informe anual 2014 annual report 2014 desarollando … · fermentación y asegurar un cacao en seco...

Desarollando Comunidades

Sembrando CacaoBuilding Communities

Growing Cacao

Informe Anual 2014Annual Report 2014

PAPEC is a market based financing mechanism established by the Company to promote the cacao industry in communities around our estate. The programme has been well-received by the communities and we are pleased to report there is a waiting list to join PAPEC. By the end of 2015, we expect to have 200 hectares of cacao planted with 176 participants. In 2016, we expect to plant an additional 500 hectares of PAPEC cacao involving an additional 350 participants. Our objective is to expand the programme to 3,250 hectares with several thousand participants.

Under PAPEC, the Company extends the necessary supplies, fertilizer and seedlings to qualified small farmers. These agricultural credits are not a donation but documented as a loan which is ultimately repaid from future cacao harvests. The Company undertakes to purchase wet beans from the PAPEC participants and we intend to process those beans in our fermentation centers ensuring top quality dried, fermented beans for the export market.

El PAPEC (Programa Alianza Producción Estratégica Cacao) es un mecanismo de financiamiento basado en el mercado que la empresa estableció para promover la industria de cacao en las comunidades cercanas a la plantación. El programa ha sido bien recibido por las comunidades y nos da placer reportar que existe una lista de espera para formar parte del PAPEC. A finales de 2015, esperamos contar con 200 ha de cacao sembradas y 176 participantes. En 2016, esperamos expandir el programa a 350 participantes adicionales quienes representarian un incremento de 500 ha. Nuestra meta para el programa es de 3,250 ha con miles de participantes.

Bajo el PAPEC, la empresa provee los materiales, fertilizantes y plantones a pequeños agricultores calificados. Estos creditos agrícolas no son donaciones sino que préstamos documentados que serán amortizados a lo largo de cosechas en el futuro. La empresa se compromete a comprar el cacao húmedo de los participantes del PAPEC para luego procesar el cacao en nuestros centros de fermentación y asegurar un cacao en seco de la más alta calidad para el mercado de exportación.

The PAPEC programme was inaugurated on 17th April 2015 at the Company’s community center in Tamshiyacu.

El PAPEC se inauguró el 17 de abril 2015 en el centro comunitario de la empresa en Tamshiyacu.

The Company’s social investments in Tamshiyacu, PAPEC and its estates is welcomed by the local Mayor, community and youth. The cycle of perpetual poverty can finally be broken.

Las inversiones sociales de la empresa en Tamshiyacu junto con el PAPEC y la plantacion son bienvenidos por el Alcalde. Finalmente el ciclo de pobreza se puede romper.

The PAPEC launch was celebrated by the community.

El inicio del PAPEC fué celebrado por la comunidad.

Programa Alianza Producción Estratégica Cacao (“PAPEC”)

Mr Adriel Caro Pacaya, aged 46, has been living in Tamshiyacu since 1989. He supports his two children by making charcoal for sale to Iquitos restaurants and growing yuca and pineapple on his nine hectare land plot. He must carry these products several kilometers to the Tamshiyacu town. Adriel is one of the first participants to join the Company’s PAPEC program.

Adriel Caro Pacaya, de 46 años, ha vivido en Tamshiyacu desde el año 1989. Él apoya a sus dos hijos haciendo carbón para ser vendido en restaurantes de Iquitos y siembra yuca y piña en su parcela de nueve hectáreas. Él debe llevar estos productos a varios kilómetros al pueblo de Tamshiyacu. Adriel es uno de los primeros en unirse como participante del Programa PAPEC de la Compañía.

Charcoal is a tough business. Adriel and his relatives work without protective equipment around the smoldering piles of charcoal for weeks in a row. They use chainsaws to extract the raw wood, cut them into smaller pieces and then build mounds which burn for several days. He must then carry the charcoal to the river port and bring the heavy bags to Iquitos for sale.

