 percent. The average
the more rural areas. investment size increased by 27 percent to R1,55 million per
investment, while an improved post-investment management
Capital projects costing billions of rand are being undertaken strategy is enabling the unit to keep the risk profile of the investment
throughout all five provinces, and this will definitely have a positive portfolio within acceptable levels.

14

On a macro-economic level, interest rate increases of 200 basis
points during the year are starting to affect small and medium
enterprises in Egoli’s region negatively. However, well-managed
investor relations are enabling the unit to soften the impact of
these increases on its clients.
Internally, Egoli is delighted with the excellence and diversity of
the expanded team it now has in place. The capacity this has
created will help to realise the unit’s objective of increasing
investment advances by 49 percent during the 2008 financial year.
In the specialist investment arena, Egoli administers the
Empowerment Fund. The fund’s aim is to facilitate the participation
of black entrepreneurs in the mainstream economy through equity
participation in well-established white-owned businesses that are
in need of an empowerment partner to ensure future growth. Black
partners are required to be involved in the business on a full-time
basis, ensuring that empowerment is real and that true value is
added to the business.
e’Thekwini Business Unit
The e’Thekwini Business Unit serves the provinces of KwaZulu-
Natal and Mpumalanga, which encompass a mix of urban, peri-
urban and rural areas.
In KwaZulu-Natal, the majority of investments are made in the
greater Durban and Pinetown hub, and cover a wide range of
industries and sectors. It is envisaged that infrastructure development
projects currently being undertaken by large corporations, the
province and the national government in the region will continue
to act as an important driver for entrepreneurs, as it has been doing
in recent years. In particular, e’Thekwini foresees that many
entrepreneurial opportunities will arise in relation to such projects
as the Port of Durban expansion, preparations for the 2010 FIFA
World Cup, and developments being planned by the major industries
in Richards Bay.
MANAGEMENT REVIEW
During the 2007 financial year, a sound economic climate in the
2007
province, as well as solid growth in such industries as tourism,
ensured consistent investments. A total of 85 investments were
annual report
approved in KwaZulu Natal, representing a value of R106 million.
In Mpumalanga, industrial development in the greater Secunda
area is paving the way for entrepreneurs to provide sub-contracting,
products and services to larger companies. The province remains
BUSINESS PARTNERS
the main corridor from South Africa through to Mozambique, and
the Nelspruit area, in particular, benefits from this. During the 2007 Stratification of investments
financial year, 45 investments to the value of R46 million were Investment portfolio composition
approved in the province. balances as at 31 March 2007
15,3% R0 – R500 000
All indications are that, due to development activity in these 18,1% R500 000 – R1 000 000
27,4% R1 000 000 – R2 000 000
two provinces, investment opportunities will remain high for the
39,2% more than R2 000 000
business unit and the specialist funds it manages throughout the
next financial year.
e’Thekwini manages three of Business Partners’ five specialist
investment funds, the UYF Business Partners Franchise Fund,
the Business Partners-Khula Start-Up Fund and the Property
Investment Fund.
The Franchise Fund was the first of the specialist funds to be
launched in 2003, and is posting excellent results. It provides
investment financing and added-value services to young black
people aged between 18 and 35 who wish to buy or expand a
franchise. The Business Partners-Khula Start-Up Fund, the second
of the two joint venture funds managed by e’Thekwini, provides
similar services for entrepreneurs of any profile who wish to start
a business or expand a recently-launched one.
iKapa Business Unit
The iKapa Business Unit serves the Western Cape, Eastern Cape,
the western half of the Northern Cape and the country’s marine
fishing industry.
15
MANAGEMENT REVIEW
Facilitating real empowerment
through equity participation
The unit is also responsible for the Tourism Fund, which services
small and medium enterprises operating in the tourism industry
throughout the country. iKapa’s investment activity is concentrated
in the Cape Town, Port Elizabeth and East London metropolitan
areas, and in the fishing industry.
During the 2007 financial year, iKapa reported exceptional
performance, processing 1 369 applications requesting R2,7 billion.
Of these, 247 applications – to the value of R328 million - were
approved, and R256,4 million was paid out. In terms of
empowerment, 30,8 percent of investments approved were for
businesses owned and run by black entrepreneurs, while 42,5
percent were for businesses owned and run by women. The unit’s
total investment book grew by 31,9 percent to R485,9 million during
the year, and, despite this rapid growth, it managed to maintain
arrears at 1,58 percent.
This excellent overall performance may be attributed to the generally
favourable economic climate in the region, especially in the
agricultural support, tourism, motor industry and manufacturing
industries, as well as to the exceptional effort of the business unit’s
team members.
During the year, a great deal of management time and effort was
devoted to building the iKapa team, to integrating three previously-
separate geographic units and to launching the Tourism Fund as
part of the strategy to expand Business Partners’ investment
footprint.
The iKapa Business Unit is now well positioned to take advantage
of the opportunities presented by infrastructural spend ahead of
the upcoming 2010 FIFA World Cup, by the rising demand for
consumer goods and products, and by the increase of foreign and
domestic tourism in the region.

Specialist Investment Funds
UYF Business Partners Franchise Fund
The R125 million UYF Business Partners Franchise Fund is a
public/private sector venture between Business Partners Limited
and the Umsobomvu Youth Fund initiave of the national government.
Umsobomvu Youth Fund contributed R100 million and Business
Partners R25 million. Business Partners (e’Thekwini Business Unit)
manages the fund.
The first of the Business Partners’ specialist investment funds, it
was launched in 2003 to provide business financing and support
services for young entrepreneurs from previously disadvantaged
communities, aged between 18 and 35 who wish to start or expand
a franchise, or to buy an existing outlet. In the four years since its
inception, the fund has concluded 169 deals to the value of
R162 million.
The fund provides investment solutions for franchised businesses
across all industries and sectors, including travel and tourism, fast
food, retailing and education, as well as for service stations.
There is a strong focus on mentoring in the administration of the
fund, with a mentor automatically being allocated to the client
company as part of each investment deal.
Business Partners-Khula Start-up Fund
The Business Partners-Khula Start-Up Fund, a venture between
Business Partners and Khula Enterprise Finance Limited, is aimed
at enabling new entrepreneurs to establish new enterprises. The
fund is capitalised at R150 million, with Khula as the primary investor
in the fund, contributing R120 million of the R150 million committed
capital. Business Partners, who performs the role of Fund Manager,
contributes the balance of R30 million. The fund, which was launched
in February 2006, is administered by e’Thekwini Business Unit. The
fund aims at empowering new businesses being founded by either
a first-time or an established entrepreneur, as well as businesses
that wish to develop a new division, department or product line.
MANAGEMENT REVIEW
A total of 39 investments have been made through this fund since
2007
its inception, with a total value of R18,5 million. The average
investment value is R474 358, and individual investments do not
annual report
usually exceed R3 million. A large percentage of the businesses
invested in through this fund are owned and run by women.
Property Investment Fund
The recently-launched Property Investment Fund is the third of
BUSINESS PARTNERS
the three specialist funds administered by the e’Thekwini
Business Unit. It aims to enable entrepreneurs either to build
or acquire a multi-tenant investment property such as a regional
or suburban shopping centre, an industrial park or, occasionally,
an office park.
As an investment partner, Business Partners is able to offer the
entrepreneur a range of added-value services, including professional
property management services. These services, contracted through
Business Partners Property Management Service, ensure that the
property is well-managed and maintained, and that rentals are
timeously collected.
A total of 10 projects were financed through this fund during the
2007 financial year, a typical example of which is an industrial park
in Richards Bay that provides industrial premises for 35 small and
medium enterprises.
Business Partners also uses this fund as a vehicle to invest – as
sole owner – in multi-tenanted properties to provide rentable units
for entrepreneurial enterprises. R24 million was advanced for
projects such as these during the financial year, with more approved
deals scheduled to be advanced during the 2008 financial year.
Properties are strategically selected to offer rental space where a
definite need exists.
Tourism Fund
Realising the heightened levels of awareness of business
opportunities in the tourism sector (including the 2010 Football
17
 MANAGEMENT REVIEW
World Cup), as well as the industry knowledge, expertise and Sectoral Review
2007

value-adding services required for successfully investing in tourism Small and medium enterprise is one of the most important
businesses, Business Partners launched its Tourism Fund in April drivers of economic growth in South Africa, and employs
annual report

2006. This R200 million fund covers all aspects of tourism-related
businesses including accommodation, tour operators, adventure
tourism and the retailing of tourism products.
The fund is wholly owned by Business Partners and is administered
BUSINESS PARTNERS
approximately 54 percent of people in full-time employment in
the private sector.
Business Partners invests in entrepreneurs across all of the major
economic sectors, with six accounting for the greatest portion of

by the iKapa Business Unit. During its first year, the fund approved investment exposure. These are:
12 investments amounting to R38,24 million from start-ups to well-
Distribution of investment established companies with investments ranging from R500 000 Manufacturing
by sector to R11 million. Investments in this sector cover the full spectrum of products
Investment portfolio composition manufactured by small and medium enterprises, including
as at 31 March 2007 automotive products, food and related products, wood and paper
Apart from providing risk finance to SMEs in the tourism industry,
27,7% Professional and Tourism Fund team members are involved in a number of forums products, publishing and recording products, and general hardware,
personal services
and initiatives to develop the overall state of the tourism industry, machinery and equipment.
18,7% Manufacturing
11,7% Motor trade
as well as to increase the level of participation of previously
10,0% Retailing disadvantaged people in this sector of the economy. 107 new investments to the value of R142,8 million were approved
8,9% Leisure for this sector during the 2006/2007 financial year.
8,5% Travel and Tourism Empowerment Fund
3,9% Coastal fishing The newly-launched Empowerment Fund, administered by the Travel and Tourism
3,5% Building, plumbing Travel and tourism is a growth industry across the world and, as
Egoli Business Unit, has had to face many challenges during its
and shopfitting
first year. such, is a key focus area for Business Partners. As a destination,
7,1% Other
South Africa offers both national and international tourists, a rare
Delays in the finalisation of the Broad-Based Black Economic combination of exciting cosmopolitan cities, unspoilt natural areas
Empowerment Codes of Good Practice (B-BBEE Codes) resulted and unusual eco-tourism destinations.
in many white entrepreneurs delaying empowerment ventures in
order to ensure compliance with the final codes. Now that the 40 new investments to the value of R112 million were approved
codes have been published, however, the fund has experienced for this sector during the 2006/2007 financial year.
a marked increase in investment applications.
Franchising and Retailing
During the financial year, the fund approved four investments to Franchising is also a world-wide growth sector. Business format
the value of R10,4 million for management buy-outs and buy-ins. franchising, in particular, is attracting more and more interest. This
It is envisaged that many more investments of this kind will be offers entrepreneurs not only the right to use the product, service
made during the 2008 financial year now that the B-BBEE Codes and trademark of a franchise organisation, but also the right to use
have been finalised. the entire business concept - a model that is changing the way the
world does business.

18

110 new investments to the value of R89,2 million were approved
for the retailing sector during the 2006/2007 financial year. For
franchising, which spans across a number of sectors, 122 new
investments were approved to the value of R137,8 million.
Leisure
In the leisure industry, Business Partners invests in restaurants,
fast food outlets and pubs, some of which are franchises. It also
has some investments in leisure venues, such as caravan parks,
home video outlets, games arcades, permanent markets, fairs and
even pleasure resorts.
84 new investments to the value of R79,7 million were approved
for this sector during the 2006/2007 financial year.
Personal and Professional Services
Personal and professional services are an important niche sector
in the economy, especially as more and more professionals move
into private practice. Entrepreneurs in this sector include auditors,
tax consultants, business advisors, legal and consulting firms,
property brokers and the provision of premises, as well as health
care professionals such as doctors, dentists and psychologists.
154 new investments to the value of R244,3 million were approved
for this sector during the 2006/2007 financial year.
Marine Fishing
The challenges facing entrepreneurs in marine fishing are unique
and the risks high, requiring from Portfolio Managers a superior
level of industry expertise. Knowledge of the legal and regulatory
frameworks within which marine fishing entrepreneurs operate is
essential and Business Partners, with its many years of experience,
continues to operate very successfully in this area.
12 new investments to the value of R17,7 million were approved
for this sector during the 2006/2007 financial year.
MANAGEMENT REVIEW
Demographic Review
2007
Entrepreneurs are represented in all of the country’s demographic
groups and the Business Partners investment portfolio reflects this
annual report
diversity.
In 2006/2007, 296 investments, representing 44,5 percent of
the total investments made and amounting to R345,1 million in
value, were approved for individuals from historically-
BUSINESS PARTNERS
disadvantaged communities. In addition, 247 investments to
the value of R281,3 million were approved for businesses owned
and run by women, while young entrepreneurs benefited from Distribution of investment
58 approved investments to the value of R53,6 million in the by sector
franchise industry. Investments advanced for the
year ending 31 March 2007
Financial Review 30,5% Professional and
The equity and quasi-equity nature of the Business Partners personal services
18,7% Manufacturing
investments are bearing fruit. Revenue in the form of income
10,4% Motor trade
from associated companies and royalty fee income, increased 11,4% Retailing
by 52 and 26 percent respectively and amounted to R57,6 million 7,6% Leisure
(2006: R43,0 million). Furthermore, dividends and surpluses on 4,1% Travel and Tourism
the realisation of investments amounted to R31,8 million (2006: 2,8% Coastal fishing
7,2% Building, plumbing
R24,3 million) an increase of 30,8 percent.
and shopfitting
7,3% Other
The valuation of the unlisted investments is performed by applying
the valuation principles as published by the South African Venture
Capital Association. The increase in value of the investment portfolio
is accounted for to the extent of the associated company income.
The increase in Director’s valuation of our investments from
R114,1 million to R134,1 million represents an additional unrealised
return not yet accounted for.
The diversification of the Business Partners revenue stream has
continued to gather momentum. Revenue generated by the property
investments, consisting mainly of rental income, revaluation of
properties and the fees earned from managing third party properties,
19
 MANAGEMENT REVIEW
contributed 25,6 percent to total revenue and increased by
2007
14,1 percent from R85,8 million in 2006 to R97,9 million in 2007.
annual report
Additional revenue streams, consisting primarily of fees earned
from the management of third party investment funds as well
as due diligence fees, increased by 51,2 percent to R25,1 million
(2006: R16,6 million).
BUSINESS PARTNERS
The total cost incurred in managing the Business Partners operations
increased by 14,9 percent from R162,2 million in 2006 to R186,4
million in 2007. This increase in operational costs reflects primarily
the increase in capacity required to pursue the Company’s growth
strategy.
Net profit consequently increased by 23,3 percent from R130,4
million in 2006 to R160,8 million in the year under review, exceeding
expectations for the year and resulting in a return on equity of
8,8 percent. Headline earnings per share increased by 21,7 percent
to 95,4 cents per share.
Risk Review
The South African economy has continued to benefit from the
sound macro-economic policies applied by the Government.
Business confidence is high, and economic growth continues
despite the increase in interest rates by 200 basis points over the
past year. Small and medium enterprises are particularly vulnerable
to economic instability and have consequently thrived in this positive
and stable macro economic environment.
The risk profile of the Business Partners investment portfolio,
as measured by the exposure to non-performing and doubtful
investments, has not been materially affected by the recent increase
in interest rates. Investments at risk amount to 9,7 percent of the
total portfolio at 31 March 2007 compared to 8,9 percent at
31 March 2006.
The concentration of risk in the investment portfolio is diversified
by the portfolio being exposed to all thirteen major industry sectors,
with the largest exposure (18,7 percent of the portfolio) to the
manufacturing sector.
664 new investments were approved in the year under review, of
which only 110 investments had approval amounts above R2 million.
These investments represent 51,9 percent of the total value of
investments approved for the year. At the end of the reporting
period, 160 of the 2 037 investments in the portfolio had an exposure
of more than R2 million, representing 39,2 percent of the value of
the investment portfolio, effectively spreading the credit risk across
a large number of investments.
The investment portfolio is carried at fair value by impairing the
carrying value of investments that present specific and objective
evidence of an event that will result in the present value of the
expected cash flows being less than the current carrying value.
The impairment on specific investment portfolios is determined by
analysing the historical loss experiences in similar portfolios and
adjusting the loss to reflect differences in prevailing economic
circumstances. In addition, the expected emergence periods for
impairment indicators are adjusted to reflect current conditions.
Bad debts written off during the year amounted to R31,0 million,
a slight increase compared to the R27,3 million written off in
2005/2006. The bad debts written off in the current year amount
to 2,4 percent (2006: 2,5 percent) of the average value of the
investment portfolio.
Net write-offs for the year (after considering bad debt recoveries)
amounted to R9,1 million representing 0,7 percent of the value of
the portfolio. Considering the overall risk profile of the Business
Partners investments, this loss experience represents an exceptional
achievement in risk management, and is the result of factors such

