Re. 1: Election of chair of the meeting

The Chairman bid everyone welcome and announced that the board proposed that Jens Bigum should chair the meeting. He also proposed that Leif Eltved and Lene Kjær from Agri Nord and shareholder Ole Nielsen should act as vote-counters.

All proposals adopted by the assembly.

The chair expressed his thanks for his election and declared that the ordinary general meeting had been legitimately called on 8/5 2017 and was thereby competent to transact business. He informed the assembly that the ordinary general meeting was being recorded on video/audio file, as the keeper of the minutes, Birthe Dencker Sørensen, was absent.

Items 2, 3 and 4 are intrinsically linked and would be debated as a single item.

Re. 2: The board’s report on the company’s activities during the year, by the Chairman

Preben Hansen had to concede that the job of chairman had brought with it a huge, unforeseen amount of work during the past two years; and now he was having to present a result that was worse than last year.

Operationally, 2016 has been a reasonable year, so he still had great faith in the future.

The result last year was much worse than expected, and it was difficult to find a satisfactory explanation, since every year has seen financial statements without any remarks.

This naturally resulted in a great deal of activity on the board, and in order to ensure that everyone present received the best possible information, the members of the board were welcome to comment if they could contribute any additional information.

Following the change of management last year, the board worked on various proposals, but ended up asking our newly-elected auditor from BDO to help with a review of accounts in Romania, commencing in June. The accounts function has always been external, as an authorisation is required (Carmen) – and we have had a somewhat difficult working relationship with her. Our own office has not had access to accounts, and we therefore asked Carmen to attend when conducting the review. We discovered reconciliation errors going back many years, e.g. prepayments, receivables, bank accounts that do not exist, so it has greatly surprised us that the financial statements have been endorsed year after year without any remarks from the auditors.

The Chairman wished to emphasise that there is nothing to suggest that any form of fraud has taken place.

As a consequence, these reviews/visits continued on a monthly basis for the rest of the year, whilst efforts were made to find a new auditor who had knowledge of agricultural accounts. We managed to find such an auditor in November – Tudor, BDO in Romania.

In light of the difficulties we had experienced with Carmen, we suggested that the auditor begin his audit at an early stage. We also assumed that an auditor with local roots would find it easier to obtain what we required from Carmen. It has been a long haul with several delays, which explains why the ordinary general meeting was postponed. We have 8 companies – and 8 drafts appeared before things were finalised!

BDO has put together the consolidated financial statements on Danish soil, and, along with the Management’s Review, endeavours have been made to make it as informative as possible.

Brief update concerning operations, by Jørgen Stougaard

An overview of the areas, ownership, etc., was presented (see attached PP).
As a new initiative, we have peas and spring barley in order to have something in the autumn with regard to MFO. We endeavour to have mostly wheat and rape, as we have had a lot of success in this regard.
Last year we had too many breakdowns of machinery: the machines were out of action for too long and we had high maintenance costs. We thus launched a programme in both Danish and English, so that we could get the machines repaired more quickly. Two old combine harvesters have been sold, and we are hiring 2 combine harvesters at a fixed hectare price.
There are rather large price differences on crops this year due to different weather conditions at the sites. We are aiming to have 6 types in culture – 4 of these will typically be used.

Company structure, by Preben Hansen
The actual structure (see attached PP)
Amaru is the northernmost site near Bucharest, where Kjeld is the site manager.
Amaru Trade and Magica Amaru are the two companies that are in operation. Vibe has been set up in order to secure hectare subsidy on slightly doubtful areas.

In Videle: Agri Consortium Videle and Agri Consortium are there where all the land lies and is let to the respective companies.
Oravita is the one we are in the process of selling. Agri Consortium Oravita SRL and Agri Trade Oravita SRL are the 2 companies that are in operation now.
Oravita Farming has been set up in order to provide an enterprise in which the land can be placed for future ownership for – hopefully – new buyers/owners.
We are endeavouring to produce an update, such that ownership/plots of land can lie with the individual properties.

Experience has taught us that this makes things much easier in the event of a sale.

Liquidity
Last year we faced major challenges in terms of liquidity – in particular around harvest time. We have managed to regain lost ground as a result of a good year for operations in 2016, we have secured hectare subsidy, etc., at an earlier stage and we have acquired chemicals that will be paid for after the harvest at no extra cost.
Our budget is greatly improved, and we have full liquidity cover until harvest, which provides peace of mind.Explanation of the result

In 2016 we have had particularly high wage costs – due in part to a change of management, the sales process involving purchase of external advice, higher interest expenses due to a lack of liquidity last year and crop financing.
The result is a loss of DKK 24.2 million and correction in the equity of – DKK 13.6 million.

