Minutes of the Ordinary General Meeting of Agri Invest
held at 10.30 on Tuesday 19 May 2020 at Agri Nord, Skalborg.

(Due to the Covid-19 situation and a prohibition on assembly of max. 10 people, the board of directors requested that the shareholders physically attend and instead submitted the proxy – cf. previous letter from Adv. Hans Peter Storvang)

On May 11, 2020, a written report from the Board of Directors incl. appendices together with an updated agenda, annual report 2019 and budget 2020 for all shareholders.

Attorney Hans Peter Storvang received a total of 74 proxies with 2328 votes (out of 6410 votes) before the general meeting

Re. 1: ELECTION OF CHAIR OF THE MEETING
Hans Peter Storvang proposed by the board and approved with 2283 votes. He declared that the ordinary general meeting had been legitimately called by mail and letter on 4th May and was thereby competent to contract business.

Birthe Dencker Sørensen is the keeper of the minutes.

Re. 2: THE BOARD’S REPORT ON THE COMPANY’S ACTIVITIES DURING THE YEAR
cf: Sent appendix 1, 2, 3 and 4

The year’s ordinary general meeting is a day which the entire board and I, as Chairman, very much look forward to. The ordinary general meeting enables us to take stock of the year and we have the chance to engage in a direct dialogue with a large number of our shareholders.

Unfortunately, that is not possible this year due to the challenges posed by COVID-19.

The financial result that we can present today is less satisfactory. I will not embark on a long list of excuses, but will try to describe what has happened during the course of the year. I will only touch on the headlines of field operations – Steen/Jan will provide greater detail in another annex.

The very dry autumn in 2018, and the lack of germination as a consequence, caused considerable concern that a lot of crops would have to be resown during the spring. Every year there are things that do not go as planned – for various reasons – and that was also the case this year. The spring, however, was much better than expected, and, in fact, was just as our experienced site managers Jan and Steen had predicted. Even though a wheat field may be completely black at Christmas, it can still develop into a good field of wheat. In the west there was snow during part of the winter, and here the field had begun to turn green under the snow. In the east there was not much snow, but even here the fields began to turn green as the winter came to a close, whilst the early onset of spring provided further benefits.

The early spring meant that all winter seed could be fertilised early, and the sowing of sunflower commenced on 11 March with 2 new seeding drills in the east that are able to sow very accurately.

Sowing began the following week in the west.

Large numbers of geese had caused problems on some of the fields (now also a familiar sight in Denmark). The damage was worst in a field of rape in which the plants were already somewhat on the small side.

Field plan 2019 of 10,219 hectares + a few hectares in fallow and oats that are used for seeding when sowing aftercrops, making up a total of 10,255 hectares. The distribution is as shown below:

In light of the challenges of the very dry autumn in 2018, crops were generally pretty good, with more or less nothing suffering damage caused by water during the course of the winter.

Very unusually we had a lot of rain in May and June – so much, in fact, that there were areas which drowned. It was a shame to see so many well established crops being destroyed.

Sunflower and maize simply could not stand upright in the completely sodden soil; part of the soya field turned into a lake; and there were wheat fields that were so soft that fungicide treatment could not be carried out.

Of course, a lot of crops benefitted from the heavy precipitation, but a more even distribution would have been preferable.

Due to the heavy rain, it has not been possible to spray in the optimum manner, but every chance to do so has been exploited.

On several occasions we have got stuck with the sprayers when carrying out roundup spraying, which caused issues at the beginning of the harvest when running with combine harvesters.

We harvested with our own 6 combine harvesters and an increasing amount of hired capacity to reflect the increase in area. In the east, local harvest help is available, whilst in the west we have an agreement with a Polish company that has 2 machines at its disposal at the beginning of the harvest and which continues working until wheat and rape are harvested, after which they head further north.

Conclusion

As the 2019 harvest drew to a close, it could be seen that it had been the worst season for many years in Oravita (west). In the east, Videle had also suffered to a certain extent from weather issues, whilst the site in Amaru had experienced more normal weather conditions.

Had we suffered all these weather problems a few years ago, then I think that yields would have been disastrous due to the poor condition of the soil. Persistent efforts to improve cultivation and the properties of the soil are the key to making progress, and we have been helped greatly by Steen and Jan, who are both highly capable site managers. Jan, who has been in Oravita for 8 years, has called 2019 the very worst year in Oravita. Steen can confirm this with his more than 12 years of experience in Romania.

The yield that suffered most was wheat in the west – and with more than 3,100 hectares, this translates into a great many tonnes when yields have suffered at a rate of 1 – 1.5 tonnes/hectare. In addition, neither rape nor maize managed to achieve their budgeted yields.

In the east (Videle), the heavy rain and flooding in the middle of the summer meant that sunflower did not achieve its expected yield.

Rape, sunflower and soya have also been sold very close to budget price, whilst wheat and maize fetched a price over budget.