La venta de carbón es un negocio duro. Adriel y sus familiares trabajan sin equipos de protección alrededor de humeantes montículos de carbón por semanas. Ellos usan motosierras para extraer la madera cruda, cortarla a pedazos más pequeños y formar montículos que estarán al fuego por varios días. Él luego tiene que llevar el carbón hacia el puerto del río y llevar bolsas de gran volumen hacia Iquitos para su venta.

Farmer’s full name: ADRIEL CARO PACAYAAge: 46 years old.Family members (# children): 2He lives in Tamshiyacu since 1989.His from Community Esperanza-Tahuayo River-Fernando Lores

Mr Enrique Paredes Hidalgo (bottom right) is a cacao technician with our PAPEC program. In 1988, Enrique started his career in cacao with the United Nations Alternative Development Program in Peru; he is one of our most skilled technicians. The UN has worked for several decades in the Amazonian Peru to migrate coca (the raw material for cocaine) farmers to plant alternative crops such as palm oil and cacao. The UN has been instrumental in planting tens of thousands of hectares of palm oil and cacao in the Amazon. Peru is the #1 coca grower in the world; coca is a crop devastating for the environment, families and society. Enrique works closely with Adriel to ensure his seedlings are well-tended and the plantings are done with the same procedures as the Company’s estate.

El señor Enrique Paredes Hidalgo (abajo a la derecha) es un técnico en cacao de nuestro programa PAPEC. En 1988, Enrique inició su carrera en cacao con el Programa de Desarrollo Alternativo de las Naciones Unidas en el Perú; él es uno de nuestros técnicos más hábiles. Las Naciones Unidas ha trabajado por varias décadas en la Amazonía Peruana para erradicar la siembra de coca (materia prima para la cocaina) por la siembra de cultivos alternativos, como la palma aceitera y el cacao. Las Naciones Unidas tiene al Perú como el país #1 en el mundo en la siembra de coca; la coca es un cultivo devastador para el medio ambiente, las familias y la sociedad. Enrique trabaja de manera cercana a Adriel para asegurar que su semillero se encuentre bien mantenido y que las plántulas se lleven a cabo con los mismos procedimientos aplicados en los terrenos de la Compañía.

“Through PAPEC, I am creating a better future for my family. One day, I will have all of my nine hectares planted with cacao.”

“A través del PAPEC, estoy creando un mejor futuro para mi familia. Un día tendré mis nueve hectáreas sembradas con Cacao”.

“Adriel is a fast learner and he is a pleasure to work with. His farm will generate top yields with our CCN 51 planting material. We are starting with two hectares but I know Adriel wants to increase this to nine hectares. We will help him achieve this.”

“Adriel aprende rápido y es un placer trabajar con él. Su plantación generará muy buenos rendimientos con nuestro material genético CCN 51. Estamos iniciando con dos hectáreas pero yo sé que Adriel desea incrementarlas a nueve hectáreas. nosotros lo ayudaremos a lograrlo.”

Changing Lives Through Cacao / Cambiando vidas mediante el cacao

Location Map & Population Survey / Mapa de localización y encuesta a la población

Company Project Area

Centro Industrial(Panguana III)

