Ladies and gentlemen, it is 12:32 Brazil time. My name is Cristiano Veloso. I'm the founder and CEO of Verde AgriTech PLC, and we're starting our call to present Q1 2020 results. Before we begin the presentation and the update, we have some sad news to the company which we'd like to share with shareholders and supporters. two of our former directors unfortunately died. One former director was Dr. Richard Garnett, who served at Verde AgriTech's board for a few years. He had a very long career in the mineral sector, having found and discovered a couple of deposits, as well as having served as board member of several other companies. I personally learned a lot from Richard Garnett, and I express our condolences to everyone in his family that I also met throughout the years.
The other former director who unfortunately passed away is Dr. Henrique Brandão, who also served in our board for several years. Dr. Henrique Brandão, he was a Minister of Agriculture in Brazil. He served in several other boards of important companies, both in Brazil and internationally. We also express our condolences to his family. Before we begin, I would like to ask for a moment of silence from everyone who's attending, and then we will begin the presentation. Thank you. Thank you, everyone. Okay. Before we begin the presentation, while we wait for another couple of minutes, I can see there are more people joining the call just now. I will quickly share a couple of developments we came up with as far as investor relations is concerned. I'm going to share my screen, and I'm going to present where you can access this information.
The first change we made last month is the monthly publication of an investor newsletter. The first version of this investor newsletter was released a few weeks ago, covering what happened in April. Everyone who registered to our newsletter gets this by email. If you haven't yet and you don't want to, you can come to our website, investor.verde.ag, and then you can come here and the presentation is in download and you can access the information. Let me take you through this investors newsletter so you know what you can expect from now onwards. There will be on the first section, there will be an update with the links to whichever documents we filed.
For example, the one from April, we have the links here to the MD&A, financial statements, to the YouTube video of our results video presentation, and to the press release, which was published that month. We also offer a summary of our applications, our environmental license, our permits, so you can follow here both the summary and a recap of what happened in the last 12 months. It's broken according to the mine pit we're developing. It's broken according to dates, categories, and the event which we're updating here. You can also see the growth in our sales. This one is the one for April, so of course, it doesn't have the result yet for Q1. Some information on operations, some information on share, both volumes and share price. Here on section six, you will see some of the articles we've written to share.
In this case here, we shared the video about our customers in all like a compilation, a video about our purpose, the video of Q1 Presentation. You will see the link to anything written by our analysts, or shared by our analysts, which come into the public domain. Christopher Ecclestone put out a piece, which we have the link here. John Kaiser gave an interview, which we offer the link here. We also will have some relevant news about the Brazilian agriculture sector. Every month, you will be reminded of the calendar showing when farmers are more likely to be applying our product, as well as when they will be harvesting and planting each one of the main crops. You will get an update of due date for filings.
This was something we had lots of emails and people, "Oh, so when are results going to come up?" You can get here monthly, when it is, when you should expect to get this update. Contact details for the analyst coverage, links to all of our social media accounts, which we will start updating more regularly. On 11, number 11 here, there is a way for you to schedule calls with myself. If you want to schedule a full corporate presentation, if you're new to the story or if you haven't followed it close enough for the last while, and you want a full recap, you come here, click here, it takes you to this page here, and you can see the availabilities. You choose a day, you pick a time, and you schedule it.
You will automatically get a web link and instructions for the phone call. The same mechanism applies if you just want an update. This other link you have is to schedule a Q&A meeting. In this one, we won't be going through the whole history of the company, the whole history of the project. It's just really, as it says, questions and answers. You follow the same process, and you can schedule it. We've also added a glossary option with some of the key terms, the translations. If there's any term here missing, please let us know, and we will add to the list. This was put together after we spoke to about 50 shareholders in the beginning of the year, compiled a bunch of feedbacks, and that's the result. We do appreciate, though, any further feedback.
If you think there's anything missing from this monthly update or something which you don't understand, you need more clarity, please let us know. Please send us feedback, and we'll try to improve it every month. Obviously, it won't have any material information here. How much we were selling in a given month, how many tons we shipped in a given month. This we consider material information, therefore, will be only disclosed in our quarter results. The other site or the other aspect I wanted to share is our YouTube channel, which is only dedicated to investors. We have another one which focus on farmers, focus on market development in Brazil, and has a lot of content, or all the content in Portuguese. This one has content in English. You can see, for example, here, the presentation, our last presentation, which had 237 views over the last month.
