CHOC.L Regulatory News (CHOC)

30 June 2015

United Cacao Limited SEZC

("United Cacao", the "Company" or, together with its subsidiaries, the "Group")

Final Results

for the year ended 31 December 2014

United Cacao (AIM: CHOC), the AIM-quoted cacao plantation company based in Peru, announces final audited results for the year to 31 December 2014. All figures are in US dollars unless otherwise indicated.

Highlights during the period:

· Admission of ordinary share capital to trading on AIM market of the London Stock Exchange on 2 December 2014 following a successful share placing to raise £6.4 million (approximately US$10 million). Funds are being used to extend the Company's planted operations from approximately 320 hectares in early December 2014 to 2,000 hectares by the end of December 2015 and for general working capital purposes.

Highlights post the period end:

· 1,150 hectares of cacao planted at the end of June 2015.

· Increase in the freehold title, agriculturally zoned land owned by the Company to 3,760.5 hectares.

· Launch of Programa Alianza Producción Estratégica Cacao ("PAPEC"), an innovative small-farmer finance programme under which United Cacao extends low-cost finance to local families for planting cacao and purchases their cacao beans for fermentation and drying. The programme was officially initiated on 17 April 2015 at a ceremony in Tamshiyacu in Peru.

· Successful dual listing on Lima Stock Exchange (Bolsa de Valores de Lima) following the admission of the Company's ordinary share capital on 19 June 2015.

Mr Dennis Melka, Executive Chairman and CEO of the Group, said: 

"The past twelve months have been transformative for the Company. Our listings in London and Lima have given us the necessary strong foundations to become one of the world's largest and lowest cost corporate growers of traceable and sustainable cacao. "

For further information, please visit www.unitedcacao.com or contact:

Posting of Annual Report and Notice of Annual General Meeting

The Group's Annual Report and Accounts for the year ended 31 December 2014, together with the Notice of Annual General Meeting and Forms of Proxy and Instruction, are being posted to shareholders today.

The Annual General Meeting will take place on 1 September 2015 at 2:00 pm at the Company's plantation outside Tamshiyacu.

Copies of the Annual Report, Notice of Annual General Meeting and Forms of Proxy and Instruction will be available to download from the Company's website later today.

CHAIRMAN'S STATEMENT

Thank you for being a shareholder or having an interest in United Cacao Limited SEZC (the "Company"). It is with your support that we are on-track to create the world's largest cacao estate and to be the world's lowest-cost cacao producer. In an industry plagued by child labour and slavery in West Africa, your Company has created sustainable employment opportunities for hundreds, and ultimately thousands of people in the Amazon, when the project is completed. The communities in and around the Tamshiyacu area, our operating area, have a fundamental human right to have access to work, clean water, a living wage and a better future for their families - rest assured your Company is making this a reality.

As of publication of this statement, your Company:

· owns over 3,760.5 hectares of private, freehold land that is fully zoned and pre-approved for agricultural purposes since 1997 under Legislative Decree 838 approved by the then President, Congress and Ministry of Agriculture;

· has over 1,150 hectares planted, consisting of 70% with CCN 51 and 30% with fine aromatic varieties such as TSH-595, IMC-67 and ICS-1. We maintain our objective to achieve 2,000 ha planted by the calendar year-end making your Company, we believe, the largest estate in Latin America. The trees we plant, approximately 1,111 per hectare, are indigenous to the Amazon area and will have a productive life in excess of 40 years.

Our Programa Alianza Producción Estratégica Cacao ("PAPEC") is also on-track to achieve an additional 200 hectares planted this year and a further 500 hectares in 2016. PAPEC is an innovative programme that allows struggling farmers around our estate to participate in the cacao industry and create a positive future for themselves and their families.

A CORPORATE MODEL FOR CACAO

Contrary to conventional industry opinion, cacao is extremely well-suited for large-scale corporate cultivation. Cacao is a high-input agricultural crop with concentrated periods of productivity. The cacao tree needs specialized knowledge for care and maintenance, in particular, regular pruning by trained technicians; furthermore, it requires regular, consistent application of fertilizer. More than 75% of the output of the tree is concentrated during a few months of the year, and this output then needs to be exported via 40 foot containers to destination markets.

Neither of these characteristics is favorable for small, under-capitalized small farmers in remote locations. This high input requirement means buying, and paying for in advance, fertilizer and other agricultural inputs from local dealers at high costs (if any dealers exist in the area). Concentrated output means all the year's revenues are received in cash in a short time frame, and usually, pressing family needs for this cash outweigh investment in the following year's crop. Export logistics means there are usually an entire series of profit-maximizing middlemen happy to take advantage of a small farmer's need to sell quickly.

A corporate cacao estate is able to invest appropriately, provide consistent regular care and maintenance, take a scientific approach to fertilization, leverage best practice and handle direct-to-chocolate maker sales eliminating the industry's numerous middlemen. Essentially it comes down to having a sufficiently large and stable balance sheet to ensure maximum productivity. This is no different to what we see in the grinding industry globally, a handful of large players (four) dominate over 50% of the global grinding capacity. We find it slightly ironic that there is incredible concentration in chocolate confectionary production and cacao grinding capacity yet industry pundits insist production must remain in the realm of impoverished small farmers! In fact, basic agronomy demands precisely the opposite.

HARVESTING ACTIVITY ALREADY UNDERWAY

Whilst we have already been harvesting pods from our fourth quarter 2013 plantings, we are using these wet beans as seedling material for our expanding nursery operations which is more efficient than selling these small volumes into the marketplace. We expect to make our first commercial sale in 2016. These production numbers will continue to rise until approximately 2021 when the estate reaches peak maturity, which should, at the minimum, be 2.5 tonnes per hectare, but should, it is hoped, be closer to 3.0 tonnes per hectare. It is worth noting that small farmers in Peru, who have the right tree density, apply basic care and maintenance and some limited fertilization, achieve regularly in excess of 2.5 tonnes per hectare. Many corporate estates in Ecuador achieve these levels as well. We are also excited to initiate the importation of ESS (aka Sacha Gold) planting material from Ecuador; this material represents the next generation planting material and is achieving over 4.0 tonnes of cacao per hectare in Ecuador with excellent disease resistance. We expect that a meaningful percentage of our 2016 plantings will be ESS. This clonal variety has fine flavor characteristics and yield productivity that appears to exceed CCN 51.

CONCLUSIVE LEGAL RULINGS

We are pleased to report that on 26 March 2015, the Superior Court of Appeals of Loreto ruled on all counts unanimously in your Company's favor with respect to the litigation that had been detailed in the Company's AIM Admission Document, fully validating the Company's legal position.

FINANCING ACTIVITIES & POSITION

On 2 December 2014, the Company raised US$10,000,000 (before fees and expenses) via a listing on the AIM market of the London Stock Exchange ("AIM"). Subsequently, on 19 June 2015, the Company secured a secondary listing on the Lima Stock Exchange (Bolsa de Valores de Lima, or "BVL"). Cash balances and receivables as of year-end 2014 were US$7,760,041. The Company has no indebtedness and reported no revenue for the reporting period. The total reported loss for the year ended 31 December 2014 was US$ 2,981,983 (a loss per share of 23 cents) compared with a loss of US$695,855 (a loss per share of 14 cents) for the year ended 31 December 2013. Net assets for the period were US$15,480,358 compared with US$1,906,766 in the prior year.