The DKK 13.6 million above is deferred tax and stems from revaluation of land. 3 revaluations have been carried out over the years, and deferred tax has been calculated on two of these, although not yet on the third, which results in the figure of DKK 13.6 million. Of the DKK 24.2 million, around half results from earlier errors in accounts.

Double sale of land

Double sale of land is not a new phenomenon in Romania. A large part of this arose from the sale of land to an individual who wished to build a pig house. This never came to fruition – and the amount was returned. In addition, there is a small area in the northerly part of Amaru that was sold 2 years ago.
Some land from the Oravita property was purchased as a single unit by a group of Italians, and this land has been sold two times. We are confident of being able to deal with them, as they have also applied for subsidy on land that they do not own.

Depreciation and write-downs 

The property, plant and equipment register has been reviewed and corrected. Recalculation has been carried out and machinery depreciated over a period of 10 years with 15% scrap value. Conveying equipment, silos and buildings are depreciated over 10, 20 and 30 years respectively.

VAT receivable of DKK 10 million has been written down by DKK 5 million, as Carmen does not think that we have enough documentation to claim this VAT. We have applied for VAT in 2 companies. One amount has been paid out and the other has been approved, but not yet paid out.

Other applications have been initiated. We wish to get to the bottom of the situation, but we have no guarantee of how much we can get – which explains the write-down.

Overall, there is a negative result of DKK 25.4 million which affects the equity – whilst operations in 2016 provide a positive result of DKK 1.2 million (see PP with explanation of the result).Our greatest asset is of course the land (cf. PP). DKK 66.4 million in value for land that is not in operation.

The new auditor in Romania has highlighted valuation of the land, but, based on the known market prices, the board has ascertained that the total land value is OK.

We know 5800 Euro/ha for Roden, but also a price for small plots without cadastre of 4000 Euro/ha.

We also know a price from small plots without cadastre of 4000 Euro/ha, where the purchaser carries out and pays for registration himself.

On 17 May, the Chairman signed an agreement for the sale of 175 hectares distributed between 329 plots.

15 hectares are non-cultivated sandy soil, whilst 160 hectares have been let since 2014. It is this leaseholder who is the purchaser, as he also has an option to buy.

With these examples of land prices as a starting point, we believe that the valuation is correct. There is heavy focus on the land being registered correctly – it is not enough that it is in cadastre, but its entire history must also be accounted for. We are therefore planning how we can ensure that all our land is in cadastre and secure full documentation as quickly as possible.

Poster of overview of areas, valuation – cf. PP.

Sale of Oravita
Due Diligence is still being carried out. The aspect taking time is the checking of the individual plots of land – and there are around 15 documents per hectare.

The latest update is from a meeting on 18 May. The purchaser’s solicitor reported a large number of problems, which led the Chairman to enquire whether this meant that our land could not be sold at all. It was concluded that in 2 – 3 weeks they would be finished, so it is expected that the situation will be resolved.

The land requires the greatest amount of checking. With 15 documents per hectare × 3700, it is not surprising that it is challenging. Greater attention is being paid to documentation, and increasing land prices are expected.

The plan is to complete the sale during the summer, with the purchaser assuming control of operations when the sowing of winter rape begins. The harvest – sunflower and maize – belongs to us, and we will rent silos and sell off the yield from the harvest during the winter.

Until the deal has been done, no announcement will be made as to who the buyer is, nor the price.

We expect to get a price approx. 25-30 % above the booked value and that we will retain the culture and hectare subsidies. Endeavours will be made to secure the amount in the cheapest possible manner – to be accounted for later today by our auditor.

The future

The future – what will we do to ensure that we maintain our course and do not end up having to present a poor result again next year?

• Continued full focus on operations
• Accounts – budget follow-up – simplified working procedures
• Steen Hjemsted Pedersen has responsibility for the office’s working procedures
• Action for recovery of VAT on an ongoing basis, better chance of documentation, and outstanding amount not too big
• Online access to accounts department

IT is managed here from Agri Nord, and the same applies to the accounts department on Danish soil. The secretary function on Danish soil is assigned to
Birthe Dencker, who is on holiday this week. Hence the ordinary general meeting is being recorded on audio file, so that she can draw up the minutes of the meeting when she returns to work.

