FirstFarms

Annual report 2015

FirstFarms A/S
Majsmarken 1
DK-7190 Billund

CVR: 28 31 25 04
Registered office: Billund

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Content

Management review

Summary 3 Auditor 33
Financial highlights and key ratios 4 Consolidated annual accounts
Management review 5 Income statement 35
Risk management 18 Total income statement 35
Shareholder information 22 Balance sheet 36
Company information 27 Equity statement 38
Statements 32 Cash flow statement 40
Management 32 Notes 41

This annual report is composed in Danish and in English. In case of doubt, in relation to interpretation, the Danish version takes precedence.

Summary

2015: EBIT-result as expected – influenced by low milk prices and drought

In 2015, FirstFarms realised a turnover of DKK 111.8 million, an EBIT-result of DKK -14.7 million and a pre-tax result of DKK -22.5 million. The result corresponds to the expectations announced in November 2015.
The result is not satisfactory. However, the result must be seen in connection with the challenges which have affected the agriculture in 2015 with low prices and drought in large parts of Central Europe.
FirstFarms realised a very satisfactory harvest in East Romania in 2015. Record yields are realised in both spring- and autumn crops, which in total are significantly above budget. In Slovakia and West Romania, the autumn crops had yields as budgeted, whereas the spring crops had yields way below the budget. The sales prices are marginal above budget. The yield results of the harvest affect the result negatively with DKK 17 million in 2015 compared to budget and with DKK 31 million compared to last year.
Sold quantity of milk has decreased by 2.4 million kg in 2015 compared to 2014. Thus 21.8 million kg milk was delivered from FirstFarms in 2015. On a daily basis, 29.8 kg milk per milking cow is delivered at the end of 2015 compared to 28.5 million at the end of 2014.
The milk price has decreased drastic from end of 2014, and it has during 2015 been in the range from DKK 2.22 to DKK 1.84. The average sales price in 2015 constituted DKK 1.98 per kg compared to DKK 2.61 per kg in 2014. During the years from 2011 till 2014, FirstFarms has achieved an average price of DKK 2.49 per kg. The milk price affects the result negatively with DKK 9 million in 2015 compared to budget and with DKK 14 million compared to last year.
In 2015, FirstFarms realised a cash flow from main activities of DKK -4.9 million.

2016: Expectations

In 2016, FirstFarms expects an EBIT-result in the level of DKK 0 million.

Like in 2015, 2016 is expected to be a challenging year on the earning side for the milk production in EU. FirstFarms adapts to these framework conditions continuously.

Crop prices are expected to be stabilised on par with the realised prices in 2015.

In 2016, the company will continue to work with optimisation of the operation, including a reduction of the uncertainty of cultivation in drought periods and expects an improved earning power.

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Financial highlights and key ratios

Financial highlights for the Group	2015	2014	2013	2012	2011
DKK 1,000
Net turnover	111,841	125,008	114,127	108,080	129,331
Gross profit/loss	-5,547	22,862	21,405	-15,110	29,695
Profit/loss from primary operations	-14,657	19,172	11,172	-27,668	17,088
Net financial items	-7,806	-7,673	-6,674	-6,847	-6,327
Pre-tax result	-22,463	11,499	4,498	-34,515	10,761
Net profit	-21,977	8,827	2,791	-27,435	9,003
Non-current assets	402,254	393,584	390,977	388,706	401,149
Current assets	123,692	112,264	96,803	78,250	95,791
Total assets	525,946	505,848	487,780	466,956	496,940
Share capital	47,122	47,122	47,122	47,122	47,122
Equity	306173	326,730	320,819	318,407	347,995
Non-current liabilities	70.,137	96,985	89,843	42,641	44,365
Current liabilities	149,636	80,133	77,118	105,908	104,580
Cash flow from primary operation	-4,937	4,382	18,302	1,972	18,501
Cash flow from operating activities	-12,916	-3,785	9,329	-4,700	10,143
Cash flow from investment, net	-21,034	-6,341	-16,414	-3,906	-13,771
Of which for investment in tangible assets	-38,493	-49,375	-28,106	-13,230	-14,445
Cash flow from financing	-14,332	2,593	30,733	2,147	1,662
Total cash flow	-48,282	-12,745	23,648	-6,459	-1,966
Key ratios for the Group
---	---	---	---	---	---
Gross margin	-5.0	18.2	18.8	-14.0	23.0
Operating margin	-13.1	15.3	9.8	-25.6	13.2
Solvency ratio	58	65	66	68	70
Earnings per share, DKK	-4.66	1.87	0.59	-5.82	1.91
Diluted earnings per share, DKK	-4.00	1.50	0.47	-5.82	1.91
Return on shareholders’ equity	-6.9	2.7	0.9	-8.2	2.6
Average number of employees	211	204	198	203	206

Key ratios for the Group

Earnings per share (EPS) and diluted earnings per share (EPS-D) are calculated in accordance with IAS 33. Other financial ratios are calculated in accordance with the Danish Finance Society's "Recommendations and Financial Ratios 2015".

The financial ratios stated in the consolidated financial statements and in the annual report have been calculated as follows:

Gross margin	(Gross profit/loss x 100) / Turnover
Operating margin	(Profit/loss from primary operations x 100) / Turnover
Solvency ratio	(Equity x 100) / Total assets
Return on equity	(Net profit x 100) / Average equity

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Management review

FirstFarms had a challenging year in 2015 based on low milk- and crop prices and drought. Ongoing through the year, maximum adaptation to the current and foreseeable conditions has taken place. There are two main reasons for the negative influence of the result. Drought in Eastern Europe has hit the maize harvest severely and the yields in the other spring crops significantly negative. The milk prices has also been historically low on the basis of a mismatch in supply and demand on the world market, significantly impacted by an increasing production of milk in Europe after discontinuation of milk quota.

In 2015, a continued reinforcement of the production efficiency and adaptability to external events has taken place. The company has a satisfactory foundation for further growth and development from FirstFarms' business model.

The cash resource has had significant focus in 2015 to secure the frames for the continued development of FirstFarms. The resource makes it possible to expand through acquisitions or mergers and operation optimisation in general. In 2015, primary focus has been on optimising the existing production. Furthermore, the company has worked on ensuring readiness to constantly be prepared for growth in relation to the strategic maneuver in the current market situation for European agriculture.

In 2015, FirstFarms realised a turnover of DKK 111.8 million (2014: DKK 125.0 million), an EBIT result of DKK -14.7 million (2014: DKK 19.2 million) and a pre-tax result of DKK -22.5 million (2014: DKK 11.5 million).

In 2015, we have started to see the even out effects of having cultivation areas with larger geographical distances and thus expect overall less risk by drought and rain.

In 2015, we have had a record year in our field production in East Romania. FirstFarms realised a very satisfactory harvest in East Romania in 2015. Record yields are realised in both spring- and autumn crops, which in total are significantly above budget. In Slovakia and West Romania, the autumn crops had yields as budgeted, whereas the spring crops had yields way below the budget. The sales prices are marginal above budget. The yield results of the harvest affect the result negatively with DKK 17 million in 2015 compared to budget and with DKK 31 million compared to last year.

The result is also negatively influenced by a low milk price, which was decreasing throughout 2015. There has been an unchanged efficiency in the milk production – despite a significantly influence on the production due to the hot summer. Concurrently with the decrease in the milk price, adjustment of the milk production has taken place, so the lowest producing cows, which due to the low milk price could not cover the variable costs, have been slaughtered. The total delivered quantity of milk is thus decreased with 10%.

In 2015, FirstFarms has optimised the frames for the new cultivation area in West Romania, where the company owns 1,600 hectares of agricultural land. A total of 3,700 hectares have been operated in this center in 2015 compared to 2,300 hectares in 2014.

The number of employees have in Slovakia and Denmark been reduced by 12 employees in 2015 and in Romania increased by 16 employees, as the operation in West Romania has been transferred from agricultural contractor to use of own machinery.

At the end of 2015, approx. 7,800 hectares of autumn crops have been seeded (2014: 6,800 hectares), and the crops have overwintered satisfactory.

The management regards the result as unsatisfactory. However, the result must be seen in connection with the challenges which have affected the agriculture in 2015 with historically low prices and drought in large parts of Central Europe.

FirstFarms is working with growth within the frames of our business model with 2020-goals as illustrated in figure 1.

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Figure 1 – Goals

Crop production/-areas, Milk production and New production types/areas:

Site	Actual	2020-Goal
Crops/Land Slovakia	9,300 hectares	12,000 hectares
Milk Slovakia	2,500 cows	3,300 cows
Crops/Land East Romania	3,100 hectares	10,000 hectares
Crops/Land West Romania	3,700 hectares	10,000 hectares
New production types/-areas	Identification and evaluation	Extent/goal to be specified

The long-term goals for the field production in FirstFarms are 2 operation centers of each 10,000 hectares in East and West Romania, respectively; a total of 20,000 hectares (operation in 2015/2016 is 6,800 hectares) and 12,000 hectares in Slovakia (operation in 2015/2016 is 9,300 hectares).

FirstFarms focuses on improving the compactation in present areas and expansion in areas with potential good compactation and high quality land close to present operation centers. FirstFarms has an average field size of 14 hectares in West Romania, 23 hectares in Slovakia and 48 hectares in East Romania. Increasing the field size creates good operating economy.

FirstFarms' main focus is to operate and develop agricultural areas and not ultimately to own these, although ownership is a possibility that is also applied. Expansion of the field production will be done by rent contracts on agricultural land depending on the market conditions of owning or renting along with the biggest earning potential in running the land. Land or renting contracts are bought in present areas, in case it improves the possibilities for compacting of our land and benefits FirstFarms' future possibilities for development.

The goal for the animal production is an expected running expansion up to 3,300 cows. We are running a maintenance strategy, until we again can create a balance in the earning capacity through satisfactory milk prices.

FirstFarms can be characterised as a modern knowledge company. Business foundation, back ground and market conditions are shown in figure 2. In figure 3, FirstFarms' business model and key roles are illustrated.

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Figure 2 – Business foundation, back ground and market conditions

FirstFarms' background and strengths:

CAPITAL
- Own means and stock exchange
- Loan capital including investor network

MANAGEMENT
- Structure/concepts
- Experienced managers

KNOW-HOW
- Agricultural operation
- Land purchase/-rent

RELATIONS
- Local and international partners

FirstFarms

POTENTIALS

Typical Eastern European market conditions:

NEED FOR CONSOLIDATION
- Ineffectiveness, small operating units
- Many private small parcels
- Actual small farmers
- Other private landowners and the state, the church and others
- Occasional possibilities compared to locally operating agricultural companies

WISH FOR DEVELOPMENT LOCALLY

GOOD FRAMEWORK CONDITIONS

CENTRAL MARKET/SALE

LACK OF KNOW-HOW

LACK OF MANAGEMENT

WEAK CAPITALSTRUCTURE/-MODEL

Figure 3 – Business model and key roles

Investor
Purchase land
Purchase lease contracts
Direct lease
Machines
Machine centres, stables, storages etc.

FirstFarms invests in, operates and develops agriculture in Eastern Europe

Operator/entrepreneur
Organisation
Machinery
Operation
Optimisation
Joint operation with partners

Integrator
Rationalisation
Facilitator and promoter
Co-ordination of operators

Developer
Renovation
Scaling
New construction
Processing
Soil improvement

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Field production

The prices on grain and oilseed peaked in the first half of 2015 and decreased in the second half of 2015. FirstFarms had according to the recognised policies chosen to sell a part of the expected harvest in the spring 2015 and during the harvest period at budgeted prices or higher. This hedged that the price variations was not fully passed on to the final realised crop prices. FirstFarms expects that the prices in 2016 will correspond to the prices realised in 2015 and is therefore expected to be at a satisfactory level.

FirstFarms realised a very satisfactory harvest in East Romania in 2015. In Slovakia and West Romania, FirstFarms realised a satisfactory harvest for wheat and rape, whereas the yields for maize, sugar beets and sunflower was on a significantly lower level than normal due to a long drought period over the summer.

In the growth season 2015/2016, all winter crops in Slovakia and Romania are well-established, and there has been satisfactory amounts of rain until the end of 2015. The foundation for a satisfactory yield in the field production in 2016 is therefore in place for the first half of the growth season.

There are ongoing improvements and maintenance of the operational area. This is done through cleaning and establishing channels (35-50 kilometers yearly), compactation of fields and also cutting and trimming of bushes and trees in field boundaries. All costs are paid continuously as maintenance and not activated in the annual accounts.

In figure 4, FirstFarms' commercial main sources and focus areas to create value are illustrated. The key words are growth, skills, efficiency and compliance within field production and thus here creating more value on the crops, dairy hear and land development.

Figure 4 – Value creation

Milk production

In 2015, FirstFarms has delivered 21.8 million kg milk compared to 24.2 million kg in 2014, and in 2016 a delivery of 24.0 million kg is expected. In Q4 2015, the production per milking cow was 29.8 kg sold milk compared to 28.5 kg ECM in Q4 2014. In 2016, a daily production per cow is expected to be 30 kg ECM. To reduce costs, it has been chosen, at the end of 2014, to change the number of milkings per day from 3 to 2. The production has been kept more or less unchanged from 2014 to 2015, despite the decrease in number of milkings.

The milk price decreased drastic from end of 2014, and in 2015 it has been in the range of DKK 2.22 to DKK 1.84. The average sales price in 2015 has constituted DKK 1.98 per kg compared to DKK 2.61 per kg in 2014. FirstFarms has during the years 2011 to 2014 achieved an average price of DKK 2.49 per kg.

A low milk price is expected in 2016 on basis of the present market conditions for milk products and with a budgeted average settled milk price of DKK 1.97 per kg in 2016. There is a great uncertainty about the market conditions for milk and thus the expected price. FirstFarms adapts in necessary extent to the framework conditions and therefore only a minimum of optimising operational investments are made.

Grants

FirstFarms receives EU-grant to the milk production in Slovakia. The grant in 2015 is DKK 4.6 million compared to DKK 3.6 million in 2014.

Hectare grant is given for cultivating the land in both Slovakia and Romania. The EU-grants are expected to increase on basis of the Agricultural reform 2014-2020 from EU.

FirstFarms has received grants to investments in Slovakia from EU's structural funds. The grants are credited concurrently as the assets are depreciated.

The total public grants in 2015 constituted DKK 30.3 million compared to DKK 30.7 million in 2014. At the end of 2015, there is a receivable subsidy of DKK 23.1 million compared to DKK 10.0 million at the end of 2014.

Balance and cash flow

In 2015, the return on FirstFarms' equity was -6.9 percent compared to 2.7 percent in 2014.

Cash flow from primary operation constitutes DKK -4.9 million in 2015 compared to DKK 4.4 million in 2014.

Investments

In 2015, FirstFarms has carried out maintenance- and profitability improving investments in existing operating systems. Investment has been done in building up our machine park in West Romania. There is also purchased land in our operational areas. In total, investments constituted DKK 38.5 million – of which land and buildings DKK 22.7 million.

In East Romania, a silo plant with capacity for 10,000 tons crops, with dryer and cleaner and railway connection is bought. The plant was taken over in the spring 2015 and is renovated towards harvest, so it today stands completely operational and has contributed to an improved profitability in the operation for 2015

In 2016, only maintenance- and profitability improving investments in operating equipment and buildings will be made. There will unchanged be additional investment in agricultural land and land lease contracts as part of the strategic goal.

In general, pressure on the settlement prices has entailed, that FirstFarms has reordered the priorities of the investment plans continuously. The crop center expected established in Slovakia in 2015, and which was to be partly finished for the harvest in 2015, is thus postponed.

Interest-bearing debt

The interest-bearing debt in FirstFarms is DKK 159 million and corresponds to 52 percent of the equity and 30 percent of the balance sum.

Exchange rate adjustment

FirstFarms operates in Slovakia and Romania and is therefore influenced by fluctuations in the exchange rates on EUR and RON. Denmark has a fixed exchange rate policy in correlation to EUR, so DKK only varies within a fixed margin and the uncertainty on EUR is thus limited.