CLOSING THOUGHTS

Your Company is applying a corporate model for cacao which has been pioneered in Ecuador and Peru for the preceding two decades. We are using the latest clonal materials and consistently innovating our practices in the field; our team is superb and arguably the best cacao field estate team in the world.

It is essential that the world uses land efficiently:

· Use the highest yielding cacao species available;

· Operate in areas with sufficient rainfall; and,

· Operate with ethical labour standards.

It makes absolutely no sense for the cacao industry to be expanding in West Africa when the yields per hectare are 500 kg per annum when a hectare in Peru can yield in excess of 2,500 kg per annum. The vast majority of cacao produced in the world, principally in West Africa, is done inefficiently, using decades old clonal materials in areas with insufficient rainfall and what we consider to be horrific labour practices. The market will adapt and change, and your Company is at the forefront of this change. We have a significant first mover advantage in a poorly understood commodity.

There are numerous barriers to entry surrounding our business model. Some are obvious, such as the rainfall requirements of the tree and limited land availability in West Africa and Asia. Some are slightly more complex, in that cacao is a far more intensive tree species to plant given the high planting density and grafting requirement; this dramatically slows the pace of planting when compared to palm oil for example. A large multinational group focused on palm oil seeks plant 5,000 to 15,000 hectares per annum; the fastest planting rate for cacao we estimate is around 1,500 hectares per annum irrespective of the capital availability. The complexity of a cacao estate also requires a specialized managerial base with a passion for the crop.

We wish to thank all of our staff, who have worked to make the Company the success that it is been thus far. We wish to thank our shareholders, who share our vision of creating the leading cacao estate in the world. The remainder of 2015 will be an exciting period for the Company as we continue to plant out the estate. We look forward to updating you on our progress in the months ahead.

Dennis Melka

Executive Chairman

30 June 2015

Annual Financial Statement for the financial year ended 31 December 2014

Independent Auditors' Report

To the Directors and Shareholders of United Cacao Limited SEZC and Subsidiaries

We have audited the accompanying consolidated financial statements of United Cacao Limited SEZC (a holding investment Company, incorporated in the Cayman Islands' Special Economic Zone) and its Subsidiaries (the "Group"), which comprise the consolidated statements of financial position as of December 31, 2014 and 2013, and the consolidated statement of comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows for the years then ended, and the summary of significant accounting policies and related notes to the consolidated financial statements. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS), as adopted by the European Union.

This report is made solely for the company's directors as a body for reporting obligations under the AIM rules for Companies issued by the London Stock Exchange. 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 auditors' 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.

Directors' responsibility for the consolidated financial statements

The Directors are responsible for the preparation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union 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 consolidated financial statements that are free from material misstatements, whether due to fraud or error.

Auditors' responsibility

Our responsibility is to audit and express an opinion on these consolidated financial statements in accordance with applicable law and International Standards on Auditing (International Federation of Accountants). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the consolidated financial statements

An audit involves obtaining evidence about the amounts and disclosures in the consolidated financial statements sufficient to give reasonable assurance that the consolidated financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the consolidated financial statements.

Opinion of the consolidated financial statements

In our opinion:

· the consolidated financial statements give a true and fair view of the state of the Group's affairs as of 31 December 2014 and 2013, and of the Group's loss for the years then ended;

· the consolidated financial statements have been properly prepared in accordance with IFRS as adopted by the European Union

United Cacao Limited SEZC and Subsidiaries

Consolidated statements of financial position

As of December 31, 2014 and 2013

The accompanying notes are an integral part of these consolidated financial statements.

Las notas a los estados financieros adjuntas son parte integrante de este estado consolidado.

United Cacao Limited SEZC and Subsidiaries

Consolidated statements of comprehensive income

For the years ended as of December 31, 2014 and 2013

The accompanying notes are an integral part of these consolidated financial statements.

Las notas a los estados financieros adjuntas son parte integrante de este estado consolidado.

United Cacao Limited SEZC and Subsidiaries

Consolidated statements of changes in equity

For the years ended as of December 31, 2014 and 2013

United Cacao Limited SEZC and Subsidiaries

Consolidated statements of cash flows

For the years ended as of December 31, 2014 and 2013

United Cacao Limited SEZC and Subsidiaries

Notes to the consolidated financial statements

As of December 31, 2014 and 2013

1. Identification and business activity of the Company

(a) Identification -

United Cacao Limited SEZC (hereinafter "the Company" or "UCL") is an investment holding Company incorporated in the Cayman Islands on May 21, 2013 and licensed by the Special Economic Zone Authority of the Cayman Islands Government.

As of December 31, 2014, after the IPO refered to in note 1(c), there were no key controlling shareholders as the Company is publicly listed; East Pacific Capital Private Limited, an entity controlled by the Chairman and CEO, holds approximately 28 percent of the Company's capital stock. As of December 31, 2013, the key controlling shareholders were East Pacific Capital Limited (45 per cent) and Latin Cacao Limited (23 per cent).

The legal domicile of the Company is Cricket Square, Hutchins Drive, PO Box 2681. Grand Cayman KY1-1111, Cayman Islands.

(b) Business activity -

UCL is a holding company for its Peruvian subsidiaries, Cacao Del Peru Norte S.A.C. ("CDPN") and Cooperativa de Cacao Peruano S.A.C. (CCP) (the "Subsidiaries"), which operate in the agricultural sector. The Company's participation in its Subsidiaries is as follows:

As of December 31, 2014 and 2013, the Company and its Subsidiaries are involved in the creation and development of cacao estates which consists of land purchasing and subsequent costs for clearing and planting. During this period, the Company received financial, economic and operational support from its shareholders. As of December 31, 2014, the Company, through its operating subsidiaries, had acquired and titled 3,877 hectares (unaudited), cleared 1,588 hectares (unaudited) and planted 527 hectares of land (unaudited) (acquired and cleared 3,160 and 525 hectares of land -unaudited-, respectively, as of December 31, 2013), see note 8(b).

The Company's Board of Directors and Management have established business plans and assumptions to ensure the continuity of the Company. In this sense, the continuity of the business operations depends of the success of such plans. The main plan established by the Board is the purchase of agricultural land in order to plant and harvest approximately 3,250 hectares of cacao.

(c) Initial Public Offering (IPO) -

During 2014, the Company approved the execution of an international offering of new shares of the Company under the Alternative Investment Market of the London Stock Exchange ("AIM").

Subsequently, the Company agreed to: (i) authorize the issuance of 5,000,000 common shares with nominal value of US$0.001, and (ii) set the issuance value of such shares at 128p (equivalent to approximately US$2.00) per share in Peruvian and international markets. The issuance of new common shares represented for the Company a gross cash contribution of US$9,955,044 and a net cash contribution of US$8,739,055 after fees and expenses (equivalent to £6.4 million approximately). Such cash contribution was recorded in the shareholders' equity as share capital and share premium of US$5,000 and US$8,734,055, respectively, see note 11(b).

