Verde increases revenue by 116% with a gross margin of 72%

(All figures are in Canadian dollars, unless stated otherwise. Average exchange rate in Q2 2021: C$1.00 = R$4.32)    Belo Horizonte, Brazil. Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) is pleased to announce its financial results for the second quarter, ended on June 30, 2021 (“Q2 2021”), and the upwards revision of its target revenue for 2021.  

Q2 2021 Financials  

  • Revenue increased by 116%, to $5,376,000 compared to $2,492,000 in the second quarter of 2020 (“Q2 2020”).  
  • Revenue in Brazilian Real (“R$”) increased by 159%, to R$23,215,000 compared to R$8,965,000 in Q2 2020. 
  • Gross margin increased to 72% in Q2 2021, compared to 62% in Q2 2020. 
  • Operating profit before non-cash events increased by 109%, to $1,220,000 compared to $584,000 in Q2 2020. 
  • Trade and other receivables increased 259%, to $6,020,000 compared to $1,675,000 in Q2 2020. 
  • Sales by volume increased by 35%, to 96,233 tonnes sold compared to 71,183 tonnes sold in Q2 2020. 
  • Verde recorded a net profit of $79,000, compared to a net profit of $444,000 in Q2 2020. $887,000 non-cash charge from Verde’s long-term incentive programme for 58 employees was the main reason for the reduction in net profit for the period. 
  • Cash held by the Company increased by 214%, to $1,908,000, compared to $ 607,000 in Q2 2020. 

“We are proud to see that Verde achieved triple-digit growth in revenue for the second quarter, especially in light of the considerable improvement in gross margin. This consistent growth in the first half of the year made it possible for us to, once more, increase our revenue target for 2021”, said Cristiano Veloso, Verde’s Founder.   

2021 Guidance 

 Originally, the Company’s target for 2021 was to achieve R$50 million revenue, as announced in the press release disclosed on November 15, 2020. On May 17, 2021, however, Verde announced a 10% increase in its guidance, aiming for a new a revenue target of R$55 million for 2021.    In light of the results of Q2, the Company is pleased to announce a second 10% increase in its 2021 guidance, now aiming for a total revenue target of R$60.5 million, which if achieved would represent a 72% growth Year-on-Year (“YoY”).    “The pride we have in the Company’s achievements to date have only boosted our efforts to continue the hard work to meet our latest guidance. Beyond the next two quarters, the Verde team is also heavily engaged with the Company’s expansion plans to increase our production capacity for the year of 2022”, completed Mr. Veloso.   

Selected Annual Financial Information 

The table below summarizes Q2 2021 financial results compared to Q2 2020 and provides information about 2021 and 2020 year-to-date (“YTD”). All amounts in CAD $’000. 

CAD $’000  Q2 2021  Q2 2020  YTD 2021  YTD 2020 
Tonnes sold ‘000  96  71  113  81 
Revenue per tonne sold $  56  35  55  37 
Production cost per tonne sold $  (16)  (13)  (18)  (16) 
Gross Profit per tonne sold $  40  22  37  21 
Gross Margin  72%  62%  68%  57% 
         
Revenue  5,376  2,492  6,207  3,001 
Production costs  (1,498)  (955)  (1,988)  (1,286) 
Gross Profit  3,878  1,537  4,219  1,715 
Gross Margin  72%  62%  68%  57% 
Sales and product delivery freight expenses  (2,236)  (604)  (2,767)  (1,026) 
General and administrative expenses  (422)  (349)  (1,119)  (768) 
Operating Profit/(Loss) before non-cash events  1,220  584  333  (79) 
Share Based Payments (Non-Cash Event)1,2  (887)  (28)  (905)  (68) 
Depreciation and Amortisation2  (10)  (3)  (16)  (15) 
Profit on disposal of plant and equipment 2      9   
Operating Profit/(Loss) after non-cash events  323  553  (579)  (162) 
Corporation tax3  (188)  (98)  (219)  (116) 
Interest Income/Expense  (56)  (11)  (131)  (70) 
Net Profit / (Loss)  79  444  (929)  (348) 

1 – One time, non-cash charge from Verde’s long-term incentive programme regarding the vesting of stock options granted to 58 employees.  2 – Included in General and Administrative expenses in the Financial Statements.  3 – For further details please refer to Q2 2021 Management’s Discussion and Analysis. 

Q2 2021 compared with Q2 2020

For Q2 2021 the Company generated a net profit of $79,000, a decrease of $365,000 compared to Q2 2020. The earnings per share was $0.001, compared to $0.009 for Q2 2020. This reduction was due to a $887,000 non-cash charge from a long-term incentive programme regarding the vesting of stock options granted to 58 employees.   