During 2015, the RON has decreased approx. 0.75 percent compared to DKK.

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The negative adjustment of the exchange rate has given a decrease in the company's equity of DKK 0.7 million.

Slovakia

Milk production

Sold amount of milk is reduced by 2.4 million kg in 2015 compared to 2014. Thus, 21.8 million kg was delivered from FirstFarms in 2015. On a daily basis, 29.8 kg milk per milking cows is delivered at the end of 2015 compared to 28.5 kg at the end of 2014.

There is great focus on the cost per produced kg milk. The net cost before interests and depreciations has in 2015 entailed DKK 2.05 per produced kg milk, which is considered to be competitive in European milk production.

Figure 5 – Development in FirstFarms' sale of milk in Slovakia

Source: FirstFarms

The production per cow was increasing slightly during 2015. FirstFarms strives towards and expects an increase in 2016. The stock of milking cows was at the end of 2015 2,357 compared to 2,311 at the end of 2014. At the end of 2016, 2,500 milking cows are expected. The increase will happen through own breeding.

In 2016, a total delivery of 24.0 million kg milk is expected from FirstFarms, which is an increase of 10 %. This is due to small optimisations of existing plants and increase in number of cows and increasing production per cows.

Field production

In 2015, the harvest in Slovakia was satisfactory for wheat, acceptable for rape and unsatisfactory for maize and beets, which was negatively influenced by a very drought period in the growth season.

Land

In 2015, approx. 9,300 hectares of land was cultivated in Slovakia, of which FirstFarms owns 587 hectares at a booked value of DKK 25,738 per hectare. FirstFarms has bought 60 hectares of agricultural land in Slovakia in 2015.

It is FirstFarms' opinion, that the land price in Slovakia in 2015 has been constant.

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Figure 6 – FirstFarms in Slovakia

The main part of the cultivated land in Slovakia is leased land, and the leasing periods are between 1 and 15 years. The approx. 10,000 lease contracts divided on approx. 30,000 land plots are renewed on an on-going basis. The lease fee in Slovakia is on a relatively low level of approx. DKK 300 per hectare and thus it is still more beneficial to lease the land than to buy it. Approx. 20 % of the land is administrated by the state through a land fund. It is considered that, over time, this land will be offered for sale with pre-emptive rights for the users.

Romania

In 2016, the total cultivated area in Romania is expected to be 7,400 hectares compared to 6,500 hectares in 2015.

Field production – East

The harvest in East Romania has been very satisfactory with realised yields higher than budget.

In 2015, 3,200 hectares were cultivated and the area is in 2016 expected to increase to 3,500 hectares.

The sprout in the autumn 2015 has been satisfactory.

Field production – West

In 2014, FirstFarms started up a crop center in West Romania. The area is the owned land south of Timisoara of 1,600 hectares and 700 hectares of rent contracts. The total cultivated area was in 2015 budgeted to be 2,300 hectares but was actually 3,300 hectares through new rent contracts. The take-over of rent contracts in 2015 was done in the middle of the spring, which entailed complicated terms for the first growth season due to drought and limited possibilities for choice of crops.

In 2016, 3,900 hectares are expected to be cultivated.

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Figure 7 – FirstFarms in Romania

Land

In 2015, FirstFarms has worked on compacting the owned land in the cultivation areas. At the end of 2015, FirstFarms owns 5,168 hectares of land in Romania, of which 95% is in land book and 5% with documented ownership but not in land book.

Trend in land prices

It is FirstFarms' assessment that the land prices in Romania in 2015 have been increasing. The number of trades is however still on a low level. The value of the land in Romania varies from area to area and according to quality and climatic conditions plus degree of compacting. The land is booked at DKK 18,345 per hectare compared to an estimated fair value of DKK 32,000 per hectare.

There are no official statistics for purchase and sale of agricultural land and there is no official evaluation of the land. It is therefore difficult to obtain confident comparable information about the land prices and the development in the land prices.

At the beginning of the year 2015, FirstFarms has conducted land evaluation of a part of the land in Romania, and this has been complemented with the company's own experiences with land prices to calculate the value of the company's land. The total value is in the range of DKK 167 million compared to a booked value of DKK 95 million.

Expectations for 2016

In 2016, FirstFarms expects an EBIT-result in the level of DKK 0 million.

Like in 2015, 2016 is expected to be a challenging year on the earning side for the milk production in EU. FirstFarms adapts these framework conditions continuously.

Crop prices are expected to be stabilised on par with the realised prices in 2015.

In 2016, the company will continue to work with optimisation of the operation, including a reduction of the uncertainty of cultivation in drought periods and expects an improved earning power.

Milk production and price

In 2016, FirstFarms expects to deliver 24.0 million kg milk. The milk production per cow is considered to be at a satisfactory level, whereas the number of cows is not at full capacity in 2016. The capacity is not expected to be fully utilised, until the milk price is satisfactory.

An average milk price of DKK 1.97 per kg is expected in 2016.

Figur 8 – Development in milk price

Source: FirstFarms

Production and prices on crops

In 2016, the prices on crops are expected to be on par with FirstFarms' realised prices for 2015.

In 2016, the settlement prices for grain (wheat, rye, maize and barley) are expected in the level of DKK 890 – 1,250 per tonne, depending on product and whether it is sold in Slovakia or Romania. A little lower price is expected in Romania.

The settlement prices for oilseed are expected in the level of DKK 2,500 – 2,600 per tonne.

The development in the prices for some of the company's main products is shown on the next pages.

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Figure 9 – Development in wheat price

Source: Matif (adjusted to local market conditions)

Figure 10 – Development in maize price

Source: Matif (adjusted to local market conditions)

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Figure 11 – Development in rape price

Source: Matif (adjusted to local market conditions)

Below in figure 13, FirstFarms' vision towards the year 2020 is described. The timeline and activities are not prioritised or time wise determined and must therefore only be seen as a possible frame for FirstFarms' development towards becoming one the most successful actors in the business.

Figure 12 – Vision

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Cash flow

In 2013, FirstFarms was provided with proceeds of DKK 50 million from convertible bonds with expiry March 2016. In 2015, a prolongation of this bond was offered, on unchanged terms, with 1 year with expiry March 2017. Owner of convertible bonds for DKK 31 million chose to accept the offer about prolongation.

Together with this prolongation and a satisfactory cash generation through the operations, it is expected to give FirstFarms a satisfactory cash resource in 2016.

In 2016, a cash resource is build up for a possible settlement of the owners of the convertible bond in March 2017, in case they do not wish a conversion into shares in FirstFarms.

FirstFarms is working on models for increasing the long-term cash resources; including possibilities for a new issuance of bonds.

An acceptable cash flow from the operation is expected in 2016 despite the unsatisfactory market situation for agricultural products in general. Primarily, investments are carried out of maintenance- and profitability improving character or with short repayment period.

FirstFarms has entered frame work agreements with banks in Slovakia, Romania and Denmark.

Investments

The investments in 2016 are expected to be maintenance- and profitability improving investments in existing plants and machines. Investments in agricultural land according to the land strategy plan are also expected.

Strategies have been prepared for the field production in Slovakia, East and West Romania and master plan for the animal production for the coming five years, including investment- and action plans, which support the visions for FirstFarms. In 2016, no significant investments due to these plans and strategies are expected.

Below in figure 14, FirstFarms' values are described; these are an essential part of the business culture.

Figure 13 – Values

Growth – scale the business with better bottom line
Seriousness – no details are too small, no effort is too big
Expertise – but keep it simple
Control of risks – take care of today, actively prepare for tomorrow

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Risk management

Market conditions

Settlement prices in agriculture (grain, oilseed, milk and cattle) and the company's operating costs (feed, fuel, energy and fertiliser) are affected by factors outside FirstFarms' control including global and local supply and demand conditions, storage volume and speculation in commodities. FirstFarms seeks to a certain extent to counteract these risks by freezing settlement prices and operating costs through entering contracts of longer duration.

If the terms of trade are deteriorated in a period with decreasing settlement prices and where the operating costs are not decreasing correspondingly or are increasing, FirstFarms' earnings will be under pressure.

Farm operation, including demand and prices on commodities and meat, is exposed to the economical development in the countries where FirstFarms operates and also towards the development in the global economy. Economical decline or recession can therefore influence the demand for the company's products.

Disease in crops and livestock

Disease in crops or livestock makes up potential risks for FirstFarms as the company has a considerable livestock and a large crop production. The livestock is exposed to diseases. FirstFarms comply with the veterinary rules at all times in the countries where FirstFarms is represented, including the use of a supervising veterinary, and in addition to that the company has an animal manager who on a daily basis inspects the livestock.

Besides diseases in the company's own livestock, FirstFarms may also be affected by diseases from farms nearby. According to EU's "Zoonoses Directive", diseases in livestock nearby FirstFarms' facilities can entail that the company can be subject to zone restrictions, which have the purpose to dike the disease which among other things could cause slaughtering of FirstFarms' livestock. FirstFarms has taken out insurances on animals affected by disease. However, the insurance does not cover operating losses resulting from diseases in the herd. To minimise risk, the company has prepared an infection protection plan.

FirstFarms is also exposed to diseases in the crops including fungus and pests. The company seeks to minimise the risk for diseases in the crops through an active and good management of the field production with consideration to special conditions in each individual country and using the correct adjuvant. No insurance has been written on diseases in the crops.

Climate

The company operates in 3 climatic zones, and FirstFarms can as an agricultural company be influenced by the weather conditions in Slovakia and East and West Romania, respectively. Periods with drought, large precipitations or other unfavourable weather conditions can affect the crops in both the growth season and harvest period. This risk is larger in Central Europe than in i.e. Denmark. Bad or unusual weather conditions can result in lower quantity of crops produced or that specific areas cannot be harvested. Bad weather conditions can also have a negative impact on the productivity in the animal production as cattle i.e. can get heat stress, for which reason a lower quantity of milk is produced.

Purchase of agriculture and land

Changes in legislation

In Slovakia a considerable part of the agricultural land is owned by institutions such as churches, municipalities and SPF; a Slovakian land foundation who administers land with unknown owners. These institutions rent land to a range of agricultural companies, including FirstFarms, as they are not allowed to sell their land. There is a political wish to change the present legislation so it among other things will be possible for the institutions/landowners to sell their land. When this happens there will, without doubt, arise a more transparent and liquid market but at the same time there is a possibility that an oversupply of land will occur, which can

contribute to lower pricing on land. In case the legislation is changed, FirstFarms expects to get pre-emptive right to the rented land, and FirstFarms wants to utilise this.

FirstFarms owns a large part of the land, which the company cultivates in Romania. Through a number of years considerable purchases of agricultural land have been made, primarily by foreign investors

In both Slovakia and Romania, changes have been made in the legislation regarding purchase of land, so that the land shall be offered with pre-emptive rights for the farmers in the area.

In 2015, FirstFarms has purchased 236 hectares and sold 102 hectares.

Lease of land

All land not owned by FirstFarms is cultivated based on land lease contracts. In Slovakia the company has leased approx. 8,800 hectares of land, whereas approx. 2,400 hectares of land is leased in Romania. The lease contracts have a life of 1-15 years and are entered into over a number of years. It is the company's expectation that there is a limited risk, that the land cannot be re-rented or alternatively bought as a result of the limited alternatives to the present owners.

Spraying in FirstFarms Slovakia

Development in land prices

FirstFarms owns 587 hectares of land in Slovakia and in Romania the company owns 5,168 hectares of land. The value of the purchased land is today estimated to be higher than the accounting value, which is DKK 15 million in Slovakia and DKK 95 million in Romania. The development in the price of land is affected by a number of factors including supply, demand, loan possibilities, land reforms and national measures which are all outside FirstFarms' control.

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Environment

FirstFarms' activities, including agricultural operation, storage of fertilizers and chemicals and delivery and use of fertilisers and chemicals, are subject to a number of environmental legislations and rules. The company has taken out insurances on environmental pollution and runs agricultural operation according to rules in force in EU and at national level. As a result of the company's activities within agricultural operations and even though FirstFarms observes legislation and rules in force, there is no absolute guarantee that land and buildings are not/will not be polluted.

Before takeover of new agricultural companies and in connection with preparation and implementation of environmental plans of actions, FirstFarms enters into dialogue with the relevant authorities, which contribute to limit the risk of environmental affairs before the plan of action is carried out. It can involve a risk to the company, if changes in the respective countries are made in environmental requirements to production or operation and demands for animal welfare. Changes or tightening of the environmental requirements can i.e. involve a need for change of operations to invest in environmental improvements.

Milk quota and support schemes

Milk quota

The quota is discontinued 31 March 2015. Thus there is no longer production limitation of milk in EU.

EU's agricultural support schemes

FirstFarms applies for and has continuously received EU grants, which includes direct grants given in proportion to objective criteria (including hectare subsidy) as well as discretionary support schemes (structural grants) which typically are distributed by the national authorities. No guarantee can be given that grants from the discretionary support schemes can be obtained, just as an obligation to pay the grant back is normally attached to these, if the company does not fulfil a number of conditions.

Legal conditions

Both Romania and Slovakia are members of EU and the countries are therefore subject to the same risks as any other agricultural production in EU. However the legal systems in these countries are on several areas quite different and less developed than in i.e. Denmark and other Western European countries. FirstFarms is therefore exposed to legal risks in Romania and Slovakia, also in connection with purchase, investments, rent of land and entering purchase and sales contracts. There is thus a risk of delays in implementation of EU directives which can create uncertainty concerning law in force especially by interaction with local authorities. Furthermore lack of land registers and weak administrative systems in general in both Romania and Slovakia means that uncertainty concerning ownership of or rights to land areas can occur. Contracts entered in connection with purchases and investments are typically subject to local legislation and the contracts are often entered in local language. FirstFarms is thus very dependent on its local advisors, including their qualifications.

Political conditions

The political systems in Romania and Slovakia are considerably different than i.e. Denmark and other Western European countries. Foreign companies operating in these countries are exposed to political interventions, initiatives and actions that can influence their operation and business concept. Also conditions like disturbances in the labour market and political unrest can affect companies operating in Eastern European countries. So far FirstFarms has not been affected by political measures.

Exchange rate

By investment in and operation of agricultural companies in Eastern Europe, FirstFarms is exposed in foreign currency. To minimise this exposure, the company takes out loans to a certain extent in the currency used in the country of investment.

There is exchange rate risk attached to sale of - and dividend from - the Eastern European subsidiaries, as the exchange rates are fluctuating. The exchange rate risk is lowest in Slovakia where the euro in January 2009 was implemented, whereas a larger risk is attached to the exchange rate in Romania. Sunflower is sold with basis in USD and is thus an exchange rate risk. This is assessed regularly hedged in relation to signed contracts.

Working conditions

Qualified employees

To be able to achieve and maintain an effective agricultural operation, FirstFarms is dependent on appointing and maintaining qualified employees. The company seeks to appoint leaders with agricultural knowledge from either Western farms or larger Eastern European farms in the purchased agricultural companies, whereas the production workers are local. FirstFarms aims at having the production companies sited near good infrastructure and larger cities to ensure that FirstFarms' local management finds it attractive to move to the area.

Payroll costs

The main part of the employees in FirstFarms is locals who are employed in the production in Slovakia and Romania. Payroll costs to these employees have historically been considerably low in proportion to more developed countries including Western Europe, but are under pressure and increasing payrolls are expected in the coming years. FirstFarms uses widely modern technology and machinery which entails that the number of employees in the production is relatively low. However the productivity is still lower than in Denmark, but FirstFarms is continuously working on improving this and it is also expected to be carried out concurrently with the payroll increases.

Industrial injury

FirstFarms' activities involve amongst others the use of chemicals, machinery, vehicles and other agricultural equipment, which can cause industrial accidents. The company has in general great focus on securing that the employees are receiving the statutory information and other training and education that FirstFarms and local advisors find necessary. Education is held on a running basis and at least once a year at the request of the company. To minimize the risk in the company, FirstFarms has taken out insurances on the necessary public liability and industrial injury.