2. Significant accounting policies and practices

(a) Basis of preparation -

Declaration of compliance -

These consolidated financial statements of the Company for the years ended December 31, 2014 and 2013 have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU").

Responsibility for the information -

The information contained in these consolidated financial statements are the responsibility of Management and the Board of the Company, which expressly state they have fully implemented the principles and criteria contained in the International Financial Reporting Standards ("IFRS") as adopted by EU as of December 31, 2014 and 2013.

Basis of measurement -

The consolidated financial statements have been prepared under the historical cost basis, from the accounting records kept by the Company. The accompanying consolidated financial statements are presented in U.S. Dollars (functional and presentation currency).

Used of judgments and estimates -

The preparation of financial information in accordance with IFRS as adopted by the EU requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial information and the reported amounts of income and expenses during the reporting period. Although these estimates are based on Management's best knowledge of the amount, event or actions, actual events ultimately may differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

Information about significant areas of estimation, uncertainly and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are described in note (f) below. IFRS also require management to exercise its judgment in the process of applying the Company's accounting policies.

(b) Going Concern-

This historical financial information relating to the Company has been prepared on a going concern basis, which assumes that the Company will continue its operations and will be able to meet its liabilities as they fall due for the foreseeable future. Management considers that the Company has sufficient funds for the foreseeable future that is for at least twelve months from the date of this document.

(c) New and revised IFRS adopted by the EU -

The accounting policies adopted are consistent with those applied in previous years, except that the Company has adopted the new and revised IFRS and IAS's that are mandatory for periods beginning on or after January 1, 2014, as described below:

- IFRS 10 "Consolidated Financial Statements", applicable for annual periods beginning on or after 1 January 2014.

IFRS 10 replaces the portion of IAS 27 'Consolidated and separate financial statements' that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12 'Consolidation-special purposes entities'. IFRS 10 establishes a single control model that applies to all entities including special purpose entities.

- IFRS 11 "Joint arrangements", applicable for annual periods beginning on or after 1 January 2014.

IFRS 11 replaces IAS 31 'Interests in joint ventures' and SIC-13 'Jointly-controlled entities non-monetary contributions by venturers'. Instead, jointly-controlled entities that meet the definition of a joint venture must be accounted for using the equity method.

- IFRS 12 "Disclosure of involvement with other entities", applicable for annual periods beginning on or after 1 January 2014.

IFRS 12 applies to an entity that has an interest in subsidiaries, joint arrangements, associates and/or structured entities. Many of the disclosure requirements of IFRS 12 were previously included in IAS 27, IAS 31, and IAS 28. A number of new disclosures are also required.

- IAS 28 "Investments in Associates and Joint Ventures (as revised in 2011)", applicable for annual periods beginning on or after 1 January 2014.

IAS 28 'Investments in Associates', has been renamed IAS 28 'Investments in Associates and Joint Ventures', and describes the application of the equity method to investments in joint ventures in addition to associates.

- Amendments to IFRS 10 "Consolidated Financial Statements", IFRS 11 "Joint Arrangements" and IFRS 12 "Disclosures of Interests in Other Entities" - Transition Guidance, applicable for annual periods beginning on or after 1 January 2014.

The amendments were set in order to clarify certain transitional guidance on the application of IFRS 10, IFRS 11 and IFRS 12 for the first time.

- Amendments to IFRS 10 "Consolidated Financial Statements", IFRS 12 "Disclosures of Interests in Other Entities" and IAS 27 "Separate Financial Statements" - Investment Entities, applicable for annual periods beginning on or after 1 January 2014.

The amendments to IFRS 10 define an investment entity and introduce an exception from the requirement to consolidate subsidiaries for an investment entity. In terms of the exception, an investment entity is required to measure its interests in subsidiaries at fair value through profit or loss. The exception does not apply to subsidiaries of investment entities that provide services that relate to the investment entity's investment activities. Consequential amendments to IFRS 12 and IAS 27 have been made to introduce new disclosure requirements for investment entities. In general, the amendments require retrospective application, with specific transitional provisions.

- Amendments to IAS 32 "Offsetting Financial Assets and Financial Liabilities" applicable for annual periods beginning on or after 1 January 2014.

The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of "currently has a legally enforceable right of set-off" and "simultaneous realisation and settlement". Retrospective application is required.

- Amendments to IAS 36 "Impairment of Assets" - recoverable amount disclosures, applicable for annual periods beginning on or after 1 January 2014.

The amendment removes the requirement to disclose recoverable amounts when there has been no impairment or reversal of impairment.

Due to the structure of the Company and its Subsidiaries and the nature of its operations, adoption of these standards had no significant effect on its consolidated financial position and results; therefore it was not necessary to modify the comparative consolidated financial statements of the Company.

(d) Basis of consolidation-

The consolidated financial statements comprise the financial statements of the Company and the controlled entities. Control is presumed when the Company owns, directly or indirectly, more than half of the voting rights of the issued share capital of Subsidiaries, and has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All balances, sales and other transactions between the Company and its Subsidiaries have been eliminated in full, including the realized and unrealized gains and losses resulting from such transactions.

(e) Segment Reporting-

Operating segments are reporting in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of operating segments, has been identified as the Board of Directors and the Financial Controller.

(f) Estimates and assumptions -

The preparation of the consolidated financial statements requires management to use estimates and assumptions to determine the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses for the year ended December 31, 2014 and 2013.

These accounting judgments and estimates are based on the best knowledge by Management of material events and circumstances, taking into account historical experience; however, the actual results obtained in future periods may differ from the estimated amounts. The Company and Subsidiaries' Management do not expect that these changes, if any, will have a significant effect on the consolidated financial statements.

Significant estimates and assumptions are as follows:

- Determination of the useful life and depreciation method of agriculture machinery, vehicles and equipment.

- Estimation of the provision for impairment of long-lived assets.

- Estimation of the provision for contingencies arising from legal processes and administrative procedures.

- Stock options valuation (share-based payments)

Any difference between estimates and actual results thereafter is recorded in year's results in which it occurs.

(g) Foreign currency transactions -

Functional and presentation currency -

The functional currency, which is the currency of the primary economic environment in which the entity operates, was determined by Management at the Company and its Subsidiaries and is the U.S. Dollar, which is also its presentation currency.

Transactions and balances in foreign currency -

Transactions in foreign currencies are initially recorded at the functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchange ruling as of the date of the consolidated statements of financial position. Gains or losses from exchange difference resulting from the settlement of such transactions and translation of monetary assets and liabilities in foreign currencies at rates of exchange ruling as of the date of the consolidated statements of financial position are recognized in the consolidated statements of comprehensive income. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated to the functional currency using the exchange rates as of the dates of the initial transactions.

(h) Financial assets -

Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale investments, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial assets are recognized initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Company and its Subsidiaries determine the classification of its financial assets at initial recognition.

