Welcome to the Annual General Meeting of Agri Invest A/S
Thursday 7 May 2015

Agenda

1. Election of meeting chairman
2. Board’s report on the company’s activities during the past year
3. Presentation of the audited annual report and management report for approval
4. Decision on the use of profits or covering of losses in relation to the annual report
5. Presentation of the budget for 2015
6. Election to the Board
7. Election of Accountant
8. Any proposals from the Board or shareholders
9. Other business

Chairman’s Report

• Group structure

Chairman’s Report

• Group structure
• Soil compaction strategy

Soil compaction strategy

• Legal/practical swap
• Tougher course towards inflexible neighbours (Vibe)
• Strategic considerations – cadaster registration

Chairman’s Report

• Group structure
• Soil compaction strategy
• Land status

Chairman’s Report

• Group structure
• Soil compaction strategy
• Land status
• Crop status

Chairman’s Report

• Group structure
• Soil compaction strategy
• Land status
• Crop status
• Building activities

Chairman’s Report

• Group structure
• Soil compaction strategy
• Land status
• Building activities

Chairman’s Report

• Group structure
• Soil compaction strategy
• Land status
• Building activities
• Focus areas

Focus Areas:

• Operation, especially: field yields
• Soil compaction – Sale – Swap
• Sale of Oravita

 Agenda

1. Election of meeting chairman
2. Board’s report on the company’s activities during the past year
3. Presentation of the audited annual report and management report for approval
4. Decision on the use of profits or covering of losses in relation to the annual report
5. Presentation of the budget for 2015
6. Election to the Board
7. Election of Accountant
8. Any proposals from the Board or shareholders
9. Other business

Presentation of the accounts

Richardt Duus
CEO / CFO

Agri Invest A/S
Company No. 29 17 54 62

Annual Report

1 January – 31 December 2014

Contents

Page

Management’s statement                       3

Independent auditor’s report                4

Management report

Company details                                      6

Group overview                                        7

Key figures for the Group                         8

Management’s report                               9

Group and annual accounts

Accounting policies                                 12

Result statement                                     18

Balance                                                  19

Notes                                                      21

Independent auditor’s report

To the shareholders of Agri Invest A/S

Report on the group accounts and annual accounts
We have audited the group accounts and annual accounts for the financial year 1 January to 31 December 2014, which covers accounting policies, result statement, balance, equity statement and notes for the group and the company. The group accounts and annual accounts are prepared in accordance with the Danish Financial Statements Act.

Management’s responsibility for the group accounts and annual accounts
Management is responsible for the preparation of group accounts and annual accounts that give a true and fair picture in accordance with the Danish Financial Statements Act. Management is also responsible for the internal control as management determines is necessary to prepare group accounts and annual accounts that are free from material misstatement, whether due to fraud or error.

The completed audit
Auditor’s responsibility
Our responsibility is to express an opinion on these group accounts and annual accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit legislation. This requires that we comply with ethical requirements, as well as to plan and perform the audit to obtain a high degree of certainty about whether the group accounts and annual accounts are free of material misstatement.
An audit involves performing audit procedures to obtain audit evidence about the amounts and disclosures in the group accounts and annual accounts. The audit procedures selected depend on the auditor’s assessment, including the assessment of the risks of material misstatement of the group accounts and annual accounts, whether it is due to fraud or error. For risk assessments, the auditor considers internal control that is relevant to the company’s preparation of group accounts and annual accounts that give a true and fair picture. The aim is to have audit procedures that are appropriate in the circumstances, but not to express an opinion on the effectiveness of the company’s internal control. An audit also includes assessing whether the management’s choice of accounting policies are appropriate and whether management’s accounting related estimates are reasonable, as well as the overall presentation of the group accounts and annual accounts.

We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our opinion, which is not subject to the group’s accounts, but subject to the parent company’s annual report.

Reservation

Basis for the conclusion with reservations

Reservation regarding the parent company’s result statement

The parent company is obligated to cover the subsidiaries’ capital losses in previous years. Management has included the subsidiaries’ capital
loss as an expense directly in the equity in the parent company’s annual accounts for 2014.

This is a departure from the Danish Financial Statements Act that requires recognition in the result statement. The parent company’s result statement for 2014 formally seen does not comply with the Danish Financial Statements Act.

The group accounts for 2014 are not affected by this and are thus not subject to this reservation.

The annual result for the parent company according to the result statement was tDKK – 169, adjusted for the recognition of capital losses in subsidiaries in the result statement, the annual result of the parent company represent tDKK – 29,847.

The parent company’s equity and balance sheet as of 31 December 2014 are not affected.

