Realisation points measures the percentage of the black owned equity that is unencumbered (i.e. debt free).
These are the measuring criteria for Realisation Points:
| Measurement Category & Criteria | Weighting Points | Compliance Target | |
| Realisation Points | Net Value | 8 | Refer to Annexure C |
The Codes have defined the Net Value sub-element of the Ownership element as a Priority Element in terms of transformation imperative.
The Entity is required to achieve the 40% subminimum in relation to Net Value points
ie 3.2 out of 8 points.
Should a Generic Entity not achieve the required 40% subminimum in relation to Net Value points its B-BBEE Status will be discounted by 1 level.
The Net Value measures the actual shareholding value in the hands of black people taking into considering the level of debt attached to such shares relative to the date on which the transaction was concluded, in accordance with the following timeframes:
| Realisation Points | Points | Target |
|
Net Value:
Achieved accordingly:
|
8 | 25% (based on table) |
The concept behind the Net Value calculation is as follows:
Net Value = Total value of Shareholding - Outstanding Monies in relation to Shareholding
| Outstanding monies refers to loans or any other form of debt owed by the shareholder which he/she incurred to obtain the shares.. |
The Codes recognise that the funding of equity through debt is necessary for the acquisition of equity. However the Codes have stipulated time frames for the repayment of such attaching debt (time based graduation factor).
| Year 1 | 10% of target (i.e. 2.5% of the total issued shares must be held in black hands and be unencumbered). |
| Year 2 | 20% of target (i.e. 5% of the total issued shares must be held in black hands and be unencumbered). |
| Year 3 - 4 | 40% of target (i.e. 10% of the total issued shares must be held in black hands and be unencumbered). |
| Year 5 - 6 | 60% of target (i.e. 15% of the total issued shares must be held in black hands and be unencumbered). |
| Year 7 - 8 | 80% of target (i.e. 20% of the total issued shares must be held in black hands and be unencumbered). |
| Year 9 - 10 | 100% of target (i.e. 100% of the total issued shares must be held in black hands and be unencumbered). |
Deemed Net Value formula:
For Net Value, you are first required to calculate Deemed Net Value:
| Formula | |
| A = (B - C) ÷ D | |
| Where: | |
| A | Deemed Net Value. |
| B | Is the value of the Equity Instruments (shares) relevant to the calculation, determined on the date of measurement. |
| C | Is the carrying value of any acquisition debts (against the shares in question) of the relevant black Participants on the date of measurement. |
| D | Is the value of the Measured Entity on the date of measurement. |
To calculate the Net Value Points, you must utilise the lower result of Formula A or Formula B.
Formula A:
| A = (B - C) ÷ D | |
| E = A x (1 ÷ 25% x F) x 8 | |
| Where: | |
| A | Deemed Net Value. |
| B | Value of the shares in the hands of black people. |
| C | Outstanding debt in respect of the shares held by black people. |
| D | Value of the measured entity. |
| E | Number of points achieved. |
| F |
Time based graduation factor:
|
Formula B:
| A = B ÷ C x 8 | |
| Where: | |
| A | Is the score for Net Value (Limited to a maximum of 8 points). |
| B | Is the percentage Economic Interest in the Measured Entity of black Participants. |
| C | Is the target for Economic Interest in the Measured Entity (25%). |
| Example |
|
Step 1 – Calculate Deemed Net Value:
Deemed Net Value = (R 200 000 – R 50 000) ÷ R 1 000 000) = 15%
Step 2 – Calculate Formula A:
The result of Formula A would be:
15% x ( 1 ÷ (25% x 40% ) x 8 = 15% x ( 1 ÷ 10%) x 8 = 15% ÷ 10% x 8 = 10.5 (Apply the limit of 8 points) = 8
Step 3 – Calculate Formula B:
The result for Formula B would be:
20% ÷ 25% x 8 = 0.8 x 8 = 6.4 points.
Step 4 – Select the lower of Formula A and B:
The lower of the two results must be utilised. Thus the result of Formula B, 6.4 points, is the score for Net Value for the Measured Entity.
|
Priority Element