I would strongly recommend that you watch this video here, 400 Happy Customers, Just the Beginning. It's a compilation, as I said, with testimonials from a bunch of our clients. The other video we strongly recommend everyone watch is this one, which talks about our purpose. Equally very important. The last thing I would like to bring up before we begin the presentation, and I presume now most people have joined, is about the crisis. It's this website I'm sharing here. Children are being badly impacted by the crisis in Brazil because poor children used to be fed in their schools. Unfortunately, all the schools are closed now, and you have thousands and thousands of children which are starving.
What we did here with the support of the state and an NGO, was to compile a list with the most vulnerable children in our state of Minas Gerais, where our operations are, where I'm from. We're raising money so they can get a minimum additional income, the family can get a minimum additional income, so there's no starvation. It's really the most vulnerable children of the state. I appreciate your help. I appreciate if anyone wants to help raising funds. To give you an idea, with as little as BRL 50 per month, which in U.S. dollars is as little as $10 per month per student. You can make a huge difference in terms of not allowing children to starve. If you want to get involved, please get in touch and we can give more details about that.
I presume most of you have joined by now, and we will now begin our presentation. You should all be seeing the slides for the first quarter. As I begin the presentation, I would like to remind you that it contains forward-looking statements and actual results may differ. The agenda for today, we will begin with our CFO, Felipe Paolucci, giving an update with the financials, a little bit about operations and how we're responding to COVID-19. I will talk about our development exploration, what has happened in the last quarter, and then we will take questions. If you want to send questions, there is a Q&A option at the bottom of the screen. Just click on the Q&A and please send your questions. With no further ado, I would like to bring on Felipe Paolucci, who will be giving the presentation.
Felipe, I'm sharing my screen, so whenever you want me to change slides, just please let me know. I'd also like to acknowledge that two of our directors are also attending the call. Paulo Sérgio Ribeiro Machado is here. If at some point he's in a place he can turn his camera on, we will put him on the screen so everyone can see you. Likewise, Michael St Aldwyn is also joining here on the call. Felipe, please, the floor is all yours.
Well, thank you. Yes. Can you hear me now?
Yes.
Sorry. Can you hear me now? Yes.
Yes, we can. Please go ahead.
Yeah. Thank you everyone for joining the meeting. The intention here is to show and to get a bit more in detail of what we've presented before, or we shared before in the MD&A and financial statements for Q1. I have a few charts here and please to answer questions in the end of the meeting. Cristiano, please move on for slide number four or five. The first chart here on financial highlights, it's our P&L, with the big numbers, showing Q1 2020, Q1 2019, and the variances. What I'd like to highlight, and first let everyone know, this is the big picture, and then we have other chart slides to get more into details of this and explain the variances. Our growth on revenue, it was in 2020, 231%. Although we had this growth, we still show a loss of BRL 792,000.
What is good to highlight here in the profit and loss is that we had a reduction in 9% quarter-on-quarter. A good point here also to mention is the gross profit growth. You can see in green above the table that the gross profit total value increased from CAD 105K to CAD 170K. I'll get more into details as I said before. After slide six, please Cristiano, where I can explain a bit more the other accounts. First, a bit about tons sold. We sold the first quarter, 10,170 tons compared to 1,093 in Q1 2019. This is a massive growth of 830% quarter-over-quarter. Total revenue, we also had a big increase, from BRL 164 to BRL 510. In the other hand, what I will get into more details, we lost a bit on revenue per ton, in consequence in gross profit per ton.
As we explained here in the third bullet point, our gross profit per ton reduced because most of Q1 2019 sales were exported to international markets, where the product achieves higher gross margin per ton compared to the domestic markets. Overall export grew by over 120%, but the share on total was proportionately reduced. We have a few tables in the next chart. Please, Cristiano, chart number seven. That will be easier for everyone to understand what happened. We can see in the left side, the total volume growth of 830%, as I said before. In the right side here, the revenue per ton decreased of 65%, and also the production cost per ton decreased of 27%.
