Ceiba Investme. Regulatory News (CBA)

30 April 2019

CEIBA INVESTMENTS LIMITED (THE "COMPANY")

ANNUAL FINANCIAL REPORT

The Board of the Company is pleased to announce its results for the year ended 31 December 2018.

To view the Company's Annual Financial Report please follow the link below:

http://www.rns-pdf.londonstockexchange.com/rns/6411X_1-2019-4-30.pdf

In addition, to comply with DTR 4.1 please find below the full text of the annual financial report and the notice of the Annual General Meeting. The report will also shortly be available on the Company's website, http://www.ceibalimited.co.uk/ceiba.

ANNUAL GENERAL MEETING

The Annual General Meeting of the Company will be held at the offices of JTC Fund Solutions (Guernsey) Limited, Dorey Court, Admiral Park, St. Peter Port, Guernsey, GY1 2HT, Channel Islands on 18 June 2019 at 2.00pm.

For further information, please contact:

COMPANY OVERVIEW

GENERAL

CEIBA Investments Limited ("CEIBA" or the "Company") is a Guernsey-incorporated, closed-ended investment company, with registered number 30083. Its shares were listed (the "Listing") on the Specialist Fund Segment ("SFS") of the London Stock Exchange's Main Market on 22 October 2018, where it currently trades under the symbol CBA. The Company is governed by a Board of Directors, the majority of whom are independent. Like many other investment companies, it outsources its investment management, administration and other services to third party providers. The Company does not have a fixed life. Through its consolidated subsidiaries (together with the Company, the "Group"), the Company invests in Cuban real estate and other assets by acquiring shares in Cuban joint venture companies that own the underlying properties. The Company also arranges and invests in financial instruments granted in favour of Cuban borrowers.

FINANCIAL HIGHLIGHTS AS AT 31 DECEMBER 2018 IN £ AND US$ (FOREX: 1.2691)3

Given the fact that the Net Asset Value ("NAV") and share price of the Company are quoted in Sterling (£) and that the functional currency of the Company is the U.S. Dollar (US$), the financial highlights of the Company set out below are being provided in both currencies, applying the applicable exchange rate as at 31 December 2018.

In £

In US$

1 These are considered Alternative Performance Measures. See glossary below for more information.

2 These figures which are Alternative Performance Measures, differ from the figures derived from the audited Consolidated Financial Statements . The figures are calculated in full accordance with IFRS, except that they include an adjustment recognising the full amount of US$5.0m / £3.9m received from Aberdeen Standard Fund Managers Limited in connection with the execution of the Management Agreement in the Statement of Comprehensive Income for the year ended 31 December 2018, rather than deferring this amount over the five-year term of the Management Agreement as required by IFRS. This adjustment results in the increase of the net income attributable to the shareholders of the Company for the year ended 31 December 2018 by US$4.9m / £3.8m. There is no impact on prior year numbers.

3 No prior year comparisons appear in the table of Financial Highlights above because the Company completed the Listing of its Ordinary Shares on the SFS during the financial year and subsequently adopted new Key Performance Indicators some of which are set out above. In the future, the Company intends to report its Financial Highlights annually, including a comparator against the previous year's performance.

MANAGEMENT

The Company has appointed Aberdeen Standard Fund Managers Limited ("ASFML"or the "AIFM") as the Company's alternative investment fund manager to provide portfolio and risk management services to the Company. The AIFM has delegated portfolio management to Aberdeen Asset Investments Limited (the "Investment Manager"). Both ASFML and the Investment Manager are wholly-owned subsidiaries of Standard Life Aberdeen plc, a publicly-quoted company on the London Stock Exchange. Aberdeen Standard Investments ("ASI") is a brand of Standard Life Aberdeen plc. References throughout this document to ASI refer to both the AIFM and the Investment Manager.

FINANCIAL CALENDAR

CHAIRMAN'S STATEMENT

OVERVIEW

I am pleased to report on the performance of CEIBA for the financial year ended 31 December 2018. This was a year that saw some very significant developments and progress within the Group.

A key event was the successful Initial Public Offering ("IPO") and Listing of all Ordinary Shares of the Company on the Specialist Fund Segment of the Main Market of the London Stock Exchange on 22 October 2018. In anticipation of the IPO, the Company carried out an 8-for-1 share split and has externalised its management by entering into a management agreement with ASI. Through the IPO, the Company raised gross proceeds of £30 million (approximately US$39 million) in new capital at an issue price of 100 pence per share (approximately US$1.30 per share).

The IPO and Listing took place against a less-than-favourable market backdrop and we are delighted to have ASI on board and are grateful for the work and efforts that it, our brokers Nplus1 Singer, and other advisers have put in to help the Company achieve this important milestone.

Following the IPO and Listing:

- we successfully concluded the merger of the two Cuban joint venture companies through which we hold our interests in four operating hotels in Cuba, with extended ground leases to 31 December 2042;

- we repaid a €30 million (approximately US$34 million) bridge loan that was outstanding; and

- the Toscuba joint venture commenced construction of a new 400 room beach resort hotel on prime beach-front property next to the historic town of Trinidad, on the southern coast of Cuba.

CUBA

During 2018 several carefully planned and directed steps were taken that are changing Cuba's internal political landscape.

· In April 2018, Raul Castro stepped down and Miguel Díaz Canel became Cuba's new President. Following his appointment, nine new cabinet ministers were named and more recently another three cabinet ministers (transport, finance and sports) have been replaced.

· In parallel, a new Constitution was drafted and subjected to extensive public consultations throughout the year and approved by the National Assembly in December 2018. It was ratified by a referendum that took place in February 2019. Among the various proposed changes is an explicit statement that foreign investment is an important element of Cuba's economic development. In addition, it contains some legal guarantees regarding personal rights, such as the right to file a petition for habeas corpus, as well as a declaration of respect for the "freedoms of thought, conscience and expression" that did not appear in the previous version of the Constitution passed in 1976. The board views these changes in a positive light.

In economic terms, despite increased production of nickel and sugar and a slight increase in tourist arrivals, 2018 proved to be a difficult year for Cuba, with GDP growing by just 1.2%, below the 2% figure that was originally forecast by the Cuban government. During the year, the headwinds faced by the Cuban economy included the after-effects of the extremely powerful and catastrophic Hurricane Irma in September 2017, the political turmoil and financial collapse of its strategic ally Venezuela, and the strengthening of travel restrictions and other measures by the Trump administration. The latter had a strong impact on individual travel from the U.S. to Cuba in 2018, and has discouraged business relationships that had been strengthened under the Obama administration.

GDP growth for the remainder of 2019 has been forecast by the Cuban government at 1.5%, which is only modestly stronger than the level achieved in 2018. The 2019 forecast is based on the continuation of an austerity programme introduced in 2016 and strategic economic goals to develop in areas such as infrastructure, industry, sugar production and tourism, and to reduce foreign debts.

US - CUBA RELATIONS

US relations with Cuba is a key influencing factor in determining CEIBA's trading results and the valuation of its assets. Since the end of the presidency of Barack Obama, the relationship between the U.S. administration and Cuba has unquestionably deteriorated. Within his administration, President Trump has appointed a number of individuals who may be described as "Cuba hardliners", and over the course of the Trump presidency U.S. policy towards Cuba has gradually hardened once again. This process culminated in April 2019 with the announcement of numerous further measures restricting U.S. travel and remittances to Cuba and fully bringing into force Title III of the Helms Burton Act, which previously had been suspended for successive six-month-periods by each of Presidents Clinton, Bush, Obama and Trump since the adoption of the Act in 1996. Although no information has as yet become available on the scope, timing or implementation of the regulatory changes necessary to carry out these actions, they will undoubtedly have a short term negative impact on the foreign investment climate and economy in Cuba, and therefore possibly on the Group and its operations. However, as the Company has witnessed in past periods of more aggressive U.S. policy towards Cuba, the hardened political stance of the Trump administration and the absence of U.S. investors in Cuba at the same time also offers a window of opportunity which is open to non-U.S. investors, such as the Company.

 TOURISM

The number of tourist arrivals in 2018 was approximately 4.8 million, which is the highest number of visitors in Cuba's history according to Cuba government statistics, since records began. However, the record number of visitors reflects a significant decrease in U.S. individual visitors and an offsetting increase in the number of visitors from cruise ships, who spend significantly less per visit than other categories of tourists. For 2019, Cuba is projecting approximately 5.1 million visitors, an increase of over 6% compared to 2018.

EARNINGS & NAV RETURN

The table below provides information relating to the NAV of the Company on the dividend reinvestment dates during the years ended 31 December 2018 and 31 December 2017.

1 Net comprehensive loss for the year includes a loss on changes in the fair value of equity investments of (US$4,483,525).

The net income for the year attributable to the shareholders was US$1,775,926 / £1,399,359 (9 months ending 31 December 2017: net loss of US$1,475,018 / £1,097,484), which resulted in a year end NAV per share of US$1.49 / £1.18 (2017: US$1.63 / £1.21). The principal factors that contributed negatively to the results were the loss on change in the fair value of the Meliã Habana Hotel, interest expense on the €30 million bridge loan facility, management bonuses and expenses related to the IPO on the SFS. The interest expense on the bridge loan facility, management bonuses and the expenses related to the IPO are non-recurring items.

Like many hotels in Havana, the occupancy and room rates of the Meliã Habana Hotel were impacted in 2018 by the general downturn in tourism arrivals to the city in the aftermath of the passage of Hurricane Irma in late 2017 as well as the significant decline in individual U.S. travel following the implementation of new travel restrictions by the Trump Administration.

DIVIDEND

The Board announces that the Company will pay a dividend of US$0.0625 per share on 14 June 2019 to Shareholders on the register on 31 May 2019. The ex-dividend date will be 30 May 2019. This dividend represents a yield of 4.9%, based on the Company's quoted share price as at 31 December 2018 (101.5p or US$1.2881). As set out in the Prospectus, the Company intends to pay its dividends in Sterling, although shareholders will be given the option to elect to receive their dividend in Euros (at the prevailing exchange rate at the time of payment).

THE BOARD

On 18 June 2018, and in anticipation of the Company's IPO, we welcomed Peter Cornell, Keith Corbin, and Trevor Bowen as independent non-executive Directors to the Board. Each of the new Directors brings a wealth of experience to the Board and I welcome them to the team.

At the same time, on 18 June 2018, Sebastiaan Berger and Enrique Rottenberg stepped down from the Board: Sebastiaan to assume the role of the Company's portfolio manager on behalf of ASI and Enrique to continue providing real estate development and management services to the Group.

As indicated in the Company's Prospectus issued at the time of the IPO, I shall shortly be stepping down from my role as Chairman but shall remain on the Board as a non-executive Director. Following approval of the Board, I shall be handing over the Chairman role at the conclusion of the upcoming Annual General Meeting of the Company on 18 June 2019.

THE MANAGER

As stated above, I am very pleased with the engagement of ASI as manager of the Company's portfolio of assets.

With some £34 billion in dedicated emerging markets mandates, ASI has extensive experience in investing and managing assets in emerging markets and the Board is confident that this expertise will be of very significant benefit to the overall management and operations of CEIBA. It is also important to highlight that the key operational management team of the Group has not changed and Sebastiaan Berger, who has acted as managing director of the Company for over 17 years has now joined ASI within CEIBA's portfolio management team and his work remains focused on operating and growing the Company's assets. Sebastiaan works alongside Real Estate Specialist Fund Managers at ASI, with the former management team, Cameron Young, Paul Austin, Gilberto Perez and Enrique Rottenberg continuing to provide key services to the Group.

ANNUAL GENERAL MEETING

The Annual General Meeting of the Company will be held at the offices of JTC Fund Solutions (Guernsey) Limited, Dorey Court, Admiral Park, St. Peter Port, Guernsey, GY1 2HT Channel Islands on 18 June 2019 at 2.00pm. The Notice of Annual General Meeting can be found below.

OUTLOOK

The political and economic situation in Venezuela and the renewed tensions between the US and Cuba described above have had, and will likely in the short term continue to have a negative impact on Cuba's economy and its overall liquidity position. Despite these external headwinds, there is no question that Cuba's economy has been showing positive developments. The country continues to welcome increasing numbers of tourists, and shows a stronger interest in attracting new foreign investment. In addition, Cuba maintains a very positive and productive relationship with Canada and most European nations (which presently are the main source markets for tourists visiting the island). This constructive relationship was most recently demonstrated by the productive and very warmly-received official visit to Cuba by their Royal Highnesses, the Prince of Wales and the Duchess of Cornwall in March 2019, underlining the UK's positive general approach of engagement and dialogue with Cuba.

In addition, the Board is grateful to the governments of Spain and Cuba, who have demonstrated a collaborative and practical approach to the encouragement of foreign investment in Cuba and have established a Debt Conversion Programme that will benefit two of the joint venture companies in which the Group has an equity interest. This Programme, which is described in greater detail in the Investment Manager's Review, is a very positive step for the Cuban foreign investment market and for the projects of the Group.

The Group has been managed by the same management team for more than 17 years and past performance (which is not a guide to future results) has shown a substantial increase in net asset value per share on an annualised basis achieved against changeable, and sometimes challenging, economic backdrops as set out in the table below:-

Note: These are Alternative Performance Measures. See glossary below for more information.

The Board is encouraged overall by the investment that is underway in respect of the new hotel near Trinidad, the modernization and extension of the Meliã Habana Hotel, and the planning of new steps to redevelop and optimise the use of the 28 hectare plot upon which the Varadero Hotels are constructed. 2019 is expected to be a challenging year for Cuba, the environment in which the Group operates, but at the same time it may very well offer new opportunities that the Group may benefit from in the absence of U.S. competition and with a view to increase its long term capital growth potential.

As Havana celebrates its 500th anniversary this year, and notwithstanding short term challenges, the Board remains optimistic on the long-term opportunities and growth prospects of the Cuban tourism industry and economy, and on the outlook for the Group in the coming years.

John Herring

Chairman, 29 April 2019

GENERAL INFORMATION ON THE COMPANY & ITS INVESTMENT STRATEGY

BACKGROUND/HISTORY

The Company was incorporated in 1995 in Guernsey as a closed-ended investment company with the purpose of investing in Cuba. The Company made its first Cuban investment in 1996 and its portfolio subsequently included interests in a variety of Cuban assets and businesses, including biotechnology ventures, mining, residential real estate, consumer/industrial ventures and trade finance.

In 2002 a new external investment manager was appointed to manage the Company. The founders of this external manager included Sebastiaan A.C. Berger and Cameron Young. Paul Austin subsequently joined the Company's management team in 2005.

Under this new external investment manager, the Company began to focus its investment activities on the Cuban real estate and tourism sectors, and disposed of its interests in non-complementary assets and businesses. In repositioning the business of the Company during this period, the Company developed a new investment strategy with the following main features:

· to acquire ownership interests in Cuban joint venture companies that own high-quality Cuban commercial real estate and hotel assets;

· to pursue investments in development projects through the entering into of new joint ventures with the Cuban government or the acquisition of interests in existing joint ventures;

· to arrange secured financing for Cuban borrowers, primarily in the tourism sector;

· to establish a professional "on-the-ground" management team with experience in negotiating, managing and exiting investments in Cuba; and

· to pay a regular annual dividend to Shareholders.