We have allocated extra costs for this restructuring in 2017, after which a fall in administration costs will occur. This will also be apparent when the budget is presented.
Re. 3: Presentation of the audited Annual Report and Management’s Review for adoption, by Christian Brasholt

CB expressed thanks for election as auditor in 2016. BDO has approx. 1100 employees and has connections abroad – including Romania. BDO Romania, Bucharest, has audited underlying subsidiaries.

The financial statements have been prepared in accordance with “updated accounting legislation”, with the requirements this stipulates for the company’s accounting class.

The independent auditor’s report

The financial statements for 2016 have been presented with an auditor’s report with an “except-for-opinion” concerning the possible effect of the circumstances that are described in the basis for opinion and the highlighting of circumstances in the financial statements.

Qualification for the values entered in the balance sheet as at 31 December 2015, including the effect of derived errors on the income statement for 2016. In connection herewith, reference to unusual circumstances during the year, including impact of DKK 25.4 million on the result and direct correction of equity of DKK 13.6 million.

Qualification for failure to register the formal ownerships in “Land Book Register Code”, and any derived effects, corresponding to a holding of land of DKK 151.8 million.

The year’s modified auditor’s report is a direct result of underlying auditor’s reports in the Romanian financial statements.

The financial statements refer to highlighting of circumstances, including reference to material estimates, and thereby related uncertainty exercised with provisions set aside for losses on VAT receivable. Furthermore, description of uncertainty related to the company’s recognition of farmland that is not in use or let with a total value entered of DKK 66.4 million. These are both issues that the Chairman has previously referred to in his report, and which do not further modify the auditor’s opinion.

Financial highlights in the financial statements: Turnover of DKK 55.7 million; Loss of DKK 24.2 million; Balance sum DKK 480.7 million; Equity DKK 367.4 million.

Investments for the year amount to approx. DKK 2.2 million, and can primarily be ascribed to the purchase of a new seeding machine for Oravita (DKK 1 million), with the remainder in minor investments.

Management’s Review (notes): The auditor refers to further reference to the year’s “unusual circumstances” and uncertainty with regard to entry and measurement.

The year’s result of “ordinary operations” shows a profit of DKK 1.2 million, whereas the year’s “unusual circumstances” have a negative impact on the result of DKK 25.4 million, resulting in a net loss of DKK 24.2 million.

Review of overview of land distribution – see attached PP.

Re. 4: Decision concerning utilisation of profits or coverage of loss in accordance with the adopted Annual Report
PH: The company – despite the loss – is continuing to do business, also with respect to liquidity, so nothing should be paid.Debate on the Management’s Review and Annual Report

Bo Arvin: Are there any grounds for suspicion of embezzlement – and who has responsibility for all the negative figures? What about the board that has been in place during this period? With regard to the DKK 151 million entered in the accounts as land value – can we be sure of this when the land isn’t registered? Will this become a problem?Bo Poulsen: DKK 1.4 million extra in personnel costs? I assume that this is severance pay to RD – and thus can be expected to fall again? 59 employees – can this be made more efficient? We are now selling all the land that is registered – and we have valued all the land at the same price. Is this realistic – and doesn’t it cost extra if it has to be registered prior to any sale?CB/PH: Total land value is DKK 303 million, based on external assessor valuations. But with the increasing land prices down there, this amount isn’t unrealistic. We’re working on getting the remaining land registered cheaply and as quickly as possible, but it takes time.

CB: During our audit, we haven’t discovered any fraudulent conditions – only reconciliation errors, etc. – in Romania.

PH: We have started over – hitherto, we have signed on the basis of what has been presented to us and we have trusted the auditor. It isn’t at all satisfactory, and we can see that things have not been in order. But none of the material issued indicates fraud.

Bo Arvin: Took part in one of the first board trips with a managing director who was certainly very generous – has this been the case elsewhere? Things have now been running so badly for so many years – if we’d let the land in 2015, as Torben Lauridsen suggested at the time, the result would have been better by approx. DKK 60 million. If we turn our attention to the revaluation of land and the uncertainty in terms of the DKK 151 million, then there’s a risk that we’ll lose all our money.

PH: DKK 60 million more through letting the land isn’t realistic. If we’d done that from day one with all the land, the amount might be realistic, but that wasn’t our intention at the time. The land was to be bought and put into operation, and it isn’t possible to just turn things around within a period of 6 months. The only option available to us now is to get the land registered and sold. That’s my best recommendation in order to maintain operations and create value.