The Company and its Subsidiaries' financial assets include cash, and other accounts receivable. As of December 31, 2014 and 2013 the Company and its Subsidiaries do not have financial assets at fair value through profit or loss, held-to-maturity investments, available-for-sale investments, or derivatives designated as hedging instruments.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, these financial assets are subsequently measured at amortized cost using the effective interest rate method (EIR), less impairment. Gains and losses are recognized in the consolidated statements of comprehensive income when the loans and receivables are derecognized or impaired, as well as through the amortization process.

Amortized cost

Any premium or discount in the debt instruments classified into the loans and receivables category is considered in the calculation of the amortized cost by applying the effective interest rate methodology, recognizing the accrued interest in the "Financial income" caption of the income statements.

(i) Impairment of financial assets -

The Company and its Subsidiaries assess at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset's original effective interest rate (for example, the effective interest rate calculated at initial recognition). The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the consolidated statements of comprehensive income.

If, in a subsequent year, the amount of the estimated impairment loss decreases and the loss can be related to an event occurring after the impairment was recognized, the previously recognized impairment loss is reduced up to the point where the carrying value of the assets does not exceed its amortized cost as of the reduction date. Any subsequent reduction related to an impairment loss will be recognized in the consolidated statements of comprehensive income.

(j) Cash -

Cash in the consolidated statements of financial position comprise current bank accounts.

(k) Inventories -

Inventories correspond mainly to cacao seeds and supplies. Such are valued at the lower of cost and net realizable value. Costs incurred in bringing each product to its present location and condition is accounted for as follows:

- Inventory -

At acquisition cost, using the weighted average cost method.

- Inventory in transit -

At specific acquisition cost.

Management periodically assesses the devaluation and obsolescence of these assets. Obsolescence and devaluation are recorded when it is estimated that these are necessary changes to the assets based on technical areas of the Company.

(l) Biological assets -

Biological assets, including mature and immature plantations of cacao, are measured at fair value less estimated selling costs. IAS 41 "Agriculture" establishes that Gains or losses arising on initial recognition of plantations at fair value less estimated costs to sell and changes in fair value less estimated selling costs in each reporting date, are included in the results of the period in which they occur.

The cacao tree is estimated to have an average life of 35 years; with the first 5 years being considered as immature. It is classified as mature when the biological asset is in the production phase. Biological assets include costs of agricultural land preparation whose principal activities are to clear the land to ensure that plantations are ready for planting cacao.

The fair value of the cacao is calculated using the discounted cash flows of the underlying biological assets. The expected cash flows throughout the life cycle of the cacao plantations is determined using the market price and the estimated yield of agricultural production, net of maintenance and harvesting costs and any necessary cost to bring cacao estates to maturity. The performance of the cacao estate is affected by age, location, soil type and infrastructure cacao trees. The market price of dry, fermented cacao beans is set in the commodity markets in London and New York.

However, cost may sometimes approximate fair value when there has been little biological transformation or it is not expected that variations in international prices will have a significant impact at this stage. As the Company's subsidiaries are in start-up stage, biological assets were valued at cos. Cost includes expenditures for seed, labor of workers, depreciation of operating assets, among other items. Additionally, in the case of biological assets for which it is not prices or values set by the market available, and for which it has been clearly determined to be unreliable are measured at historical cost less accumulated depreciation and any impairment loss value.

As of December 31, 2014 and 2013, the Company classifies as part of biological assets the preparation of cacao's seedlings for planting in the definitive growfield; net of any provision for loss on disposal or handling, see note 9.

(m) Land, vehicles, agriculture machinery, equipment and construction in progress, net -

Land, vehicles, agriculture machinery and equipment are stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any.

The initial cost comprises the purchase price, including import duties and non-refundable purchase taxes and any directly attributable cost necessary to place and bring the asset to its working condition. For land, including subsequent costs and charges related to preparation and adaptation in order to use as growing field. Other subsequent disbursements related to repair and maintenance costs are recognized in the results of the period when incurred. Subsequent disbursements that will result in future economic benefits, in excess of the originally assessed standard of performance, are capitalized as an additional cost.

Land is not be depreciated. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

When selling or retiring vehicles and equipment, the cost and associated accumulated depreciation is eliminated, and any gain or loss arising on such disposal is included in the consolidated statements of comprehensive income.

Construction in progress -

Constructions in progress include the costs incurred for the construction of assets and other expenses directly attributable to such constructions, accrued during its execution. Constructions in progress are capitalized when completed and its depreciation is measured and recorded since the moment when they are put into use.

To capitalize directly attributable personnel expenses, the Company identifies each one of the areas and time dedicated to the planning, execution and management of the constructions.

The book value of an asset is provisioned immediately to its recoverable amount if the carrying amount of the asset is greater than its estimated recoverable value.

(n) Impairment of long-lived assets -

Whenever events or circumstances indicate that the carrying amount of long-term duration assets may not be recoverable, the Company assesses the value of land, vehicles and equipment; and biological assets to verify that there is no impairment. When the book value exceeds its recoverable value, an impairment loss is recognized in the consolidated statements comprehensive income.

The recoverable value is the higher between the net sale price and its value in use. The net sale price is the amount that can be obtained from the sale of an asset on a free market, while the value in use is the present value of estimated future cash flows from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for each asset or cash generating unit.

(o) Administrative and other expenses recognition -

Costs and expenses are recognized on an accrual basis, regardless of when they are paid, and are recorded in the periods to which they relate.

(p) Share based payments -

The Company operates an equity settled share based option scheme under which the entity receives services from employees' in consideration for equity instruments (options) of the Company. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. The fair value of the employees' services received in exchange for the grant of options is recognized as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions. The total amount expensed is recognized over the vesting period, which is the period over which all the specified conditions are satisfied. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest based on the vesting conditions. The dilutive effect of outstanding stock options is reflected as additional share dilution in the computation of diluted earnings per share, when it is applicable (further details are given in Note 16).

(q) Income tax -

Current income tax

Assets and liabilities for current income tax are measured by the amount expected to be recovered or paid to the Tax Authority. The tax rates and tax laws used to compute the amount are those in effect on the date of closing of the reporting period reported in Peru.

Deferred income tax

Deferred tax is recognized using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured at the tax rates that have been enacted and are expected to apply in the year when the asset is realized or the liability is settled. The measurement of deferred assets and deferred liabilities reflects the tax consequences that arise from the manner in which the Company and its Subsidiaries expect, as of the date of the consolidated statement of financial position, to recover or settle the carrying amount of its assets and liabilities.

Value added tax -

Revenue, expenses and assets are recognized excluding the amount of Value Added Tax (VAT), except:

- When the VAT incurred on a purchase of asset or service is not recoverable from the Tax Authorities, in which case, the VAT is recognized as part of the cost of acquisition of the asset or as part of the expenditure, as appropriate;

Receivables and payables that are already expressed by the amount of VAT included.