The Company's total equity has grown from approximately U.S.$19 million in 2001 to U.S.$206 million as at 31 December 2018. During this period the Company has also paid approximately U.S.$80 million in cash dividends.

The Company was listed on the Irish Stock Exchange from 1996 to 2002 and subsequently on the Channel Islands Stock Exchange (now known as The International Stock Exchange) from 2004 until the end of 2010. During the period from 2011 to 2018 the Company was unlisted and internally-managed.

The Company has been accepted by the Guernsey Financial Services Commission as a Registered Closed-Ended Collective Investment Scheme with effect from 11 September 2018 under The Protection of Investors (Bailiwick of Guernsey) Law, 1987 as amended.

NEW MANAGEMENT CONTRACT AND SPECIALIST FUND SEGMENT LISTING 2018

In October 2018, the Company completed an IPO and listed its Ordinary Shares on the Specialist Fund Segment of the Main Market of the London Stock Exchange, where it presently trades under the symbol CBA. As at 31 December 2018, its issued share capital consisted of 137,671,576 fully paid Ordinary Shares (2017 - 13,458,947 Ordinary Shares prior to an 8 for 1 share split). As part of the process for listing on the SFS, the Company reconverted itself to a registered collective investment scheme regulated by the Guernsey Financial Services Commission and re-externalised management.

In addition, the Company entered into a Management Agreement under which the Company has appointed ASFML as the Company's alternative investment fund manager to provide portfolio and risk management services to the Company. ASFML has delegated portfolio management to the Investment Manager. Both ASFML and the Investment Manager are wholly-owned subsidiaries of Standard Life Aberdeen plc.

INVESTMENT OBJECTIVE

The investment objective of the Company is to provide a regular level of income and substantial capital growth.

INVESTMENT POLICY

The Company is a country fund with a primary focus on Cuban real estate assets. The Company will seek to deliver the investment objective primarily through investment in, and management of, a portfolio of Cuban real estate assets, with a focus on the tourism-related and commercial property sectors. Cuban real estate assets may also include infrastructure, industrial, retail, logistics, residential and mixed-use assets (including development projects).

The Company may also invest in any type of financial instrument or credit facility secured by Cuba-related cash flows.

In addition, subject to the investment restrictions set out below, the Company may invest in other Cuba-related businesses, where such are considered by the Investment Manager to be complementary to the Company's core portfolio ("Other Cuban Assets"). Other Cuban Assets may include, but are not limited to, Cuba-related businesses in the construction or construction supply, logistics, energy, technology and light or heavy industrial sectors.

Investments may be made through equity, debt or a combination of both.

The Company will invest either directly or through holdings in special purpose vehicles (SPVs), joint venture vehicles, partnerships, trusts or other structures. The Cuban Foreign Investment Act guarantees that the holders of interests in Cuban joint venture companies may transfer their interests, subject always to agreement between the parties and the approval of the Cuban government.

INVESTMENT RESTRICTIONS

The following investment limits and restrictions will apply to the Company and its business which, where appropriate, will be measured at the time of investment:

· the Company will not knowingly or intentionally use or benefit from confiscated property to which a claim is held by a Person subject to U.S. jurisdiction;

· the Company may invest 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, in aggregate, be limited to less than 10 per cent. of the Gross Asset Value;

· save for Monte Barreto (please see the Investment Manager's Review for more information on this asset), the Company's maximum exposure to any one asset will not exceed 30 per cent. of the Gross Asset Value;

· no more than 20 per cent. of the Gross Asset Value will be invested in Other Cuban Assets; and

· no more than 20 per cent. of the Gross Asset Value will be exposed to "greenfield" real estate development projects, being new-build construction projects carried out on undeveloped land.

The Company will not be required to dispose of any asset or to re-balance the Portfolio as a result of a change in the respective valuations of its assets. The investment limits detailed above will apply to the Group as a whole on a look through basis, i.e. where assets are held through subsidiaries, SPVs, or equivalent holding vehicles, the Company will look through the holding vehicle to the underlying assets when applying the investment limits.

KEY PERFORMANCE INDICATORS ("KPIs")

The KPIs by which the Company measures its economic performance include:

· Total income

· Net income

· Total net assets (NAV)

· Net asset value per share*

· Non IFRS net asset value per share*

· Net asset value total return*

· Market capitalisation

· Premium / Discount to NAV*

· Dividend yield*

· Dividend per share

· Gain/Loss per share

· Shares in issue

* These are considered Alternative Performance Measures.

In addition to the above measures, the Board also regularly monitors the following KPIs of the joint venture companies in which the Company is invested and their underlying real estate assets, all of which are Alternative Performance Measures.

In the case of commercial properties, KPIs include:

· Occupancy levels

· Average monthly rate per square meter (AMR)

· Earnings before interest, tax, depreciation and amortisation (EBITDA)

· Net income after tax

In the case of hotel properties, other key indicators include:

· Occupancy levels

· Average Daily Rate per room (ADR)

· Revenue per available room (RevPAR)

· EBITDA

· Net income after tax

The Board monitors the financial performance of the Cuban joint venture companies owning the commercial and hotel properties using these KPIs with the objective, using its best efforts to influence the management decisions of the Cuban joint venture companies through representation on their corporate bodies, of generating reliable and growing cash flow for the Cuban joint venture companies, which in turn will be reflected in reliable and growing dividend streams in favour of the Company.

The relevant information is produced by the management of the underlying Cuban joint venture companies and may not be calculated in accordance with IFRS or have any standardised meaning prescribed by IFRS, EBITDA and Net income after tax are calculated in accordance with IFRS. Consequently, comparisons to similar measures presented by other entities operating in other places should be undertaken with care.

PRINCIPAL RISKS

PRINCIPAL RISKS & UNCERTAINTIES

There are a number of risks which, if they occurred, could have a material adverse effect on the Company and its financial condition, performance and prospects.

The Company invests in Cuba, which may increase the risk as compared to investing in similar assets in other jurisdictions.

A full description of the risks faced by the Company is contained in the Company`s Prospectus and should be referred to prior to any investment decision.

Risk Management and Internal Controls

The Board is responsible for the management of risk and regularly carries out a robust assessment of the principal risks and uncertainties affecting the business, discusses how these may impact on operations, performance and solvency and what mitigating actions, if any, can be taken. The Audit Committee is responsible for ensuring that the internal control procedures are robust and that risk management processes are appropriate.

Principal Risks and Uncertainties

The most significant risks identified by the Board appear in the table below, together with a description of the possible impact thereof, mitigating actions taken by the Company and an assessment of how such risks have changed during the year.

The Board relies upon its external service providers to ensure the Company's compliance with applicable regulations and, from time to time, employs external advisers to advise on specific concerns.

The financial risks associated with the Company include market risk, liquidity risk and credit risk, all of which are described in greater detail in note 18 to the Consolidated Financial Statements.

Following the ongoing assessment of the principal risks facing the Company, and its current position, the Board is confident that the Company will be able to continue in operation and meet its liabilities as they fall due.

VIABILITY STATEMENT

VIABILITY STATEMENT

The Board considers the Company, with no fixed life, to be a long-term investment vehicle.

The Board continually considers the prospects for the Company over the longer term. Based on the Company's current financial position, its operating model and track record, as well as the experience of the Investment Manager from both a Cuban investment and closed-end investment company perspective, the Board believes that the Company has a sound basis upon which to continue to deliver capital growth and returns over the long term.

However, for the purposes of this viability statement, the Board has decided that a period of three years is an appropriate period over which to report. All significant commitments of the Company fall within the next two years and the Company will have sufficient resources to fund them based on current levels of cash flow. Thereafter, the net income of the Company will be sufficient to fund its ongoing operations, but the Board believes that additional sources of capital or finance, or the syndication to other lenders of existing finance facilities extended to the joint venture companies, will be required prior to any significant new commitments being entered into in connection with the further development of its investment plans.

In assessing the viability of the Company over the review period, the Directors have conducted a robust review of the principal risks focusing upon the following factors:

· The principal risks as detailed in the Principal Risks reported above;

· The ongoing relevance of the Company's investment objective in the current environment;

· The level of income generated by the Company and forecast income;

· The absence or level of debt available to the Company on attractive terms;

· The valuation of the Company's property portfolio, the Investment Manager's portfolio strategy for the future and the market outlook; and

· The liquidity and cash position of the Company over the next 36 months, including the Toscuba loan commitment and the payment of dividends.

Accordingly, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for the period of assessment, which is three years from the date of this Annual Report. In making this assessment, the Board has considered the fact that matters such as significant economic volatility, a substantial change in the outlook for Cuba, or changes in investor sentiment could have an impact on the correctness of its assessment of the Company's prospects and viability in the future.

GOING CONCERN

In accordance with the guidance of the Financial Reporting Council, the Directors have undertaken to review the Company's ability to continue as a going concern.

The Directors are mindful of the principal risks and uncertainties disclosed above and the Viability Statement . Following the full repayment of the Company's bridge loan following Listing, the Company does not have any external finance. In the event that gearing becomes available in the future on attractive terms, the Board would establish gearing guidelines for the AIFM in order to maintain an appropriate level and structure of gearing.

The Directors have reviewed cash flow projections that detail revenue and liabilities and will continue to receive cashflow projections as part of the full year reporting and monitoring processes. After reviewing the cashflow projections and the significant capital commitments, the Directors believe that the Company has adequate financial resources to continue its operational existence for the foreseeable future and at least 12 months from the date of this Annual Report.

Accordingly, the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Financial Statements.

INVESTMENT MANAGER'S REVIEW

INTRODUCTION

During the 17 years since the investment team were appointed as managers of the Company's portfolio, the Net Asset Value ("NAV") accretion of CEIBA has clearly moved independently from the performance of the MSCI Frontier Index, which supports our view that the assets of the Company show little correlation generally with global events and crises, but are sensitive and responsive to changes in the relationship between the US and Cuba. The general strategy of the Company is to combine income generated by operational assets with the development, expansion and growth of its investments.

2018

The principal focus of the management team during the year has been to supervise and manage the operations, upkeep and development of the assets of the Group, but also to successfully extend the land leases of the indirectly owned operational hotels of the Group, to re-organise and simplify CEIBA's corporate and shareholder structure, to externalise CEIBA's management with the appointment of ASI as investment manager, and to assist the Company in carrying out its successful £30 million (US$39 million) IPO and Listing on the Specialist Fund Segment of the London Stock Exchange.

In line with the Prospectus published by the Company in advance of its IPO on 22 October 2018, CEIBA deployed the proceeds of the IPO during 2018 by repaying a €30 million bridge loan (US$34,195,489) provided by the Company's largest shareholder in 2017 to enable the Group to increase its interests in the operational hotel portfolio, and fund the start of construction of the 400 room hotel development in Trinidad, Cuba. The remaining funding for construction of the hotel will amongst others come from loan facilities provided by the Group using existing cash reserves and future earnings of the Group.

Total assets of the Company as at 31 December 2018 was US$268,352,002 / £211,450,636 (2017: US$268,375,632 / £211,469,255) and was approximately 88% indirectly invested in income generating Cuban commercial and tourism related real estate assets and 12% in finance facilities and cash. The total dividend income from the Cuban joint venture companies during the year 2018 was US$16.2 million (9 months ending 31 December 2017: US$8.4 million).

As mentioned in the Chairman's Statement, the net income for the year attributable to the shareholders was US$1,775,926, which resulted in a year end NAV per share of US$1.49 / £118p (2017: US$1.63/ £121p). The principal factors that contributed negatively to the results were the loss on change in the fair value of the equity investments, interest expense on the bridge loan facility, management bonuses and expenses related to the listing of the Company's shares on the SFS.

The loss on change in the fair value of the equity investments of US$4,483,525 / £3,532,838 (2017: loss of US$6,929,045 / £5,155,539) was primarily due to the decrease in the fair value of the Meliã Habana Hotel caused by lower occupancy rates and income levels compared to the prior year. The decrease of the Company's share in the fair value of the Hotel Meliã Habana, prior to excess cash adjustments at the joint venture level, was US$11,900,000 / £9,376,723.

In November 2017, the Company entered into a bridge loan agreement to borrow €30,000,000 (US$35,374,619) to finance the increase of the Company's interest in the Varadero Hotels. The bridge loan was repaid in full on 25 October 2018. During the year, the bridge loan accrued interest of €3,000,000 (US$3,560,772).

Included within the legal and professional fees of 2018 is US$912,588 attributable to the listing of the Company's Ordinary Shares on the SFS.

In addition to the above items, the NAV per share was also adversely affected by the issuance of the new IPO shares at a discount to NAV per share at the time of the listing. As a result, the negative dilution effect to the value of the shares was approximately US$0.08 (£0.06p) per share.

OPERATIONAL ASSETS

The Miramar Trade Centre - 28% of Total Assets (including non-controlling interests)

The Group is the largest foreign investor in Cuba's commercial real estate sector through its interest in the Miramar Trade Center, Havana's leading commercial real estate complex. The Group's interest in the Miramar Trade Center is held through Inmobiliaria Monte Barreto S.A. ("Monte Barreto"), the Cuban joint venture company that owns and operates the Miramar Trade Center. The Group has a 49 per cent ownership interest in Monte Barreto, with the remaining 51 per cent ownership interest indirectly held by the Cuban joint venture partner. The Miramar Trade Center is a six building complex comprising approximately 56,000 square metres (approximately 600,000 square feet) of net rentable area that constitutes the core of the Miramar business district in Havana. It has 100 per cent occupancy rates, over 250 tenants, and has very limited competition in the modern segment of the Cuban office property market.

During 2018, Monte Barreto maintained its full occupancy and experienced its strongest financial year to date with total comprehensive income of US$12.7 million / £10 million. In the prior year, Monte Barreto had total comprehensive income of US$11.5 million/ £9.1 million. The modest increase is due to Monte Barreto continuing to raise rental rates as tenant leases are renewed. The outlook for 2019 continues to be encouraging, with Monte Barreto expected to continue improving its results.

The Hotels of Miramar S.A. - 58% of Total Assets (including non-controlling interests)

CEIBA has interests in the Meliã Habana Hotel, an international category 5-star hotel in Havana, and the Meliã Las Americas Hotel and Meliã Varadero Hotel, two international category 5-star hotels in Varadero with a total of 1,227 rooms, and the Sol Palmeras Hotel, an international category 4-star hotel in Varadero with 607 rooms. All four hotels are managed and operated by Meliã Hotels International S.A. ("Meliã Hotels International").

The Company owns a 65 per cent interest in HOMASI S.A. ("HOMASI"), which in turn owns a 50 per cent interest in Miramar S.A. ("Miramar"), the Cuban joint venture company that owns the Meliã Habana Hotel and the three operating hotels in Varadero (the "Varadero Hotels" and together with the Meliã Habana Hotel the "Hotel Assets"). The other 50 per cent interest in Miramar S.A. is owned by the Cuban joint venture partner.

