Minutes of the Ordinary General Meeting of Agri Invest
held at 10.30 on Thursday 23 May 2019 at Agri Nord, Skalborg.

Re. 1: ELECTION OF CHAIR OF THE MEETING
Jens Bigum proposed by the board and approved. He declared that the ordinary general meeting had been legitimately called on 1 May and was thereby competent to contract business.

Leif Eltved and Lene Kjær from Agri Nord chosen as vote-counters. Adopted by the assembly.

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

Birthe Dencker Sørensen is the keeper of the minutes.

Re. 2: THE BOARD’S REPORT ON THE COMPANY’S ACTIVITIES DURING THE YEAR

The organisational structure remains unchanged from recent years.

Last year the Chairman was satisfied to report that we had returned the hitherto best operating profit of DKK 6.5 million.
This year we have achieved an even better profit of DKK 8.7 million. And this was not simply down to good fortune – spring 2018 was dry, with the wheat harvest beginning as early as 8 June in Oravita. All crops with the exception of maize returned a lower yield. They were, however, sold at reasonable prices at the optimum time.

There has been appreciation in the value of the land of some DKK 30 million.

2018 has not seen particularly significant fluctuations in currency, thus ensuring no material impact on the result.

We strive at all times to focus on costs and to keep them to a minimum, but there are of course still things that can be deemed to be out of the ordinary. Overall, we have enjoyed what can be regarded as being normal operation in all aspects on the agricultural side.

For the seventh year running, Jan has been responsible for operations at Oravita. Steen began at Videle in 2017 and has had responsibility for both properties in the east throughout 2018. He will provide an account of this. Operations have been very stable during the last 2 years, and we are continuing to try to simplify the structure; we currently have operations in just 3 companies.
cf. group structure in attached PP.

Operations, cadastre in Amaru and Videle by Site Manager Steen Hjemsted (cf. attached PP)
The 2017/18 season was extremely dry. The only time it rained was during the 3 weeks of the harvest!
The field plan shows a little less winter seed then we would like. Sunflower and maize are therefore considerably higher this year. Alfalfa and Soya are used as aftercrops.

Extremely dry autumn – so dry that damage was caused to harrows, etc. Managed to more or less sow the hectares we wanted to, but there was no precipitation until the end of November.
In February we could just about spot the first wheat that was sown in September/October. Fertiliser was applied at the end of February/beginning of March, after which there was a lot of rain and we applied a lot of nitrogen to the soil. From March to April growth really took off and was considerably better than expected. Slight differences from one variety to the next, but things are looking good. We will not have a record harvest, but we are more optimistic than earlier.

Also a very dry spring when it came to sowing aftercrops. However, we completed nice sowing beds at the beginning of April, after which we got rain, and things look fine now. Maize and sunflower are nice and uniform, although it is difficult to sow sunflower with the correct spacing.

Investment in machinery 2019:
cf. overview in attached PP of investments in machinery and land in daily operation = cultivated area.

We have made great efforts to produce a good map structure, thus ensuring that we have a good picture of swap areas, etc. See overview in attached PP.
We have approx. 200 ha. more in operation in Videle, rented 150 ha. in good, moist plots. Major land swap contracts with the 5 municipal authorities furthest away are now underway – approx. 3-400 ha. in total, which can be put into operation over the next 2-3 years.

In Videle it is possible to get approx. 2500 Euro/ha close to the areas of land we already have and thereby consolidate larger areas.
I did not start in Amaru until 2018, but have a good overview of the site. Expect approx. 150-200 ha. more in operation within the next couple of years.

Cadastre work – status April 2019
cf. overview in attached PP.
Solicitors and surveyors affiliated/employed in both areas – split into AC and OFL – solely to effect cadastre. Extensive and time-consuming work.

Amaru: Total area = 3,443 ha. distributed between 23 municipalities. Currently working in 5 municipalities representing a total of 1,220 ha.
218 ha. currently at OCPI (Landbook office) and waiting.
There can be a 4-5-month wait before we get the paperwork back or receive information concerning problems, etc. – very slow process.

Videle: 3,774 ha. distributed between 15 municipalities. Currently working in 5 municipalities representing a total of 1,050 ha.
65 ha. currently at OCPI (Landbook office) and waiting.

Chairman Preben Hansen, continued:
A significant addition of lime in east and west has been required, whilst there has also been a lot of work concerning maintenance of canals. There has been a great need for canals during the past month in Oravita, where there has been heavy rainfall.

Liquidity – cf. overview in PP: Has been somewhat improved leading up until status on 31.12.18. Remains good, so we can buy fertiliser in June if this is attractive and we are able to receive and store it. If we have a year that does not quite go to plan, then good liquidity also provides peace of mind.