 

Conclusion

In our opinion, the group’s accounts and the annual accounts, except for the impact of the relationship of the parent company’s annual report that is described in the basis for the conclusion with reservations, gives a true and fair picture of the group’s and the company’s assets, liabilities and financial position as of 31 December 2014, as well as the group’s activities for the year 1 January to 31 December 2014 in accordance with the Danish Financial Statements Act.

Statement on the management’s report

In accordance with the Danish Financial Statements Act, we have reviewed the management’s report. We have not carried out any procedures in addition to the audit of the group’s accounts and the annual accounts. On this basis, we believe that the information in management’s report is consistent with the group’s accounts and the annual accounts.

Management’s Report

Main activity

The main activity has, as in previous years, consisted of investment in and operation of agricultural land in Romania, as well as sales of crop products. The investments in agricultural land and yards, grain processing facilities and agricultural machinery, as well as the operation of crop production in Romanian subsidiaries, see the Group overview.

Development in activities and economical conditions

Management considers the result for the year as unsatisfactory.

There is good progress in the crop yield in 2014. However, they have not quite lived up to budgets and expectations, as there is a deviation in the order of 5%. The overall unsatisfactory economic result is, however, primarily due to the prices obtained for the products, which have been about 18% below budget.

The often violent changes in the weather in Romania will often be a challenge. This means that there will often be short periods to carry out particular processes, as well as to prepare the soil, which require different action depending on conditions. In recognition of this, a number of initiatives have been launched to address these weather fluctuations. These initiatives are starting to show results, and they are of course expected to have a positive effect going forward. Likewise, there are significant investments in soil improvements in 2014.

Efforts regarding the consolidation of the land in Romania have continued in 2014, and have resulted in improvements in the layout and in the condition of the soil. Efforts have been made with the company’s own personnel resources and they have also resulted in an increased area of ​​cultivation at the two sites in particular, Videle and Mizil. Efforts will also continue in 2015.

Investment in new production facilities is underway, and work continues in 2015. Subsidies have been received from the EU’s structural funds, and investment in this programme will be completed in 2015. The support is recognised as income in line with assets as they depreciate.

In accordance with the company’s overall objective, dialogue has initiated with international investors for the sale of operating units – primary the site at Oravita. There are ongoing adjustments in the corporate structure as part of this sales initiative.

Management has chosen a uniform principle for the statement of income and equity in the group accounts and the parent company accounts, in accordance with the wishes for this purpose, so the accounts become more informatively uniform , while we have also formalised obligations within the group, so we act as one company with joint liability . Economic focus will remain on the group’s overall result and equity, which are not affected by the above change.

Events after the balance sheet date

No post balance sheet significant events have occurred which are considered to have a material effect on the annual report.

Uncertainties or unusual conditions that have affected recognition or measurement

There has not been considerable uncertainty or unusual circumstances that have affected recognition of income.

Price risks

There are no other price risks than the normal risks surrounding the purchase of raw and auxiliary materials and the sale of finished goods. These prices are affected by global supply and demand, and the local market. Inventories as of the balance sheet date are not subject to uncertainty.

Currency risks

Activities and investments in Romania has meant the results and equity have been affected by exchange rate developments in the Romanian currency. This effect was due to the intercompany receivables that are rate adjusted, just as the fact that the Romanian subsidiary’s annual report is presented in Romanian currency (RON), which upon conversion to DKK has an impact on the result and equity adjustment, which in 2014 has been negative.

This factor is not considered to be of significant primary importance as the starting point for pricing of cash crops as the real valuation of the fixed assets, especially real estate, is made in Euro, where the uncertainty is limited due to Denmark’s fixed exchange rate policy against the Euro.

Interest rate risks

As the interest-bearing debt totalled a modest amount – 5-10% – compared to the balance sheet and equity, changes in interest rates have no material effect on earnings.

Environmental factors

The company operates under Romanian and EU environmental regulations, and is subject to regular environmental monitoring by the authorities.

Knowledge resource

The company’s goal is to operate profitable crop production using updated technology and knowledge. This places great demands on managers’ knowledge and for employee understanding of the performance of work.

Managers are trained and experienced in the operation and management of plant production and the company uses great resources on continuing training, knowledge sharing and sparring, both inside the company, between managers and employees and with the involvement of colleagues from other companies in the form of participation in an erfa-group with other Danish-owned farms, as well as the involvement of consultants and group management.

Research and development activities

There is an ongoing trial of cultivation methods, fertilizers, liming and crop protection, etc., in the operating companies.

The expected development

As the group’s gross yield is chiefly made up of sales of plant products, the result in 2015 is largely dependent on the price development of these products, which is of course subject to economic conditions, and supply and demand.