Figure 14 – Business environment and risk characteristics

→ The produce
- Yield Variations
- Weather fluctuations (heat, drought, rain etc.)
- Plant diseases and insect attacks
- Animal diseases
- Price fluctuations on agricultural products
- Political impact

→ Cultivation arable land
- Dependant on local availability
- Increase in land price and rental costs
- Political decisions and legal limitations

→ Currency variations
- Romanian RON and USD

→ Other
- Price fluctuations on consumables, fertiliser, fuel, minerals etc.
- Different languages/cultures – with English as the corporate language

Shareholder information

Share capital

FirstFarms' nominal share capital is DKK 47,122,410 and is divided into 4,712,241 shares of DKK 10, corresponding to 4,712,241 voting rights.

Basic data
Stock exchange	NASDAQ OMX Copenhagen
Index	SmallCap
Sector	Consumer staples
ISIN code	DK0060056166
Short name	FFARMS
Share capital	DKK 47,122,410
Nominal denomination	DKK 10
Number of shares	4,712,241
Negotiable securities	Yes
Voting right restriction	No
Share classes	One

Shareholder composition

As per 31 December 2015, FirstFarms had 2,941 shareholders. The majority is Danish investors, whereas 78 shareholders are registered outside Denmark. As per 31 December 2015, the name register share in the company's owner book was 96.70 percent. 2 shareholders own more than 5 percent of the share capital.

Shareholders	No. of shares (pcs.)	Capital (%)
Henrik Hougaard	706,860	15.0
Olav W. Hansen	339,934	7.2
Other registered shareholders	3,509,943	74.5
Non-registered shareholders	155,504	3.3
Own shares	0	0.0
Total	4,712,241	100.0

Capital structure

The company's Management reviews FirstFarms' ownership and capital structure on an on-going basis. The company does not hold any of its own shares, which is why the percentage of negotiable FirstFarms shares, or the free float, is 100 percent. On the ordinary general meeting on 21 April 2015, authority was given to the company to acquire up to 10 percent of own shares. The authority was not used in 2015. In connection with the issuance of warrants for the company's Management and for employees in Denmark and abroad, FirstFarms' Board of Directors is authorised to carry out the capital increase associated with the warrants. Until 28 April 2016, the Board of Directors has authority to issue 60,000 share options corresponding to nominal DKK 600,000. On 18 may 2015, the Board of Directors issued 60,000 warrants.

Furthermore, the Board of Directors is authorised to in the period until 28 April 2016, in one or more stages, to issue up to 1,500,000 shares corresponding to nominal DKK 15,000,000 through cash payment, by contribution of assets other than cash (non-cash contribution) or conversion of debt or through a combination thereof. The capital increase must be effected at market price – with or without pre-emption rights for the Company's shareholders.

In 2013, FirstFarms issued convertible bonds at a total of nominal DKK 50 million. The bonds ran up to and including 15 March 2016 for nominal DKK 19 million and up to and including 15 March 2017 for nominal DKK 31 million. The interest is 6 percent p.a. As from 11 November 2014, the bonds could be converted into shares at a rate of 42.78 per share corresponding to the value of share at the time of issue. In case bond

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owners with expiry on 15 March 2017 wish to convert the outstanding amount according to this bond with effect from 2 January 2017 at 5 p.m. Danish time, notice hereof shall be given to FirstFarms at the latest one week after release of FirstFarms' interim financial report for Q3 2016.

Convertible bonds for nominal DKK 19 million with expiry 15 March 2016 are redeemed at price 100.

Shareholdings of Management and Board of Directors

As on 31 December 2015, the Management and the Board of Directors of FirstFarms A/S held, direct or indirect, nominally 764,996 shares which are divided as follows:

Name	No. of shares
Henrik Hougaard	706,860 pcs.
Jens Bolding Jensen	10,097 pcs.
Bent Juul Jensen	3,600 pcs.
Asbjørn Børsting	14,575 pcs.
Anders H. Nørgaard	29,864 pcs.

No special redundancy payment has been made for the Management and Board of Directors in FirstFarms A/S.

Dividend

FirstFarms' goal is to secure the necessary equity to finance the operation of the company and that surplus capital can be distributed to the shareholders through dividend or share buy-back. The shareholders shall have a return on their investments in the form of share price increases and dividends.

The FirstFarms share

As per 1 January 2015 the share price was 44.60 and the FirstFarms share closed at price 41.10 at 30 December 2015. At the end of the year the market value was DKK 193.7 million and the share price decreased by 7.8 percent. In the same period the Danish smallcap-index, in which the FirstFarms share is traded, increased by 20 percent. In 2015, the average share turnover was DKK 215,109 per business day.

Share price development 2015

Source: Nasdaq OMX

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Insider register

In accordance with the Danish Securities Trading Act and other rules and regulations that apply to listed companies at NASDAQ OMX Copenhagen, FirstFarms keeps an insider register of persons who have access to internal knowledge regarding the company. The insider register comprises the Board of Directors, Management and other key staff in Denmark and in foreign subsidiaries, as well as advisors in the FirstFarms Group. These persons are subject to internal rules which, among other things, specify that they are only allowed to trade FirstFarms shares for a period of four weeks after the publication of company announcements on the company's accounts, provided that they do not have any knowledge of confident information that could have influence on the price of the company's shares (open window).

Financial calendar for 2016
22 March 2016	Annual report 2015
26 April 2016	Annual general meeting
24 May 2016	Interim financial report for 1 January – 31 March 2016
30 August 2016	Interim financial report for 1 January – 30 June 2016
29 November 2016	Interim financial report for 1 January – 30 September 2016

Annual general meeting

FirstFarms' annual general meeting is held on Tuesday 26 April 2016 at 3.00 p.m. at Jysk Landbrugs-rådgivning, Majsmarken 1, DK-7190 Billund. The notice will be forwarded to all registered shareholders, who have given their e-mail address to the company. Furthermore, the notice will be forwarded to those who have signed up for FirstFarms news service, just as the notice will be available on the company's website www.firstfarms.com.

Investor Relations

FirstFarms' goal is to maintain an open, continuous and service oriented dialogue with current shareholders, potential investors, analysts, the media and other stakeholders. Through this dialogue and by passing on open and relevant information, FirstFarms tries to secure the best possible conditions for correct pricing of the share. The company's website is an important tool and FirstFarms thus urges its investors and other stakeholders to visit the company's website www.firstfarms.com where shareholders' portal, company announcements, financial calendar and other investor-related information, but also information about FirstFarms' history, organisation, values and objectives can be found.

Dialogue and contact

Visit the company's website www.firstfarms.com under the section "Investor Relations", which contains information to shareholders and other stakeholders, or sign up for the company's news service on www.firstfarms.com/investor-relations/news-service/. If any questions, comments or inquiries regarding Investor Relations, please contact CFO Jørgen Svendsen via [email protected] or on telephone +45 75 86 87 87.

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Company announcements from FirstFarms A/S

Published company announcements in 2015

Date	Number	Announcement
26 March 2015	1	Annual report 2014
30 March 2015	2	Notice to convene the annual general meeting in FirstFarms A/S
9 April 2015	3	Report on insiders trade with FirstFarms A/S' shares
10 April 2015	4	Report on insiders trade with FirstFarms A/S' shares
13 April 2015	5	Report on insiders trade with FirstFarms A/S' shares
13 April 2015	6	Premium of 0.5 % by early request for conversion of convertible bond
14 April 2015	7	Expansion of cultivated area in Romania - intention about cooperation with DCH International A/S
21 April 2015	8	Progress of annual general meeting in FirstFarms A/S
18 May 2015	9	Interim financial report for 1 January – 31 March 2015 for FirstFarms A/S
18 May 2015	10	Allocation of warrants to management and employees in FirstFarms A/S and in the company's subsidiaries and change of Articles of Association
27 May 2015	11	Discontinuation of negotiations with DCH International A/S
29 May 2015	12	Shareholder announcement – Thoraso ApS
4 June 2015	13	Report on insiders trade with FirstFarms A/S' shares
10 June 2015	14	Report on insiders trade with FirstFarms A/S' shares
10 June 2015	15	Major shareholder announcement – Skiold Holding ApS
10 June 2015	16	Major shareholder announcement – Thoraso ApS
11 June 2015	17	Report on insiders trade with FirstFarms A/S' shares
27 August 2015	18	Interim financial report for 1 January – 30 June 2016 for FirstFarms A/S
28 August 2015	19	Report on insiders trade with FirstFarms A/S' shares
11 September 2015	20	Report on insiders trade with FirstFarms A/S' shares
14 September 2015	21	Report on insiders trade with FirstFarms A/S' shares
3 November 2015	22	FirstFarms A/S offers prolongation of convertible bonds
26 November 2015	23	Interim financial report for 1 January – 30 September 2015 for FirstFarms A/S
26 November 2015	24	Financial calendar 2016 for FirstFarms A/S
30. november 2015	25	Shareholder announcement– Olav W. Hansen
3. december 2015	26	Report on insiders trade with FirstFarms A/S' shares
4. december 2015	27	Prolongation of convertible bonds and insiders trade with convertible bonds in FirstFarms A/S
16. december 2015	28	Report on insiders trade with FirstFarms A/S' shares
16. december 2015	29	Major shareholder announcement– Henrik Hougaard

Published company announcements in 2016

Date	Number	Announcement
22 March 2016	1	Annual report 2015

Expected company announcements in 2016

Date	Number	Announcement
26 April 2016		Annual general meeting
24 May 2016		Interim financial report for 1 January – 31 March 2016
30 August 2016		Interim financial report for 1 January – 30 June 2016
29 November 2016		Interim financial report for 1 January – 30 September 2016

The Board's other management tasks

Name	Management functions	Board functions
Henrik Hougaard (CH)
Born 1958, entered 2004	Thoraso ApS
SKIOLD Holding ApS
Skaarupgaard Skov ApS
Henrik Hougaard Invest ApS	SKIOLD A/S (CH)
Graintec A/S (CH)
Engsko A/S (CH)
United Milling Systems A/S (CH)
Scandinavian Farms Invest A/S (CH)
Danagri-3S Ltd. (CH)
DK-TEC A/S (CH)
Fortin Madrejon A/S (CH)
Thoraso ApS
Skovselskabet Rumænien A/S
Tolne Skov ApS
Jens Bolding Jensen
Born 1963, entered 2013	BPI A/S (+36 positions in subsidiaries)
Westcon ApS	HP Schou A/S
HP Schou Holding A/S
Jørgen Schou Holding A/S (+2 positions in subsidiaries)
Schou Ejendomme A/S
Schou Invest Kolding A/S
Royal Oak K/S
Schou Golf K/S
Schou Holding A/S
Schou Absolute Horses A/S
Schou I/S
Vision Properties A/S
Schou Republic A/S
Out-Net A/S
Outnet Direct A/S
John Christian Aasted
Born 1961, entered 2013	Aasted Consult - Aalborg	Sv. Aage Christiansen A/S (BF)
Nørresundby Bank A/S
SKIOLD A/S
Graintec A/S
System Cleaners A/S
SC Holding 2013 A/S
Gisselfeld Kloster
Bent Juul Jensen
Born 1953, entered 2013
Asbjørn Børsting
Født 1955, indtrådt 2014	DAKOFO
Sammenslutting af Danske
Sortsejere
NKB Invest 101 ApS	DLF-Trifolium A/S
Crop Innovation Denmark (BF)
Danæg Holding A/S
Danæg amba
Munax OY
Grøngas A/S
Karl Pedersen og Hustrus Industrifond
EUDP (Energi-, Forsynings- og Klimaministeriet)

CH = Chairman of the Board

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Group structure

All subsidiaries are 100 percent owned by the FirstFarms Group.

Statement for corporate social responsibility

FirstFarms aims to produce agricultural products of high quality. The production must be done in a way, so that focus is maintained on environment and animal welfare. Through the local production FirstFarms also contributes to streamline the agriculture in the concerned regions and to generate production with benefit to the local population.

FirstFarms thus continuously operates commercial to increase the social advantages and minimize the liability of social resources.

Environment

At present, FirstFarms produces crops and milk. The production of crops is carried out according to the local rules and the rules in EU, as both Slovakia and Romania are members of EU. Hence there are a range of requirements regarding use of spray pesticides and fertiliser, both organic and non-organic fertiliser, which the company must meet. Logbooks are kept of the usage according to the local rules. The local employees are trained in correct handling of fertiliser and spray pesticides. FirstFarms experiences improvements of the land over time, when it has been cultivated for a number of years. Fewer pesticides are used and the yields are increasing.

FirstFarms cattle stables in Slovakia with appurtenant capacity to handle manure fulfil the present requirements from EU and the Slovakian authorities. The modern plant with manure separation gives a better utilisation of the manure and a more proper environmental handling.

Our self-monitoring and the supervision from the authorities have shown that FirstFarms complies with regulatory requirements.

FirstFarms in West Romania

Animal welfare

FirstFarms places great emphasis on animal welfare, and focus is on animal welfare in the daily established routines for the association with cows and young cattle. Focus is on correct transportation of the animals according to the rules in EU and requirements to external collaborators to comply with rules.

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Medication is carried out according to the local rules, and the medicine is stored under the control of the inspecting veterinary. Cows treated with medicine are milked separately, so that no milk with medicine residues is delivered to the dairies.

FirstFarms has not determined a policy for respect for human rights and for reduction of the climate impact.

Goals for the underrepresented sex

Today, the company has no women on the Board of Directors. It is the company's goal over the next 2 years that at least one board member must be a woman. In 2015, no members of the Board of Directors were replaced. Due to the number of employees in the Parent Company, no goals have been stated about other managerial positions.

Statement for corporate governance cp. the accounts act's section 107b

The complete statement can be downloaded from the company's website:

http://www.firstfarms.com/investor-relations/firstfarms-corporate-governance/corporate-governance-annual-report-2015/.

Below is an excerpt from the statement.

The statement is divided in three sections:

A statement for FirstFarms A/S' work with Recommendations for good corporate governance
A description of the main elements in FirstFarms A/S' internal control- and risk management systems in connection with the presentation of accounts
A description of the composition of FirstFarms A/S' management bodies, their committees and their duties

Recommendations for good corporate governance

Corporate Governance is the frames and guidelines for the management of companies including overall principles and structures, which adjust the relation between the management organs in the company. The purpose is to establish good corporate governance i.e. by creating transparency and openness, so that the companies' interested parties receive relevant, true and fair information about the company.

FirstFarms is a Danish listed limited company, subject to regulation of i.e. the stock exchange legislation and the Companies Act in Denmark. "Recommendations for good corporate governance", prepared in 2005 and revised and updated in May 2013, is a part of the code of practice for listing on NASDAQ OMX Copenhagen. FirstFarms has, according to the "comply-or-explain" principle, obligation to comply with the recommendations or explain why the recommendations are not complied with completely or partly.

FirstFarms has chosen not to appoint a vice-chairman for the Board of Directors, and it is also decided that the Board of Directors handles the tasks of the audit committee.

In 2015, FirstFarms' Board of Directors has held 9 board meetings.

The main elements in the Group's internal control- and risk management systems in connection with the presentation of accounts

The Board of Directors and the Management have the overall responsibility for the Group's risk management and internal control in connection with the process of presentation of the accounts including the compliance with the relevant legislation and other regulation in relation to the presentation of the accounts.

The Group's risk management and internal controls in connection with the process of presentation of the accounts has been adjusted for the Group's limited staff in the finance department and can only generate fair, but not absolute, certainty that misappropriation of assets, loss or considerable errors or defects in connection with the process of presentation of the accounts is avoided.

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Control environment

At least once a year, the Board of Directors evaluates the Group's organisational structure and staff on essential areas.

The Board of Directors has adopted politics and procedures within essential areas in connection with presentation of the accounts. The procedures are communicated to the subsidiaries to secure the compliance of the guidelines and policies.