as improved due diligence, benign economic conditions, efficient
credit control and effective post-investment management.
Business Partners International (Pty) Limited
In December 2004, the International Finance Corporation (IFC)
and Business Partners Limited entered into a working relationship
aimed at taking the Business Partners’ entrepreneurship model
into Africa.
In terms of the agreement, Business Partners International, a small
and medium enterprise investment fund management company,
was established with a support grant of US$2,5 million from the
IFC. The primary objective of this wholly-owned Business Partners’
subsidiary was to undertake a pilot phase, establishing three risk
capital funds with third party investors, one in Madagascar, one in
Kenya and one in a third country to be agreed upon by the partners.
These funds were to provide risk capital financing to local
entrepreneurs, and were to be managed by local Fund Managers,
trained and supported by Business Partners International.
During 2007, this new business unit successfully established
investment funds in Madagascar and Kenya, and is currently working
on establishing the third fund.
The Business Partners International Madagascar SME Fund is a
US$10 million investment fund, supported by a further US$2 million
Technical Assistance Fund. Active operations commenced in October
2006, and the fund has made six investments to date.
The Business Partners International Kenya SME Fund is a US$14,1
million investment fund, supported by a US$2,5 million Technical
Assistance Fund. The fund commenced active operations in late
2006 and has also made six investments in Kenyan companies
to date.
MANAGEMENT REVIEW
Business Partners International Madagascar
2007
Business Partners International Madagascar Limited is a wholly-
owned subsidiary of Business Partners International (Pty) Limited.
annual report
The Company is a société anonyme incorporated in Madagascar,
with social capital of MGA 2 000 000 divided into 100 shares of
MGA 20 000 each.
The company manages risk capital investment and technical
BUSINESS PARTNERS
assistance funds aimed at small and medium enterprises
incorporated in Madagascar. Based in Antananarivo, it acts on
behalf of its shareholders as the in-country fund manager for the
Business Partners International Madagascar SME Fund.
The fund’s aim is to deliver customised investment and added-
value solutions to local entrepreneurs in a commercially-viable way,
while also generating an acceptable rate of return for its investors.
Recognising the power of women-owned businesses, it aims to
have at least 30 percent of its portfolio made up of women-owned
businesses.
Business Partners International Kenya
Business Partners International Kenya Limited is a wholly-owned
subsidiary of Business Partners International (Pty) Limited. Based
in Nairobi, like its counterpart in Madagascar, it acts on behalf of
its shareholders as the in-country fund manager for the Business
Partners International Kenya SME Fund. The US$14,1 million fund
is used to invest in formal small and medium enterprises incorporated
in Kenya.
Its aim, like that of the Business Partners International Madagascar
Fund, is to deliver financial and technical assistance to local
entrepreneurs in a commercially-viable way, while generating an
acceptable rate of return for its investors. It also aims to have at
least 30 percent of its portfolio made up of women-owned
businesses.
21
 PROPERTY MANAGEMENT
SERVICES
2007
annual report
BUSINESS PARTNERS

Customised property broking and

management solutions
for all types of enterprise

22
 PROPERTY MANAGEMENT SERVICES
Business Partners Property Management Services provides property broking and management services tailored for small

2007
and medium enterprises. The division sources and secures appropriate business premises for entrepreneurial enterprises
at market-related rentals or purchase prices. It also provides integrated property management for enterprises that have

annual report
invested in property, either for own use or rental.

The services provided by Business Partners Property Management by Business Partners Property Management Services, with the

Services are an intrinsic aspect of the Business Partners’ customised,
full-service offering for entrepreneurs.
Business Partners Property Management Services manages
properties owned by the Company itself, as well as premises owned
by third parties, including Khula Enterprise Finance Limited. Premises
owned by either Business Partners or Khula may be sold to individual
entrepreneurs from time to time, should they become available for
sale. Current tenants are normally invited to submit offers to
purchase before the properties are finally sold.
2006/2007 Review
Business Partners Property Management Services experienced a
satisfactory year, with vacancies at an all-time low. Third party-
owned properties now also comprise a significant percentage of
the portfolio.
The division was also actively involved in a number of new projects
related to both wholly-owned properties and co-investments with
entrepreneurs.
Geographic Distribution and Penetration
The portfolios under management represent the full spectrum of
commercial and specialised properties, and are situated in all of
the major commercial centres in the country.
There are currently 3 477 businesses from all sectors of the
economy accommodated in premises either owned or managed
BUSINESS PARTNERS
industrial sector being best represented.
Portfolio Management
Sectoral breakdown of
The overall property management portfolio is broad-based, providing portfolio
for the needs of a wide range of entrepreneurs, particularly in the For the year ended 31 March 2007
retail and industrial sectors. Premises under management include
69,1% Industrial
individual retail sites, shopping centres, offices and industrial parks. 4,7% Office
25,8% Retail
Property portfolio management is one of the division’s core 0,4% Other
competencies and, in line with company strategy, is an important
source of sustainable non-interest income. As at 31 March 2007,
the property portfolios under management were made up of 243
individual properties, comprising 682 449m2 of lettable space and
occupied by 3 477 tenants.
Property Ownership, Investment and Sales
The demand for commercial and industrial premises has grown
significantly during the past financial year, with vacancies at an all-
time low. A significant increase in demand for industrial space in
particular has been recorded, and Business Partners Property
Management Services is gearing up to take advantage of this trend
by developing some of the vacant land in its proprietary portfolio
for industrial use.
Sectoral classification of
tenant businesses
Some projects of this nature are already underway, such as the
43,8% Industrial
construction of an additional warehouse for an existing leaseholder
32,4% Retail
in Silverton. Similarly, the construction of an industrial park in
23,8% Service
Nelspruit is set to commence soon, while a retail project is being

23
 PROPERTY MANAGEMENT SERVICES
planned in Montana, Tswane. Vacant land is also available for
2007
development in Burgersfort, Polokwane and Retreat, as the need
for industrial premises in these areas grows.
annual report
In Port Elizabeth, a major upgrade to the Business Partners’ industrial
park in North End has recently been completed, while renovations
are underway at the Business Partners’ office blocks in Westville,
Durban and Cape Town’s CBD.
BUSINESS PARTNERS
In terms of rationalising the portfolio, eight properties that did not
Management fees received fit the overall strategic profile were sold and transferred during the
50,2% Business Partners
year. A further 79 properties, including sectional title units, were
R10,85m
sold and transferred on behalf of Khula.
37,8% Khula R8,17m
12,0% Other R2,59m Both Business Partners and its clients have benefited from the
positive performance of the property market during the past
two years, and feel sure that both its property management and
broking services will continue to exhibit growth during the 2008
financial year.
Consulting Services
Property-related consulting services are provided by both Business
Partners Property Management Services and third parties contracted
on its behalf. The aim of these services is primarily to determine
the value and business viability of properties for both investment
24
and disinvestment purposes. This added-value service is strategically
aligned to the Business Partners’ business and marketing strategy.
Procurement Policy
Business Partners Limited and all of its divisions adhere to an
empowerment procurement policy in all discretionary spending.
The Company ensures that, wherever possible, the small and
medium enterprise sector and, in particular, historically-
disadvantaged individuals, are involved in the supply of goods
and services required.
As far as possible, the company supports its own clients, adhering
to sound business practice at all times. While recognising the need
to support the small and medium enterprise sector and historically-
disadvantaged individuals, Business Partners is nevertheless aware
of the fact that independent enterprises need to compete in the
open market and, for this reason, suppliers are required to provide
quality goods and services to deadline and at competitive prices.
Each region and each division is set individual targets for
empowerment procurement and, at the end of the 2007 financial
year, Business Partners Property Management Services had
exceeded its targets in all regions. The overall empowerment
procurement target for the division was 70 percent, and the actual
achieved was 63 percent.
TECHNICAL ASSISTANCE,
MENTORSHIP AND

2007
CONSULTING SERVICES

annual report
BUSINESS PARTNERS
Professional support
services to facilitate
ongoing business success

25
 TECHNICAL ASSISTANCE, MENTORSHIP
AND CONSULTING SERVICES
Business Partners Technical Assistance, Mentorship and Consulting Services, a division of Business Partners Limited,
2007

offers professional business support services to both Business Partners’ clients and a wide range of other entrepreneurs
and businesses. These services are a practical manifestation of the company’s mission, which is to invest skill and
annual report

knowledge, as well as capital, into the small and medium enterprise sector. The division also embodies the company’s
core value in that it aims, in a real way, to partner with its clients in their successes.
BUSINESS PARTNERS

Objectives and Focus
The goal of this business unit is to provide professional technical
assistance, mentorship and consulting services centred on a mutual
exchange of information. Its principal objective is to offer specialist
services to clients as needed, and to provide skills transfer and
mentoring to facilitate ongoing business success.
Since its re-launch in September 2000, Business Partners Technical
Assistance, Mentorship and Consulting Services has successfully
established a national network of professionals who are able to
offer diverse added-value services to clients.
The focus has been on attracting high-calibre, experienced mentors
who are able to support entrepreneurs in maximising the profitability
of their businesses, and in managing these through difficult
challenges and growth phases. The Company therefore contracts
professionals that not only have superior industry knowledge, but
also the necessary skills and experience to assist entrepreneurial
enterprises with their own unique needs.
Mentors have been contracted from all of the major economic
sectors, from manufacturing to mining, retailing, financial, legal,
production and construction.
The Role of Technical Assistance, Mentorship and
Consulting
Business statistics world-wide reveal that approximately 62 percent
of business failure is as a direct result of under-skilled management
or the poor administration of financial activities. This is where
technical assistance, mentorship and consulting have such an
important role to play in entrepreneurial enterprise. Appropriate
interventions and skills transfer can enable many more small and
medium enterprises to be stable and successful.
More than 50 percent of the mentors contracted by Business
Partners Technical Assistance, Mentorship and Consulting Services
have core competencies in general management, accounting and
administration, and the demand for their services is high. The next
highest demand is for industry-specific assistance, turnaround
intervention and marketing.
2006/2007 Review
During the 2007 financial year, Business Partners Technical
Assistance, Mentorship and Consulting Services focused on
consolidating the growth of the previous three years. It
concentrated in particular on improving the added-value of
its service to clients, restructuring the role of the Mentor
Coordinators as part of this.
Ongoing quality management also received intensive attention,
with the objective being to secure and develop relationships
with existing mentors rather than to recruit new mentors. A process
of re-evaluating the skills of registered mentors was also initiated
in order to ensure that clients are able to avail themselves of the
best skills, knowledge and experience at all times. New mentors
were only contracted if there was a specific need for their skills

26
 TECHNICAL ASSISTANCE, MENTORSHIP
AND CONSULTING SERVICES
amongst clients, and their backgrounds, knowledge and expertise This programme aims to provide investment financing, training and

2007
was carefully evaluated as part of the registration process. mentorship for young entrepreneurs in particular and, in so doing,
to reduce the barriers to entry into the entrepreneurial sector.

The value of the service to both Business Partners and independent
clients is growing demonstrably. There was an increase of six
percent in the total number of assignments completed during the
year, up to 699 from 658 during the previous year.
annual report
A further initiative was the expansion of the unit’s participation in
the Succeed Campaign, an initiative of the Business Women’s
Association (BWA), facilitated through Deloitte’s Women Leadership
Initiative. Business Partners Technical Assistance, Mentorship and

External assignments, namely services to entrepreneurs who are
not Business Partners investment clients, accounted for 42 percent
of all assignments by value, up from 32 percent three years ago.
This indicates a growing demand for professional services across
the small and medium enterprise sector. Value to internal clients
is ensured by cultivating managed relationships between the client,
the operational team and the mentor.
In both cases, the primary aim is to be pro-active in empowering
a business or in troubleshooting problems, rather than being reactive
when difficulties occur.
Stakeholders and Joint Ventures
Business Partners Technical Assistance, Mentorship and Consulting
BUSINESS PARTNERS
Consulting Services is now involved is assessing the business skills
and activities of all candidates applying for participation in the
campaign.
In addition, established relationships with Standard Bank and
Nedbank continued to grow and develop. In terms of the agreement
to provide professional services to the clients of these two banks,
several assignments were concluded during the course of the year.
The unit also provides mentorship and consulting services to clients
of CEDA, a government agency in Botswana, as well as to the
International Finance Corporation in Mozambique.

699
Services has undertaken a number of new joint ventures during

658
the financial year.

521
507
In the first of these, the business unit is collaborating with North

437

487
West University to develop a standard model that will identify
341

problems in the operational activities of small and medium

284
enterprises. This initiative also aims to formalise the quality of and

282
210

standards for business mentors in the mentorship and consulting

industry as a whole.

The second of these, the Entrepreneur Development Programme,

a joint initiative with the Gauteng Enterprise Propeller, the 03 04 05 06 07 03 04 05 06 07
Umsobomvu Youth Fund and Sanlam Life Assurance, was finalised.
Number of mentors Number of assignments completed

27
 OPERATIONAL SUPPORT SERVICES
During the past year, there has been a change in focus at Business Partners as far as operational support services are
2007

concerned. Moving away from the principle that each business unit should provide its own support services, a new
methodology has been adopted. This saw the centralisation of the management of all decentralised support staff situated
annual report

in each of the business units.

In line with this, a Service Centre Model was developed for use or risk management aspects of the business. These teams are
throughout the Company. There are now four integrated support responsible for the advancing of deals, as well as the collection of
BUSINESS PARTNERS

services centres situated in Johannesburg, Cape Town, Durban
and Port Elizabeth, which are managed centrally to ensure
consistency, efficiency and economies of scale. Each centre’s
responsibilities are allocated depending on client needs in the
region and on available capacity, neither of which are necessarily
linked to the geographically-defined business units.
non-performing, legal and bad debt deals, and also for the legal
processes involved, if required.
Consolidating support services independently of the business units
has freed up the units to focus on deal-making, assured that the
administration of each deal will be handled by a specialist team.

The activities of the support services centres are focused mainly
on streamlining deal implementation and improving risk management
procedures. Deal implementation involves the advancement of
investment financing as per the approved terms and conditions
of a contract, while risk management involves the management
of collections.
2006/2007 Review
In terms of financial management, advances during the year were
up 32,5 percent on the previous year. The number of accounts in
arrears and balances at risk increased slightly, due mainly to the
changing risk profile of the Company’s deals. The bad debt recovery
target for the year was, however, exceeded.

The teams situated in the support services centres are lead by

Legal Managers, who specialise in either the deal implementation

Mobilising the full potential of both our

brand and our people

28

The focus of the Business Partners’ marketing and communications programme during the 2007 financial year continued
to be on maintaining and improving brand awareness, as well as on strengthening client relationship management. With
this in mind, target marketing was reviewed and refined, and client relationship management was similarly reviewed
and improved.
Much attention was also given to improving the general
understanding of the Company’s products and services, mainly
through managed media communications and the ongoing
development of product and information leaflets. Media
communications take the form of media releases, financial results
releases, editorials and features in special supplements. Target
media include national and local newspapers, as well as financial,
trade and consumer publications.
From a sales perspective, one of the primary objectives of Business
Partners’ marketing activity is to increase the number of investment
deals per annum, as well as the average deal size.
The marketing division’s objectives for the year were met by using
the full extent of the marketing mix. In support of increased brand
awareness, media advertising continued in a range of targeted
publications on a regular basis. Advertising was, in turn, supported
by a range of direct communications, which remain the cornerstone
of the Business Partners’ marketing programme. These include
such elements as client newsletters, networking functions and
relationship-building initiatives, which are conceptualised and
developed at business unit level to meet the specific needs of
clients in each region. In addition, client and intermediary loyalty
programmes continue to be extended and improved, as a large
proportion of the Company’s business is derived from direct referrals.
During the year, much attention was also given to improving client
focus and to extending the client relationship management
programme. This involved broadening the annual client satisfaction
survey to include monthly follow-ups by marketing staff. The aim
MARKETING
2007
annual report
of this initiative is mainly to identify client relationship management
BUSINESS PARTNERS
problems as early as possible, so that appropriate remedial action
can be taken without delay. It also aims to give the Company
constant insight into the changing needs of its client base.
The client satisfaction survey and the programme of follow-up calls
focus on service delivery, client satisfaction, overall perceptions of
the Company and specific problem areas.
Client protection methodologies were also improved, ensuring
clients appropriate protection through the Company’s ISO 9000:2001
processes, as well as the right to complain and to
expect the appropriate resolution of complaints.
Communications with existing and potential clients continues on
an ongoing basis through the Business Partners’ web site, from
which visitors can download important documents such as the
annual report, interim results and information brochures. A free,
comprehensive business plan template is also available, and specific
industry-related information is provided as an added value for
Business Partners’ clients.
Implementation of marketing strategy and plans is done on a
matrix management basis through professionals based at the
Company’s corporate offices in Parktown and at each of the business
unit offices in Johannesburg, Cape Town and Durban. This enables
the Company’s marketing team to remain close to clients in
each region, as well as to maintain a real understanding of the
business and marketing issues in the local environment.
29
MARKETING
Investing skills and knowledge to
enable independent business to thrive
Marketing highlights of the year included the successful launch of
Business Partners International Kenya in Nairobi, as well as excellent
coverage in the print media and on TV.
Entrepreneur of the Year
The Entrepreneur of the Year Awards programme, a well-established
component of client relationship management, continues with
annual refinements. The programme focuses on celebrating
entrepreneurial ability, and aims to ensure that individual
entrepreneurs are recognised and celebrated in their own
communities. The national award winner receives a cash prize,
free business-related mentorship, and media coverage through
Business Partners.
Stakeholder Engagement
Business Partners is an active member of the business community,
and is a member of such professional and industry bodies as the
Franchise Association of South Africa (FASA), the Businesswomen’s
Association (BWA) and the Black Management Forum. It also
participates in a number of joint ventures, most notably with Khula
Enterprise Finance and the Umsobomvu Youth Fund.
2007/2008 Marketing Focus
In the upcoming financial year, the marketing division will continue
to implement its strategy of raising brand awareness and of ensuring
continual client satisfaction improvement. The focus will continue
to be on strengthening Business Partners as a niche provider of
integrated investment solutions for entrepreneurs. This will be
done by means of planned and consistent brand and tactical
advertising, media communications, direct marketing, client
relationship management and special projects.
 HUMAN RESOURCES
The quality, added-value products and services that Business Partners is known for can only be delivered by people

2007
who are motivated, dedicated, specialised, professional and well-trained. The Company’s staff complement, with its long-
standing and in-depth knowledge of the entrepreneurial environment, of specialist sectors and industries, and of the

annual report
factors that influence business viability, are an essential aspect of its competitive advantage. As such, careful attention
is given firstly to recruiting the right person for each job and then to ensuring their long-term development and effectiveness.