The sales strategy has been to sell rape before the harvest and the wheat that we cannot keep in stock. The price of wheat was not so good prior to the harvest, so in Videle, where storage capacity is limited, we rented extra silos and reaped the benefits of rising prices later in the year.

In May, the final quantities from Oravita will be delivered. Payment is effected prior to delivery and there are now a number of well-run firms, but the logistics of picking up the goods can still be a challenge for some of them.

Start of the growth season in 2020

The sowing of wheat was completed in week 45, 2019 – during the last week a lot of small areas were sown in Videle and Amaru in order to demonstrate our right to cultivate crops on the areas which we have registered in cadastre during the course of the year or hold a lease on. The first year is always difficult, but it helps the neighbours’ willingness to swap land so that next year the land can be consolidated in larger areas. This is somewhat atypical in relation to conditions in Denmark, but is the way things work in Romania. It becomes ever easier to localise our land as it is registered in cadastre and we secure proper cartographic material.

The area sown in autumn 2019 covers a total of 7,894 hectares, made up of 6,811 hectares of wheat and 1,083 hectares of rape.

There was no rain in the east in August/September, which is why no rape has been sown here.

Once again, drainage projects were implemented in the autumn in order to minimise the risk of flooding, which vey unusually came in the middle of the growth season in 2019, whereas the risk is normally greatest in the winter.

With the large amounts of water in the middle of the growth season we experienced in 2019, it meant that the yield of crops harvested was a lot lower than budgeted, which has obviously had a negative impact on the result. We are, however, in the fortunate position that we have good liquidity and have therefore also been able to purchase our entire fertiliser needs for the 2020 harvest in good time at what we deem to be good prices, in addition to which we have also secured a good stock of agents to protect the health of the crops if delivery problems occur due to the situation concerning Corona.

The cultivated area for the 2020 harvest will be increased by approx. 135 hectares to 10,390 hectares. The reason for the increase in area is that we will have more land registered in cadastre and under lease and better cartographic material, and can therefore prove that it is our land that others have previously cultivated. The thing that helps us the most is the 3-year plan of having the land registered in cadastre that was launched 2 years ago. Having registration and accurate maps in our possession gives us the best opportunity to prove our ownership.

Land is and will continue to be our greatest asset, so it is very positive to see that our 3-year plan of registering at least 85 % land in cadastre is progressing as planned. It should be mentioned at this point that nationally only 30 % of land is in cadastre, but efforts are also being ramped up on the part of the public authorities, although at a much slower rate.

Doing this is not exactly without costs for Agri Invest, and the estimate we had from the start was a total budget of approx. DKK 9 million, which appears to be realistic.

Unlike earlier, land cannot be bought and sold without cadastre.

Steen will provide a more detailed account of the plan, but I am happy to report that it looks like we will achieve our objectives in a year’s time.

Sale of Oravita

As reported earlier, we have not been able to work on this sale for around a year due to the splitting up of the company and registration of land in the new company.

In summer 2019 we were able to begin a dialogue with the potential buyer who was referred to at last year’s ordinary general meeting. They had hired an English consulting firm, which, along with the CFO, came to the farm in Oravita for 4 days. Buildings and machines were examined, while all fields were surveyed, the soil tested and samples taken. Satisfaction was expressed in terms of what they had seen and examined.

Following this visit, we expected to be able to conclude the sale. However, there was one thing the buyer was not happy about: the fact that we – like everyone else – cultivate pieces of land on which the owner is unknown. In order to be able to understand this, you need to know that in Romania 70 % of the land is not registered in cadastre and that the sizes of the pieces of land are between 0.5 and 1 hectare. It is also important to emphasise that this information has been clearly presented in our sales material right from the very beginning and has therefore not been an unknown factor for the parties in the sales process.

The buyer, who is well known in Romania, did not want to risk cultivating other people’s land, which makes it impossible if in a field of 100 hectares there are thirty 0.6-hectare pieces of land scattered all around. Of course, it is the buyer who has the last word, and the sale thus fell through.

There is a new potential buyer and we have an agreement with an estate agent. The potential buyer comes from Hungary, but by the time the buyer was ready to meet at the farm, the outbreak of Corona virus meant that the borders had been closed. We are now waiting to see when we will be in a position to hold the meeting – nobody said it was going to be easy!

The outbreak of Corona virus also causes problems in Romania, with a number of restrictions and measures being implemented at the farms. Everyone must have documentation with them in their vehicle that proves why they are out driving. No employees have yet been struck down by the virus, and spring operations have been carried out on time.

Jan and Steen are unable to visit Denmark, as this would entail a period of quarantine on their return to Romania.

Most of the employees at the office in Bucharest are working from home, but this seems to have worked out fine.

The final challenge is that it has not been possible to travel to Romania with our auditor Christian Brasholt Larsen in order to finalise the accounts. We have held meetings on Teams, which fortunately is a good help, but it would certainly have been preferable to be able to travel down there one more time in order to be able to close out the year.