The other significant factor is the yields. There are, as mentioned in the second section, a number of measures regarding this, which is expected to give further positive results in 2015. Of course, extreme weather in 2015 can affect this, but there is the best possible preparedness against bad weather, in the form of investment in machinery and buildings/silos for the storage of crops, etc., that have been made and which will be made in 2015.

These investments and the above-mentioned measures are of course expected to have a positive effect on yields no matter what the weather and thus on the results for 2015.

Accounting policies

The annual report has been prepared in accordance with the provisions of the Danish Financial Statements Act for accounting Class B with individual options from Class C.

The accounting policies are unchanged from last year.

Income recognition and measurement in general

In the income statement, income is recgonised as it is earned, including value adjustments of financial assets and liabilities. In the income statement, all costs are recognised, including depreciation and devaluation.

Assets are recognised in the balance sheet when it is probable that future economic benefits will flow to the company and the asset can be measured reliably.

Liabilities are recognised in the balance sheet when it is probable that future economic benefits will flow from the company and the liability can be measured reliably.

On initial recognition, assets and liabilities are at cost price. Subsequently, assets and liabilities are measured as described for each accounting item below.

Certain financial assets and liabilities are measured at depreciated cost price, applying a constant effective interest rate until maturity. The depreciated cost price is calculated as original cost price less any repayments, as well as supplements /deductions of the accumulated depreciation of the difference between cost price and nominal amount.

Recognition and measurement takes into account predictable losses and risks arising before the annual report and which prove or disprove matters existing at the balance sheet date.

Consolidation practice

The annual report comprises the parent company, as well as subsidiaries in which the parent company directly or indirectly has a majority of the voting rights or which the parent company through share ownership or otherwise has a controlling influence. The consolidated accounts are prepared as a consolidation of the parent company and the individual subsidiaries’ accounts prepared in accordance with Group accounting policies.

With consolidation, there is an elimination of intra-group income and expenses, shareholdings, balances, etc., as well as realised and unrealised internal gains and losses on transactions between the consolidated companies.

The parent company’s investments in the consolidated subsidiaries are set off by the parent company’s share of the associated company’s net asset value calculated at the time when the group relationship was established.

Accounting policies

Minority interests

In the group accounts the subsidiaries account items are recognised 100%. Minority interests’ proportionate share of the subsidiaries’ results and equity are adjusted annually and recognised separately in the result statement and balance sheet.

Conversion of foreign currency

Transactions in foreign currencies are converted at the transaction date rate. Exchange differences arising between the transaction date and the date of payment are recognised in the result statement as a financial item.

Receivables, debt and other monetary items in foreign currencies that have not been settled at the balance sheet date are converted at the balance sheet date rate. The difference between the balance sheet date rate and the exchange rate at the time the receivable or payable are recognised in the result statement under financial income and costs.

The group’s foreign subsidiaries are independent entities, and therefore the result statement is converted at the average exchange rate, while their balance sheet items are converted at the balance sheet date rate.

Exchange rate adjustments arising from the conversion of independent foreign enterprises equity at the start of the year and foreign exchange adjustments arising from the conversion of independent foreign entities’ result statements at average exchange rates are recognised directly in the equity.

Result statement

Net income

Net income of the sale of commodities and finished goods, which include crops and derived products are recognised in the result statement if delivery and transfer of the risk to the buyer has taken place before the year end and that the income can be reliably calculated and is expected as received. Net income is recognised excluding VAT, taxes and discounts in connection with the sale.

Public subsidy

Hectare subsidies are recognised in the result statement under other operating income as the right of the subsidy is obtained. Until the subsidy is paid, typically at year-end or at the start of the next year, are recognised as other receivables in the balance sheet.

Subsidies for investments/purchase of assets are recognised in the balance sheet under deferred income (liabilities) and transferred to public subsidies in the result statement as depreciation of assets that the subsidy is awarded for.

Value adjustment of biological assets

Value adjustments of biological assets comprise of value adjustments to fair value less realisation costs.

Other external costs

Other external costs include costs related to distribution, sales, advertising, administration, premises and bad debts.

Other operating income/costs

Other operating income and costs comprise accounting items of a secondary nature relative to the company’s main activities, including gains and losses on the sale of intangible and tangible fixed assets.

Income from equity holdings in subsidiaries

In the parent company’s result statement, the proportionate share of each subsidiary’s profit after tax after for full elimination

of intercompany profit/loss are recognised. Subsidiary companies with negative net asset value at year-end are not recognised full/no profit share.

