Amended Codes of Good Practice (2017): Construction Sector Code > Code Series CSC500: Measurement of the Socio-Economic Development Elements of Broad-Based Black Economic Empowerment in the Construction Sector > Statement CSC500: The General Principles for Measuring the Socio-Economic Development Element

2.1	The Target of 1.25% of NPAT for indicator 2.4.1 and 30% thereof for 2.4.2 on the SED scorecard is based on the average NPAT of the Measured Entity over the three financial years that precedes the Measurement Period and will be the basis for determining the Targets unless:

2.1.1

The Measured Entity did not make a profit on average over this three year period; or

2.1.2

The average net profit margin of the Measured Entity over this three year period was less than a third of the industry norm net profit margin during the same three year period.

2.2

Notwithstanding the fact that only contributions that became payable within the Measurement period will be recognised for inclusion in the Measured Entity’s SED claim, it is expressly stated for the avoidance of doubt, that the NPAT for the Measurement Period itself does not form part of the calculation of the Target as per 2.1 above.

2.3	Where either of the factors in 2.1.1 to 2.1.2 are present then the Indicative NPAT of the Measured Entity for the three financial years that precedes the Measurement Period, will be the basis for determining the Targets.

2.3.1

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 that precedes the Measurement Period.

2.3.2

The industry norm net profit margin must be determined with reference to the quarterly statistics supplied by Stats SA or such other verifiable data that might be available for the applicable Construction Sector; or any quarterly published statistics.

2.3.3

Where in 2.3.2 the industry norm net profit margin for the three financial years that precedes the Measurement Period yields a negative result then Qualifying Socio-Economic Contributions of nominal value will earn the Measured Entity the full points under paragraphs 2.4.1 and 2.4.2 respectively. Provided that the nominal value shall not be less than 50% of the previous years target.In the case of a second measurement period which yields a negative result the nominal value will be 50% of the previous years nominal value this will continue for any subsequent periods of negative results.

2.4	The following table represents the criteria and method used for deriving a score for Socio-Economic Development under this statement:

Socio-Economic Development		Weighting Points	Compliance Target
2.4.1	Annual value of all Qualifying Socio-Economic Contributions by the Measured Entity as a percentage of the Target	4	1.25% of NPAT
2.4.2	The portion of Qualifying Socio-Economic Contributions in 2.4.1 above spend on Communities with Limited Services.	1	30% of Target in 2.4.1
Bonus Points
2.4.3	Annual value of contributions towards Structured SED Projects by the Measured Entity as a percentage of the Target	1	1.25% of NPAT
TOTAL		6

2.5	The weighting points in the SED scorecard represent the maximum number of points possible for each of the criteria. Contributions recognised under 2.4.2 may be double counted under 2.4.1 of the SED scorecard.

Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

Amended Codes of Good Practice (2017)

Amended Code Series CSC500: Measurement of the Preferential Procurement and Supplier Development Element of Broad-Based Black Economic Empowerment in the Construction Sector

Statement CSC500: The General Principles for Measuring the Socio-Economic Development Element

2. The SED Scorecard