FinExpert, which prepares the accounts for the 8 companies and the consolidated accounts, and the auditors at BDO Romania do not have quite the same codex that we expect in Denmark – and thus a physical presence is preferable.

With the many initiatives and changes that have taken place over the last 3 years, we are left with a business that has become increasingly streamlined. The costs have been high – and will continue to be so – not least the plan involving cadastre, which still has a year left to run.

More follow-up work has been implemented to ensure adherence to the planned tasks and costs. Budgeted costs can generally be managed well, but there are large variations in terms of yields and sales prices.

As shown in the budget, we expect a positive result on operations in 2020.

Shareholders’ tour

In addition to the benefits provided by the professional content of such a tour, I also had the pleasure of joining a group of shareholders on a tour last June. During recent years, tours of different lengths have been on offer, and it was this tour lasting 9 days that attracted enough interest for it to be viable. You were a group of technically competent and highly interesting people to spend time with. It was also great to hear direct praise being given to our site managers as a result of what you saw. This really means a lot.

Conclusion

Thank you to our business partners and all our employees, with Jan and Steen at their head. A thank you also goes to the board and to Christian Brasholt, whose expertise we have once again drawn heavily upon this year.

Finally, I would like to thank all the shareholders for providing Agri Invest with excellent support throughout the year. This is of course a written report sent out with the notification of the meeting, and I hope you will send any questions to us. We will try to answer any questions to the best of our ability.

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

The company’s annual report was adopted electronically.

The company’s annual report shows for 2019 a profit of DKK 1.7 m and equity of DKK 406 m. The company’s equity is for 2019 affected by a negative exchange rate adjustment of DKK 9.9 m and adjustment of the company’s holding of land of a net amount of DKK 19.2 m. It is noted that the company’s accounting policies for 2019 are changed so that exchange rate adjustment arising from the parent company’s long-term receivables and payables that do not arise from current trading are recognised directly in the company’s equity under reserve for net revaluation according to the equity value method. The change for the year has for 2019 a positive impact on the company’s results of DKK 2 m.
The balance sheet total and equity are unchanged and the comparative figures have been adjusted.

The auditor’s opinion includes, in line with opinions issued in previous years, a qualification of the valuation of farm land for which a formal ownership is not registered (value DKK 101.1 m), and emphasis of matter in relation to land that is not being cultivated/leased out (value DKK 33.6 m), uncertainty in relation to valuation of VAT receivable and a general uncertainty relating to the valuation of the company’s holding of land, including the write-down made on the basis of a number of assumptions, cf. the company’s Management’s review and description in note 20.

In general, we refer to the Management’s review and the notes in the annual report which give a comprehensive description of the above matters and the conditions.

Question received from shareholder:
Vagn Klitgaard: Questions regarding the item ”pensions” in the consolidated financial statements. According to his calculations, the item is 23 % of the payroll cost – how does this add up?
Christian Brasholt/Preben Hansen: The amount concerns solely the Romanian share of social contributions to Romanian employees – meaning that a wage is paid and employer/AI pays on a share to social costs.

The Management’s review and Annual Report were adopted as follows:
2308 votes for and 40 neutral. No votes against.

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

The Board recommends carry-forward to next year.
Adopted by 2308 votes for and no votes against.

Re. 5: PRESENTATION OF BUDGET 2020
Cf. Appendix 5

Preliminary budget presented and distributed to the shareholders – only small changes in relation to the budget we presented in shareholder news shortly before Christmas:

It is mostly an adjustment of the existing field plan, and adjustment of exchange rate adjustment to (rate 1.55).

Budget for 2020 shows a result of DKK 4.1 m before tax, restatement to Danish accounting policies and exchange rate losses. The budget for 2020 is subject to some uncertainty because of the present crop situation, see the chairman’s report.

Re. 6: ELECTION OF THE BOARD
Up for election: Preben Hansen, Claus Nørgaard and Jens Bigum.
All 3 nominated and re-elected by a unanimous assembly.
Preben Hansen: 2318 votes, Claus Nørgaard and Jens Bigum 2308.

Re. 7: ELECTION OF THE AUDITOR
The Board’s proposal was to continue with BDO. This was also approved by the assembly.
Re-election with 2283 votes

Re. 8: INCOMING PROPOSALS FROM THE BOARD OR SHAREHOLDERS
Proposal to reduce the Board from 7 to 5 members from Kjeld Uhrenholt – K.U. Handel og Produktion received on 14 May, after the deadline (9 May) – and, thus, the proposal was not up for voting.

The Chair of the meeting noted that the proposal received would mean an amendment of the articles of association and the Board indicated that they are facing a modernisation of the articles and will consider the proposal in connection with this work.

Re. 9: ANY OTHER BUSINESS
The Chair of the meeting thanked for a good general meeting. Preben Hansen thanked the Chair of the meeting for his job.

Keeper of the Minutes: Birthe Dencker Sørensen