Most of the extra salary is to RD, and this payment was completed in 2016. We make adjustments all the time in order to save costs. The amount also includes tractor drivers, etc., who don’t receive a very high wage. There are requirements as to how many hours they may have – and we had an inspection during the winter.
It’s difficult to state the exact price of having the land registered, but we’ll try to have a plan ready in the autumn.

Ejnar Lyngby: Do we risk losing the land if we cannot prove that we own it – and if so, will the money used to buy it be lost?

Ole Nielsen: Can we claim damages/take legal action against the former auditor? Deferred tax of DKK 13.6 million has been forgotten, in addition to other mistakes that a Danish auditor should have picked up long ago. The managing director should have been fired 3-4 years ago; then we could have avoided many of these mistakes.

PH: With regard to the 175 hectares about which an agreement has just been concluded, they have up to 1½ years to get things in order. The money will be transferred as and when it’s registered in cadastre. They pay rent until the land is correctly registered.
In Oravita approx. 50 hectares have been sold twice – and we’re somewhat stuck with this. But we’re pursuing the Italians, as they’ve applied for Apia on this land earlier.

We’ve contacted a solicitor with regard to taking legal action – and we have to be able to prove a so-called loss, which we don’t have. This is simply a question of when things were entered into the accounts.
The board also has a responsibility, and we’ve acted on the basis of what has been presented to us and to the best of our ability.

We should never have had anything to do with subsidies in a project such as with the mills. During the course of the project, demands have been stipulated concerning the establishment of an organic area/end product – we’ve built with subsidies in both Oravita and Amaru.
We’ve been negotiating with organic farmers in Oravita on use of the mill in order not to have to pay anything back. Otherwise we’ll start a small production ourselves.

JS: The value of land is based on assessor valuations, and uncertainties have been taken into account.Valdemar Bogh: Whatever has gone on is very worrying. How long will it take before everything is registered? Hasn’t the price agreement been finalised with regard to sale? How are any profits to be distributed?
It’s completely reprehensible that a Danish auditor has overlooked DKK 13.6 million, whilst I hope that Richardt Duus is completely out of the picture – also with regard to the sale? It’s great that we’ve managed to find a new and capable auditor.

PH: We can’t say how long it will take – but it’ll take at least 2 years before everything is registered. It’s also important that we get everything together at the same time – we have a lot of focus on this area.
If things are otherwise as they should be, then we’ll get the agreed price. It’s difficult to explain the DKK 13.6 million – and extremely frustrating with all the mistakes. RD was involved in the sale, as he had the best overview of the network of buyers. It wasn’t particularly easy to work for 6 months with a managing director who’d been fired, but we discharged the task in a good and professional manner and managed to find the buyer we have today, so the mission was successful and RD is completely out of the loop now. Excellent working relationship with Christian Brasholt, which has been a great help and a real pleasure.Ole Skårhøj: The past doesn’t deserve much in the way of praise. Do you expect to return a profit in the future? No investments have been made in 2016, and this would normally be necessary with so many hectares of land. Is it necessary to register the land in order to prove ownership?

PH: We weren’t afraid to invest the large sums of money when we commenced the project. We were surprised to learn how ownership worked down there. You have to be able to prove ownership, which is in itself a challenge, takes time and is very complicated when it comes to completing a sale. We wish to reach 80% in cadastre. A reasonable investment sum has been included in the budget and we expect positive operations in the future. The buyer has already spent a lot of money on DD, so they mean business.

JS: Investments – not much was invested in 2016, and nor will it be in 2017. It’s to be worn down, so we can implement efficiency drives in one go. Svend Jensen: We’ve increased our turnover by DKK 15-20 million if we look back to 2012 – can we expect a turnover of DKK 60 million in future?

PH: We’ve begun a programme of cost reduction, but it won’t be particularly visible in 2017. If we manage to sell, then clearly things will happen. Steen will be able to combine things better and we won’t have a new managing director in DK.
With regard to turnover – DKK 55 million this year, whilst the future figure will depend on if and when we complete the sale.Bo Arvin: Great praise to the Chairman for his good work – an unenviable task and we’ve uncovered what’s actually been going on. In my opinion, the financial statements cannot be adopted with the DKK 151 million and all the uncertainties that exist. Furthermore, more information is required concerning DD in terms of the sale – what is included in terms of fixtures and equipment, etc.? It’s our money, so it’s only reasonable that the figures are put on the table. Perhaps there are competent people in the circle who can provide good input.

