Annual Report and Consolidated Financial Statements 31 March 2015 Cover: Vintage cars in Havana’s Malecon. TABLE OF CONTENTS DIRECTORS AND MANAGEMENT . 2 ADMINISTRATION AND KEY ADVISERS . 2 FINANCIAL HIGHLIGHTS . 3 CHAIRMAN’S STATEMENT . 4 MANAGEMENT DISCUSSION & ANALYSIS . 5 INTRODUCTION . 5 FORWARD–LOOKING STATEMENTS . 5 OVERVIEW OF THE BUSINESS . 6 BUSINESS STRATEGIES OF THE COMPANY . 7 RECENT DEVELOPMENTS . 9 INVESTMENTS OF THE COMPANY . 14 Performance Measurement . 14 Key Performance Drivers . 15 Commercial Properties . 16 Hotel Properties . 18 Development Projects . 23 Other Investments . 23 OTHER ASSETS AND ACTIVITIES . 24 COMMITMENTS AND CONTINGENCIES . 24 LIQUIDITY . 24 DISCLOSURE OF OUTSTANDING SHARE DATA . 25 DIVIDENDS . 25 OPERATING RESULTS . 26 Income . 26 Operating Expenses . 27 Change in Fair Value of Equity Investments . 28 Taxation . 31 RISKS AND UNCERTAINTIES . 31 Cuba Risks . 31 Real Estates Risks . 35 Tourism Risks . 38 CRITICAL ACCOUNTING POLICIES AND ESTIMATES . 39 Changes in Accounting Policies . 39 Critical Accounting Policies . 42 Use of Estimates . 43 RELATED PARTY TRANSACTIONS . 43 DIRECTORS’ report . 44 STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE CONSOLIDATED FINANCIAL STATEMENTS . 45 CONSOLIDATED FINANCIAL STATEMENTS . 46 INDEPENDENT AUDITORS’ Report . 46 CONSOLIDATED STATEMENT OF FINANCIAL POSITION . 48 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME . 49 CONSOLIDATED STATEMENT OF CASH FLOWS . 50 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY . 51 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS . 52 1 DIRECTORS AND MANAGEMENT DIRECTORS MANAGEMENT John Anthony Herring (Chairman) Sebastiaan A.C. Berger Colin Kingsnorth Cameron Young Sebastiaan A.C. Berger Paul S. Austin Enrique Rottenberg Enrique Rottenberg Peter Fletcher ISIN CODE (ORDINARY SHARES) REGISTERED OFFICE GG00B5491D76 CEIBA Investments Limited Frances House, Sir William Place REGISTRATION NUMBER St. Peter Port, Guernsey 30083 Channel Islands GY1 4HQ ADMINISTRATION AND KEY ADVISERS ADMINISTRATOR, CUSTODIAN AND SECRETARY INDEPENDENT AUDITORS JTC (Guernsey) Limited Ernst & Young, Caribbean Professional Services Limited Frances House, Sir William Place Worthing Corporate Center St. Peter Port, Guernsey Christ Church, BB15008 Channel Islands GY1 4HQ Barbados REGISTRAR LEGAL ADVISERS Ansons Registrars Limited Carey Olsen Anson Place, Mill Court, La Charrotterie PO Box 98, Carey House, Les Banques St. Peter Port, Guernsey St. Peter Port, Guernsey Channel Islands GY1 1EJ Channel Islands GY1 4BZ 2 FINANCIAL HIGHLIGHTS CEIBA Investments Limited (the “Company” or “CEIBA”) is an international investment and development company that was incorporated in 1995 in Guernsey, Channel Islands, under registration number 30083, for the purpose of investing in Cuba. The Company is organized under The Companies (Guernsey) Law 2008. The registered office of the Company is located at Frances House, Sir William Place, St. Peter Port, Guernsey, Channel Islands GY1 4HQ. CEIBA is exclusively dedicated to investment in Cuba. It may invest in any Cuba-related project but its pri- mary focus is on the development and acquisition of commercial real estate and hotel properties and other prioritized sectors of the Cuban economy. The activities of CEIBA are presently comprised of two principal operating segments: (1) commercial real estate investments, and (2) tourism real estate investments. The real estate investments of the Company are primarily made up of participations in Cuban joint venture com- panies that own the underlying real estate assets. The following is a summary of the Company’s financial information: 31 March 2015 31 March 2014 US$ US$ Results of operations Total income 9,417,091 7,428,126 Change in fair value of equity investments 10,936,797 5,772,036 Total comprehensive profit 15,158,576 9,979,179 Basic and diluted earnings per share 1.14 0.73 Balance Sheet Total assets 118,501,376 108,014,152 Total liabilities (1,756,480) (1,696,719) Equity attributable to the shareholders of the parent 116,062,708 104,893,318 Dividends paid 4,000,000 4,000,000 Dividends per share 0.297 0.297 Total shares in issue 13,458,947 13,458,947 Net asset value per share 8.6235 7.7936 3 CHAIRMan’s STATEMENT On behalf of the Board of Directors, I am pleased to present the annual report and consolidated financial statements of CEIBA Investments Limited for the year ended 31 March 2015. Last year I commented here that “one may hope that US policy towards Cuba ultimately finds a more positive footing, since it remains clear that improved relations between the United States and Cuba will be beneficial to the investments and operations of the Company”. On 17th December 2014, this hope came to pass and a long-overdue, major first step in this direction