Verde launches Bio Revolution

Technology Will Help Enable the Fourth Agricultural Revolution Through Microorganisms

 

Belo Horizonte, Brazil. Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) is pleased to announce the launch of Bio Revolution, a new technology that enables the incorporation of microorganisms to Verde’s multinutrient potassium fertilizers, K Forte® and BAKS®, sold internationally as Super Greensand® (the “Product”).

Brazil’s Ministry of Agriculture, Livestock and Supply (“MAPA“, from Ministério da Agricultura, Pecuária e Abastecimento) has approved the incorporation to Verde’s Product of the microorganism Bacillus aryabhattai ASN10 (“B. aryabhattai”), which is renowned in agriculture for its several benefits. Bio Revolution is the technology that will allow the incorporation of B. aryabhattai and other microorganisms into the Product. Verde is the first company to commercialize a fertilizer with added microorganisms. The Company has filed for patent protection of its Bio Revolution technology.

In 2015, Verde started its research that culminated in Bio Revolution technology. Throughout 2020 and 2021, tests established that when Bio Revolution was used to incorporate microorganisms into Verde’s Product, the microorganism’s colonies were constant for periods of six months. Further to B. aryabhattai, the Company is currently conducting research with different microorganisms, and expects to be able to incorporate 3 new microorganisms to its Product in 2022.

“As part of the Fourth Agricultural Revolution, microorganisms are seen as a vital component in boosting plant productivity. Farmers are keenly aware of the transformational opportunities from adding microorganism to their crops, but usually encounter high-costs and technical challenges in effectively deploying microorganisms over vast areas of farmland. It was with that in mind that we developed Bio Revolution, a technology that enables our Product to become the vehicle for the direct application of microorganisms onto soils using traditional fertilization methods. This two-in-one solution will reduce costs for farmers by sustainably increasing the productivity and profitability. Given Verde’s first mover advantage, we will work to become world leaders at offering a cost-efficient platform for adding microorganisms to agriculture.” declared Cristiano Veloso, Verde’s Founder and CEO.

Microorganisms play an important role in agriculture through nitrogen fixation, carbon sequestration, phosphate solubilisation, potassium mobilisation, protection against pathogens and pests, organic matter decomposition, and humus formation.[1] Since the vital importance of soil biome was established for the optimal development of plants,[2] there has been an increasing interest in the use of microorganisms to improve plant health and productivity while ensuring safety for human consumption and protection of the environment.[3]

Verde’s Plant 1 is already endowed with a facility for deploying Bio Revolution. Commercialization of microorganism-incorporated Product is scheduled to start by May 2022. At Plant 2, currently under construction, a proportionally larger Bio Revolution facility will be built, and its operations will start by the end of the year.

Call with Cristiano Veloso, Founder and CEO

Cristiano Veloso will host a call on Monday, May 09, 2022, at 10:00 am Eastern Time, to discuss the Fourth Agricultural Revolution. The call will be held on Twitter Spaces. Subscribe and join the Space using the link below:

Date: Monday, May 09, 2022
Time: 10:00 am Eastern Time
Subscription link: https://twitter.com/i/spaces/1MYxNnpYoXnxw

 

About Verde AgriTech

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

 

Corporate Presentation

For further information on the Company, please view shareholders’ deck:

https://verde.docsend.com/view/9fd2rhwwxxexvnnf

 

Investors Newsletter

Subscribe to receive the Company’s updates at:

http://cloud.marketing.verde.ag/InvestorsSubscription

The last edition of the newsletter can be accessed at: https://bit.ly/InvestorsNL-March2022

 

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, Founder, Chairman & Chief Executive Officer

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

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

 

 

[1] REZENDE, C. C.; SILVA, M. A. .; FRASCA, L. L. de M. .; FARIA, D. R.; FILIPPI, M. C. C. de .; LANNA, A. C.; NASCENTE, A. S. Multifunctional microorganisms: use in agriculture. Research, Society and Development, [S. l.], v. 10, n. 2, p. e50810212725, 2021. DOI: 10.33448/rsd-v10i2.12725.

[2] ​FAO, ITPS, GSBI, SCBD, and EC. 2020. State of knowledge of soil biodiversity – Status, challenges and potentialities, Report 2020. Rome, FAO. https://doi.org/10.4060/cb1928en

[3] AVIS, Tyler J et al. Multifaceted beneficial effects of rhizosphere microorganisms on plant health and productivity. Soil Biology and Biochemistry 40(7):1733-1740. 2008.

Verde’s Q4 sales by volume grow 137% driving 2021 net profit growth to 540%

(All figures are in Canadian dollars, unless stated otherwise. Average exchange rate in 2021: C$1.00 = R$4.31)

Belo Horizonte, Brazil. Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) is pleased to announce its financial results for the fourth quarter 2021 (“Q4 2021”) and full year ended December 31, 2021 (“FY 2021”).

Q4 2021 Financials

  • Revenue increased by 391% in Q4 2021, to $10,851,000 compared to $2,209,000 in Q4 2020.
  • Revenue in Brazilian Real (“R$”) increased by 450% in Q4 2021, to R$46,723,000 compared to R$8,489,000 in Q4 2020.
  • Sales by volume increased by 137% in Q4 2021, to 134,350 tonnes sold compared to 56,585 tonnes sold in Q4 2020.
  • Gross margin increased to 75% in Q4 2021, compared to 59% in Q4 2020.
  • Operating profit before non-cash events increased by 6786% in Q4 2021, to $2,452,000 compared to $36,000 in Q4 2020.
  • Net profit increased to $1,878,000 in Q4 2021, compared to a net loss $192,000 in Q4 2020.

