Welcome to the Ordinary General Meeting at Agri Invest A/S 
Thursday, 1st May 2014

Agenda

 

Chairman’s report

• Group structure

 

Chairman’s report

• Group structure
• Strategy concerning consolidation of land

 

Strategy concerning consolidation of land

• Sale of “unwanted” areas
• Acquisition of well-situated areas
• Tougher line on inflexible neighbours
• Awaiting land distribution reform

 

Chairman’s report

• Group structure
• Strategy concerning consolidation of land
• Area status

Chairman’s report

• Group structure
• Strategy concerning consolidation of land
• Area status
• Crop status

 

Chairman’s report

• Group structure
• Strategy concerning consolidation of land
• Area status
• Crop status
• Construction activities

 

 

 

“Racasdia”, etape 3

 

 

“Amaru”, etape 3

 

 

Development of internal silo capacity

 

Chairman’s report

• Group structure
• Strategy concerning consolidation of land
• Area status
• Crop status
• Construction activities
• Organisation

 

Chairman’s report

• Group structure
• Strategy concerning consolidation of land
• Area status
• Crop status
• Construction activities
• Organisation
• Focus areas

 

Focus areas

• Operations, in particular: field yields
• Consolidation of land – Sale – Purchase – Swap
• “Cultivation” of external investors

 

Prerequisites for being attractive

• Minimum 3 years’ “track record”
• Minimum 5-6% EBITDA
• Professional and reliable management
• Dividend paid out

 

Agenda

1. Election of chairperson
2. The board’s report on the company’s activities during the previous year
3. Presentation of the audited financial statements and management’s review for adoption
4. Decision concerning utilisation of profits or coverage of loss in accordance with the adopted financial statements
5. Action plan 2013-2014
6. Presentation of budget 2014
7. Election to the board
8. Election of auditor
9. Proposals, if any, from the board or shareholders
10. Any other business

 

 

Agri Invest A/S

CVR no. 29 17 54 62

 

Annual report

1. januar – 31. december 2013

Table of contents
				Page
Statement by the board and management				3
The independent auditor’s report				4
Management’s review
Company information				6
Group overview				7
Financial highlights				8
Management’s review				9
Financial statements and consolidated financial statements
Accounting policies				12
Profit and loss account				18
Balance sheet				19
Notes				21

 

 

The independent auditor’s report

 

To the capital owners at Agri Invest A/S

Report on the financial statements and consolidated financial statements
We have audited the financial statements and consolidated financial statements for the fiscal year 1 January – 31 December 2013, comprising the accounting policies, profit and loss account, balance sheet , equity statement and notes for both the group and the company . The financial statements and consolidated financial statements have been presented in accordance with the Danish Financial Statements Act.

The management’s responsibility for the financial statements and consolidated financial statement s
The management is responsible for preparing and presenting financial statements and consolidated financial statements that provide a true and fair view in accordance with the Danish Financial Statements Act. The management is also responsible for internal control systems that the management deems necessary for preparing and presenting financial statements and consolidated financial statements that are free from material misstatements, whether due to fraud or error.

Auditor’s responsibility and basis of opinion
Our responsibility is to present an opinion on the financial statements and consolidated financial statements on the basis of our audit. We have conducted our audit in accordance with international auditing standards and further requirements pursuant to Danish auditing legislation. This requires that we satisfy ethical requirements and that we plan and conduct our audit to obtain a high degree of assurance that the financial statements and consolidated financial statements are free from material misstatements.
An audit involves the performance of procedures designed to obtain audit evidence concerning the amounts and disclosures stated in the financial statements and consolidated financial statements. The procedures chosen depend on the auditor’s judgement, including the assessment of the risk of material misstatements, whether due to fraud or error, in the financial statements and consolidated financial statements. In this risk assessment, the auditor considers internal control systems that are relevant for the company’s preparation and presentation of financial statements and consolidated financial statements which give a true and fair view. The purpose herewith is to design audit procedures that are appropriate in the circumstances, but not to express an opinion concerning the effectiveness of the company’s internal control systems. An audit also includes an evaluation of whether the accounting policies applied by the management are appropriate and whether the accounting estimates made by the management are reasonable, in addition to an evaluation of the overall presentation of the financial statements and consolidated financial statements.
We are satisfied that the audit evidence obtained is sufficient and appropriate as a basis for our opinion.
Our audit has not resulted in any qualification.

Opinion
In our opinion, the financial statements and consolidated financial statements provide a true and fair view of the assets, liabilities and financial position of the group and the company as at 31 December 2013 and the result of the group’s and company’s activities for the fiscal year 1 January – 31 December 2013 in accordance with the Danish Financial Statements Act.

