At 10.30 a.m. on Tuesday 18 May 2022 in Tårnsalen, Agri Nord, Hobrovej 437, 9200 Aalborg SV

Power Point from the meeting:
Power Point - Agri Invest - Generalforsamling 2022

Re. 1: ELECTION OF CHAIR OF THE MEETING
Jens Bigum proposed by the board and elected. He declared that the ordinary general meeting had been legitimately called via mail on 2 May 2022 and was thereby competent to contract business pursuant to Article 8 of the Articles of the Association.

Items 2, 3 and 4 of the agenda are grouped together as a single item for the purpose of debate.

The ordinary general meeting can also be followed via Teams.

Keeper of the minutes: Birthe Dencker Sørensen

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

PH welcomed participants to the ordinary general meeting and announced that the vote tellers had been chosen from amongst Agri Nord’s employees, thus ensuring that no shareholders would miss out on any aspects of the meeting.
Tellers: Jane, Connie and Lene

Although we reviewed the result in the field at the shareholders’ meeting in December – and will thus not spend so much time on this aspect today – we will refer to the highlights. Regardless of how capable our administrative employees are or how competent the consultants we use, the results in the field make up the basis for everything else.

(Page 4 in PP) Overall field plan 2022

The number of hectares cultivated has not changed very much, but we get documentation for more of the cultivated hectares on a regular basis – and thereby the opportunity to apply for hectare subsidy on more areas. Alternatively, we can rent out the land and thus generate revenue.

(Page 5 in PP) Total harvest quantities per crop/Production quantity, budget vs. realised 2022

Soya and sorghum are slightly below budget. Sunflowers are approximately in line with budget, whilst the other crops are over budget.

Soya faced challenges due to a shortage of water. We exploit sorghum, which is a new crop, by sowing where the fields are ready late. This resulted in a lower yield, but the alternative is nothing on these fields.

As usual, there is a significant difference between the 3 properties, but this also provides stability for the enterprise.

(Page 6 in PP) Financial highlights and key figures, Income Statement, for the past 7 years.

 (Page 7 in PP) Where does the result come from?

The result for the year is significantly over budget, in particular due to higher yields, lower costs and higher prices.

The result has been strongly influenced by rapidly rising prices. It is good that we have remained committed to our strategy of distributing the sale of crops throughout most of the year.

Had everything been sold at harvest time, things would have looked quite different – which would also have been the case had everything been saved until now.

(Page 8 in PP) Financial highlights and key figures, Equity:

Of course, a profit of DKK 45 million also has a positive impact on the equity. Exchange rate regulation has cost us money every year to date – approx. DKK 1 million this year.

 (Page 9 in PP) Development in DKK/RON – Exchange rates:

(Page 10 in PP) Cadastre %:

Our first target of registering 85 % in cadastre has been achieved, but a lot of work remains in terms of getting the final areas of land registered. COVID-19 has delayed matters, and several registrations are thus still in the process of being completed. An upgrade is now being tried out, according to which an employee responsible for the land is being appointed at both eastern properties to check up on the location in the landscape, which we can either cultivate ourselves or – if the location is not suitable – draw up a rental contract.

The increase in value is based on what we have registered in terms of paperwork/in cadastre. Steen has 2 of the employees mentioned above lined up for interview. We expect things to fall into place within the space of a month, after which they can get started. There are pieces of land of half a hectare, which we have to find amongst thousands of others, locate boundaries, etc. It is a major task, and we know the process, but it is in everybody’s interest to acquire large, continuous areas when cultivating farmland.

(Page 11 in PP) Recognition of agricultural land:

 

The value assessment from 2020 is retained in 2021, which is why the regulation of land value is primarily related to a fall in the exchange rate (negative) and secondarily to positive regulation as a result of registration in cadastre.

The auditor in Romania deemed that the changes in land prices in 2021 were not significant enough to warrant a new valuation report. Of course, having more land in cadastre and more of our own land in operation or rented out both have a positive effect.

The price is increasing in Videle and Amaru, whilst Oravita is the only site that has been hit by exchange rate regulation even though we do not have revaluation of the land. A new assessment will result in an increase again next year.