(r) Provisions -

Provisions are recognized when the Company and its Subsidiaries have a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in the consolidated statements of comprehensive income, net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

(s) Share capital -

Ordinary shares are classified as equity. Any excess above the par value of shares received upon issuance of those shares is classified as "additional capital" (share premium).

(t) New accounting pronouncements -

New and revised IFRS adopted by the EU that are not mandatorily effective (but allow early application) for the year ending December 31, 2014:

- Amendments to IAS 19 "Defined Benefit Plans: Employee Contributions", applicable for annual periods beginning on or after February 1, 2015.

The amendments clarify how an entity should account for contributions made by employees or third parties that are linked to services to defined benefit plans, based on whether those contributions are dependent on the number of years of service provided by the employee.

- Annual improvements 2010-2012 Cycle, not yet endorsed by the EU.

These improvements relate to IFRS 2 Share-based payments, IFRS 3 Business combinations, IFRS 8 Operating segments, IAS 16 Property, plant and equipment, IAS 38 Intangible assets, and IAS 24 Related party disclosures and are effective for annual periods beginning on or after February 1, 2015.

- Annual improvements 2011-2013 Cycle, not yet endorsed by the EU.

These improvements relate to IFRS 3 Business combinations, IFRS 13 Fair value measurement, and IAS 40 Investment property and are effective for annual periods beginning on or after February 1, 2015.

- IFRIC Interpretation 21 Levies (IFRIC 21), applicable to annual periods beginning on or after June 17, 2014.

IFRIC 21 clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached.

The Company has decided not to early adopt the mentioned standards and interpretations.

Standards and Interpretations issued by the IASB but not yet adopted by the EU -

As of the date of these financial statements, IFRS as adopted by the EU do not significantly differ from regulations adopted by the International Accounting Standards Board (IASB) except for the following standards and amendments to the existing standards, which were not endorsed for use in the EU as of 31 December 2014 and cannot be applied by the entities preparing their financial statements in accordance with IFRS as adopted by the EU:

- IFRS 9 "Financial Instruments", not yet endorsed by the EU.

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory.

- IFRS 14 "Regulatory Deferral Accounts", not yet endorsed by the EU.

IFRS 14 permits an entity which is a first-time adopter of International Financial Reporting Standards to continue to account, with some limited changes, for 'regulatory deferral account balances' in accordance with its previous GAAP, both on initial adoption of IFRS and in subsequent financial statements. IFRS 14 is effective for an entity's first annual IFRS financial statements for annual periods beginning on or after 1 January 2016, with earlier application permitted.

- IFRS 15 "Revenue from contracts with customers", not yet endorsed by the EU.

IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15 revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a more structured approach to measuring and recognising revenue. The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under IFRS. Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2017 with early adoption permitted.

- Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture, not yet endorsed by the EU.

These amendments clarify the treatment of the sale or contribution of assets from an investor to its associate or joint venture requiring full recognition in the investor's financial statements of gains and losses arising on the sale or contribution of assets that constitute a business (as defined in IFRS 3 Business Combinations) and the partial recognition of gains and losses where the assets do not constitute a business, i.e. a gain or loss is recognised only to the extent of the unrelated investors' interests in that associate or joint venture. These amendments are effective for annual periods beginning on or after January 1, 2016.

- Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception, not yet endorsed by the EU.

The amendments address issues that have arisen in the context of applying the consolidation exception for investment entities. The amendments confirm that the exemption from preparing consolidated financial statements for an intermediate parent entity is available to a parent entity that is a subsidiary of an investment entity, even if the investment entity measures all of its subsidiaries at fair value. A subsidiary that provides services related to the parent's investment activities should not be consolidated if the subsidiary itself is an investment entity. These amendments are effective for annual periods beginning on or after January 1, 2016.

- Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations, not yet endorsed by the EU

The amendments to IFRS 11 provide guidance on how to account for the acquisition of an interest in a joint operation in which the activities constitute a business as defined in IFRS 3 Business Combinations. Specifically, the amendments state that the relevant principles on accounting for business combinations in IFRS 3 and other standards (e.g. IAS 36 Impairment of Assets regarding impairment testing of a cash generating unit to which goodwill on acquisition of a joint operation has been allocated) should be applied. The same requirements should be applied to the formation of a joint operation if and only if an existing business is contributed to the joint operation by one of the parties that participate in the joint operation. A joint operator is also required to disclose the relevant information required by IFRS 3 and other standards for business combinations. The amendments to IFRS 11 apply prospectively for annual periods beginning on or after January 1, 2016.

- Amendments to IAS 1 Disclosure initiative, not yet endorsed by the EU.

The IAS 1 Disclosure initiative was issued in December 2014 and seeks to clarify the concept of materiality in filtering out entity-specific information which is not relevant to financial statement users.

- Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation, not yet endorsed by the EU.

The amendments to IAS 16 prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment. The amendments to IAS 38 introduce a rebuttable presumption that revenue is not an appropriate basis for amortisation of an intangible asset. This presumption can only be rebutted in the following two limited circumstances: when the intangible asset is expressed as a measure of revenue or when it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated. The amendments apply prospectively for annual periods beginning on or after 1 January 2016.

- Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants, not yet endorsed by the EU.

The amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture define a bearer plant and require biological assets that meet the definition of a bearer plant to be accounted for as property, plant and equipment in accordance with IAS 16, instead of IAS 41. In terms of the amendments, bearer plants can be measured using either the cost model or the revaluation model set out in IAS 16. On the initial application of the amendments, entities are permitted to use the fair value of items of bearer plant as their deemed cost as at the beginning of the earliest period presented. Any difference between the previous carrying amount and fair value should be recognised in opening retained earnings at the beginning of the earliest period presented. The produce growing on bearer plants continues to be accounted for in accordance with IAS 41.

- Amendments to IAS 27 Equity Method in Separate Financial Statements, not yet endorsed by the EU.

IAS 27 Separate Financial Statements requires an entity to account for its investments in subsidiaries, joint ventures and associates either at cost or in accordance with IFRS 9 Financial Instruments (or IAS 39 Financial Instruments: Recognition and Measurement for entities that have not yet adopted IFRS 9). The amendments allow an entity to apply also the equity method in accounting for its investments in subsidiaries, joint ventures and associates in its separate financial statements. The accounting option must be applied by category of investments. The amendments also clarify that when a parent ceases to be an investment entity, or becomes an investment entity, it shall account for the change from the date when the change in status occurred. These amendments are effective for annual periods beginning on or after January 1, 2016.

- Annual improvements 2012-2014 Cycle, not yet endorsed by the EU.

These improvements relate to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee Benefits, and IAS 34 Interim Financial Reporting and are effective from 1 July 2016.

The Company is in the process of evaluating the impact of the application of these rules, if any, on its consolidated financial statements and disclosures in the notes of the consolidated financial statements.

3. Transactions and balances in foreign currency

The main foreign exchange operations are stated in "Nuevos Soles" (Peruvian currency), which are carried out at market exchange rates published by the Peruvian Superintendencia de Banca y Seguros y AFP. As of December 31, 2014, the exchange rates issued for Nuevos Soles for that institution were US$0.3346 for buying and US$0.3355 for sale (US$0.3577 and US$0.3579 as of December 31, 2013, respectively), and have been applied by the Company for the accounts of assets and liabilities, respectively.