The balance of the share capital of HOMASI (being 35 per cent. of its share capital) is held by Meliã Hotels International (also the manager of the hotels). Through this structure the Company has an ultimate economic interest of 32.5 per cent in the Hotel Assets. As part of the restructuring carried out in conjunction with the IPO in 2018, Miramar was merged with Cuba-Canarias S.A. ("Cubacan") the Cuban joint venture company that owned the Varadero Hotels previously, with the result that all four hotels are presently owned by Miramar. The merger, together with the accompanying extension and granting of the surface rights for the four hotels to 31 December 2042, received the required Cuban government approval in September 2018, and was completed shortly following the IPO.

OPERATIONAL INVESTMENTS - RESULTS

1 Figures represent the Company's indirect interest and does not include non-controlling interests of the hotel interests.

2 Net income figures of Miramar include the results of Cubacan S.A. that was merged into Miramar in November 2018.

The Meliã Habana Hotel

The Meliã Habana Hotel is a 5-star business hotel located on prime ocean-front property in the Miramar business district of Havana, directly facing the Miramar Trade Center. The Meliã Habana Hotel has 397 rooms, including 16 suites, and is one of only seven 5-star hotels presently operating in Havana, and one of only two business hotels. The hotel offers conference facilities, numerous meeting rooms, a business centre and three executive floors and is rated "Superior First Class" by OHG International. The majority of rooms have direct ocean views, and the site has extensive gardens and the largest swimming pool of all Cuban city hotels. The hotel has been managed by Meliã Hotels International since commencing operations in September 1998.

The shareholders of Miramar have agreed, and government approval has been obtained, to proceed with an extension of the Meliã Habana Hotel, which is expected to involve, amongst other things, upgrading the existing rooms and restaurants, the construction of a further 168 new rooms and the construction of a large modern ballroom and conference centre. The surface rights over the property have been extended to 31 December 2042.

The planning and permitting process has begun and the aggregate cost of the extension is expected to be approximately U.S$35 million, of which HOMASI is expected to arrange funding of US$28 million by way of a finance facility. This investment is scheduled to be carried out within the next four years with limited disruption to the existing operations of the hotel. The first phase of construction is expected to start during the second half of 2019 and will include the addition of new rooms within the existing structure and the upgrade of all existing rooms and public areas. The remaining new rooms will be constructed in a new tower at a later stage.

As a result of the new measures adopted by the Trump administration, which greatly restricts individual U.S. travel to Cuba, and a decrease in foreign business delegations and international tourists - other than cruise ship passengers - visiting Havana, Havana's hotel segment suffered through a difficult year in 2018 and will likely have an equally challenging 2019. Although this has had a negative impact on the results of the Meliã Habana hotel, Miramar is using this period to carry out its investment program to refurbish and expand this asset. The EBITDA of the hotel in 2018 was US$7,686,699 / £6,056,811 (2017: US$13,248,588 / £10,439,357) based on a 65% room occupancy rate (2017: 74%) and revenue per available room ("RevPAR") of $112 / £88 (2017: US$164 / £129).

The Varadero Hotels

The Varadero Hotels together operate 1,437 4-star and 5-star hotel rooms, located on 28 hectares of prime beach-front property in Varadero, adjacent to the Varadero Golf Course, which is currently Cuba's only 18 hole golf course and there are no new courses currently under construction. As part of the government approval of the merger, new surface rights over the properties were granted to 31 December 2042.

The Meliã Las Americas Hotel is a 5-star luxury beach resort hotel located next to the famous Dupont House and the Varadero Golf Course. It has 340 rooms, including 90 bungalows and 14 suites, and is presently one of only four 5-star hotels in Varadero having a foreign ownership interest. Foreign ownership enables the hotel operator to maintain international standards of capital expenditure and import food rather than having to purchase exclusively from local sources. It is located on 400 metres of beachfront and operates as an all-inclusive beach resort. The hotel has been managed by Meliã Hotels International since commencing operations in 1994.

The 5-star Meliã Varadero Hotel is located next to the Meliã Las Americas Hotel and is also adjacent to the Varadero Golf Course. It has 490 rooms, including seven suites, and is another one of only four 5-star hotels in Varadero having a foreign ownership interest. It is located on 300 metres of beachfront and operates as an all-inclusive beach resort. The hotel has been managed by Meliã Hotels International since commencing operations in 1992.

The 4-star Sol Palmeras Hotel is located next to the Meliã Varadero Hotel and also borders on the Varadero Golf Course. It has 607 rooms, including 200 bungalows, of which 90 are of suite or deluxe standard. It is located on 500 metres of beachfront and operates as an all-inclusive beach resort. The hotel has been managed by Meliã Hotels International since commencing operations in 1990.

The board of directors of Miramar has agreed to proceed, subject to budget approvals, with a refurbishment and upgrade of the Varadero Hotels. Detailed plans and budgets for the upgrade and modernisation are in development. The Company estimates that the works would have a target execution phase of three to five years.

Financial information of the Varadero Hotels is as follows:

The Company's interest in Miramar is accounted for at fair value. Under this accounting treatment, dividends declared by Miramar that are attributable to the Company are recorded as dividend income in the Statement of Comprehensive Income of the Company in the period the right to receive payment is established or cash amounts have been received.

Management of Hotels

All of the operational Hotel Assets are managed externally by Meliã Hotels International, the largest international hotel operator in Cuba. The hotel management contracts pursuant to which Meliã Hotels International manages the Hotel Assets in Havana and Varadero expire in 2022. All management contracts are based on a five-year management term in line with the standard Meliã Hotels International contract terms in Cuba. The Company expects that all management contracts will be renewed in the ordinary course prior to their expiry. In addition to the management contracts, Meliã Hotels International has minority equity interests in all the Company's current Hotel Assets, including the Meliã Trinidad Playa Hotel development project.

THE MELIÃ TRINIDAD PLAYA HOTEL DEVELOPMENT PROJECT

The Company has an 80 per cent indirect interest in Mosaico Hoteles S.A. ("Mosaico Hoteles"), which in turn holds a 50 per cent interest in TosCuba S.A. ("TosCuba"), a Cuban joint venture company. TosCuba holds the surface rights (expiring in 2048) relating to a 400 room 4-star hotel development project on a prime six hectare beachfront plot at Playa Maria Aguilar, near the City of Trinidad, a UNESCO World Heritage Site located in central Cuba. Trinidad represents a significant opportunity as its UNESCO World Heritage Site status encourages high visitor numbers and currently has only seven hotels (of which two are 4 or 5- star) in the city and surrounding area. Construction was started in December 2018 and is currently ongoing. Following completion, it is intended that the new hotel will also be managed by Meliã Hotels International and will be named the Meliã Trinidad Playa Hotel. Meliã Hotels International is the minority co-investor in this project.

The Company has made capital contributions to TosCuba in the amount of US$8 million representing its 50% equity interest in the joint venture. The overall project budget is approximately US$60 million. In April 2018 the Company arranged and presently participates in a US$45 million construction finance facility (amount disbursed as at 31 December 2018: US$4,749,764 / £3,742,624) secured by the future income of the hotel and additional tourism cash flows. The turnkey construction contract executed with a Cuba-Italian construction joint venture provides for construction to be completed at the end of 2020.

The Spanish Cuban Debt Conversion Programme

On 2 November 2015 and 4 May 2016, the governments of Spain and Cuba executed agreements regarding the creation of a debt conversion programme (the "Debt Conversion Programme") under which outstanding bilateral debts in excess of US$400 million owed to Spain by Cuba could be settled through a debt conversion programme aimed at promoting Spanish private sector investments in Cuba. For this purpose, the parties established a special fund (the "Countervalue Fund") to finance the grants extended under the Debt Conversion Program.

Under the Debt Conversion Programme, investment projects in Cuba in which Spanish parties have an interest can apply to receive funding from the Countervalue Fund. Amounts granted under the Debt Conversion Programme must be used to pay local invoices relating to goods and services received from Cuban suppliers (including private sector business and cooperatives) in local currencies (Cuban Convertible Pesos and Cuban Pesos), with no obligation to repay such amounts.

During 2018, TosCuba (the Cuban joint venture company that is constructing the 400 room Meliã Trinidad Playa Hotel near Trinidad, Cuba) and Miramar (the joint venture company that owns and plans to refurbish and expand the Meliã Habana Hotel in Havana) applied to the Debt Conversion Programme. On 9 April 2019 it was announced that TosCuba was awarded US$10 million and that Miramar was awarded US$8.25 million under the Debt Conversion Program. Under these awards, invoices relating to local services and materials received in Cuba in the course of constructing the projects will be paid from the Countervalue Fund on behalf of the joint ventures. It is expected that these awards will have the effect of reducing the future financing requirements of the joint ventures in relation to their projects, thereby reducing in part the finance that the Group may otherwise have needed to provide.

THE FINTUR AND TOSCUBA FINANCE FACILITIES

FINTUR Facility

Since 2002, the Company has arranged and participated in numerous secured finance facilities extended to Casa Financiera FINTUR S.A., the financing entity of Cuba's tourism sector. These facilities act as a medium term investment and treasury management tool. The facilities are fully secured by offshore tourism proceeds from numerous internationally-managed hotels and selected tour operators. The Company has a successful 17 year track record of participating in over €140 million of facilities with FINTUR, with no defaults.

The Company has a €4 million participation in the most recent facility executed in March 2016 (a €24 million four year facility with an 8 per cent. interest rate), which is operating successfully without delay or default. As at 31 December 2018 the principal amount of €2,416,667 (US$2,764,550) was outstanding under the Company's participation.

TOSCUBA - Construction Facility

In April 2018 the Company arranged and executed a secured construction finance facility in favour of TosCuba in order to provide funding for the construction of the Meliã Trinidad Playa Hotel. The facility is in the maximum principal amount of up to US$45 million, to be disbursed in two tranches, with an 8 per cent. interest rate. The first disbursement under the facility was made in November 2018 in the lead-up to construction starting in December 2018 and as at 31 December 2018 the principal amount of US$4,749,764 was outstanding under the Company's participation. The remainder of the facility will be disbursed over the 22 month construction period, followed by an eight year repayment period. This facility may be syndicated and is secured by future income of the hotel under construction and 50% of the principal amount is further secured by a guarantee given by Cubanacán S.A., Corporación de Turismo y Comercio Internacional ("Cubanacán"), the Cuban shareholder of TosCuba, backed by income from another hotel in Cuba.

OUTLOOK

Notwithstanding the fact that 2019 will likely prove to be a challenging year, we expect that all of our underlying Cuban real estate assets, the Cuban joint ventures in which we are invested and the loan facilities in which we participate will have positive operational results and that notwithstanding Cuba's actual challenging economic environment we will continue to receive ongoing dividends and payments.

Miramar Trade Centre

As stated before, the Miramar Trade Centre is expected to continue performing well in comparison to previous years.

Meliã Habana Hotel

In line with the decrease in the fair value of the Meliã Habana Hotel reflected in the financial statements, it is expected that the tourism sector in Havana will continue to suffer from the existing and potentially strengthened US Cuban Embargo legislation. As mentioned above, the hotel will nevertheless continue to show positive results (similar to the results achieved during the first half of the second term of the Obama Presidency where the hotel delivered steady operational performance). Meanwhile, Miramar will start construction of additional rooms and will modernise existing rooms, thereby ensuring that the hotel remains an attractive destination in the face of increased competition from new hotels in Havana.

The Varadero Hotels

The Varadero Hotels are expected to generate income levels similar to the levels of 2018 assuming that the availability of scheduled flights direct to Varadero will continue at levels similar to 2018. During the year, Miramar is expected to finalise the development of plans to modernise and re-orientate the Meliã Las Americas and Meliã Varadero Hotels.

Meliã Trinidad Playa Hotel

The construction of the Meliã Trinidad Playa Hotel is underway and progress is being monitored by all parties.

Sebastiaan A.C. Berger

Aberdeen Asset Investments Limited, 29 April 2019

THE BOARD OF DIRECTORS

The current Directors' details, all of whom are non-executive and are considered by the Board to be independent of the Investment Manager, are set out below. The Directors supervise the management of CEIBA Investments Limited and represent the interests of shareholders.

JOHN HERRING

Status: Non-Executive Chairman

Length of service: 9 years, appointed on 12 November 2009

Experience: John qualified as a Chartered Accountant in 1982. In 1986, John joined the corporate finance department of Kleinwort Benson, where he was involved in the IPOs on the LSE for several companies. In 1996 he established his own private equity advisory business and joined the boards of a number of public and private companies including JD Wetherspoon plc where he became deputy chairman and served as a non-executive director for 14 years. He is currently the non-executive chairman of the Edinburgh Woollen Mill Group Limited.

Last re-elected to the Board: 27 December 2017

Committee membership: Management Engagement Committee (Chairman)

Remuneration: £40,000 (US$50,764) per annum

All other public company directorships: None

Employment by the Investment Manager: None

Other connections with Investment Manager: None

Shared Directorships with any other Directors: None

Shareholding in Company: 40,000 Ordinary Shares held indirectly representing 0.03 per cent. of the existing issued share capital of the Company. John acts as a Consultant to Northview Investment Fund Limited which currently owns 37,764,018 Ordinary Shares representing 27.43 per cent. of the existing issued share capital of the Company.

TREVOR BOWEN

Status: Independent Non-Executive Director

Length of service: 10 months, appointed on 18 June 2018

Experience:  Trevor has over 30 years' experience spanning across a variety of industries. Trevor spent 11 years as a partner of KPMG and 17 years managing artists in the music industry. Trevor has acted as a non-executive director on a number of boards, most notably as a director on the board of Ulster Bank for nine years, which included six years as the Chairman of its Audit Committee. He is an Irish national and a Chartered Accountant.

Appointed to the Board: 18 June 2018

Committee membership: Management Engagement Committee, Nomination Committee and Audit Committee (Chairman)

Remuneration: £40,000 (US$50,764) per annum

All other public company directorships:  Cavalli Investments ICAV, KW Investment Funds ICAV & KW Real Estate ICAV; Kennedy Wilson Inc.

Employment by the Investment Manager: None

Other connections with Investment Manager: None

Shared Directorships with any other Directors: None

Shareholding in Company: 43,600 Ordinary Shares held indirectly representing 0.03 per cent. of the existing issued share capital of the Company.

KEITH CORBIN

Status: Independent Non-Executive Director

Length of service: 10 months, appointed on 18 June 2018

Experience: Keith is Executive Chairman of Nerine International Holdings Limited, a network of trust and fiduciary services companies which is a wholly owned subsidiary of PraxisIFM Group Limited, and serves as a director of a number of regulated financial services companies. Keith is an Associate of the Chartered Institute of Bankers (ACIB) and a Member of the Society of Trust and Estate Practitioners (STEP).

Appointed to the Board: 18 June 2018

Committee membership:  Management Engagement Committee, Nomination Committee (Chairman) and Audit Committee

Remuneration: £35,000 (US$44,419) per annum

All other public company directorships: HarbourVest Global Private Equity Limited

Employment by the Investment Manager: None

Other connections with Investment Manager: None

Shared Directorships with any other Directors: None

Shareholding in Company: None

PETER CORNELL

Status: Senior Independent Director - Non-Executive

Length of service: 10 months, appointed on 18 June 2018

Experience:  Peter is a founding partner of Metric Capital, a pan-European special situations fund. He is a Non-Executive Director of F&C Commercial Property Trust Limited and a member of the International Advisory Board of the Madrid Business School. Previously he was Global Managing Partner of Clifford Chance until 2006. During his tenure with Clifford Chance his roles included managing partner for Spain and Continental Europe. He then became managing director of Terra Firma, a European private equity firm until 2011.