What it explains it, you can see in the table, is that the export sales last year, they were 14% of the total volume sold. In 2020, they were only 3% of total volume. Of course, the price per ton when they export is much higher than the domestic market price per ton, because we have the international logistics. We need to have freight from the factory to the port. We have also customs expenses, et cetera. Normally, a size of the packaging sold to the national market are much smaller, 20 kg or 25 kg. The price per ton is much higher than the price per ton sold in the domestic market. Yeah. Moving on, please, Cristiano, slide eight. Now, a bit on expenses, Selling, General and Administrative expenses.
We are showing here the key lines of the expenses of the company in the first quarter in 2020 and 2019. Also, again, that's the big picture only, and we want to get into more details in the next charts. What you can see, as a total of SG&A, we had an increase of 50% year-on-year, from BRL 561,000 to BRL 842,000. The key points here that we're going to explain in detail is why we had such increase in sales and marketing expenses, and also in distribution expenses, which are the key ones that explain how this increase on SG&A. Please, Cristiano Veloso, slide nine. We have a bit little detail on sales and marketing expense, for example, which increased around 126%.
The key reason for this is that we hired 23 sales and marketing professionals, being hired in Brazil during 2019 as a full-time staff in order to achieve the 2020 goals. We're going to see later that you have the 2020 volume here, and, well, we're going to be a bit more on detail on it. Probably, the sales and marketing expenses is something that we're going to see each quarter is growing, because most of the people who were hired in the end of 2019 begin 2020. Distribution expense is also a good point to raise and detail a bit. This year, we are selling as well in the domestic market for CIF.
I'm not sure if everyone is aware, but CIF, Cost, Insurance and Freight, which means that we deliver the goods in the farmer's door instead of FOB, that Free On Board, when the customer pick up the product in our plant. Just a percentage of the sales are related to it. Most of it's still FOB as last year. The other point is that also in Q1 2020, we sold more than twice, over 124%, to other countries, which has a huge cost here on international logistics and also freight from the factory to the port. It explains the distribution expenses growth from BRL 25,000, almost none last year, to BRL 167,000 here in Q1 2020. Cristiano, please move on to slide 10. Now, a bit on 2020 guidance and increasing sales profile. You can see that climate is driving our agricultural cycle.
Most of the sales are expected to take place from June to September. For example, you can see in the left side here in the graph, that we saw in Q1 10,000 last year, but in Q3, we had 62,000 tons. What is really a huge increase in concentration in Q3 of the year. What we can see in the right side of the table is the last three years, two years, 2018, 2019, and also Q1 2020. You can see that 2018, we had 29,000 tons sold. 2019, we achieved almost 120,000. Now 2020, we have a projection of 85% growth expected for this year, 222,000 tons to be sold during this period. We already sold in Q1, as expected, 10,000. Considering the cycle and seasonality, it's more than expected.
The revenue target that will remain with BRL 32 million for this year, which is a 76% growth expected compared to prior year. That's the key point for 2020 so far. Please, Cristiano, slide 11. Liquidity and cash flow. Just some three bullet points that we chose to get a bit more in detail again, of what is happening or how is our situation here on cash flow. The net cash generated from operating activities, we had an improvement of over BRL 1.06 million. This was mainly due to decrease in receivables and increase in payables. We are working on always extending accounts payable and of course, reducing accounts receivable in order to improve our working capital. The second bullet point is about investing activities. We had a significant increase as well, mainly with the factory expansion that we started and already concluded in 2020.
The expenses were recognized in our books during Q1 this year. Yes. Thanks, Cristiano. It's highlighted in blue to be the third one to understand. The third bullet here, it's about the net cash generated from financial activities. We had a decrease compared to last year, which was expected since I think everyone knows that we had the private placement that raised over BRL 1.8 million last year in Q1 2019. This year so far, we did not have any kind of cash coming from debt or other financing activities. For this reason, we have this decrease. These are the key points on liquidity and cash flows. Cristiano can move on to slide 12, please. Now a bit about our strategy. We believe, and we are confident that we have a solid balance sheet situation at this moment.