BUSINESS PARTNERS
People Management Philosophy This approach will continue to play a deciding role in helping the
At Business Partners, people are our real business and this company to become even more professional in the challenging
philosophy extends as much to our employees as to our clients. years to come.

With this in mind, our human resources practices are designed to
be flexible and to accommodate the needs of each individual
employee. As importantly, they are designed to encourage an
entrepreneurial approach to business, a sense of ownership in the
company’s various business units, superior client service, honesty,
integrity and sound financial discipline.
Our people management objective is to have the best people that
are able to experience job satisfaction at individual level, the pride
of working for a respected organisation and ongoing growth and
development in the working environment.
Training and Development
Skills development at all levels is a core objective for Business
Partners, as is creating an enabling business culture. The company
has a multi-level, multi-functional approach to training, and uses
both packaged and custom-developed programmes for this purpose.
Electronic communiqués and tasks are also sent out regularly to
all employees by a dedicated training unit in order to raise awareness
levels and improve competency levels, while training initiatives of
all types are encouraged throughout the organisation.
Business Partners is registered with the appropriate sectoral training
authority, namely the SETA for Finance, Accounting, Management
Consulting and other Financial Services (FASSET).
During the 2006/2007 financial year 452 training sessions were
provided within the company, amounting to 2 668 student sessions
and 11 878 hours of training exposure, an average of 40 hours of
training per employee.
Employment Equity
Since its inception, Business Partners has aspired to make equal
employment opportunities available to all suitable candidates,
regardless of race or gender. Similarly, it recognises the need for
preferential programmes aimed at redressing historical inequalities.
It also fosters a business environment in which diversity is viewed
as a strength in competing for business.
During the past financial year, Business Partners has complied with
the provisions of the Employment Equity Act and will continue to
do so. Details of this compliance are submitted in full in the
company’s annual employment equity report to the Department
of Labour. The employee profile was summarised in the report
on 27 September 2006 to the department, as following on the
next page:

31
 HUMAN RESOURCES
Workforce Profile Staffing
2007

As at 27 September 2006 (numbers in brackets indicate the profile As at 31 March 2007, 300 people were employed at Business
as at 31 August 2005) Partners. The statistical breakdown is as follows:
annual report

Permanent Employee Statistics

Employees by MALE FEMALE TOTAL
Occupational 2007 2006
Category African Coloured Indian White African Coloured Indian White
Business Investments 211 200
BUSINESS PARTNERS

Managers 6 (2) 4 (3) 5 (3) 38 (31) 1 (0) 0 (0) 2 (2) 5 (6) 61 (47) Operational Employees 106 93
Professionals 14 (6) 8 (6) 15 (8) 39 (45) 2 (3) 4 (3) 3 (3) 21 (22) 1071 (96) Operational Support Employees 105 107
Technicians and
Associate Professionals 0 (0) 0 (1) 1 (0) 1 (2) 0 (0) 2 (2) 0 (0) 2 (1) 6 (6) Property 46 48
Clerks 13 (17) 9 (11) 3 (4) 7 (10) 10 (9) 20 (19) 19 (18) 34 (33) 115 (121) Operational Employees 27 29
Elementary Occupations 2 (2) 2 (2) 0 (0) 1 (0) 1 (2) 1 (0) 0 (0) 0 (0) 7 (6) Operational Support Employees 19 19
Sub Total 35 (27) 23 (23) 24 (15) 86 (88) 14 (14) 27 (24) 24 (23) 62 (62) 296 (276)
Group/Divisional 43 48
Non-Permanent
Employees 1 (2) 1 (0) 2 (2) 1 (1) 1 (0) 0 (0) 0 (0) 0 (1) 6 (6)
Total 36 (29) 24 (23) 26 (17) 87 (89) 15 (14) 27 (24) 24 (23) 62 (63) 302 (282)
1
One female foreign national included under total for professionals
Two Year Overview of Employee Statistics
Community Profile
2007 2006 2007 2006
The company’s transformation and evolutionary process is guided Total Number of Employees 300 296
Black 156 141
by policies and principles that:
White 144 155 • benefit existing employees, the company and employment Staff Turnover
Total 300 296 candidates from previously-disadvantaged communities
Total Employees at
• include a comprehensive advancement programme
Beginning of Year 296 279
Age Distribution of Employees • accept the company’s responsibility for addressing any
at Year-end Add: Recruitments 43 50
imbalances that may occur in the workplace
2007 2006 Sub Total 339 329
• ensure fairness in work practices, policies and facilities
Less: Resignations (39) (33)
21–31 58 53 • encourage the sharing of information
Total at Year-end 300 296
32–40 68 65 • improve competency levels as measured against
competitive norms
41–50 92 101 Gender Profile
• maintain merit as a guideline when considering promotion
51–60 71 65 opportunities, salary and benefits structuring Female 129 127

Over 60 11 12 • ensure the implementation of a human resources strategy in Male 171 169
line with our core values of integrity, client service and Total 300 296
Total 300 296
economic merit

32
 CORPORATE AND
SHAREHOLDER

2007
INFORMATION

annual report
BUSINESS PARTNERS
Committed to the highest levels
of corporate governance and the
creation of shareholder value

33
 SHAREHOLDER INFORMATION
DISTRIBUTION OF SHAREHOLDING Number of % of Number of % of
2007

holders holders shares shares

annual report

0 – 10 000 30 25,0% 88 825 0,0%

10 001 – 100 000 25 20,8% 648 899 0,4%
100 001 – 1 000 000 43 35,8% 10 337 906 5,8%
1 000 001 – 10 000 000 17 14,2% 60 620 453 33,9%
BUSINESS PARTNERS

10 000 000 and above 5 4,2% 107 138 511 59,9%

Number of shareholders 120 100,0% 178 834 594 100,0%

11,7% Banks
45,0% Corporate bodies
0,8% Government
MAJOR SHAREHOLDERS Number of % of
10,0% Insurance companies shares shares
32,5% Individuals
Khula Enterprise Finance Limited 35 766 919 20,0%
Remgro Limited (Eikenlust (Pty) Limited) 35 766 919 20,0%
Sanlam Limited (CMB Nominees (Pty) Limited) 13 799 152 7,7%
Business Partners Employee Share Trust 11 084 900 6,2%
Billiton SA Limited 10 720 621 6,0%
ABSA Group Limited 8 117 003 4,5%
Nedcor Limited 6 918 205 3,9%
Firstrand Limited 6 093 656 3,4%
Old Mutual Life Assurance Co of SA 5 822 304 3,3%
Standard Bank Investment Corporation Limited 5 602 422 3,1%
Anglo Corporate Enterprises (Pty) Limited 5 523 801 3,1%
Number of shares
De Beers Holdings (Pty) Limited 5 523 801 3,1%
17,9% Banks
Standard Bank Nominees Tvl (Pty) Limited 3 420 252 1,9%
49,7% Corporate bodies
20,0% Government
12,2% Insurance companies 154 159 955 86,2%
0,2% Individuals
Business Partners Limited shares can be traded
by contacting the Company Secretary.

34
 CORPORATE GOVERNANCE
Business Partners is committed to being one of the most internationally respected, successful and profitable investors

2007
in small and medium enterprises. In order to achieve this, we are also committed to the highest level of corporate
governance, and have a culture that values business and personal integrity, superior client service, transparency and

annual report
accountability in all our business activities. We believe that there is a link between high-quality governance and the creation
of shareholder value.

Compliance with Corporate Governance Standards
We use the following seven categories of good governance identified
by the King Report II to measure whether we are operating in a
sound corporate governed environment:
Discipline
Commitment by the organisation’s senior management,
management and staff to widely-accepted standards of correct
and proper behaviour.
Transparency
The ease with which an outsider can meaningfully analyse the
organisation’s actions and performance.
Independence
The extent to which conflicts of interest are avoided, such that the
organisation’s best interests prevail at all times.
Accountability
Addressing the shareholders’ rights to receive and, if necessary,
query information relating to the stewardship of the organisation’s
assets and its performance.
BUSINESS PARTNERS
Fairness
Acknowledgement of, respect for and balance between the rights
and interests of the organisation’s various stakeholders.
Social Responsibility
The organisation’s demonstrable commitment to ethical standards
and its appreciation of the social, environmental and economic
impact of its activities on the communities in which it operates.
Board of Directors
Role and Responsibilities
The role of the Board is to represent the shareholders and to
promote and protect the interests of the Company. The Board has
delegated all authority to achieve the corporate objectives to the
Managing Director, who is free to take all decisions and actions
which, in his judgement, are reasonable within the limits imposed
by the Board. The Managing Director remains accountable to the
Board for the authority that is delegated to him and for the
performance of the Company. The Board monitors the progress of
the Company towards set goals through the decisions made by
the Managing Director and through the performance of the
Committees of the Board.

Responsibility
Acceptance of all consequences of the organisation’s behaviour
and actions, including commitment to improvement where required.
The Board specifically reserves the following matters for its decision:
• appointment of the four Executive Directors
• approval of strategy and annual budgets
• determination of matters in accordance with the approvals
framework

35
 CORPORATE GOVERNANCE
Membership
2007
The Board comprises of a non-executive chairman, a non-executive
deputy chairman, a managing director, a deputy managing director,
annual report
two executive directors, 10 non-executive directors and one alternate
non-executive director.
In terms of the Company’s articles of association, shareholders
or groups of shareholders may appoint one non-executive director
BUSINESS PARTNERS
for every 10 percent of issued share capital held in the Company.
Up to six independent non-executive directors may be appointed
by shareholders. The Managing Director is an executive director
and his service contract does not exceed two years. The Deputy
Managing Director and the two executive directors remain
directors for as long as they hold an executive office in the Company,
provided shareholders confirm their appointment as directors every
three years.
Skills, Knowledge and Experience
The non-executive directors are from different business backgrounds,
and their experience enables them to exercise independent
judgement on the Board. They contribute to the Company’s strategy
formulation in addition to monitoring the Company’s performance
and its executive management.
Meetings
The Board meets five times a year. The roles of the Chairman and
the Managing Director do not vest in the same person. Both the
Chairman and the Managing Director provide leadership and
guidance to the Company’s Board, encourage proper deliberation
of all matters requiring the Board’s attention and obtain optimum
input from the other directors.
The Board and its committees are supplied with timely information
to enable them to discharge their responsibilities effectively. All
directors have access to the Company Secretary, as well as to
independent professional advice at the Company’s expense in
appropriate circumstances.
Committees of the Board of Directors
In line with best practice, sub-committees of the Board exist within
written terms of reference, respectively defining their frequency
of meetings, powers, duties and reporting obligations.
Audit and Risk Committee
The Audit and Risk Committee members are identified in the
Company Information section of this report. The Audit and Risk
Committee operates in accordance with an Audit and Risk
Committee Charter, approved annually by the Board.
The Audit and Risk Committee reviews whether:
• relevant, reliable and timely information is available to the Board
to monitor the performance of the Company
• the annual report and accounts presented to the Board and to
the external auditors have been prepared with the required
care, diligence and skill
• the internal audit function is adequately staffed to reassure
the Board and management that internal controls are suitable
to the needs of the business, and that they are functioning
satisfactorily
• all relevant information is made available to the external auditors
to ensure that they are able to discharge their statutory
responsibilities
• the Code of Corporate Practices and Conduct is complied with,
external audit plans, findings, problems, reports and fees are
reviewed and approved
• matters relating to financial and internal control, accounting
policies, reporting and disclosure are fully discussed and
implemented
• internal and external audit policies are properly formulated and
implemented
• applicable legislation and the requirements of regulatory
authorities are complied with
The committee assesses its performance annually.

National Investment Committee
The National Investment Committee members are identified in
the Company Information section of this report. The committee
considers investments for approval, the sale of assets and property
development projects beyond the delegated powers of executive
management. Its mandate also includes the monitoring of
performance on projects in which the Company has invested.
Nominations Committee
The Nominations Committee members are identified in the Company
Information section of this report. The committee is authorised to
consider and submit proposals regarding the optimum size of the
Board, as well as its structure and composition. This is done with
due regard to the skills and knowledge of the incumbent Board
and the requirements of the Company. In addition, the requirements
for and the functioning of the sub-committees of the Board are
considered by this committee. The committee makes
recommendations to the board on the appointment of trustees
of the Company pension and retirement funds as well as the
Company employee share trust. The committee is further
authorised to review and submit recommendations to the
board on directors’ fees.
Personnel Committee
The Personnel Committee members are identified in the Company
Information section of this report. The committee is authorised to
consider and submit recommendations to the Board on general
staff policy, remuneration, directors’ remuneration, service contracts,
the employee share incentive scheme and the Company pension
and retirement funds.
Regional Committees
The Regional Committee members are identified in the Company
Information section of this report. Regional committees assist the
Board in monitoring corporate governance and compliance with
the Company’s strategy and policies in each business unit. Each
CORPORATE GOVERNANCE
committee takes an active interest in matters affecting Business
2007
Partners in the relevant region, contributes expertise in due diligence
investigations when required, and assists in promoting the Company
annual report
in the small and medium sector.
Transactions Committee
The Transactions Committee considers all the Company’s
transactions in which directors, regional committee members
BUSINESS PARTNERS
or employees have any interests. In addition, executive directors’
directorships in other companies are considered by this committee,
prior to acceptance by such directors. Full transparency to the
Board on any transaction considered will ensure the required
corporate governance. The committee members will always
be disinterested parties and therefore the committee has no
permanent members.
Footprint Committee
The Footprint Committee members are identified in the Company
Information section of this report. The committee is authorised to
consider the approval of the individual business plan for the new
Women’s Fund.
B-BBEE Strategy Committee
The members of the B-BBEE Strategy Committee are identified
in the Company Information section of this report. The committee
is authorised to develop a comprehensive broad-based black
economic empowerment strategy for the Company, including
for every element of the scorecard in terms of the B-BBEE Codes
of Good Practice.
37
CORPORATE GOVERNANCE
Internal Audit
Business Partners has an Internal Audit division, which assists with
the identification and control of the Company’s business risks. The
Audit and Risk Committee reviews the Internal Audit Charter and
approves an annual audit plan.

The role of the division includes the achievement of internal audit

objectives, which are:
• assessment of the design and operating effectiveness of
controls governing key operational processes and business
risks
• independent assessment of the adequacy of the Company’s
internal operating and financial controls, systems and practices
• enterprise risk management

Code of Ethics
Business Partners has adopted a code of ethics that formalises a
culture of the highest standards of integrity and uncompromising
honesty.

The principles to which each individual subscribes in accepting the

code are:
• integrity • incorruptibility • good faith
• impartiality • openness • accountability

New employees receive a copy of the Code of Ethics as part of

their employment conditions. The code also forms an integral part
of the induction programme.