 

The independent auditor’s report

Statement on the management’s review We have read the management’s review pursuant to the Danish Financial Statements Act. We have not carried out any procedures other than those performed during the audit of the financial statements and consolidated financial statements. On this basis, we consider the information in the management’s review to be consistent with the financial statements and consolidated financial statements.

Aalborg, 3. April 2014

Agri Nord

Willy Møller

Certified auditor, FSR, FDR

Management’s review

Main activity
As has been the case in previous years, the enterprise’s main activity has comprised investment in and operation of agricultural land in Romania, in addition to the sale of products for plant production. Investments in farmland and farmyards, grain treatment plants and agricultural machinery, as well as the operation of plant production, are carried out in Romanian subsidiaries, cf. group overview.

Development in activities and economic conditions
The management does not consider the year’s result to be satisfactory.

The fiscal year has been characterised by poorer yields in plant production than expected, in addition to extremely difficult market conditions in Romania in connection with the sale of maize throughout 2013.
The poor yields are due primarily to very difficult weather conditions during spring 2013. Until March the weather was very wet, with April then seeing the onset of hot weather and  a severe drought. This resulted in very difficult conditions in terms of establishing the spring crops, in addition to which the winter crops were also negatively affected.

In recognition of the fact that in certain years these extreme weather conditions will be a challenge, an action plan was launched in 2013 and 2014 to counteract these fluctuations in the weather. Such an action plan is of course expected to have a positive impact in the future.
Due to the fact that the group was highly exposed in terms of maize with regard to sales in 2013, the poor sales conditions for maize in 2013 have had a significant influence on the result. This experience has had an influence on the choice of species of crops in 2014 and beyond, as well as on the action plan mentioned above.

Focus on consolidation of land in Romania has continued in 2013 and has resulted in improvements to the configuration of holdings and in the quality of the soil. These initiatives have been carried out using the company’s own resources in terms of personnel and have also resulted in an increased area under cultivation, in particular on the two sites at Videle and Mizil. Work will continue to this effect in 2014.
Investments in new production plant are underway. This work will continue in 2014. Subsidies received from the EU’s structural funds are recognised as income as and when the assets are depreciated.

Events after the balance sheet date
No significant events have taken place since the balance sheet date that are deemed to have had material influence on the assessment of the annual report.

Uncertainties or unusual conditions that have had an effect on recognition or measurement
There have been no material uncertainties or unusual conditions that have affected recognition.

 

Management’s review

Price risks
There are no price risks other than the normal risks concerning the purchase of raw materials and consumables and the sale of finished products. These prices are affected by global supply and demand and by local market conditions. Stock on the balance sheet date is not subject to any uncertainty.

Currency risks
Activities and investments in Romania mean that earnings and equity are affected by currency rate developments in Romanian currency. This effect is due to the fact that there are intra-group receivables that are adjusted according to the exchange rate, in addition to the fact that the Romanian subsidiaries’ annual reports are presented in Romanian currency (RON), which when converted to DKK entails impacts on earnings and adjustment of equity which in 2013 have been negative.

This matter is not regarded as being of material primary significance since the basis for price determination of both sales crops and the actual valuation of fixed assets, including in particular real property, is conducted in Euro, whereby any uncertainty is limited as a consequence of Denmark’s fixed exchange rate policy in relation to EUR.

Interest risks
As the interest-bearing debt amounts to a modest amount in relation to the balance and equity, changes in the interest rate will not have any material effect on earnings.

Environmental conditions
The company is operated under Romanian and EU environmental regulations and is subject to regular environmental inspection by the authorities.

Knowledge resources
The company’s objective is to operate profitable plant production by means of the application of up-to-date technology and know-how. This makes great demands on managers’ knowledge and  employees’ understanding with regard to  performance of the work.

The managers are qualified and experienced in the operation and management of plant production, and a great many resources are spent on continued training, knowledge-sharing and sparring, both within the company between managers and employees and with the involvement of colleagues from other companies, consultants and group management.

Research and development activities
Experiments and trials are carried out on an ongoing basis with regard to cultivation methods, fertiliser, use of lime and plant protection methods, etc., in the operating companies.

Expected development
As the group’s gross profits are predominantly made up of the sale of plant products, earnings in 2014 are to a great extent dependent on the development in prices on these products, which is of course subject to the state of the market, as well as supply and demand.

The other significant factor is crop yields. As described elsewhere, an action plan has been launched to this effect which is expected to have a positive result in 2014. Of course extreme weather conditions in 2014 may affect this, but measures have thus been put in place to have the best possible contingency plans against bad weather in the form of investments in machinery and buildings/silos for storage of crops, etc., that have already been carried out and will continue to be carried out in 2014.