Appointed to the Board: 18 June 2018

Committee membership: Management Engagement Committee, Nomination Committee and Audit Committee

Remuneration: £35,000 (US$44,419) per annum

All other public company directorships: Breedon Group Plc, F&C Commercial Property Trust Limited

Employment by the Investment Manager: None

Other connections with Investment Manager: None

Shared Directorships with any other Directors: None

Shareholding in Company: 100,000 Ordinary Shares held indirectly representing 0.07 per cent of the existing issued share capital of the Company.

COLIN KINGSNORTH

Status: Non-Executive Director

Length of service: 17 years, appointed on 10 October 2001

Experience: Colin is a partner and director of Laxey Partners Limited, a UK-based active value investment firm focusing on closed-end funds and property investments. Colin previously worked for Robert Fleming Asset Management, headed the investment trust research at Olliff & Partners and managed the emerging markets fund of Buchanan Partners Limited. In 1995, Colin co-founded Regent Kingpin Capital Management. In 1997, he founded Laxey Partners Ltd with Andrew Pegge. Since then Laxey Partners Ltd has become a prominent active value investor focusing on closed-ended funds and property investments. Colin holds a BSc in Economics and is a CFA.

Last re-elected to the Board: 27 December 2017

Committee membership: Management Engagement Committee, Nomination Committee and Audit Committee

Remuneration: £35,000 (US$44,419) per annum

All other public company directorships: Eddie Stobarts Logistics Plc

Employment by the Investment Manager: None

Other connections with Investment Manager: None

Shared Directorships with any other Directors: None

Shareholding in Company: Colin is a partner and director of Laxey Partners Limited. Laxey Partners Limited and Value Catalyst Fund Limited (a fund managed by Laxey Partners Limited) together currently own, in aggregate, 30,979,316 Ordinary Shares representing 22.50 per cent of the issued share capital of the Company.

DIRECTORS' REPORT

The Directors present their Report and the audited Consolidated Financial Statements for the year ended 31 December 2018.

A key event during the financial year was the successful IPO and Listing of all Ordinary Shares of the Company on the Specialist Fund Segment of the Main Market of the London Stock Exchange on 22 October 2018. Through the IPO, the Company raised gross proceeds of £30 million (approximately US$39 million) in new capital at an issue price per share of 100p (approximately US$1.30). The Company also externalised its management by entering into a management agreement with Aberdeen Standard Fund Managers Limited ("ASFML").

STATUS

The Company is a Guernsey company which was incorporated on 10 October 1995. With effect from 11 September 2018, the Company became a Registered Closed-ended Collective Investment Scheme pursuant to The Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended and the Registered Collective Investment Schemes Rules 2015 issued by the Guernsey Financial Services Commission.

The Company will invest either directly or through holdings in special purpose vehicles, joint venture vehicles, partnerships, trusts or other structures. As at 31 December 2018, the Group held the following interests in joint venture properties in Cuba:

· An indirect 49 per.cent interest in Inmobiliaria Monte Barreto S.A., which is the Cuban joint venture company that owns and operates the Miramar Trade Centre, a 56,000m2 mixed-use office and retail complex in Havana;

· An indirect 32.5 per.cent interest in Miramar S.A., which is the Cuban joint venture company that owns the Meliã Habana Hotel and the Varadero Hotels; and

· An indirect 40 per cent. interest in TosCuba S.A., which is the Cuban joint venture company that owns and is constructing the Meliã Trinidad Playa Hotel.

The Directors are of the opinion that the Company has conducted its affairs from 11 September 2018 to 31 December 2018 as a registered collective investment scheme, so as to comply with the Registered Collective Investment Scheme Rules 2015.

RESULTS AND DIVIDENDS

Details of the Company's results and proposed dividends are shown below.

CAPITAL STRUCTURE AND ISSUANCE

The Company's capital structure is summarised in note 12 to the financial statements. At 31 December 2018, there were 137,671,576 fully paid Ordinary Shares (2017 - 13,458,947 Ordinary Shares) in issue. On 14 September 2018 there was an 8-for-1 stock split for existing shareholders.

On 22 October 2018 the Company successfully raised gross proceeds of £30 million (approximately US$39 million) through the initial issue of 30,000,000 new Shares at a price of 100 pence per Share, capitalising the Company at approximately £137million.

VOTING RIGHTS

Ordinary Shareholders are entitled to vote on all resolutions which are proposed at general meetings of the Company. The Ordinary Shares carry a right to receive dividends. On a winding up, after meeting the liabilities of the Company, the surplus assets will be paid to Shareholders in proportion to their shareholdings.

BORROWINGS

The Company does not have any borrowings as at 31 December 2018 (31 December 2017 US$35,820,895 / €30,000,000). As set out in the Chairman's Statement, immediately following the Listing, the Company repaid the outstanding €30million (US$34,195,489) bridge loan that was previously provided by one of the Company's largest shareholders.

MANAGEMENT AGREEMENT

On 31 May 2018, the Company entered into the Management Agreement under which ASFML was appointed as the Company's alternative investment fund manager to provide portfolio and risk management services to the Company. The Management Agreement took effect on 1 November 2018. ASFML has delegated portfolio management to the Investment Manager. Both AFSML and the Investment Manager are wholly-owned subsidiaries of Standard Life Aberdeen plc.

Pursuant to the terms of the Management Agreement, ASFML is responsible for portfolio and risk management on behalf of the Company and will carry out the on-going oversight functions and supervision and ensure compliance with the applicable requirements of the AIFMD.

MANAGEMENT FEE

Under the terms of the Management Agreement, ASFML is entitled, with effect from 1 November 2018, to receive an annual management fee equivalent to 1.5 per cent of net asset value. The annual management fee payable by the Company to the AIFM will be reduced by the deduction of the (annual) running costs of the Havana operations of CEIBA Property Corporation Limited, a subsidiary of the Company.

In addition, the AIFM is entitled to reimbursement for all costs and expenses properly incurred by the AIFM and/or the Investment Manager in the performance of its duties under the Management Agreement.

There are no performance, acquisition, exit or property management fees payable to the AIFM and/or the Investment Manager.

In connection with the Management Agreement, ASFML paid the Company US$5,000,000 for the purpose of compensating the Company for the costs relating to the IPO and Listing as well as for releasing and making available the Company's internal management team to ASFML. In the event that the Management Agreement is terminated prior to the fifth anniversary of its coming into effect, the Company must pay ASFML a prorated amount of the US$5,000,000 payment based on the amount of time remaining in the five year period. As such, this payment has been recorded as a deferred liability and is being amortised over the five year period. The amount amortised each period is accounted for as a reduction of the management fee.

The Directors reviewed the terms of the Management Agreement and management fees during the year and have confirmed that, due to the investment skills, experience and commitment of the Investment Manager, the appointment of ASFML, on the terms agreed, is in the interests of Shareholders as a whole. In the future, the Management Engagement Committee will be responsible for undertaking a review of the Management Agreement on a regular basis and providing a recommendation on the continued appointment of the AIFM to the Board.

POLITICAL AND CHARITABLE DONATIONS

The Company does not make political donations (2018 - nil) and has not made any charitable donations during the year (2018 - nil).

RISK MANAGEMENT

Details of the financial risk management policies and objectives relative to the use of financial instruments by the Company are set out in note 18 to the financial statements.

THE BOARD

The Directors of the Company are John Herring, Keith Corbin, Peter Cornell, Trevor Bowen and Colin Kingsnorth. John Herring is the Chairman and Peter Cornell is the Senior Independent Director. On 18 June 2018, Sebastiaan Berger and Enrique Rottenberg resigned as Directors of the Company in anticipation of the Company's Listing and appointment of ASFML as AIFM. Sebastiaan Berger became an employee of ASFML on 1 January 2019 and Enrique Rottenberg continues to act as the Vice Chairman and General Manager of Inmobiliaria Monte Barreto S.A.. Keith Corbin, Peter Cornell and Trevor Bowen were appointed to the Board as independent non-executive Directors on 18 June 2018 in anticipation of the Listing. John Herring and Colin Kingsnorth have both served on the Board for more than nine years. Following the appointment of the Investment Manager all of the non-executive Directors participated in induction sessions hosted by the Investment Manager.

The Board considers that John Herring and Colin Kingsnorth continue to be independent in character and judgement and bring a wealth of experience. However, due to John's historical connection with Northview Investment Fund Limited (the Company's largest shareholder), and his length of service on the Board, John is not considered independent for the purposes of the UK Corporate Governance Code (published in 2016) (the "UK Code"). As set out in the Chairman's Statement, John Herring will hand over the Chairman role at the conclusion of the next Annual General Meeting. In addition, Colin Kingsnorth, having served on the Board for an extended period of time and as a representative of Laxey Partners, and the investment manager of Value Catalyst Fund, both major shareholders in the Company, is also not considered independent for the purposes of the UK Code.

ROLE OF THE CHAIRMAN

The Chairman is responsible for providing effective leadership to the Board, demonstrating objective judgement and promoting a culture of openness and debate. The Chairman facilitates the effective contribution, and encourages active engagement, by each Director. In conjunction with the Company Secretary, the Chairman ensures that Directors receive accurate, timely and clear information to assist them with effective decision-making. The Chairman will lead the evaluation of the Board and individual Directors, and acts upon the results of the evaluation process by recognising strengths and addressing any weaknesses. The Chairman also engages with major shareholders and ensures that all Directors understand shareholder reviews.

ELECTION OF THE BOARD

In accordance with corporate governance best practice, the Board has agreed that all Directors will retire annually and, if appropriate, will seek re-election at the Annual General Meeting of the Company. John Herring and Colin Kingsnorth will stand for re-election, and, Trevor Bowen, Keith Corbin, and Peter Cornell will stand for election at the forthcoming Annual General Meeting. The Board has reviewed the skills and experience of each Director and believes that each contributes to the long-term sustainable success of the Company. The Board has no hesitation in recommending their election or re-election to shareholders.

In common with most Registered Closed Ended Collective Investment Schemes, the Company has no direct employees. Directors' & Officers' liability insurance cover has been maintained throughout the year at the expense of the Company.

CORPORATE GOVERNANCE

The Company is committed to high standards of corporate governance. As the Company is listed on the SFS, the Company has undertaken to voluntarily comply with provision 9.8 of Chapter 9 of the Listing Rules regarding corporate governance and the principles identified in the UK Code for the year ended 31 December 2018.

The UK Code is available on the Financial Reporting Council's website: www.frc.org.uk.

The Board confirms that, since Listing on 22 October 2018, the Company has complied with the relevant provisions contained within the UK Code, except as set out below.

The UK Code includes provisions relating to:

· the independence of the chairman;

· the role of the chief executive;

· executive directors' remuneration;

· and the need for an internal audit function.

The Board considers that the role of the chief executive, executive directors' remuneration and the need for an internal audit function are not relevant to the position of the Company, being an externally-managed investment company. In particular, all of the Company's day to day management and administrative functions are outsourced to third parties. And, as set out above, a new Chairman will be appointed, in the place of John Herring, with effect from 18 June 2019.

During the year ended 31 December 2018, the Board had 5 scheduled meetings and a further 3 Board meetings to consider and approve the Listing on the SFS. Directors have attended the following scheduled Board meetings during the year ended 31 December 2018.

*Joined the Board on 18 June 2018

** Resigned from the Board on 18 June 2018.

In anticipation of Listing, the Board has established an Audit Committee, a Management Engagement Committee and a Nomination Committee, none of which met during the year. The Audit Committee has met twice since 31 December 2018.

Policy on Tenure

The Board's policy on tenure is that Directors need not serve on the Board for a limited period of time only. The Board does not consider that the length of service of a Director is as important as the contribution he or she has to make, and therefore the length of service will be determined on a case-by-case basis. The Board believes that changes to its composition, including succession planning for Directors, can be managed without undue disruption to the Company's operations. Directors are able and encouraged to provide statements to the Board of their concerns and ensure that any items of concern are recorded in the Board minutes and the Chairman encourages all Directors to present their views on matters in an open forum.

The Board notes that some Shareholders may see longevity on the Board as a negative. The Board is compliant with the terms of the UK Code rules relating to corporate governance and time served on boards and will continue to ensure that it meets these rules in the future. The Board has a mix of longer serving and more recently appointed Directors and the Board believes that the experience of the longer serving Directors has served the Company very well through numerous investment cycles and is valued by the Board as a whole.

The Board has a schedule of matters reserved to it for decision and the requirement for Board approval on these matters is communicated directly to the senior staff at the Investment Manager. Such matters include strategy, gearing, treasury and dividend policy. Full and timely information is provided to the Board to enable the Directors to function effectively and to discharge their responsibilities. The Board also reviews the financial statements, performance and revenue budgets.

In future, the Board intends to conduct, on an annual basis, an appraisal of the Chairman of the Board, Directors' individual self-evaluation and a performance evaluation of the Board and its committees as a whole. The Board has not undertaken a formal performance evaluation during the year to 31 December 2018 in light of the Listing in October 2018. However, the Board has no hesitation in recommending to Shareholders the election or re-election of all Directors.

There is an agreed procedure for Directors to take independent professional advice if necessary and at the Company's expense. This is in addition to the access which every Director has to the advice and services of the Company Secretary, which is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with.

Board Committees

The Board has established an Audit Committee, a Management Engagement Committee and a Nomination Committee. These committees undertake specific activities through delegated authority from the Board. Terms of reference for each committee have been adopted and will be reviewed on a regular basis by the Board.

Where an investment company has only non-executive directors, the UK Code principles relating to directors' remuneration do not apply, therefore the Board has not appointed a separate remuneration committee. The remuneration of the Directors has been set in order to attract individuals of a calibre appropriate to the future development of the Company. The Company's policy on Directors' remuneration, together with details of the remuneration of each Director, is detailed in the Directors' Remuneration Report.

Details of the activities of each of the committees are set out below.

Audit Committee

In accordance with the UK Code, an Audit Committee was established on 14 September 2018. Save for John Herring, all Board members are members of the Audit Committee and the committee is chaired by Trevor Bowen. In the opinion of the Board, the constitution, terms of reference and activities of the Audit Committee fulfil all the relevant requirements of the UK Code, save that the Company does not maintain an internal audit function.

The Board continues to seek to ensure that all areas of risk and control are addressed by the Audit Committee. The Audit Committee is responsible for monitoring the effectiveness of the controls and systems in place to address, inter alia, the risks of loss or misappropriation of assets, misstatement of liabilities or failure of financial reporting systems or processes, including valuation reporting and processes.

The Audit Committee monitors the performance of the auditor, and also examines the remuneration and engagement of the auditor, as well as its independence and any non-audit services provided by it. EY Caribbean Professional Services Limited provided audit services to the Company until 22 October 2018. The Company's current auditor, Ernst & Young LLP, Guernsey, was appointed with effect from Listing on 22 October 2018 so its tenure is not currently an area of consideration for the Audit Committee.