Risk assessment

At least once a year, the Board of Directors and the Management carry out an overall risk assessment in connection with the process of presentation of the accounts.

Seeder FirstFarms East Romania

As part of the risk assessment, the Board of Directors and the Management commit themselves once a year to the risk of frauds and to the measures to be taken in regards to reducing or eliminating these risks. At significant acquisitions, an overall risk analysis is carried out for the newly purchased company. Immediately after the takeover the most significant procedures and internal controls in connection with the presentation of the accounts in the newly purchased companies are examined.

Control activities

The control activities have their basis in the risk assessment. The goal of the Group's control activities is to secure that the defined goals, policies and procedures outlined by the Management are fulfilled and in time so that any errors, deviations and defects can be discovered and remedied. The control activities include manual and physical controls and general IT-controls and automatic application controls in the applied IT-systems etc.

There are minimum requirements for proper protection of assets and to reconciliations and analytic financial audit including continuous evaluation of goal achievement.

The Management has established a formal process of Group reporting which includes continuous reporting. Besides income statement and balance sheet the reporting also includes notes and additional information. Information for the use of fulfilment of any note requirements and other information requirements is gathered continuously.

FirstFarms' managing director is also managing director in the Slovakian and Romanian subsidiaries, and follow-up is hereby close to the activities in the subsidiaries, where the Group's operations are.

Information and communication

The Board of Directors has adopted an information and communication policy which among other things overall determines the demands for the presentation of the accounts and to the external financial reporting in accordance with the legislation and the regulations for this. One of the goals with the Board of Director's adopted information and communication policy is to secure that present information obligations are followed, and that the submitted information are adequate, complete and precise.

The Board of Directors emphasises that within the frames that applies to listed companies, there is an open communication in the company and that the individual employee knows his/her role in the internal control in the company.

Supervision

Every risk management and internal control system shall continuously be supervised, controlled and quality assured to safeguard that it is effective. The supervision takes place continuously. The extent and the frequency of the periodical evaluations depend primarily on the risk assessment for this and the efficiency of the on-going controls. Any weak points are reported to the Management. Essential circumstances are also reported to the Board of Directors.

The auditors elected on the annual general meeting report essential weak circumstances in the Group's internal control system in connection with the process of presentation of the accounts in the audit report to the Board of Directors. The Board of Directors supervises that the Management reacts efficiently on any weak points or defects and takes care that agreed initiatives in relation to strengthening risk management and internal controls in relation to the process of presentation of the accounts are implemented as planned.

Composition of the Groups management bodies, their committees and duties

Information about the company's Board of Directors is found on p. 25. Furthermore, reference is made to corporate governance, which can be seen or downloaded on the company's website.

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Management statements

Management statement

Today the Board of Directors and the Management have discussed and approved the annual report for 2015 of FirstFarms A/S.

The annual report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual report of listed companies.

We consider the accounting policies used to be appropriate. Accordingly, the annual report gives a true and fair view of the Group's and the parent company's financial position at 31 December 2015 and of the results of the Group's and the parent company's operations and cash flows for the financial year 1 January – 31 December 2015.

Further, in our opinion the Management's review gives a fair review of the development in the Group's and the parent company's operations and financial matters, the results of the Group's and the parent company's operations and financial position as a whole and describes the significant risks and uncertainties pertaining to the Group and the parent company.

We recommend the annual report to be approved at the annual general meeting.

Billund 22 March 2016

Management

Anders H. Nørgaard
CEO

Board of Directors

Henrik Hougaard
Chairman

Jens Bolding Jensen

Asbjørn Børsting

John Chr. Aasted

Bent Juul Jensen

Independent auditors' report

To the shareholders of FirstFarms A/S

Independent auditors' report on the consolidated financial statements and the parent company financial statements

We have audited the consolidated financial statements and the parent company financial statements of FirstFarms A/S for the financial year 1 January – 31 December 2015. The consolidated financial statements and the parent company financial statements comprise income statement, statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes for the Group as well as for the parent company. The consolidated financial statements and the parent company financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies.

Management's responsibility for the consolidated financial statements and the parent company financial statements

Management is responsible for the preparation of consolidated financial statements and parent company financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies and for such internal control that Management determines is necessary to enable the preparation of consolidated financial statements and parent company financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' responsibility

Our responsibility is to express an opinion on the consolidated financial statements and the parent company financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statements and the parent company financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements and the parent company financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements and the parent company financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company's preparation of consolidated financial statements and parent company financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the consolidated financial statements and the parent company financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our audit has not resulted in any qualification.

Opinion

In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the Group's and the parent company's financial position at 31 December 2015 and of the results of the Group's and the parent company's operations and cash flows for the financial year 1 January – 31 December 2015 in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies.

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Statement on the Management's review

Pursuant to the Danish Financial Statements Act, we have read the Management's review. We have not performed any further procedures in addition to the audit of the consolidated financial statements and the parent company financial statements. On this basis, it is our opinion that the information provided in the Management's review is consistent with the consolidated financial statements and the parent company financial statements.

Aarhus, 22 March 2016

Ernst & Young P/S
Godkendt revisionspartnerselskab
CVR: 30 70 02 28

Jes Lauritzen	Søren Jensen
State Authorised	State Authorised
Public Accountant	Public Accountant

Income statement

	Note	Group		Parent company
DKK 1,000		2015	2014	2015	2014
Net turnover	3,4	111,841	125,008	250	250
Value adjustments of biological assets	5	-15,953	13,407	0	0
Production costs	6	-131,688	-146,245	0	0
Grants	7	30,253	30,692	0	0
Gross profit/loss		-5,547	22,862	250	250
Other operating income	8	908	7,445	0	0
Administration costs	6	-9,540	-10,295	-5,075	-6,433
Other operating costs	9	-478	-840	0	0
EBIT-result		-14,657	19,172	-4,825	-6,183
Financial income	10	602	80	3,567	5,864
Financial costs	11	-8,408	-7,753	-3,811	-4,078
Pre-tax result		-22,463	11,499	-5,069	-4,397
Tax on net profit	12	486	-2,672	1,110	1,007
Net profit		-21,977	8,827	-3,959	-3,390


Earnings per share	13	-4.66	1.87	-	-
Diluted earnings per share	13	-4.00	1.50	-	-

Total income statement

	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Net profit	-21,977	8,827	-3,959	-3,390
Other total income
Items that can be reclassified to the income statement:
- Exchange rate adjustments by conversion of foreign units	-650	-916	0	0
- Tax of other total income	0	0	0	0
Other total income after tax	-650	-916	0	0
Total income	-22,627	7,911	-3,959	-3,390

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Balance sheet

	Note	Group		Parent company
DKK 1,000		2015	2014	2015	2014
ASSETS
Non-current assets
Intangible assets	14
Goodwill		16,067	16,026	0	0
Land lease contracts		4,967	6,413	0	0
Milk quota		0	490	0	0
Total intangible assets		21,034	22,929	0	0

Tangible assets	15
Land and buildings		261,251	253,469	0	0
Plant and machinery		73,870	78,076	0	0
Fixtures and fittings, tools and equipment		1,253	1,183	87	119
Assets under construction and prepayments		8,466	2,002	0	0
Total tangible assets		344,840	334,730	87	119

Biological assets	5
Basic herd		23,693	23,230	0	0
Total biological assets		23,693	23,230	0	0

Other non-current assets
Investments in subsidiaries	16	0	0	249,174	249,174
Amount owed by affiliated companies	18	0	0	212,008	204,217
Deferred tax asset	20	12,687	12,695	0	0
Total other non-current assets		12,687	12,695	461,182	453,391

Total non-current assets		402,254	393,584	461,269	453,510

Current assets
Inventories	17	38,192	40,024	0	0
Biological assets
-breeding and crops	5	45,091	38,905	0	0
Receivables	18	8,512	7,733	0	0
Other receivables	7,18	29,251	18,008	308	408
Accruals an deferred expenses		1,463	2,488	25	33
Cash at bank and in hand	28	1,183	5,106	0	1,782
Total current assets		123,692	112,264	333	2,223

TOTAL ASSETS		525,946	505,848	461,602	455,733

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	Note	Group		Parent company
DKK 1,000		2015	2014	2015	2014
EQUITY AND LIABILITIES
Equity
Share capital	19	47,122	47,122	47,122	47,122
Reserve for decrease of share capital		0	424,102	0	424,102
Reserve for exchange rate adjustment		-22,124	-21,474	0	0
Transferred result		281,175	-121,020	346,944	-73,271
Proposed dividend		0	0	0	0
Total equity		306,173	328,730	394,066	397,953

Liabilities
Non-current liabilities
Deferred tax	20	8,472	9,315	4,347	5,457
Credit institutions	22	30,651	38,021	0	0
Convertible bonds	21	31,014	49,649	31,014	49,649
Total non-current liabilities		70,137	96,985	35,361	55,106

Current liabilities
Credit institutions	22	79,914	35,510	11,434	0
Convertible bonds	21	18,934	0	18,934	0
Trade payables and other payables	23	37,424	30,202	1,807	2,674
Corporation tax	24	262	411	0	0
Accruals and deferred income	7	13,102	14,010	0	0
Total current liabilities		149,636	80,133	32,175	2,674

Total liabilities		219,773	177,118	67,536	57,780

TOTAL EQUITY AND LIABILITIES		525,946	505,848	461,602	455,733
Accounting policies	1
---	---
Accounting estimates	2
Contingent liabilities, contingent assets and securities	25
Change in working capital	26
Non-cash transactions	27
Risks of exchange rate and interest	29
Operational leasing obligations	30
Related parties	31
Subsequent events	32
New accounting regulation	33

Equity statement

Group	Share capital	Reserve for decrease of share capital	Reserve for exchange rate adjustment	Transferred result	Proposed dividend	Total
DKK 1,000
Equity 1 January 2014	47,122	424,102	-20,558	-129,847	0	320,819
Total income 2014
Net profit	0	0	0	8,827	0	8,827
Other total income
Exchange rate adjustment re. conversion of foreign currency	0	0	-916	0	0	-916
Tax of other total income	0	0	0	0	0	0
Other total income	0	0	-916	0	0	-916
Total income	0	0	-916	8,827	0	7,911
Transactions with owners
Total transactions with owners	0	0	0	0	0	0
Equity 31 December 2014	47,122	424,102	-21,474	-121,020	0	328,730
Equity 1 January 2015	47,122	424,102	-21,474	-121,020	0	328,730
Total income 2015
Net profit	0	0	0	-21.977	0	-21.977
Other total income
Exchange rate adjustment re. conversion of foreign currency	0	0	-650	0	0	-650
Tax of other total income	0	0	0	0	0	0
Other total income	0	0	-650	0	0	-650
Total income	0	0	-650	-21.977	0	-22.627
Transactions with owners
Transfer	0	-424.102	0	424.102	0	0
Share based remuneration	0	0	0	70	0	70
Total transactions with owners	0	-424.102	0	424.172	0	70
Equity 31 December 2014	47.122	0	-22.124	281.175	0	306.173

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| Parent company
DKK 1,000 | Share capital | Reserve for decrease of share capital | Transferred result | Proposed dividend | Total |
| --- | --- | --- | --- | --- | --- |
| Equity 1 January 2014 | 47,122 | 424,102 | -69,879 | 0 | 401,345 |
| Total income 2014 | | | | | |
| Net profit | 0 | 0 | -3,390 | 0 | -3,390 |
| Other total income | 0 | 0 | 0 | 0 | 0 |
| Total income | 0 | 0 | -3,390 | 0 | -3,390 |
| Transactions with owners | | | | | |
| Total transactions with owners | 0 | 0 | 0 | 0 | 0 |
| Equity 31 December 2014 | 47,122 | 424,102 | -73,269 | 0 | 397,955 |
| Equity 1 January 2015 | 47,122 | 424,102 | -73,269 | 0 | 397,955 |
| Total income 2015 | | | | | |
| Net profit | 0 | 0 | -3,959 | 0 | -3,959 |
| Other total income | 0 | 0 | 0 | 0 | 0 |
| Total income | 0 | 0 | -3,959 | 0 | -3,959 |
| Transactions with owners | | | | | |
| Transfer | 0 | -424,102 | 424,102 | 0 | 0 |
| Share based remuneration | 0 | 0 | 70 | 0 | 70 |
| Total transactions with owners | 0 | -424,102 | 424,172 | 0 | 70 |
| Equity 31 December 2015 | 47,122 | 0 | 346,944 | 0 | 394,066 |

Cash flow statement

	Note	Group		Parent company
DKK 1,000		2015	2014	2015	2014
Pre-tax result		-22,463	11,499	-5,069	-4,397
Adjustments for non-monetary operating items etc.:
Depreciation/amortisation and impairment	6	23,758	22,039	32	43
Reversal of profit, sale of non-current assets	8,9	-503	-7,443	0	0
Value adjustment of biological assets	5	-6,405	-3,635	0	0
Financial income	10	-602	-80	-3,566	-5,864
Financial costs	11	8,408	7,753	3,811	4,078
Share based remuneration		70	0	70	0
Cash generated from operations (operating activities) before changes in working capital		2,263	30,133	-4,722	-6,140
Changes in working capital	26	-7,200	-25,751	-759	400
Cash flow from main activities		-4,937	4,382	-5,481	-5,740
Interest received		602	80	0	0
Interest paid		-8,109	-7,145	-3,510	-3,145
Paid corporation tax	24	-472	-1,102	0	0
Cash flow from operating activities		-12,916	-3,785	-8,991	-8,885
Acquisition and sale of biological assets, net	5	4,105	4,849	0	0
Disposal of material assets, paid		6,392	33,834	0	0
Acquisition of intangible assets		0	-6,282	0	0
Acquisition of tangible assets	27	-31,531	-38,768	0	0
Cash flow from investing activities		-21,034	-6,367	0	0
Proceeds from loans	27	-14,332	2,593	0	0
Loan to affiliated businesses		0	0	-4,225	-650
Cash flow from financing activities		-14,332	2,593	-4,225	-650
Cash flow of the year		-48,282	-12,745	-13,216	-9,535
Available, at the beginning		-30,404	-17,647	1,782	11,317
Exchange rate adjustment of available		-45	-12	0	0
Available at closing	28	-78,731	-30,404	-11,434	1,782
Available at closing is recognised as follows:
Available funds		1,183	5,106	0	1,782
Current bank debts		-79,914	-35,510	-11,434	0
Available at closing		-78,731	-30,404	-11,434	1,782

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Notes

1. Accounting policies

FirstFarms A/S is a public limited company domiciled in Denmark. The annual report for 2015 comprises both the consolidated financial statement of FirstFarms A/S and its subsidiaries for the period 1 January – 31 December 2015 and separate parent company financial statements. The annual report of FirstFarms A/S has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies.

The Board of Director and the Management have 22 March 2016 discussed and approved the annual report for 2015 of FirstFarms A/S. The annual report is presented to FirstFarms A/S' shareholders for approval on the annual general meeting 26 April 2016.

Basis for preparation

The annual report has been presented in DKK, rounded to the nearest thousand. The annual report has been prepared on the historical cost basis except for biological assets and financial instruments which are measured at fair value. The accounting policy set out below has been used consistently in respect of the financial year and to comparative figures.

Changes in accounting policies

FirstFarms A/S has implemented the standards and interpretations, which become effective for 2015.

None of the new standards and interpretations has affected or is expected to affect recognition and measurement and also not result and diluted result per share.

Consolidated financial statements

Consolidated financial statements comprise the parent company FirstFarms A/S and subsidiaries in which FirstFarms A/S has control, i.e. the power to govern the financial and operating policies so as to obtain benefits from its activities. Control is obtained when the company directly or indirectly holds more than 50 percent of the voting rights in a subsidiary or which it, in some other way, controls. Enterprises over which the Group exercises significant influence, but which it does not control, are considered associates. Significant influence is generally obtained by direct or indirect ownership or control of more than 20 percent of the voting rights but less than 50 percent. When assessing whether FirstFarms A/S exercises control or significant influence, potential voting rights which are exercisable at the balance sheet date are taken into account.