5 km

IquitosPopulation: 422,000 people

Carretera Tamshiyacu

Nuevo Jerusalén

Terrabona

Collpa

Nuevo TarapacáSanta Rosa del Shato

San Juan de Cunshico

Canaan

Punga

Capital de Loreto / State Capital of Loreto

Leyenda / LegendPueblos / Villages

Comunidad Población Estimada

Nuevo Jerusalén 120

Centro Industrial (Panguana III) 389

Terrabona 105

Collpa 80

Nuevo Tarapacá 80

Carretera Tamshiyacu 4,638

Santa Rosa del Shato 60

Punga 72

Canaan 100

San Juan de Cunshico 40

Población Total 5,684

Community Estimated Population

Nuevo Jerusalén 120

Centro Industrial (Panguana III) 389

Terrabona 105

Collpa 80

Nuevo Tarapacá 80

Carretera Tamshiyacu 4,638

Santa Rosa del Shato 60

Punga 72

Canaan 100

San Juan de Cunshico 40

Total Population 5,684

Resumen Poblacion Aproximada de Diez Comunidades del Rio Amazonas y Tamshiyacu

Population Summary of Ten Communities along the Amazon River and Tamshiyacu

The Company has undertaken a detailed social survey in

the area of its plantations and identified ten communities

with over 5,684 people. It is the Company’s philosophy

to improve the lives of those around our operating

areas and the following pages detail our initiatives in

this respect.

La Compañía ha llevado a cabo una encuesta social detallada en la zona

de influencia de sus plantaciones y ha identificado diez comunidades

con más de 5,684 pobladores. Es la filosofía de la Compañía mejorar las

condiciones de vida de los pobladores que viven alrededor de las zonas

de sus operaciones. En las siguientes páginas se detallan las iniciativas

implementadas para alcanzar estas metas.

R io J apurá

R ío Yavarí

R io Içá

R ío Napo

R ío Marañón

R io J uruá

R io Purus

Río

De s aguadero

Río

Ma ntaro

Río

Huallaga

R ío Putumayo

R íoApuríma c

RíoPasta za Amazon

Río Ucayali

Río Napo

R íoM

arañón

Ama zon

R io J avari

RíoSantiago

R ío C aquetá

RíoU

cayali

Río

Ben

i

R íoMadre de Dios

R íoZam

ora

RíoU

rubamba

R ío AltoPurús

Lago Titicaca

Lago Poopó

SOUTH

PACIFIC

OCEAN

Pan- American Highway

Pan-American

Highw

ay



Pan-Americ an

Highway


ferry

00

6

12

18

6

18

12

78 72

78 72

Equator

ECUADOR

COLOMBIA

B R A Z I L

BOLIVIA

CHILE

Oruro

Arica

La Oroya

Yurimaguas

Tarapoto

Talara

PaitaSullana

Macará

Salaverry

Chimbote

Huacho

Pisco

ChinchaAlta

San Martín

Nazca

Ilo

Juliaca

Quillabamba

Tingo María

Santa Lucia Pucallpa

Cruzeiro do Sul

Manta Quevedo

Guayaquil

Loja

Cuenca

Riobamba

Leticia

Tabatinga

Iñapari

Guaqui

Viacha

Desaguadero

Matarani

Rio Branco

Tacna

Moquegua

Arequipa

Puno

PuertoMaldonado

Cusco

Machupicchu(ruins)

