16 The term “Special Markets” at NCT refers to non-JSE listed companies and other independent buying entities such as (Pty) Ltd.’s, CC’s, Sole Proprietor and markets like International Forest Products, Treated Timber Products, Tekwani and Natal Forest Products. Over the years we have built up a network of registered and accredited financially secure markets, with a trading history, which ranges throughout the whole of the KZN province and into Southern Mpumalanga covering our members’ major timber growing areas. The main benefits for growers in trading through NCT into our registered markets are the optimisation of the timber stand, guaranteed timeous payments and competitive market-related prices. Since 1 March 2023, we offer free access to our accredited special markets for NCT members as we have scrapped the commission we charged previously. We are also in discussion with our major buyers to reward the collective ease-of-trade and guaranteed supply offering from NCT by paying us a premium - similar to the Guaranteed Supply Contract (GSC) reward paid to growers who perform to pulp markets. At this moment, special market trade does not attract the GSC purely as the GSC premium is paid from export and pulpwood trade at no cost. We have decided to offer this service for free to fulfill NCT’s service vision to growers in looking after all their marketing needs – not just the pulpwood section. It also ensures that NCT becomes a one-stopshop which leads to improved loyalty and limits the need for interaction with any other undesired third parties on the farm. In essence, this will cement our relationship with our growers. Credit and Risk Management The biggest challenge in managing this market segment is the identification of risk and the mitigation thereof. This is even more important after the latest FICA regulations forced upon business in South Africa. The volume and who we trade with all revolves around a trade credit value we allocated to each market, after careful consideration and adjudication by the credit committee that was established within NCT for this sole purpose. Steps in the Credit Application and Approval Process 1 Completion of Application documents: Banking details, VAT certificate, Owner IDs 2 Widened Search: Judgements, Risk analysis 3 Analyse Financials and Calculate Financial Ratios: 4 Liquidity ratios: Current ratio and the Acid test 5 Profitability ratios: Gross Margin ratio and Net Profit Margin ratio 6 References of other Trading partners: eg. Sappi for IFP 7 Credit Committee agree on a Credit limit: Assess and weigh all data. 8 Agreed Credit limit is governed by Oracle: Capping of delivery notes issued, 60-day period. 9 Trade Admin: Order confirmation signed, and delivery notes are generated. 10 Actual Deliveries are made: POD’s, Invoices and Receipts 11 Follow up & Chase Outstanding debts. Handover for collection if Red flagged As our road and rail network is becoming more challenging in some areas, congestion of roads, harbors and the increasing costs of diesel, and transport costs in general, we believe it is our duty to seek markets closer to our growers’ farms to optimise their income. We trust that our renewed focus on this market segment will serve our growers well and we expect to see an increase in volumes marketed to this market. NCT Special Markets – James van Zyl – Commercial Manager – Small truck delivering to a market in close proximity to the farm reducing transport costs for the farmer Special selected poles demanding a higher price than the normal pulpwood price
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