The consolidated financial statements have been prepared as a consolidation of the parent company and the individual subsidiaries' financial statements prepared according to the Group's accounting policies. On consolidation, intra-group income and expenses, shareholdings, intra-group balances and dividends, and realised and unrealised gains on intra-group transactions are eliminated.

Foreign currency translation

For each of the reporting enterprises in the Group, a functional currency is determined. The functional currency is the currency used in the primary economic environment in which the reporting enterprise operates. Transactions in currencies other than the functional currency are transactions in foreign currencies.

On initial recognition, transactions denominated in foreign currencies are translated to the functional currency at the exchange rates at the transaction date. Foreign exchange differences arising between the exchange rates at the transaction date and at the date of payment are recognised in the income statement as financial income or financial expenses.

Receivables and payables and other monetary items denominated in foreign currencies are translated to the functional currency at the exchange rates at the balance sheet date. The difference between the exchange rates at the balance sheet date and at the date at which the receivable or payable arose or was recognised in the latest annual report is recognised in the income statement as financial income or financial expenses.

On recognition in the consolidated financial statements of enterprises with another functional currency than Danish kroner, the income statements are translated at the exchange rates at the transaction date and the balance sheet items are translated at the exchange rates at the balance sheet date. An average exchange rate for the month is used as the exchange rate at the transaction date to the extent that this does not significantly distort the presentation of the underlying transactions.

Foreign exchange differences arising on translation of the opening balance of equity of such enterprises at the exchange rates at the balance sheet date and on translation of the income statements from the exchange rates at the transaction date to the exchange rates at the balance sheet date are recognised in other total income in a separate reserve for exchange rate adjustment. Foreign exchange adjustment of balances which are considered part of the investment in enterprises with another functional currency than Danish kroner are recognised in the consolidated financial statements directly in equity under a separate exchange rate adjustment reserve. Correspondingly, foreign exchange gains and losses on the part of loans and derivative financial instruments which are designated as hedges of investments in such enterprises and efficiently hedge against corresponding foreign exchange gains and losses on the investment in the enterprise are also recognised in other total income in a separate reserve for exchange rate adjustment.

On disposal of 100 percent owned foreign operations, the exchange rate adjustments accumulated in the equity through other total income, and which can be assigned to the unit, are reclassified from "Reserve for exchange rate adjustment" to the income statement together with any profit or loss at the disposal.

Repayment of debts, considered to be a part of the net investment, is not itself considered to be partial disposal of the subsidiary.

Income statement

Net turnover

Net turnover from the sale of commodities and finished products, comprising crops, animals and related products, is recognised in the income statement provided that delivery and transfer of significant risks and rewards to the buyer has taken place before year end and that the income can be reliably measured and is expected to be received. Revenue is measured ex. VAT and taxes charged on behalf of third parties. All discounts granted are recognised in revenue.

Government grants

Government grants include the following:

Hectare grants are recognised on a regular basis in the income statement concurrently as the right of grants is obtained. Until the grants have been received, typically at the end of the financial year or in the beginning of the subsequent financial year, these are recognised as other receivables in the balance sheet.

Grants for milk production are recognised on a regular basis in the income statement concurrently as the right of grants is obtained. Until the grants have been received, typically at the end of the financial year or in the beginning of the subsequent financial year, these are recognised as other receivables in the balance sheet.

Grants for investments/acquisition of assets are recognised in the balance sheet as deferred income and transferred to public grants in the income statement as the assets for which grants were awarded are amortized.

Grants for ecological cultivation are received annually and are recognised in the balance sheet as deferred income. The amount is transferred to public grants in the income statement at the end of the 5-year period where a final right for the grant is achieved.

Value adjustments of biological assets

Value adjustments of biological assets comprise value adjustment at fair value less point-of-sale costs.

Value adjustments are made for both livestock (non-current assets) and breeding and crops (current assets).

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Production costs

Production costs comprise costs incurred in generating the revenue for the year. Such costs include direct and indirect costs for raw materials and consumables, wages and salaries, rent and leases, depreciation and impairment of production plant and milk quota.

Administrative expenses

Administrative expenses comprise expenses incurred during the year for management and administration, including expenses for administrative staff, office premises and office expenses, and depreciation and impairment losses.

Other operating income and costs

Other operating income and costs comprise items secondary to the principal activities of the enterprises, including gains and losses on on-going disposal and replacement of intangible assets and property, plant and equipment. Gains and losses on disposal of intangible assets and property, plant and equipment are determined as the sales price less selling costs and the carrying amount at the selling date.

Financial income and expenses

Financial income and expenses comprise interest income and expense, gains and losses on securities and impairment of securities, payables and transactions denominated in foreign currencies, amortization of financial assets and liabilities, as well as surcharges and refunds under the on-account tax scheme. Dividends relating to investments in subsidiaries are recognised as income in the parent company's income statement in the financial year when they are adopted at the annual general meeting (declaration date). Similarly, decreases in value are expensed according to impairment test. Borrowing costs are activated as part of larger investments.

Tax on profit/loss for the year

FirstFarms A/S has chosen international joint taxation for the whole Group. The actual corporation tax is allocated between the jointly taxed companies in proportion to their taxable income.

By utilisation of deficit in foreign companies deferred tax is allocated in the balance sheet in the Danish company. Tax for the year comprises current tax and changes in deferred tax for the year. The tax expense relating to the profit/loss for the year is recognised in the income statement, and the tax expense relating to changes directly recognised in equity is recognised directly in equity.

Balance sheet

Intangible assets

Goodwill

Goodwill is initially recognised in the balance sheet at cost price.

Subsequently, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortized. The carrying amount of goodwill is allocated to the Group's cash-generating units at the acquisition date. Identification of cash-generating units is based on the management structure and internal financial control.

Other intangible assets

Other intangible assets, including intangible assets acquired in business combinations, are measured at cost less accumulated amortization and impairment losses.

Other intangible assets are amortized on a straight line basis over the expected useful life.

Land lease contracts are amortised on the expected lease period.

Milk quota was depreciated on a straight line basis from acquisition time to 31 March 2015, where the quota system is terminated.

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Tangible assets

Land and buildings, production plants and machinery and fixtures and fittings, other plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost comprises the purchase price and any costs directly attributable to the acquisition until the date when the asset is available for use. The loan costs are activated.

The cost of self-constructed assets comprises direct and indirect costs of materials, components, sub suppliers, and wages and salaries. The present value of estimated liabilities related to dismantling and removing the asset and restoring the site on which the asset is located are added to the cost of self-constructed assets. Where individual components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items, which are depreciated separately. The cost of assets held under finance leases is stated at the lower of fair value of the assets or the present value of the future minimum lease payments. For the calculation of the net present value, the interest rate implicit in the lease or an approximation thereof is used as discount rate.

Subsequent costs, e.g. in connection with replacement of components of property, plant and equipment, are recognised in the carrying amount of the asset if it is probable that the costs will result in future economic benefits for the Group. The replaced components are de-recognised in the balance sheet and recognised as an expense in the income statement. Other costs incurred for ordinary repairs and maintenance is recognised in the income statement as incurred.

Depreciation is provided on a straight-line basis over the expected useful lives of the assets/components:
Buildings 15-30 years
Plant and machinery 5-10 years
Fixtures and fittings, other plant and equipment 3-7 years
Land is not depreciated.

The basis of depreciation is calculated on the basis of the residual value less impairment losses.

The residual value is determined at the acquisition date and reassessed annually. If the residual value exceeds the carrying amount, depreciation is discontinued. When changing the depreciation period of the residual value, the effect on the depreciation is recognised prospectively as a change in accounting estimates. Depreciation is recognised in the income statement as production costs, distribution costs and administrative expenses to the extent that the depreciation is not included in the cost of self-constructed assets.

Biological assets – non-current assets

Biological assets comprise basic herd of animals and are recognised as non-current assets measured at fair value less point-of-sale costs.

Investments in subsidiaries in the parent company's financial statements

Investments in subsidiaries are recognised as the cost price. If the cost price exceeds the recoverable amount, write-down is made to this lower value.

Impairment of non-current assets

Goodwill is subject to annual impairment tests, initially before the end of the acquisition year. The carrying amount of goodwill is tested for impairment together with the other non-current assets in the cash generating unit to which goodwill is allocated and written down to the recoverable amount over the income statement if the carrying amount is higher. The recoverable amount is generally computed as the present value of the expected future net cash flows from the enterprise or activity (cash generating unit) to which goodwill is allocated. Impairment of goodwill is recognised in a separate line item in the income statement. Deferred tax assets are subject to annual impairment tests and are recognised only to the extent that it is probable that the assets will be utilized.

The carrying amount of other non-current assets is tested annually for indications of impairment. When there is an indication that assets may be impaired, the recoverable amount of the asset is determined. The recoverable amount is the higher of an asset's fair value less expected costs to sell and its value in use. Value in

use is the present value of the future cash flows expected to be derived from an asset or the cash-generating unit to which the asset belongs.

An impairment loss is recognised if the carrying amount of an asset or a cash-generating unit, respectively, exceeds the recoverable amount of the asset or the cash-generating unit. Impairment losses are recognised in the income statement under production costs and administrative expenses, respectively. However, impairment of goodwill is recognised in a separate line item in the income statement.

Impairment of goodwill is not reversed. Impairment of other assets is reversed only to the extent of changes in the assumptions and estimates underlying the impairment calculation. Impairment is only reversed to the extent that the asset's new carrying amount does not exceed the carrying amount of the asset after amortization had the asset not been impaired.

Wheat in Slovakia

Inventories

Inventories are measured at the lower of cost in accordance with the FIFO-method and the net realizable value. Goods for resale and raw materials and consumables are measured at cost, comprising purchase price plus delivery costs. Finished goods and work in progress are measured at cost, comprising the cost of raw materials, consumables, direct wages and salaries and indirect production overheads. The net realizable value of inventories is calculated as the sales amount less costs of completion and costs necessary to make the sale and is determined taking into account marketability, obsolescence and development in expected sales price.

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The value of inventories is measured at cost with the addition of indirect production overheads. At the harvest date, crops are transferred from biological assets to inventories at fair value less selling cost, which then reflect cost.

Biological assets – current assets

Biological assets comprising animals held for stock and crops recognised as current assets are measured at fair value less point-of-sale costs.

Receivables

Receivables are measured at amortized cost. Write-down is made for bad debt losses on individual basis.

Accruals

Accruals comprise costs incurred concerning subsequent financial years and are measured at cost.

Equity

Exchange rate adjustment reserve

The exchange rate adjustment reserve in the financial statements comprises part of the shareholders of the parent company's foreign exchange differences arising from exchange rate adjustment of financial statements of foreign entities from their functional currencies into the presentation currency used by the FirstFarms Group (Danish kroner). The reserve is distributable.

Dividends

Proposed dividends are recognised as a liability at the date when they are adopted at the annual general meeting (declaration date). The expected dividend payment for the year is disclosed as a separate item under equity. Interim dividends are recognised as a liability at the date when the decision to pay interim dividends is made.

Own shares

Cost of acquisition, consideration received and dividends received from own shares are recognised directly as retained earnings in equity. Capital reductions from the cancellation of own shares are deducted from the share capital in an amount corresponding to the nominal value of the shares. Proceeds from the sale of own shares and issue of shares, respectively, in FirstFarms A/S in connection with the exercise of share options or employee shares are recognised directly in equity.

Special reserve for share capital decrease

Reserve for decrease of the share capital covers in full the decreased amount as a result of decrease of the nominal denomination from DKK 100 to DKK 10, decided on the extraordinary general meeting on 11 December 2008 and finally implemented 22 April 2009.

This is a free reserve, which can be allocated or transferred to free equity reserves by decision hereof at the general meeting.

On the annual general meeting in 2015, the reserve was transferred to Transferred Result.

Employee benefits

Pension obligations

The Group has entered into pension schemes with some of the Group's employees. The Group has no defined benefit plans. Contributions to defined contribution plans where the Group currently pays fixed pension payments to independent pension funds are recognised in the income statement in the period to which they relate and any contributions outstanding are recognised in the balance sheet as other payables.

Warrant programme

The value of services received in exchange for granted options is measured at the fair value of the options granted.

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FirstFarms A/S only has equity-settled programmes for which the share options are measured at the fair value at the grant date and recognised in the income statement under staff costs over the vesting period. The set-off item is recognised directly in equity. On initial recognition of the share options, the company estimates the number of options expected to vest. That estimate is subsequently revised for changes in the number of options expected to vest. Accordingly, recognition is based on the number of options ultimately vested. The fair value of granted options is estimated using an option pricing model, taking into account the terms and conditions upon which the options were granted.

Corporation tax and deferred tax

Current tax payable and receivables are recognised in the balance sheet as tax computed on the taxable income for the year, adjusted for tax on the taxable income of prior years and for tax paid on account. Deferred tax is measured using the balance sheet liability method on all temporary differences between the carrying amount and the tax base of assets and liabilities. However, deferred tax is not recognised on temporary differences relating to goodwill which is not deductible for tax purposes and on office premises and other items where temporary differences - apart from business combinations - arise at the date of acquisition without affecting either profit/loss for the year or taxable income. Where alternative tax rules can be applied to determine the tax base, deferred tax is measured based on Management's planned use of the asset or settlement of the liability, respectively.

Deferred tax assets, including the tax base of tax loss carry forwards, are recognised under other non-current assets at the expected value of their utilization; either as a set-off against tax on future income or as a set-off against deferred tax liabilities in the same legal tax entity and jurisdiction.

Adjustment is made to deferred tax resulting from elimination of unrealised intra-group profits and losses. Deferred tax is measured on the basis of the tax rules and the tax rates applicable in the respective countries at the balance sheet date when the deferred tax is expected to be realised as current tax. The change in deferred tax as a result of changes in tax rates is recognised in the income statement.

The company has chosen international joint taxation.

Provisions

Provisions are recognised when, as a result of events arising before or at the balance sheet date, the Group has a legal or a constructive obligation and it is probable that there may be an outflow of resources embodying economic benefits to settle the obligation.

On measurement of provision, the costs required to settle the liability are discounted if the effect is material to the measurement of the liability. A pre-tax discount factor is used that reflects the current market interest rate level plus risks specific to the liability. Changes in present values during the year are recognised as financial expenses. The amount recognised as a provision is Management's best estimate of the expenses required to settle the obligation. A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable costs of meeting its obligations under the contract. When the Group has a legal obligation to dismantle or remove an asset or restore the site on which the asset is located, a provision is recognised corresponding to the present value of estimated future costs.

Convertible bonds

Convertible bonds are regarded as combined instruments consisting of a financial obligation measured at amortised cost price and an equity instrument in form of the integrated right to convert. At the date of issuance the fair value of the financial obligation is determined by use of a market interest corresponding to a similar non-convertible debt instrument. The difference between the proceeds at issuance of the convertible bond and the fair value of the financial obligation, corresponding to the integrated option to convert the obligation to equity, is recognised directly on the equity. The fair value of the financial obligation is recognised as long-term debt and afterwards measured at amortised cost price.

Financial liabilities

Amounts owed to mortgage credit institutions etc. are recognised at the date of borrowing at the net proceeds received less transaction costs paid. In subsequent periods, the financial liabilities are measured at amortized

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cost using the effective interest method. Accordingly, the difference between the proceeds and the nominal value is recognised under financial expenses over the term of the loan.

Financial liabilities also include the capitalized residual obligation on finance leases.

Other liabilities are measured at net realizable value.

Leases

For accounting purposes lease obligations are divided into finance and operating leases.

Leases are classified as finance leases if they transfer substantially all the risks and rewards incident to ownership to the lessee. All other leases are classified as operating leases. The accounting treatment of assets held under finance leases and lease obligations is described under "Property, plant and equipment" and "Financial liabilities", respectively. Operating lease payments are recognised in the income statement on a straight-line basis over the lease term.