VAT – cf. overview in PP: Back in 2016 we had a balance in our favour of DKK 14.5 million – which has now shrunk to DKK 4.3 million – and we continue to chase up this money every month. It has been a major issue for many years, but it has now acquired as normal a level as possible. We still set aside some funds in the Annual Report, however, as some of the VAT money is paid out without checks being made, and therefore carries a degree of uncertainty.

Developments in currency DKK/RON – cf. overview in PP: From 2017 until 2018, the exchange rate rose from 159 to 160, so there was practically no exchange rate loss. It has fallen again in 2019 from 160 to just below 157, but we will wait and see whether it recovers during the course of the year.

Our new reporting system with budget follow-up has been running since the turn of the year. It had some teething troubles, as we initially had to implement bookkeeping with a new chart of accounts at our own office. It is now up and running, so we are continuing to make improvements. Budget control is submitted to the board every month, so there is close follow-up.

We have sold the apartment that is located in the same stairwell as our office in Bucharest.

We are working on an ongoing basis to put more land into operation – cf. land area overviews in attached PP.

PURCHASES/SALES

As mentioned earlier, in 2017 and 2018 we sold 175 ha. distributed across 326 plots of land, which the purchaser (a local farmer) is registering in cadastre. Some of the plots of land were not fully accounted for, which is a requirement if the purchaser wishes to borrow money for the purchase. According to the information we have from our own solicitor, however, this should be completed during the course of 2019.

The sales process in Oravita is still underway. Exactly one year ago we sent a signed LOI to a buyer, submitted a number of responses to the court concerning the split process, which was a requirement before all the land that belongs to the farm could be transferred to the new company OFL. Unfortunately, shortly afterwards we received the somewhat surprising news that the split could not be approved.

We got in touch with a new solicitor during the summer and submitted a new application in the autumn. However, in contrast to earlier, we were now informed that it was absolutely forbidden to speak to the buyer during the process or for a reasonable period following an approval. Nobody was willing to say what a ‘reasonable period’ was.

We received approval from the court on 27/12-2018, and at present a notary is responsible for altering the name on 6500 plots of land. It is somewhat unclear as to when everything will be in place.

We have maintained contact with the interested buyer and expect things to start moving on a possible deal at the end of the summer. If we can reach agreement, it will in any case be expedient to have a transaction date following the turn of the year due to the stipulation to maintain a sufficient time interval from when the split was approved.

As shareholders, you have exhibited a great deal of trust and respect towards the company during recent years, so we are therefore happy to inform you about what the future might bring. The buyer has plenty of financial strength and acumen, but not so much experience of farming, so they have asked whether we would be interested in renting and cultivating the property during the years ahead. We have put forward a proposal and expect that this will help secure a reasonable price on the sale. Today, we farm 1500 ha without any paperwork, and this will allow time to purchase small plots of land, register them and sell them on to new owners at an agreed price once a year.

The buyers also wish to buy more land (up to around 30,000 ha.) in the longer term, which could be some of the land we have in the east – as and when we are ready. This may prove to be a good idea, although we will not get a huge return.
It goes without saying, however, that nothing is certain before any money has been paid into our account.

As things look at the moment, there is nothing to suggest that increases in the price of land will not continue.

We have a new website, www.agriinvest.eu, so please follow developments, in particular under News, where we will regularly post pictures from daily operations in the fields.

Thank you to everyone who has made a positive contribution to keeping the company running throughout the year. It gives us great satisfaction to have such good all-round support: site managers, employees on the Romanian board, Christian, BDO, shareholders and secretariat – it is of great importance for our work.

Re. 3: PRESENTATION OF THE AUDITED ANNUAL REPORT AND MANAGEMENT’S REVIEW FOR ADOPTION &

Re. 4: DECISION CONCERNING UTILISATION OF PROFITS OR COVERAGE OF LOSS IN ACCORDANCE WITH THE ADOPTED ANNUAL REPORT.

Christian Brasholt / BDO – cf. attached PP
Finexpert has day-to-day responsibility/advisory function at the office in Romania, and is charged with reporting VAT, for example.
BDO in Romania conducts the audit and BDO/the undersigned in Denmark audits and prepares the overall consolidated accounts.

An important change in 2018 is that an assessor has valued the land in Romania. This indicates a total value of DKK 390 million, against the previous figure of DKK 295 million. In Denmark an appreciation of DKK 34.9 million (ex. tax) has been entered as a correction on the equity.

Notwithstanding this, the auditor in Romania has declared an unchanged “qualification” for the value of included farmland of DKK 331 million which is not in cadastre, along with “highlighting of conditions” concerning land that is not in operation /rented out at a value of DKK 52.4 million. These matters are reproduced in the Danish report.

VAT receivable has been reduced to a reasonable level of DKK 4.3 million, against DKK 11.1 million in 2017.