Flemming Christensen: I don’t think enough has been done with respect to ownership of land – things need to change?

Bent Hjort Knudsen: I can see that not many people know how things work in terms of land down there. Oravita was bought as a single transaction in which all of the land was registered. Hereinafter, land that wasn’t registered was purchased on contract. The law was subsequently amended such that land couldn’t be sold if it wasn’t registered. If the land was sold, the money for the land would be deposited and only released once the land was registered. This represented a huge change in terms of the applicable conditions.

PH: I hope that covers some of the questions that have been put forward today – thank you, Bent, who has been involved since the very beginning and has excellent knowledge of the ins and outs of the situation.
We’ve studied the DKK 151 million very carefully, so there’s nothing to suggest that the amount isn’t correct. With regard to the deal, we cannot provide more information about DD: there are land, buildings, silos and machines – but no culture or work in progress. We finish up by harvesting, keep the crops – and then they start up by sowing.

JB: It’s important to note that it isn’t the equity that’s written down by DKK 151 million, but more a case of finger-wagging.

CB: The finger-wagging “qualification” from Romania doesn’t involve valuation, but is because the land isn’t registered in cadastre. The assessor valuations reflect this, so it’s only a question of the uncertainty. The net asset value is now 114.6.Management’s Review and Annual Report adopted by the ordinary general meeting.

Re. 5: Presentation of budget for 2017
CB and PH’s first visit was at the end of June, and this provided an idea of what needed to be done. A major process, but a realistic budget has been drawn up. Undertakings from banks with regard to support – was a bit turbulent in 2016.

CB presented the budget for 2017, which indicates a positive result of DKK 4.1 million.
Liquidity has a good head start, so looks reasonable. A lot of chemicals have been purchased with credit until 1/8.
Apia money receivable will be secured more quickly than expected, whilst there are a number of investments that have been rescheduled.Re. 6: Election to the board

Up for election:
Niels Busk, Lars Skov Olesen, Jørgen Stougaard and Ole Søndergaard Madsen.
Niels Busk was not willing to stand for re-election.

Nominations: The 3 existing members of the board and Bent Jeppesen, Ole Nielsen, Torben Lauritsen and Keld Uhrenholt.

Torben Lauritsen was not present and could not be elected without his acceptance. Kjeld Uhrenholt did not stand for election this year and thinks that the board has done a good job. Urged that serious efforts are made to get the land registered.
Ole Nielsen did not wish to be elected, after all.

Elected to the board were:
Re-elected: Lars Skov Olesen, Jørgen Stougaard, Ole Søndergaard Madsen

Newly-elected: Bent Jeppesen

The Chairman offered his congratulations and bid Bent Jeppesen welcome.

Re. 7: Election of the auditor

PH proposed re-election to BDO. Approved by the ordinary general meeting.

AD 8: Incoming proposals
None.

AD 9: Any other business

Question concerning distribution in the event of a sale?

CB: At the request of the board, CB provided a brief account of the sales process, including the fact that valuation in the sales process takes place on the basis of assets, with a subsequent sale of “shares”.

The composition of the ownership of the company is diverse, including ownership under the auspices of company, personal, pension, foreign owners, etc. In the event of distribution in connection with a sale, the consequences in terms of tax for each shareholder will depend on how the funds are designated and who the shareholder is.

The company board will aim to create the optimum situation for as many as possible, and will of course look at the possibility of obtaining dispensation from the Danish tax authorities, SKAT, to treat a capital reduction or resale as a sale of shares; a dispensation that will trigger a tax rebate (depending on shareholder type) of up to 15.4%. A dispensation from SKAT is not a legal requirement and will be based on a concrete application, which at present involves a relatively long processing time.

It is assumed that in the event of actual negotiations and on the convening of an extraordinary general meeting in connection herewith, a more detailed memo will be drawn up for the company’s shareholders.

Kjeld Larsen wanted the net asset value of 114.6 to be entered in the financial statements. This was noted.

PH: Thanked Niels Busk for his contribution to the board, as well as thanking the entire board for its efforts. Also, thanks to everyone who has worked positively for Agri Invest, and, not least, Christian Brasholt, on whom we have drawn to a considerable extent.

It has been good to feel support with regard to tasks, especially in a turbulent year.

The chair concluded proceedings, expressing thanks for a good ordinary general meeting.

Keeper of the minutes, Birthe Dencker Sørensen

___________________________

Chair, Jens Bigum