Product Sales

In Q2 2021, the Company sold 96,233 tonnes, an increase of 35% in comparison to Q2 2020. BAKS® accounted for approximately 13% of Verde’s sales in Q2 2021.   

Revenue

Revenue from sales for Q2 2021 was $5,376,000 from the sale of 96,233 tonnes of the Product, at $56 per tonne sold. Despite the 20% Brazilian Real devaluation against the Canadian Dollar, revenue per tonne was higher than Q2 2020 ($35 per tonne sold) mainly due to three factors:  

  1. Product volume sold as CIF (Cost Insurance and Freight) increased from 6% of total sales in Q2 2020 to 43% in Q2 2021.  
  2. Potassium Chloride CIF (Minas Gerais) price increased from US$287-US$303 per tonne in Q2 2020 to US$395-535 per tonne in Q2 2021 (as per Acerto Limited report).  
  3. BAKS® has a higher sales price per tonne than the Product, it was launched on Q4 2020 and in Q2 2021 it has accounted for 13% of the total volume sold. 

 

Production costs

Production costs include all direct costs from mining, processing, and the addition of the other nutrients such as Sulfur and Boron, logistics from the mine to the factory and supply chain salaries, which are paid in R$. Production costs for Q2 2021 were $1,498,000, an increase of $543,000 compared to Q2 2020. Cost per tonne for the quarter was $16 compared to $13 for the same period in 2020. This increase was due in large part to higher fuel prices, which increased 45% in Q2 2021 compared to Q2 2020, and due to the production of BAKS, which has a higher cost per tonne due to the addition of other nutrients to the Product.    

Sales Expenses  

CAD $’000  Q2 2021  Q2 2020  YTD 2021  YTD 2020 
Sales and marketing expenses  (410)  (369)  (712)  (634) 
Product delivery freight expenses  (1,826)  (235)  (2,055)  (392) 
Total  (2,236)  (604)  (2,767)  (1,026) 

General and Administrative Expenses

CAD $’000  Q2 2021  Q2 2020  YTD 2021  YTD 2020 
General administrative expenses  (240)  (197)  (718)  (416) 
Legal, professional, consultancy and audit costs  (106)  (121)  (265)  (284) 
IT/Software expenses  (70)  (27)  (122)  (49) 
Taxes and licenses fees  (6)  (4)  (14)  (19) 
Total   (422)  (349)  (1,119)  (768) 

 

General administrative expenses

These costs include general office expenses, rent, bank fees, insurance, foreign exchange variances and remuneration of the executives and administrative staff in Brazil. The costs have increased by $43,000 in Q2 2021 compared to Q2 2020 as they include an additional 29 administrative employees, with professional headcount increasing from 18 in Q2 2020 to 47 in Q2 2021 to support the Company’s growth and due to incentive compensation. The Company had 26 administrative employees in Q1 2021. 

 

Legal, professional, consultancy and audit costs 

Legal and professional fees include legal, professional, consultancy fees along with accountancy, audit and regulatory costs. Consultancy fees are consultants employed in Brazil, such as accounting services, patent process, lawyer’s fee and regulatory consultants. The costs in Q2 2021 are $15,000 lower than Q2 2020 mainly due to audit cost reduction and Brazilian Real devaluation against Canadian dollar. 

IT/Software expenses

IT/Software expenses include software licenses such as Microsoft Office, CRM and enterprise resource planning (ERP). In Q2 2021 expenses were $70,000, an increase of $43,000 on Q2 2020 due to an increase in the number of the software licenses used by the Company.    

Taxes and licences

  Taxes and licence expenses include general taxes, product branding and licence costs. In Q2 2021, expenses were $6,000 compared to $4,000 in Q2 2020.    

Share Based Payments (Non-Cash Event)  

The directors have not received any shares in lieu of compensation since Q3 2020.      Share Based Payments costs in Q2 2021 represent the expense associated with stock options granted to employees as part of the Company’s long-term incentive programme. These are measured under the Black-Scholes Model.    

Capital Expenditure  

In Q2 2021, the Company invested $515,000 in infrastructure improvements: the grounds of Plant 1 were paved to provide greater operational efficiency; access routes to the mine pits have been enhanced; project developments for Plant 2 were further advanced. 

Q2 2021 Results Conference Call 

The Company will host a conference call on Wednesday, August 25, 2021 at 11:00 am Eastern Time (4:00 pm Greenwich Mean Time), to discuss Q2 2021 results and provide an update. Subscribe using the link below and receive the conference details by email.      