Each year the Board will examine the Audit Committee's performance and effectiveness, and ensure that its tasks and processes remain appropriate. The chairmanship of the Audit Committee will be reviewed by the Nomination Committee on an annual basis. Key areas to be covered will include the clarity of the Audit Committee's role and responsibilities, the balance of skills among its members and the effectiveness of reporting of its work to the Board. The Board is currently satisfied that all members of the Audit Committee have relevant financial experience and knowledge and ensure that such knowledge remains up to date.

The Audit Committee shall meet at least twice per year and otherwise as required.

The Audit Committee Report is set out below.

Nomination Committee

All appointments to the Board are considered by the Nomination Committee which is chaired by Keith Corbin and comprises all of the Directors except John Herring. The Board's overriding priority in appointing new directors to the Board is to identify the candidate with the best range of skills and experience to complement existing Directors. The function of the Nomination Committee is to ensure that the Company goes through a formal process of reviewing the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board, identifying the experience and skills which may be needed and those individuals who might best provide them and to ensure that the individual has sufficient available time to undertake the tasks required. When considering the composition of the Board, members will be mindful of diversity, inclusiveness and meritocracy. The outside directorships and broader commitments of Directors are also monitored by the Nomination Committee.

The Company's aim as regards the composition of the Board is that it should have a balance of experience, skills and knowledge to enable each Director and the Board as a whole to discharge their duties effectively. Whilst the Board agrees that it is entirely appropriate that it should seek diversity, it does not consider that this can be best achieved by establishing specific quotas and targets and appointments will continue to be made based wholly on merit. Accordingly, when changes to the Board are required, the Nomination Committee will have regard to diversity and to a comparative analysis of candidates' qualifications and experience. A pre-established, clear, neutrally formulated and unambiguous set of criteria will be utilised to determine the most suitable candidate for the specific position sought. Once appointed, the successful candidate will receive a formal and tailored induction.

The remuneration of the Directors will be reviewed on an annual basis by the Nomination Committee and compared with the level of remuneration for directorships of other similar companies. All Directors receive an annual fee and there are no share options or other performance related benefits available to them.

The Nomination Committee shall meet at least once per year and otherwise as required.

Management Engagement Committee

The Management Engagement Committee comprises the entire Board of Directors and is chaired by John Herring. The principal duties of the Management Engagement Committee are to review the performance of the Investment Manager and its compliance with the terms of the Management Agreement. The terms and conditions of the Investment Manager's appointment, including an evaluation of fees, will be reviewed by the Committee on an annual basis.

The Management Engagement Committee shall also review the terms of appointment of other key service providers to the Company.

The Management Engagement Committee shall meet at least once per year and otherwise as required.

Terms of Reference

The terms of reference of all the Board Committees may be found on the Company's website (www.ceibalimited.co.uk) and copies are available from the Company Secretary upon request. The terms of reference will be reviewed and re-assessed by the Board for their adequacy on an annual basis.

INTERNAL CONTROL & RISK MANAGEMENT

The Board is ultimately responsible for the Company's system of internal control and for reviewing its effectiveness and confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. This process has been put in place during the year under review and up to the date of approval of this Annual Report and Accounts. It is regularly reviewed by the Board and accords with the Financial Reporting Council Guidance.

The Board has reviewed the effectiveness of the system of internal control. In particular, it has reviewed and updated the process for identifying and evaluating the principal risks affecting the Company and policies by which these risks are managed.

The Directors have delegated the investment management of the Company's assets to the ASFML within overall guidelines, and this embraces implementation of the system of internal control, including financial, operational and compliance controls and risk management. Internal control systems are monitored and supported by the ASFML internal audit function which undertakes periodic examination of business processes, including compliance with the terms of the management agreement, and ensures that recommendations to improve controls are implemented.

Risks are identified and documented through a risk management framework by each function within the Investment Manager's group activities. Risk includes financial, regulatory, market, operational and reputational risk. This helps the internal audit risk assessment model identify those functions for review. Any weaknesses identified are reported to the Board, and timetables are agreed for implementing improvements to systems. The implementation of any remedial action required is monitored and feedback provided to the Board.

The principal risks and uncertainties faced by the Company are detailed above.

The key components of the process designed by the Directors to provide effective internal control are outlined below:

· the Investment Manager prepares forecasts and management accounts which allow the Board to assess the Company's activities and review its performance;

· the Board and Investment Manager have agreed clearly defined investment criteria, specified levels of authority and exposure limits. Reports on these issues, including performance statistics and investment valuations, are regularly submitted to the Board and there are meetings with the Investment Manager as appropriate;

· as a matter of course the Investment Manager's compliance department continually reviews the Investment Manager's operations and will report to the Audit Committee on a six monthly basis;

· written agreements are in place which specifically define the roles and responsibilities of the Investment Manager and other third party service providers and, where relevant, ISAE3402 Reports, a global assurance standard for reporting on internal controls for service organisations, or their equivalents are reviewed;

· the Board has considered the need for an internal audit function but, because of the compliance and internal control systems in place within the Investment Manager, has decided to place reliance on the Investment Manager's systems and internal audit procedures; and

· at its 23 April 2019 meeting, the Audit Committee carried out an annual assessment of internal controls for the year ended 31 December 2018 by considering documentation from the Investment Manager, and the Depositary, including their internal audit and compliance functions and taking account of events since 31 December 2018. The results of the assessment, that internal controls are satisfactory, will be reported to the Board at the next Board meeting.

Internal control systems are designed to meet the Company's particular needs and the risks to which it is exposed. Accordingly, the internal control systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and by their nature can only provide reasonable and not absolute assurance against mis-statement and loss.

MANAGEMENT OF CONFLICTS OF INTEREST

The Board has a procedure in place to deal with a situation where a Director has a conflict of interest. As part of this process, the Directors prepare a list of other positions held and all other conflict situations that may need to be authorised either in relation to the Director concerned or his connected persons. The Board considers each Director's situation and decides whether to approve any conflict, taking into consideration what is in the best interests of the Company and whether the Director's ability to act in accordance with his or her wider duties is affected. Each Director is required to notify the Company Secretary of any potential, or actual, conflict situations that will need authorising by the Board. Authorisations given by the Board are reviewed at each Board meeting. No Director has a service contract with the Company although Directors are issued with letters of appointment upon appointment. The Directors' interests in contractual arrangements with the Company are as shown in note 14 to the financial statements. No other Directors had any interest in contracts with the Company during the period or subsequently. The conflicts of the non independent directors are well known to the Board and reviewed regularly.

The Board has adopted appropriate procedures designed to prevent bribery. The Company receives periodic reports from its service providers on the anti-bribery policies of these third parties. It also receives regular compliance reports from the Investment Manager and the Administrator.

The Criminal Finances Act 2017 has introduced a new corporate criminal offence of "failing to take reasonable steps to prevent the facilitation of tax evasion". The Board has confirmed that it is the Company's policy to conduct all of its business in an honest and ethical manner. The Board takes a zero-tolerance approach to facilitation of tax evasion, whether under Guernsey law or under the law of any foreign country.

SUBSTANTIAL INTERESTS

The Company has been advised that the following shareholders owned 3% or more of the issued Ordinary share capital of the Company at 31 December 2018:

There have been no significant changes notified in respect of shareholdings between 31 December 2018 and 29 April 2019.

ANNUAL GENERAL MEETING

The Notice of the Annual General Meeting ("AGM") is included within this Annual Report and Consolidated Financial Statements. The AGM will take place at the offices of JTC Fund Solutions (Guernsey) Limited, Dorey Court, Admiral Park, St. Peter Port, Guernsey, GY1 2HT Channel Islands on 18 June 2019 at 2.00pm. All shareholders have the opportunity to put questions to the Board or the Investment Manager at the Company's AGM. Please note that the Company Secretary is available to answer general Shareholder queries at any time throughout the year.

RELATIONS WITH SHAREHOLDERS

The Directors place a great deal of importance on communication with Shareholders. The Board welcomes feedback from all Shareholders. The Chairman meets periodically with the largest Shareholders to discuss the Company. The Annual Report and Consolidated Financial Statements are widely distributed to other parties who have an interest in the Company's performance. Shareholders may obtain up to date information on the Company through the Company's website www.ceibalimited.co.uk

The Board's policy is to communicate directly with Shareholders and their representative bodies without the involvement of the Investment Manager in situations where direct communication is required and usually a representative from the Board is available to meet with major Shareholders on an annual basis in order to gauge their views.

By order of the Board

29 April 2019

JTC Fund Solutions (Guernsey) Limited

Company Secretary

Ground Floor

Dorey Court

Admiral Park

St Peter Port

Guernsey GY1 2HT

DIRECTORS' REMUNERATION REPORT

The Board has prepared this report on a voluntary basis in accordance with the UK regulations governing the disclosure and approval of Directors' remuneration.

The Company's auditor has not audited any of the disclosures provided in this Directors' Remuneration Report.

REMUNERATION POLICY

This part of the Remuneration Report provides details of the Company's Remuneration Policy for Directors of the Company. As the Board is comprised wholly of non-executive Directors and given the size and nature of the Company, the Board has not established a separate Remuneration Committee. Directors' remuneration is determined by the Board as a whole.

The Directors are non-executive and the Company's Articles of Association limit the annual aggregate fees payable to the Board of Directors to no more than £500,000 (US$634,550) per annum. The aggregate level of the fees payable to the Directors may only be increased subject to Shareholder Resolution. Subject to this overall limit, the Board's policy is that the remuneration of non-executive Directors should reflect the nature of their duties, responsibilities and the value of their time spent and be fair and comparable to that of other investment companies that are similar in size, have a similar capital structure and have a similar investment objective. Fees are reviewed annually against the Company's peer group and increased accordingly if considered appropriate. In the past year, aggregate fees of £117,000 were paid to the Directors. The table below shows the fees agreed per annum.

The directors fees were increased with effect 18 June 2018 in anticipation of Listing.

APPOINTMENT

· The Company only intends to appoint non-executive Directors.

· All the Directors are non-executive appointed under the terms of Letters of Appointment.

· Directors must retire and be subject to re-election at each AGM.

· New appointments to the Board will be placed on the fee applicable to all Directors at the time of appointment (currently £35,000 per annum).

· No incentive or introductory fees will be paid to encourage a Directorship.

· The Directors are not eligible for bonuses, pension benefits, share options, long term incentive schemes or other benefits.

· Directors are entitled to re-imbursement of out-of-pocket expenses incurred in connection with the performance of their duties, including travel expenses.

· The Company indemnifies its Directors for all costs, charges, losses, expenses and liabilities which may be incurred in the discharge of duties, as a Director of the Company.

PERFORMANCE AND SERVICE CONTRACTS

· The Directors' remuneration is not subject to any performance-related fee.

· No Director has a service contract.

· Although John Herring and Colin Kingsnorth are linked to large shareholders of the Company, no Director has an interest in any contracts with the Company during the period or subsequently.

· The terms of appointment provide that a Director may be removed subject to three months' notice.

· Compensation will not be due upon leaving office.

· No Director is entitled to any other monetary payment or to any assets of the Company.

Directors' and Officers' liability insurance cover is maintained by the Company on behalf of the Directors. Under the Articles, the Company indemnifies each of the Directors out of the assets of the Company against any liability incurred by them as a Director in defending proceedings or in connection with any application to the Court in which relief is granted and separate deeds of indemnity exist in this regard between the Company and each Director.

IMPLEMENTATION REPORT

Directors' Fees

On 15 June 2018, the Board reviewed the fees applicable for non-executive directors of listed companies domiciled in Guernsey, and increased the level of the Chairman and Directors fees accordingly with effect from 18 June 2018. The increased fees are a reflection of the Company becoming a listed Company and serves to bring the Company closer to the median level for fees payable to the wider peer group. The increase is also a reflection of the increased work load and general responsibilities expected from directors of listed companies. There are no further fees to disclose as the Company has no direct employees, chief executive or executive directors.

Spend on Pay

As the Company has no direct employees, the Board does not consider it appropriate to present a table comparing remuneration paid to Directors with distributions to shareholders. Fees are pro-rated where a change takes place during a financial year.

The total fees paid to Directors for the calendar years 2017 and 2018 are shown below.

Fees Payable

The Directors received the following fees for the year ended 31 December:

*Appointed to the Board on 18 June 2018.

**Resigned from the Board on 18 June 2018.

Sums Paid to Third Parties

No fees were paid to thirds parties for services as non-executive Directors.

Directors' Interests in the Company

The Directors are not required to have a shareholding in the Company. The Directors' interests in contractual arrangements with the Company are as shown in note 14 to the financial statements. The Directors (including connected persons) at 31 December 2018 are shown in the table below.

1 Includes Ordinary Shares held by Laxey Partners Limited and Value Catalyst Fund Ltd.

* Appointed to the Board on 18 June 2018.

**Resigned from the Board on 18 June 2018.

The above interests are unchanged at 26 April 2019, being the nearest practicable date prior to the signing of this Report.

ANNUAL STATEMENT

On behalf of the Board I confirm that the above Report on Remuneration Policy and Remuneration Implementation summarises, as applicable, for the year ended 31 December 2018:

· the major decisions on Directors' remuneration;

· any substantial changes relating to Directors' remuneration made during the year; and

· the context in which the changes occurred and in which decisions have been taken.

For and on behalf of the Board,

John Herring

Chairman, 29 April 2019

REPORT OF THE AUDIT COMMITTEE

COMMITTEE COMPOSITION

In accordance with the UK Code, an Audit Committee (the "Committee") has been established. At the year end the Audit Committee comprised of Trevor Bowen as Chairman, Keith Corbin, Peter Cornell and Colin Kingsnorth.

In accordance with the terms of reference, appointments to the Committee are for a period up to three years, which may be extended for further periods of up to three years, provided the Director still meets the criteria for membership of the Committee.

The Audit Committee have satisfied themselves that at least one of the Committee's members has recent and relevant financial experience. Trevor Bowen is a Chartered Accountant and previously spent 11 years as a partner at KPMG and has recent and relevant financial experience. The Audit Committee is also considered, as a whole, to have competence relevant to this sector. The Audit Committee continues to believe that the Company does not require an internal audit function of its own as it delegates its day to day operations to third parties from whom it receives regular internal controls reports.

FUNCTIONS OF THE COMMITTEE

The principal function of the Committee is to assist the Board in relation to the reporting of financial information, and ensuring that the internal control procedures are robust and that risk management processes are appropriate.

The Committee has defined terms of reference which will be reviewed and re-assessed for their adequacy on an annual basis. Copies of the terms of reference are published on the Company's website.