We have an ability to generate significant free cash flow. Why I'm saying this is because we still have a very good gross margin, as you can see. Together with our sales growth, we're going to dilute our fixed costs. Including cost and also expenses that are fixed, we also decrease what will deliver to us a good cash flow, free cash flow expectation for the year. We have, in the second hand, we have also credit facilities already approved totaling over 21.8 million BRL that we can use wherever we need, if we need. We can anticipate, for example, receivables from customers. We are offering to some customers a longer term for payment, sometimes 180 days up to 12 months if necessary. If needed, we can anticipate receivables using these facilities that were approved with two or three companies.
The average interest rate around 1% per month. In conclusion, we believe that we have reduced the cash liquidity risk for this year for the company. A bit on the operational improvement. We are working in the factory and the mine with ISO 9001 and ISO 14001 implementation. We have a third-party consultancy company, very well-recognized in Brazil, that are working together with our team in the factory and in the mine. We do expect to have the certification in Q1 2021. This will bring to us some really improvements that we really believe that will take us to the next stage. Also, of course, and always, we are 100% focused on improvement safe for our workforce. We're going to see more a bit of it later.
Cristiano will show some charts on COVID, et cetera, that we are going to cover a bit on safety concerns that we have in our factory. Please move to 13, Cristiano. A bit on agribusiness in Brazil. This slide here shows three key commodities price that we have from March, beginning of March to June or April, June. We can see that, for example, coffee, soybeans and corn. Coffee and soybeans raised a lot, and corn around flat. The key point for this chart is to show to everyone that we do expect, besides the huge crisis around the world and Brazil related to COVID-19, we do expect a growth on revenue for our business. Agribusiness in Brazil still projects a growth even to 8.6%.
It's very good for our company that the business that you are 100% into it's like an essential business, and the expectation for 2020 is still growth besides our crisis around the world and the country. Cristiano can move on to 14, please. Now, just for to update everyone, I'm not sure if everyone's aware, but the Brazilian real devaluation and also federal interest rate decreased. Just for a comparison, from January to April 2020, Brazilian real devaluated around 23%. We've achieved this April, the $5 , 5.3 for BRL 1. We had a peak last month or a few weeks ago of almost 6 reais per dollar, 6.86 around. Now it went back now in May. Yesterday it was 5.3 again, so hopefully that much seasonality is not good for anyone.
Brazilian federal interest rate, SELIC, also reduced from 6.5% - 3% in one year, which is for Verde company, it's an opportunity also because we want to have lower interest rates for loans. That can support our cash flow operation with lower cost to the company. Well, I think these were the key slides on financial. I'll pass back to Cristiano to move on with the presentation. We'll be here to answer your questions at the end of the presentation. Thank you, Cristiano.
Thanks, Felipe. Quickly going through what we've been doing in the COVID-19 response. First of all, as we said in our last meeting, fertilizer production falls into the food production chain, and therefore, it's protected. We didn't have any interruption problem, and we don't foresee to have to interrupt our manufacturing activities. All our plans are moving forward as planned, respecting, of course, social distancing whenever possible and the use of masks and equipment to assure the protection of our employees. In terms of those actions we took, everyone from the administrative, financial, sales teams have been working home office. We've suspended all non-essential business travel, and as what has been reported by several other companies, we've seen productivity increase.
We're very pleased with the support and the dedication given by all our employees in this difficult time, and we can see the results in terms of increased sales, in terms of consumer satisfaction on customer service. As far as the impact in home office and having to work home office, I would even dare to say it's been very positive for the company. It has also been positive that we're so happy with the system, that it allowed us to expand our recruitment beyond the city where we're based, beyond the state where we are. We're hiring people from all over Brazil, accessing other pools of talents in order to build a team which can be working remotely whenever possible. A little bit of an update in terms of development and exploration. We had three very important events in the last quarter.
We filed an environmental license application to allow us to produce 2.5 million tons per annum. That's in connection to Mine Pit 2. We also had some excellent news from the mining agency in Brazil. They approved our Plano de Aproveitamento Econômico, which in English has been translated as feasibility study for a cluster of mining rights that could allow us to be producing up to 25 million tons per year. We applied for another cluster of mining rights. In another cluster of mining rights, we applied for another mining concession for up to 2.5 million tons per annum production. It was a very successful and busy quarter as far as license is concerned. A little bit of a summary we have now for our three different mine pits.