Building small and medium enterprises

through visionary investment partnership
 CORPORATE GOVERNANCE

2007
BUSINESS PARTNERS
SHAREHOLDERS

annual report
BOARD OF DIRECTORS

BUSINESS PARTNERS
MEETING FREQUENCY 5 times per annum

REGIONAL NATIONAL
SUB- AUDIT AND RISK PERSONNEL NOMINATIONS TRANSACTIONS COMMITTEES FOOTPRINT B-BBEE STRATEGY INVESTMENT SUB- INVESTMENT
COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE Egoli, e’Thekwini, iKapa COMMITTEE COMMITTEE COMMITTEE COMMITTEE
business units

MEETING At least twice per At least once per MEETING 2 meetings

4 times per annum When required 4 times per annum When required When required per month
FREQUENCY annum annum FREQUENCY

• 4 Non-executive • Chairman of • Chairman of • Any 3 • 4 Non-executive • 4 Non-executive • 4 Non-executive • 2 Non-executive

Directors the Board or the Board or disinterested members Directors Directors members
alternate: Deputy alternate: Deputy non-executive • Managing
Chairman of the Chairman of the Directors Director
Board Board Equity and Loan
financing above
R4 million to
R15 million
COMPOSITION • Managing • 3 Non-executive • 3 Non-executive • Managing • Executive • 1 Chairman of • 1 Chairman of COMPOSITION
Director Directors Directors Director Director of the Regional Regional AND DELEGATED • 3 Non-executive
business unit Commitee Commitee AUTHORITY members
• Managing
Director
Wholly-owned
property
investments
with “deemed”
equity portion
• Managing • Managing • Managing • Managing • Managing above R15
Director Director Director Director Director million (equity
• 1 Other Executive • 1 Other portion is
Director Executive deemed to be
Director 35% of total
value of property)

39
 ENTERPRISE RISK MANAGEMENT
Effective enterprise risk management is one of Business Partners’ management strategies. A properly designed risk
2007

management programme allows the company to take on investment risk without compromising security or growth.
Options for management of exposure to loss include acceptance, avoidance, reduction, insurance transfer, and retention.
annual report

The most effective treatment of risk usually involves more than one of these methods. Experienced coordination of the
selected methods of treatment is essential to effect real change and to accurately monitor results.
BUSINESS PARTNERS

The company’s business activities involve the acceptance and
management of a range of risks. Risks are uncertain future events
that may influence the achievement of Business Partners’ strategic,
operational and financial objectives. The management of these
risks requires that they be identified and that appropriate procedures
be put in place to mitigate against them.
A risk-management framework has been developed and integrated
into the day-to-day management of the company. The primary risks
identified in this framework are:
Environment Risks
This is the risk of loss resulting from a change in the socio-economic
environment in which the company operates. It is controlled through
the continuous monitoring of the environment and by reacting to
any significant changes immediately in order to minimise identified
risks.
Credit Risks
This risk arises from the potential inability of clients to meet their
financial obligations. The assessment of this risk during the due
diligence phase, and in-depth knowledge of the sector in which
each business operates, are the primary methodologies in place
to minimise this risk.
Business Continuity Risks
The risk that the Company will, for any reason, not be able to
continue its operations in the foreseeable future is defined as
a business continuity risk. Business Partners minimises this risk
by closely monitoring both internal and external factors that might
pose a threat to business continuity.
Human Resources Risks
The specific nature of the company’s activities necessitates
specialised knowledge in certain areas. In order to ensure that
Business Partners has an adequate knowledge base at all times,
the company invests significantly in continuous training programmes,
undertakes succession planning for key personnel, and is committed
to good remuneration practices.
Operational and Financial Risks
Operational risk lies in potential management failures, inadequate
internal systems and controls, fraud and human error, all of which
may cause losses. These risks are managed by means of an
appropriate organisational culture and value system, a
comprehensive system of internal controls, contingency planning
and internal audit procedures.
Risk arising as a result of the inaccurate functioning or failure of
the financial systems or failure of the appropriate controls in these
systems is classified as a financial risk. Internal and external systems
reviews, a pro-active segmentation of duties in key areas and
extensive management procedures and controls are some of the
measures in place to ensure that this risk does not manifest and
result in losses for the Company.

40
 ENTERPRISE RISK MANAGEMENT
Legal Risks
Legal risk arises from the potential inability to enforce, through
legal and judicial processes, the obligations of the Company’s
clients and counterparts. Business Partners minimises such
uncertainty through continuous consultation with internal and
external legal advisors and by means of the proper structuring
of transactions.

The Company has established best-practice legal standards and

procedures, which have been designed to ensure compliance with
all applicable statutory and regulatory requirements.

Quality Management
Business Partners has adopted a policy of total quality management,
conforming to the ISO 9001:2000 standard for quality management
systems.

Continuous evaluation and improvement of quality management

practices and the wide communication of control procedures are
an integral part of the company’s overall risk management
philosophy.

Effective management of risk through

total quality management
 ENVIRONMENTAL AND SOCIAL MANAGEMENT
Sustained socio-economic prosperity depends on human welfare and a healthy environment. Business Partners is
2007
committed to sustainable wealth creation through investment in viable entrepreneurial enterprises that operate in an
environmentally and socially sound way.
annual report
Environmental Legislation
The Company is therefore compliant with the country’s
BUSINESS PARTNERS
environmental legislation and subscribes to an internal environmental
policy. This commits Business Partners to practices that do not
pollute the natural and social environment, and this commitment
is constantly monitored and evaluated.
As part of the due diligence procedure, all potential clients are
evaluated in terms of their compliance with internationally-accepted
environmental management standards. Business Partners will not
invest in companies that do not respect the local and global
environment, no matter how lucrative the potential investment may
be. The Company also reserves the right, in terms of its investment
agreements, to call in the investment facility should a client company
be found to be in breach of environmentally-sound practices.
As far as possible, clients are encouraged to comply with the
environmental practices and procedures as outlined in the
ISO 14001 certification procedure.
In addition, Business Partners will not let out premises to any tenant
or business whose practices and/or procedures are harmful to the
environment. Existing tenants whose practices are found to be
harmful to the environment will be given a written warning, and
they will be evicted if they do not respond to the warning.
Finally, Business Partners will under no circumstances consider
investing in any businesses involved in covert, environmentally
harmful or illegal activities, such as Category A projects or any
activities suspected of being associated with money laundering.
42
Corporate Social Investment
Business Partners is cognisant of the fact that a company is not
an island, that every successful business is part of a broader socio-
economic community. The Company’s corporate social investment
programme acknowledges this and is focused on empowering
small and medium enterprises and the communities in which
they operate.
Adopt-a-Guesthouse
The Adopt-a-Guesthouse programme was initiated by the Southern
Sun Hotel Group to assist emerging bed and breakfast
establishments in Soweto. Given the range of needs that these
establishments have, the group approached a number of different
stakeholders in the tourism industry to participate in the programme
and to provide input in their areas of expertise.
As the most experienced financial institution servicing the small
and medium enterprise sector, Business Partners became involved
to assist with financial and financial management information.
The Tourism Fund has undertaken to sit on the programmes’
advisory panel, to assist with site visits and to provide training
workshops in business planning. Business Partners considers its
participation in this initiative as part of its social responsibility, but
also as an opportunity to extend its client base to establishments
that may require its products and services.
Twenty-three bed and breakfast establishments run by black
women in various townships and suburbs currently participate in
the Adopt-a-Guesthouse programme. It assists them to identify
 ENVIRONMENTAL AND SOCIAL MANAGEMENT
knowledge and skills gaps, and provides training and support in
such areas as service excellence, business skills and financial
management. It also provides business opportunities, access to
various marketing channels and assistance in preparing an
establishment for grading.
In order for establishments to qualify for participation in the
programme, they must be registered businesses, have the potential
to qualify for grading within 12 months, have a turnover of less
that R1 million per annum, and have been in business for more
than a year, but for less than five years.
Some of the other stakeholders in the programme that are also
contributing resources are:
• The Tourism Enterprise Programme (TEP)
• Johannesburg Tourism Company
• Baird’s Renaissance Strategy Consultants
• FEDHASA
• Bid Travel
• Gauteng Tourism Authority
• Nedbank
• Tourism Grading Council
• Simmons SA
This pilot programme is expected to run for a period of between
six months and a year and, if successful, may be rolled out to other
parts of the country.
Succeed Campaign, in Association with the Businesswomen’s
Association and Deloitte
Business Partners has also recently become a partner in the Succeed
Campaign, an initiative of the Business Women’s Association (BWA)
and Deloitte.
Female entrepreneurs who have been in business for less than five
years, and who have a turnover of less than R5 million, are able to
participate in the programme. Selected entrepreneurs will be
2007
partnered with advisors from Deloitte, who will provide assistance
in improving their business in a number of different areas.
annual report
As these advisors are from a consulting background, however,
Deloitte approached Business Partners to provide the input of the
company’s mentors, who have broader backgrounds, extensive
practical business experience and specialist knowledge of the small
BUSINESS PARTNERS
and medium enterprise environment.
These mentors will provide advice on business improvement to
the programme’s participants, offering mentorship rather than the
technical assistance provided by Deloitte. The mentor, the advisory
team and the entrepreneur will work together in developing
customised solutions for each participating business. All mentorship
and advisory services will be provided pro bono.
The aim of the Succeed Campaign is to assist individual
entrepreneurs with business development in order to attain
sustainable profitability.
Schools and Universities
Business Partners holds a number of practical workshops at high
schools, university campuses and business schools throughout
the country every year. These are aimed at promoting
entrepreneurship and at helping participants to assess the
possibility of starting a small or medium enterprise.
Competitions Promoting Entrepreneurship
The Company is also involved in judging and sponsoring a number
of competitions that promote entrepreneurship. These include the
Enterprise of the Year competition, which is run in association with
Rapport, Old Mutual and AHI, and the Workshop for Black Business
Development, which was held in March 2006 to promote
understanding of tenders and contracts.
43
BROAD-BASED BLACK ECONOMIC EMPOWERMENT
Business Partners has, for a number of years, been
recording, monitoring and measuring its broad-based black
economic empowerment (B-BBEE) performance as an
integral part of its mission to investment in and develop
small and medium enterprises in South Africa.

This commitment was further entrenched when, at a meeting in

September 2006, the Board of Directors appointed a new sub-
committee, the Black Economic Empowerment Strategy Committee.
This was formed in order to ensure that Business Partners complies
with the letter and spirit of the country’s B-BBEE legislation and
the Broad-Based Black Economic Empowerment Codes of Good
Practice (B-BBEE Codes), which were being developed by the
Department of Trade and Industry (dti) at the time.

On 9 February 2007, the Minister of Trade and Industry gazetted

the final B-BBEE Codes, as well as the Financial Sector Charter
(FSC), in accordance with the Broad-Based Black Economic
Empowerment Act of 2003.

As Business Partners’ core business is the provision of customised

financial and added-value solutions for small and medium
enterprises, the Black Economic Empowerment Strategy Committee
resolved that the company’s B-BBEE credentials should be
measured in line with the gazetted FSC.

Business Partners has since been independently certified by Exceed

Verification Agency as being 71,48 percent compliant with the FSC,
Ensuring long-term development the second highest level of certification available.

for each employee

 VALUE ADDED STATEMENT

2007
2007 2006
R000 % R000 %

annual report
VALUE ADDED
Interest received, rent charged and other income 423 603 353 117
Less: paid to suppliers (101 913) (82 629)

Total wealth created 321 690 100,0% 270 488 100,0%

BUSINESS PARTNERS
Distributed as follows: 2007
EMPLOYEES 72 000 22,4% 62 003 22,9% 22,4% Employees
Salaries, wages and contributions 72 000 22,4% 62 003 22,9% 27,1% Government
9,0% Shareholders
41,5% Future Operations
GOVERNMENT 87 377 27,1% 76 221 28,3%
Normal taxation 47 083 14,6% 45 224 16,7%
Employee taxes 29 099 9,0% 20 217 7,5%
Skills development levies 982 0,3% 680 0,3%
Regional services levies 260 0,1% 714 0,3%
Value added tax 9 953 3,1% 9 386 3,5%

SHAREHOLDERS 28 987 9,0% 25 766 9,5%

Shareholders for dividend 28 987 9,0% 25 766 9,5%

RETENTIONS TO SUPPORT FUTURE OPERATIONS 133 326 41,5% 106 498 39,3%
2006
Depreciation 1 492 0,5% 1 866 0,7%
22,9% Employees
Income retained 131 834 41,0% 104 632 38,6%
28,3% Government
9,5% Shareholders
321 690 100,0% 270 488 100,0% 39,3% Future Operations

45
 FINANCIAL STATEMENTS
2007
annual report
BUSINESS PARTNERS
FINANCIAL STATEMENTS

Partnering for consistent

business success

46
STATEMENT OF RESPONSIBILITY BY THE
BOARD OF DIRECTORS

2007
The Directors are responsible for the preparation, integrity and fair presentation of access to all financial records and related data, including minutes of all meetings

the financial statements of Business Partners Limited and its subsidiaries. The
financial statements, presented on pages 49 to 82, have been prepared in accordance
with South African Statements of Generally Accepted Accounting Practice, and
include amounts based on judgements and estimates made by management. The
annual report
of shareholders, the Board of Directors, committees of the Board and management.
The Directors believe that all representations made to the independent auditors
during their audit were valid and appropriate. The audit report of

BUSINESS PARTNERS
Directors reviewed the information included in the Annual Report and are responsible PricewaterhouseCoopers Incorporated is presented below.
for both the accuracy and consistency of the financial statements.
The financial statements were approved by the Board of Directors on 17 May 2007
The going concern basis has been adopted in preparing the financial statements. and are signed on its behalf.
The Directors have no reason to believe that the Company or the Group will not be
going concerns in the foreseeable future, based on forecasts and available cash
resources. The viability of the Company and of the Group is supported by the financial
statements.

The financial statements have been audited by the independent accounting and T. van Wyk J. Schwenke
auditing firm, PricewaterhouseCoopers Incorporated, which was given unrestricted Deputy Chairman Managing Director

FINANCIAL STATEMENTS
47
 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
BUSINESS PARTNERS LIMITED
We have audited the annual financial statements and group annual financial statements assessments, the auditor considers internal control relevant to the entity’s preparation
of Business Partners Limited and its subsidiaries, which comprise the directors’ and fair presentation of the financial statements in order to design audit procedures
2007

report, the balance sheet and the consolidated balance sheet as at 31 March 2007, that are appropriate in the circumstances, but not for the purpose of expressing an
the income statement and the consolidated income statement, the statement of opinion on the effectiveness of the entity’s internal control.
annual report

recognised income and expense and the consolidated statement of recognised

income and expense, the statement of changes in equity and the consolidated An audit also includes evaluating the appropriateness of accounting policies used
statement of changes in equity, the cash flow statement and the consolidated cash and the reasonableness of accounting estimates made by the Directors, as well as
flow statement for the year then ended, and a summary of significant accounting evaluating the overall presentation of the financial statements.
BUSINESS PARTNERS

policies and other explanatory notes, as set out on pages 49 to 82.

Directors’ responsibility for the financial statements
The company's directors are responsible for the preparation and fair presentation
of these financial statements in accordance with South African Statements of
Generally Accepted Accounting Practice, and in the manner required by the Companies
Act of South Africa.
This responsibility includes: designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable
in the circumstances.
We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the
financial position of the company and of the group as of 31 March 2007, and of their
financial performance and their cash flows for the year then ended in accordance
with South African Statements of Generally Accepted Accounting Practice, and in
the manner required by the Companies Act of South Africa.