 

FY 2021 Financials

  • Revenue increased by 202% in FY 2021, to $27,709,000 compared to $9,167,000 in FY 2020.
  • Revenue in R$ increased by 239% in FY 2021, to R$119,310,000, compared to R$35,232,000 in FY 2020.
  • Sales by volume increased by 64% in FY 2021, to 400,133 tonnes sold compared to 243,707 tonnes in FY 2020.
  • Gross margin increased to 74% in FY 2021, compared to 62% in FY 2020.
  • Operating profit before non-cash events increased by 305% in FY 2021, to $6,450,000 compared to $1,591,000 in FY 2020.
  • Net profit increased by 540%, to $3,522,000 in FY 2021 compared to $550,000 in FY

 

Subsequent Events

  • In January 2022, as a result of the Company’s continued accelerated market expansion, Verde announced its Paid for Growth (“P4G”) strategy, a cornerstone program aimed at distributing gains to shareholders. P4G strategy is possible because cashflow is now freed up thanks to Verde’s ability to finance expansion backed by future sales contracts. Previously, financing could only be secured by invoice discounting or guaranteed by capital goods; now, Verde’s future sales contracts are accepted as debt collateral.
  • In February 2022, Verde adopted Earned Growth Rate (“EGR”) as a key metric for market success. EGR measures the sales growth by volume generated by returning customers and new client purchases made by existing clients’ referrals. The Company achieved an EGR of 165% in 2021, compared to a rate of 61% in 2020, demonstrating a higher client repurchase rate and successful client referrals.
  • In February 2022, the Company received a new Mining Concession for the extraction of up to 2,500,000 tonnes per year (“tpy”) of Product. Verde is now fully permitted to produce up to 2,833,000 tpy.
  • In February 2022, Verde AgriTech Plc’s Brazilian subsidiaries, Verde Fertilizantes LTDA and FVS Mineração LTDA, earned ISO 9001 and ISO 14001 certifications.
  • In February 2022, the Company created a Special Committee to evaluate when and how to share profits with shareholders. The Special Committee to conduct the analysis is comprised of independent directors of the Board, consisting of Mr. Michael St Aldwyn (Verde’s Lead Independent Director), Mr. Renato Gomes and Mr. Paulo Sérgio Ribeiro.
  • In February 2022, the Company’s Board of Directors unanimously approved an accelerated investment program to bolster an expansion plan that has two objectives: First, expand Plant 2’s operational capacity from 1,200,000 to 2,400,000 tpy by Q4 2022; and second, upgrade local infrastructure to sustain Plant 2’s logistics with added capacity to enable a future Plant 3. By Q4 2022, with Plant 2’s expansion, Verde expects to have raised its overall production capacity to 3,000,000 tpy. The approved expansion plan investment totals R$ 51 million Brazilian Reais (“R$”), which comes on top of the R$22 million previously approved for the construction of Plant 2. The Company aims to fund the expansion plan through a combination of future cashflow and debt finance backed by future sales contracts.

 

“Thanks to our team and all their efforts in 2021, Verde continued its accelerated growth with improving numbers in every subsequent quarter. We are excited and proud to be part of a team that is second to none when it comes to motivation and competence. We all recognize how fortunate we are to make a living while making a major contribution to the world”, declared Verde’s Founder, President & CEO Cristiano Veloso.

 

2021 Guidance

The Company’s original 2021 revenue guidance was R$50 million, the amount was revised upwards on November 15, 2021, to R$110 million. However, the realized 2021 revenue totalled R$119 million.

 

2022 Guidance

As announced in the press release published on January 10, 2022, the Company’s 2022 target, detailed on a quarterly basis to reflect the market demand’s seasonality, is as follows:

Period Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022
Sales target (tonnes) 115,000 200,000 250,000 135,000 700,000
Revenue ($’000) 10,070 21,954 27,228 13,011 72,263
EBITDA ($’000) 1,358 10,155 13,414 3,506 28,434
EPS ($) 0.02 0.18 0.25 0.06 0.50

 

The 2022 guidance is underpinned by the following assumptions:

  • Average Brazilian Real (“R$”) to Canadian dollar exchange rate: C$1.00 = R$4.40 (in March 18, 2022, the exchange rate closed at C$1.00 = R$3.99).
  • Average KCl CFR Brazil of US$500, compared to current price of US$1,025 per tonne (as per the market intelligence firm Acerto Limited weekly price for March 17, 2022).
  • Sales Incoterms: 50% CIF and 50% FOB.
  • Sales channels: 50% direct sales and 50% indirect sales.

Note that the assumption above does not include the grant of a new mining concession, as originally presented in the January 10, 2022, press release, because in February, 2022, Verde was awarded a Mining Concession for extraction of an additional amount 2,500,000 tpy of Product, bringing Verde’s total permitted mining capacity to 2,833,000 tpy.

“The 2022 Guidance is a noticeable leap from 2021 numbers. We still expect, however, to revise these numbers upwards as the year progresses to reflect both Product demand and increased potash prices, despite Q1 having been one of the wettest ever rainy seasons and the oil price increases,” commented Cristiano Veloso.

 

2023 Guidance

For 2023, Verde’s original sales volume target is 1.4 million tonnes. This target represents a potential 100% growth Year-on-Year (“YoY”) but it is now under review in light of the recent total 2.8 million tonnes permitted production capacity following the permits received in February, 2022, and increased production potential for 2022.