Manú

Abancay

Ayacucho

Ica

Huancavelica

Callao

Cerrode Pasco

Huánuco

Huaraz

MoyobambaChachapoyas

Cajamarca

Trujillo

Chiclayo

Piura

Tumbes

Iquitos

Huancayo

Nauta

NuevoRocafuerte Pantoja

La PedreraVila BittencourtAmbato

PuertoLeguízamo

PuertoSantander

Tarma

Atalaya

Goyllarisquizga

Toquepala

Assis Brasil

PortoviejoPortoviejo

Santo Domingode los ColoradosSanto Domingo

de los Colorados

Machala

Cobija

Rurrenabaque

Quito

Lima

La PazLa Paz

PeruInternational boundary United Cacao Estates

National capital RailroadRoadRoad under construction

0 100 200 Kilometers

0 100 200 Miles

Transverse Mercator Projection, CM 75 W

Base 803152AI (G00212) 1-06

Cacao Indigenous Growing Zone

PERU

CoRPoRATE InFoRMATIon

InFoRMACIón CoRPoRATIvA2

PRoFILE oF dIRECToRS

PERFIL dE dIRECToRES3

ChAIRMAn’S STATEMEnT

dECLARACIón dEL PRESIdEnTE5

AnnUAL FInAnCIAL STATEMEnTS

ESTAdoS FInAnCIERoS AnUALES18

IndEPEndEnT AUdIToRS’ REPoRT

InFoRME IndEPEndIEnTE dEL AUdIToR19

ConSoLIdATEd STATEMEnTS oF FInAnCIAL PoSITIon

ESTAdoS ConSoLIdAdoS dE CAMbIoS En LA SITUACIón FInAnCIERA21

ConSoLIdATEd STATEMEnTS oF CoMPREhEnSIvE InCoME

RESULTAdoS InTEGRALES ConSoLIdAdoS22

ConSoLIdATEd STATEMEnTS oF ChAnGES In EqUITy

ESTAdo dE CAMbIoS En EL PATRIMonIo nETo ConSoLIdAdo23

ConSoLIdATEd STATEMEnTS oF CASh FLowS

ESTAdoS dE FLUjoS dE EFECTIvo ConSoLIdAdoS24

noTES To ThE ConSoLIdATEd FInAnCIAL STATEMEnTS

noTAS A LoS ESTAdoS FInAnCIERoS ConSoLIdAdoS25

ConTEnTS / ConTEnIdo

Cacao Indigenous Growing Zone

dIRECToRS / dIRECToRESdennis nicholas Melka Founder, Executive Chairman and Chief Executive OfficerFundador, Director Ejecutivo Conjunto y Presidente Ejecutivo

Anthony (“Tony”) john Kozuch Executive DirectorDirector Ejecutivo

Constantine Gonticas Non-Executive DirectorDirector No Ejecutivo

Roberto Tello Pereyra Non-Executive DirectorDirector No Ejecutivo

REGISTEREd oFFICE / oFICInA REGISTRAdA

United Cacao Limited SEZC Codan Trust Company (Cayman) LimitedCricket Square, Hutchins Drive, PO Box 2681Grand Cayman, KY1-1111, Cayman Islands

bUSInESS AddRESS / doMICILIo CoRPoRATIvoUnited Cacao Limited SEZC HSBC House68 West Bay Road, PO Box 10315Georgetown, KY1-1003Grand Cayman, Cayman Islands

CoMPAny SECRETARy / SECRETARIo dE LA EMPRESA Codan Trust Company (Cayman) LimitedCricket Square, Hutchins Drive, PO Box 2681Grand Cayman, KY1-1111, Cayman Islands

noMInATEd AdvISER / ConSEjERo noMInAdo

Strand hanson Limited 26 Mount Row, London W1K 3SQUnited Kingdom

AUdIToR / AUdIToR

Paredes, Zaldivar, burga & Asociados S.Civil.de R.L. Member of Ernst & Young GlobalAv. Víctor Andrés Belaunde 171San Isidro, Lima 27Peru

bRoKERS / CoRREdoRES

vSA Capital Limited Fourth Floor New Liverpool House 15-17 Eldon StreetLondon EC2M 7LDUnited Kingdom

KALLPA Securities Sociedad Agente de bolsa S.A. Jr. Monterosa 233 Oficina 902 Urb. Chacarilla del EstanqueSurco, Lima 33 Peru

REGISTRARS / REGISTRAdoR

Computershare Investor Services (Cayman) LimitedThe R&H Trust Co. Ltd. Windward 1, Regatta Office Park West Bay Road Grand Cayman, KY1-1103Cayman Islands

dEPoSITARy / dEPoSITARIo

Computershare Investor Services PLCThe PavilionsBridgwater RoadBristol BS13 8AEUnited Kingdom

ConTACT / ConTACTo

Phone: +1 345 815 2710

Email: [email protected]

website: www.unitedcacao.com

ISIn: KYG9271M1078

LSE Ticker / Símbolo: CHOC

bvL Ticker / Símbolo: CHOC

Shares outstanding / Acciones en circulación: 18,590,000 (as of 29 June / al 29 de junio, 2015)

Corporate Information / Información Corporativa

Annual Report 2014 / Informe Annual 2014

2

Corporate Information / Información Corporativa

Profile of Directors Perfíl de DirectoresdEnnIS nIChoLAS MELKA Age 42, is the Founder, Chairman and Chief Executive Officer of United Cacao Limited SEZC.