As of the dates of statements of financial position, the Company had the following assets and liabilities denominated in Nuevos Soles:

As of December 31, 2014 and 2013, the Company and its Subsidiaries do not use derivative instruments to reduce the foreign exchange risk.

During year 2014, the net loss originated from exchange differences was US$105,344 (US$21,783, during 2013). All of these effects are presented in the "Exchange rate differences, net" caption in the consolidated statement of comprehensive income.

4. Cash

The Company and its Subsidiaries held current accounts mainly in Peruvian and Singaporean banks and are denominated in Nuevos Soles and U.S. Dollar. These funds are freely available and do not earn interest.

5. Transactions and balances with related parties

(a) During 2014 and 2013, the Company carried out the following transactions with related parties:

(b) The Company conducts its operations with related parties under the same conditions as those carried out by third parties; therefore there is no difference in pricing or base tax settlement. In relation to the payment terms, they do not differ from policies granted to third parties.

(c) As of December 31, 2014, the Company maintains accounts payable to related parties with Plantaciones del Perú Este S.A.C. amounting to US$107,028 related to the purchase of boats used in the transportation of people and goods to the location of the Company's plantations through river Amazonas. As of 31 December 2013, the Company had accounts payable to related parties, mainly to East Pacific Capital Private Limited and Grupo Palmas del Perú S.A.C. for US$9,637 and US$6,546, respectively. Such balances are denominated in U.S. Dollar and Nuevos Soles (Peruvian currency); have current maturities, non interest and no guarantees have been provided.

(d) Corresponds to the sale of land to Plantaciones de Loreto S.A.C.

(e) Corresponds to support and management services in the operation provided by its related party Grupo Palmas del Perú S.A.C.

(d) Key management compensation -

Key management comprises the Directors and Executive Officers of the Company. During 2014, the compensation of key management personnel amounted to US$33,267 (US$3,000, during 2013), which corresponds to short-term employee benefits. No post-retirement and termination benefits are paid to key management. The share-based payment pertaining to key management amounted approximately to US$143,613, during 2014 (US$64,513, during 2013).

Clasified by Directors -

6. Other accounts receivable, net

(a) This item is made up as follows:

(b) As of December 31, 2014, this balance corresponds to an account receivable provided by IPO contributions collected by the Company's broker. This balance was credited to the Company in January 6, 2015.

(c) Corresponds to the tax credit of VAT generated from the purchase of goods and services in accordance with the tax regime described in note 13. Management and its tax advisors have assessed the form and timing of the recoverability of such tax credit, and have decided to record a provision for the full amount due to the uncertain of its recoverability.

(d) As of December 31, 2013, the balance relates to advances granted to domestic suppliers which have been fully applied to invoices received during first quarter 2014.

(e) All receivables at each reporting date are current. Any receivables are neither past due nor impaired. The Company considers that the carrying amount of the other receivables do not differ significantly from their estimated fair value at each reporting date.

7. Inventory, net

Corresponds to fertilizers and other agricultural consumables to be used in the Company's operations. In Management's opinion, it is not necessary to record a provision for inventory obsolescence as of December 31, 2014 and 2013.

8. Land, agriculture machinery, vehicles, equipment and constructions in progress, net

(a) The movement and composition of this item is as follows:

(b) During 2014, the Company acquired 717 hectares of agricultural land for a total cost amounting to US$74,613 (3,160 hectares during the year 2013 for a total cost amounting to US$142,274). Additions in the cost of land also include costs for approximately US$2,772,000 (US$721,000 during 2013) related to the preparation and adaptation in order to use the land as a growing field.

Additionally, the Company acquired machineries and vehicles for an amount of approximately US$1,416,000, such as trucks, motorcycles and vans (US$108,000 during 2013).

(c) The Company keeps insurance contracts on their main assets, in accordance with the policy established by Management. In Management's opinion, its insurance policies are consistent with industry practice. The risk of potential losses for claims considered in the insurance policy is reasonable considering the type of assets held.

(d) During the periods presented, the depreciation was allocated as follows:

(e) Construction in progress correspond to disbursements related to the construction of roads necessary for transportation from and to the plantations as well as to costs incurred in the camps of the operating locations.

(f) As of December 31, 2014 and 2013, Management has assessed the recoverable amount of its long-term assets and did not find any impairment indicator.

9. Biological assets

(a) The movement and composition of this item is as follows:

(b) During 2014 and 2013, the Company cleared 1,063 and 525 hectares (unaudited) land for cultivation, respectively; and during 2014 planted 527 hectares (unaudited) in the final growing fields. The Company incurred costs amounting to US$1,445,069 that mainly correspond to disbursements for the preparation of agricultural land, treatment of seeds in the nursery and operating costs for planting seedlings in the final growing field, payroll dedicated to such activities (salaries), and other consumables (US$171,053 during 2013).

(c) As of December 31, 2014 and 2013, the Company has defined its biological assets measured at cost, which is similar to their fair value at such dates, mainly because of the following:

- The Company is in a pre-operational stage and is expected to enter the harvesting stage during 2017.

- Plantations in process corresponding mainly to first planting of seedlings in the final growing field.

- There has been little biological transformation.

- Significant impact of the variations in international prices at this stage are not expected.

10. Trade and other accounts payable

(a) This item is made up as follows:

(a) As of December 31, 2014 and 2013, mainly corresponds to the provision for professional services payable such as audit, legal and accounting services.

11. Shareholders' equity, net

(a) Issued capital -

As of December 31, 2014, the Company's share capital amounted to US$18,430, which is represented by 18,430,000 ordinary shares issued and fully paid as set out below (US$6,595 and 6,595,000 ordinary shares respectively, as of December 31, 2013). All of which have a nominal book value of US$0.001:

All classes of shares have the same rights, mainly related to voting rights (one vote per share), dividends as the Board may from time to time declare, and others.

(b) Additional capital -

This item is made up for the share premium account, as follows:

(i) On August 16, 2013 the Board approved that each US$0.01 ordinary share of the Company be split into 10 new ordinary shares amounting to US$0.001 each and such new shares be issued and allotted. In the same date, the Board approved the "Contribution Agreement" whereby the Company issued 2,999,990 shares Class A (the "Initial EPC Class A Share") to its main Shareholder (East Pacific Capital Private Limited - EPC) in exchange of EPC's participation into Cacao Del Peru Norte S.A.C. ("CDPN"). Capital contributions in advance for US$417,310 performed at that date were regularized as share premium of Class A ordinary shares issued. Furthermore, Latin Capital Limited (a totally owned company by EPC) purchased 1,500,000 Class A Share at nominal value of US$0.001 each.

(ii) On August 16, 2013, the Company and third parties ("Investors") entered the Class A-1 Share Subscription Agreement, whereby, each Investor agreed to subscribe and purchase a number of Class A-1 Shares, at a price of US$1.00 per subscription share (the nominal value was agreed in US$0.001 each), as follows:

The Company received a total amount of US$5,987,500, net of its corresponding transaction costs.

