Re. 1: Welcome from Claus Melgaard
CM welcomed everybody and spoke about the reason for the meeting, which was also referred to in the notice to call this meeting.
Then he handed over to lawyer Henrik Skaarup, who was the chairman of the evening’s meeting. He gave thanks for being elected and appealed for a good and constructive dialogue. Minutes will be circulated after the meeting, made by Secretary Birthe Dencker.

Re. 2: Information on the previous crop growing season, as well as the current status from horticultural consultants Jørgen  Evald Jensen and Morten Eshøj.

Morten Eshøj:
Started as a Horticultural Consultant in Oravita in the spring. Has 4-5 years experience in Eastern Europe.
It is very heavy clay soil which means a shorter time to establish. The yield appears to give 10 t/ha, but it gives 7.
Long warm periods and rain makes it difficult for the plants to establish a root system.

Status 2014: Rain, rain, hail and more rain. Currently 870 mm compared to the normal 478 mm (March to October), which means a difficult season. Rainfall was between 1-80 mm/day at the end of June and start of July, where there was the start of the harvest. You have to wait quite a while before you can drive on it again after so much water.

Due to the heavy rainfall, we had a very late harvest, which gave a significantly lower yield – see the attached PowerPoint.

Yield in RO:
A German neighbour grew approx. 2 t of wheat/ha.
Agri Invest has received a diploma for the yields in Caras Serverin Country – 1st and 3rd place for cereals (wheat and barley).

Investments in 2014:
DD Packer, Sprayer, Water Truck, Cultivator/Subsoiler, Belt Tractor – to increase the achievement of timeliness.

Liming
We need to add more lime to improve the soil and make the soil easier to work with. 4000 t/lime were used in Oravita. The amount corresponds to normal maintenance – so it needs more.
Rt is 5.2 to 6.0 – with the optimum at about 6.5 to 7.0. Trials were made of 3-5 t/ha in smaller areas for 3 consecutive years to increase levels.

Nutrients
The level is adapted according to yields – allocation in the autumn is reduced. Pt very low – most below 2.0.

Focus 2015
A lot of focus is needed for establishment. To drain in wet periods and give the root system access during dry periods, channels need to be dug, subsoiling, etc. We need to go 70-80 cm down, so the plants will benefit from the water.

Potential yield Oravita – see attached PP. . 

Head Consultant Jørgen Evald Jensen
Has been in Videle and Mizil for 3-4 years, and has followed the developments and had daily sparing with Morten.

Growing season:
1 March: The area around Bucharest was flooded – had snow on 12 March!
Winter crops – Wheat, Barley and Rapeseed were actually good and we fertilised on schedule – 17
March.
3 May very nice and well-developed winter fields – but then there was heavy rain and it presented huge
challenges for making the seedbed. Dug channels and lakes so that it was possible to get out to the fields.
May 11 drove with the harrow – but it was completely sticky. Only 1 mm of rain gives very sticky soil, which cannot be worked. If the strong heat comes, it only takes 2 days and then it’s dusty!
Very short sowing period as we are very weather dependent.

23 May: Nice corn and sunflowers where the seedbed was good. Unfortunately there were also large areas where it was wet and muddy. It greatly lowered the average yield.

Water drainage is essential for making the seedbed due to periodic heavy rainfall.
There was a lot of lodging, despite 2-3 growth adjustments.
Extra focus on fungal diseases with one extra spraying.
We have worked with an intense plant protection policy.
Weed control was a great success against wild sorghum, reeds, grass & lamb’s quarters.
Effective agents for combating fungi – adjusted depending on the weather.
Pests caused excessive pressure, but we have pretty good control of it.

A fertilisation plant analysis has been made, and we are at the high end because of the heavy clay soil. So the more organic material we can add the better. We are constantly working to get a better balance and we are on track.

Morten Enshøj and I have collected from seven Danish farms for an Erfa (Experience) Group. Can we find lines to increase the yields? It is hard to compare 100% due to differences in soil and weather conditions.

10 September to 5 November sowing of wheat – is vital to establish a good seedbed, more so than the sowing time.
Rapeseed yields 2.5 – 4.5 t/ha – here again the short period of establishment applies.

The corn should be sown early to get the maximum yield – it can be difficult when the weather is not typical.
How much area do we need for winter crops?

Where are the opportunities for improvement?
Maximum focus on soil structure
Root depth must be increased
Timeliness/capacity in the spring is very important:
Avoid drying-out = Water Management
Utilising the sowing windows optimally – preparedness must be in order.

Realistic average yield:
Wheat – 6 t/ha
Rapeseed 3 t/ha
Corn 7 t/ha
Sunflower 2.5 t/ha

We will be above average.

Ole E. Nielsen: Has heard from two others in the area that a corn level of 9.5 to 10 t/ha should be the goal.