Date:  Wednesday, August 25, 2021 
Time:  11:00 am Eastern Time (4:00 pm Greenwich Mean Time)   
Subscription link:  https://bit.ly/Q2_2021_Results_Presentation 

  The Company’s first quarter financial statements and related notes for the period March 31, 2021  are available to the public on SEDAR at www.sedar.com and the Company’s website at www.investor.verde.ag/.   

Investors Newsletter   

Subscribe to receive the Company’s monthly updates at:   http://cloud.marketing.verde.ag/InvestorsSubscription The last edition of the newsletter can be accessed at: https://bit.ly/InvestorNL-July2021    

About Verde AgriTech

Verde is an agricultural technology company that develops and produces fertilizers. Rooting our solutions in nature, we make agriculture healthier, more productive, and profitable for farmers. We work to improve the health of all people and the planet.   

Cautionary Language and Forward-Looking Statements 

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. The Cautionary Language and Forward-Looking Statements can be accessed at this link.    

For additional information please contact: 

 Cristiano Veloso, President & Chief Executive Officer 

Tel: +55 (31) 3245 0205; Email: investor@verde.ag 

 www.investor.verde.ag | www.supergreensand.com | www.verde.ag  

 

Verde Announces Results of the 2021 Annual General Meeting of Shareholders

BELO HORIZONTE, BRAZIL, June 30, 2021 – Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) held its Annual General Meeting (“AGM”) of shareholders on Wednesday, June 30, 2021, in Belo Horizonte, Brazil, and is pleased to announce that its shareholders approved all items put before them.  

The director nominees were elected as directors of the Company. Shareholders adopted the Directors’ Report, the Audited Statement of Accounts and the Auditors’ Report for the year ended December 31, 2020 and appointed PKF Littlejohn LLP as auditors of the Company for the ensuing year. In addition, shareholders approved the Company’s stock option plan, as it may be amended from time to time, which approval shall remain effective until June 30, 2024. The results were as follows:  


Investors Newsletter   

Subscribe to receive the Company’s monthly updates at:  

http://cloud.marketing.verde.ag/InvestorsSubscription    
The last edition of the newsletter can be accessed at: https://bit.ly/InvestorsNL_May_2021 

 

About Verde AgriTech  

 

Verde AgriTech promotes sustainable and profitable agriculture through the development of its Cerrado Verde Project. Cerrado Verde, located in the heart of Brazil’s largest agricultural market, is the source of a potassium-rich deposit from which the Company intends to produce solutions for crop nutrition, crop protection, soil improvement and increased sustainability. 

 

Cautionary Language and Forward-Looking Statements  

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. The Cautionary Language and Forward-Looking Statements can be accessed at this link.  

 

For additional information please contact: 

 Cristiano Veloso, President, Chairman & Chief Executive Officer 

Tel: +55 (31) 3245 0205; Email: cv@verde.ag 

www.investor.verde.ag www.verde.ag | www.supergreensand.com 

Verde Updates COVID-19 Procedures For Upcoming Annual Meeting Of Shareholders

Belo Horizonte, Brazil. Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) is pleased to update shareholders on the procedures for its upcoming annual general meeting (the “Meeting”) of Verde’s shareholders, scheduled to take place on June 30, 2021 at 3:00 p.m. (EDT).

In light of concerns about COVID-19, the notice calling the Meeting issued on May 20, 2021 (the “Notice”) indicated that it would be “closed”, without the ability for registered shareholders and duly appointed proxyholders to physically attend the Meeting unless the local rules at the time and place of the Meeting permitted admission of additional persons.

The Notice states: “unless a change in the rules allows a wider attendance (which will be communicated to shareholders) the Meeting will be a closed event”

Current COVID-19 restrictions on gatherings in the City of Belo Horizonte, the location of the Meeting, currently permit physical gatherings subject to certain density limitations. As such, and in accordance with the Notice and the latest local health regulations, the Company advises shareholders that in-person Meeting attendance will now be permitted.  Any shareholder or duly appointed proxyholder that attends the Meeting in person will be required to comply with the local restrictions, e.g. social distancing; wearing a mask or other appropriate face covering at all times, among others.

Although the latest restrictions permit limited public gathering, the COVID-19 crisis in Brazil continues to intensify and could result in the implementation of further government restrictions on gatherings. The Company will notify shareholders in the event further restrictions are implemented prior to the Meeting.