These investments and the aforementioned action plan are of course expected to have a positive effect on yields whatever the prevailing weather conditions and thereby on earnings in 2014.

Accounting policies

The annual report is presented in accordance with the provisions of the Danish Financial Statements Act for enterprises in reporting class B with additional choices from reporting class C.

The accounting policies are unchanged from the previous year.

Basis of recognition and measurement
Income is recognised in the profit and loss account as and when it is earned, in addition to which value adjustments of financial assets and liabilities are recognised. Furthermore, all costs, including depreciation and write-downs, are recognised in the profit and loss account.

Assets are recognised in the balance sheet when it is probable that future economic benefits will accrue to the company, and the value of such assets can be reliably measured.

Liabilities are recognised in the balance sheet when it is probable that future economic resources will be deducted from the company, and the value of such liabilities can be reliably measured.

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

Certain financial assets and liabilities are measured at amortised cost price, whereby a constant effective rate of interest is factored in over the term of the asset or liability in question. Amortised cost price is calculated as the original cost price less any repayments paid plus the addition/deduction of the accumulated amortisation of the difference between cost price and the nominal amount.

When carrying out recognition and measurement, predictable losses and risks are taken into account that appear prior to the presentation of the annual report and which confirm or invalidate matters or conditions that existed on the balance sheet date.

Consolidation policy
The annual report comprises the parent companies and enterprises in which the parent company directly or indirectly has the majority of the voting rights or in which the parent company has a controlling influence through shareholdings or otherwise. The group financial statements are compiled as a summary of the financial statements of the parent company and each subsidiary drawn up in accordance with the group’s accounting policies.

On compiling the financial statements, intra-group revenue and expenses, shareholdings and debts, etc., are eliminated, as are realised and unrealised internal gains and losses on transactions between the consolidated companies.

The parent company’s equity holdings in the consolidated affiliated companies are balanced with the parent company’s share of the affiliated companies’ accounting equity value calculated at the time at which the group relationship was established.

Profit and loss account 1 January – 31 December
			Group				Parent company
Note			2013		2012		2013		2012
			DKK		DKK		DKK		DKK
1	Net turnover		34,359,041		36,469,784		0		958,659
	Change in stocks of finished goods, work in progress and commodities		9,189,108		2,275,490		0		0
	Other operating revenue		7,652,524		9,746,894		355,415		631,356
	Costs of raw materials, consumables and commodities		-27,397,290		-24,790,320		0		-983,858
	Other external costs		-5,916,607		-10,114,387		-1,366,846		-1,497,132
	Gross profit		17,886,776		13,587,461		-1,011,431		-890,975
	Personnel costs		-6,200,317		-6,112,339		-1,606,501		-2,093,587
	Depreciation on tangible and intangible fixed assets		-7,687,117		-5,975,949		0		0
	Other operating costs		-2,187,119		-1,086,370		0		0
	Operating profit		1,812,223		412,803		-2,617,932		-2,984,562
	Result of equity holdings in subsidiaries before tax		0		0		5,638,357		4,043,045
2	Other financial revenue		9,951		910,830		3,748,938		3,304,713
3	Other financial expenses		-2,668,010		-2,218,694		-309,020		-1,625,463
	Profit/loss before tax		-845,836		-895,061		6,460,343		2,737,733
4	Tax on year’s result		-15,848		-3,045		0		0
	Result for minority interests		-861,684		-898,106		6,460,343		2,737,733
	Minority interests’ share of profit/loss of subsidiaries		2,915		1,391		0		0

 

 

Profit and loss account for 1 January – 31 December
			Group				Parent company
Note			2013		2012		2013		2012
			DKK		DKK		DKK		DKK
	Profit/loss for the year		-864,599		-899,497		6,460,343		2,737,733
	Proposal for distribution of earnings
	Proposed dividend						0		0
	Allocated to reserve for net revaluation according to the equity method						5,638,357		4,043,045
	Retained earnings						821,986		-1,305,312
							6,460,343		2,737,733

 

 

Yields and prices:

 

Wheat: 4.62 tonnes/HA (2 – 7 tonnes7HA)

Maize: 4.26 tonnes/HA (2-7 tonnes/HA)

Rape: 2.26 tonnes/HA

————————————————-

Wheat: 121 DKK/Hkg (97 – 135 DKK/Hkg)

Maize: 104 DKK/Hkg (86 DKK/Hkg)

Rape: 263 – 283 DKK/Hkg

 

Conclusion: When having to carry a DKK 6.6 million loss on the 2012 maize, money will not be earned at the above price levels!!