The Committee's main audit review functions are;

· to monitor the integrity of the financial statements of the Company, including its annual and half-yearly reports and any other formal announcement relating to its financial performance, reviewing significant financial reporting issues and judgments which they contain;

· to review the content of the annual financial report and advise the Board on whether, taken as a whole, it is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy;

· to review the adequacy and effectiveness of the Company's internal financial controls and risk management systems, for example including the risks of misappropriation or loss of assets, of misstatement of accounting records or of non-compliance with accounting standards, and monitor the proposed implementation of such controls;

· to review the Company's procedures for detecting fraud, the systems and controls in place for prevention of bribery, the adequacy of the Company's anti-money laundering systems and controls and the Company's compliance function;

· monitor and review whether an internal audit function is required;

· to oversee the relationship with the external auditor and review the effectiveness of the external audit process; including the remuneration of the auditor as well as their independence and any non-audit services provided by them. The Committee will monitor the performance of the auditor with the aim of ensuring a high quality and effective audit;

· to make recommendations to the Board, to be put to shareholders for approval in general meeting, in relation to the appointment, re-appointment and removal of the Company's external auditor;

· to develop and oversee the selection process for new external auditors and if an external auditor resigns, investigate the issues leading to this and decide whether any action is required; and

· to ensure that at least once every ten years the audit services contract is put out to tender to enable the Committee to compare the quality and effectiveness of the services provided by the incumbent auditor with those of other audit firms and, in respect of such tender, oversee the selection process and ensure that all tendering firms have such access as is necessary to information and individuals during the tendering process.

FREQUENCY OF MEETINGS DURING THE YEAR

The Committee will meet at least twice a year at appropriate times in the Company's reporting and audit cycle and otherwise as required.

ACTIVITIES DURING THE YEAR

The Audit Committee did not meet during the last year due to the Committee being constituted on 14 September 2018 ahead of the Listing on the Specialist Fund Segment of the London Stock Exchange's Main Market on 22 October 2018. The Board appointed the Company's auditor which was subsequently ratified by the Audit Committee. Subsequent to the financial year end, the Audit Committee has met twice, and the Chairman of the Audit Committee has maintained regular contact with the auditors throughout the course of the audit.

REVIEW OF INTERNAL CONTROL SYSTEMS AND RISK

At its Committee meeting on 23 April 2019, the Committee reviewed the internal control systems and considered the Company's principal risks. It is intended that the Committee will consider the internal control systems and a matrix of risks at each of its meetings.

FINANCIAL STATEMENTS AND SIGNIFICANT ISSUES

During its review of the Company's financial statements for the year ended 31 December 2018, the Audit Committee considered the following significant issues, including, in particular, those communicated by the Auditor as key areas of audit emphasis during their planning and reporting of the year end audit.

Valuation of Investments

The fair value of the equity investments, driven by underlying investment property valuations, are the most substantial figures on the Consolidated Statement of Financial Position. The underlying valuations of the investment properties and investment properties under construction require significant judgements and estimates to be made. This is a key risk that requires the attention of the Audit Committee.

The fair values of the equity investments of the Company are determined by the Investment Manager and the Board primarily on the basis of the valuation reports prepared by Arlington Consulting - Consultadoria Imobiliaria Limitada, trading as "Abacus", and subsequently reviewed in detail and challenged by the Audit Committee. The valuation reports were prepared in accordance with RICS Valuation - Global Standards 2017, and, in future, will be reviewed by the Audit Committee on a six monthly basis and by the Auditor at least annually.

In determining the fair value of each equity investment, the Investment Manager and the Directors may also take into account additional relevant information that impacts the fair value of the relevant joint venture company that has not been considered in the valuation report of the underlying property of the joint venture. One such fair value consideration is cash held by the joint venture in excess of its working capital needs ("Excess Cash"). As the valuation of the underlying property only assumes a level of working capital to allow for day to day operations of the property, the existence of any Excess Cash needs to be included as an additional component of the fair value of the joint venture company. To determine the amount of Excess Cash, the Investment Manager and the Board estimate the amount of cash required by the property for working capital needs and deduct this amount from the cash and cash equivalents held by the joint venture. The above estimates are also reviewed by the Audit Committee.

Dividend Income

As dividend income is the Company's major source of income and a significant item on the Consolidated Statement of Comprehensive Income, the recognition of dividend income from the underlying equity investments is another key risk considered by the Audit Committee. The Company's policy is that dividends from equity investments are recognised when the Company's right to receive payment of the dividend is established. The Audit Committee reviewed the controls in place at the Investment Manager in respect of recognition of dividend income and intends to do so at least every six months.

Consideration and Approval of Principal Risks & Uncertainties

The Audit Committee considered, in detail, the principal risks & uncertainties facing the Company, particularly in light of the volatility impacting the economy and tourism industry in Cuba, as well as the ongoing US Sanctions. The Audit Committee considered the risk relating to the Company and its investment strategy at a corporate level, as well as the portfolio and operational risks, risks relating to investment in Cuba and the U.S. Embargo and the Company's regulatory and tax framework, and its disclosure in the Annual Report. The output from the risk assessment is set out in the Principal Risks & Uncertainties above. It is intended that the Committee will review a matrix of its risk at each committee meeting.

Key Performance Indicators and the use of Alternative Performance Measures

Performance Measures used in the Annual Report and Consolidated Financial Statements are recognised as important for shareholders and the users of accounts to determine how the Company is doing over time, and relative to other companies or an index.

As described in the section entitled "Key Performance Indicators", the Company measures its economic performance using a number of KPIs, some of which are derived directly from the Consolidated Financial Statements and some of which are Alternative Performance Measures. As part of its review of the Annual Report and Consolidated Financial Statements, the Audit Committee must ensure that where Alternative Performance Measures are used, there is clarity and transparency as to how these relate to the numbers reported under International Financial Reporting Standards as presented in the Consolidated Financial Statements. This is done by way of explanation in the text where the APM appears, footnotes and a glossary of terms which defines the meanings of terms used.

Normally, the Company presents information regarding its assets and income derived directly from the Consolidated Financial Statements, as well as information regarding share price and market capitalisation derived from the London Stock Exchange. Other measures such as discount/premium to NAV represent the difference between the two.

However, there are particular circumstances that affect the presentation of KPIs for the 2018 financial year end. As is explained elsewhere in this document, a number of important changes were implemented during the year, including the IPO and Listing of the Ordinary Shares of the Company on the SFS and the contracting of ASFML, a third party investment manager, to manage the portfolio of investments of the Company, which previously was managed internally. In negotiating the Management Agreement, it was agreed with ASFML that, as part of the terms and conditions upon which they would assume the task of portfolio management, ASFML would pay to the Company consideration in the amount of US$5 million for the purpose of (i) paying the listing costs associated with the IPO, and (ii) compensating the Company for the release of its internal management team, which was subsequently contracted by ASFML. This payment was conditional upon a successful listing on a recognised stock exchange and a minimum capital raise in the amount of £30 million (approximately US$39 million), and was paid to the Company in November 2018 following completion of the IPO and Listing.

Given that the payment of this amount is linked to execution of the Management Agreement, the proper accounting treatment to be given to this payment under International Financial Reporting Standards is to recognise it evenly over the five year term of the Management Agreement. This results in a NAV per share of US$1.49 / £1.18, which is the figure that appears in the Statement of Financial Position below.

However, since the parties intended that this payment be recognised in full upon successful completion of the IPO as indicated in the Prospectus, the Audit Committee believes that the immediate recognition of this amount provides more relevant information to shareholders. This would result in a non-IFRS year-end NAV per share of US$1.53 / £1.20.

Whilst the difference between the NAV derived from the two methodologies is not significant in the context of the Company as a whole, it was deemed relevant information to present to shareholders. In addition, the two figures will converge over the five year term of the Management Agreement.

The Audit Committee sought guidance from its auditor, the Investment Manager and others, and decided to implement the following steps:

· To accrue the ASFML payment evenly over the five year term of the Management Agreement.

· To include a non-IFRS NAV and NAV per share (and all related measures) in the Financial Highlights, together with an explanation of the adjustment made.

· To continue to include the non-IFRS NAV and NAV per share (and all related performance measures) until convergence of the two figures is completed after five years.

To ensure that there is clarity and transparency in how these measures are calculated and presented in the Annual Report and Consolidated Financial Statements.

Having reviewed the reports from the Investment Manager and having considered the significant issues or judgements, the Audit Committee is satisfied that the key areas of risk and judgement have been appropriately addressed in the Consolidated Financial Statements and that the significant assumptions used in determining the value of assets and liabilities have been properly appraised and are sufficiently robust.

REVIEW OF FINANCIAL STATEMENTS

The Committee is responsible for the preparation of the Company's Annual Report. The process is extensive, requiring input from a number of different third party service providers. The Committee reports to the Board on whether, taken as a whole, the Annual Report and Consolidated Financial Statements are fair, balanced and understandable. In so doing, the Committee has considered the following matters:

· the existence of a comprehensive control framework surrounding the production of the Annual Report and Consolidated Financial Statements which includes a number of different checking processes;

· the existence of extensive levels of reviews as part of the production process involving the Administrator, the Investment Manager, the Company Secretary and the auditor as well as the Committee's own expertise;

· the controls in place within the various third party service providers to ensure the completeness and accuracy of the financial records and the security of the Company's assets;

· the externally audited internal control reports of the Investment Manager, Administrator and any other related service providers.

The Committee has reviewed the Annual Report and the work undertaken by the third party service providers and is satisfied that, taken as a whole, the Annual Report and Consolidated Financial Statements is fair balanced and understandable. In reaching this conclusion, the Committee has assumed that the reader of the Annual Report would have a reasonable level of knowledge of the investment industry in general. The Committee has reported its findings to the Board which in turn has made its own statement in this regard in the Directors' Responsibility Statement.

REVIEW OF AUDITOR

The Audit Committee has reviewed the effectiveness of the Auditor including:

· Independence: the Audit Committee will ensure there is a discussion with the Auditor, at least annually, in regards to the steps it takes to ensure its independence and objectivity and to make the Committee aware of any potential issues, explaining all relevant safeguards;

· Quality of audit work (i) the ability to resolve issues in a timely manner - the Audit Committee is confident that identified issues are satisfactorily and promptly resolved; (ii) its communications/presentation of outputs - the Audit Committee is satisfied that the explanation of the audit plan, any deviations from it and the subsequent audit findings are comprehensive and comprehensible; and (iii) working relationship with management - the Audit Committee is satisfied that the Auditor has a constructive working relationship with the Manager; and,

· Quality of people and service including continuity and succession plans: the Audit Committee is satisfied that the audit team is made up of sufficient, suitably experienced staff with provision made for knowledge of the investment trust sector and retention on rotation of the partner.

TENURE OF THE AUDITOR

EY Caribbean Professional Services Limited has previously provided audit services to the Company. The Company appointed Ernst & Young LLP ("EY") to act as auditor for the financial year ended 31 December 2018. The Committee considers EY, the Company's auditor, to be independent of the Company. As set out above, the Committee is satisfied with the performance of EY and therefore supports the recommendation to the Board that the reappointment of the Auditor be put to shareholders for approval at the AGM.

ACCOUNTABILITY AND AUDIT

The responsibility of the Audit Committee in connection with the financial statements is set out above.

Each member of the Audit Committee confirms that, so far as he or she is aware, there is no relevant audit information of which the Company's auditor is unaware, and he or she has taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information. Additionally there are no important events since the period end other than as disclosed in the notes to the financial statements.

The Audit Committee have reviewed the level of non-audit services provided by EY during the year, and are comfortable that EY was best placed to provide the particular services required and remain satisfied that the auditor's objectivity and independence is being safeguarded. EY were engaged by the Company during the financial year but prior to the Listing to provide assistance with the review of documentation required for the Listing. These additional fees amounted to US$316,706 (£ 249,552) for these non-audit services.

Trevor Bowen

Audit Committee Chairman, 29 April 2019

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and Consolidated Financial Statements, in accordance with applicable law and regulations.

The Companies (Guernsey) law, 2008 requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the Consolidated Financial Statements in accordance with International Financial Reporting Standards (IFRS). Under Company law the Directors must not approve the Consolidated Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these Consolidated Financial Statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgments and estimates that are reasonable and prudent;

· prepare the Consolidated Financial Statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business; and

· state whether all applicable IFRS standards have been followed, subject to any material departures disclosed and explained in the financial statements.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions and which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its Consolidated Financial Statements comply with the Companies (Guernsey) Law, 2008. They are also responsible for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

The Directors listed, being the persons responsible, hereby confirm to the best of their knowledge that:

· the Consolidated Financial Statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company, and all the undertakings included in the consolidation taken as a whole;

· that in the opinion of the Directors, the Annual Report and Consolidated Financial Statements taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the Company's performance, business model and strategy; and

· the General Information section and Directors' Report include a fair review of the development and performance of the business and the position of the Company and all the undertakings included in the consolidation taken as a whole, and the Principal Risks section provides a description of the principal risks and uncertainties that they face.

· there is no additional information of which the Company's auditor is not aware.

For CEIBA Investments Limited

John Herring

Chairman, 29 April 2019

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CEIBA INVESTMENTS LIMITED

Opinion

We have audited the consolidated financial statements of CEIBA Investments Limited (the 'Company') and its subsidiaries (together the "Group") for the year ended 31 December 2018, which comprise the Consolidated Statement of Financial Position, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity and the related notes 1 to 25, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards ('IFRS').

In our opinion, the financial statements:

• give a true and fair view of the state of the Group's affairs as at 31 December 2018 and of its loss for the year then ended;

• have been properly prepared in accordance with IFRS; and

• have been properly prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ('ISAs (UK)') and applicable law. Our responsibilities under those standards are further described in the "Auditor's responsibilities for the audit of the financial statements" section of our report below. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

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

Conclusions relating to principal risks, going concern and viability statement

We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs(UK) require us to report to you whether we have anything material to add or draw attention to:

• the disclosures in the annual report that describe the principal risks and explain how they are being managed or mitigated;

• the directors' confirmation that they have carried out a robust assessment of the principal risks facing the entity, including those that would threaten its business model, future performance, solvency or liquidity;

• the directors' statement about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the entity's ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;

• whether the directors' statement in relation to going concern is materially inconsistent with our knowledge obtained in the audit; or

• the directors' explanation as to how they have assessed the prospects of the entity, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the entity will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

Overview of our audit approach

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.

An overview of the scope of our audit

Tailoring the scope

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope. Taken together, this enables us to form an opinion on the financial statements.

Our application of materiality

We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion.

Materiality

Materiality is the magnitude of omissions or misstatements that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.

We determined materiality for the Company to be $4.11 million, which is 2% of equity attributable to the shareholders of the parent. We believe that equity attributable to the shareholders of the parent provides us with an appropriate basis for audit materiality as it is a key published performance measure and is a key metric used by management in assessing and reporting on overall performance.

During the course of our audit, we reassessed initial materiality and noted no matters leading us to amend the basis of materiality (2% of equity attributable to the shareholders of the parent). However, the materiality amount was adjusted to reflect equity attributable to the shareholders of the parent at year end rather than equity attributable to the shareholders of the parent at the audit planning stage.

Performance materiality

Performance materiality is the application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the Company's overall control environment, our judgement was that performance materiality was 50% of our planning materiality, namely $2.06 million. We have set performance materiality at this percentage because we have considered the likelihood of misstatements to be moderate. We have considered both quantitative and qualitative factors when determining the expected level of detected misstatements and setting the performance materiality at this level.