GIVEN THE SERIOUSNESS OF THE COVID-19 SITUATION IN BRASIL, SHAREHOLDERS ARE STRONGLY ENCOURAGED NOT TO ATTEND THE MEETING AND TO VOTE BY WAY OF PROXY IN ADVANCE OF THE MEETING.

Commenting, President & CEO, Cristiano Veloso cautioned: “From its onset, we at Verde have taken this pandemic very seriously. To date, we are relieved to say that not a single Verde employee or contractor was among the over 500 thousand hapless Brazilian victims of COVID-19. It is with the same care and attention to health regulation and expert recommendations that I emphasize: in presence attendance at our Meeting is not advisable, for the wellbeing of Verde’s team – some of whom need to be physically in our offices – and of the shareholders – who can all adequately and safely attend remotely.”

Registered shareholders or duly appointed proxyholders who intend to attend the Meeting in person are asked to notify the Company or its transfer agent, TSX Trust Company, in advance of the Meeting, and in any event not less than 24 hours prior to the Meeting, of their intention to attend, to allow the Company time to ensure compliance with local restrictions on gatherings. Registered shareholders and duly appointed proxyholders can provide notification by sending an email to investor@verde.ag or tsxtrustclientsupport@tmx.com.

In order to ensure that any questions shareholders may have regarding the business of the Meeting are received in time to be considered at the Meeting, registered shareholders and duly appointed proxyholders are encourage to send their questions in advance of the meeting through the following link: http://bit.ly/SubmitQuestion-2021AGM.

 

About Verde AgriTech

Verde AgriTech promotes sustainable and profitable agriculture through the development of its Cerrado Verde Project. Cerrado Verde, located in the heart of Brazil’s largest agricultural market, is the source of a potassium-rich deposit from which the Company intends to produce solutions for crop nutrition, crop protection, soil improvement and increased sustainability.

 

Cautionary Language and Forward-Looking Statements

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. The Cautionary Language and Forward-Looking Statements can be accessed at this link.

 

For additional information please contact:

Cristiano Veloso, President & Chief Executive Officer

Tel: +55 (31) 3245 0205; Email: cv@verde.ag

www.investor.verde.ag | www.supergreensand.com | www.verde.ag

Verde’s N Keeper® technology to boost agricultural productivity and help fight climate change

Belo Horizonte, Brazil. Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) is pleased to announce the launch of N Keeper®, a proprietary processing technology for glauconitic siltstone that alters its physical-chemical properties to enable ammonia retention for use as a calibrated additive in Nitrogen fertilizersThis combination is responsible for the reduction of Nitrogen volatilization loss, allowing more agronomic efficiency for farmers and contributing to the reduction of the global warming impacts caused by Nitrogen fertilizers manufacturing and application. 

 

Nitrogen Fertilizers Impacts 

Nitrogen is part of the NPK triad (Nitrogen, Phosphorus and Potassium) that make up the vital macronutrients for plants. The main source of Nitrogen in Brazilian agriculture is urea, mainly due to its low cost, when compared to other sources.  

Traditionally, the production of synthetic Nitrogen fertilizers is a significant source of greenhouse gas (“GHG”) emissions. The GHG are generated from the fossil fuel mining and transportation, the ammonia synthesis and its conversion into various Nitrogen fertilizer products.[1] Moreover, the application of synthetic Nitrogen fertilizers is recognized as the most important factor contributing to direct nitrous oxide (“N2O”) emissions from agricultural soils.[2],[3] Studies report that up to 75% of the total GHG emission in crop production stemmed from the use of Nitrogen fertilizers.[4] This finding is particularly relevant because N2O is a potent GHG, with a 298 higher global warming potential over a 100-year timeframe than carbon dioxide (“CO2”).[5]

Despite the use of urea as the most common Nitrogen source in agriculture, it has low use efficiency under field conditions due to its high susceptibility to losses, mostly caused by the ammonia (“NH3”) volatilization[6].

 

Verde Introduces N Keeper® 

Verde observed an opportunity that led to the development of a technology with the purpose of mitigating reactions and loss processes, thus increasing the agronomic efficiency for the use of urea in agricultural systems and optimizing Nitrogen fertilization: N Keeper®. 

The conception of the N Keeper® technology came from studies carried out by the Company, scientifically determining the most efficient outcome. An independent research concluded that the use of Verde’s multinutrient potassium fertilizer, marketed and sold in Brazil under the K Forte® brand and internationally as Super Greensand® (the “Product”), processed with the N Keeper® technology, showed a potential to reduce relative ammonia volatilization between 10% to 27%, depending on the proportion of Product employed, when compared to conventional regular use of urea without any of it. 

