BEE Partner, South Africa Economy Watch

The enterprise development scores are measured with this formula: A = B/C x D

A = the score for enterprise development carried forward to the generic scorecard

B = the value of all qualifying contributions from the date of inception of measurement or the date of this statement

C = the compliance target

D = the weighting points.

The measurement of enterprise development contributions requires a more in-depth look. The complexity lies in the measurement of the numerator and denominator of B above.

Determining the numerator

Step 1 Categorise all qualifying enterprise development contributions since the commencement date or inception date according to benefit-matrix calculations. Multiply each category’s contribution amount by the benefit-matrix factor.

Step 2 Add the result of all the categories above and divide the result by the number of months since the commencement date of the Codes or the inception date.

Step 3 Multiply the result of Step 2 by 12 to obtain the annualised average. The result of Step 3 is the numerator.

Determining the denominator

To recap, it is the NPAT unless the business does not make a profit for the last five years on average or the net profit margin is less than a quarter of the industry norm. In the case of the latter, NPAT is discarded in favour of turnover, which is calculated using the indicative profit margin. For practical purposes in the first year, the net profit after tax of the previous year can be used to determine the level of contribution required for the year.

Step 4 Assuming there is a net profit for the year, or average net profit over the preceding five years, and the net margin exceeds a quarter of the industry average net margin, add the net profit after tax since the commencement date of the Codes or the inception date and divide the result by the number of months since that date. Then multiply the result by 12 to establish the annualised average. Multiply the result by 2% to establish the target.

Step 5 Where there are net losses, average net losses or the entity’s net margin is less than a quarter of the industry’s average net margin, calculate 2% of NPAT at the last instance where the entity’s profit margin was greater than one quarter of the industry’s average, divided by the turnover at that date and multiplied by the turnover for the period under review.

Step 6 Take the result of Step 4 or 5, as appropriate, as the denominator.

Determining the points

Step 7 Divide the numerator, Step 3, by the denominator, Step 6. Step 8 Multiply the result by the 25 weighting points.

Step 9 The result is the measured entity’s enterprise development points, limited to a maximum of 25 points and rounded off to two decimal places.

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