Reporting threshold

The reporting threshold is an amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of $0.21 million, which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other information and to report as uncorrected material misstatements of the other information where we conclude that those items meet the following conditions:

• Fair, balanced and understandable- the statement given by the directors that they consider the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or

• Audit committee reporting- the section describing the work of the audit committee does not appropriately address matters communicated by us to the audit committee is materially inconsistent with our knowledge obtained in the audit; or

• Directors' statement of compliance with the UK Corporate Governance Code - the parts of the directors' statement relating to the Company's compliance with the UK Corporate Governance Code containing provisions specified for review by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:

• proper accounting records have not been kept by the Company; or

• the financial statements are not in agreement with the Company's accounting records and returns; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the Company's members, as a body, in accordance with Section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Andrew Dann FCA

for and on behalf of Ernst & Young LLP

Guernsey, Channel Islands

29 April 2019

Notes:

1. The maintenance and integrity of the Company's web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site.

2. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

See accompanying notes 1 to 25, which are an integral part of these consolidated financial statements.

* Certain figures of 2017 have been reclassified to match the 2018 presentation, with no impact to total equity.

These audited Financial Statements were approved by the board of Directors and authorised for issue on 29 April 2019.

They were signed on the Company's behalf;

* Certain figures of 2017 have been reclassified to match the 2018 presentation, with no impact to total comprehensive income.

See accompanying notes 1 to 25, which are an integral part of these consolidated financial statements.

* Certain figures of 2017 have been reclassified to match the 2018 presentation, with no impact to the cash flows from operating, investing and financing activities.

* Certain figures of 2017 have been reclassified to match the 2018 presentation, with no impact to total equity.

See accompanying notes 1 to 25, which are an integral part of these consolidated financial statements.

See accompanying notes 1 to 25, which are an integral part of these consolidated financial statements.

1. Corporate information

These consolidated financial statements for the year ended 31 December 2018 include the accounts of CEIBA Investments Limited and its subsidiaries, which are collectively referred to as the "Group" or "CEIBA".

CEIBA was incorporated in 1995 in Guernsey, Channel Islands as a registered closed-ended collective investment scheme with registered number 30083. In May 2013, the status of CEIBA changed to an unregulated investment company rather than a regulated investment fund. The status of CEIBA was changed back to a registered closed-ended collective investment scheme on 11 September 2018 under The Protection of Investors (Bailiwick of Guernsey) Law, 1987 as amended. The registered office of CEIBA is located at Dorey Court, Admiral Park, St. Peter Port, Guernsey, Channel Islands GY1 2HT.

The principal holding and operating subsidiary of the Group is CEIBA Property Corporation Limited ("CPC") which holds a license issued by the Cuban Chamber of Commerce and has offices in Cuba located at the Miramar Trade Center, Edificio Barcelona, Suite 401, 5ta Avenida, esq. a 76, Miramar, Playa, La Habana, Cuba.

The principal investment objective of CEIBA is to achieve capital growth and dividend income from direct and indirect investment in or with Cuban businesses, primarily in the tourism and commercial real estate sectors, and other revenue-generating investments primarily related to Cuba.

The Group currently invests in Cuban joint venture companies that are active in two major segments of Cuba's real estate industry: (i) the development, ownership and management of revenue-producing commercial properties, and (ii) the development, ownership and management of hotel properties. In addition, the Group occasionally arranges and participates in secured finance facilities and other interest-bearing financial instruments granted in favour of Cuban borrowers, primarily in the tourism sector. The Group's asset base is primarily made up of equity investments in Cuban joint venture companies that operate in the real estate segments mentioned above.

The officers are contracted through third party entities or consultancy agreements. CEIBA and its subsidiaries do not have any obligations in relation to other future employee benefits.

On 22 October 2018, CEIBA completed an initial public offering and listed its ordinary shares on the Specialist Fund Segment of the London Stock Exchange ("LSE-SFS"), where it trades under the symbol "CBA" (see note 12) The Group also entered into a management agreement, with effect from 1 November 2018, under which the Group has appointed Aberdeen Standard Fund Managers Limited ("ASFML" or the "AIFM") as the Group's alternative investment fund manager to provide portfolio and risk management services to the Group. The AIFM has delegated portfolio management to Aberdeen Asset Investments Limited (the "Investment Manager"). Both the AIFM and the Investment Manager are wholly-owned subsidiaries of Standard Life Aberdeen plc (see note 16).

2. Basis of preparation

2.1 Statement of compliance and basis of measurement

These consolidated financial statements have been prepared under the historical cost convention, except for certain financial instruments as disclosed in note 3.9 and certain property, plant and equipment as disclosed in note 3.12 which are measured at fair value, in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

2.2 Functional and presentation currency

These consolidated financial statements are presented in United States Dollars ("US$"), which is the Group's functional currency. The majority of the Group's income, equity investments and transactions are denominated in US$, subsidiaries are re-translated to US$ to be aligned with the functional currency of the Group.

2.3 Use of estimates and judgments

The preparation of the Group's consolidated financial statements, in conformity with IFRS, requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

Management judgements

The key management judgements made by management in relation to the financial statements are:

a) That the Group is not an Investment Entity (refer note 3.15);

b) That the Group is a Venture Capital Organisation (refer note 3.16).

Management estimates - valuation of equity investments

Significant areas requiring the use of estimates also include the valuation of equity investments. Actual results could differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future period affected.

In determining estimates of recoverable amounts and fair values for its equity investments, the Group relies on independent valuations, historical experience, assumptions regarding applicable industry performance and prospects, as well as general business and economic conditions that prevail and are expected to prevail. Assumptions underlying asset valuations are limited by the availability of reliable comparable data and the uncertainty of predictions concerning future events (see note 8).

By their nature, asset valuations are subjective and do not necessarily result in precise determinations. Should the underlying assumptions change, the carrying amounts could change and, potentially, by a material amount.

2.3 Use of estimates and judgments

Change in Management estimates - valuation of equity investments

The determination of the fair values of the equity investments may include independent valuations of the underlying properties owned by the joint venture companies. These valuations assume a level of working capital required for day to day operations of the properties. Management estimates the amount of cash required for these working capital needs to determine if the the joint venture companies hold any excess cash that should be added as a component of the fair value of the equity investments. Subsequent to the review by the Investment Manager of the prior year's estimate of cash required for the working capital needs (including consultation with the management of the joint venture companies), the calculation at 31 December 2018 was adjusted to a greater level of detail to ensure a more accurate estimate (see note 8).

2.4 Reportable operating segments

An operating segment is a distinguishable component of the Group that is engaged in the provision of products or services (business segment), which is subject to risks and rewards that are different from those of other segments. The primary segment reporting format of the Group is determined to be business segments as the Group's risks and returns are affected by the differences in investment activities.

2.5 Equity investments

Equity investments include the direct and indirect interests of the Group in Cuban joint venture companies, which in turn hold commercial properties, hotel properties and hotel properties under development. Cuban joint venture companies are incorporated under Cuban law and have both Cuban and foreign shareholders.

Equity investments of the Group are measured at fair value through profit or loss in accordance with IFRS 9, Financial Instruments: Recognition and Measurement ("IFRS 9"), on the basis of the exception provided for per IAS 28. Changes in fair value are recognised in the statement of comprehensive income in the period of the change.

2.6 Change in accounting period

On 11 December 2017, the Board of Directors resolved to change the financial year end of CEIBA to 31 December from 31 March; in order to harmonise CEIBA's accounting period with the joint venture companies of its equity investments. The current financial year end as at 31 December 2018 is a 12 month period with comparative figures for the 9 month period ended 31 December 2017.

2.7 New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2018 and not early adopted that are relevant to the Group

The IASB and the IFRIC have published the following standards and interpretations, which are not yet effective. The standards, amendments and interpretations are not expected to significantly impact the Group's operations:

- IFRS 16 Leases: (Full or partial) application with retrospective effect for reporting periods beginning on or after January 1, 2019 is required.

IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged from its predecessor, IAS 17. The Group assesses new lease contracts to determine the right of use liability. The Group has assessed that there is not a material impact to the financial statements as a result of the adoption of IFRS 16.

There are no other standards, interpretations or amendments to existing standards that are not yet effective that would be expected to have a significant impact on the Group.

2.8 Changes in accounting policies

Standards and interpretations applicable this period

The accounting policies applied during this year are fully consistent with those applied in the previous period. 

During the fiscal year the Group applied the following standard applicable for reporting periods beginning on or after 1 January 2018:

(i) IFRS 9 'Financial Instruments'

IFRS 9 'Financial Instruments' became effective for annual periods beginning on or after 1 January 2018. It addresses the classification, measurement and derecognition of financial assets and liabilities and replaces the multiple classification and measurement models in IAS 39.

Classification and measurement

Classification and measurement of debt assets is driven by the entity's business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. (A debt instrument is measured at amortised cost if the objective of the business model is to hold the financial asset for the collection of the contractual cash flows and the contractual cash flows under the instrument solely represent payments of principal and interest (SPPI)). A debt instrument is measured at fair value through other comprehensive income if the objective of the business model is to hold the financial asset both to collect contractual cash flows from SPPI and to sell.

2.8 Changes in accounting policies

(i) IFRS 9 'Financial Instruments'

Classification and measurement

All other debt instruments must be recognised at fair value through profit or loss. An entity may however, at initial recognition, irrevocably designate a financial asset as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency. Derivative and equity instruments are measured at fair value through profit or loss unless, for equity instruments not held for trading, an irrevocable option is taken to measure at fair value through other comprehensive income. IFRS 9 also introduces a new expected credit loss (ECL) impairment model.

Application to the Group

IFRS 9 has been applied retrospectively by the Group and did not result in a change to the classification or measurement of financial instruments as outlined in note 3.9 (Detailed retrospective application of the classification and measurement of financial assets and liabilities in accordance with IFRS 9 was outlined). As permitted by IFRS 9 comparatives were restated. The Group's investment portfolio continues to be classified as fair value through profit or loss and other financial assets which are held for collection continue to be measured at amortised cost. There was no material impact on adoption from the application of the new impairment model.

(ii) IFRS 15 'Revenue from Contracts with Customers'

IFRS 15 is effective for accounting periods beginning on or after 1 January 2018. The objective of IFRS 15 is to establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. A five step model framework is adopted to recognise revenue based on the amount of consideration to which the entity expects to be entitled to in exchange for goods or services promised to customers.

Scope

IFRS 15 applies to all contracts with customers except those within the scope of IAS 17 'Leases', IFRS 9 'Financial Instruments', IFRS 10 'Consolidated Financial Statements', IFRS 11 'Joint Arrangements', IAS 27 'Separate Financial Statements', IAS 28 'Investments in Associates and Joint Ventures', IFRS 4 'Insurance Contracts' and non-monetary exchanges between entities in the same line of business to facilitate sales to customers.

Application to the Group

Revenue from commissions received falls within IFRS 15.

Revenue is obtained from acting as an intermediary between the customer and airlines, tour operators and hotels. The Group facilitates transactions and earns a commission in return for its service. This commission may take the form of a fixed fee per transaction or a stated percentage of the customer billing, depending on the transaction and the related vendor as outlined in 3.6. Revenue is recognised on booking on the respective hotel accommodation or tour. Therefore the adoption of IFRS 15 has no material impact on the Group.

3. Summary of significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

3.1 Consolidation

The consolidated financial statements comprise the financial statements of CEIBA and its subsidiaries as at 31 December 2018. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

· Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)

· Exposure, or rights, to variable returns from its involvement with the investee, and

· The ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

· The contractual arrangement with the other vote holders of the investee

· Rights arising from other contractual arrangements

· The Group's voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Where there is a loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which the Group has control.

The Group had direct and indirect equity interests in the following entities as at 31 December 2018 and 31 December 2017:

a) Company consolidated at 31 December 2018 and 31 December 2017.

b) Company consolidated at 31 December 2017.

c) Company accounted at fair value at 31 December 2018 and 31 December 2017.

d) Company accounted at fair value at 31 December 2017.

(i) Holding company for the Group's interests in real estate investments in Cuba that are facilitated by a representative office in Havana.

(ii) Operates a travel agency that provides services to international clients for travel to Cuba.

(iii) Holding company for underlying investments with no other significant assets.

(iv) Company which is in the process of being liquidated.

(v) Joint venture company that holds the Miramar Trade Center as its principal asset.

(vi) Dutch company responsible for the holding and management of the Group's investments in tourism. In December 2017 it was converted from a cooperative to a limited liability company (B.V.).

(vii) Joint venture company that holds the Meliã Habana Hotel, Meliã Las Americas Hotel, Meliã Varadero Hotel and Sol Palmeras Hotel as its principal assets

(viii) Joint venture company that previously held as its principal assets the Meliã Las Americas Hotel, Meliã Varadero Hotel and Sol Palmeras Hotel and was merged with Miramar S.A in November 2018 (see note 7).

(ix) Joint venture company incorporated to build a beach hotel in Trinidad, Cuba.

All inter-company transactions, balances, income, expenses and unrealised surpluses and deficits on transactions between CEIBA Investments Limited and its subsidiaries have been eliminated on consolidation. Non-controlling interest represent the interests in the operating results and net assets of subsidiaries attributable to minority shareholders.

3.2 Foreign currency translation

Transactions denominated in foreign currencies during the period are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the reporting date into functional currency at the exchange rate at that date. Foreign currency differences arising on translation are recognised in the consolidated statement of comprehensive income as foreign exchange income (loss).

The financial statements of foreign subsidiaries included in the consolidation are translated into the reporting currency in accordance with the method established by IAS 21, The Effects of Changes in Foreign Exchange Rates. Assets and liabilities are translated at the closing rates at the statement of financial position date, and income and expense items at the average rates for the period. Translation differences are taken to other comprehensive income and shown separately as foreign exchange reserves on consolidation without affecting income. Translation differences during the year ended 31 December 2018 were loss of US$7,285,831 (nine months ended 31 December 2017 period: gain of US$7,131,689).

The exchange rate used in these consolidated financial statements at 31 December 2018 is 1 Euro = US$1.1440 (31 December 2017: 1 Euro = 1.1940 US$).

3.3 Change in fair value from equity investments and short term borrowings at fair value through profit or loss

Changes in fair value from equity investments and short term borrowings at fair value through profit or loss includes all realised and unrealised fair value changes, but excludes interest and dividend income.

3.4 Dividend income

Dividend income arising from the Group's equity investments is recognised in the consolidated statement of comprehensive income when the Group's right to receive payment is established or cash amounts have been received.

3.5 Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable. Interest income is recognised in the consolidated statement of comprehensive income.

3.6 Travel agency commissions

GrandSlam, a wholly-owned subsidiary of the Group, is a travel agency that acts as an intermediary between the customer and airlines, tour operators and hotels. GrandSlam facilitates transactions and earns a commission in return for its service. This commission may take the form of a fixed fee per transaction or a stated percentage of the customer billing, depending on the transaction and the related vendor. Consequently, in accordance with IFRS 15 Revenue recognition: "The amounts collected on behalf of the principal are not revenue; instead, revenue is the amount of commission when performance obligations are met can be recognised."