(iii) On April 28, 2014, the Investors entered the Class A-2 Share Subscription Agreement,

whereby each Investor agreed to subscribe and purchase a number of Class A-2 Shares, at a price of US$1.25 per subscription share (the nominal value was agreed in US$0.001 each), as follows:

The Company received a total amount of US$3,483,501, net of its corresponding transaction costs.

(iv) On November 11, 2014, all members of the Class A Ordinary Shares, the Class A-1 Ordinary Shares and the Class A-2 Ordinary Shares agreed to amend their respective class rights and restrictions, so that each share class has equal rights and restrictions effective upon Admission. Contingent on and effective upon Admission, all Members in the Company approved the conversion of all classes presently in issue into Ordinary Shares.

(v) On December 2, 2014, 5,000,000 new ordinary shares were allotted in the Company, each at a price of 128 pence (equivalent to approximately US$2.00) (the nominal value was agreed in US$0.001 each), and consisting of 1,447,753 Placing Shares and 3,552,247 Subscription Shares, to raise gross proceeds of £6.4m equivalent to US$9,955,044 (approximately £5.5m net of expenses, equivalent to US$8,739,055).

(c) Other reserves -

Share-based payments -

The share-based payment reserve is used to recognize the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration, see Note 12 for further details of these plans.

12. Share based payments

(a) The Company operates a share option scheme for the benefit of its employees. Grants are made at the discretion of the Board of Directors. The exercise price of the share options is equal to the market price of the underlying shares on the date of grant. The contractual term of each option granted is 10 years and there are no cash settlement alternative employees (employees must remain in service until 2017). Options are forfeited three months following the employee termination date with the Company and can only be exercised to the extent that they have vested.

The fair value of share options granted is estimated at grant date using a Hull and White 2002 valuation model, taking into account the terms and conditions upon which the share options were granted.

(b) The movement on options in issue under these schemes is set out below:

During 2014, 1,140,00 additional options were granted to employees at fair value of US$877,800 and the options outstanding as of that date had a weighted average remaining contractual life of 9.2 years. During 2013, 1,000,000 options were granted to employees at fair value of US$450,000, and the options outstanding had a weighted average remaining contractual life of 9.7 years.

Based on the calculation of the total fair value of the options granted, during 2014, the Company recognized a total charge through the consolidated statements of comprehensive income of US$336,505 (US$125,853 during 2013) and a charge of US$106,854 during 2014 to biological assets (for the portion related to operating personnel). The total fair value amounted to US$440,890 (US$125,853 during 2013) was accredited into to "Stock options reserve" caption in the consolidated statement of changes in equity.

The inputs used in the Hull and White option pricing model are as follows:

Expected volatility and the expected life used in the model are based in management's best estimates and are adjusted for the effects on non-transferability, exercise restrictions and behavioral considerations. The risk free rate is based on the US Treasury rate.

13. Tax situation

(a) UCL is subject to the tax and regulatory regime established by the Special Economic Zone Authority of The Cayman Islands.

(b) Peruvian tax regime -

Peruvian Subsidiaries are subject to the Peruvian tax law. As of December 31, 2014 and 2013, the statutory income tax rate is 30 per cent on taxable income, calculated on the period results in Nuevos Soles.

From the financial year 2015, in response to the Law 30296 published on December 31, 2014 and effective from January 1, 2015, the tax rate applicable on taxable income, after deducting the workers' profit sharing will be as follows:

- Year 2015 and 2016: 28 per cent.

- Years 2017 and 2018: 27 per cent.

- Year 2019 forward: 26 per cent.

Legal persons not domiciled in Peru and individuals are subject to retention of an additional tax on dividends received. In attention to Law 30296, the additional tax on dividends is as follows:

- 4.1 per cent of the profits generated until December 31, 2014.

- For profits generated from 2015, whose distribution is made after that date will be the following:

- 2015 and 2016: 6.8 per cent.

- 2017 and 2018: 8 per cent.

- 2019 forward: 9.3 per cent.

According to Law No. 27037 - Taxation of Investment Promotion in the Amazon (hereinafter "the Amazon Law"), if the Peruvian Subsidiaries qualify for the requirements of this Law, they could enjoy tax benefits related to the value added tax, such as exemption from the sale of goods for consumption in the Amazon, services and construction contracts made in this area, special tax credit of 25 or 50 per cent depending on the area in which the activities of the Peruvian Subsidiaries and the nature of activity are carried out, and that tax exemption on the import of goods contained in the Appendix to Decree Law No. 21503 and specified and fully released in the common tariff annexed to the protocol amending of the Convention Colombian Peruvian Customs Cooperation (PECO), 1938. Furthermore, in compliance with the Amazon Law, the Peruvian Subsidiaries may also access the related tax benefits on income tax, which basically consist of obtaining reduced rates of 0 per cent, 5 per cent and 10 per cent depending on the activities to be performed, the specific area where they develop and the type of crop.

Tax benefits related to income tax and value added tax will be effective until 2048, except for the benefit of the tax exemption for the import of goods to be consumed in the Amazon region, which expires in 2015.

According to the Amazon Law, the Subsidiaries may use the benefits indicated in the previous paragraph only if all the requirements below are fulfilled:

(i) The head office must be in the Amazon, where the administration and accounting is carried out.

(ii) The administration shall be held in the Amazon.

(iii) The accounting records and the individual responsible of keeping the books shall be located in the Amazon.

(iv) The company must be registered in the registry office of the Amazon.

(v) At least 70 per cent of the assets must be in the Amazon.

(vi) Production should be in the Amazon. Service companies cannot provide services outside the Amazon. Goods produced in the Amazon may be placed inside or outside the Amazon.

As of 31 December, 2014 and 2013, the Company and its Subsidiaries are performing procedures to comply with the requirements of the Tax Authorities, and thus enjoy the benefits of the Amazon Law.

(b.1) Transfer pricing transactions -

For the purpose of determining the income tax, the transfer pricing of transactions with related companies and companies residing in areas of low or no taxation, should be supported by documentation and information on the valuation methods used and the criteria used for its determination. To date, the transfer pricing rules are in force in Peru, these regulate that transactions with related companies and local or foreign companies domiciled in tax havens must be carried at market value. Based on the analysis of the Company's and Subsidiaries operations, in Management's opinions and of its legal advisors, as a result of the application of these standards will not result in significant contingencies for the Company and its Subsidiaries as of 31 December 2014 and 2013.

(b.2) Tax Authority reviews -

The Peruvian Tax Authority is entitled to review and, if applicable, amend the income tax calculated by the Company's Subsidiaries up to four years after the tax return was filed. Due to the interpretations likely to be given by the Peruvian Tax Authority on current legal regulations, it is not possible to determine, as of this date, if whether the reviews to be conducted will result or not in liabilities for the Company and its Subsidiaries, therefore, any increased tax or surcharge that could arise from possible tax reviews will be applied to the consolidated results of the year in which is determined. In Management's opinion and of its tax advisors, any additional tax settlement will not be significant for the consolidated historical financial information as of 31 December 2014 and 2013.