Auditor's responsibility
Our responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit in accordance with International Standards on
Auditing. Those standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance whether the financial
statements are free from material misstatement.
PricewaterhouseCoopers Inc.
An audit involves performing procedures to obtain audit evidence about the amounts Director: JH Cloete
and disclosures in the financial statements. The procedures selected depend on the Registered Auditor
FINANCIAL STATEMENTS

auditor’s judgement, including the assessment of the risks of material misstatement Johannesburg
of the financial statements, whether due to fraud or error. In making those risk 1 June 2007

48
DIRECTORS’ REPORT
for the year ended 31 March 2007
1. Nature of the business
The Company is principally engaged in investing capital, knowledge and skill into
viable small and medium sized businesses.
2. Business activities
During the period under review 664 (2006: 633) investment projects amounting
to R876,6 million (2006: R740,0 million) were approved for investment at an
average investment amount of R1 320 000 (2006: R1 169 000). Business Partners
follows a risk based investment approach by structuring the majority (70,3 percent
(2006: 73,1 percent)) of its investments with equity and royalty based instruments.
An equity stake was obtained in 156 projects (2006: 134 projects) at an average
investment amount of R2,1 million (2006: R2,1 million).
Business Partners manages a portfolio of industrial and commercial properties
with a lettable area totalling more than 682 000 m2 (2006: 675 000 m2), providing
business premises to more than 3 475 (2006: 3 450) tenants.
Additional information on the business activities of the Company is available in
the Management Review section of the Annual Report.
3. Operational and financial review
The Company's net profit amounted to R160,8 million, (2006 restated: R130,4
million), an increase of R30,4 million compared to the previous year. The increase
in net profit of 23,3 percent is the result of additional revenues yielded by the
investment portfolio, the fair value adjustment to the investment properties and
an increase in the equity accounted earnings from associated companies which
benefited from the buoyant South African economy.
The financial position and the results of the various operations are fully disclosed
in the financial statements on pages 49 to 82.
The business investment portfolio is continually analysed in terms of a range of
risk management and control measures, ensuring that risks are identified and
adequately provided for. During the period under review, bad debts amounting
to R32,6 million (2006: R29,1 million) were written off. The recovery of bad debts
written off amounted to R22,4 million (2006: R19,3 million).
4. Events subsequent to the balance sheet date
No material changes in circumstances occurred between the end of the financial
2007
year and the date of this report.
annual report
5. Share capital and reserves
The authorised share capital remained unchanged at 400 million ordinary shares
of R1 each. The issued share capital remained unchanged at 178,8 million shares
of R1 each.
BUSINESS PARTNERS
6. Dividend
Dividend cover for the year equals 5,0 times. The dividend policy objective is to
ensure at least a four times cover for the dividend. A cash dividend of 20 cents
per share in respect of the 2007 financial year (2006: 18 cents) was declared on
17 May 2007, payable on or about 10 August 2007 to all shareholders registered
in the share register at the close of business on 25 July 2007.
7. Earnings per share
Earnings per share increased to 99,5 cents (2006: 81,0 cents) based on 161,6
million weighted number of shares in issue. Diluted earnings per share increased
to 91,0 cents (2006: 74,2 cents). Headline earnings per share increased to 95,4
cents (2006: 78,4 cents). Diluted headline earnings per share increased to 87,3
cents (2006: 71,9 cents). For more information refer to notes 12 and 24 in the
financial statements.
8. Directors’ remuneration and interest
Details of the Directors’ remuneration are set out in note 29 to the financial
statements. No material contracts in which the Directors have any interest were
entered into in the current year.
9. Major shareholders
Shareholders holding beneficially, directly or indirectly, in excess of 5 percent of
FINANCIAL STATEMENTS
the issued share capital of the Company are detailed on page 34 of the annual report.
49
 DIRECTORS’ REPORT
for the year ended 31 March 2007

10. Directors 12. Acknowledgements

10.1 The Directors of the Company on the 31st of March 2007 were: Sincere appreciation is extended to all our shareholders, members of the Board
2007

and its committees for their dedicated and positive participation throughout
Directors appointed in terms of Article 13.4 of the Articles of Association: the year. To the entire staff of Business Partners, we express our gratitude for
annual report

Mr JP Rupert Dr ZZR Rustomjee their loyalty, commitment and hard work in achieving the objectives of the
Mr PM Baum Mr XGS Sithole Company.
Mr F Meisenholl Mr T van Wyk

Directors appointed in terms of Article 17.1 of the Articles of Association:

BUSINESS PARTNERS

Mr SST Ngcobo – Alternate to Mr DR Geeringh

Directors appointed in terms of Article 13.2 of the Articles of Association:

Mr DR Geeringh Mr DM Moshapalo T. van Wyk J. Schwenke
Dr P Huysamer Dr MA Ramphele Deputy Chairman Managing Director
Dr E Links Dr JG Smith 17 May 2007

Directors appointed in terms of Article 15 of the Articles of Association:

Mr J Schwenke (Managing Director)
Mr N Martin (Deputy Managing Director)
Mr C Botes (Executive Director)
Mr G van Biljon (Executive Director) CERTIFICATE BY THE COMPANY SECRETARY
10.2 During the year the following changes occurred in the composition of the In terms of Section 268G(d) of the Companies Act 61 of 1973, as amended, I hereby
Board of Directors: certify that the Company has, in respect of the financial year under review, lodged
with the Registrar of Companies all returns required of the Company in terms of the
Director Event Terms Date Act, and that all such returns are true, correct and up to date.

Mr DR Geeringh Ceased to hold office

as a shareholder
could no longer appoint
the director in terms of
FINANCIAL STATEMENTS

Article 13.8 Article 13.4 27 February 2007

Mr DR Geeringh Re-appointed Article 13.2 27 February 2007

11. Auditors Ms C M Gerbrands

PricewaterhouseCoopers Incorporated will continue in office in accordance Company Secretary
with Section 270(2) of the Companies Act. 17 May 2007

50
BALANCE SHEET
as at 31 March 2007 GROUP COMPANY

2007 2006 2007 2006

Notes R000 R000 R000 R000
ASSETS
Non-current assets 1 557 633 1 228 741 1 511 857 1 211 571

2007
Investment properties 3 267 760 224 474 235 080 202 287
Business investments 4 1 122 658 938 900 1 124 674 937 104

annual report
Investments in associates 5 37 978 25 770 1 877 1 894
Property and equipment 6 16 369 16 132 2 535 2 345
Investments in subsidiaries 7 – – 34 823 45 789
Defined benefit pension fund surplus 15 112 868 112 868
Deferred tax asset 8 – 23 465 – 22 152

BUSINESS PARTNERS
Current assets 538 620 601 598 525 951 597 852

Inventories and assets held for resale 9 3 518 6 331 3 518 6 331
Short-term portion of business investments 4 242 439 199 447 241 780 199 026
Accounts receivable 12 048 8 973 6 940 8 425
Deposits and bank balances 10 280 615 386 847 273 713 384 070

Total assets 2 096 253 1 830 339 2 037 808 1 809 423

EQUITY AND LIABILITIES

Capital and reserves 1 942 977 1 714 395 1 891 532 1 697 453

Share capital 12 178 835 178 835 178 835 178 835
Treasury shares 12 (29 033) (46 626)
Fair value and other reserves 13 80 770 1 615 80 856 1 615
Retained earnings 1 712 405 1 580 571 1 631 841 1 517 003

Non-current liabilities 56 885 40 910 60 044 40 910

Borrowings 14 289 599 289 599

Post-retirement medical aid obligation 15 43 983 40 311 43 983 40 311
Deferred tax liability 8 12 613 – 15 772 –

Current liabilities 96 391 75 034 86 232 71 060

FINANCIAL STATEMENTS
Accounts payable 31 213 24 613 23 344 20 832
Provisions 16 37 260 33 592 36 605 33 592
Current tax liability 27 893 16 713 26 258 16 520
Shareholders for dividend 25 116 25 116

Total liabilities 153 276 115 944 146 276 111 970

Total equity and liabilities 2 096 253 1 830 339 2 037 808 1 809 423

51
 INCOME STATEMENT
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

Notes R000 R000 R000 R000
2007

Revenue 18 300 239 263 802 293 020 261 723

Other operating income 19 81 754 57 317 83 441 51 564
Operating expenses 20 (186 360) (162 186) (178 576) (159 281)
annual report

Profit from operations 21 195 633 158 933 197 885 154 006
Finance cost (276) (55) (76) (52)
Income from associated companies 19 255 12 651
BUSINESS PARTNERS

Profit before taxation 214 612 171 529 197 809 153 954
Tax expense 23 (53 791) (41 131) (50 781) (34 843)

Net profit 160 821 130 398 147 028 119 111

STATEMENT OF RECOGNISED INCOME AND EXPENSE

for the year ended 31 March 2007
2007 2006 2007 2006
R000 R000 R000 R000

Actuarial gain / (loss) on post-retirement benefits (1 050) 1 675 (1 050) 1 675

Initial recognition of pension fund surplus 112 868 112 868
Gain / (loss) on available for sale instruments (210) 229 (210) 229
Foreign currency translation gains / (losses) (86)
Deferred taxation on items above (32 367) (552) (32 367) (552)

Net income / (expense) recognised directly in equity 79 155 1 352 79 241 1 352
Profit for the year 160 821 130 398 147 028 119 111
FINANCIAL STATEMENTS

Total recognised income for the year 239 976 131 750 226 269 120 463

52
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2007
FAIR VALUE
SHARE AND OTHER RETAINED
CAPITAL RESERVES EARNINGS TOTAL

Notes R000 R000 R000 R000

2007
CHANGES IN EQUITY – GROUP

annual report
Balance at 1 April 2005 132 209 263 1 473 239 1 605 711
Change in accounting policy 2 690 2 690
Retained earnings / (loss) of subsidiary sold 10 10
Fair value adjustments of available for sale instruments 13 162 162
Actuarial gains / (losses) 1 190 1 190
Net profit 130 398 130 398

BUSINESS PARTNERS
Dividend 25 (25 766) (25 766)
Balance at 31 March 2006 132 209 1 615 1 580 571 1 714 395
Balance at 1 April 2006 132 209 1 615 1 580 571 1 714 395
Share options taken up 17 593 17 593
Fair value adjustments of available for sale instruments 13 (149) (149)
Actuarial gains / (losses) on employee benefits (746) (746)
Initial recognition of pension fund surplus 80 136 80 136
Foreign currency translation gains / (losses) (86) (86)
Net profit 160 821 160 821
Dividend 25 (28 987) (28 987)
Balance at 31 March 2007 149 802 80 770 1 712 405 1 942 977

CHANGES IN EQUITY – COMPANY

Balance at 1 April 2005 178 835 263 1 423 816 1 602 914
Change in accounting policy 2 690 2 690
Fair value adjustments of available for sale instruments 13 162 162
Actuarial gains / (losses) 1 190 1 190
Net profit 119 111 119 111
Dividend 25 (28 614) (28 614)
Balance at 31 March 2006 178 835 1 615 1 517 003 1 697 453
Balance at 1 April 2006 178 835 1 615 1 517 003 1 697 453

FINANCIAL STATEMENTS
Fair value adjustments of available for sale instruments 13 (149) (149)
Actuarial gains / (losses) on employee benefits (746) (746)
Initial recognition of pension fund surplus 80 136 80 136
Net profit 147 028 147 028
Dividend 25 (32 190) (32 190)

Balance at 31 March 2007 178 835 80 856 1 631 841 1 891 532

53
 CASH FLOW STATEMENT
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

Notes R000 R000 R000 R000
2007

Cash flow from operating activities

Cash received from clients 343 000 291 803 330 694 284 906
Cash paid to suppliers and employees (165 044) (150 821) (157 061) (149 065)
annual report

Cash generated from operating activities 28.1 177 956 140 982 173 633 135 841
Finance cost (276) (55) (76) (52)
Taxation paid 28.2 (35 903) (37 887) (35 486) (37 638)
Dividends paid 28.3 (29 078) (25 794) (32 281) (28 641)
BUSINESS PARTNERS

Net cash generated from operating activities 112 699 77 246 105 790 69 510
Cash flow from investing activities
Capital expenditure on
– investment properties (24 387) (10 760) (13 397) (10 439)
– property and equipment (1 568) (1 669) (1 495) (1 669)
Proceeds from the sale of
– investment properties 10 928 15 055 8 028 10 555
– property and equipment 216 174 216 174
Business investments advanced (629 185) (496 148) (628 849) (496 148)
Business investments repaid 395 449 315 956 380 394 314 818
Investment in subsidiaries 10 966 9 223
Proceeds from sale of other investments 25 123 12 831 25 123 12 831
Dividends received from other investments 4 493 12 707 2 867 14 883

Net cash utilised in investing activities (218 931) (151 854) (216 147) (145 772)
Cash flow from financing activities
Long-term borrowings – (8 200) – (8 200)

Net cash utilised in financing activities – (8 200) – (8 200)

Net decrease in cash and cash equivalents (106 232) (82 808) (110 357) (84 462)
Cash and cash equivalents at the beginning of year 386 847 469 655 384 070 468 532

Cash and cash equivalents at the end of year 280 615 386 847 273 713 384 070
FINANCIAL STATEMENTS

54
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
1. Summary of accounting policies
The principal accounting policies adopted in the preparation of these
consolidated financial statements are set out below and are consistent with
those of the previous year, except for the application of a different treatment
of actuarial gains and losses as allowed by the restatement on IAS 19 (AC
116) Employee Benefits as set out in note 2.
1.1 Basis of preparation
The consolidated financial statements are prepared in accordance with and
comply with South African Statements of Generally Accepted Accounting
Practice. The consolidated financial statements are prepared under the
historical cost convention, as amended by the fair value of investment
properties and financial instruments.
The preparation of financial statements in conformity with South African
Statements of Generally Accepted Accounting Practice, requires the use of
estimates and assumptions based on management's best knowledge of
current events and actions. These estimates and assumptions affect the
reported amounts of assets and liabilities, and the disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual
results may ultimately differ from these estimates.
1.2 Group accounting
1.2.1 Subsidiaries
Subsidiary undertakings, which are those companies and other entities in
which the Company, directly or indirectly, has an interest of more than one
half of the voting rights, or otherwise has power to govern the operations,
are consolidated.
Subsidiaries are consolidated from the date on which effective control is
transferred to the Company and are no longer consolidated from the date
that control ceases. The purchase method of accounting is used to account
for the acquisition of subsidiaries. The cost of an acquisition is measured
as the fair value of assets given up, shares issued or liabilities undertaken at
the date of acquisition plus costs directly attributable to the acquisition. The
excess of the cost of acquisition over the fair value of the net assets of the
subsidiary acquired, is recorded as goodwill. All intercompany transactions,
balances and unrealised surpluses and deficits on transactions between
group companies have been eliminated.
Where necessary, accounting policies in subsidiaries have been changed
to ensure consistency with the policies adopted by the Group.
1.2.2 Investments in associates
Investments in associates are accounted for by the equity method of
accounting. Under this method the Company’s share of the post-acquisition
2007
profits or losses of associates is recognised in the income statement and its
share of post-acquistion reserves is recognised in reserves. The cumulative
annual report
post-acquisition movements are adjusted against the cost of the investment.
Associates are entities over which the Company generally has between 20
percent and 50 percent of the voting rights, or over which the Company has
significant influence, but which it does not control. Impairments are recorded
for long-term diminutions in value. Unrealised gains on transactions between
the Company and its associates are eliminated to the extent of the Group’s
BUSINESS PARTNERS
interest in the associates; unrealised losses are also eliminated, unless
the transaction provides evidence of an impairment of the asset transferred.
When the Company’s share of losses in an associate equals or exceeds its
interest in the associate, the Company does not further recognise losses,
unless the Company has incurred obligations or made payments on behalf
of the associates. Audited financial statements are utilised to determine the
share of the associated company earnings. Where these are not available,
management estimates are not included in the equity accounted earnings.
1.2.3 Joint ventures
A joint venture is a contractual arrangement whereby two or more parties
undertake an economic activity that is subject to joint control. The Company's
interest in a jointly-controlled entity is accounted for by proportionate
consolidation. The Company combines its share of the joint venture's individual
income and expenses, assets and liabilities and cash flows on a line-by-line
basis with similar items in the Company's financial statements.
As with subsidiaries, joint ventures are excluded from consolidation if the
interest is intended to be temporary or if the joint venture operates under
severe long-term restrictions.
Where required, accounting policies in joint ventures have been changed to
ensure consistency with the policies adopted by the Group.
FINANCIAL STATEMENTS
1.3 Foreign currencies
1.3.1 Functional and presentation currency
The consolidated financial statements are presented in South African Rands,
which is the Company's functional currency and the Group’s presentation
currency.
55
 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which
the entity operates (the "functional" currency).
2007
1.3.2 Foreign currency translations
annual report
The results and financial position of all the Group entities that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
The assets and liabilities of foreign subsidiary companies are translated at
the closing exchange rates ruling at year-end. Income statement items in
BUSINESS PARTNERS
respect of foreign entities are translated at the appropriate weighted average
exchange rate for the year where they approximate actual rates. Gains and
losses arising on translation are transferred to fair value and other reserves
(foreign currency translation reserve).
On consolidation, exchange differences arising on the translation of the net
investment in foreign entities and of borrowings, are taken to shareholders’
equity.
1.4 Financial instruments
Financial instruments carried on the balance sheet include loans and receivables,
listed shares, bonds, cash and bank balances, money market assets and
accounts payable. The particular recognition methods adopted are disclosed
in the individual policy statements associated with each item.
The Company classifies its financial instruments primarily into the following
categories: loans and receivables and available for sale instruments. The
classification of investments are done in consultation with the Audit and Risk
Committee.
Investments intended to be held for an indefinite period of time, which may
be sold in response to market opportunities, are classified as available for
sale. The fair value of these investments is based on quoted bid prices.
Unrealised gains and losses, arising from changes in fair value of investments
classified as available for sale, are recognised in equity. When investments
FINANCIAL STATEMENTS
classified as available for sale are sold or impaired, the accumulated fair value
adjustments are included in the income statement as gains and losses.
Loans and receivables include shareholder's loans, royalty agreements and
interest bearing loans and other loans. These financial instruments are initially
recorded at fair value. Thereafter, the instruments are measured at
amortised cost.
56
Loans and receivables are reviewed by applying a range of risk identification
criteria for impairment losses, which may indicate that the full carrying amount
will not be recoverable. An impairment loss is recognised for the amount by
which the carrying value of the investment exceeds its recoverable amount.
Impairment losses are recognised based on objective evidence of impairment
and adjusted to the income statement. Impairment losses are also collectively
recognised for asset classes with similar risk profiles where impairments are
empirically proven to have been incurred but for which the objective evidence
is not yet reported but is expected to emerge in the near future. The
impairment losses collectively assessed are adjusted to the income statement.
Investments are derecognised when the Company no longer has control over
the contractual right that comprises the investment.
Disclosure about financial instruments to which the Company is a party is
provided in note 11 to the annual financial statements.
1.5 Investment properties
Investment properties are held for long-term rental yields and are not occupied
by the Company. Investment properties are treated as long-term investments
and are carried at fair value. Valuations are done internally at the end of each
accounting period on the capitalised income basis, taking into account the
profile and locality of the property, market conditions and core vacancy factors.
Changes in fair values are recorded in the income statement and are included
in other operating income.
Properties to be disposed of are valued based on the above criteria, influenced
by market offers received. Leased properties are reflected at original capital
cost less depreciation.
1.6 Property and equipment
All owner-occupied property is initially recorded at cost. Depreciation is
calculated on a straight-line basis to the revised residual value over the
estimated useful life of the property which varies between 25 and 30 years.
Land is not depreciated.
Equipment acquired is initially recorded at cost and depreciation is calculated
on the straight-line method to write off the cost of each asset to its residual
value over its estimated useful life, currently assessed as being between
three and ten years.
Where the carrying amount of an asset is greater than its estimated recoverable
amount, it is written down immediately to its recoverable amount.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
Gains and losses on disposal of property and equipment are determined by
reference to their carrying amount and are included in the income statement.
1.7 Inventories and assets held for resale
Inventories consist mainly of repossessed assets and are stated at the lower
of cost or net realisable value. Net realisable value is the estimated selling
price in the ordinary course of business, less selling expenses.
1.8 Trade receivables
Trade receivables are carried at anticipated realisable value and consist mainly
of rent receivable and interest accrued.
1.9 Trade and other payables
Trade and other payables represent liabilities for goods and services provided
to the Company prior to the end of the financial year which are unpaid. The
amounts are unsecured and are usually paid within 30 days of recognition.
1.10 Cash and cash equivalents
Money market assets form part of deposits and bank balances and are carried
at fair value.
For the purposes of the cash flow statement, cash and cash equivalents
comprise cash in hand, deposits held at call with banks and investments in
money market instruments.
1.11 Provisions
Provisions are recognised when the Company has a present legal or
constructive obligation as a result of past events. It is probable that an outflow
of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate of the amount of the obligation can be
made.
Employee entitlements to annual leave and bonuses are recognised when
they accrue to employees. A provision is made for the estimated liability for
annual leave as a result of services rendered by employees up to the balance
sheet date.
1.12 Employee benefits
1.12.1 Pension obligations
The Company operates a defined benefit pension plan and a defined
contribution pension plan. All employees are members of one of these funds.
The assets of the defined benefit pension plan are held in a separate trustee-
administered fund. The pension plan is funded by payments from employees
and the Company, taking into account the recommendations of independent
actuaries.
2007
The pension accounting costs are assessed using the projected unit credit
annual report
method. Under this method, the cost of providing pensions is charged to the
income statement to spread the regular cost over the service lives of
employees, in accordance with the advice of actuaries who carry out a full
statutory valuation of the plan every three years. In addition, an interim, non-
statutory valuation is performed between statutory valuation dates.
BUSINESS PARTNERS
The pension obligation is measured as the present value of the estimated
future cash outflow, using interest rates of government securities that have
terms to maturity, approximating the terms of the related liability.
The Group’s net obligation to the pension fund can either be a liability or a
benefit to the Group. Assets and liabilities resulting from the calculation are
recognised in full on the balance sheet. Actuarial gains or losses that arise
from the determination of the liability or asset, are recognised in the statement
of recognised income and expense and reflected in equity.
The Company pays fixed contributions into a separate trustee-administered
fund in terms of the defined contribution plan. The Company will have no
legal or constructive obligation to pay further contributions if the fund does
not hold sufficient assets to pay all employee benefits relating to employee
service in the current and prior periods.
1.12.2 Post-retirement medical aid obligations
The Group provides post-retirement medical aid benefits to employees and
pensioners in service of the Group on or before 30 April 1999. The entitlement
to post-retirement medical aid benefits is based on the employee remaining
in service up to retirement age. The expected costs of these benefits are
accrued over the period of employment, using the projected unit credit
method. Valuations of these obligations are carried out by independent
actuaries. Actuarial gains or losses are recognised in full in the year in which
the gain or loss is determined by the actuary in the statement of recognised
FINANCIAL STATEMENTS
income and expense, and are accounted for under fair value and other
reserves.
1.13 Deferred tax
Deferred tax is determined by using the liability method, for all temporary
differences arising between the tax base of assets and liabilities and their
carrying values for financial reporting purposes. Currently enacted tax rates
are used to determine deferred tax.
57
 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007