 

2021’s Key Objectives:

On March 31, 2021, Verde announced its key objectives for the year. A review of those objectives is detailed below:

 

Achieve 10% of the Company’s total sales as BAKS®:

BAKS® accounted for 9.8% of the total volume sold in 2021. BAKS® demand outstripped Verde’s production capacity for the period.

 

Launch a new technology in the second quarter of 2021:

On June 02, 2021, the Company launched 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 fertilizers. This combination is responsible for the reduction of Nitrogen volatilization loss, allowing more agronomic efficiency for farmers and contributing to the reduction of global warming impacts caused by Nitrogen fertilizers manufacturing and application.

 

Get ISO 9001 and ISO 14001 certified:

Verde AgriTech Plc’s Brazilian subsidiaries, Verde Fertilizantes LTDA and FVS Mineração LTDA, were ISO 9001 and ISO 14001 certified in February 2022.

 

Obtain the Mining Concession for 2,500,000 tpy for Mine Pit 2:

Verde received the Mining Concession for extraction of up to 2,500,000 tpy for Mine Pit 2, which will supply raw material for our Plant 2, to boost our production in the coming years. Verde is now fully permitted to produce up to 2,833,000 tpy.

This is one of the milestones towards the target of 25,000,000 tonnes annual production, which represents a NPV per share of $50.94, based on the NI 43-101 Pre-Feasibility Technical Report Cerrado Verde Project filed by the Company on SEDAR in 2017 (“Old Pre-Feasibility),[1] which relied on a KCl price of US$250, instead of US$1,025 per tonne currently negotiated (as per the market intelligence firm Acerto Limited weekly price for March 17, 2022).

 

Initiate the construction of Plant 2, with the completion of the necessary infrastructure for its development, such as the plant’s power grid connection, access routes improvement and preliminary civil construction:

As disclosed in the press release published on November 16, 2020, the construction of Plant 2 was scheduled to begin in the second half of 2021. Groundbreaking took place in August 2021, and Plant 2 is expected to reach commercial production by Q3 2022.

Verde’s Key Objectives for 2022:

  • Reach Plant 2’s commercial production by Q3 2022.
  • Expand Plant 2’s operational capacity from 1,200,000 to 2,400,000 tpy by Q4 2022, raising Verde’s overall production capacity to 3,000,000 tpy.
  • Upgrade local infrastructure to sustain Plant 2’s logistics with added capacity to enable a future Plant 3.
  • Finish the New Pre-Feasibility Study (“PFS”), which is currently under elaboration. In addition to the potash market, the New PFS has the objective to assess sulfur and micronutrients’ potential market in Brazil, based on the technologies MicroS and 3D Alliance developed by the Company. The New PFS will revamp the information disclosed in the Old Pre-Feasibility Study. The New PFS will contemplate a scenario of total annual production of 50,000,000 tonnes of Verde’s Product, equivalent to 63% of the total Brazilian potash consumption in 2021.
  • Launch a new technology in Q2 2022.
  • Reach 100 cities with Cultivando Amor, Verde’s flagship social engagement program that in 2021 raised over R$270,000 for charities across 16 cities in Brazil. The program donates part of Verde’s sales proceeds to charities chosen by the Company’s clients in their municipalities.

Environmental

Verde’s production process is sustainable. The processing does not require tailings dams, nor does it generate any waste by products. In sum, the ore recovery rate is 100%.

The mined area is mainly composed of degraded pasturelands that, once mined, Verde transforms into tropical forest. To that end, the Company planted 4,300 trees in 2019, 5,000 trees in 2020, and 9,888 trees in 2021. All planted species are originally native to the region, many of which are today deemed endangered species.

 

Selected Annual Financial Information

The table below summarizes Q4 and FY 2021 financial results compared to Q4 and FY 2021:

All amounts in CAD $’000 Q4 2021 Q4 2020 FY 2021 FY 2020
Tonnes sold ‘000 134 57 400 244
Revenue per tonne sold $ 81 39 69 38
Production cost per tonne sold $ (20) (16) (18) (14)
Gross Profit per tonne sold $ 61 23 51 23
Gross Margin 75% 59% 74% 62%
   
Revenue 10,851 2,209 27,709 9,167
Production costs (2,691) (912) (7,131) (3,515)
Gross Profit 8,160 1,297 20,578 5,652
Gross Margin 75% 59% 74% 62%
Sales and product delivery freight expenses (4,463) (673) (11,252) (2,270)
General and administrative expenses (1,245) (588) (2,876) (1,791)
Operating Profit before non-cash events 2,452 36 6,450 1,591
Share Based and Bonus Payments (Non-Cash Event) (1) (23) (18) (1,551) (425)
Depreciation and Amortisation (1) (18) (4) (53) (23)
Profit on disposal of plant and equipment (1) 9 (17)
Operating Profit after noncash events 2,411 14 4,855 1,126
Income tax (2) (360) (79) (931) (330)
Interest Income/Expense (173) (127) (402) (246)
Net Profit 1,878 (192) 3,522 550

 

(1) – Included in General and Administrative expenses in financial statements

(2) – Please see Income Tax notes.

 

Q4 and FY 2021 compared with Q4 and FY 2020

 

Q4 2021

The Company generated a net profit of $1,878,000 for Q4 2021, an increase of $2,070,000 compared to a net loss of $192,000 for Q4 2020. The profit per share was $0.037 for Q4 2021, compared to loss per share of $0.003 for Q4 2020.

FY 2021

The Company generated a net profit of $3,522,000 in FY 2021, an increase of 540% compared to a net profit of $550,000 in FY 2021. The increase was due to the continued growth of the Company. The earnings per share was $0.070 for FY 2021, compared to $0.012 for FY 2020.