Financial items

Financial income and costs include interest income and costs, realised and unrealised rate gains and losses on securities, debt and transactions in foreign currencies, depreciation of financial assets and liabilities and surcharges and allowances under the prepaid tax scheme, etc.

Corporate tax and deferred tax

Tax for the year comprises of the year’s actual tax and movements in deferred tax is recognised in the result statement with the portion attributable to the profit and directly in equity with the portion that can be attributable to items recognised directly in equity.

Balance

Group goodwill

Goodwill is measured as the difference value between the purchase price and the share of the value of the acquirer’s net assets. Goodwill is depreciated over 20 years and reviewed annually. There is devaluation if there are indications of depreciation.

Acquired rights

Acquired rights are measured at cost price less accumulated depreciation and recoverable value, whichever is lower.

Acquired rights are depreciated over the depreciation period which is usually 5 years and does not exceed 20 years.

Tangible assets

Soil, land and buildings, plant and machinery and other fixtures and fittings are measured at cost price. Land is subsequently measured at fair value. Revaluations are recognised directly in equity, while depreciation goes in the result statement.

The basis of depreciation is cost price less estimated scrap value after service life. There is no depreciation of land plots, but the land plots are recognised with land improvement expenses. The cost price includes the purchase price and costs directly associated with the acquisition up until the time when the asset is ready to be put into use.

Gains and losses on the disposal of fixed assets is calculated as the difference between the selling price less selling costs and the accounting value at the time of sale. Gains and losses are recognised in the result statement.

There is a linear depreciation based on the following assessment of the expected service lives of the assets:

Buildings                                30 years

Land improvements                  5 years

Plant and machinery            5-10 years

Other fixtures and fittings    5-10 years

Depreciation of fixed assets

The accounting value of intangible and tangible fixed assets is reviewed annually to determine whether there is any indication of depreciation other than that expressed by normal depreciation.

There is deprecation to the recoverable value if this is lower than the accounting value.

For the recovery value, the highest value of the net selling price and capital value are used. The capital value is calculated on the present value of expected net cash flows from the use of the asset or asset group and the expected net cash flows from the sale of the asset or asset group after their service life.

Equity holdings in subsidiaries

Equity holdings in subsidiaries are recognised in the balance sheet at the proportionate share of the company’s net asset value calculated by the parent company’s accounting policies minus or plus unrealised gains and losses.

Subsidiaries with a negative net asset value are recognised at DKK 0, and any receivables from these companies are depreciated by the parent company’s share of the negative equity if it is deemed irrecoverable. If the negative net asset value exceeds the amount owed, the remaining amount is recognised under provisions to the extent that the parent company has a legal or constructive obligation to cover the subsidiary’s deficit.

Net revaluation of equity holdings in subsidiaries is transferred under equity to the reserve for net revaluation under the equity method. Dividends from subsidiaries that are expected to be adopted before the approval of the annual report for Agri Invest A/S, are not bound to the revaluation reserve.

Inventories

Inventories are measured at cost price using the FIFO method. In cases where the cost price exceeds the net realisable value, it is depreciated to the lower value.

The cost price for commodities, as well as raw materials and auxillary materials is calculated as purchase price plus delivery .

The cost price of finished goods, as well as work in progress includes the cost price of raw materials, direct labour and indirect production costs. The net realisable value of inventories is calculated as the selling price less completion costs and costs incurred to execute the sale and is determined taking into account marketability, unsaleability and development in expected sales. The value of inventories is measured at cost price plus indirect production costs. At the time of harvest, crops (biological assets) become finished goods inventory, measured at fair value less realisation.

Stocks of finished goods of biological assets

Biological inventories of finished goods include harvested crops, which are measured at fair value less the realisable costs.

Receivables

Receivables are measured at the deprecation cost price, which usually corresponds to nominal value. Provisions are made for bad debts to net realisable value.

Accruals and prepaid items

Accrual and prepaid items recognised under assets include costs incurred relating to subsequent financial years.

Equity

Reserve for net revaluation according to the equity method

The reserve for revaluation by the equity method includes net revaluation of equity holdings in subsidiaries in relation to cost price. The reserve can be eliminated by losses, realisation of equity holdings or changes in accounting estimates. The reserve cannot be recognised with a negative amount.

Dividends

The dividend expected to be paid for the year is shown as a separate item under equity. Dividends are recognised as a liability at the time of adoption at the Annual General Meeting.

Deferred liabilities

Corporate tax and deferred tax
Actual tax liabilities and actual tax receivables are recognised in the balance sheet as calculated tax on the annual taxable income adjusted for tax on previous years’ taxable income and prepaid taxes.