(Page 12 in PP) Budget 2022: 

Budget 2022 – presented December 2021, retained as working budget
Considerable uncertainty in current crop and commodities market (incl. energy)
Basis for budget 2022 retained
Sale of crops 2022 increase – compensate for purchase of fertiliser autumn 2022

It is always interesting to examine the budget. Can the expected yields out in the field be met? There are normally challenges related to the weather – and this year was no exception!
In Amaru it is very dry, but to date it is what we would normally expect was possible at one of the properties, and we therefore expect to see the predicted harvest yields.

Uncertainty can also result from the extreme drought that Amaru is suffering from right now, which will have an impact on winter seed. However, a small amount of water fell on the eastern properties last night – approx. 10-15 mm.
We have never had a year in which conditions have been the same on all 3 properties, so this is actually quite normal.

(Page 13 in PP) Amount covered and expected harvest 2022


As of May 2022, sales agreement has been reached on 2022 harvest, including:
19.000 tonnes wheat, average price of 1.85 against budgeted price of 1.5 (increase re. budget DKK 6,650.000)
1.000 tonnes rape, price of 4.04 against budgeted price of 3.90 (increase re. budget DKK 138,000)
Total increase in relation to basis budget t.DKK 6.788

Somewhat atypically, we began as early as the end of November/beginning of December to sell harvest 2023 at prices we had never seen before (DKK 150 for wheat), thus securing the trade-off. Today we all know that it would have been better to sell today, but it was a risk we were not prepared to take at the time.

At the end of April, we sold 6,000 tonnes of wheat (at DKK 225 instead of DKK 150) to counterbalance purchase of all DAP fertiliser for use in the autumn.

To date there has been a partial sale of wheat and rape – around 1/3 of the expected harvest, whilst work is ongoing with respect to partial sale of sunflower.

We have so far not had problems with delivery of fertiliser, seed corn and chemicals, and we are making efforts to secure these in good time. Normally, we are able to buy the cheapest N fertiliser mid-summer. Whether this will still be the case this year is difficult to predict. Just like back in Denmark, we are trying to secure our position as best we can in relation to the uncertain situation.

Machine investment is now approx. = annual depreciation. Upgrades have been made to transport in terms of getting the grain off the field. Only minor aspects have been adjusted in order to ensure continual optimisation.

(Page 14 in PP) Teaser 

As we announced at the shareholders meeting in December, we issued a Teaser, which offers a collective sale of Agri Invest, since new legislation prohibits partial sale in Romania. This attracted some attention, but nothing that has so far led to actual negotiations. News of this was soon published in the Romanian press; in this regard it is important that the employees are properly informed in order to ensure their peace of mind.

All 3 properties are running well, so we can sell when circumstances allow. The entire organisation has functioned in a satisfactory manner, which also represents value to a potential buyer.

On Tuesday evening (17/5) an agreement was reached to hold a Teams meeting with an interested buyer.

In order to test sales opportunities, we have reached an agreement with Oaklins, which later today will announce what they can offer to help us along the next steps of the process.

Other operations that are currently underway:

Purchase and rent of land in our cultivation areas
In the process of employing personnel for land conditions in east
33 wind turbines in Oravita are still in play, but this is taking time
Solar cells in east. Agreement has been reached for 50 ha and a lot more is on the drawing board, but it also takes time to ascertain whether the transformer has sufficient capacity, etc.
Purchase and sale of crops/seed corn harvest 2023

Result for the year:

Today it is with great pleasure that the Board is able to present the best result in the history of Agri Invest: + DKK 45.2 million. I am particularly pleased on behalf of Steen and Jan, who have been putting in a supreme effort for the last 5 and 10 years respectively. As owners, we can be rather proud of having 3 well-run properties in Romania.

Things are running well, and the properties are attractive to those that visit them. This is also positive in relation to a sale.

We have paid off all bank debt, but in order to cover all our bases we have retained a credit facility of DKK 28 million. We have also chosen to continue to finance machines.

The Board has proposed a dividend payment of DKK 3,000/share – corresponding to around 50 % of the profits. This will be voted on in a later item.