JJE : Yes, very nice yields, but also better soil. Difficult to compare farms as the conditions are very different.

Martin Gregersen: Hear what our neighbours grow – is there also focus on margin/cost comparison?

RD: Erfa Group – we look at cost comparisons. Relate greatly to our own costs now. We continue to work with our good neighbours.

Gitte Jørgensen: What is it that makes two fields that are so close, have such different soil?

ME: The establishment is very different – and different times. Sow at just the right time and the best seedbed. Much depends on what there is in the way of water, etc.

Arne Søgaard: Do we have enough capacity for the few days of sowing, etc., 120-130 ha/day – need 25 days to get it all sown. Should we have more capacity, so we can be on time?

JJE : We have the capacity and flexibility in relation to the soil that is cultivated.

RD: Focus on manpower development/training and the necessary staffing – 1 Dane in Oravita/2 young employees in Oravita, as well as 2 more in the autumn/winter. Maybe we are one too many and then we need to sort. Success at getting younger employees – they are more flexible and willing to learn. We have one new employee in Videle – also younger.
Danes are recruited to Mizil in the spring – more help with management here for better utilisation of machines and use the method with younger employees.

Søren Aaen: Can’t we find Romanians who can drive at night?

RD: Yes, but there must be assurance that things are done properly and the Danes are better at working independently. Romanians are not self-driven, but need management in everyday work.

Ejner Bech: Is there a problem with getting enough lime?RD: Yes, and lime is expensive Oravita – DKK 350/t. We must be able to obtain lime and we must have the capacity to drive out the 4,000 tons, which has been a challenge this year. At present we cannot get more with our gear and workforce.

Valdemar Bogh: Why do we still have such low lime levels? Is wrong, and what about phosphorus?

RD: We have limed every year in Videle, but we started late in Oravita, difficult and expensive to obtain proper lime here, but the work continues.

ME: Phosphorus of less than 2 is very low. Is hugely expensive to fertilise generally, and it takes between 10-20 years to get it optimal. Therefore, we use phosphorus every year.

JJE: If you generally want to increase the phosphorus levels, it costs as much as buying the land, which does not make sense.Re 3: Information on the company’s current financial situation from CEO Richardt Duus
The deviation of 13 million in gross proceeds eats into our expected profit. We are missing a good 5 percent in volume and over 18% in price compared to budget.

Hail damage insurance: We have been insured up to 2.5 tons, but this year it has been negotiated up to 3 t/ha after the insurance company inspected our fields.

Sales Strategy – outlined in the published material. We must keep to our strategy, which we have done this year. The situation in the spring (March): sold bread wheat for DKK 132, feed wheat for DKK 125 – the latter transaction was entered into without quality parameters. Therefore, it was not attractive to enter into contracts in the spring for the next harvest at levels of DKK 124 for bread wheat with high parameters, including hl weight.

Liquidity must be in order and it is according to the graph. Costs to take on new land include herein DKK 1.4 million.

Have reduced investments, so we only establish the things that are necessary for our business today.

                                                                                                 Value of the harvest DKK 57 mill.
For sale herafter
The Group’s combined liquidity development in DKK
KK max withdrawal = DKK 55 mill.
“normal” unit costs, capacity costs, financing costs, etc., as well as costs for taking on new land, budgeted investments.

Equity:
Equity is at DKK 412 million (land valued at DKK 286 million/farms with building and facilities DKK 59 million/machines and equipment DKK 45 million).
Paid DKK 360 million in initial capital, and that gives an increase in equity of almost DKK 52 million.
There has been a fall in the rate of the Ron, which has reduced equity without requiring liquidity, but it now appears to be changing upwards, which strengthens us.

Soil compaction:

Soil compaction and land swap activities the last   three years
Oravita:
Additional 366 HA in operation
in addition to a large number of 1: 1 swaps
average field size 66 HA
Videle:
Additional 666 HA in operation
in addition to a number of 1:1 swaps
average field size 36 HA (46 HA)
Mizil:
Additional 287 HA in operation
in addition to 301 HA swapped 1:1
average field size 38 HA

 

 

 

 

 

 

 

 

 

 

 

 

 

Ole E. Nielsen: DKK 40 million in bank overdrafts – are we paying 6% interest? The value of the harvest is set at DKK 57 million in the budget – is it not an unrealistic picture of liquidity? Are we heading for a loss?

RD: Interest payments are included in liquidity. The value of the harvest is not included in the liquidity curve, but with a withdrawal of DKK 43 million at the end of June 2015, we are ready to start sales of the harvest with a value set at DKK 57 million with a grain price of DKK 118/hkg. and 6 tons per HA. With the prices used it is still expected to have a 0 result for 2014.

