The Board considers the results as unsatisfactory.

The overriding condition for creating a proper operating profit for the company is that crop yields are at an acceptable level.

There was a good crop yield increase in 2014. However, they have not quite lived up to budgets and expectations, as there is a discrepancy of 5%. The overall unsatisfactory financial result is mainly due to the prices obtained for the products, which have been about 18% under budget.

Crop production yields

The spring and throughout the growing season in 2014, as opposed to previous years, was characterised by large amounts of water, both in the establishment of crops and during harvesting.

This meant, especially in Videle and Mizil, the seeding of our spring crops, corn and sunflower, was not optimal that resulted in reduced yields in these crops. Corn yields in Oravita were quite acceptable.

The winter crops were generally fine after the winter and we also had acceptable results for rapeseed, which was reduced, however, by the loss from hail damage in Oravita.

Barley and wheat did very well during the growing season, but a very wet harvest was obviously reflected somewhat in the form of dividend reductions and a difficult, lengthy and costly harvest, but all crops were harvested and stored after quite a lot of drying and cleaning.

As shown below, the yields have increased nicely compared to previously, even though we have not yet achieved the results we are aiming for.

There has been a lot of work with analysis and benchmarking, which undoubtedly points to a good and cultivable seedbed as the most important. So the timings are less important compared to this, and in particular for wheat.

There are, of course, also a number of other horticultural technical prerequisites that must be in order, just as preparedness in relation to the violent fluctuations and changes in the weather must be in place.

This means, among other things, ongoing adjustments of resources, controlled field trials and active participation in erfa collaboration with colleagues from other major Scandinavian owned farms. There are a number of initiatives and follow-up points, of which the following can be mentioned in particular:

1. Liming: In continuation of previous years’ efforts, this year a total of 6500 tonnes of lime were added in Oravita and in Videle. Measurements of this are obviously ongoing and there is no doubt that this liming effort must continue.
2. Potash availability: Analysis has shown that the soil has sufficient potash content. The question is whether this is available for the plants. There has been focus on this area, with controlled experiments and plant analyses. We are about to get a picture of whether, at least for corn, we should continue efforts and analysis in this area.
3. Surface drainage: Especially in Mizil, but also in certain areas of Videle and Oravita, there has previously been a need of upgrading and new construction of surface drainage. Great efforts have been made on this over the last two years and the effort must obviously continue to be present.
4. Subsoiling: The places where there have been problems with directing water away, or down in the soil, have really been evident during this growing season due the heavy rainfall. So far we have made interventions with drain cultivators, but we have now supplemented this with additional capacity with “ordinary” straight toothed cultivators. This has naturally had a – positive – dewatering effect in wet years, but also opens the soil downwards for the roots in the dry years, which there are still expected to be most of, without opening the soil surface to drying out.

In early spring 2015, it is very early to draw conclusions on the results of the above initiatives, but we are beginning to see the first indications of a positive effect.

Sales prices:

As you know, there has been a global decline in crop prices in 2014.

The prices obtained for rapeseed and sunflower were DKK 230/Hkg for rapeseed and DKK 199/Hkg for sunflower.

Barley was contracted on around 1 February and the price is DKK 108-111/Hkg.

Wheat sales started with the sale of a batch of late harvest wheat with a lot of lodged corn at a price of DKK 88/Hkg.

At the end of 2014, we entered into contracts for the sale of wheat. Wheat prices are in the range of DKK 102-131/Hkg. The lowest price was in Oravita, where the hectolitre weight was low due to a very high proportion of lodged crops, and where, in certain situations like the current one, reduces the price of goods to be transported on the Danube to Constanta.

The corn from Mizil was sold at DKK100/Hkg and the remaining amount of about 6000 tonnes is expected to be sold a little above this level.

Investments in soil improvements, etc

In addition to the above liming efforts, the year was very marked by great activity regarding the creation and restoration of surface drainage in the form of ditches and channels. This work has established a total of over 20 kilometres.

Likewise, in 2014, 3500 HA was drain-cultivated, distributed over all three sites.

It should also be mentioned that much of the grain harvest has been through extraordinary cleaning, just as the entire corn harvest in Oravita and a lot of grain, both here and at the other sites, is dried, and of course, then aerated to a great extent.

Thus, it has been a year of high costs, both for the operation and investments in soil improvements.

Building/Construction

We are approaching the end of the two EU-funded projects in Oravita and Mizil.

With the decision in the autumn of 2014 about an investment stop, the remaining projects primary cover factors that the authorities require completed.

It is about fire protection in the form of establishing a water tank with an associated pumping station to a network of hydrants, as well as fire protection of our engineering buildings.

The physical construction activities will be completed during July/August 2015, and the EU administrative and approval activities will take place in autumn 2015.

Soil compaction

We continued to use our own employees to conduct work on soil compaction.

In 2014, we took a total of a further 465 HA into rotation. The largest proportionate area increases were in Videle and Mizil.

We now have a utilisation coefficient of approximately 85%.

Sale of assets

As previously announced, it is our opinion that we have the first of our three sites at a level where we can say that it is fully developed and thus ready for a possible sale.

Therefore, during the autumn we have signalled to the world that the Oravita the site will be acquired, either in a pure sale or in a sale-leaseback-agreement.

Feedback has been very positive, especially by the food industry, including the primary sector, which has appeared in earnest on the radar of global investors.

Negative interest rates are not a concept that is accepted in investor circles. Likewise, all well-reputed research institutes agree that food production globally has to be increased by about 60% due to the greater buying power, as well as a population increase of up to 9 billion people by 2050.

The energy sector, including oil exploration, shale gas, etc., has largely stalled, which has meant a significant “relocation” of vested interest. Factors that increase focus on food.

We therefore consider the time to be well chosen to go onto the market and seek a sale of the Oravita site.

Thus serious discussions have begun with financially strong investors.

Internally, we have worked extensively with optimising the corporate structure. The goal has been to achieve a structure so that we have three independent legal entities comprising of land, buildings, as well as machinery, without such a restructuring leading to taxation.

Organisation

At the end of 2014, the Operating Management was as follows:

• Jan Kærvang Nielsen, Site Manager, Oravita
• Alexander Christensen,  Manager Assistant, Oravita
• Allan Burmeister, Site Manager, Videle
• Kjeld Flemming Jensen, Site Manager, Mizil
• Søren Søborg, Manager Assistant, Mizil
• Daniela Donoiu,  Controller, Bucharest

In addition, at the end of the year we employed 24 tractor drivers, 12 guards, three farm secretaries and three administrative secretaries.

Claus Melgaard                       Richardt Duus

Chairman of the Board             CEO