Deferred tax is measured using the balance sheet liability method on the temporary differences between accounting and tax values of assets and liabilities.

Deferred tax assets including the tax value of tax loss carry forwards, are measured at the value at which the asset is expected to be realised, either by elimination in tax on future earnings or by offsetting deferred tax liabilities. Deferred tax is allocated to the tax rates in the respective countries, and the balance sheet date applicable regulations will apply when the deferred tax is expected to result in actual tax.

Financial liabilities

Financial liabilities, which include bank loans, are recognised initially when taking out the loan of the received proceeds, less the incurred transaction costs. In subsequent periods, the financial liabilities at depreciated at cost price equal to the capitalised value using the effective interest rate, if the difference between the proceeds and the nominal value is recognised in the result statement over the loan period.

Other liabilities, including debts to suppliers, affiliated companies and other debt, is measured at the depreciated cost price, which usually corresponds to the nominal value.

Accruals and prepaid items

Accruals and prepaid item income recognised as liabilities comprises of payments received concerning income in subsequent years, as well as phasing of subsidies.

12  Mortgages and security

As security for a total borrowing limit at the financial institution of DKK 50,000, which is granted to 3 subsidiaries, with respectively tDKK 9000, 15,000 and 26,000, there is a mortgage given in land and buildings associated with another subsidiary. The accounting value of land and buildings a of 31 December 2014 represents an estimated tDKK 121,500.

13 Contingencies, etc.

Contingent assets

The Group has an assurance of a total maximum FEADR subsidy for investments in 2015 of approximately tDKK 4600. The subsidies cover projects/sub-projects within the above financial framework, to the extent that projects are carried out with about 50% of the total investment.

Contingent liabilities

FEADR subsidies have been received totalling tDKK 14,750, which is subject to the subsidy eligible tangible assets kept in operation for 2016 and 2017.

14 Closely related parties

Ownership

The following shareholders are registered as company shareholders owning at least 5% of the votes or at least 5% of the share capital:

Thybjerggård Invest ApS

Herlufmagle

2013-14 growing season at ORAVITA:

• A lot of lodged crops => low settlement prices for grains and increased harvesting costs, as well as drying and cleaning
• 406 HA of rape hail damaged => net loss of DKK 700,000
• Good maize yields (price DKK 100 /Hkg)
• Greatly increased fungicide spraying
• Greatly increased diesel costs

2013-13 growing season at VIDELE:

• All grain sold as bread grain
• Rapeseed > 3 tons / HA
• Sunflower 2.7 tons /HA
• Greatly increased fungicide spraying

2013-14 growing season at MIZIL:

• Very bad establishment of spring crops (late, wet, poor seed bed):
• Sunflower
• Maize
• 170 HA holdt sort
• 100 HA sunflower drowned
• Increased fungicide spraying
• Increased costs as a result of lodged crops: harvest costs, cleaning
• Increased diesel costs

Budget 2015 – assumptions:

Wheat – 6 T/HA – 124 DKK/Hkg

Maize – 6.5 T/HA – 109 DKK/Hkg

Rapeseed – 3 T/HA – 255 DKK/Hkg

W Barley – 5 T/HA – 109 DKK/Hkg

Sunflower – 2 T/HA – 233 DKK/Hkg

Sensitivity:  Total HA  Total tons  +/-  Total DKK

Maize  1766  11,479  500 kg  971,653

Maize  1766  11,479  DKK 10/100 kg  1,147,900

Rapeseed  1418  4254  250 kg  911,207

Rapeseed  1418  4254  DKK 20/100 kg  850,800

Corn  3784  22,531  500 kg  2,352,134

Corn  3784  22,531  DKK 10/100 kg  2,253,100

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Aalborg, 8. May 2015

Newsletter

News from the Annual General Meeting 7 May 2015

This just some important informations from the recently completed General Meeting.
Final minutes shall be sent later.

After the election and constitution Board consists of:

• Preben Hansen Chairman
• Jørgen Stougaard Deputy Chairman, chosen 2015
• Palle Kjærsgaard
• Jens Bigum
• Claus Melgaard
• Lars Skov Olesen, chosen 2015
• Niels Busk, chosen 2015
• Ole S. Madsen, chosen 2015

Slides from the meeting will in a few days could be seen on www.agriinvest.eu, under shareholder login.

There was no proposal for a vote at the general meeting.As you already knows, all communication to shareholders is electronically – which of course also applies to this orientation.Notification of mail address or change this, please wrote to : bds@agrinord.dk .
Alternatively inform the undersigned in writing, that you wish to receive messages in letter .

Kind regards

Richardt Duus, CEO