Deferred income

Deferred income comprises payments received concerning income in subsequent years, mostly concerning grants.

Fair value measurement

FirstFarms uses the fair value concept for recognition of biological assets and for recognition of the value of financial instruments.

The fair value is defined as the price that can be obtained by selling an assets or payable for transferring a liability in an ordinary transaction on a market with independent parties. Fair value is based on a primary market.

There are three levels of the fair value hierarchy for estimating the value:

Statement from fair value in a similar market
Statement by accepted valuation methods based on observable market information
Statement from generally accepted valuation methods and reasonable estimates.

Cash flow statement

The cash flow statement shows the cash flows from operating, investing and financing activities for the year, the year's changes in cash and cash equivalents as well as cash and cash equivalents at the beginning and end of the year. The cash flow effect of acquisitions and disposals of enterprises is shown separately in cash flows from investing activities. Cash flows from acquisitions of enterprises are recognised in the cash flow statement from the date of acquisition. Cash flows from disposals of enterprises are recognised up until the date of disposal.

Cash flows from operating activities

Cash flows from operating activities are calculated after the indirect method as the profit/loss before tax adjusted for non-cash operating items, changes in working capital, interest, dividends and corporation tax paid.

Cash flows from investing activities

Cash flows from investing activities comprise payments in connection with acquisitions and disposals of enterprises and activities and of intangible assets, property, plant and equipment and other non-current assets as well as acquisition and disposal of securities not recognised as cash and cash equivalents.

Cash flows from financing activities

Cash flows from financing activities comprise changes in the size or composition of the share capital and related costs as well as the raising of loans, repayment of interest-bearing debt, acquisition and disposal of own shares and payment of dividends to shareholders.

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Cash and cash equivalents

Cash and cash equivalents comprise cash less short-term bank debt. Cash flows in other currencies than the functional currency are translated at average exchange rates unless they deviate materially from the exchange rates at the transaction date.

Segment information

Information is provided on business segments, which also represent the Group's primary reporting format, and geographical markets. Segment information is based on the Group's risks, management and internal financial management.

Segment information is provided in accordance with the Group's accounting policies. Segment revenue and costs and segment assets and liabilities comprise items which are directly attributable to the individual segment and the items which can be allocated to the individual segment on a reliable basis. Unallocated items primarily comprise assets and liabilities and income and costs related to the Group's administrative functions, financing conditions, income taxes, etc.

Non-current segment assets comprise non-current assets used directly in the operating activities of the segment, including intangible assets, property, plant and equipment. Segment liabilities comprise liabilities resulting from the operating activities of the segment, including bank debt, debt to parent company, trade payables and other payables.

2. Accounting estimates

As part of application of the Groups' accounting policy, the Management is making valuations, besides estimated valuations, which can have essential effect on the amounts given in the annual report.

Expected period of use for milk quota

The milk quota system ceased 31 March 2015, and the milk quota is fully depreciated.

Measurement of biological assets

The biological assets, herds, breeding and crops are valued at fair value with deduction of realisation costs. The value of the biological assets totals DKK 68.8 million as per 31 December 2015 (2014: 62.1 million).

A completely comparable market does not exist in Slovakia for cows with the yielding capacity that FirstFarms' cows achieve. Due to this, the Management has chosen to value the cattle in the light of the prices on the European market, also cp. note 5.

3. Segment information

| 2015
DKK 1,000 | Romanian
activities | Slovakian
activities | Total report
compulsory segments |
| --- | --- | --- | --- |
| Total segment turnover | 36,455 | 75,386 | 111,841 |
| Grants | 7,983 | 22,270 | 30,253 |
| Value adjustments of biological assets | -11,510 | -4,443 | -15,953 |
| Financial income | 602 | 0 | 602 |
| Depreciations and impairments | 6,294 | 17,432 | 23,726 |
| Segment result before tax | -5,187 | -12,762 | -17,949 |
| Segment assets | 176,867 | 351,036 | 527,903 |
| Plant investments *) | 25,748 | 12,745 | 38,493 |
| Segment liabilities | 127,697 | 238,884 | 366,581 |

*) Plant investments are investments in machinery, land and buildings.

| 2014
DKK 1,000 | Romanian
activities | Slovakian
activities | Total report
compulsory segments |
| --- | --- | --- | --- |
| Total segment turnover | 38,021 | 86,987 | 125,008 |
| Grants | 9,034 | 21,658 | 30,692 |
| Value adjustments of biological assets | 4,766 | 8,641 | 13,407 |
| Financial income | 46 | 34 | 80 |
| Depreciations | 3,204 | 18,792 | 21,996 |
| Segment result before tax | 12,738 | 2,758 | 15,496 |
| Segment assets | 152,147 | 351,358 | 503,505 |
| Plant investments *) | 21,410 | 27,965 | 49,375 |
| Segment liabilities | 99,214 | 224,341 | 323,555 |

*) Plant investments are investments in machinery, land and buildings.

FirstFarms' report compulsory segments are constituted by the business units in Slovakia and Romania. Slovakia operates within milk- and field production, whereas Romania only operates within field production. The two business units are operated independently, as each unit has different management, activities and customers. The report compulsory segments are identified without aggregation of operation segments.

Products and services

FirstFarms' turnover primary concerns milk production and field production. The turnover is specified as:

	Romania		Slovakia
DKK 1,000	2015	2014	2015	2014
Milk production	0	0	47,363	67,984
Field production	36,346	35,914	23,534	16,747
Other	109	2,107	4,489	2,256
Total	36,455	38,021	75,386	86,987

Geographical information

FirstFarms operates in Romania and Slovakia. Services from the parent company to the subsidiaries are of a limited extent. Financing of the subsidiaries primary consists of loans from the parent company. At presentation of the information regarding geographical areas, information about the turnovers allocation on geographical segments is constituted based on the geographical location, whereas information about the assets allocation on geographical segments is constituted based on the assets physical location.

Turnover and non-current assets is specified as:

DKK 1,000	2015		2014
	Turnover	Non-current assets	Turnover	Non-current assets
Denmark	250	461,269	250	453,510
Slovakia	75,386	264,726	86,987	271,288
Romania	36,455	137,442	38,021	122,177
Elimination	-250	-461,183	-250	-453,391
Total	111,841	402,254	125,008	393,584

Reconciliation of report compulsory segments turnover, result, assets, liabilities and other essential items

DKK 1,000	2015	2014
Turnover
Segment turnover for report compulsory segments	111,841	125,008
Group function	250	250
Elimination of internal turnover	-250	-250
Total turnover, cp. income statement	111,841	125,008
Result
---	---	---
Segment result before tax for report compulsory segments	-17,949	15,496
Non-allocated result, Group function	-4,514	-3,997
Result before tax, cp. income statement	-22,463	11,499
Assets
---	---	---
Total assets for report compulsory segments	525,526	503,505
Other non-allocated	420	2,343
Total assets, cp. balance sheet	525,946	505,848
Liabilities
---	---	---
Total liabilities for report compulsory segments	366,581	323,555
Elimination of debt to parent company	-212,008	-204,217
Other non-allocated liabilities	65,200	57,780
Total liabilities, cp. balance sheet	219,773	177,118

4. Turnover

DKK 1,000	Group		Parent company
	2015	2014	2015	2014
Sale of milk	43,259	63,133	0	0
Sale of meat	4,104	4,851	0	0
Sale of corn etc.	59,880	52,661	0	0
Other turnover	4,598	4,363	250	250
Total	111,841	125,008	250	250

At the end of 2015, FirstFarms has crops on stock at a fair value of approx. DKK 11 million.

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5. Value adjustments of biological assets

| Group 2015
DKK 1,000 | Basic herd 1) | Breeding 2) | Crops 2) | Total |
| --- | --- | --- | --- | --- |
| Opening | 23,230 | 15,350 | 23,555 | 62,135 |
| Addition | 0 | 0 | 97,737 | 97,737 |
| Value adjustment of the year recog-nised in the income statement | -6,688 | 13,093 | -22,358 | -15,953 |
| Transfer | 10,084 | -10,084 | 0 | 0 |
| Disposal | -2,933 | -1,172 | -70,907 | -75,012 |
| Exchange rate adjustment | 0 | 0 | -123 | -123 |
| Accounting value 31 December 2015 | 23,693 | 17,187 | 27,904 | 68,784 |

1) Non-current assets 2) Current assets

Non-current assets consist of a herd of 2,357 cows at the end of 2015. Breeding consist of 2,597 heifers and calves, whereas crops are the value of the sowed fields. At the end of 2015 the sowed fields mainly consist of 480 hectares of alfalfa/grass, 1,645 hectares of wheat, 888 hectares of rye and 1,294 hectares of rape in Slovakia. In Romania the fields consisted of 3,620 hectares of wheat and 790 hectares of rape at the end of 2015. The land itself is valued at cost price under tangible assets as far as the land is not leased, cp. note 15.

The fair value for basic herd and breeding is estimated with basis in what similar animals are traded for at the European market. By estimation of the fair value of cows a valuation of the cows' performance, age composition etc. is carried out. By estimation of breeding age, quality etc. is accounted for.

The fair value of crops is estimated on basis of the cost price for seeding, fertiliser etc. attributed changes due to the biological transformation, from the time of seeding to 31 December 2015. As the biological change for crops seeded in the autumn is limited, the fair value corresponds in all essential to the costs incurred for seeding etc. Furthermore, it is reviewed whether the crops are satisfactory compared to the season.

The fair value of biological assets enters level 3 in the fair value hierarchy.

| Group 2014
DKK 1,000 | Basic herd 1) | Breeding 2) | Crops 2) | Total |
| --- | --- | --- | --- | --- |
| Opening | 23,704 | 16,090 | 21,245 | 61,039 |
| Addition | 0 | 0 | 97,698 | 97,698 |
| Value adjustment of the year recog-nised in the income statement | -7,877 | 11,512 | 9,772 | 13,407 |
| Transfer | 11,250 | -11,250 | 0 | 0 |
| Disposal | -3,847 | -1,002 | -105,068 | -109,917 |
| Exchange rate adjustment | 0 | 0 | -92 | -92 |
| Accounting value 31 December 2014 | 23,230 | 15,350 | 23,555 | 62,135 |

1) Non-current assets 2) Current assets

Non-current assets consist of a herd of 2,311 cows at the end of 2014. Breeding consist of 2,384 heifers and calves, whereas crops are the value of the sowed fields. At the end of 2014 the sowed fields mainly consist of 525 hectares of alfalfa/grass, 1,850 hectares of wheat, 600 hectares of rye and 650 hectares of rape in Slovakia. In Romania the fields consisted of 2,500 hectares of wheat and 700 hectares of rape. The land itself is valued at cost price under tangible assets as far as the land is not leased, cp. note 15.

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Costs

DKK 1,000	Group		Parent company
	2015	2014	2015	2014
Cost of sales for the period	81,032	79,319	0	0
Reversed write-down on inventories	0	0	0	0

At transition, in connection with harvest, the stock of crops is valuated at market value less point-of-sale costs. By a subsequent decrease in the value, the amount is credited in production costs.

Staff costs
Fees to the Board of Directors in the parent company	440	440	440	440
Wages and salaries	22,853	22,140	2,484	3,120
Share based remuneration	70	0	70	0
Defined contribution plans	286	269	286	269
Other social security costs	7,292	7,467	28	24
Other staff costs	2,623	2,787	487	670
Total staff costs	33,564	33,103	3,795	4,523

Staff costs:

Production	28,338	27,980	0	0
Administration	5,228	5,123	3,795	4,523
Total	33,564	33,103	3,795	4,523
Average number of employees	211	204	4	4

At the end of the year, the number of employees was 210 of which 3 are sited on the headquarter in Denmark, 167 in Slovakia and 40 in Romania.

Executive Board remuneration of the parent company

DKK 1,000	2015		2014
	Board of Directors	Management	Board of Directors	Management
Wages and salaries	440	1,221	440	1,537
Pension	0	120	0	120
Share based remuneration	0	58	0	0
Total	440	1,399	440	1,657

Warrant programme

Number of warrants	Management	Other employees	Total	Utilisation price	Fair value per option DKK	Fair value in total (DKK 1,000)
Allotted
1 January 2015	0	0	0	-	-	-
Allotted during the year	50,000	10,000	60,000	52.51	6.16	370
Allotted
31 December 2015	50,000	10,000	60,000	52.51	6.16	370

The market value is calculated from the Black-Scholes-model with a volatility of 25 percent, a risk-free interest of 0.5 percent p.a. and a share price of 46 at the time of allotment.

As per 31 December 2015, the company has 60,000 outstanding warrants, which were allotted 18 May 2015. Each warrant grants to warrant owner right to purchase one share of nominal DKK 10. The outstanding warrants correspond to 1.3 percent of the share capital, if all warrants are utilised.

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The utilisation price for the warrants is 52.51 and the warrant programme runs till 2018, where the warrants can be utilised in a period of 4 weeks from the company's announcement of the interim financial report for the period 1 January – 30 June 2018.

The company has no outstanding warrants at the end of 2014.

Depreciations and impairments

	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Depreciations, intangible assets	1,945	2,951	0	0
Depreciations, property, plant and equipment	21,813	19,088	32	43
Impairments, property, plant and equipment	0	0	0	0
Total depreciations and impairments	23,758	22,039	32	43

Depreciations and impairments are recognised as follows:
Production	23,315	21,545	0	0
Administration	443	494	32	43
Total	23,758	22,039	32	43

Fee to the auditors appointed at the general meeting

Total fee to EY	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Audit	270	278	270	278
Other declarations	0	0	0	0
Tax and VAT services	0	22	0	22
Other non-audit services	45	91	45	91
Total	315	391	315	391
Fees to other auditors	Group		Parent company
---	---	---	---	---
1.000 kr.	2015	2014	2015	2014
Audit	366	307	0	0
Other declarations	0	0	0	0
Tax and VAT services	0	0	0	0
Other non-audit services	41	86	0	0
I alt	407	393	0	0
Total fees for auditors	722	784	315	391
---	---	---	---	---

7. Grants

	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Grant for investments	1,063	1,070	0	0
EU hectare subsidy	24,554	25,312	0	0
Grant for milk production	4,569	3,613	0	0
Government grant etc.	67	697	0	0
Total	30,253	30,692	0	0

FirstFarms can apply for grants for investments from EU. Investment grants are given under the condition that the assets are kept in the company for at least 5 years. Otherwise there are no specific conditions attached to the grants. The subsidy is credited concurrently as the assets are depreciated. EU hectare subsidy is a yearly subsidy, which is given to operation of farming. The cattle subsidy is a subsidy to milk production, which is permanent every year. Furthermore, there are some old subsidies from the Slovakian government that is credited concurrently as the assets are depreciated.

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Subsidies form an essential part of the accruals and other receivables. Different subsidy schemes and calculations are shown below.

| 2015
DKK 1,000 | Hectare
grant | Milk grant | Government
grant | Investment grant etc. | Total |
| --- | --- | --- | --- | --- | --- |
| Grants calculated
in accruals | 0 | 0 | 0 | 13,102 | 13,102 |
| Period of crediting | Continuously | Continuously | Continuously | Concurrently as the
asset is depreciated | - |
| Grants calculated in
"Other receivables" | 19,053 | 4,019 | 0 | 0 | 23,072 |
| 2014
DKK 1,000 | Hectare
grant | Milk grant | Government
grant | Investment grant etc. | Total |
| Grants calculated
in accruals | 0 | 0 | 0 | 14,010 | 14,010 |
| Period of crediting | Continuously | Continuously | Continuously | Concurrently as the
asset is depreciated | - |
| Grants calculated in
"Other receivables" | 10,011 | 170 | 0 | 0 | 10,181 |

8. Other operating income

	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Profit from sale of fixed assets	590	7,443	0	0
Other secondary income	318	2	0	0
Total	908	7,445	0	0

In 2015, FirstFarms has only to a smaller extent sold land in East Romania.