RD : We have the increase on a revaluation/exchange rate adjustment = DKK 80 mill. We evaluate the land every 3 years, i.e. next year. We could be more offensive – EURO 3500 is a conservative figure.
EU subsidies account for about EURO 155 compared to the EURO 3500. Has increased from 120 up to 150/155.

Mogens Jeppesen: Evaluation by an independent notary should be shown at the meeting. The budget for 2015 expected dividends – prices, how does it look?

RD: Regarding budgets. We cannot make money if prices of corn, etc., is DKK 95-98 – must be up to about DKK 120 to make a proper profit.

Poul E. Nielsen: Can equity be realised if we will sell. Very modest dividends so far – now we want to see some money?

RD: Next time we present accounts we will present the accounts for each site individually.

Re 4: Information on action plans and current initiatives from Deputy Chairman Preben Hansen
Together with RD, went around all three farms once a month during the growing season to check on and spar with managers. Preferably in periods where there was something going on, so everything can be discussed, including logistics, storage, etc.

Managers appear to be supportive of our dialogue – we aren’t coming to teach but to spar – new eyes can always see something new – this is also true a few days after you come home from your own farm.

RD always gives specific feedback on what we have seen and discussed.

Although we go there often, there are always a few things that can be addressed and improved or ideas that can be given, so the trip is always “paid” for.

We also have an examination twice a year when the entire board visits. There are many good skills gathered and this is where there is a lot of competent and sharp feedback.

We all complement each other well. Between visits there is ongoing dialogue.

We can also make sure that knowledge is transferred between properties – and from our other experiences.

One challenge is of course the weather, usually it’s the drought that is the challenge, this year it’s a lot of water.

Suppliers of services and spare parts can be a challenge. Here the CEO also has a role in terms of backstops when there are situations where it is not working.

Very good Experience (ERFA) Groups for exchange of experience.

We could all wish for a better financial result, but every time I go home from Romania, I feel sure that the values are present and we will achieve the goals.

Henrik Larsen: Are there any questions about action plans?

PH: It has been clarified by the horticultural consultant, so I will therefore not repeat it, but would like to add that we also focus on employee development and improvement of staff.

Re. 5: Information on the company’s strategy from Chairman Claus Melgaard
The strategy is the plan to achieve our objectives.

We must remember our original purpose – see Section 2 of the statutes.
There were lively debates at the start-up of the company on how to handle this. We had to buy as much land as possible and engage in active agriculture. Value increment in Romania is created by the land being in rotation and compacted. HA subsidy has increased slightly, but the value increase is in cultivating the land.
We talked about that being the long-term plan, about 10 years, in the meantime, we have also been hit by the financial crisis and look a little differently at it.

Stock market listing: We have investigated the possibilities with Danske Bank and PWC, but we are simply too small. We must create a history and show an increase in the profit of the operation that can give a good return on capital. The food industry today, according to experts, is a major focus area for professional investors. The global forecasts are for an increase of up to 60% in the demand for foodstuff by 2050. A major challenge for the food sector.

Overall economic objectives:

1. 1.Realisation of approved budgets
2. 2.Create an appropriate return on invested capital through earnings from operations, as well as the sale of fully developed assets.

The Oravita the site is ready for sale in 2015, if the EU project has been clarified. But it should not be sold for a song. We are quite convinced to sell when the time is right and have worked with various options.What is the price of land in Romania? We have knowledge of major transactions around EURO 4900-5100/Ha, so EURO 5,000 is probably a good average price.

We continually work with the sales possibilities there are and we also make sure that it is known in the area that we are interested in selling at the right price. If we get a good offer, we will call an extraordinary general meeting to see if that is what we will do.

Currently we have 1500-2000 ha bought and paid for, which is not in rotation. There is work on this.

Ole E. Nielsen: I have spoken to the Board about my view of the company’s finances, and announced that I want a total change of things, since the Board has failed to fulfil its promises. There is now a call for this meeting. There is a need for a new Board – we should liquidate and realise our values now before they completely lose value. I believe we need to call an extraordinary general meeting at which the management has to make their mandate available.

Meeting Chairman Henrik Skaarup: Be aware that no decision will be made today, but the recommendations will of course be heard.

Mogens Jeppesen: How many shares does the Board own, and why will you not state it? How big a stake do you have in the company? What are you paid?

CM: The Chairman received DKK 275,000 this current year and the Deputy Chairman DKK 125,000. Other board members receive DKK 2,000 per meeting/travel days – in total approx. DKK 120,000.

Regarding shares – the Board owns a total of 415 new shares (nominal value DKK 50,000) divided between 8 members.

Wages for management totalled DKK 1.3 million including 2 managers receiving part of their salary via DK due to tax, social security, etc. So it is not just wages to the management.