(b.3) During the years 2014 and 2013, the Company's Subsidiaries generated tax losses. According to the recovery system chosen by the Management, the tax loss can be carried forward indefinitely and offset up to a maximum of 50 per cent of taxable earnings for each year. The amount of the tax loss carry forward is subject to the outcome of the reviews referred to in paragraph (b.2) above.

As of December 31, 2014 and 2013, Cacao Del Peru Norte S.A.C. had tax losses declared to the tax administration amounting to S/.3,426,599 and S/.780,199, respectively (equivalent to US$1,146,403 and US$279,109, respectively). The Subsidiaries are in start-up phase and Management expects to have taxable income over the long term. In addition, as explained in literal (b.2), Subsidiaries are subjected to the Tax Administrator's review in order to offset any tax losses. Management assessed there is no certainty about when the Company would be able to apply its carry forward tax losses. Thus, Management has decided not to recognize deferred tax asset on the carry forward tax loss as of 31 December 2014 and 2013.

14. Administrative expenses

(a) This item is made up as follows:

(b) The services provided by third parties is further broken down as follows:

(c) Personnel expenses are made up as follows:

Average number of employees -

The average number of people employed by the Company during the periods was:

(d) The item is made up as follows:

15. Contingencies

Certain non-governmental organizations have expressed concern on the internet related to the environmental impact of the Company's activities. In the opinion of the Company's Management and its legal counsel, the Company is in compliance with the administrative, legal, social and environmental requirements to conduct its agricultural investments. Thus, in the Company's opinion, there is no litigation or other contingencies that have a significant impact on the consolidated historical financial information of the Company and its Subsidiaries as of December 31, 2014 and 2013.

16. Loss per share

Basic loss per share amounts are calculated by dividing net loss for the year attributable to equity holders of the parent by the weighted average number of Ordinary Shares outstanding during the year. Diluted loss per share amounts are calculated by dividing the net loss for the year attributable to ordinary equity holders of the parent by the weighted average number of Ordinary Shares outstanding during the year plus the weighted average number of Ordinary Shares that would be issued on the conversion of all the dilutive potential Ordinary Shares into Ordinary Shares.

The following reflects the loss and share data used in the basic and diluted loss per share computations:

(*) The weighted average number of shares takes into account the weighted average effect of changes in ordinary share transactions during the year

The Company has granted stock options to certain employees whose corresponding number of shares related to outstanding options (see note 12) may have a dilutive effect in earnings per share in future periods. However, considering that the Company had net losses during 2014 and 2013, these options were not considered in the earnings per share calculation as of December 31, 2014 and 2013, due to its potential anti-dilutive effect.

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of authorisation of these financial statements.

17. Financial risk management

The activities of the Company and its Subsidiaries are exposed to market risks during the normal course of their operations; however, Management, based on its technical knowledge and experience, intends to diminish the potential adverse effects in its financial performance, establishing policies for credit, liquidity, currency and interest risks.

The Company's Management is aware of market conditions and, based on its knowledge and experience, manages liquidity, interest rate, currency and credit risks following the policies adopted by the Board. The most important aspects of managing these risks are:

(a) Market risks-

The market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks arise from open positions in interest rates, currency and equity products. In case of the Company and its Subsidiaries, the financial instruments affected by the market risks include bank deposits, receivable and payable accounts which are exposed to currency, interest rates, credit and liquidity risks.

(b) Currency risk -

The Company and its Subsidiaries obtain financing for working capital and investments in U.S. Dollars, so there is no exchange rate risk. The Company's Subsidiaries are in start-up stage so there are some local buys in foreign currency (mainly Nuevos Soles). Management believes that future fluctuations in the exchange rate of Peruvian currency against the U.S. Dollar will not affect significantly the results of the Company's future operations.

The following table demonstrates the sensitivity to a reasonably possible change in the Nuevos Soles (Peruvian Currency - S/.) exchange rate, with all other variables held constant. The impact on the Company's results before income tax is due to changes in the fair value of monetary assets and liabilities:

(c) Credit risk -

Credit risk is the risk that a counterparty does not perform its assumed obligations in a financial instruments or a commercial contract, and this causes a financial loss. The Company and its subsidiaries are exposed to credit risk from its operating and financial activities, including deposits in banks and financial institutions and other financial instruments.

Financial instruments and bank deposits -

The credit risk on bank balances is managed by the Finance Department in accordance with Company's policies. The counterparty credit limits are reviewed by Management and the Board of Directors.

The limits are set to minimize the concentration of risks and therefore mitigate financial losses from potential counterparty defaults. The Company and its subsidiaries' maximum exposure to credit risk for the components of the consolidated statements of financial position as of December 31, 2014 and 2013 is the carrying amount as illustrated in notes 4 and 6.

In Management's opinion, as of December 31, 2014 and 2013, the Company does not consider that those concentrations imply unusual risk for its operations.

(d) Liquidity risk -

Liquidity risk originates from the inability to obtain funds necessary to meet the Company's financial obligations.

The administration of the liquidity risk implies keeping enough cash as well as having the availability to obtain financing through adequate credit sources and the capability to liquidate transactions.

As of December 31, 2014 and 2013, the Company's subsidiaries are in the initial agricultural growth stage and have the financing support of its shareholders. In Management's opinion, the Company and its subsidiaries are not exposed to a significant risk of liquidity risk.

(e) Interest rate risk -

The Company and its Subsidiaries are not exposed to this risk because do not have financial liabilities subject to fixed and/or variable interest rates. Management believes that future fluctuations in interest rates will not affect significantly the results of the Company's future operations.

(f) Capital management -

The primary objective of the Company and its Subsidiaries capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value.

The Company and its Subsidiaries manage its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Company and its Subsidiaries may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

No changes were made in the objectives, policies or processes for managing capital during the years ended as of December 31, 2014 and 2013.

18. Fair value information

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

In Management's opinion, the fair value of the Company and its Subsidiaries financial instruments is not significantly different from their carrying values; therefore, the disclosure of this information has no effect on the consolidated historical financial information as of December 31, 2014 and 2013.

19. Segment information

The Company's activities consist of agricultural operations related to cacao cultivation. The Board of Directors and the Financial Controller are together considered be the chief operating decision makers. The business is managed as one entity, and activities are not split into any further regional or product subdivisions in the internal management reporting as any such split would not provide management with meaningful information. Consequently, all activities relate to this one segment. All non-current assets are located in the Subsidiaries' country of domicile, being Peru.

20. Commitments

There were no capital commitments as of December 31, 2014 and 2013.

21. Events after the reporting period

On January 5, 2015, the Company's Chairman & CEO, Dennis Melka, exercised 150,000 options at an exercise price of US$1.00 and 10,000 options at an exercise price of $1.25. Total shares outstanding following the issuance was 18,590,000.

On June 19, 2015, the Company's shares were registered for trading on the Lima Stock Exchange ("BLV" for its Spanish acronym).