Under this method, the Company is required to make provision for deferred The estimates and variables used in determining the fair value adjustments
tax on the fair value adjustments arising from investment properties and, in on investment properties are disclosed in note 3.
relation to an acquisition, on the difference between the fair values of net
2007

assets acquired and their tax base. Assets are subject to regular impairment reviews as required. Impairments
are measured as the difference between the cost (or amortised cost) of a
annual report

The principal temporary differences arise from provisions. Deferred tax assets particular asset and the current fair value or recoverable amount. In determining
are recognised to the extent that it is probable that future taxable profit will the recoverable amount on portfolios of investments, historical loss experience
be available against which the tax asset can be utilised. is adjusted to reflect current economic conditions, as well as changes in the
emergence period for objective evidence of impairment to present itself.
1.14 Operating leases
Leases of assets, under which all the risks and benefits of ownership are
BUSINESS PARTNERS

effectively retained by the lessor, are classified as operating leases. Payments

made under operating leases are charged to the income statement on a
straight-line basis over the period of the lease.

1.15 Revenue recognition

Revenue comprises the invoiced value, net of value added tax, rebates
and discounts.

Interest income is recognised on a time apportionment basis, taking account

of the principal amount outstanding and the effective rate over the period to
maturity to determine when such income will accrue to the Company.

Rental income is recognised equally over the period of the lease taking into
consideration the clauses affecting the rental charge.

Dividend income is recognised when the right to receive payment is established.

1.16 Critical accounting estimates and judgements

Critical accounting estimates are those that involve complex or subjective
judgements or assessments. The areas of the Company’s business that
typically require such estimates are the determination of fair value for financial
assets, financial liabilities and investment properties, the impairment charges
on financial instruments and deferred taxes.

The fair values of financial assets and liabilities are classified and accounted
FINANCIAL STATEMENTS

for in accordance with the policies set out on section 1.4 above. Listed market
prices for equities, bonds and other instruments are used as far as possible
in the determination of the fair value. If prices are not available, pricing
models are used that consider a range of probable factors.

58
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

R000 R000 R000 R000

2007
2. CHANGE IN ACCOUNTING POLICY
During the current financial year, the Company changed its accounting policy to comply
with the following South African Statements of Generally Accepted Accounting Practice:

annual report
– IAS 19 (AC 116), Employee Benefits.
The revised accounting statement allows for actuarial gains and losses on Employee
Benefits to be reflected in full in the statement of recognised income and expenses.
This approach has been adopted, whereas in previous years such gains and losses were
accounted for in terms of the corridor approach. The effects of the change in policy

BUSINESS PARTNERS
is set out below:

2.1 Net profit

Net profit as previously reported 133 088 121 801
Accounting for actuarial gains / (losses) on employee benefits (3 789) (3 789)
Deferred tax 1 099 1 099

Net profit as currently reported 130 398 119 111

2.2 Retained earnings

Opening balance as previously reported 1 580 571 1 473 239 1 517 003 1 423 816
Restatement – 2 690 – 2 690

Restated opening balance 1 580 571 1 475 929 1 517 003 1 426 506

2.3 Fair value and other reserves

Opening balance as previously reported 425 263 425 263
Restatement 1 190 – 1 190 –

Restated opening balance 1 615 263 1 615 263

2.4 Post-retirement medical aid obligation

Opening balance as previously reported 41 987 43 265 41 987 43 265
Restatement (1 676) (3 789) (1 676) (3 789)

Restated opening balance 40 311 39 476 40 311 39 476

FINANCIAL STATEMENTS
2.5 Deferred tax asset
Opening balance as previously reported 23 951 25 891 22 638 22 607
Restatement (486) (1 099) (486) (1 099)

Restated opening balance 23 465 24 792 22 152 21 508

59
 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

R000 R000 R000 R000
2007

3. INVESTMENT PROPERTIES
Fair value – beginning of year 224 474 209 544 202 287 185 431
Acquisitions 24 387 10 760 13 397 10 439
annual report

Disposals (4 174) (11 170) (3 373) (7 855)

Depreciation on leasehold property (99) (99) (99) (99)
Fair value adjustment 23 172 15 439 22 868 14 371

Fair value – end of year 267 760 224 474 235 080 202 287
BUSINESS PARTNERS

The valuation of property investments was performed internally by suitably qualified

personnel and was based on the capitalised income method. The key assumptions used
in the valuation of the investment properties were:
– Capitalisation rates used varied between 10,5% and 16%
– Vacancy factors varied between 0% and 16%
– Property maintenance and expenses varied between 12% and 35% of total rent

The following items regarding the investment properties are included in the
income statement:
– Rental income 51 540 48 183 42 550 39 847
– Repairs and maintenance expenses 7 674 5 105 5 941 3 929
– Other operating expenses 25 128 23 028 19 236 17 836

A register of the property portfolio is available for inspection at the registered office.

4. BUSINESS INVESTMENTS
Investment in En Commandite partnerships (Refer note 4.1) 26 153 16 847 26 025 15 417
Financial instruments – fair value adjusted to equity (Refer note 4.2) 1 689 1 899 1 689 1 899
Loans and receivables (Refer note 4.3) 1 337 255 1 119 601 1 338 740 1 118 814
Less: Short-term portion (242 439) (199 447) (241 780) (199 026)

Carrying value of business investments 1 122 658 938 900 1 124 674 937 104

4.1 Investment in En Commandite partnerships

FINANCIAL STATEMENTS

The Company entered into an En Commandite partnership with the Umsobomvu Youth Fund to establish a R125 million investment fund aimed at expanding the ownership
of franchises amongst the previously disadvantaged youth. The Company will contribute 20 percent of the capital for the fund, and the Umsobomvu Youth Fund the balance
of 80 percent.

The Company entered into an En Commandite partnership with Khula Enterprise Finance Limited to establish a R150 million investment fund aimed at promoting start-
up ventures amongst previously disadvantaged individuals. The Company will contribute 20 percent of the capital for the fund, and Khula the balance of 80 percent.

The investments are stated at cost and profits are equity accounted in line with specifications of the partnership agreements. Future investments by the Company in the
partnerships are disclosed in note 26.
60
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

R000 R000 R000 R000

2007
4.2 Financial instruments – fair value adjusted to equity
Fair value – beginning of year 1 899 1 670 1 899 1 670
Disposals – – – –

annual report
Aquisitions – – – –
Fair value (loss) / surplus transferred to equity (210) 229 (210) 229

Fair value – end of year 1 689 1 899 1 689 1 899

BUSINESS PARTNERS
The above available for sale investments, comprising mainly bond market investments and
listed shares, are measured at fair value. Fair value is determined by reference to quoted
prices on the relevant bond market and securities exchange.

4.3 Loans and receivables

Interest bearing loans
These loans are secured and are priced at market related rates relative to the quality and
coverage of the underlying collateral. The loans are initially recorded at fair value and
thereafter measured at amortised cost, at level yields to maturity that vary between
10,5 percent and 22 percent. 1 268 087 1 046 930 1 267 249 1 046 271

Shareholder’s loans
These loans are unsecured, and are priced at interest rates between 0 percent and
13,5 percent. The loans are initially recorded at fair value and thereafter measured at
amortised cost, based on rates applicable to instruments with a similar expected
lifespan or duration which vary between 7,3 percent and 8,2 percent. 46 898 50 474 49 235 50 365

Royalty agreements
The future cash flows resulting from the royalty agreements are adjusted to expected
royalty payments by applying a risk premium to the contracted royalty payments.
These expected future royalty payments are then discounted at a rate intrinsic to the
investment to which the royalty agreement relates and measured at amortised cost.
The rates vary between 1,25 percent and 17,5 percent. 19 953 18 094 19 951 18 087

Staff loans
These loans, consisting mainly of mortgage loans over residential property and bearing

FINANCIAL STATEMENTS
interest at rates linked to the prime overdraft rate, are initially recorded at fair value and
thereafter measured at amortised cost using rates that vary between 6 percent
and 11 percent. 2 317 4 103 2 305 4 091

Total for loans and receivables 1 337 255 1 119 601 1 338 740 1 118 814

61
 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

R000 R000 R000 R000
2007

5. INVESTMENTS IN ASSOCIATES
Audited financial statements are utilised to determine the share of associated company
earnings. Where these are not available, management estimates are not included in
annual report

equity accounted earnings. A register containing details of all listed, unlisted and other
investments is available at the registered office.

Unlisted shares at cost 3 685 3 692 1 877 1 894

Share of retained earnings 34 293 22 078
BUSINESS PARTNERS

Total for unlisted associates 37 978 25 770 1 877 1 894

Directors’ valuation of the investment in unlisted associates 134 062 114 114 133 177 111 596

The valuation methods applied to determine the directors’ valuation are consistent with the
valuation guidelines recommended by the South African Venture Capital Association (SAVCA).

The movement in investments in associates is as follows:

At beginning of year 25 770 24 107 1 894 3 256

Share of results before tax 19 255 12 651
Share of tax (2 997) (3 976)
Other movements (net acquisitions and disposals) (4 050) (7 012) (17) (1 362)

At end of year 37 978 25 770 1 877 1 894

6. PROPERTY AND EQUIPMENT

6.1 Equipment
Cost – beginning of year 21 013 20 452 21 013 20 434
Acquisitions 1 568 1 669 1 495 1 669
Disposals (1 951) (1 108) (1 951) (1 090)

Cost – end of year 20 630 21 013 20 557 21 013

Accumulated depreciation – beginning of year (18 668) (18 036) (18 668) (18 018)
FINANCIAL STATEMENTS

Depreciation charged (1 158) (1 532) (1 150) (1 532)

Depreciation on disposals 1 796 900 1 796 882

Accumulated depreciation – end of year (18 030) (18 668) (18 022) (18 668)

Closing net book amount 2 600 2 345 2 535 2 345

62
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

R000 R000 R000 R000

2007
6.2 Land
Cost – beginning of year 7 295 7 295 – –
Disposals – – – –

annual report
Cost – end of year 7 295 7 295 – –

6.3 Buildings
Cost – beginning of year 7 431 7 262 – –

BUSINESS PARTNERS
Improvements 217 169 – –
Disposals – – – –

Cost – end of year 7 648 7 431 – –

Accumulated depreciation – beginning of year (939) (704) – –

Depreciation charged (235) (235) – –
Depreciation on disposals – – – –

Accumulated depreciation – end of year (1 174) (939) – –

Closing net book amount 6 474 6 492 – –

Total net book amount for property and equipment 16 369 16 132 2 535 2 345

7. INVESTMENTS IN SUBSIDIARIES
Unlisted shares at cost 6 6
Loans 39 934 50 900
Provisions (5 117) (5 117)
34 823 45 789

The Company’s interest in the aggregate net profits and losses

of subsidiaries are:
Profits 13 441 12 358
Losses – (719)

FINANCIAL STATEMENTS
The details of the subsidiaries are disclosed in note 31.

63
 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

R000 R000 R000 R000
2007

8. DEFERRED TAX ASSET / LIABILITY

Deferred tax is calculated on all temporary differences under the liability method using
a principal tax rate of 29 percent (2006: 29 percent).
annual report

The movement on the deferred tax account is as follows:

At beginning of the year 23 465 24 792 22 152 21 508

Income statement charge – Provisions 904 5 236 1 388 (221)
BUSINESS PARTNERS

– Fixed assets (3 291) (4 976) (3 093) 743

– Fair value adjustments (363) (3 349) (2 414) (807)
– Assesed losses 477 833 – –
– Dividends received after the dividend cycle (1 438) 1 481 (1 438) 1 481
Fair value and other reserves charge (32 367) (552) (32 367) (552)

At end of the year (12 613) 23 465 (15 772) 22 152

Deferred tax assets / (liabilities) consist of temporary differences relating to:

Provisions 33 983 33 079 32 533 31 145
Fixed assets (13 888) (10 597) (13 286) (10 193)
Fair value adjustments: financial instruments (2 369) (2 371) (2 330) (281)
Dividends received after the dividend cycle 43 1 481 43 1 481
Assessed losses 2 350 1 873 – –
Defined benefit pension fund surplus (32 732) – (32 732) –

Total deferred tax asset / (liability) (12 613) 23 465 (15 772) 22 152
9. INVENTORIES AND ASSETS HELD FOR RESALE
Equipment (at cost) 100 103 100 103
Repossessed properties (at lower of cost or net realisable value) 3 378 6 191 3 378 6 191
Other (at cost) 40 37 40 37

3 518 6 331 3 518 6 331

10. DEPOSITS AND BANK BALANCES
Term deposits 261 210 367 255 261 210 367 255
FINANCIAL STATEMENTS

Bank current accounts 15 904 14 378 9 002 11 601

Interest accrued 3 501 5 214 3 501 5 214

280 615 386 847 273 713 384 070

64
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007

11. FINANCIAL INSTRUMENTS The sensitivity to interest rate changes is decreased by alternative revenue
The primary risks arising from the Company’s financial instruments are credit streams from the investment portfolio, such as investment property returns,
risk, interest rate risk and liquidity risk. dividends and royalty fees.