Thank you to our loyal and capable employees headed by Jan and Steen, Birthe for keeping the website up to date and administrative work, etc., other business partners at home and abroad, all shareholders for their continued support, the entire Board, where you, Jørgen Stougaard, are often involved in signing lots of documents, and once again Christian Brasholt, BDO, for your untiring efforts to ensure that everything is correct down to the last decimal – without much help from the Romanian auditors.

Re. 3: PRESENTATION OF THE AUDITED ANNUAL REPORT AND MANAGEMENT’S REVIEW FOR ADOPTION by auditor Christian Brasholt

1. Annual Report issued and PP, pages 18 – 33

Annual Report 2021 in brief:

The result for the year is a profit of DKK 45.2 million before tax / DKK 40.6 million after tax.

Tax on the year’s result is positively influenced by exploitation of historical non-capitalised tax losses (effective tax rate 16% in the event of normal taxation / 1% – 3% taxation of revenue in small businesses), corresponding to approx. DKK 6.5 – 7.2 million – versus DKK 4.5 million carried to the debit side.

Equity is affected by negative exchange rate regulation of DKK 9.1 million – and positive net regulation as a result of increase of land area registered in cadastre (regulation of write-down) of net DKK 2.4 million. As of 31/12, equity stands at DKK 488.3 million.

Valuation from 2020 retained in the Romanian accounts in 2021 – negative exchange rate regulation is thus expressed in terms of land area as a result of fall in RON/DKK.

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

The Management’s Review and Annual Report were adopted without written ballot.

PH: The Board proposes a dividend of DKK 3,000 per share, which corresponds to a total dividend of approx. DKK 20 million, which would be approx. 50% of the year’s result.
Proposal to pay out a dividend of DKK 3,000/share adopted by the general meeting without written ballot.

Debate items 2, 3 and 4:

Jørgen Kristensen: What about calculation of the book value – why does it not increase more with a large profit? The equity is affected by the exchange rate loss, and the book value is calculated by dividing the equity (DKK 488,000,000) by the total nominal value (DKK 320,000,000).

Niels Buhl: Support for paying out a dividend. Black Sea issue – Ukraine cannot export grain via this route. How do things look for us? Makes sense to purchase fertiliser when selling grain – good correlation.
PH: With regard to shipping crops out of the country, we have not as yet felt the effects of this. Whether this will become an issue, we do not know – we have not had any problems, although delivery times have perhaps been slightly longer. This might be true with regard to machinery, but this has always taken a long time.

Bo Arvin: In 2017 we were not allowed to include the value of land that was not in cadastre in the equity.

CLA: All the company’s land has always been recognised in the equity. Valuation has been based on the assessor’s report. Commenced with an overall valuation of DKK 426 million. The Board has written down DKK 12.7 million: small areas, corners, etc., 3%, land not in operation at a lower price and a direct loss of land is expected.
In 2017 the auditor said that a large area worth DKK 148 million could not be recognised. We have made write-downs in the event of uncertainty, which the auditor has thus taken into account.

Ejnar Lyngby: Wind turbines, solar cells – what are the rules down there?
PH: Wind turbines have been underway for the longest amount of time. When they begin building wind turbines, they take a rent of 8000 Euro/wind turbine for a period of 30 years. Jan has been good at helping them find their way out there.

With respect to solar cells, the first bid was 1000 Euro/year. Currently 1800 Euro/year. Almost everything with a view to renting out of continuous areas of land, so as not to have a mix of too many different things. Somewhat similar to what happens on Danish soil. At the 50-ha site, we have a similar piece of land adjacent to this. Some parties wish to buy/lease land to be used to build a transformer station, which will be a large facility.

Morten Rasmussen: Rules concerning taxation in the event of min. ownership for 8 years. What will the effect of this be in the event of a sale?
Preben/Christian: The code pf practice is untested on Romanian soil – we cannot get a clear answer. The risk of having to pay tax definitely exists. 80% of the difference between our purchase price and the value of the land according to the assessor. We expect this will be amended – but nothing has happened yet. It is possible to sell the Danish part – but in this case “front men” in Romania would have to be involved. If there are other possibilities, we would like to hear about them.