was finally taken. On that date historic announcements were made simultaneously by President Castro and President Obama laying out a new and positive future for US-Cuban relations. While the full embargo has yet to be lifted – since that would require the approval of Congress – the re-establishment of formal diplomatic relations announced on 1 July 2015, after more than 50 years of estrangement, is a further important milestone in the road to normalisation. In parallel, the internal reforms being implemented by the Cuban government have continued apace, result- ing in greater optimism and a wide range of new opportunities in the country, both for the local population and the foreign investment community. The ongoing favourable effects of these improvements are discussed in greater detail later in this annual report and I shall just observe that I believe that they will have a considerable positive impact on the future of the country as well as on the interests of CEIBA Investments. The first signs of this are demonstrated by the improving foreign investment climate on the ground in Havana and growing investor interest in the affairs of the Company. During the year, the Company received dividend income from its investments totalling US$7,755,757, an increase of approximately US$1.3 million over the prior year, while operational costs have remained broadly in line with last year. As at 31 March 2015, the net assets of the Company attributable to shareholders were valued at approximately US$116 million (not including non-controlling interests), which compares with ap- proximately US$105 million at 31 March 2014. This increase is primarily driven by uplifts in the fair values of the Company’s investments reflecting material enhancements in performance and future outlook, most notably in respect of the Miramar Trade Center, and by increased dividend income received during the year. Overall, the Board is increasingly optimistic regarding the future prospects for the Company’s investments, which are expected to benefit further from the continued modernisation efforts and reforms being implement- ed, as well as from the ongoing restoration of relations between the United States and Cuba. As outlined in my correspondence to shareholders earlier this year, the Board plans to capitalise on improved market condi- tions and investor interest by seeking a listing of the shares of the Company on the Toronto Stock Exchange during the present financial year. Given the peculiarities and rapidly evolving nature of the Cuban foreign investment market, as well as the Company´s position as a first mover into international capital markets in the Cuban context, we shall proceed towards a listing with care. CEIBA has excellent operational assets in Cuba’s commercial and tourism real estate sectors, and remains well positioned and fully committed to participate in Cuba’s exciting future. The Board’s policy will continue to be centred upon properly managing the Company’s current portfolio while seeking to position the Company to enable it to enhance its investment pipeline and pursue new opportunities as they arise. I would like to thank the executive management team for their contribution in managing the assets of the Company portfolio and I would also like to extend my thanks to our shareholders for their continued sup- port. John Herring Chairman 4 MANAGEMENT DISCUSSION & ANALYSIS INTRODUCTION This Management Discussion and Analysis on the results of operations and financial position (“MD&A”) of CEIBA Investments Limited contains Management’s analysis of the businesses, assets, activities and financial results of the Company and should be read in conjunction with the audited consolidated financial statements of the Company for the year ended 31 March 2015 that have been prepared in accordance with International Financial Reporting Standards (IFRS) as prescribed by the International Accounting Standards Board (IASB). The information contained in this MD&A relates to CEIBA, its subsidiaries and interests in Cuban joint venture companies for the year ended 31 March 2015, unless otherwise indicated. The information in this MD&A is based on information available to Management as of 30 June 2015. The financial year of the Company ends on 31 March each year. In this MD&A, references to the “Company” or to “CEIBA” are to CEIBA Investments Limited, together with its consolidated subsidiaries and its propor- tionate interests in joint venture companies. References to “Management”, unless otherwise indicated, are to the management of the Company. For information purposes, this MD&A contains certain figures representing the operations and performance measures of the Cuban joint venture companies that are included within the equity investments of the Com- pany.