The aim of this analysis is to recognise and highlight the black economic empowerment (BEE) contributions made and disclosed by JSE Securities Exchange listed companies in 2004 to provide an up-to-date picture of BEE in SA.
The methodology behind this year's Top Empowerment Companies survey takes into account the regulatory changes introduced by the BEE Act and the codes of good practice and incorporates the lessons learnt in previous projects such as last year's Top Empowerment Companies survey and Empowerdex's Empowerment Watch 2003.
The survey covers all JSE listed companies, except those listed under the development capital and venture capital sectors and those listed on the AltX.
Our methodology is based on the BEE balanced scorecard and the draft codes of good practice.
Companies are ranked according to a total BEE score achieved on all seven pillars of broad-based BEE - ownership, management, employment equity, skills development, affirmative procurement, enterprise development and corporate social investment.
The information for the ranking was obtained from two sources. First, publicly available information such as annual reports, sustainability reports, company websites, share registers and Sens announcements were analysed by Empowerdex for BEE information. And second, the FM call centre surveyed all companies using a questionnaire designed by Empowerdex.
A number of methodological decisions were made for this year's survey.
General
No points were allocated where information was not disclosed. Where possible, the key principles of the BEE codes of good practice were included in the methodology.
Ownership
BEE ownership transactions are recognised on the date of the Sens announcements to reflect the most probable ownership position in 2004. BEE ownership is ranked according to the weighted ownership percentage, calculated after excluding government ownership and pension funds from both BEE ownership (numerator) and total ownership (denominator) as per the codes of good practice.
The survey ranks the ownership status of the listed entity, so companies that entered into BEE transactions at various subsidiary levels receive recognition only through enterprise development.
Management
Management representation is weighted according to the codes of good practice, where senior executive and executive positions have heavier weighting than nonexecutive positions.
The survey applied the codes' restriction of a maximum of 10 management points for nonexecutive directors.
Employment equity
Analyses employment equity measures and ranks companies in terms of their black employee representation across all employee levels. Representation in senior levels of organisations is given a higher weighting.
Skills development
Two instruments were used to measure skills development - the skills development spend as a percentage of payroll and the percentage of black learners.
Preferential procurement
Companies are evaluated according to their procurement from companies that meet the requirements of the scorecard. Companies that measure BEE spend according to the ownership status of their suppliers and where there are no verification mechanisms are penalised in the rankings.
Enterprise development
Enterprise development evaluates the investment or support provided to BEE companies. In certain circumstances the disposal of equity stakes in subsidiaries has been recognised and rewarded through enterprise development in this ranking.
Corporate social investment
The ranking aims to compare companies across sectors, so corporate social investment (CSI) is still used as the residual factor. It is expected that once industry charters have been finalised and gazetted, the companies will be ranked in accordance with their specific sector indicators when sector rankings are compiled.
Overall score
The overall BEE score compiled in this survey tends to be lower than the companies' actual scores because of the limited access to information and the methodological decision to allocate zero points for poor disclosure.
The research team cautions readers that this is neither a definitive nor an exhaustive indication of companies' BEE status or activities.