3.7 Fees and expenses

Fees and expenses are recognised in the statement of comprehensive income on the accrual basis as the related services are performed. Transaction costs incurred during the acquisition of an investment are recognised within the expenses in the consolidated statement of comprehensive income and transactions costs incurred on share issues or placements are included within consolidated statement of changes in equity in respect of stated capital.

Transaction costs incurred on the disposal of investments are deducted from the proceeds of sale and transactions costs incurred on shares are deducted from the share issue proceeds.

3.8 Taxation

Deferred taxes are provided for the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities using current corporation tax rate.

Deferred tax liabilities are recognized for temporary differences that will result in taxable amounts in future years. Deferred tax assets are recognised for temporary differences that will result in deductible amounts in future years. Where it is not certain that the temporary difference will be reversed no deferred taxation asset is established. At 31 December 2018 and 31 December 2017 the Group has not established any deferred tax assets or liabilities.

The average tax rates applicable to the income of the Group and its subsidiaries in their respective jurisdictions are as follows:

3.9 Financial assets and financial liabilities

(a) Recognition and initial measurement

Financial assets and financial liabilities at fair value through profit or loss are measured initially at fair value.

(b) Classification

The Group has classified financial assets and financial liabilities into the following categories:

Financial assets and financial liabilities classified at fair value through profit or loss:

Financial assets and financial liabilities classified in this category are those that have been designated by management upon initial recognition. Management may only classify an instrument at fair value through profit or loss upon initial recognition when one of the following criteria are met, and designation is determined on an instrument-by-instrument basis:

· The designation eliminates, or significantly reduces, the inconsistent treatment that would otherwise arise from measuring the assets or liabilities or recognising gains or losses on them on a different basis or,

· For financial liabilities that are part of a group of financial liabilities, which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy or,

· For financial liabilities that contain one or more embedded derivatives, unless they do not significantly modify the cash flows that would otherwise be required by the contract, or it is clear with little or no analysis when a similar instrument is first considered that separation of the embedded derivative(s) is prohibited in relation to financial liabilities.

Financial assets and financial liabilities at fair value through profit or loss are carried in the consolidated statement of financial position at fair value. Changes in fair value are recognised in the statement of comprehensive income.

Financial assets and financial liabilities measured at fair value through profit or loss are the following:

· Equity Investments are classified at fair value through profit or loss, with changes in fair value recognised in the statement of comprehensive income for the period.

· Short-term Borrowings that include an equity conversion feature are designated at fair value through profit or loss. (see note 11)

Financial assets and financial liabilities measured at amortised cost:

Financial assets and financial liabilities measured at amortised cost are initially recognised at fair value and are subsequently measured at amortised cost using the effective interest rate methodology, in respect of financial assets less allowance for impairment. A debt instrument is measured at amortised cost if the objective of the business model is to hold the financial asset for the collection of the contractual cash flows and the contractual cash flows under the instrument solely represent payments of principal and interest (SPPI). Amortised cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the effective interest rate. Therefore, the Group recognises interest income using a rate of return that represents the best estimate of a constant rate of return over the expected behavioural life of the loan, hence, recognising the effect of potentially different interest rates charged at various stages, and other characteristics of the product life cycle (prepayments, penalty interest and charges). If expectations are revised the adjustment is booked a positive or negative adjustment to the carrying amount in the balance sheet with an increase or reduction in interest income. The adjustment is subsequently amortised through Interest and similar income in the income statement.

Financial assets and financial liabilities measured at amortised cost are the following:

· Cash and cash equivalents,

· Accounts receivable and accrued income,

· Loan and advances,

· Accounts payable and accrued expenses

Retrospective application of IFRS 9 to financial assets and liabilities below:

Investments held at fair value through profit or loss

The Group's investments were previously held at fair value through profit or loss under IAS 39. In terms of IFRS 9, the investment in its entirety continues to be held at fair value through profit or loss as the investment is not held for trading nor will the fair value through other comprehensive income option be elected.

Therefore there is no change in the recognition or measurement of investments held at fair value through profit or loss.

Trade and other receivables and cash and cash equivalents

Trade and other receivables and cash and cash equivalents were previously measured at amortised cost under IAS 39. Under IFRS 9 assets can be classified under amortised cost under the following conditions:

- the assets must be held in a business model whose objective is to collect contractual cash flows, i.e. "held to collect"; and

- the contractual cash flows must represent solely payment of principal and interest on the principal amount outstanding.

These assets by virtue of their nature meet the above conditions and will therefore continue to be held at amortised cost under IFRS 9. Therefore there is no change in the recognition or measurement of trade and other receivables and cash and cash equivalents.

Trade and other payables

Under IAS 39, trade and other payables were measured at amortised cost. This does not change with the application of IFRS 9.

IFRS 9 has been applied retrospectively by the Group and did not result in a change to the classification or measurement of financial instruments as outlined.

(c) Fair value measurement

Fair value is the amount for which an asset can be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's-length transaction on the measurement date.

The Group does not have any instruments quoted in an active market. A market is regarded as active if quoted prices are readily and regularly available and represent actual and regularly occurring market transactions on an arm's length basis.

As the financial instruments of the Group are not quoted in an active market, the Group establishes their fair values using valuation techniques. Valuation techniques include using recent arm's length transactions between knowledgeable, willing parties (if available), reference to the current fair value of other instruments that are substantially the same, estimated replacement costs and discounted cash flow analyses. The chosen valuation technique makes maximum use of market inputs, relies as little as possible on estimates specific to the Group, incorporates all factors that market participants would consider in setting a price, and is consistent with accepted economic methodologies for pricing financial instruments. Inputs to valuation techniques reasonably represent market expectations and measures of the risk-return factors inherent in the financial instrument. The Group calibrates valuation techniques and tests them for validity using prices from observable current market transactions of similar instruments or based on other available observable market data.

The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, i.e. the fair value of the consideration given or received, unless the fair value of the instrument is evidenced by comparison with other observable current market transactions in the other instruments that are substantially the same or based on a valuation technique whose variables include only data from observable markets.

All changes in fair value of financial assets, other than interest and dividend income, are recognised in the consolidated statement of comprehensive income as change in fair value of financial instruments at fair value through profit or loss.

(d) Identification and measurement of impairment

IFRS 9 Financial Instruments requires the Group to measure and recognise impairment on financial assets at amortised cost based on Expected Credit Losses, replacing IAS 39's incurred loss model. The Group was required to revise its impairment methodology under IFRS 9 for each class of financial asset.

From 1 January 2018, the Group assesses on a forward looking basis the expected credit losses ("ECL") associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial. Investments held at fair value through profit or loss are not subject to IFRS 9 impairment requirements.

Loans receivable measured at amortised cost fall within the scope of ECL impairment under IFRS 9. As per IFRS 9, a loan has a low credit risk if the borrower has a strong capacity to meet its contractual cash flow obligations in the near term, and adverse changes in economic and business conditions in the longer term might, but will not necessarily reduce the ability of the borrower to fulfil its obligations. For loans that are low credit risk, IFRS 9 allows a 12-month expected credit loss to be recognised. Based on the net asset positions of the subsidiaries, the Group has determined that the loans to the subsidiaries have low credit risks and very low risk of default. Therefore, management has concluded that any impairment would be immaterial.

The Group's approach to ECLs reflects a probability-weighted outcome, the time value of money and reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

Instruments: Recognition and Measurements. All changes to the accounting policies applicable before 1 January 2018 are explained in detail in note 2.8.

(e) Derecognition

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or when it transfers the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all the risks and rewards of ownership and does not retain control of the financial asset. Any interest in transferred financial assets that qualify for derecognition that is created or retained by the Group is recognised as a separate asset or liability in the consolidated statement of financial position.

On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the consideration received (including any new asset obtained less any new liability assumed) is recognised in the consolidated statement of comprehensive income.

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

3.10 Cash and cash equivalents

Cash and cash equivalents are defined as cash on hand and short-term deposits and other short-term highly liquid investments with remaining maturities at the time of acquisition of three months or less.

3.11 Loans and lending facilities

Loans and lending facilities comprise investments in unquoted interest-bearing financial instruments. They are carried at amortised cost. Interest receivable is included in accrued income.

3.12 Property, plant and equipment

Property, plant and equipment, with the exception of works of art, held by the Group and its subsidiaries are stated at cost less accumulated depreciation and impairment. Depreciation is calculated at rates to write off the cost of each asset on a straight-line basis over its expected useful life, as follows:

The carrying amounts are reviewed at each statement of financial position date to assess whether they are recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount. Works of art are carried at their revalued amount, which is the fair value at the date of revaluation. Increases in the net carrying amount are recognised in the related revaluation surplus in shareholders' equity. Valuations of works of art are conducted with sufficient regularity to ensure the value correctly reflects the fair value at the statement of financial position date. Valuations are mostly based on active market prices, adjusted for any difference in the nature or condition of the specific asset.

 3.13 Stated capital

Ordinary shares are classified as equity if they are non-redeemable, or redeemable only at CEIBA's option.

3.14 Acquisitions of subsidiary that is not a business

Where a subsidiary is acquired, via corporate acquisitions or otherwise, management considers the substance of the assets and activities of the acquired entity in determining whether the acquisition represents the acquisition of a business.

Where such acquisitions are not judged to be an acquisition of a business, they are not treated as business combinations. Rather, the cost to acquire the corporate entity or assets and liabilities is allocated between the identifiable assets and liabilities (of the entity) based on their relative values at the acquisition date. Accordingly, no goodwill or deferred taxation arises.

3.15 Assessment of investment entity status

Entities that meet the definition of an investment entity within IFRS 10 "Consolidated Financial Statements" are required to measure their subsidiaries at fair value through profit and loss rather than consolidate them. The criteria which define an investment entity are, as follows:

· An entity that obtains funds from one or more investors for the purpose of providing those investors with investment management services;

· An entity that commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and

· An entity that measures and evaluates the performance of substantially all of its investments on a fair value basis.

The Group's objective includes providing investment management services to investors to achieve capital growth and dividend income from direct and indirect investment in or with Cuban businesses, primarily in the tourism and commercial real estate sectors, and other revenue-generating investments primarily related to Cuba.

However in addition to reviewing fair values, the Group also reports to its Directors, via internal management reports, various other performance indicators in relation to the operating performance of the investments. Therefore Management is not measuring and evaluating the performance of the investments solely on a fair value basis.

Accordingly Management has concluded that the Group does not meet the definition of an investment entity. These conclusions will be reassessed on a continuous basis, if any of these criteria or characteristics change.

3.16 Assessment of venture capital organisation

There is no specific definition of a "venture capital organisation". However, venture capital organisations will commonly invest in start-up ventures or investments with long term growth potential.

Venture capital organisations will also frequently obtain board representation for the investments that it has acquired an equity interest. The Group has representation on all of the Board of Directors of the Joint Ventures in which it has an interest and participates in strategic policy decisions of its investments, but does not exercise management control. 

Accordingly Management has concluded that the Group is a venture capital organisation and has applied the exemption in IAS 28 "Investments in Associates and Joint Ventures" to measures it investments in joint ventures at fair value through profit or loss.

4. Cash and cash equivalents

(i) Balance without restriction. Included within the balance are amounts held on behalf of shareholders amounting to $1,305,982 (see note 10).

5. Accounts receivable and accrued income

(i) This amount was settled against a capital contribution to Miramar S.A. subsequent to its merger with Cubacan S.A. (see note 7).

(ii) This amount relates to the sale of a non-controlling interest to Meliã Hotels International S.A. and was settled in January 2018.

Trade receivables are assessed in terms of the simplified approach for expected credit losses per IFRS 9 due to trade receivables not containing a significant financing component and majority consisting of prepayments and an insignificant portion of accounts receivable from travel agency activities in GrandSlam, a wholly owned subsidiary of the Group. As a result of the composition of the receivables balance we assess the credit risk to be low since the nature of the receivables and composition of the balance been majority prepayments and impairment loss to be immaterial.

6. Loans and lending facilities

(i) In April 2018, the Group entered into a construction finance agreement (the "Construction Facility") with TosCuba S.A. ("TosCuba") for the purpose of extending to TosCuba part of the funding necessary for the construction of the Meliã Trinidad Playa Hotel. The Construction Facility is in the maximum principal amount of US$45,000,000, divided into two separate tranches of US$22,500,000 each. The Group has the right to syndicate Tranche B of the Construction Facility to other lenders.

The principal terms of the Construction Facility include, (i) a grace period for principal and interest during the construction period of the hotel (expected to be completed by 31 December 2020), (ii) upon expiry of the grace period, accumulated interest will be repaid, followed by a repayment period of eight years during which blended payments of principal and interest will be made, (iii) interest will accrue on amounts outstanding under the Construction Facility at the rate of 8 per cent.

The first disbursement under the Construction Facility was made on 23 November 2018. Repayment of the Construction Facility is secured by an assignment in favour of the lenders of all of the future income of the Meliã Trinidad Playa Hotel following start-up of operations. In addition, Tranche B of the Construction Facility is also secured by a guarantee provided by Cubanacán S.A., Corporaciön de Turismo y Comercio Internacional (the Cuban shareholder of TosCuba) as well as by an assignment in favour of the Group (in its capacity as Tranche B lender) of all international tourism proceeds generated by the Meliã Santiago de Cuba Hotel. Loan to Toscuba (The construction facility) represents a financial asset, based on the terms of the loan the loan is not repayable on demand and there is no expectation to be repaid within 12 months since there is a 2 year grace period and a further 8 year payment period, therefore we have assessed the immediate expected credit loss to be immaterial to the Group.

(ii) In July 2016, the Group participated in a €24,000,000 syndicated facility provided to Casa Financiera FINTUR S.A. ("FINTUR"). The facility has a term of 48 months, a fixed interest rate of 8%, quarterly payments of interest only for the first 12 months, and twelve quarterly principal and interest payments beginning 30 September 2017. This facility was secured by Euro-denominated

off-shore tourism proceeds payable to FINTUR by certain international hotel operators managing hotels in Cuba. The loan to FINTUR represents a financial asset. Based on historical analysis FINTUR has made all payments on time with no defaults since the inception of this facility as well with previous loan facilities. The loan is not repayable on demand. It has been determined that there is no significant risk of default over the next 12 months, therefore the expected credit loss is assessed to be immaterial to the Group.

The following table details the expected maturities of the the loans and lending facilities portfolio:

7. Changes in equity investments during the year

Miramar and Cubacan

In November 2018, Miramar S.A. ("Miramar"), which owns the Meliã Habana Hotel, was merged with Cuba-Canarias S.A. ("Cubacan"), the Cuban joint venture company that owned three beach resort hotels in Varadero known as the Meliã Las Americas, Meliã Varadero and Sol Palmeras Hotels. As a result of the merger, the four hotels are now owned by Miramar as the remaining joint venture company.

In November 2018 the Cuban shareholder, Corporación de Turismo y Comercio Internacional Cubanacán S.A. ("CUBANACAN"), contributed to Miramar for a deemed value of US$28,381,566 the extension and granting of the surface rights for the four hotels to 2042. The Group, through its subsidiary HOMASI, made a matching contribution comprised of dividends owing by Miramar to the Group as well as a cash payment:

8. Equity investments