That is possible due to the proprietary processing technology of the material, which is carried out in Verde’s facilities and allows the enhancement of its feedstock’s natural characteristics. N Keeper® accentuates the negative correlations in the glauconite grains, identified by electron micro spread dispersive energy spectrometer in an electronic microprobe, indicating cationic substitutions giving to the mineral the characteristics of an anion. These unbalanced anions allow cationic exchanges between the potassium present in interlayers of glauconite with ammonium (NH4+) ions present in the soil. Therefore, N Keeper® provides a high capacity of ammonia retention, leading to the reduction of Nitrogen volatilization loss.  

“By drastically reducing the volatilized Nitrogen from urea, N Keeper® guarantees an increase in the efficiency of crop fertilization. As importantly, with low environmental impact and low costs for farmers, N Keeper® represents an important advance of agricultural technologies in the fight against climate change and thereby fulfilling Verde’s purpose of improving both the health of people and the Planet”, commented Cristiano Veloso, Verde’s Founder and CEO. 

Verde has filed for patent protection for the N Keeper® technology. As a result of its research and development focus, the Company has already filed seven patents. 

 

Next Steps 

When Verde’s Products are added to the soil along with other sources of Nitrogen or even before the nutrient’s application, the N Keeper® technology is activated. Thus, both the Company’s customers and the environment can already benefit from the improvements enabled by the technology. 

For Plant 2, the Company will be able to add nitrogen to BAKS®, further increasing the benefits for the N Keeper® technology.

 

Q&A Event:  

The Company will host a Q&A session on Wednesday, June 09, 2021 in order to provide further details about the N Keeper® technology. Subscribe using the link below and receive the conference details by email.

     

Date:    Wednesday, June 09, 2021 
Time:    11:00 am Eastern Time (4:00 pm Greenwich Mean Time)  
Subscription link:    http://bit.ly/Technology-Launch–QA 

 

The questions can be submitted in advance through the following link: http://bit.ly/SubmitQuestionQ-A  

 

Investors Newsletter   

Subscribe to receive the Company’s monthly updates at:  

http://cloud.marketing.verde.ag/InvestorsSubscription    
 The last edition of the newsletter can be accessed at: http://bit.ly/InvestorsNL-April2021 

 

About Verde AgriTech

 Verde AgriTech promotes sustainable and profitable agriculture through the development of its Cerrado Verde Project. Cerrado Verde, located in the heart of Brazil’s largest agricultural market, is the source of a potassium-rich deposit from which the Company intends to produce solutions for crop nutrition, crop protection, soil improvement and increased sustainability. 

 

Cautionary Language and Forward-Looking Statements

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. The Cautionary Language and Forward-Looking Statements can be accessed at this link.  

 

For additional information please contact: 

Cristiano Veloso, President, Chairman & Chief Executive Officer 

Tel: +55 (31) 3245 0205; Email: cv@verde.ag 

www.investor.verde.ag www.verde.ag | www.supergreensand.com 

 

 

[1] Chai, R., Ye, X., Ma, C. et al. Greenhouse gas emissions from synthetic nitrogen manufacture and fertilization for main upland crops in China. Carbon Balance Manage 14, 20 (2019). https://doi.org/10.1186/s13021-019-0133-9.

[2] Bouwman AF. Direct emission of nitrous oxide from agricultural soils. Nutr Cycl Agroecosyst. 1996;46:53–70.

[3] Faradiella Mohd Kusin, Nurul Izzati Mat Akhir, Ferdaus Mohamat-Yusuff, Muhamad Awang. The impact of nitrogen fertilizer use on greenhouse gas emissions in an oil palm plantation associated with land use change. Atmósfera vol.28 no.4 Ciudad de México oct. 2015.

[4] Yahya, N. Urea fertilizer: The global challenges and their impact to our sustainability. Green Energy and Technology (978981). 2018. p. 1-21. http://eprints.utp.edu.my/21254/

[5] IPCC (2007): Climate Change 2007: Synthesis Report. 2007. In: Pachauri R.K., Reisinger A. (eds.): Contribution of Working Groups I, II and III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. Geneva, Intergovernmental Panel on Climate Change.

[6] Pereira, H. S.; Leão, A. F.; Verginassi, A.; Carneiro, M. A. C. Ammonia volatilization of urea in the out-of-season corn. Revista Brasileira de Ciência do Solo, Viçosa, v. 33, n. 6, p. 1685-1694, 2009.