The year’s operating profit has improved to DKK 8.7 million, compared to DKK 6.4 million in 2017.

The year’s declared tax amounts to DKK 2.1, of which approx. DKK 1 million can be ascribed to tax payment as a result of the restructuring of activities in Romania.

A number of the companies return either a profit or a loss, which means a lack of uniformity. There continues to be a focus on reducing this factor on Romanian soil.

The rules for taxation have changed in Romania. If you have turnover of 1 million Euro, then tax must be paid, regardless of whether the company returns a profit or a loss.

In the Management’s Review, it is also noted under unusual conditions that this year there have been extra costs of DKK 1.9 million for the implementation of the restructuring process/segregation, etc., concerning the sale. This continues to place demands on resources. There are currently two solicitors and administrative personnel employed solely to take care of this. Renewed registration is required – so this cost is included in the accounts.

With regard to the assessor valuation, there has been a net appreciation of DKK 34.9 million before tax. This revaluation includes a correction for:

A swap agreement in Oravita has been entered into on land that is due to be swapped in 2019. This is assessed to be considerably higher than the swap price.

General provision of 3% for drought, waterholes, areas which in good faith were entered at a price of 100 back in 2015. This also includes land which does not have any real value.

Land that is not in operation. In this case, a price adjustment of minus 30% = net price is made. Enables purchase of small areas, etc. All small areas that are not in operation are written down to the amount at which we can buy other plots in the area.

Current cash funds amount to DKK 17.1 million. Net debt is DKK 40.6 million, as opposed to DKK 47.8 million last year – an improvement of approx. DKK 7 million.

With reservations for minor rounding-down, we have achieved an improvement in liquidity of DKK 7.782 million in relation to last year.

In the notes on page 29, a change has been made such that part of the salaries is paid out as pension. It is therefore necessary to look at the total amount.

Dialogue concerning report and financial statements:
Michael Dam Madsen: Unmodified qualification – does that mean CLA agrees or disagrees?
CLA: It means that apart from this matter, I agree. Question mark concerning formal ownership – reproduced from Romanian soil. A declaration to which I draw attention, but am in agreement.

Michael Dam Madsen: What are the total costs if everything has to go into cadastre? And how is this in relation to the registered costs?
JS/CLA: The assessor has surveyed the land, so they’ve decided whether it’s good or bad soil, compacted, etc. If the land isn’t in cadastre, it has a lower value. A process risk is included at 10%.

Jens Møller Nielsen: The sale in Oravita. When was the price determined – and has there been a price increase since?
PH: The price was definitely not at the low end, and isn’t binding for a period of several years. The price was determined last year – and now we have a valuation by an assessor that corresponds to this price. So the price has been set high enough.

Bo Arvin: Was all the land we bought not in cadastre at the time it was purchased? Did we buy it “blind” and were we aware of the procedures?
PH: Yes, blind – just like everyone else did at the time. Steen has 12 years’ experience of this in Romania, and will take over here:
Steen: It was absolutely normal to buy without cadastre up until 2014, after which it was no longer possible. Today we’ve learnt a lot and don’t buy or sell without cadastre. We’ve sold land in Busau Nord without cadastre. This was specified in the sales contract, and the deal won’t go through until he has it in cadastre.
Bent Hjort Knudsen: We knew it when we bought it and created some value by getting it in cadastre. A large part of the western part was in cadastre. BHK thanked the chairman, operations manager and auditor for good reports. We all know that there’ll be bumps on the road, but you respond to them and deal with them. Good impression with respect to qualifications and financial statements that present a true and fair view. Very positive for us as shareholders. Hope you continue to work in the same way.

Niels Buhl: Thank you for an excellent review of everything. As shareholders, we’re dependent on you doing the best job possible. With regard to a possible sale, perhaps we should operate the land for a few years. If this is the way forward, then that’s OK. Do we have a time frame? Be careful not to tie yourselves down any longer than necessary.
PH: It’ll give us time to get everything under control in terms of some of the ha. that are currently cultivated without ownership or lease contract. Thank you to Bent; you know a lot about the start-up process and the work done, and thank you to Niels Buhl. When starting now, possibly making an agreement over a period of 5 years, we will make a rolling two-year agreement after the first three years. We hope that the process gets moving.

Kjeld Uhrenholdt: Bent Knudsen, the aim of the investment was that the price increase on the land should generate a return.
We have invested DKK 100 million to generate a return. I think we have invested completely blind – including major investments in machinery. Can compare with others who are at a completely different level. Are gross earnings expected at this level – approx. DKK 1000/ha. incl. ha. subsidy? This should be much higher.

Poul Bech Sørensen: Conversation culture. Is it something we could benefit from?
Steen: I don’t think our land is in good enough condition that we can do it.
PH: Are gross earnings too low? – I don’t know, but I look at the overall operating profit, which is on the rise.

