Business Strategy and Competitive Advantages

STRATEGY

The iPlantForest Group aims to be the largest reforestation company to recover degraded areas in Brazil. IPlantForest permanently invests in research and development of seedling production techniques, fast planting and organization for wood certification and constantly updates its computerized management system to obtain the highest levels of control and satisfaction from its customers and employees. The revenues from logging allow the company to be competitive in the timber sector even though it practices conservative prices for its products, and in some cases, prices that even compete with the illegal timber market. We focus on generating cash to generate value for our investors and allow reinvestment in the entire project, based on pillars such as creativity and innovation, adjacent businesses and disruptive industry.

CRIATIVITY AND INNOVATION

Challenge old practices seeking greater efficiency and more competitive assets.

The iPlantForest Group does not settle for repeating millennial practices of tree production and management (example from forestry). Nor does it accept the fact that planting forests, instead of monoculture, is a much more complex and expensive task. From the creation of new equipment and methods of seedling production in the nursery, planting forests (native and exotic species), efficient management of these forests, always thinking outside the box, we can compete with advantages with the illegal wood industry, helping to preserving native forests and giving our client a safer and more competitive alternative.

The main action to succeed in this initiative is the relentless search for the new, for which it was not tried, for the different, for the unusual, carefully evaluating millennial processes and seeking the optimization of each small task, always facing the fear of making mistakes, the fear of appear different, resulting in faster and more efficient processes, bigger, better and faster results in the production of seedlings, and wood production similar to that obtained in the most successful silvicultural enterprises today.

Investing in research and challenging our employees and scientists is a constant in our company’s innovation process.

ADJACENT BUSINESS

Focus on the diversification of forest species ensuring the permanent and consistent exploitation of bioproducts and wood

The iPlantForest Group invests in mechanizing forest planting, and not just monoculture, to allow the installation of true forest systems from which we can permanently and consistently extract bioproducts for the chemical, pharmaceutical and cosmetic industries, among others, thus guaranteeing an income that adds value to the areas of Legal Reserve and Permanent Preservation Areas recovered, further stimulating the decisions of rural landowners to reforest their environmental liabilities. In addition to the gains from the exploitation of bioproducts, we also created a strategy for logging with cuts in 6 years, 9 years, 12 years and 17 years, which further enhances the curve of financial returns per hectare, making the whole enterprise even more attractive to landowners and streamlining the average curve for total return on investment.

DISRUPTIVE INDUSTRY

Creating solutions for problems not faced until today

The timber industry has been supported by the same age-old solutions to ensure relatively well-balanced returns since its foundation. We are not denying the financial potential of the sector, both with regard to wood products and the products resulting from its transformation. However, we have decided to face a bigger and more complex problem, which is to recover degraded areas, convincing landowners to carry out this recovery with our support, while helping to combat climate change, reducing CO2 emissions, meeting or to try to comply with the Paris Agreement, in short, an agenda much more linked to solving problems that afflict the whole existence of life on earth, than simply a business based on planting seedlings (monoculture) and selling products derived from trees, without here to discredit those who live by exploring ancient solutions, on the contrary.

With these ideas in mind, we decided, just to put an end to the enormity of the task, to invest in software and machine solutions that would allow us to face the problem and overcome the difficulties presented. In this sense, we created a new management system that grows every day, and whose basic purpose is to organize, monitor and guide the company towards the monumental task that we are facing. After all, the information generated by all the innovations in the nursery and forestry tract needs to be compiled, read and analyzed, to obtain new solutions to old problems, and to ensure that a planted forest can bear fruit, that we can reinvest in new ones. forests, creating environmentally balanced and correct solutions and allowing the conscious and permanent exploration of these areas.

We work with living forests, with biodiversity, with regeneration and above all with innovation and courage.

We created and continue to challenge our creativity in order to break away from old practices and risk tirelessly building new mechanical and software solutions.

STRONG POINTS

Lower market production costs and 100% interconnected operations

Thanks to the concentrated investments of the iPlantForest Group in the development of distributed cloud management systems, in the development of techniques for seedling production, dormancy breaking and in the research of clones of native species, and efforts concentrated in the creation of revolutionary methods of planting and more recently from the construction of 3 different versions of the forest planting machine (native and exotic species), we managed to reach the mark of the lowest cost per planted seedling in the market.

In contrast to the forest development market, which has a specific focus on silviculture, with the planting of eucalyptus and pine primarily, the iPlantForest Group has dedicated itself to planting forests with native varieties by region and exotic, in such a way that liquidity events are comparable to the liquidity events of the markets mentioned above. Our liquidity events start in the third year, with some even more premature, through the exploration of the bioproducts taken from the native species that make up the planting mosaics, in addition to the exploration of wood with cuts that started in the 6th year, and continue with 9 years, 12 years and final cut in the 17th year, generating revenues that vary, in the most conversational analysis, around BRL R$ 197 thousand per hectare.

