The entities that form part of the Construction Sector Codes must spend a percentage of their Net Profit After Tax on Socio-economic Development initiatives in their applicable financial period.
Regarding a QSE Company (revenue between R10 – R50 million for contractors and R6 – R25 million for BEP’s), the target is 1% of Net Profit After Tax. A further requirement is that 50% of the calculated target must be spent on Communities with Limited Services.
A Generic Company (revenue above R50 million for contractors and above R25 million for BEP’s) have a target of 1.25% of Net Profit After Tax, and 30% of the calculated target must be spent on Communities with Limited Services.
The NPAT calculation is based on the average NPAT over the last three financial years that precede the measurement period unless:
- The measured entity did not make a profit on average over the past three-year period;
- The average net profit margin of the measured entity over the three-year period is less than a third of the industry net profit margin during the same three-year period.
If the above applies, the indicative NPAT is the revenue of the measured entity for the measurement period multiplied by a third of the average industry norm net profit margin for the three financial years preceding the measurement period.
The requirement to assist a Community with Limited Services only applies to the Construction Sector, and one must obtain the latest STATS SA census results filtered to the local Municipality level to determine if the specific area meets the below requirements:
- Do less than 65% of the households have access to piped water? Or;
- Do less than 85% of households have access to electricity?;
- In addition to (a) or (b), does over 50% of the households have an average household income in the first five levels (including none) of the income data table.
The following documents are required to claim points under the SED element:
- Appreciation letter from the organisation confirming the value of the contribution, as well as the percentage of black beneficiaries of the organisation;
- Independent 3rd party confirmation of the percentage of black beneficiaries of the organisation;
- STATS SA Report confirming that the area meets the definition of a community with limited services;
- Proof of payment or proof of assistance provided.
About The Author:
Seshni Chetty joined SEESA in September 2016. She is currently a BEE Legal Advisor at the SEESA Durban branch. She obtained her LLB degree from the University of KwaZulu-Natal in 2014 and is an admitted Attorney.
Resources:
- The Amended Construction Sector Charter gazetted on 1 December 2017;
- Geralene Van Wyk Construction Manual.