Annual Report and Financial Statements 31 March 2007 CONTENTS Directors and Administration……................... 2 Summary Sheet…………………….................. 3 Chairman’s Statement……………................... 4 About the Company………………................... 5 - 7 About Cuba…………………………................. 8 - 13 Investment Review…………………................. 14 - 17 Schedule of Investments………….................. 18 - 19 Directors’ Report……………………................ 20 - 22 Financial Statements………………................. 23 - 39 The opinions expressed in the sections “About Cuba” and “Investment Review” are those of the Investment Manager. The Investment Review is included in this Annual Report to provide background information to Shareholders. The information is selective and should not be used as the basis of a decision to buy or sell any particular security. Much of the information, statistics and forecasts contained in the Investment Review has been obtained or extracted from published sources and documents but no attempt has been made to verify the accuracy of such data. Information relating to Cuba may be incomplete and unreliable. Investment in Cuba may involve greater than normal risk and is not suitable for unsophisticated investors. Past performance is not a guide to future performance. 1 DIRECTORS AND ADMINISTRATION REGISTERED OFFICE Frances House, Sir William Place St Peter Port, Guernsey GY1 4HQ Tel. +44 (1481) 723573 Fax +44 (1481) 732131 REGISTRATION NUMBER 30083 INVESTMENT MANAGER ZAPA International Management Ltd. c/o CEIBA Property Corporation Ltd. Miramar Trade Center, Ed. Barcelona, Suite 401 5th Avenue, between 76 and 78, Miramar, Playa Havana, Republic of Cuba Tel. +53 (7) 2047934 Fax +53 (7) 2047935 ADMINISTRATOR, REGISTRAR, CUSTODIAN AND SECRETARY Bachmann Fund Administration Limited Frances House, Sir William Place St Peter Port, Guernsey GY1 4HQ PRINCIPAL BANKER Barclays Private Clients International Limited Le Marchant House, Le Truchot St Peter Port, Guernsey GY1 3BE LEGAL ADVISORS Maclay, Murray & Spens Solicitors 5 Old Bailey EC 4M 7JX London, England INDEPENDENT AUDITORS PricewaterhouseCoopers CI LLP, Guernsey National Westminster House Le Truchot, St Peter Port, Guernsey GY1 4ND DIRECTORS Sir John Morgan (Chairman) Colin Kingsnorth Sebastiaan A.C. Berger Jaime García-Andrade Federico Spinola Martin Lancaster (Appointed 10 July 2006) Peter Fletcher (Appointed 21 February 2007) Enrique Rottenberg (Appointed 21 February 2007) 2 SUMMARY SHEET 31 March 2007 31 March 2006 Total Net Assets (Company) € 75,614,289 € 54,398,817 Shares in Issue 102,732,188 75,006,523 Net Asset Value per Share € 0.7360 € 0.7251 Dividends for the Year Nil* € 3,079,613* Yield 7.2% 6.5% * The 2005/2006 year-end dividends were declared on 18 May 2006 and are not included in the NAV per Share as at 31 March 2006 (See note 7 of the Financial Statements). COMPANY NAV/SHARE PLUS DISTRIBUTED DIVIDENDS (March 2003 - March 2007) COMPANY NET ASSET VALUE (March 2003 - March 2007) 3 CHAIRMAN´S STATEMENT Dear Shareholders, I believe that it is fair to say that, as a result of years of hard work, a rigorous professional approach and the development of an excellent relationship with the Cuban authorities, CEIBA Investments Ltd. (“CEIBA Investments” or the “Company”) is presently considered to be the leading foreign investor in Cuba’s commercial real estate sector. In particular, as a result of various transactions executed by the Company during the past financial year, CEIBA Investments is now the controlling shareholder in the foreign partner of Inmobiliaria Monte Barreto S.A., Cuba’s largest real estate joint venture, which has constructed and manages the Miramar Trade Center complex. The successful placing in March 2007 of approximately €16M of new capital was used in part to pay for this acquisition. The latest Placing was oversubscribed and almost entirely taken up by existing shareholders. In the year since the illness of Fidel Castro was first announced, Cuba has maintained a high degree of social and political stability, to the surprise of many. Although significant uncertainty continues to surround the future role that Fidel will play in the country, it is looking more and more likely that the provisional team led by Raúl Castro and other senior ministers will remain in control of day-to-day government affairs and that this team will generally adopt a more favourable view towards renewed foreign investment as a means to drive the Cuban economy forward. We believe that the Company will be uniquely positioned to take advantage of new opportunities as they arise in this challenging new environment. Indeed, in recent months, the Company has been able to rapidly advance a number of existing and exciting new projects. Amongst others, advanced negotiations