Proximity to export areas

The iPlantForest project was started in the state of Roraima, which is close to the port of the capital of the former English Guiana, which is the closest port to the Panama Canal of a Brazilian city. From British Guiana, the exported raw material arrives in the Panama Canal in 4 days, which significantly reduces the cost of transportation in the export of wood and bioproducts to all markets in the world.

The proximity to several ports in the region, which are within a radius ranging from 600 to 1200 kilometers, makes our products even more competitive, and may even compete with the illegal wood market, which we sincerely believe, should not have the strength that today (2020) in the years to come.

The company’s projects are for expansion to the entire region of the Legal Amazon, that is, the Brazilian Amazon, and in all these places we will take the same techniques that have made us so attractive to investors that they have a concrete need to reduce CO2 emissions, those who have environmental liability problems and need to be solved, those who like to invest in the medium and long term in sustainable and environmentally friendly products, and for everyone who is concerned with promoting ideas that help save the world, while generating wealth.

Respect for clean energy production

All electrical energy used in the project is solar. We invest in solar plants to produce clean energy and have a speech 100% aligned with our actions.

We care of rural producers and nature

The project as a whole has a strong socioeconomic and environmental appeal, as it solves the problem of deforestation, reforesting areas with environmental liabilities, and does so with native and exotic forests, something that is much more difficult to implement than planting monoculture tree species.

TECHNOLOGIES THAT DECOMPLICATE AND CONSTANT TRAINING

The iPlantForest Group has invested since its foundation in 2016 in cutting edge technologies to simplify and standardize all day-to-day operations of the company. Every day we are challenged to create, improve and systematize all of our tasks. We are creating a true factory for planting forests, with identification and systematization of everything that needs to be done, from the production of seedlings to the cutting and exploitation of bioproducts from our forests, which will allow us to inaugurate industrial structures for planting forests anywhere in Brazil or the World, with the same quality standard that we printed at our first branch, in Boa Vista, Roraima.

Our team, both administrative and field, are periodically recycled and trained for new technologies, and for everything we are doing, seeking a higher quality of processes, more safety for our employees, and a higher level of professionalism, found only in very large companies with many years of existence.

PRODUCT DIVERSIFICATION AND SOLID WEALTH GENERATION

The production of wood and all its wood products at lower costs allows us to compete, even with the illegal wood market that still exists in the Legal Amazon. We believe, of course, that in the near future the sale of illegal wood and biopiracy in the Amazon will fall to more acceptable levels, for the market and for the protection of the native forest, however, the reality today is that we compete with the illegal market.

Some recipes put us in a position of competitive advantage, also the high value of the exotic wood that we cultivate, and the possibility to explore from an early age, and for countless years, the bioproducts extracted from the planted forest.

Among the products that we will commercialize, we can mention: antioxidant and antitumor bioactives, essential oils, bioinsecticide, bioherbicide, antimicrobial, anti-fungicide, sedatives, anxiolytics, antianginal, antiseptic, emollient, exciting, tonic, vulnerary, among others, besides being clear , of wood products such as stakes, fences, platforms, partitions, plumps, panels, logs, sawn wood, sawn and dry wood, among other products, that will start to be commercialized from the planting, once some bioproducts begin to be extracted in the first year of planting, and thinning the forest for sale of wood, will be done from the 6th year.

Right after completing the planting of the forest, the company issues and can sell Forest Replacement Credits (CRF). For each hectare planted with exotic seedlings, we can issue 150 CRF, and for each hectare planted with native seedlings, we issue 200 CRF. The minimum current value of the CRF is BRL R$ 40 per unit, and in Pará State the CRF is sold for more than R$ 60 each.

Therefore, each hectare planted, yields between BRL R$ 6 thousand to R$ 8 thousand per hectare. This first revenue helps the company cover the first costs of planting its forests, and generates solid cash to continue the project. The following revenues from the sale of bioproducts and wood will assist the company in its growth and reinvestment in more forests. The challenge of planting enough trees to fight climate change, requires a permanent and very strong recipe, and this recipe is perfectly supported by the activities that we integrate, permanently and constantly throughout the years of the forests’ existence.

Regardless of whether we operate in a market where the sale of illegal wood would stifle the sale of softwood (eucalyptus, pine, etc.), in the case of hardwood (African mahogany, ipê, cedar, etc.), not so much, as it is wood high market value, and produced with modern planting techniques, which greatly reduce all crop costs.

We format a robust business, thanks to investments in new technologies, management systems, artificial intelligence, process automation, planting machines, other equipment that we have been building over the years, new methods of work, and all investments in innovation that are the brand of our companies, and of our performance in the market for over 35 years.

