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July 11, 2011


Richard Ferrer

It needs to be on net profit after tax, rather than dividends, so as not to further increase incentives to 'fiddle the books'. As it is so many (Pty) Ltd businesses find ways to declare very low profits, especially those involved in importing, or exporting, either goods or materials. I visited a company recently who had a turnover of some R 100 million, and looking at the type of business, margins and cost structures, I estimated that net profit after tax would be about R 8 milllion. Well it was declared at about 15% of that level. Here BEE gets something, albeit at a very diminished level. But if it was based upon dividends paid to the owners, there simply wouldn't be any!!

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