Change in site visit procedures
Our regulator (SANAS) notified us that as of Friday, 01 April 2022, all rating agencies are required to conduct physical site visits as virtual site visits will no longer be permitted. SANAS granted special provisions to all organisations during the height of the COVID-19 pandemic, which allowed for site visits to be conducted remotely; however, this will no longer be valid subject to any new announcements from the government regarding COVID-19 measures.
We would also like to remind you that SANAS now requires certified copies of all of your staff’s IDs on record for verification. Please ensure that all certified ID copies are clear (able to read all the details on the ID and see the subject’s face clearly) to avoid additional interview requirements, which may result in delays during the site visit.
Notwithstanding the above, however, SANAS is still willing to allow for interviews through virtual means, such as Zoom, Teams, Skype or any other digital platforms in cases where employees or individuals are not available at the Measured Entity’s premises. It is important to note that all virtually conducted interviews will need to be fully recorded. Face-to-face interviews will also be acceptable if all the contamination risks are mitigated.
Indicative Net Profit After Tax (NPAT) calculation
After deliberation with SANAS and the DTIC, we have been instructed to amend the Indicative Net Profit After Tax (NPAT) calculation for the Amended Codes of Good Practice applicable under Enterprise Development, Supplier Development and Socio-Economic Development. This also impacts the calculations for the following sector codes:
- Agriculture
- Defence
- ICT
- MAC
- Property
- Transport
This will not impact certificates already issued. It may, however, affect current verifications where the Measured Entity made a loss in the Measurement Period (financial year under review) or if the NPAT was less than a quarter of the industry norm but made a profit over the last five years that exceeded a quarter of the industry norm.
Therefore, rather than using an average margin – as would be the next step for entities under the Forestry or Tourism Sector Codes – the Measured Entity should instead apply their profit margin from the most recent year in which they made a profit exceeding a quarter of the industry norm and apply that margin to the revenue in the Measurement Period. This will go back a maximum of five years.
The following table shows the industry norms for the last 12 months, extracted from Stats SA:
If, however, the Measured Entity made a profit that exceeded a quarter of the industry norm in the Measurement Period or made consecutive losses over the last five years, it is unlikely to impact the final scoring for Enterprise & Supplier Development or Socio-Economic Development. Therefore, the standard methodology applies as per the Codes.
There are three simple steps to follow to determine the NPAT applicable to the Amended Codes and Sector Codes:
Step 1: Did the Measured Entity make a profit margin (NPAT divided by revenue) of more than a quarter of the industry norm in the Measurement Period? If yes – use the actual NPAT to calculate the target. If not, go to step 2.
Step 2: Did the Measured Entity make a profit of more than a quarter of the industry norm within the last five years? If yes – use the margin from the most recent year and multiply that by the current revenue to calculate the implied NPAT to calculate the target. If not, go to step 3.
Step 3: If the Measured Entity did not exceed a quarter of the industry’s norm profit margin for the last five years, then use a quarter of the industry norm margin for the Measurement Period multiplied by the revenue of the Measurement Period to calculate the target for the Measurement Period.
As one of the top B-BBEE rating agencies in South Africa, we are committed to providing you with the utmost quality and professional service, with uncompromising ethics and a passion for transformation.
If you have any queries, please do not hesitate to contact our office at This email address is being protected from spambots. You need JavaScript enabled to view it.. For technical queries outside of your verification, please direct your question in as much detail as possible to This email address is being protected from spambots. You need JavaScript enabled to view it..
Sincerely,
Jeanette Buys
CEO