DIVERSIFIED PRODUCT CATALOG

The iPlantForest Group is the first initiative in the world to carry out the planting of forests, not monoculture, with native and exotic species, using native ones selected for the exploration of bioproducts from their plantation, which works on an industrial scale this plantation. Usually reforestation projects with this specific focus are projects implemented in very small, almost experimental areas. Planting real forests, creating mosaics combined by different species is rare and so complex that it is difficult to leave the sphere of isolated experiments.

The invention of the forest planting machine, which is already in its third version, tested, adjusted and approved, and its construction by specialists with extensive experience in planting forests, puts us in a privileged and unique situation to be able to execute our project and make our dream come true.

For this reason, we have a varied catalog of products of different species, both native and exotic, which guarantees us a solid position in the hardwood timber industry. Among the main products, we can mention bioproducts extracted from the forest and wood base, which ranges from wood for fence to sawn and dry wood for furniture and decoration.

Recalling that the extraction of wood in our planted forests will always be through sustainable forest management, and will remove for years, slowly and in a way that does not harm the planted forest, only exotic trees, and this management will not cause any negative impact. or degrading in the recovered forest. On the contrary, a native forest undergoes processes of self-management, and in our case, we will reproduce these natural movements of the forest, without damaging it, and without harming the environment.

SOCIO-ECONOMIC-ENVIRONMENTAL EXCELLENCE

The most important structural basis for the creation of the iPlantForest Group and what defines us, is the fact that we formed this group of companies to combat one of the most complicated and difficult problems today. The recovery of environmental liabilities from farms that may even be embargoed, bringing a self-sustainable economic alternative, with clear environmental gain, and allowing the reforestation of these areas to be a spring that boosts gains for the landowner, and not a hindrance, a problem . Depending on the profile of the landowner, we help with this highly profitable and long-lasting project, to keep him and his family in the countryside, without having to migrate to urban centers. The exploitation of bioproducts is an increasingly important asset and provides consistent and lasting gains.

The “forest to eat” project brings security to our forests and employment and income for the people who live around our forests. The idea came up as an alternative to protect our forests from fire. Training, paying for the necessary investments for the installation of agroforestry within our forest, and offering an economical alternative for those who live in the countryside and have few options for work, and do not have the resources to implement an agroforestry. Our company pays all the costs of implementing agroforestry and technically assists, with training and support, to help accelerate the production of agroforestry within our forests. This initiative helped us to protect our forests from fire, improved soil conditions in the places where it was implanted, and has helped more humble people to settle and have a solid income.

We signed a partnership with the Brazilian Army and offer agricultural inputs to support the operation hosted in the state of Roraima, at no cost to the Army. The vegetables of our agroforestry are produced with our resources, to help in the production of food for those who cannot afford to buy food. We believe that if each one makes a small sacrifice, together we can build a better world.

Regarding the production of our wood, we are concerned with being in line with the prerequisites of the FSC, the most important wood certification body in the world, and to maintain the level of demand required by them, we have developed methods and a sophisticated system that allows you to track all the trees from the seedling to the cut, and in the case of trees that will never be cut, know exactly where they are, registering their GPS position and all the necessary information for their management since planting.

We sponsor amateur sports in the state of Roraima, serving athletes from Jiu-Jitsu, Skydiving, Motocross, Motovelocidade, among other sports. Our athletes are true champions in their sports and people that we are very proud of, and we are honored to be able to support them.

EXPERIENCED TEAM WITH A FOCUS ON QUALITY AND INNOVATION

The iPlantForest Group brings together professionals from different fields with decades of experience in the main sectors in which we operate, with emphasis on innovation in process management, technology, artificial intelligence, construction of new agricultural machines, fully covering the sectors in which we operate. We are an AgTech, a technology company in the field and we are constantly creating new standards and methods to gain scale in reforestation and afforestation projects, which naturally translates into more value for our investors and shareholders.

Despite being a privately held corporation, we are committed to a publicly traded company and act as such, promoting transparency, better governance and clear results for our investors and shareholders.

We have concentrated efforts on improving governance practices that bring even more transparency to all the group’s actions, with an emphasis on:

Implementation of the highest levels of Corporate Governance;
Incorporation of a new Code of Conduct, widely disseminated among its investors, shareholders, employees, suppliers and customers;
We are in the process of creating the committees for: Sustainability, Strategy, Management and Auditing);
Until 2021, the Board of Directors will be reformulated to open vacancies for Independent Directors, following the standards of the Brazilian Institute of Corporate Governance.

FINANCIAL ADMINISTRATION FOCUSED ON MAXIMUM LIQUIDITY

The group’s financial management is 100% guided by policies and guidelines with a focus on mitigating liquidity risks. As a direct consequence, we maintain a level of cash and cash equivalents that we believe is sufficient to cover our short-term debt-related obligations, reducing the risks of debt renegotiation and rollover and the need to access debt markets on a crisis, such as the one we are experiencing today with the coronavirus. Our indebtedness is kept at low levels in the regular course of business, with additional debt limited to financing growth projects, taking into account the debt service and the cash flow generation of each project.