are presently underway regarding the build-out of further phases of the Miramar Trade Center to increase the existing rentable area of approximately 56,000 m2 to over 120,000 m2. The Company is also discussing the incorporation of a new Cuban joint venture company for the construction and management of new office and apartment complexes in Varadero, Cuba’s principal beach resort destination. In addition, the Company has executed a letter of intent regarding the construction and management of a recreational and commercial complex to be constructed on a 15 hectare plot in Varadero, and is presently waiting for the approval of the Cuban authorities for the proposed extension to 50 years of the land surface rights for the TosCuba project, a project for the construction and management of a 292 room beach hotel resort to be located near the city of Trinidad. Numerous other projects are also under development. In order to carry out these projects and pursue other investment opportunities as they present themselves, it is likely that the Company will, during the course of its present financial year, return to the capital markets to raise substantial new funds. Before doing so, the Company intends to issue to its present shareholders a one-for-one subscription right having a term of three years. In summary, the Company continues to expand and further improve its already unique position in a very challenging investment market. It is in an excellent position to profit from future developments and is committed to continue to create value for its shareholders. Your continuing support and confidence in CEIBA Investments Ltd. is very much appreciated. Sir John Morgan Chairman 4 ABOUT THE COMPANY Introduction CEIBA Investments Ltd. (the “Company” or “CEIBA Investments”) is an investment company registered with limited liability under the laws of Guernsey, Channel Islands. The Company was formerly known as CEIBA Finance Ltd. and officially changed its name effective on 12 January 2007. The Company was listed on the Channel Islands Stock Exchange (CISX) on 13 May 2004 (trading symbol CBA). The Company has been listed on the London Stock Exchange service for mid-cap and most AIM listed securities, SEAQ, since 29 July 2004. On 31 March 2007, the Company had 102,732,188 Shares in issue, having a nominal value of €0.10 per Share. Shares in the Company are issued in certificated form, and may be held and settled through Clearstream. Shares may be purchased and sold through non-US brokers. The Articles of Association of the Company prohibit US Persons (as this term is defined in the US Cuban Assets Control Regulations) from investing in the Company or holding Shares on behalf of third parties. Investment Policy At a meeting of the Board of Directors of the Company held on 21 February 2007, the following investment policy of the Company was adopted: Principal Investment Objective The principal investment objective of CEIBA Investments is to achieve long-term capital growth from direct and indirect investment in or with Cuban businesses, balanced by current income from interest-bearing financial instruments and other financial transactions and revenue- generating investments primarily related to Cuba. Investment Policies The Company may make any investment primarily related to Cuba, but the primary focus of the Company will be to: make long-term investments in Cuba's real estate sector; take participations in listed and unlisted companies, joint ventures and other foreign investment vehicles and entities generating substantially all of their revenues from activities related to Cuba, whether incorporated in Cuba or elsewhere; participate in development projects in Cuba; arrange and invest in interest-bearing financial instruments and other financial transactions related to Cuba. The Company may invest with Cuban partners in Cuban and non-Cuban companies, joint ventures and other entities that earn all or a substantial part of their revenues from activities outside Cuba, although such investments will normally be limited to less than 10% of the total assets of the Company, unless with prior Shareholder approval. All investment decisions relating to the portfolio of the Company will be made by the Investment Manager under the supervision of the Board of Directors of the Company. 5 In the case of direct or indirect equity investments, preference will be given to projects where: ABOUT THE COMPANY there is an experienced foreign or foreign-trained management team; the Company will have a sufficient interest that will allow the Company to influence management decisions; accounting, auditing and financial reporting are carried out to an internationally acceptable standard; and a suitable exit strategy has been identified. Investments and financial