In 2014, FirstFarms has sold land in East Romania. The sale is within FirstFarms' strategy about purchase and sale of land to optimise the operation. In 2014, the possibility came to sell a larger part, which is not in the company's future plans.

9. Other operating costs

	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Loss from sale of fixed assets	87	0	0	0
Other secondary costs	391	840	0	0
Total	478	840	0	0

10. Financial income

	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Interest, cash at bank and in hand	0	23	0	0
Interest income from affiliated companies	0	0	3,567	5,864
Other financial income	602	57	0	0
Total	602	80	3,567	5,864

11. Financial costs

	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Interest, bank loans	4,118	3,291	299	66
Other financial costs	4,290	4,462	3,512	4,012
Total	8,408	7,753	3,811	4,078

12. Tax on net profit/loss

	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Tax on net profit/loss	486	-2,672	1,110	1,007
Tax on other total income	0	0	0	0
Total	486	-2,672	1,110	1,007

Tax on net profit/loss is specified as:
Current tax	-323	-909	0	0
Deferred tax	809	-1,763	1,110	1,007
Total	486	-2,672	1,110	1,007

Tax on net profit/loss can be explained as:
Calculated tax of net profit/loss before tax (25 %)	5,279	-2,817	1,191	1,078
Reduction in tax rate in Denmark and Slovakia	-70	-101	-70	-101
Write down/ unrecognised tax assets	-3,409	0	0	0
Other adjustments, net	-1,314	246	-11	30
Total	486	-2,672	1,110	1,007

Effective tax rate	2	23	22	23

13. Earnings per share

Group	2015	2014
DKK 1,000
Net profit	-21,977	8,827
Number of shares	4,712,241	4,712,241
Average diluted effect of outstanding warrants	786,180	1,168,770
Diluted number of shares in circulation	5,498,421	4,712,241
Earnings per share (EPS)	-4.66	1.87
Diluted earnings per share (EPS-D)	-4.00	1.50

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14. Intangible assets

| Group 2015
DKK 1,000 | Goodwill | Lease contracts | Milk quota | Total |
| --- | --- | --- | --- | --- |
| Cost price 1 January | 16,026 | 7,402 | 16,198 | 39,626 |
| Addition | 0 | 0 | 0 | 0 |
| Disposal | 0 | 0 | -16,198 | -16,198 |
| Exchange rate adjustment | 41 | 1 | 0 | 42 |
| Cost price 31 December | 16,067 | 7,403 | 0 | 23,470 |
| Depreciations and impairments 1 January | 0 | -989 | -15,708 | -16,697 |
| Depreciations | 0 | -1,455 | -490 | -1,945 |
| Impairments | 0 | 0 | 16,198 | 16,198 |
| Exchange rate adjustment | 0 | 8 | 0 | 8 |
| Depreciations and impairments 31 December | 0 | -2,436 | 0 | -2,436 |
| Accounting value 31 December | 16,067 | 4,967 | 0 | 21,034 |

FirstFarms' Management has at the end of 2015 carried out impairment test of the accounting value of goodwill in Slovakia. The recoverable amount is based on the capital value (the value in use), which is determined based on expectations to the future cash flow in the coming 5 years. Significant assumptions worked in the impairment test is a growth in the terminal period of 1.5 percent, a return (WACC) of 8.5 percent after tax (before tax 10.4 percent) and milk prices of DKK 2.70 per kg as of 2017. In the impairment test carried out for 2016 normal harvest yield and settlement prices are assumed as stated in the management review page 13-15. The crop prices in the coming year are assumed to be on par with the budget for 2016.

The budget is 2,800 milking cows and cultivation of 9,300 hectares of land at the end of the period.

The impairment test carried out on the activities in Slovakia has shown that the capital value of the activities is above the accounting value of the assets (including intangible assets).

The Group has assessed that a change in the key assumptions could entail impairment. Provided that other variables are unchanged, a reduction in the milk prices in the region of DKK 0.15 per kg will entail that the recoverable amount corresponds to the accounting value.

The parent company has no intangible assets included.

| Group 2014
DKK 1,000 | Goodwill | Lease contracts | Milk quota | Total |
| --- | --- | --- | --- | --- |
| Cost price 1 January | 16,060 | 1,127 | 16,201 | 33,388 |
| Addition | 0 | 6,282 | 0 | 6,282 |
| Disposal | 0 | 0 | 0 | 0 |
| Exchange rate adjustment | -34 | -7 | -3 | -44 |
| Cost price 31 December | 16,026 | 7,402 | 16,198 | 39,626 |
| Depreciations and impairments 1 January | 0 | 0 | -13,749 | -13,749 |
| Depreciations | 0 | -991 | -1,960 | -2,951 |
| Impairments | 0 | 0 | 0 | 0 |
| Exchange rate adjustment | 0 | 2 | 1 | 3 |
| Depreciations and impairments 31 December | 0 | -989 | -15,708 | -16,697 |
| Accounting value 31 December | 16,026 | 6,413 | 490 | 22,929 |

FirstFarms' Management has at the end of 2014 carried out impairment test of the accounting value of goodwill in Slovakia. The recoverable amount is based on the capital value (the value in use), which is determined based on expectations to the future cash flow in the coming 5 years. Significant assumptions worked in the

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impairment test is a growth in the terminal period of 1.5 percent, a return (WACC) of 8.5 percent after tax (before tax 10.4 percent) and milk prices of DKK 2.70 per kg as of 2016. In the impairment test carried out for 2015 normal harvest yield and settlement prices are assumed as stated in the management review page 11-13. The crop prices in the coming year are assumed to be on par with the budget for 2015.

The budget is 2,800 milking cows and cultivation of 9,300 hectares of land at the end of the period.

The impairment test carried out on the activities in Slovakia has shown that the capital value of the activities is above the accounting value of the assets (including intangible assets).

The parent company has no intangible assets included.

Tangible assets

Group 2015	Land and buildings	Plant and machinery	Fixtures and fittings, tools and equipment	Construction work under execution and prepayments	Total
DKK 1,000
Cost price 1 January 2015	288,351	112,963	3,099	2,002	406,415
Addition	12,978	13,401	413	11,701	38,493
Transfer between categories	3,078	861	0	-3,939	0
Disposal	-1,078	-7,995	-7	-1,294	-10,374
Exchange rate adjustment	-467	-113	-8	-4	-592
Cost price 31 December 2015	302,862	119,117	3,497	8,466	433,942
Depreciations and impairments
1 January 2015	-34,882	-34,887	-1,916	0	-71,685
Depreciations	-6,611	-14,867	-335	0	-21,813
Impairment	0	0	0	0	0
Disposal	0	4,478	7	0	4,485
Transfer between categories	0	0	0	0	0
Exchange rate adjustment	-118	29	0	0	-89
Depreciations and impairments
31 December 2015	-41,611	-45,247	-2,244	0	-89,102
Accounting value
31 December 2015	261,251	73,870	1,253	8,466	344,840
- assets held under finance lease	0	39,117	0	0	39,117
Depreciation period	15-30 years	5-10 years	3-7 years	-	-

As per 31 December 2015 security for leasing debts of DKK 17.1 million (2014: DKK 17.3 million) has been given in the respective machines (booked value DKK 18.2 million). For the bank debt in Slovakia security has been given in the large cattle site (booked value DKK 94.5 million). Furthermore, there is security in EU-grants in Slovakia.

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| Group 2014
DKK 1,000 | Land and buildings | Plant and machinery | Fixtures and fittings, tools and equipment | Construction work under execution and prepayments | Total |
| --- | --- | --- | --- | --- | --- |
| Cost price 1 January 2014 | 284,787 | 104,261 | 3,117 | 9,163 | 401,328 |
| Addition | 11,095 | 28,860 | 127 | 9,293 | 49,375 |
| Transfer between categories | 13,929 | 54 | -90 | -13,893 | 0 |
| Disposal | -20,566 | -19,775 | -52 | -2,497 | -42,890 |
| Exchange rate adjustment | -894 | -437 | -3 | -64 | -1,398 |
| Cost price 31 December 2014 | 288,351 | 112,963 | 3,099 | 2,002 | 406,415 |
| Depreciations and impairments
1 January 2014 | -29,818 | -38,479 | -1,135 | 0 | -69,432 |
| Depreciations | -6,189 | -12,111 | -788 | 0 | -19,088 |
| Impairment | 0 | 0 | 0 | 0 | 0 |
| Disposal | 979 | 15,518 | 3 | 0 | 16,500 |
| Transfer between categories | 0 | 0 | 0 | 0 | 0 |
| Exchange rate adjustment | 146 | 185 | 4 | 0 | 335 |
| Depreciations and impairments
31 December 2014 | -34,882 | -34,887 | -1,916 | 0 | -71,685 |
| Accounting value
31 December 2014 | 253,469 | 78,076 | 1,183 | 2,002 | 334,730 |
| - assets held under finance lease | 0 | 41,986 | 0 | 0 | 41,986 |
| Depreciation period | 15-30 years | 5-10 years | 3-7 years | - | - |
| Book value of purchased farm land
DKK 1,000 | 2015 | | 2014 | |
| --- | --- | --- | --- | --- |
| Farm land in Slovakia | 587 hectares | 15.108 | 527 hectares | 12,995 |
| Farm land in Romania | 5,168 hectares | 94.811 | 5,094 hectares | 88,892 |

2015

At the turn of the year 2015/2016, FirstFarms has evaluated the land in Romania from known sales prices and the company's own experiences with land prices to calculate the value of the company's land. The total fair value is in the range of DKK 167 million, corresponding to an average price of approx. DKK 32,000 per hectare. The average booked value in Romania at the end of 2015 is DKK 18,345 per hectare and the average booked value in Slovakia is DKK 25,738 per hectare.

2014

At the turn of the year 2014/2015, FirstFarms has conducted land evaluation of a part of the land in Romania and this has been complemented with the company's own experiences with land prices to calculate the value of the company's land. The total fair value is in the range of DKK 131 million, corresponding to an average price of approx. DKK 26,000 per hectare. The average booked value in Romania at the end of 2014 is DKK 17,448 per hectare and the average booked value in Slovakia is DKK 24,658 per hectare.

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Parent company 2015
DKK 1,000.
Fixtures and fittings, tools and equipment
Cost price 1 January 2015 463
Addition 0
Disposal 0
Cost price 31 December 2015 463

Depreciations and impairments 1 January 2015 -344
Depreciations -32
Disposal 0
Depreciations and impairments 31 December 2015 -376

Accounting value 31 December 2015 87

assets held under finance lease 0
Depreciation period 3-7 years

Parent company 2014
DKK 1,000.
Fixtures and fittings, tools and equipment
Cost price 1 January 2014 463
Addition 0
Disposal 0
Cost price 31 December 2014 463

Depreciations and impairments 1 January 201 -301
Depreciations -43
Disposal 0
Depreciations and impairments 31 December 2014 -344

Accounting value 31 December 2014 119

assets held under finance lease 0
Depreciation period 3-7 years
Capital shares in subsidiaries

Parent company
DKKK 1,000
2015 2014
Cost price 1 January 299,486 299,486
Changes in the period 0 0
Cost price 31 December 299,486 299,486

Impairment 1 January 50,312 50,312
Changes in the period 0 0
Impairment 31 December 50,312 50,312
Accounting value 31 December 249,174 249,174

All subsidiaries are 100 percent owned by the FirstFarms Group.

17. Inventories

	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Raw materials and other materials	13.984	17,934	0	0
Manufactured goods and commodities, grain, fodder etc.	24.208	22,090	0	0
Total	38.192	40,024	0	0
Accounting value of inventories included at fair value	24.208	22,090	0	0
Write-downs	0	0	0	0
Reversed write-downs	0	0	0	0

At transition, in connection with harvest, the stock of crops is valuated at fair value less point-of-sale costs. By a subsequent decrease in the value, the amount is included in production costs.

18. Receivables

	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Receivables from sales	8,512	7,733	0	0
Other receivables	29,251	18,008	308	408
Receivables from associated companies	0	0	212,008	204,217
Total	37,763	25,741	212,316	204,625
Impairments, contained in the receivables above, developed as follows:	2015	2014
---	---	---
1 January	2,282	2,205
Impairments in the year	343	735
Implemented in the year	0	-638
Reversed	0	0
Exchange rate adjustments	5	-20
31 December	2,630	2,282

In 2015 and 2014, there is taken out debtor insurance for the most significant part of the company's receivables.

Receivables, which per 31 December were due, but not impaired, can be seen below.

DKK 1,000	2015	2014
Period of decadence:
Up to 30 days	304	1,318
Between 30 and 90 days	78	145
Over 90 days	658	458

19. Share capital

Issued shares	Amount (pcs.)		Nominal value (DKK)
	2015	2014	2015	2014
1 January	4,712,241	4,712,241	47,122,410	47,122,410
31 December	4,712,241	4,712,241	47,122,410	47,122,410

At the end of 2015, the share capital consisted of 4,712,241 shares at nominal DK 10. No shares are attributed special rights.

The Group's result of DKK -22.0 million and the parent company's result of DKK -4.0 million are proposed transferred to next year.

Capital management

The capital structure in FirstFarms is evaluated continuously. To see the Groups' policies on profit distribution, debt finance etc., see p. 23 concerning profit and p. 18 for risk management.

The realised equity return for 2015 was -6.9 percent (2014: 2.7 percent).

Capital structure

In connection with the issuance of warrants for the company's Management and for employees in Denmark and abroad, FirstFarms' Board of Directors is authorised to carry out the capital increase associated with the warrants. Until 28 April 2016, the Board of Directors has the authority to issue 60,000 share options corresponding to DKK 600,000 and corresponding to 1.1 percent of the nominal capital. On 18 May 2015, the Board of Directors issued 60,000 warrants.

Furthermore, the Board of Directors is authorised to, until 28 April 2016, in one or more stages, to issue up to 1,500,000 shares corresponding to nominal DKK 15,000,000 through cash payment, by contribution of assets other than cash (non-cash contribution) or conversion of debt or through a combination thereof. The capital increase must be effected at market price – with or without pre-emption rights for the Company's shareholders.

In 2013, convertible bonds are issued for DKK 50 million, which gives right to convert to 1,168,770 shares. This corresponds to approx. 25 percent of the present share capital. Owners of convertible bonds for DKK 31 million have chosen to prolong the bond to expiry in 2017, whereas the bond owners for DKK 19 million wishes to have the bonds repaid in 2016.

Dividend

It is FirstFarms' dividend policy that the shareholders shall have a return on their investments in the form of share price increases and dividends.

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20. Deferred tax

| Group
DKK 1,000 | 2015 | 2014 |
| --- | --- | --- |
| Deferred tax 1 January | -3,380 | -5,271 |
| Tax recognised in the equity | 0 | 0 |
| Exchange rate adjustment | -26 | 128 |
| Deferred tax of the year calculated in net profit/loss | -809 | 1,763 |
| Deferred tax 31 December | -4,215 | -3,380 |
| How deferred tax is calculated in the balance sheet: | | |
| Deferred tax (asset) | -12,687 | -12,695 |
| Deferred tax (liability) | 8,472 | 9,315 |
| Deferred tax 31 December, net | -4,215 | -3,380 |
| Deferred tax concerns: | | |
| Intangible assets | -103 | -1,050 |
| Tangible assets | 1,908 | 3,074 |
| Biological assets | 2,509 | 3,618 |
| Other accounting items | -4,800 | -3,879 |
| Deficits with right to put forward | -9,681 | -12,537 |
| Re-taxation balance | 5,952 | 7,394 |
| Total | -4,215 | -3,380 |

All deferred tax assets and obligations are included in the balance sheet. The fiscal deficits concern mostly the Group's foreign activities and are included in the assumption that positive taxable income will be obtained within a period of approx. 3 years.