 

Product Sales

 

Q4 2021

Sales by volume increased by 137% in Q4 2021, to 134,350 tonnes sold compared to 56,585 tonnes sold in Q4 2020.

FY 2021

Sales increased by 64% in FY 2021, to 400,133 tonnes sold, compared to 243,707 tonnes FY 2020, as the Company’s Product continues to grow in the market.

 

Revenue

 

Q4 2021

Revenue from sales increased by 391% in Q4 2021, to $10,851,000 from the sale of 134,350 tonnes of the Product, at $81 per tonne sold; compared to $2,209,000 in Q4 2020 from the sale of 56,585 tonnes of the Product, at $39 per tonne sold.

Revenue per tonne excluding freight expenses (FOB price) improved by 24% in Q4 2021, to $53 compared to $31 in Q4 2020.

The KCl price increased by 165% in Q4 2021, compared to Q4 2020. Verde did not, however, see a proportional increase in its pricing for Q4 2021 sales because it had sold most of its Q4 production earlier in the year.

Despite the 7% Brazilian Real devaluation against the Canadian Dollar, revenue per tonne in Q4 2021 was higher than Q4 2020 mainly due to:

  1. Product volume sold as CIF (Cost Insurance and Freight) increased from 23% of total sales in Q4 2020 to 63% in Q4 2021.
  2. Potassium Chloride CIF (Minas Gerais) price increased from US$315-US$320 per tonne in Q4 2020 to US$760-850 per tonne in Q4 2021 (as reported by Acerto Limited, a market intelligence firm).
  3. BAKS® has a higher sales price per tonne than K Forte®. BAKS® was launched in December 2020 and in Q4 2021 it accounted for 7,2% of the total volume sold by the Company.

 

FY 2021

Revenue from sales increased by 202% in FY 2021, to $27,709,000 from the sale of 400,133 tonnes of the Product, at $69 per tonne sold; compared to $9,167,000 in FY 2020 from the sale of 243,707 tonnes of the Product, at $38 per tonne sold.

Revenue per tonne excluding freight expenses (FOB price) improved by 42% in FY 2021, to $47 compared to $33 in FY 2020.

The KCl price increased by 136% in FY 2021, compared to FY 2020. Verde did not, however, see a proportional average increase in its pricing for FY 2021 sales because it had sold most of its Q4 production earlier in the year.

Despite the 12% Brazilian Real devaluation against the Canadian Dollar, revenue per tonne in FY 2021 was higher than FY 2020 mainly due to:

  1. Product volume sold as CIF (Cost Insurance and Freight) increased from 13% of total sales in FY 2020 to 52% in FY 2021.
  2. Potassium Chloride CIF (Minas Gerais) price increased from US$280-US$360 per tonne in FY 2020 to US$315-850 per tonne in FY 2021 (as reported by Acerto Limited).
  3. BAKS® has a higher sales price per tonne than K Forte®. BAKS® was launched in December 2020 and in FY 2021 it accounted for 9.8% of the total volume sold by the Company.

 

Production costs

Production costs include all direct costs from mining, processing, and the addition of the other nutrients to the Product, such as Sulfur and Boron. They also include the logistics costs from the mine to the factory and related salaries.

 

Q4 2021

Production costs increased by 195% in Q4 2021, to $2,691,000 compared to $912,000 in Q4 2020. This was due to a 135% increase in volume sold, from 57,000 tonnes in Q4 2020 to 134,000 tonnes in Q4 2021, and due to local inflation. Cost per tonne increased by 24% in Q4 2021, to $20 compared to $16 in Q4 2020. This increase was due in large part to higher fuel prices, which increased by 45% in Q4 2021 compared to Q4 2020.

 

FY 2021

Production costs increased by 103% in FY 2021, to $7,131,000 compared to $3,515,000 in FY 2020. This was due to a 64% increase in volume sold, from 244,000 tonnes in FY 2020 to 400,000 tonnes in FY 2021, and due to local inflation. Cost per tonne increased by 24% in FY 2021, to $18 compared to $14 in FY 2020. This increase was due in large part to higher fuel prices, which increased by 37% in FY 2021 compared to FY 2020. The production costs increase are also due to the larger production of BAKS®, which has a higher cost per tonne because its feedstock includes other nutrients that Verde purchases from third parties.

 

Sales Expenses

CAD $’000 3 months ended

Dec 31, 2021

3 months ended

Dec 31, 2020

12 months ended

Dec 31, 2021

12 months ended

Dec 31, 2020

Sales and marketing expenses (578) (179) (1,818) (975)
Fees paid to independent sales agents (203) (16) (464) (162)
Product delivery freight expenses (3,682) (478) (8,970) (1,133)
Total (4,463) (673) (11,252) (2,270)

 

Sales and marketing expenses

Sales and marketing expenses include employees’ salaries, car rentals, travel within Brazil, hotel expenses, customer relationship management (CRM) software licenses, and the promotion of the Product in marketing events.

 

Q4 2021

Expenses increased by 222% in Q4 2021, to $577,000 compared to $179,000 in Q4 2020, mainly due to a further expansion of Verde’s sales and marketing team, with professional headcount increasing from an average of 35 in Q4 2020 to 54 in Q4 2021. This increase is in line with the Company’s accelerated growth strategy.

 

FY 2021

Expenses increased by 86% in FY 2021, with a total of $1,818,000, compared to $975,000 in FY 2020, also mainly due to a further expansion of Verde’s sales and marketing team, with professional headcount increasing from an average of 32 in FY 2020 to 46 in FY 2021. Such as for Q4 2021, this increase is in line with the Company’s accelerated growth strategy.