CLA: Earnings per ha. are lower – that’s a fact. What is missing is that the land that capital costs have been paid on has shown a shortfall in terms of return. In the accounts for 2016, 2017 & 2018 there have been relatively high costs. There’s no doubt that there are high costs involved in running this business – administration is necessary in order to get things under control.
PH: I think the lack of return stems from the past – and the land has increased in value.

Valdemar Bogh: The investment in machinery sounds a little high – what does the future hold? Loans at Danish banks for DKK 50 million – are these on reasonable terms? Leasehold, is this attractive – would suggest as short a time as possible.
PH: Investment in machinery – we have spent a lot of money during the past 2 years, but we’ve also increased the land area by more than 1000 ha., which carries costs in terms of machinery. Hopefully, we’ll have a slightly lower level in the future, but we need to invest on an ongoing basis in order to be able to operate the land.
We didn’t exactly get improved terms from Danish banks, as we returned very bad results a few years ago. Earnings on rented land have shown that we can increase operating profit. The budget is drawn up on the basis of the earnings we can make on the property.

Christian Bagge Hansen: Thank you for good reports. When we lease 950 ha, what condition is the soil in and for how long a period? With regard to general information – we didn’t have a meeting in the autumn, so we’d like slightly more concrete/detailed info on a weekly/monthly basis.
PH: I hope you read our newsletters and look at the pictures, etc., under “News” on the website. We’ll try to improve matters if this is the general feeling. Leasehold – generally-speaking I believe that if we have to leave an area, it’s a good idea to have major operations in another area. It’s cost-intensive to make cuts in administration in the event of falling turnover.
Steen: We rent the land around the plots of land we already have, so everything is consolidated. We believe that this will get better and that we’ll have lower costs.

There was no need for a written ballot – the review and financial statements were adopted by the assembly.

Re. 5: PRESENTATION OF BUDGET 2019
CLA reviewed the working budget for 2019 – slightly revised in relation to that published in the autumn – cf. attached PP. There will be minor adjustments when it is converted to Danish.

Field plan of 9,300 ha extended to 10,257 ha – biggest extension in Videle.
Expected turnover DKK 58,857 million.

We expect a contribution margin of 34.6 against 32.9, whilst administration costs will perhaps be slightly higher.

Debate:
Shareholder: 12.4 million in ha. subsidy, we distribute it – so there’s a loss of around 270-300 per ha. We need to remember this.
PH: If we’d chosen this model from the start, we’d have been in a better position, but now we have to get to the other side and make money. We can’t just pull the plug and believe that it’ll pay to rent out the land.
Bo Arvin: That was my strong recommendation 5 years ago!
PH: It hasn’t been the strategy – we’ve built silos, etc., and weren’t in a position to just abandon the planned strategy.

Asger Overgaard: In hindsight, of course it would have been better to rent out – but fortunately matters have improved.

Re. 6: ELECTION OF THE BOARD
Up for election: Lars Skov Olesen, Jørgen Stougaard, Ole S. Madsen, Bent Blindkilde Jeppesen.
All 4 nominated and re-elected by a unanimous assembly.

Re. 7: ELECTION OF THE AUDITOR
The board’s proposal was to continue with BDO. This was also approved by the assembly.

Re. 8: INCOMING PROPOSALS FROM THE BOARD OR SHAREHOLDERS
None received.

Re. 9: ANY OTHER BUSINESS
Ole Nielsen: I’ve been a shareholder for 10 years and attended the ordinary general meetings every time. We’ve invested a lot – how will we realise our money again? Reserve some of the money for the shareholders in the event of a sale – earnings of 1 or 2% give nothing.
PH: I’m sure that there are several people sitting here with the same feeling. I hope you still believe in the project – and have faith that money will be realised from a sale. In the event of a sale, you’ll all be involved. We can definitely pay our debt. The sale of Oravita has taken a long time – and we hope that it’ll take place within the foreseeable future.
We don’t know the prices for trading with shares.

Bo Arvin: How does the expected sales price of Oravita look in relation to our valuations?
PH: The value of the land looks reasonable. The biggest challenge is on the farm site. We agreed and published the price last year. Today, there are of course things that aren’t OK, but we’ve done our best. The expected sales price corresponds to the land value – perhaps the price is a bit too high on the farm site.

Shareholders’ tour in June:
PH: We’ve tried to make short trips – limited to 6 people. Now we’ve tried to combine it with a trip of a more touristy nature. Therefore at rather short notice – but attractive trip in May/June. We just about got the 14 participants to ensure the feasibility of the trip. If it’s a success, we’ll try to organise a new trip and provide better notice.

The chair concluded proceedings, expressing thanks for a good ordinary general meeting and a good dialogue. PH thanked the chair.

Keeper of the Minutes: Birthe Dencker Sørensen