Re. 5: AUTHORISATION FOR THE COMPANY’S PURCHASE OF ITS OWN SHARES

There is no particular background for this – the item just has to be included in accordance with the Articles of Association and is discussed every year. If there is shareholder who is in a position that they are forced to sell their shares, then the company can legally purchase them – e.g. in the event of death or similar.

Ulrik Lund: How do we ensure that that this takes place in a proper manner – and is not subject to exploitation? Not keen on authorising abolition of the 10% limit, which amounts to DKK 32 million – is it not possible to describe it with more clarity?
PH: The shareholders will be notified by a solicitor if this occurs. We have experienced a death only once. We need to safeguard the interests of the company/shareholders. It is not thought to be a problem – and has not been previously.
Solicitor Esben: The Articles of Association reflect the provisions of the relevant legislation, and there are no longer limitations. Only the ordinary general meeting can authorise the Board to purchase shares for the company.
Ulrik Lund: Call for a ballot on this issue – show of hands is sufficient.

2 voted against the proposal, whilst the remainder voted for by means of a show of hands.

Henrik Larsen: Some of us have borrowed money in order to invest – should we not pay out a greater dividend of the profits?
We have not taken much out of the company during the past 15 years.

Jens Bigum/Preben: This matter has been discussed by the Board and we need liquidity in order to maintain operations. We therefore do not wish to drain the company of cash. If we have to rely on credit and run into a period of uncertainty, we might have problems. Remember that the company must be healthy – and thus generate interest – if we are going to sell.

Shareholder: You could try selling the shares – it should be easier now.

Re. 6: ELECTION OF THE BOARD
Up for election: Preben Hansen, Jens Bigum and Claus Nørgaard.
There were no other nominations – everyone nominated by the Board and re-elected without the need for a written ballot.

Re. 7: ELECTION OF THE AUDITOR
The Board’s proposal was to continue with BDO. BDO re-elected without further remarks.

Re. 8: PROPOSAL FOR AMENDMENTS TO ARTICLES OF ASSOCIATION by solicitor Esben Kjær
Articles of Association with proposal for amendments issued along with notice of the ordinary general meeting.

Reason for the proposal:
In connection with meetings with Oaklins and solicitor Esben Kjær, it has been pointed out that an amendment to the Articles of Association is necessary. A potential buyer will not waste time and money on submitting a bid if 10% of the votes can obstruct a sale.
The most important amendment to the Articles of Association is therefore that if 75% vote for a sale, it can be executed.

Solicitor Esben Kjær described and explained the background for the amendments, which were adopted by means of a show of hands. cf. enclosed PP, pages 44-59.

Jens Bigum: Many of them are legal, and only such that the Articles of Association are kept up to date pursuant to the Danish Companies Act.

Re. 9: INCOMING PROPOSALS FROM THE BOARD OR SHAREHOLDERS
None received.

Re. 10: BRIEFING ON SALES PROCESS by Oaklins – Kim Harpøt Jespersen

1. enclosed PP with presentation from Kim Harpøt Jespersen, pages 61-77

Preben: Strategy meeting held in January, where we ascertained that Kim has the necessary competences via experience of such sales processes. We held a meeting, and it was in line with what we wish to do.

As announced at the shareholders’ meeting in December 2021, Agri Invest has been put up for sale as a single entity, as, due to Romanian law, partial sale is not possible at present.

Oaklins has presence in 45 countries with 850 employees. It operates across national borders and has international presence, also in Romania. The majority of the offices are in Europe, but also in Asia and South America, etc.

Presented team:
Nina, from Romania – 20 years’ experience of purchase and sale of businesses.

Nicolai: Assistance from the Danish office

Christan Ravnsborg has worked in Germany and has wide experience

Serban – a member of Nina’s team

Kim Harpøt has worked with the purchase and sale of businesses for 20 years across many sectors out of DK, and transactions with a Danish angle. Has worked with a number that have the same structure and a large circle of owners. Crucial that there is open and direct dialogue throughout the process, such that the correct decisions can be taken. Has worked for DC, Arla and Danish groups outside DK.