Mine Pit 1, we have this mining permit granted for 233,000 tons, and then we're waiting for an environmental license to produce these 233,000 tons. We expect to get this license before the end of the year. On Mine Pit 2, we're fully permitted to produce 150,000 tons, and we have additional applications in the mining permit front for 25 million tons, and already an environmental license application for 2.5 million tons. Here, we also like to expect or to believe we will be granted an environmental license by the end of the year for an additional 2.5 million tons, which combined with our mining permit, could see this area significantly expanded in terms of production capacity.
Mine Pit number three, we have 49,000 tons, and it's there we made an additional application for 2.5 million tons, and we will be also working on environmental application for an additional 2.5 million tons. In summary, we're currently allowed to produce 199,000 tons on a calendar year basis from the permits, and we have additional applications as I expressed. One thing is important to say, it's on this footnote here on this slide, that we can reach more than 199,000 tons production this year because of unused mining quota from last year. Last year, we had permits to produce more than we actually mined, so some of that unused quota comes to this year and allow us to hit a greater production amount. In terms of ESG, we always like to stress how little impact we have in the environment.
We're really borrowing a rock from an area of degraded pasture, putting it through our mechanical activation technology, accelerating the availability of nutrients, giving it back to farmers who then apply it to the fields, improving productivity, improving the nutrient density of food. This area, which is mined, it is recovered as we progress the mine pit into tropical forest. Last year, we planted over 4,000 trees, and for this year we are planning to plant an additional 5,000 trees. All of this has been recognized in an important award here in Minas Gerais State. We won in terms of Best Practices in the Mining Sector. This concludes the presentation. We will now be taking questions. There is an option at the bottom of the screen which says Q&A. You can click there, type in your questions, and we will be happy to address those as well.
While we wait for questions, I'm going to try something. I don't know if it will work or if someone will accept. We're very glad that one of our shareholders came to visit us a couple of months ago. His name is Mark Bradshaw. Mark, if you could share a little bit of what you saw in Brazil, what your impressions were before you came to Brazil, and I think it would be important to say you've been following Verde since 2010. That was the first time you came down to the site, and you met other people from the team, you met all the directors, you met some of our clients, you met some of the scientists doing development work. If you want to join us, I'm unmuting your microphone, and if you want to share something with us, everyone can hear you now, Mark.
This is a put up job by Chris Veloso, who didn't ask me to do this beforehand. I'll give you three minutes on what I think the key issues are. Before that, I will then talk to you about my experiences. It was a great visit, thank you very much, Chris, for that. I think it's fair to say that I was deeply impressed by the quality of the operation they've got down there. There's been huge progress made in the last two years. The actual mines themselves look well run. The plant and equipment is very well-based. I was very impressed with the guys they had on site during my visit. There was a whole load of bags ready for shipment to China, which someone else may want to take up in a minute.
This is a very easy and blessed operation to the extent that really, as you can see behind Chris's photo, this is a question of digging up lots of glauconite from the ground. glauconite is a very soft substance, so it's quite easy to crush. They crush it at their mill, bag it up, or load it directly onto lorries and send it off to their customers. There's a further thing which probably hasn't been discussed much, which is that there is demand for blending from customers, because obviously farmers need not only K2O, but they need other nutrients as well. I understand that that's a significant potential long-term value-added area for Verde, which I don't think has necessarily been discussed by the public, but it's amazing what you get when you look around plants.
We went to a coffee research station, where we saw quite clearly that use of K2O was superior to use of a lot of other products and certainly vastly superior to leaving coffee untreated with fertilizers. After that, we went to an avocado growing plantation, where not only did we meet the owner of that, who was extraordinarily happy with his supply so far of K2O, but also his father, who has now become a customer since our visit. That was very successful. I think it's fair to say that there is a guy doing a PhD as well who is, I think, going to publish some very interesting information in the coming months about the uses of K2O in Brazilian farming. What are the key issues and takeaways that I got from this?