2007
11.1 Credit risk 11.3 Liquidity risk

Accepting the credit risk of investing in small and medium businesses forms
the core business activity of the Company. The credit risk at the investment
stage of any potential investment is analysed and assessed in a due diligence
process where the entrepreneur is evaluated, the viability of the enterprise
is considered and various other risk indicators are determined, verified and
annual report
In order to mitigate any liquidity risk, the Company’s policy has been to
balance net operational cash flows with the maturity term of the treasury
investments. In addition, substantial borrowing facilities have been arranged
should it be required.

BUSINESS PARTNERS
benchmarked. The concentration of risk in the investment portfolio is also 11.4 Fair values of financial assets and financial liabilities
decreased through industry diversification. The 2 037 investments in the The carrying amount of the financial assets and liabilities is fair and where
portfolio are representative of most sectors of the economy, with no required, adequate provision was made for any potential impairments to the
specific industry or geographical area representing undue risk. carrying value. The fair values have been determined using available information
and are indicative of the amounts the Company could realise in the normal
No single investment represents more than 0,9 percent of the total investment course of business.
portfolio, limiting the concentration of risk in a single investment.
11.5 Deposits and bank balances
The ongoing monitoring of the risk profile of the portfolio is managed and The investment of cash and cash equivalents, and the management thereof,
guided by investment policies, investment committees and credit control are controlled through a treasury policy which is reviewed by the Audit and
functions. Risk Committee. Investment limits exist for each instrument and institution
used. Returns on investments are measured against returns of comparable
Exception reporting at various levels within the organisation provides early money market instruments. The carrying value of deposits and bank balances
identification of increases in the credit risk of the business investment portfolio. are fair.
A formal risk assessment process is undertaken in terms of which investments
are impaired in line with extraordinary increases in the credit risk.
Remaining term of money market instruments Total
The credit risk of rent debtors is controlled and monitored on an ongoing R000
basis by property management committees, credit control functions as well 0 to 1 month 77 114
as exception reporting at various levels in the management structure. 1 to 3 months 150 000
3 to 6 months 50 000
Credit risk in the investment of treasury funds is controlled by a treasury 6 to 12 months –
policy as reviewed and approved by the Audit and Risk Committee. An Over 12 months –
investment mandate limits the investment exposure to each specific instrument Accrued interest 3 501
and institution used.
Total 280 615

FINANCIAL STATEMENTS
11.2 Interest rate risk
Changes in interest rates will affect the revenue stream of the Company, as
most of the interest bearing investment products are linked to the prime
overdraft rate. The level of interest rates also determines the return on treasury
funds, since most investments are made over the short-term to minimise
liquidity risk.

65
 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

R000 R000 R000 R000
2007

12. SHARE CAPITAL

12.1 Authorised
annual report

400 000 000 ordinary shares of R1 each 400 000 400 000 400 000 400 000

12.2 Issued
178 834 594 ordinary shares of R1 each 178 835 178 835 178 835 178 835
11 084 900 (2006: 17 800 000) treasury shares held by the share trust (29 033) (46 626)
BUSINESS PARTNERS

167 749 694 (2006: 161 034 594) ordinary shares 149 802 132 209 178 835 178 835

12.3 Unissued shares

Ten percent of the unissued shares are under the control of the directors in terms of a
general authority to allot and issue shares on such terms and conditions and at such
times as they deem fit.

This general authority expires at the forthcoming annual general meeting of the Company.
The Company has a share incentive scheme in terms of which shares are issued and
options are granted (refer to note 30).

13. FAIR VALUE AND OTHER RESERVES

Balance – beginning of year 1 615 263 1 615 263
Fair value adjustment to financial instruments (refer note 4.2) (149) 162 (149) 162
Actuarial gains / (losses) – post-retirement medical aid (746) 1 190 (746) 1 190
– defined benefit pension fund 80 136 80 136
Foreign currency translation losses (86) – – –

Balance – end of year 80 770 1 615 80 856 1 615

14. BORROWINGS
14.1 Unsecured
Interest-free loans repayable by rebates on petrol purchases 289 599 289 599
FINANCIAL STATEMENTS

289 599 289 599

14.2 Borrowing powers
Maximum permitted borrowings in terms of the Company's articles of association 2 648 145 2 376 434

Total borrowings 289 599

66
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007

15. EMPLOYEE BENEFITS

2007
15.1 Pension funds
The Company operates a defined benefit pension fund as well as a defined contribution pension fund. All permanently employed personnel are members of one of the two
funds. Both pension funds are funded by employee and employer contributions.

annual report
Defined Contribution Pension Fund
The Company pays fixed contributions into a separate trustee-administered fund in terms of the defined contribution plan. The Company has no legal or constructive obligation
to pay additional contributions to the fund apart from those contributions that are contractual between the employer and employee. Should the fund not hold sufficient assets
to pay employee benefits, no liability to make any additional contribution can or will accrue to the Company.

BUSINESS PARTNERS
Defined Benefit Pension Fund
The defined benefit fund was actuarially valued at 1 April 2004 in terms of section 16 of the Pension Fund Act of 1956 (as amended). Statutory valuations of this fund are
performed every three years. The next statutory valuation of the fund will be performed with an effective date of 1 April 2007.

Projected unit credit valuation performed in terms of the requirements of IAS 19 (AC 116), Employee Benefits
An actuarial valuation of the defined benefit pension fund was performed effective for 31 March 2007 applying the Projected Unit Credit method in line with the requirements
of IAS 19 (AC 116), Employee Benefits. The current service cost reflects the increase in the past service liability resulting from employee service during the financial year.
The interest cost represents the increase during the year in the past service obligation which arises because the benefits are one year closer to retirement and is determined
by multiplying the discount rate used in the 1 April 2006 valuation by the average liability over the period. Based on the market value of the assets, the funding level, in terms
of this valuation basis and assumptions, was 146,2 percent.

FINANCIAL STATEMENTS
67
 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007

2007 2006 2005 2004

R000 R000 R000 R000
2007

The results of the valuation are as follows:

Projected benefit obligation at beginning of year 235 769 176 285 169 852 156 037
annual report

Interest cost 20 047 20 603 19 038 19 553

Current service cost 9 619 8 369 8 681 8 826
Benefits paid (13 736) (10 062) (27 253) (12 901)
BUSINESS PARTNERS

15 930 18 910 466 15 478

Additional past service obligations 12 243 1 966 – –
Actuarial gains / (losses) (4 733) 38 608 5 967 (1 663)

Projected benefit obligation at end of year 259 209 235 769 176 285 169 852

The total value of the past service liabilities are made up as follows:
Active members 191 779 173 697 130 130 124 729
Pensioners 67 430 62 072 46 155 45 123

Total past service liability at end of year 259 209 235 769 176 285 169 852

Market value of assets at beginning of year 319 471 240 630 210 764 168 753
Expected return on assets 25 877 24 063 23 184 20 250
Actuarial gains / (losses) 62 576 58 421 27 344 24 993
Employer contributions 7 942 6 899 6 599 7 216
Member contributions 2 877 2 500 3 666 4 017
Benefits paid (13 736) (10 062) (27 253) (12 901)
Expenses and tax paid (2 533) (2 980) (3 674) (1 564)

Market value of assets at end of year 402 474 319 471 240 630 210 764

The principal actuarial assumptions used were:

Discount rate 8,5% 8,1% 10,0% 11,0%
Expected rate of return on assets 8,5% 8,1% 10,0% 11,0%
FINANCIAL STATEMENTS

Expected future salary increases 6,7% 6,2% 6,7% 8,0%

Expected average remaining working life 14,7 15,1 16,1 19,3

68
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007 2007
R000

The pension fund assets, as administered by three asset managers, are in

accordance with prudential guidelines, and consist of the following asset classes

2007
Equity 301 404
Capital market 26 512

annual report
Money market 70 266
Pooled funds 4 292

Market value of assets at end of year 402 474

BUSINESS PARTNERS
It is anticipated, on a best estimate basis, that contributions to be paid to the pension fund will amount to R9,995 million in the period 1 April 2007 to 31 March 2008. This
amount includes contributions made by the employer as well as the members.

Recognition of the surplus of the Fund as an asset of the Company

The surplus of the Fund is recognised as an asset in the balance sheet of the Company after a decision was taken by the Trustees of the Fund to apportion all future surplusses
of the Fund to an employer surplus account. This decision was taken on 23 March 2007, and the rule change was submitted to the FSB for approval. The decision followed
protracted negotiations between the Trustees and the employer, and was taken on the basis of certain benefit improvements and amendments to conditions of service.

The Pension Fund Second Amendment Act, 2001 permits the establishment of contingency reserve accounts that the Board of Trustees deem to be prudent. The Trustees
decided to establish a Data Reserve and a Solvency Reserve amounting to R2,22 million and R28,177 million respectively on 31 March 2007. These reserves are deducted
in the determination of the surplus.

The Trustees of the Pension Fund identified “prior improper uses of the pension fund surplus”, in terms of the definition of “surplus utilised improperly by the employer
prior to surplus apportionment” as contained in Section 15B(6) of the Pension Fund Second Amendment Act, 39 of 2001. The value of the so-called “improper use of surplus”
amounted to R9,829 million on 1 April 2004. This amount has not been repaid to the Fund by the employer. The actuary determined the amount of this liability on 31 March
2007 by adding interest to the amount from 1 April 2004 at the rate of return achieved by the Fund, and the value at 31 March 2007 amounts to R21,001 million.

In calculating the surplus or shortfall in the Fund to reflect either an asset or liability of the Company, the amount of the “prior improper uses of the pension fund surplus”
of R21,001 million has been excluded. It is unclear at this stage whether the amount constitutes a liability of the employer to the Fund.

The amount of R21,001 million has therefore been reflected as a “contingent liability” (refer note 27) and will remain a contingent liability until finality regarding the interpretation
of the Act is obtained. It should be noted that had the liability been accounted for, the effect on the consolidated net asset value of the Group would have been nil, since
both the liability and the asset would have been reflected. In addition, since any future surplus of the Fund will be allocated to the employer surplus account, any liability of
the employer to the Fund will result in a corresponding asset of the Company, since it will be utilised for the economic benefit of the employer within the prescribed rules
of the Act.

FINANCIAL STATEMENTS
Financial position of the Fund
Assets 402 474
Less Contingency reserves (30 397)
Less Past Service liabilities (259 209)

Surplus reflected as an asset of the Group 112 868

69
 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007

15.2 Post-retirement medical aid obligation

The Company has an obligation to provide post-retirement medical aid benefits to employees and pensioners in the service of the Company on or before 30 April 1999.
The entitlement to these benefits is dependent upon the employee remaining in service until retirement age. The employer set the post-retirement medical aid subsidy for
2007

all participants (pensioners and employees) at a fixed amount since 1 January 2000 which increases annually by the same percentage granted as an increase to pensioners’
pensions in the previous calendar year. The main actuarial assumptions used in determining the liability are the investment returns expected in the Pension Fund which will
annual report

afford the annual increase in pensions to which this liability is linked. An investment return of 9 percent (2006: 9 percent) per annum was applied, and a subsidy inflation
equal to the investment returns in excess of 5 percent (2006: 5 percent) per annum was applied.

The amounts recognised are as follows:

GROUP COMPANY
BUSINESS PARTNERS

2007 2006 2007 2006

R000 R000 R000 R000

Interest cost 3 628 3 553 3 628 3 553

Current service cost 764 779 764 779
Benefits paid (1 770) (1 821) (1 770) (1 821)

Total included in staff costs 2 622 2 511 2 622 2 511

Actuarial gains / (losses) recognised in statement of recognised
income and expense 1 050 (1 676) 1 050 (1 676)

Movement in liability recognised in the balance sheet 3 672 835 3 672 835

Liability accounted for at beginning of year 40 311 39 476 40 311 39 476

Total expense as above 3 672 835 3 672 835

Liability accounted for at end of year 43 983 40 311 43 983 40 311

FINANCIAL STATEMENTS

70
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
LEAVE PAY BONUS TOTAL

R000 R000 R000

16. PROVISIONS

2007
Group
At 1 April 2005 13 762 14 837 28 599

annual report
Provided for the year 2 919 20 776 23 695
Utilised during the year (1 123) (17 579) (18 702)

At 31 March 2006 15 558 18 034 33 592

BUSINESS PARTNERS
At 1 April 2006 15 558 18 034 33 592
Provided for the year 2 311 17 587 19 898
Utilised during the year (1 305) (14 925) (16 230)

At 31 March 2007 16 564 20 696 37 260

Company
At 1 April 2005 13 762 14 837 28 599
Provided for the year 2 919 20 776 23 695
Utilised during the year (1 123) (17 579) (18 702)

At 31 March 2006 15 558 18 034 33 592

At 1 April 2006 15 558 18 034 33 592

Provided for the year 2 311 17 587 19 898
Utilised during the year (1 575) (15 310) (16 885)

At 31 March 2007 16 294 20 311 36 605

FINANCIAL STATEMENTS
71
 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
INTERNATIONAL BUSINESS PROPERTY
INVESTMENTS TOTAL
OPERATIONS INVESTMENTS

R000 R000 R000 R000

2007

17. SEGMENT INFORMATION

For the year ended 31 March 2007
annual report

Revenue 1 780 237 656 60 803 300 239

Profit before tax 104 155 884 58 624 214 612

Total assets 4 885 1 782 855 295 900 2 083 640

Total liabilities 4 866 104 423 31 374 140 663

BUSINESS PARTNERS

Other segment items

– Capital expenditure 73 1 471 24 411 25 955
– Depreciation 8 1 131 353 1 492

For the year ended 31 March 2006

Revenue 205 502 58 300 263 802
Profit before tax 125 870 45 659 171 529
Total assets 1 557 736 272 603 1 830 339
Total liabilities 91 585 24 359 115 944

Other segment items

– Capital expenditure 1 667 10 762 12 429
– Depreciation 1 487 379 1 866

The Company activities are concentrated in a number of business divisions:

The International Operations division comprise a fund management company, currently busy with a pilot phase of establishing three small and medium enterprise investment
funds with third party investors.

The Business Investments division makes equity, as well as interest-bearing investments, with a range of investment products structured to address the requirements of
the investee company.

The Property Investments division earns property management fees from the management of commercial and industrial properties on behalf of the Company as well as
other property owners. The Company also invests in property, either wholly-owned or partially-owned, on which rental income is earned and property related expenses are
FINANCIAL STATEMENTS

incurred.

Other operations of the Company comprise the mobilisation and facilitation of Mentorship services, the management of surplus funds and providing corporate support
services. These operations have been included in the Business Investments segment.

The assets of the divisions consist primarily of business investments, investment properties, equipment, furniture and vehicles, inventories, receivables and operating cash.
The liabilities comprise operating liabilities, taxation and borrowings. Capital expenditure comprises additions to investment properties, equipment, furniture and vehicles.