Change in interim differences in 2015

| DKK 1,000 | Balance
1/1-2015 | Included in net profit/loss, net | Recognised in the equity | Exchange rate adjustments | Balance
31/12-2015 |
| --- | --- | --- | --- | --- | --- |
| Intangible assets | -1,050 | 947 | 0 | 0 | -103 |
| Tangible assets | 3,074 | -1,156 | 0 | -10 | 1,908 |
| Biological assets | 3,618 | -1,109 | 0 | 0 | 2,509 |
| Other accounting items | -3,879 | -910 | 0 | -11 | -4,800 |
| Deficits with right to put forward | -12,537 | 2,861 | 0 | -5 | -9,681 |
| Re-taxation balance | 7,394 | -1,442 | 0 | 0 | 5,952 |
| Total | -3,380 | -809 | 0 | -26 | -4,215 |

Change in interim differences in 2014

| DKK 1,000 | Balance
1/1-2014 | Included in net profit/loss, net | Recognised in the equity | Exchange rate adjustments | Balance
31/12-2014 |
| --- | --- | --- | --- | --- | --- |
| Intangible assets | -1,771 | 721 | 0 | 0 | -1,050 |
| Tangible assets | 5,465 | -2,373 | 0 | -18 | 3,074 |
| Biological assets | 4,347 | -729 | 0 | 0 | 3,618 |
| Other accounting items | 121 | -4,001 | 0 | 1 | -3,879 |
| Deficits with right to put forward | -21,213 | 8,531 | 0 | 145 | -12,537 |
| Re-taxation balance | 7,780 | -386 | 0 | 0 | 7,394 |
| Total | -5,271 | 1,763 | 0 | 128 | -3,380 |

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Parent company	2015	2014
DKK 1,000
Deferred tax 1 January	5,457	6,464
Deferred tax of the year calculated in net profit/loss	-1,110	-1,007
Tax recognised in the equity	0	0
Deferred tax 31 December	4,347	5,457
How deferred tax is calculated in the balance sheet:
Deferred tax (asset)	0	0
Deferred tax (liability)	4,347	5,457
Deferred tax 31 December, net	4,347	5,457

The deferred tax at the end of 2015 and 2014 is mainly allocation of deferred tax of re-taxation balances as a result of international joint taxation.

21. Convertible bonds

DKK 1,000	Group		Parent company
	2015	2014	2015	2014
Proceeds from issuance of convertible bonds	50,000	50,000	50,000	50,000
Fair value of right to convert at date of issuance recognised in the equity	-655	-655	-655	-655
Fair value of financial obligation at the date of issuance	49,345	49,345	49,345	49,345
Amortisation 1 January	304	24	304	24
Amortisation for the year	299	280	299	280
Accounting value of financial obligation 31 December	49,948	49,649	49,948	49,649

In 2013, FirstFarms has issued convertible bonds for total nominal DKK 50 million. The bonds run up to and including 15 March 2016 and carry interest at 6 percent p.a. In November 2015, FirstFarms offered the bond owners a prolongation of the convertible bond till 15 March 2017. Owners of convertible bonds for DKK 31 million accepted this offer.

The fair value of the financial obligation is at the date of issuance calculated using a market interest of 6.63 percent corresponding to the interest for a similar non-convertible debt instrument. The difference between the proceeds at issuance of the convertible bonds and the fair value of the financial obligation constitutes the fair value of the right to convert at the date of issuance which is recognised directly in the equity (level 3 in the fair value hierarchy).

22. Debts to credit institutions

Liabilities are recognised in the balance as follows:

DKK 1,000	Group		Parent company
	2015	2014	2015	2014
Non-current liabilities	30,651	38,021	0	0
Current liabilities	79,914	35,510	11,434	0
Total	110,565	73,531	11,434	0
Fair value	110,565	73,531	11,434	0
Nominal value	110,565	73,531	11,434	0
- of this fixed interest	0	0	0	0

A change in the interest with 1 percentage point will, incl. other loans, entail a change in the interest expenses of DKK 1.1 million (2014: DKK 0.7 million).

Current maturity:	2015	2014
Within 1 year	79,914	35,510
1-5 years	28,339	35,683
> 5 years	2,312	2,338
Total accounting value	110,565	73,531

The debt in Slovakia is taken out in EUR, and there is an average interest rate at the end of 2015 at 3-5 percent (2014: 3-5 percent). In Romania, the majority of the debt is taken out in the local currency or EUR, and the interest here is 3-6 percent (2014: 6-7 percent).

In both 2015 and 2014, the fair value is calculated as present value of expected future repayments and interest payments. No specific terms or conditions are attached to the Group's loan including leasing obligations. The Group's debts to credit institutions are carried with variable interests and estimated in EUR.

Financial leases

Liabilities regarding financial leased assets incur in debts to credit institutions:

| Group 2015
DKK 1,000 | Minimum-contribution | Interest etc. | Repayment of liabilities |
| --- | --- | --- | --- |
| 0-1 year | 5,574 | 618 | 4,956 |
| 1-5 years | 12,792 | 696 | 12,096 |
| > 5 years | 0 | 0 | 0 |
| Total | 18,366 | 1,314 | 17,052 |
| Group 2014
DKK 1,000 | Minimum-contribution | Interest etc. | Repayment of liabilities |
| --- | --- | --- | --- |
| 0-1 year | 6,177 | 677 | 5,500 |
| 1-5 years | 12,519 | 768 | 11,751 |
| > 5 years | 0 | 0 | 0 |
| Total | 18,696 | 1,445 | 17,251 |

At the termination of the leasing contracts, the Group has possibility to acquire production plants and machinery at favourable prices.

23. Supplier debts and other debt obligations

	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Supplier debts	26,145	16,365	266	258
Other debt obligations	11,279	13,837	1,541	2,416
Total	37,424	30,202	1,807	2,674

24. Corporation tax

	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Corporation tax 1 January	-411	-604	0	0
Current tax of the year	-323	-909	0	0
Paid corporation tax	472	1,102	0	0
Corporation tax 31 December	-262	-411	0	0

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25. Contingent liabilities, contingent assets and securities

Contingent liabilities

The Group is involved in a few pending disputes. It is the Management's assessment that clarification will not have significant influence for the Group's financial position. FirstFarms is at the end of the year involved in a tax case in Romania. The case is not expected to have significant influence for the Group's financial position.

Securities

As per 31 December 2015, security for leasing debts of DKK 17.1 million (2014: DKK 17.3 million) has been given in the respective machines (booked value DKK 18.4 million). For the bank debt in Slovakia security has been given in the large cattle site (booked value DKK 94.5 million). Furthermore, there is security in EU-grants in Slovakia.

The parent company has guaranteed for the subsidiaries' debt in credit institutions with an accounting value of DKK 82.1 million (2014: DKK 71.7 million).

26. Change in working capital

	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Change in biological assets and inventories	-2,517	-14,698	0	0
Change in receivables etc.	-10,997	-10,255	108	-154
Change in supplier debts, other debt obligations and accruals	6,314	-798	-867	554
Total	-7,200	-25,751	-759	400

27. Non-cash transactions

DKK 1,000	2015	2014
Acquisition of tangible assets, cp. note 15	38,493	49,375
Of this financial leased assets	-6,962	-10,607
Paid regarding acquisition of tangible assets	31,531	38,768
Proceeds at raising financial debt liabilities	-7,370	8,014
Of this leasing debt	-6,962	-10,607
Received at raising financial debt liabilities	-14,332	-2,593

28. Cash and cash equivalents

	Group		Parent company
DKK 1,000	2015	2014	2015	2014
Available funds	1,183	5,106	0	1,782
Current debt for credit institutions	-79,914	-35,510	-11,434	0
Available 31 December	-78,731	-30,404	-11,434	1,782

29. Risk management

The Groups' risk management policy

Due to the fact that FirstFarms operates, invests and finances abroad, the company is exposed to fluctuations in exchange rates and interest rates. FirstFarms' policy is not to make speculation. The financial control of the Group is made to control the financial risks, which are a consequence of the Group's operations and finance.

There are no significant changes in the Group's risk exposure or risk management compared to 2014.

To a large extent FirstFarms' foreign companies are not affected of exchange rate fluctuations because both revenues and costs are settled in domestic currency. The income statement in the Group accounts will therefore mainly be affected by conversion of the subsidiaries' result to DKK.

In the following, the consequences of changes in interest rates, exchange rates and other important factors are given to assess the company's expectations for 2016.

FirstFarms' activities are placed in Slovakia and Romania. A change in the Romanian lei of 1 percent will - all things being equal - affect EBIT with approx. DKK 0.1 million (2014: DKK 0.1 million). Furthermore, a direct effect on the equity will show due to a changed conversion of assets and liabilities.

A change in the interest rate with 1 percent will - all things being equal - entail a change in the financial expenses with DKK 1.1 million (2014: DKK 0.7 million). The convertible bond has a fixed interest and thus it is not affected.

FirstFarms' result will mainly be affected by changes in the milk price, where a change in the milk price of 1 percent will - all things being equal - cause a change in the EBIT-result of DKK 0.5 million (2014: DKK 0.7 million). In addition to this, a value adjustment on biological assets (the value of stock) as a result of changes in milk prices can occur.

A 1 percent change in the price or quantity of sales crops will - all things being equal - entail a change in the EBIT-result of DKK 0.9 million (2014: DKK 0.8 million).

Regarding credit risk, reference is made to note 18 regarding receivables.

Liquid funds

FirstFarms has entered agreements with banks in Slovakia and Romania regarding credit lines, which, together with the present financing in the company, is assessed to cover the company's cash needs in 2016.

The Group's liabilities fall due as follows:

| 2015
DKK 1,000 | Accounting
value | Contractual
cash flows | Within 1 year | 1 to 5 years | After 5 years |
| --- | --- | --- | --- | --- | --- |
| Non-derivative
financial instruments | | | | | |
| Credit institutions
and banks | 93,513 | 100,278 | 80,502 | 16,943 | 2,833 |
| Financial leasing
liabilities | 17,052 | 18,366 | 5,574 | 12,792 | 0 |
| Trade payables | 26,145 | 26,145 | 26,145 | 0 | 0 |
| Loans | 49,928 | 52,489 | 20,569 | 31,920 | 0 |
| Derivative financial
instruments | 0 | 0 | 0 | 0 | 0 |
| 31 December 2015 | 186,638 | 197,278 | 132,790 | 61,655 | 2,833 |

| 2014
DKK 1,000 | Accounting value | Contractual cash flows | Within 1 year | 1 to 5 years | After 5 years |
| --- | --- | --- | --- | --- | --- |
| Non-derivative financial instruments | | | | | |
| Credit institutions and banks | 56,280 | 62,387 | 32,924 | 26,423 | 3,040 |
| Financial leasing liabilities | 17,251 | 18,696 | 6,177 | 12,519 | 0 |
| Trade payables | 16,365 | 16,365 | 16,365 | 0 | 0 |
| Loans | 49,649 | 53,750 | 3,000 | 50,750 | 0 |
| Derivative financial instruments | 0 | 0 | 0 | 0 | 0 |
| 31 December 2014 | 139,545 | 151,198 | 58,466 | 89,692 | 3,040 |

All the parent company's liabilities fall due with one year.

30. Operational leasing obligations

Minimum irredeemable operational leasing- and rent payments are as follows:

| Group
DKK 1,000 | 2015 | 2014 |
| --- | --- | --- |
| 0-1 year | 11,718 | 8,268 |
| 1-5 years | 20,774 | 9,625 |
| > 5 years | 1,653 | 547 |
| Total | 34,145 | 18,440 |

Agricultural activity in foreign subsidiaries is partly carried out by ownership of farm land and partly by making leasing contracts. In Slovakia, the yearly rent is determined by the official unit of land valuation and in Romania as per agreement.

In the income statement for 2015 DKK 8.2 million was put to cost regarding land lease (2014: DKK 3.5 million)

Per 31 December 2015, FirstFarms has leased an area of 8,800 hectares in Slovakia, distributed on 10,100 land lease contracts with a currency of 1-15 years (2014: 8,800 hectares distributed on 10,100 land lease contracts).

In Romania leasing contracts have been entered of approx. 2,400 hectares of land to be cultivated in 2015/2016 (2014/2015: 1,300 hectares) with a currency of 1-5 years.

Furthermore, FirstFarms has entered agreement about operational leasing of machines with an annual cost of approx. DKK 4.0 million (2014: DKK 3.4 million) with a currency of 1-4 years.

The parent company has entered agreement about operational leasing with yearly contributions of DKK 0.1 million (2014: DKK 0.1 million).

31. Related parties

FirstFarms A/S do not have shareholders with determinative influence on FirstFarms A/S.

FirstFarms A/S' related parties with determinative influence include the management and the Board of Directors of the company. Related parties also include the company where the above mentioned persons have considerable interests. Besides remuneration, cp. note 6, no transactions with the Board of Directors and Management have been made in 2015.

For a description of accounts between related companies, see the balance sheet of the parent company and note 10 and 11 as regards to returns on accounts.

In 2015, FirstFarms A/S has invoiced group contributions etc. of DKK 0.3 million (2014: 0.3 million).

2015

At the end of 2015, Anders Holger Invest ApS, closely related to CEO Anders H. Nørgaard, has convertible bonds for DKK 1,351,648, Henrik Hougaard Invest ApS, closely related to Chairman Henrik Hougaard, has convertible bonds for DKK 7,500,000, Thoraso ApS, closely related to Chairman Henrik Hougaard, has convertible bonds for DKK 4,505,495. At the end of 2015, board member Bent Juul Jensen has convertible bonds for DKK 4,802,198.

All transactions are made on market terms.

2014

Anders Holger Invest ApS, closely related to CEO Anders H. Nørgaard, has subscribed convertible bonds for DKK 1,351,648. Thoraso ApS, closely related to Chairman Henrik Hougaard, has subscribed for DKK 4,505,495 and board member Bent Juul Jensen has subscribed for DKK 1,802,198.

All transactions are made on market terms.

32. Subsequent events

After the balance day 31 December 2015, no essential events for the Group's and the company's position have occurred.

33. New accounting regulations

A number of new standards and interpretations, that are not mandatory for FirstFarms A/S for the preparation of the Annual Report for 2015, are published, including IFRS 14-16 and changes to IFRS 9. FirstFarms is working on analysing the effect of the new standards. The changes are not expected to have significant impact on the financial reporting of FirstFarms. It is however assessed that IFRS will have some significance for the Group, as the Group has minimum leasing obligations in the region of DKK 35 million corresponding to approx. 7 percent of the balance, which potential in future shall be recognised in the balance.

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AI assistant

FirstFarms — Annual Report 2015

3433_rns_2016-03-22_c0a4d9e2-d7cf-4de2-bb89-bf4dd6805d87.pdf

Content

Management review

Financial highlights and key ratios

Key ratios for the Group

Management review

Field production

Milk production

Grants

Balance and cash flow

Investments

Interest-bearing debt

Exchange rate adjustment

Slovakia

Milk production

Field production

Land

Romania

Field production – East

Field production – West

Land

Trend in land prices

Expectations for 2016

Milk production and price

Figur 8 – Development in milk price

Production and prices on crops

Cash flow

Investments

Figure 13 – Values

Risk management

Market conditions

Disease in crops and livestock

Climate

Purchase of agriculture and land

Changes in legislation

Lease of land

Development in land prices

Environment

Milk quota and support schemes

Milk quota

EU's agricultural support schemes

Legal conditions

Political conditions

Exchange rate

Working conditions

Qualified employees

Payroll costs

Industrial injury

Figure 14 – Business environment and risk characteristics

Shareholder information

Share capital

Shareholder composition

Capital structure

Shareholdings of Management and Board of Directors

Dividend

The FirstFarms share

Share price development 2015

Insider register

Annual general meeting

Investor Relations

Dialogue and contact

Company announcements from FirstFarms A/S

Published company announcements in 2015

Published company announcements in 2016

Expected company announcements in 2016

Company information

Company

Board of Directors

Management

Auditors

Annual general meeting

Group structure

Statement for corporate social responsibility

Environment

Animal welfare

Goals for the underrepresented sex

Statement for corporate governance cp. the accounts act's section 107b

Recommendations for good corporate governance

FirstFarms Annual Report 2015