 

ANALYSIS UNIT COSTS
			DKK/HA
Budgeted sowing, fertiliser, chemicals			2,965
Realised sowing, fertiliser, chemicals			2,972

 

ANALYSIS UNIT COSTS
			DKK/HA
Budgeted sowing, fertiliser, chemicals			2,965
Realised sowing, fertiliser, chemicals			2,972

 

CAPACITY COSTS (1,000 DKK):		BUDGET	REALISED
Salaries, wages and personnel costs		6,323	6,746
Other capacity costs		13,625	11,579
Depreciation		7,852	7,687
SUM		27,800	26,012

 

Balance sheet 31 December
Assets
			Group				Parent company
Note			2013		2012		2013		2012
			DKK		DKK		DKK		DKK
	Group goodwill		1,542,458		1,870,275		0		0
	Acquired rights		25,134		38,936		0		0
5	Intangible fixed assets		1,567,592		1,909,211		0		0
	Agricultural land		264,417,517		272,407,591		0		0
	Payments for agricultural land		21,151,496		25,337,291		0		0
	Operating buildings		41,815,750		35,599,283		0		0
	Fixed assets under construction		17,497,019		24,951,847		0		0
	Production plant and machinery		633,044		762,535		0		0
	Other plant, operating equipmnent and fixtures & fittings		44,488,067		45,506,373		0		0
6	Tangible fixed assets		390,002,893		404,564,920		0		0
7	Equity holdings in subsidiaries		0		0		349,408,567		348,391,503
	Other securities and shareholdings		4,170		4,223		0		0
	Receivables from affiliated companies		0		0		51,798,118		0
	Own equity holdings		0		0		0		0
	Financial fixed assets		4,170		4,223		401,206,685		348,391,503
	Fixed assets		391,574,655		406,478,354		401,206,685		348,391,503

 

Balance sheet 31 December
Assets
			Group				Parent company
Note			2013		2012		2013		2012
			DKK		DKK		DKK		DKK
8	Stock		38,471,641		33,070,748		0		0
	Trade receivables		2,317,061		224,052		188,511		224,052
	Receivables from affiliated companies		0		0		44,491,911		99,142,446
	Other receivables		17,149,892		20,553,673		0		0
	Cut-off items		4,299,617		8,039,789		0		0
	Receivables		23,766,570		28,817,514		44,680,422		99,366,498
	Cash at hand and in bank		11,409,159		7,666,978		69,696		69,836
	Current assets		73,647,370		69,555,240		44,750,118		99,436,334
	Assets		465,222,025		476,033,594		445,956,803		447,827,837

 

Balance sheet 31 December
Liabilities
			Group				Parent company
Note			2013		2012		2013		2012
			DKK		DKK		DKK		DKK
	Share capital		320,500,000		320,500,000		320,500,000		320,500,000
	Premium on emission		34,937,290		34,937,290		34,937,290		34,937,290
	Reserve for revaluation		142,176,208		143,728,890		0		0
	Reserve for exchange rate adjustment		-23,443,097		-19,193,928		0		0
	Reserve for net revaluation in accordance with equity method		0		0		89,628,278		88,986,812
	Retained earnings		-62,033,865		-60,230,131		-3,193,467		-4,015,453
	Proposed dividend for fiscal year		0		0		0		0
9	Equity capital		412,136,536		419,742,121		441,872,101		440,408,649
	Minority interests		22,729		20,106		0		0
10	Provisions for deferred tax		10,187,080		10,482,829		0		0
	Provisions		10,187,080		10,482,829		0		0
	Long-term debt		0		0		0		0
	Debt to financial institutions		30,017,716		30,940,445		287,413		3,723,257
	Suppliers of goods and services		3,496,739		10,857,857		0		0
	Debt to affiliated companies		0		0		3,492,692		3,492,874
	Corporation tax		111,390		72,239		0		0
	Other debt		680,803		1,337,020		304,597		203,057
	Cut-off items		8,569,035		2,580,977		0		0
	Short-term debt		42,875,680		45,788,538		4,084,702		7,419,188

 

Balance sheet 31 December
Liabilities
			Group				Parent company
Note			2013		2012		2013		2012
			DKK		DKK		DKK		DKK
	Debts		42,875,680		45,788,538		4,084,702		7,419,188
	Liabilities		465,222,025		476,033,594		445,956,803		447,827,837
11	Personnel matters
12	Mortgages and securities
13	Contingent liabilities, etc.
14	Associated parties