 

Fees paid to independent sales agents

As part of Verde’s marketing and sales strategy, the Company pays out commissions to its independent sales agents.

 

Q4 2021

Fees paid to sales independent agents increased by 1150% in Q4 2021, to $203,000 compared to $16,000 in Q4 2020, as a direct result of increased sales.

 

FY 2021

Fees paid to sales independent agents increased by 185% in FY 2021, to $464,000 compared to $162,000 in FY 2020, for the same reason as in the quarter.

 

Product delivery freight expenses

 

Q4 2021

Product delivery freight expenses increased by 671% in Q4 2021, to $3,682,000 compared to $478,000 in Q4 2020, as the Company has significantly increased the volume sold as CIF (Cost Insurance and Freight), up from 23% of total sales in Q4 2020 to 63% in Q4 2021 and due to higher fuel prices, which increased 45% in Q4 2021 compared to Q4 2020.

 

FY 2021

Expenses increased by 692% in FY 2021, to $8,970,000 compared to $1,133,000 in FY 2020, as the Company has significantly increased the volume sold as CIF (Cost Insurance and Freight), up from 13% of total sales in FY 2020 to 52% in FY 2021 and due to higher fuel prices, which increased 37% in FY 2021 compared to FY 2020.

 

General and Administrative Expenses

CAD $’000 3 months ended

Dec 31, 2021

3 months ended

Dec 31, 2020

12 months ended

Dec 31, 2021

12 months ended

Dec 31, 2020

General administrative expenses (612) (494) (1,621) (1,149)
Legal, professional, consultancy and audit costs (516) (75) (915) (520)
IT/Software expenses (103) (23) (307) (98)
Taxes and licenses fees (14) 4 (33) (24)
Total (1,245) (588) (2,876) (1,791)

 

General administrative expenses

These costs include general office expenses, rent, bank fees, insurance, foreign exchange variances and remuneration of executive and administrative staff in Brazil.

 

Q4 2021

Expenses increased by 24% in Q4 2021, to $612,000 compared to $494,000 in Q4 2020, as they include additional administrative employees, with professional headcount increasing from an average of 20 in Q4 2020 to 51 in Q4 2021 to help support the Company’s growth and incentive compensation.

 

FY 2021

Expenses increased by 41% in FY 2021, to $1,621,000 compared to $1,149,000 in FY 2020, as they include additional administrative employees, with professional headcount increasing from an average of 18 in FY 2020 to 43 in FY 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 fees and regulatory consultants.

 

Q4 2021

Expenses increased by 584% in Q4 2021, to $516,000 compared to $75,000 in Q4 2020. The increase is largely due to a $347,000 provision in Q4 2021, set aside for a contested claim made by a consultant retained by the Company in 2012. The consultancy services were for an environmental report, the quality of which was disputed by Verde and payments withheld.  A court decision in Q4 2021 was partially favourable to the consultant and requested an adjusted payment, the Company has appealed the decision.

 

FY 2021

Expenses increased by 76% in FY 2021, to $915,000 compared to $520,000 in FY 2020, mainly due to the provision in Q4 2021.

 

IT/Software expenses

IT/Software expenses include software licenses such as Microsoft Office, Customer Relationship Management (CRM) software and enterprise resource planning (ERP).

 

Q4 2021

Expenses increased by 350% in Q4 2021, to $103,000 compared to $23,000 in Q4 2020.

 

FY 2021

Expenses increased by 213% in FY 2021, to $307,000 compared to $98,000 in FY 2020, due to an increase in third party computing services and number of software licenses used by the Company in Brazil.

 

Taxes and licences

Taxes and licence expenses include general taxes, product branding and licence costs.

 

Q4 2021

Expenses increased by 450% in Q4 2021, to $14,000 compared to a credit of $4,000 in Q4 2020. During Q4 2020, an amount of $15,000 was credited to licence costs for reversal expenses which should have been capitalised in Q1 and Q3 2020.

 

FY 2021

Expenses increased by 34% in FY 2021, to $33,000 compared to $24,000 in FY 2020.

 

Share Based and Bonus Payments (Non-Cash Event)

These costs represent the expense associated with stock options granted to employees and directors and non-cash bonuses paid to key management.

 

Q4 2021

Share Based Payments costs increased by 25% in Q4 2021, to $23,000 compared to $18,000 in Q4 2020, as they represent the expense associated with stock options granted to employees as part of the Company’s long-term incentive programme in Q4 2021. These are measured under the Black-Scholes Model.

 

FY 2021

Share Based Payments costs increased by 265% in FY 2021, to $1,551,000 compared to $425,000 in FY 2020.

 

Income tax

Brazilian corporations are subject to income taxes (IRPJ and CSLL) using an ‘Actual Profits’ method (i.e. APM – Lucro Real), which is based on taxable income (i.e. earnings before taxes or EBT), adjusted by certain additions and exclusions as determined by the legislation. The Actual Profit can be calculated annually or quarterly – for the annual calculation, the tax authorities collect anticipations during the year, as the taxpayer is obliged to calculate the income tax monthly.

Subject to certain restrictions (i.e. where gross income does not exceed R$78 million and depending on the activity), Brazilian taxpayers have the option to calculate IRPJ and CSLL using a ‘Assumed Profits’ method (i.e. PPM – Lucro Presumido). Under the PPM, the income is calculated on a quarterly basis on an amount equal to different percentages of gross revenue (i.e. based on the entity’s activities) and adjusted as determined by the prevailing legislation.