Works in industrial groups in 15 different industries, including Agri College.

The team in Romania works together with VICTORIA BANK, who has a great insight into the agricultural market in Romania.

The Danish team has existed since 1979. Kim was part of the generational change in 2018 with 20 employees.

SALES PROCESS:
Finding the best customer requires a great deal of effort. Talk with other offices, German, French, etc., about what type of business it is and whether they can see a potential buyer from there.
New possibilities can be brought to the table. Colleagues have a very close relation to the parties, which can open the door for a good dialogue. This makes a great difference during the process.

The sales process will take several months, but it is possible to complete a sale before the end of the year. The field of potential purchasers will be contacted in mid-June when the preliminary phase is over.

In the case of particularly interested companies, we need to consider whether they should pay a visit. The summer holidays are somewhat staggered, but if we can work towards September, we may be able to receive bids. If there are no bids, we will stop working on the sales process.

The amount of work and resources expended will vary depending on the qualified interest.

Sales material and professional dialogue must be made ready.

If bids have been submitted, the parties in question must have more material, see sites, meet people from the organisation – this will take a few weeks/months. During this process, they must be in a position to submit a final bid and clarify which conditions apply in the event of a purchase.

Negotiations may be necessary – Kim/the Board and a draft resolution.

The shareholders must have full access to information throughout the entire process.

5-6 employees from Oaklins will be involved in the matter and will acquire info from the Board.
PH: The price is DKK 100,000/month + 1% bonus in the event of a sale. Important that we can break off collaboration if it is leading nowhere. We wish to be open about the entire process.

Shareholder: Important that we have professionals involved, although it costs money. What about Chinese buyers, who purchase a great deal of agricultural land?
Kim: Difficult to get over the finish line with them – we have good people/relations in China, which will be brought to the table.

Shareholder: Has a merger with First Farm been considered, such that those who wish to continue can do so?
PH: We are pursuing all leads and have contacted many different parties. We are only selling as a single entity, but can also sell off a percentage if any interesting business partners are forthcoming.
We have not previously been in a position to accept professional assistance – but are doing so now, and things take time.

Kim: We have discussed different structures – and it can be difficult to open a dialogue with some parties. We are determined to find the best possible solution and are open.

Shareholder: The sales price – what is it currently?
Kim: We will not be determining a price immediately; we are feeling our way a little bit. We will not announce a price at this time, but of course we are looking for as high a price as possible. Land prices are increasing at the moment. Important that the buyer knows that the seller knows what it is worth. Can in no way see that we should not be able to get more than DKK 500,000,000. The DKK 100,000/month does not cover our costs, so we are also hoping for a good sale.

Shareholder: How interesting is a sale if it is taxed at 80%? And can a buyer be nervous about the high rate of taxation?
Kim: If you sell Agri Invest complete as DK shares, you avoid the high Romanian taxes. But otherwise it is an aspect we need to take into account.
Bent: Rules involving selling off assets from the company – will this have an influence on the price/the buyer’s interest?
Kim: There needs to be a clarification of this, otherwise the possibilities will stagnate. The right buyer will be one with a long-term interest.

Shareholder: We have had fluctuating results – would it not be better to wait 2 more years and hope to be able to present healthy financial statements for 3 years running?
Kim: Perhaps – also with the increasing crop prices, but we do not know how things will pan out in the longer term. Whether one good year is enough is difficult to predict – but 2022 also looks promising.

Shareholder: Have higher prices been considered?
PH: When we issued the Teaser, we quoted DKK 750,000,000. We have highlighted the fact that there were energy plants underway. It also has to be a price that is interesting.

We have the right to terminate the contract with Oaklins if things do not work out. If we sell the day after termination, we have to pay a fee. Otherwise, it is only for the time that HAS elapsed that we have to pay DKK 100,000/month.

Re. 11: ANY OTHER BUSINESS

The chair of the meeting thanked the participants for a good ordinary general meeting with good dialogue. Thank you to Esben and Kim.

PH thanked the chair for the manner in which the meeting was governed and for the election.

Keeper of the minutes: Birthe Dencker Sørensen