Torben Lauritsen, Nykredit: An expected result of 0 for 2014 is hard to believe, and we have been promised too many things that have not been borne out. Too low a turnover and too high costs. Should give a 4% return. Have great respect for the work that has gone into this project, but believes that the bad accounts must have a consequence – and suggested one of three possible scenarios:

–          New Board

–          Sale of Agri Invest

–          Rental of land/machinery – should provide a surplus of about DKK 15 million

An extraordinary general meeting should be called to decide this.

CM: Does not agree with the points, but it was probably not expected.

RD: Many theories about the options, but there are some scenarios that we must be aware off about renting out land. We rent small pieces of Oravita for 400 kg of wheat, which of course cannot be compared with renting the large collective area. We cannot avoid property taxes and insurance. Best price for renting larger pieces of collective land.

Ejner Lyngby: It is difficult in Romania. Is there an exchange of experiences going on between other companies?

CM: Yes, and we have established Experience (Erfa) Groups.

Kristian Bakke: It is easy to be wise after the event. Nykredit has previously calculated incorrectly and we must not give anything away. I support the Board.

??: Are the other sites ready for sale – the Company should be sold within 2-3 years. I do not believe that we will have better results next year.

CM: It has also been a major task to put the land into operation and we also had to learn in this process. But we still believe that it can be done – just a little longer time horizon than expected.

Bo Arvin: To rent the land out would be a good idea. As long as we get ha subsidy. It must be possible to get hectare subsidy in rental income. Torben Lauritsen’s request should be followed.

Niels Busk: Commented on the expectation in TL’s proposal. Does Nykredit get 4% of your mortgages at the moment with the current grain and commodity prices? No – so it is illogical to claim that one can get that rate of return elsewhere. Land prices will increase in Eastern Europe and there is a demand for more land to feed a global population. We are in possession of some of the best land in Europe.

Ole E. Nielsen: Agri Invest has not shown any real return on the DKK 400 million – we have now been running for 8 years and now we have a specific debate. I’m looking for support of an extraordinary general meeting.

CM: If you want an extraordinary general meeting it requires that 15% of the vote express a wish for it.

Ole Skårhøj: Management have done a good job, but it will not make a profit from operations. We need to rent out. If we can just get a return of 3% it would be good.

Claus Pedersen: How much have we received in investment grants from the EU?

RD: We have received about DKK 20 million that is proportionally reduced building depreciation and not directly impacted on operating profit. Have no experience with land rental of larger areas in Oravita, so we have to make calculations on it as there are many aspects to it. There may be opportunities, but also many great challenges with it.

The time horizon to sell – Board’s position:
Jens Bigum: The time is quite different from when we started. There has been a financial crisis that has given very different challenges. We have to realise it again, but we do not want to fall head over heels. If it was so easy to operate land in Romania, the land price would probably be completely different. We have a company in balance and no liquidity problems, now we need to show patience.

Jørgen Vestergaard: It must be a clean sale, we need to get out as soon as possible.

CM: We are fully aware of the pressure that is on us, so we work to realise our assets with profit.

??: Some have large bank loans in their properties and perhaps pay 9-10% interest, or are even about to close down. They need the shares to be sold now. It may well be the land continues to increase, but we don’t know that.

Jens Gade Holm: Agrees with Bigum. Is afraid of ruining our company by starting with an extraordinary general meeting. If you have invested money in this that you can’t do without, then it must be an unwise investment. You shouldn’t do this if you can’t afford it.

Ole E. Nielsen: More work is needed to get it sold – of 5,000/h of land has been sold down there. Is the Board aware of that? But the way management are working is completely stupid.

CM: Be careful not to say anything about something you do not have insight on. We work with it all the time. In the last 9 months we have been very active and devoted much time to following up on potential buyers for the Oravita site. We have full insight into the market, prices, etc.

Henrik Skaarup, Meeting Chairman: Many agree on the long-term goals and fewer are more for getting it sold/liquidated. Such is the dialogue interpreted.

Kristian Møller Sørensen: You should stick to your strategy – we have also invested in this. We can’t earn from renting out. Keep the management that has the experience. An extraordinary general meeting does not solve anything. Have patience with the operation, which of course has to be constantly optimised. Wait and see if a good buyer comes along.

Jespersen: You don’t change the captain and crew in the middle of a storm – we must keep the management we have, they have the experience and are doing a good job.

Jørgen Larsen: We have heard various suggestions. Can the Board make some suggestions about what options we have?

Jørgen Westergaard: In connection with the sale, transparency is important – make sure to simplify the company structure so it can be done when other conditions permit it.

RD: We have initiated a merger of two companies in order to simplify the structure and make reporting easier, we must continue when the “authority factors” permit it.

CM: Thank you to Henrik Skaarup and the attending shareholders. We have listened to what has been said and will work further on it.

Ref. Birthe Dencker Sørensen