The Brazil subsidiaries are currently under ‘Assumed Profits’ method, which is the most efficient method at this time. Under ‘Assumed Profits’ method, it is not possible to utilise prior period losses to reduce income tax. When the Company switches to “Realized Profits” method, these losses can be utilised.

 

Cultivando Amor

Cultivando Amor is an initiative from Verde, in which there is a partner charity institution for each of the project’s member cities. For each hectare in the region that is cultivated with BAKS® or K Forte®, Verde donates part of the sales’ profits to the partner institution of that city. The initiative has the support of the cities’ Rural Union of Farmers (Sindicato Dos Produtores Rurais).

In 2020, Cultivando Amor’s pilot project was conducted in the city of Patrocínio, where the program’s funds contributed to the Cancer Hospital of Patrocínio, a regional reference in cancer treatment.

In 2021, Verde raised over R$270,000 for charities across 16 cities in Brazil.

Cultivando Amor’s goal for 2022 is to magnify its impacts to 100 cities.

 

Q4 and FY 2021 Results Conference Call

The Company will host a conference call on Wednesday, April 06, 2022, at 09:00 am Eastern Time, to discuss Q4 and FY 2021 results and provide an update. Subscribe using the link below and receive the conference details by email.

Date: Wednesday, April 06, 2022
Time: 09:00 am Eastern Time
Subscription link: https://bit.ly/Q4FY_2021_Results_Presentation

The questions can be submitted in advance through the following link up to 48 hours before the conference call: https://bit.ly/VerdeAgriTech-Q4FY2021-questions

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

 

About Verde AgriTech

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

 

Corporate Presentation

For further information on the Company, please view shareholders’ deck: https://verde.docsend.com/view/vidm2xesz92yhyht

 

Investors Newsletter

Subscribe to receive the Company’s updates at:

http://cloud.marketing.verde.ag/InvestorsSubscription

The last edition of the newsletter can be accessed at: https://bit.ly/InvestorsNL-February2022

 

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: investor@verde.ag

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

 

[1] Based on $2.607 billion NPV after tax divided by 50,398,619 shares outstanding as of March 21, 2022. Estimated Net Present Value after tax of US$1.99 billion, with 8% discount rate and Internal Rate of Return of 287% (see NI 43-101 Pre-Feasibility Technical Report Cerrado Verde Project, MG, Brazil, page 207). Currency exchange: US$1.00 = C$1.29.

Verde to reach 3 million tonnes potash production capacity in 2022

Verde will double its Plant 2 production capacity and become the country’s largest producer

 

Belo Horizonte, Brazil. Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) announces that it has started working to double the capacity of its second production facility, currently under construction (“Plant 2”). Verde will also upgrade local infrastructure to sustain Plant 2’s increased output and enable a future Plant 3 (the “Expansion Plan”). Plant 2 is on track to start production in Q3 2022, and the enlarged production capacity is expected to be in operation early Q4 2022. Verde expects to start construction on Plant 3 in 2023 conditioned on permits.

In the face of recent geopolitical events involving Russia and Ukraine, noticeably the collateral impact of economic sanctions on Russia and its ally Belarus on the potash supply to Brazil, Verde’s Board of Directors (the “Board”) has unanimously approved an accelerated investment program to sustain the Expansion Plan. As disclosed in the press release published on September 27, 2021, Plant 2 is on track to reach commercial production of Verde’s multinutrient potassium products, BAKS® and K Forte® sold internationally as Super Greensand® (the “Product”), by Q3 2022 with an initial operational capacity of 1,200,000 tonnes per year (“tpy”). The Company will simultaneously work on the Expansion Plan with two core objectives:

  1. Expand Plant 2’s operational capacity from 1,200,000 to 2,400,000 tpy by Q4 2022.
  2. Upgrade local infrastructure to sustain Plant 2’s logistics with added capacity to enable a future Plant 3.

By Q4 2022, with Plant 2’s expansion, Verde expects to have raised its overall production capacity to 3,000,000 tpy, becoming Brazil’s largest potash producer. On February 10, 2022, the Company announced that it had received a further 2,500,000 tpy Mining Concession, bringing the total capacity now fully permitted to mine to 2,833,000 tpy.

“Over the past months, we have followed the escalation of tensions in Ukraine and become concerned about the suffering of the innocents caught in this geopolitical tussle. Given the latest sanctions applied to Belarus and Russia, we are acutely aware of the collateral impact on Brazil’s agriculture in the case of a potash supply disruption. We are equally worried about a global food shortage, which might be unavoidable if there is a break down in fertilizer supply”, commented Verde’s Founder, President & CEO Cristiano Veloso.

Capital Expenditure

The Board has approved an investment of R$ 51 million Brazilian Reais (“R$”) to fund the Expansion Plan, which comes on top of the R$22 million previously approved for the construction of Plant 2.

The Company expects to fund the Expansion Plan through a combination of future cashflow and debt finance backed by future sales contracts.

 

Impacts to the potash market

Brazil ranks second in world potash consumption and first in importation. The country relies on imports for more than 96% of its potash needs. Verde’s potash production in Brazil is strategic to the development of a domestic supply that will increasingly help reduce the country’s dependence on imported fertilizers, and meet Brazil’s demand for food production, consumption and exports. This strategy becomes particularly important in light of the recent geopolitical events involving directly and indirectly two of the world’s largest potash producers, Russia and Belarus.