72
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

R000 R000 R000 R000

2007
18. REVENUE
Revenue consists of:

annual report
Interest on business investments 148 037 117 984 147 633 117 453
Interest on cash and cash equivalents 25 085 30 394 24 649 30 143
Royalty fees 38 301 30 382 38 253 30 354
Financing fees 6 958 5 708 6 958 5 697
Dividends received 4 493 12 707 2 867 14 882

BUSINESS PARTNERS
Fund management fees 14 186 6 733 12 412 6 733
Rental income 48 641 45 733 43 397 40 518
Property management fees 10 605 10 036 12 918 11 819
Professional services rendered 3 933 4 125 3 933 4 124

300 239 263 802 293 020 261 723

19. OTHER OPERATING INCOME
Profit on realisation of assets 36 443 15 668 37 313 14 868
Recovery of property expenses 15 457 14 633 13 108 12 337
Fair value adjustment of investment properties 23 172 15 439 22 868 14 371
Fair value adjustment of financial instruments (1 685) 5 404 5 673 4 039
Interest on other loans 1 331 1 714 1 262 1 683
Other 7 036 4 459 3 217 4 266

81 754 57 317 83 441 51 564

20. OPERATING EXPENSES
Staff costs (refer note 22) 114 690 103 222 111 210 103 222
Bad debts – net of recoveries and impairment reversed 6 701 (308) 7 331 49

Bad debts written off 32 613 29 064 31 776 28 716

Bad debt recoveries (22 353) (19 344) (21 876) (19 222)
Impairment on investments reversed (3 559) (10 028) (2 569) (9 445)

Repairs and maintenance 9 762 6 932 8 026 5 781

Other administrative overheads 55 207 52 340 52 009 50 229

FINANCIAL STATEMENTS
186 360 162 186 178 576 159 281

73
 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

R000 R000 R000 R000
2007

21. PROFIT FROM OPERATIONS

The following items have been included in arriving at profit from operations:
annual report

Depreciation on property and equipment 1 492 1 866 1 249 1 631

Interest paid 276 55 76 52
Directors' emoluments
– as directors 1 127 809
– as management 9 190 10 744
BUSINESS PARTNERS

Auditor's remuneration
– audit 1 124 1 224 881 1 163
– other services 160 154 160 154
Impairment on investments reversed 3 559 10 028 2 569 9 445
Bad debts 32 613 29 064 31 776 28 716
Repairs and maintenance 9 762 6 932 8 026 5 781
Leasing charges
– equipment 15 16 15 16
– office premises 1 460 1 457 5 917 4 724
Dividends on investments
– listed 4 2 4 2
– unlisted 4 489 12 705 2 863 14 880
Income from subsidiaries
– dividends received 2 174 2 175
Profit on sale of property and equipment 60 96 60 96
Profit on sale of investment properties 6 554 3 990 4 654 2 700
Profit on sale of investments 29 851 11 459 32 621 11 971
Fair value adjustment on investment properties 23 172 15 439 22 868 14 371

22. STAFF COSTS

Salaries 74 564 63 499 72 080 63 499
Bonuses 17 587 20 776 17 587 20 776
Leave pay 2 311 2 919 2 311 2 919
Pension costs (see note 15.1) 10 819 9 399 10 819 9 399
Post-retirement medical aid costs 2 622 2 511 2 622 2 511
FINANCIAL STATEMENTS

Other costs 6 787 4 118 5 791 4 118

114 690 103 222 111 210 103 222

74
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

R000 R000 R000 R000

2007
23. TAX EXPENSE
23.1 Income statement charge
South African normal tax

annual report
Current year 41 045 31 717 39 186 31 376
Deferred tax current year 3 711 775 5 557 (1 196)

44 756 32 492 44 743 30 180

Secondary tax on companies 2 661 3 319 2 661 3 319

BUSINESS PARTNERS
Tax of associated companies 2 997 3 976
Capital gains tax 3 377 1 344 3 377 1 344

53 791 41 131 50 781 34 843

23.2 Reconciliation of rate of taxation
South African normal tax rate 29,00% 29,00% 29,00% 29,00%
Adjusted for: -3,94% -5,02% -3,33% -6,37%

Income not subject to normal tax -5,72% -4,96% -6,09% -5,80%

Secondary tax on companies 1,24% 1,94% 1,35% 2,16%
Capital gains tax 1,57% 0,78% 1,71% 0,87%
Other -1,03% -2,78% -0,30% -3,60%

Total effective rate on profit before taxation 25,06% 23,98% 25,67% 22,63%

24. EARNINGS PER SHARE

Basic earnings per share are calculated by dividing the net profit by the number of
ordinary shares in issue during the year.

24.1 Basic earnings per share

Net profit 160 821 130 398
Weighted number of ordinary shares (’000) 161 594 161 035
Basic earnings per share (cents) 99,5 81,0

For the diluted earnings per share calculation the number of ordinary shares in issue
are adjusted on the assumption that all remaining share options are exercised. The

FINANCIAL STATEMENTS
net profit is adjusted for interest earned on the capital received from the share trust
for the full repayment of the loan.

75
 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

R000 R000 R000 R000
2007

24.2 Diluted earnings per share

Net profit 160 821 130 398
annual report

Interest received (net of tax effect) 1 842 2 312

Net profit used to determine diluted earnings per share 162 663 132 710

Number of ordinary shares in issue ('000) 167 750 161 035

Adjustment for share options 11 085 17 800
BUSINESS PARTNERS

Number of ordinary shares used to determine diluted earnings per share 178 835 178 835

Diluted earnings per share (cents) 91,0 74,2

24.3 Headline earnings per share

Net profit 160 821 130 398
Capital profit on sale of equipment (60) (96)
Profit on sale of property investments (6 554) (3 990)

Headline earnings 154 207 126 312

Headline earnings per share (cents) 95,4 78,4

24.4 Diluted headline earnings per share

Headline earnings 154 207 126 312
Interest received (net of tax effect) 1 842 2 312

Diluted headline earnings 156 049 128 624

Diluted headline earnings per share (cents) 87,3 71,9

25. DIVIDEND PER SHARE

Dividend in respect of 2006 of 18 cents per share paid on 11 August 2006 to
FINANCIAL STATEMENTS

shareholders registered on 25 July 2006. 28 987 32 190

Dividend in respect of 2005 of 16 cents per share paid on 12 August 2005 to
shareholders registered on 26 July 2005. 25 766 28 614

28 987 25 766 32 190 28 614

A dividend in respect of 2007 of 20 cents per share was declared on 17 May 2007,
payable to shareholders registered on 25 July 2007, payable on or about 10 August 2007.

76
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

R000 R000 R000 R000

2007
26. COMMITMENTS AND LEASE AGREEMENTS
Business investments approved but not yet paid out 252 421 230 930 252 421 230 915
Capital committed to En Commandite partnerships (refer note 4). 28 975 39 583 28 975 39 583

annual report
Unexpired portion of lease agreements
– less than 1 year 2 582 2 672 2 582 2 672
– 1 year to 4 years 6 064 6 286 6 064 6 286
– 5 years 1 143 3 215 1 143 3 215

BUSINESS PARTNERS
291 185 282 686 291 185 282 671
All commitments will be funded from own resources.

27. CONTINGENT LIABILITIES

Defined benefit pension fund # 21 001 9 829 21 001 9 829
Guarantees * 487 756 487 756

21 488 10 585 21 488 10 585

# The existence of the liability by the employer to the pension fund is uncertain,
and the final amount is subject to an agreement between the Trustees of the
Fund and the employer (refer note 15 for more details). The effect of the potential
liability will be negated by the fact that any surplus/asset of the Fund will be
reflected as an asset of the Company.

* The guarantees are issued to third parties on behalf of clients and will be paid
should the clients default on their obligations to the third parties.

FINANCIAL STATEMENTS
77
 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

R000 R000 R000 R000
2007

28. CASH FLOW INFORMATION

28.1 Cash generated from operating activities
Profit before taxation 214 612 171 529 197 809 153 954
annual report

Adjustments (43 270) (39 016) (31 059) (25 308)

Depreciation 1 492 1 866 1 249 1 631

Profit on sale of assets (36 443) (15 668) (37 313) (14 868)
Dividends received (4 493) (12 707) (2 867) (14 883)
BUSINESS PARTNERS

Income from associated companies (19 255) (12 651)

Adjustment to the carrying value of properties (23 172) (15 439) (22 868) (14 371)
Fair value adjustment of inventories and assets held for resale 833 306 833 306
Fair value adjustment of financial instruments 1 685 (5 404) (5 673) (4 039)
Non-cash movement in borrowings (310) (2 069) (310) (2 069)
Provisions and write-offs 36 393 22 750 35 890 22 985

Changes in working capital 6 338 8 414 6 807 7 143

Decrease / (increase) in inventory and assets held for resale 2 814 5 061 2 814 5 061
Decrease / (increase) in accounts receivable (3 075) 1 500 1 481 1 299
(Decrease) / increase in accounts payable 6 599 1 853 2 512 783

Finance cost 276 55 76 52

177 956 140 982 173 633 135 841

28.2 Taxation paid

Taxation liability at beginning of year (16 713) (18 220) (16 520) (18 119)
Tax provision for the year (53 791) (41 131) (50 781) (34 843)
Deferred tax 3 711 775 5 557 (1 196)
Paid by associated companies 2 997 3 976
Taxation liability at end of year 27 893 16 713 26 258 16 520

(35 903) (37 887) (35 486) (37 638)

28.3 Dividends paid
Dividends payable at beginning of year (116) (143) (116) (143)
FINANCIAL STATEMENTS

Dividends declared (32 190) (28 614) (32 190) (28 614)
Share trust dividends 3 203 2 847
Dividends payable at end of year 25 116 25 116

(29 078) (25 794) (32 281) (28 641)

78
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
GROUP COMPANY

2007 2006 2007 2006

R000 R000 R000 R000

2007
29. RELATED PARTIES
29.1 Loans to related parties
Loan to the Business Partners Employee Share Trust

annual report
Balance at the beginning of the year 24 953 29 069
Fair value adjustment 7 358 (1 266)
Loan repaid during the year (23 342) (2 850)

Balance at the end of the year 8 969 24 953

BUSINESS PARTNERS
Loans to subsidiaries
Balance at the beginning of the year 20 830 25 938
Loans advanced during the year 5 018 (5 108)

Balance at the end of the year 25 848 20 830

Dividends received from subsidiaries 2 174 2 175

29.2 Directors' remuneration

Executive directors
– as management 9 190 10 744
– gains made on the exercise of share options 7 219 –
Non-executive directors 1 127 809

29.3 Loans to associates

Balance at the beginning of the year 477 074 410 912 472 150 405 895
Loans advanced during the year 218 079 178 864 217 743 178 864
Loan repayments received (119 102) (103 441) (117 829) (103 348)
Loans written off (6 506) (9 261) (6 506) (9 261)

Balance at the end of the year 569 545 477 074 565 558 472 150

These loans form part of the normal business activities and are included
under business investments (refer note 4).

FINANCIAL STATEMENTS
79
 NOTES TO THE FINANCIAL STATEMENTS
2007 2006
for the year ended 31 March 2007 No. of shares No. of shares
‘000 ‘000

30. SHARE INCENTIVE SCHEME

17 800 000 shares of R1 each were reserved to meet the requirements of the Employee Share Incentive Scheme in terms of the shareholder’s
resolution dated 18 August 1998. The Business Partners Employee Share Trust has acquired the full allocation of shares (refer note 12.2)
2007

Unallocated options 5 553 5 011

annual report

The movement in the scheme during the year is summarised as follows:

Shares under option at beginning of the year 12 789 13 764
Share options allocated – 0
Options exercised during the year (6 715) 0
Options forfeited during the year
@ 300 cents (276) (617)
BUSINESS PARTNERS

@ 325 cents (100) (188)

@ 250 cents (166) (169)
@ 262 cents – (1)
Under option at the end of the year 5 532 12 789
The shares under option are available for exercise as follows:
After 1 October 2002 @ 300 cents 191 2 521
After 1 October 2003 @ 325 cents 826 860
After 1 October 2004 @ 300 cents 191 2 521
After 1 October 2004 @ 250 cents 508 552
After 1 October 2005 @ 325 cents 826 860
After 1 October 2005 @ 250 cents 314 325
After 1 October 2006 @ 300 cents 191 2 521
After 1 October 2006 @ 250 cents 511 555
After 1 October 2007 @ 325 cents 826 860
After 1 October 2007 @ 250 cents 314 325
After 1 October 2007 @ 262 cents 2 2
After 1 October 2008 @ 250 cents 511 555
After 1 October 2009 @ 250 cents 314 325
After 1 October 2009 @ 262 cents 2 2
After 1 October 2010 @ 250 cents 3 3
After 1 October 2011 @ 262 cents 2 2
5 532 12 789
The expiry dates of these share options are as follows:
at 30 September 2007 573 7 565
at 30 September 2008 2 479 2 579
at 30 September 2009 1 524 1 655
FINANCIAL STATEMENTS

at 30 September 2010 941 975

at 30 September 2011 10 10
at 30 September 2012 5 5
5 532 12 789
During the year no share options were allocated to executive directors.
Total outstanding share options allocated to current executive directors are:
@ 300 cents 217 2 623
@ 325 cents 501 501
@ 250 cents 620 620
80
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007
SHARES AT COST LOANS

2007 2006 2007 2006

R R R000 R000

2007
31. PRINCIPAL SUBSIDIARIES
Business Partners International (Pty) Ltd 100 100 – –

annual report
Business Partners Mentors (Pty) Ltd 100 100 – –
Business Partners Property Brokers (Pty) Ltd 100 100 – –
Business Partners Venture Managers (Pty) Ltd 100 100 (32) 84
Business Partners Ventures 1 (Pty) Ltd 100 100 (3 706) 394
Cussonia Trust (Pty) Ltd 3 3 1 497 1 778

BUSINESS PARTNERS
Finance for the Third Millennium (Pty) Ltd 100 100 693 693
JRC Properties (Pty) Ltd 100 100 (1 363) (1 411)
Lindros Investments (Pty) Ltd 4 000 4 000 (89) (763)
Miriam Patsanza Property (Pty) Ltd 1 000 1 000 27 155 17 481
Unitrade 106 (Pty) Ltd 100 100 6 810 7 691
Share trust – – 8 969 24 953
Franchize Partners (Pty) Ltd – indirectly held 1
Business Partners International Madagascar Société Anonyme – indirectly held 2
Business Partners International Kenya Limited - indirectly held 3
5 803 5 803 39 934 50 900

All subsidiaries are wholly owned unless otherwise stated. All holdings are in the ordinary
share capital of the entity concerned and are unchanged from 2006.

1
Franchize Partners (Pty) Ltd is a wholly owned subsidiary of Business
Partners Ventures 1 (Pty) Ltd.
2
Business Partners International Madagascar Société Anonyme is a wholly owned
subsidiary of Business Partners International (Pty) Ltd.
3
Business Partners International Kenya Limited is wholly owned by Business Partners
Limited (5 percent shareholding) and Business Partners International (Pty) Ltd (95
percent shareholding).

FINANCIAL STATEMENTS
81
 NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2007

2007 2006
R000 R000
2007

32. INTEREST IN JOINT VENTURES

The Company has a 50 percent interest in a joint venture with ZASM.
annual report

The following amounts represent the Company's share of the assets and liabilities
and revenue and results of the joint venture, and are included in the consolidated
balance sheet and income statement:
BUSINESS PARTNERS

Business investments 1 103 1 559

Current assets 4 489 3 103
Current liabilities (815) (657)

Net assets 4 777 4 005

Revenue 515 480

Profit before taxation 773 330

Taxation (226) (98)

Net profit 547 232

FINANCIAL STATEMENTS

82
NOTICE CONVENING THE ANNUAL GENERAL MEETING
Notice is hereby given that the twenty-sixth Annual General Meeting of the Company will be held on Tuesday, 24 July 2007 at 15h30, in the auditorium of The Court House,
2 Saxon Road, Sandhurst, Sandton, to:

1. receive and adopt the audited annual financial statements for the year ended 31 March 2007.
2. elect directors (in terms of the Articles of Association, directors retire, but are eligible for re-election).

2007
3. consider and pass special resolutions, with or without modification, to amend the Company’s Articles of Association by inserting articles 15.5 and 15.6, which provisions

annual report
were erroneously replaced when the existing articles 15.3 and 15.4 were inserted during 2001, in order to provide for:
3.1 the payment of additional remuneration to a director appointed as managing director or to any other executive office (article 15.5); and
3.2 directors to entrust and confer upon the managing director or other executive officer powers and authorities vested in them (article 15.6).
4. transact any other business that falls within the scope of the meeting.

BUSINESS PARTNERS
A member who is entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and speak on his/her behalf and, on poll, to vote in his/her stead.
Such proxy need not be a member of the Company.

By order of the Board of Directors

Ms C M Gerbrands
Company Secretary
17 May 2007

FINANCIAL STATEMENTS
83
 CORPORATE INFORMATION
BUSINESS PARTNERS LIMITED

COMPANY REGISTRATION NUMBER TELEPHONE TRANSFER SECRETARIES

1981/000918/06 +27 (0)11 480 8700 Computershare Investor Services 2004 (Pty) Limited
2007

70 Marshall Street
FAX Johannesburg
COMPANY SECRETARY
2001
annual report

+27 (0)11 642 2791

Ms CM Gerbrands

E-MAIL PO Box 61051

REGISTERED OFFICE Marshalltown
enquiries@businesspartners.co.za
5 Wellington Road 2107
BUSINESS PARTNERS

Parktown WEBSITE
Johannesburg www.businesspartners.co.za SHARE TRADING
Business Partners Limited shares can be traded by
2193
contacting the Company Secretary.
AUDITORS
PO Box 7780 PricewaterhouseCoopers Inc.
Johannesburg
BANKERS
2000
ABSA Bank Limited
Standard Bank of South Africa Limited
FINANCIAL STATEMENTS

84
A business model that assures another
strong performance