Coop Summit Quebec 2012

Round table on future COOP financing

Svend Erik Sørensen, Danish Crown

Danish Crown is a primary cooperative

• Each single farmer has direct membership

• Supply directly from the single farm to the coop under full price transparency

• Elected management in two levels only

• A commercial supply chain – not a political body

• All non-retained earnings are paid back to the members at year-end

• A robust business model with a high implicit credit rating

Our development is based on the coop model

• Our lean and direct coop model has served us for 125 years and put us on the global scene

• Investments beyond the home base requires more equity

• Sooner or later we will reach the limit of what equity can be sourced from members

• The GFC has increased the need for equity

• COOPs with an international growth strategy should start looking for other equity sources

Limitations in attracting more coop equity from members

• European farmers under financial pressure with limited debt capacity

• Many would prefer to invest in developing their own farming enterprise

• Concentration among farmers increases the challenge

• Collective investment decisions become difficult ~ individual investments may not be coop compatible

• A potential barrier for attracting new members

Value creation and control – option 1

Value creation by growth and development

Time

Maximum growth under full

COOP regime

Full coop control given up but growth

continued

Value creation and control – option 2

Value creation by growth and development

Time

Maximum growth under full

COOP regime

Control maintained but growth and

value lost

Danish CrownCOOP

Danish Crown COOP

Danish Crown Ltd.

BEFORE AFTER

We have prepared our group structure for new investors

New shareholders

can be added

... and thereby increased our financial flexibility

Member equity

Financialinvestors

Internat.mergers

Listing / IPO

Transfer to Ltd.structure

Here we are

To be in place if and when the equity base is expanded:

• The company must be a good investment ! – earnings, technology, market position, growth

potential

• Governance model satisfying all stakeholders

• Transparent and market based trading and reporting

• The right time window

• We should open the door for new partners

• We need to make it attractive for new partners to enter through the door

• We need to ensure a fair ticket price