In 2021 Brazil’s consumption of potash (in K2O) was 7.92 million[1], which is equivalent to 79.2 million tonnes of Verde’s Product. This market stood at 3.99 million tonnes (in K2O) in 2010 and 2.71 million tonnes (in K2O) in 2000,[2] reflecting Brazil’s growing agricultural production.

 

About Verde AgriTech

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

Corporate Presentation

For further information on the Company, please view shareholders’ deck: https://verde.docsend.com/view/2f4963id4j6h4prh

 

Investors Newsletter

Subscribe to receive the Company’s updates at:

http://cloud.marketing.verde.ag/InvestorsSubscription

The last edition of the newsletter can be accessed at:  https://bit.ly/InvestorsNL-January2022

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, Founder, Chairman & Chief Executive Officer

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

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

 

[1] Source: Union of the Agricultural Fertilizers and Correctives Industry, in the State of São Paulo (“SIACESP”, from Sindicato da Indústria de Fertilizantes e Corretivos Agropecuários, no Estado de São Paulo).

[2] Source: Brazilian potash consumption, Statistical Yearbook of the National Association for the Dissemination of Fertilizers (“ANDA”, from Associação Nacional para Difusão de Adubos).

Verde announces 169% increase in revenue in Q3 2021 and revises upwards its target for the year

(All figures are in Canadian dollars, unless stated otherwise. Average exchange rate in Q3 2021: C$1.00 = R$4.26)

Belo Horizonte, Brazil. Verde AgriTech Plc (TSX: “NPK”) (OTCQB: “AMHPF”) (“Verde” or the “Company”) is pleased to announce its financial results for the third quarter, ended on September 30, 2021 (“Q3 2021”).

 

Q3 2021 Financials

  • Revenue increased by 169%, to $10,651,000 compared to $3,956,000 in the third quarter of 2020 (“Q3 2020”).
  • Revenue in Brazilian Real (“R$”) increased by 206%, to R$45,409,000 compared to R$14,815,000 in Q3 2020.
  • Gross margin increased to 77% in Q3 2021, compared to 67% in Q3 2020.
  • Operating profit before non-cash events increased by 124%, to $3,665,000 compared to $1,635,000 in Q3 2020.
  • Trade and other receivables increased by 141%, to $8,238,000 compared to $3,415,000 in Q3 2020.
  • Sales by volume increased by 45%, to 153,674 tonnes sold compared to 105,769 tonnes sold in Q3 2020.
  • Net profit increased by 192% in Q3 2021, to $3,183,000, compared to $1,090,000 in Q3 2020.

“Our hard work over the years is yielding consistent growth since production started in 2017. In Q3 2021 the effort was relentless as we sought to meet our heightened target, which was achieved thanks to the high quality and commitment of our team. We will endeavour to maintain an exponential growth expansion for the foreseeable future”, said Cristiano Veloso, Verde’s Founder and CEO.

 

Subsequent Events

  • In October 2021, the Company has secured $3.75 million (R$16 million) in loan agreements to fully cover the capital expenditure for the construction of Plant 2. The first $1.17 million (R$5 million) was released to the Company by Santander. The remaining $2.58 million (R$11 million) was approved in the same month by Santander and Bradesco, to be drawn down according to the project requirements. The total construction cost of Plant 2 is expected to be $5.16 million (R$22 million) with $1.41 million (R$6 million) invested through internally generated cashflow.

“From September onwards, market demand has outstripped Plant 1’s operational capacity. Therefore, after having invested over C$66 million to reach our current rate of production, we are proud to finance the tripling of current capacity based on debt and cashflow alone. Many shareholders have continuously supported Verde over the years – it is therefore gratifying to reciprocate by growing through a shareholder-friendly dilution-free strategy”, declared Mr. Veloso.

 

2021 Guidance

The Company is pleased to announce another increase in its 2021 guidance. The new target is set at R$110 million of revenue for 2021, which would represent an increase of 120% to the Company’s original guidance of R$50 million. If achieved, this new target will represent a 212% growth Year-on-Year (“YoY”).

 

Selected Annual Financial Information

The table below summarizes Q3 2021 financial results compared to Q3 2020 and provides information about 2021 and 2020 year-to-date (“YTD”). All amounts in CAD $’000.

CAD $’000 Q3 2021 Q3 2020 YTD 2021 YTD 2020
Tonnes sold ‘000 154 106 266 187
Revenue per tonne sold $ 69 37 63 37
Production cost per tonne sold $ (16) (12) (17) (14)
Gross Profit per tonne sold $ 53 25 47 23
Gross Margin 77% 67% 74% 63%
   
Revenue 10,651 3,956 16,858 6,957
Production costs (2,452) (1,316) (4,440) (2,602)
Gross Profit 8,199 2,640 12,418 4,355
Gross Margin 77% 67% 74% 63%
Sales and product delivery freight expenses (4,022) (570) (6,789) (1,596)
General and administrative expenses (512) (435) (1,631) (1,203)
Operating Profit before non-cash events 3,665 1,635 3,998 1,556
Share Based and Bonus Payments (Non-Cash Event) (1) (13) (339) (1,528) (407)
Depreciation and Amortisation (20) (3) (35) (18)
Profit on disposal of plant and equipment (18) 9 (18)
Operating Profit after noncash events 3,632 1,275 2,444 1,113
Income tax (352) (136) (571) (252)
Interest Income/Expense (98) (49) (229) (119)
Net Profit 3,182 1,090 1,644 742

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) – Included in General and Administrative expenses in financial statements.

 

Q3 2021 compared with Q3 2020

For Q3 2021 the Company generated a net profit of $3,182,000, an increase of $2,093,000 compared to Q3 2020. The earnings per share was $0.06, compared to $0.02 for Q3 2020.