Really this is a case of Felipe managing the cash flows properly, and I think he's given you some evidence about the various commitments he's received from Brazilian banks in order to allow that to happen. Most importantly, it's about the sales operation actually generating the tonnage required in order to become profitable. Don't forget that the break-even number here is less than 150,000 tons a year, so they'll be nicely profitable if they make their 220,000 tons. My hope is they make more than that, we will see. Thirdly and finally, a key interest is the state of Minas Gerais and how they act in future to grant the necessary permissions for this business to increase its production, ultimately to 25 million tons a year. That's a long way off.
I would be thrilled if they're up to 750,000 tons a year in the next couple of years. That will more than justify my investments several times over. I think, I would very much like to hear more from Chris, because I was hoping there would be some information on this in this conference call, about your continuing relationship with Minas Gerais and how you see these permissions developing in the coming months. Chris, do you want me to say anything else, or is that it? As I say, this is an unrehearsed statement. Is there anything else you'd like me to cover? Indeed, if any other investor wants me to cover anything. I've got to leave the call at 7:25, sorry, 5:25, but happy to take any other questions if anyone wants me to.
Unrehearsed things in life, Mark, are usually the best ones, so it was perfect. I have no other questions. Thanks for sharing. If someone has a question, I will bring you back in. Thank you a lot, Mark. thanks again-
Pleasure
For taking the time to come and meet us in Brazil.
Well, I encourage other people to come and thank you for the opportunity, Chris. It's great.
Thanks a lot. Mark Bradshaw, he's one of the founders of Mercury, which then became BlackRock, was taken over. He's a very senior fund manager in London. Through his firm, Bradshaw Asset Management, he became a shareholder back in 2010 and has followed us closely ever since. I'll start reading and answering some of the questions we have here. One first question here by Philippe Alves, "Is your fully licensed current limit of 199,000 tons an amount approved per calendar year or in total combined production over time?" The latter. It's a total combined production over time, because for each one of our licenses, it follows a slightly different timeframe. For 2020, in terms of fully licensed capacity, you should consider 199,000 tons, plus, as I said, the unused quota from 2019. Also, when do you expect a mining concession permit of Portaria de Lavra?
We have a Portaria de Lavra which was issued for mine pit number one. For that mine pit, we're waiting for the environmental license, and then we have an application for concession permits in two of the other mine pits. The other question by Stephen Baker. Chris, please speak to the opportunity to sell more to China and associated revenue increase versus the lower domestic price per ton. At this point, I don't know if the potential to sell to China is much greater than what we've been doing. So far, we've been supplying niche markets in China. We've been competing against a product called polyhalite, which is sold in China by a company called ICL, an Israeli company, and we're also competing against potassium sulfate. There are several trials going on. Our distributor seems very excited.
It's always going to be a very small portion of our business in comparison to the Brazilian market, which is far more significant for us. What is no doubt very encouraging is to see Chinese farmers, the Chinese government paying for this product about 10 x more than a Brazilian farmer is currently paying for it. Another question by Ricardo Miranda. "What about the ambiental, the environmental license? How much Verde is already allowed to produce this year, and how much do you predict it will be issued by the state this year?" I think throughout the presentation, I went on in terms of the license on the slide, which has a summary, and I addressed it. There's a footnote at the bottom which has the number, but about 250,000 tons. How much do we predict it will be issued by the state this year?
As Mark Bradshaw was saying, we've had some very good feedback by the government and I'm encouraged or I have big hopes we'll get them issued before the end of the year for additional production. Those were the questions we received. Unless there is any other question, I will conclude today's investors call. I'll give a couple more minutes to see if anyone wants to ask any other questions. No. Okay. This will be available in our YouTube channel. If you haven't registered to our newsletter yet, please do so on our website. At the bottom of the page, there's a place where you can add your email, and we will be sending you the updates. Thanks a lot for everyone who joined today to be with us on the call.
Thanks a lot for everyone who is watching this on YouTube, and we're very excited about the work we're doing in Brazil. We're very excited about what we believe and what we can accomplish here. We're excited about coming up with even better news in a couple of months' time or in a few months' time for our Q2 results. If anyone wants an update, a Q&A, a full corporate presentation, wants to share, as I showed, just get in touch or just use those links and schedule a call with us. Thanks a lot, everyone. Have an excellent day and stay safe. Bye-bye.