Product Sales

In Q3 2021, the Company sold 153,674 tonnes, an increase of 45% in comparison to Q3 2020. BAKS® accounted for approximately 10% of Verde’s sales in Q3 2021.

 

Revenue

Revenue from sales for Q3 2021 was $10,651,000 from the sale of 153,674 tonnes of the Product, at $69 per tonne sold. Despite the 14% Brazilian Real devaluation against the Canadian Dollar, revenue per tonne was higher than Q3 2020 ($37 per tonne sold) mainly due to three factors:

  1. Product volume sold as CIF (Cost Insurance and Freight) increased from 14% of total sales in Q3 2020 to 50% in Q3 2021.
  2. Potassium Chloride CIF (Minas Gerais) price increased from US$290-US$310 per tonne in Q3 2020 to US$515-790 per tonne in Q3 2021 (as reported by Acerto Limited, a market intelligence firm).
  3. BAKS has a higher sales price per tonne than the Product, it was launched in Q4 2020 and in Q3 2021 it accounted for 10.5% of the total volume sold.

 

Production costs

Production costs in R$ include all direct costs from mining, processing, and the addition of the other nutrients such as Sulfur and Boron, the logistics from the mine to the factory and related salaries. Production costs for Q3 2021 were $2,452,000, an increase of $1,136,000 compared to Q3 2020. Cost per tonne for the quarter was $16 compared to $12 for the same period in 2020. This increase was due in large part to higher fuel prices, which increased 80% in Q3 2021 compared to Q3 2020, and due to the production of BAKS, which has a higher cost per tonne because its feedstock includes other nutrients that Verde purchases from third parties.

 

Sales Expenses

CAD $’000 Q3 2021 Q3 2020 YTD 2021 YTD 2020
Sales and marketing expenses (601) (294) (1,241) (796)
Fees paid to independent sales agents (188) (12) (260) (145)
Product delivery freight expenses (3,233) (264) (5,288) (655)
Total (4,022) (570) (6,789) (1,596)

 

 

 

 

Sales and marketing expenses

Sales and marketing expenses include employees’ salaries, car rentals, travel within Brazil, hotel expenses, customer relationship management (CRM) software licenses, and the promotion of the Product in marketing events. Expenses increased by $483,000 in Q3 2021 compared to Q3 2020 mainly due to a further expansion of Verde’s sales and marketing team, with professional headcount increasing from 32 in Q3 2020 to 57 in Q3 2021. This increase is in line with the Company’s accelerated growth strategy. The Company’s sales and marketing team had 50 employees in Q2 2021.

Fees paid to independent sales agents

As part of Verde’s marketing and sales strategy, the Company pays out commissions to its independent sales agents. Fees paid to sales independent agents increased by $176,000 in Q3 2021 compared to Q3 2020. This was mainly due to an overestimated provision of $80,000 for Q1 and Q2 2020, which left a surplus that was therefore deducted from the Q3 2020 costs. Taking into account the surplus, the expenses increased by $96,000 for Q3 2021, due to increased sales success.

 

Product delivery freight expenses

Product delivery freight expenses were $2,969,000 higher in Q3 2021 compared to Q3 2020 as the Company has significantly increased the volume sold as CIF (Cost Insurance and Freight), up from 14% of total sales in 2020 to 50% in 2021 and due to higher fuel prices, which increased 80% in Q32021 compared to Q3 2020.

 

General and Administrative Expenses

CAD $’000 Q3 2021 Q3 2020 YTD 2021 YTD 2020
General administrative expenses (291) (240) (1,009) (656)
Legal, professional, consultancy and audit costs (134) (160) (399) (444)
IT/Software expenses (82) (26) (204) (75)
Taxes and licenses fees (5) (9) (19) (28)
Total (512) (435) (1,631) (1,203)

 

 

 

 

 

 

General administrative expenses

These costs include general office expenses, rent, bank fees, insurance, foreign exchange variances and remuneration of executive and administrative staff in Brazil. The costs have increased by $51,000 in Q3 2021 compared to Q3 2020 as they include an additional 36 administrative employees, with professional headcount increasing from 20 in Q3 2020 to 56 in Q3 2021 to support the Company’s growth and due to incentive compensation. The Company had 47 administrative employees in Q2 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 fees and regulatory consultants. The costs in Q3 2021 are $26,000 lower than Q3 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 Q3 2021 expenses were $82,000, an increase of $56,000 on Q3 2020 due to an increase in the number of software licenses used by the Company.

 

Taxes and licences

Taxes and licence expenses include general taxes, product branding and licence costs. In Q3 2021, expenses were $5,000 compared to $9,000 in Q3 2020.

 

Share Based and Bonus Payments (Non-Cash Event)

These costs represent the expense associated with stock options granted to employees and directors and non-cash bonuses paid to key management.

Share Based Payments costs in Q3 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.

 

Q3 2021 Results Conference Call

The Company will host a conference call on Wednesday, November 24, 2021 at 09:00 am Eastern Time, to discuss Q3 2021 results and provide an update. Subscribe using the link below and receive the conference details by email.

Date: Wednesday, November 24, 2021
Time: 09:00 am Eastern Time
Subscription link: https://bit.ly/Q3-2021_ResultsPresentation

 

 

 

The questions can be submitted in advance through the following link: https://bit.ly/Q3-2021-QuestionForm

The Company’s first quarter financial statements and related notes for the period September 30, 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 most recent edition of the newsletter can be accessed at: https://bit.ly/InvestorNL-October2021

 

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 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