Previously, Mr Melka was the Co-Founder, Executive Director and Joint Chief Executive Officer of Asian Plantations Limited, a plantation company on the London Stock Exchange’s Alternative Investment Market (AIM). Asian Plantations Limited was admitted to AIM in November 2009 at 75 pence per share and was subsequently purchased by a strategic acquirer for 220 pence per share in October 2014; during this time period, the market capitalization grew from £22m (at Admission) to £110 m at the time of acquisition. Since 2006, he has co-founded and launched companies in agriculture, consumer finance, hotels and mobile telecommunications. Mr Melka started his career as an investment banker with Credit Suisse First Boston from 1995 to 2005 in New York, London, Prague, Singapore and Bangkok. Mr Melka graduated magna cum laude from the Edmund A. Walsh School of Foreign Service, Georgetown University in Washington D.C. He is a Czech citizen and resident in the Cayman Islands.

dEnnIS nIChoLAS MELKA 42 años, es el Fundador, Presidente Ejecutivo y Director Ejecutivo Conjunto de United Cacao Limited SEZC.

Previamente, el señor Melka fue el co-fundador, Presidente Ejecutivo y Director Ejecutivo conjunto de Asian Plantations Limited, una compañía agroindustrial cotizada en la Bolsa de Valores Alternativa de Londres (AIM). Asian Plantations Limited fue admitida en la AIM en Noviembre de 2009 a 75 peniques por acción y posteriormente fue comprada por un comprador estratégico a 220 peniques por acción en Octubre de 2014; durante este periodo de tiempo, la capitalización del mercado creció de £22 millones (en su admisión) a £110 millones al momento de la adquisición. Desde el año 2006, el señor Melka ha co-fundado y emprendido compañías en agricultura, consumo financiero, hoteles y telecomunicaciones de teléfonos móviles. El señor Melka inició su carrera como banquero de inversión con Credit Suisse First Boston del año 1995 al 2005 en Nueva York, Londres, Praga, Singapur y Bangkok. El señor Melka se graduó magna cum laude de la escuela Edmund A. El señor Melka se graduó magna cum laude de la Escuela de Servicio Exterior Edmund A. Walsh de la Universidad de Georgetown, en Washington D.C. Él es ciudadano Checo y residente en Islas Gran Caimán.

AnThony j. KoZUCh Age 41, is an Executive Director of United Cacao Limited SEZC.

Mr. Kozuch was born and raised in Mexico City and is a native Spanish speaker. Over the last 14 years, Mr. Kozuch has been the Chief Financial Officer of Communiqué Conferencing, Inc., an international conferencing services company he co-founded in 2001. Prior to Communiqué, Mr. Kozuch served in various channel marketing, program management, and business development roles with voice and data providers in the U.S. and Latin America including Winstar Communications, Concert and Avantel (MCI’s venture in Mexico). Mr. Kozuch travels frequently to Central and South America and is an Executive Director of United Oils Limited SEZC, a developer of palm oil plantation estates with a land bank in excess of 30,000 hectares. Mr. Kozuch graduated from the Edmund A. Walsh School of Foreign Service, Georgetown University in Washington DC. He is a U.S. citizen and resident.

AnThony j. KoZUCh41 años, es Director Ejecutivo de United Cacao Limited SEZC.

El señor Kozuch nació y creció en la ciudad de México y tiene como lengua nativa el español. En los últimos 13 años, el señor Kozuch ha sido el Director Financiero de la empresa Communiqué Conferencing, Inc., una compañía internacional de servicios de conferencia que co-fundó en el año 2001. Antes de formar parte de Communiqué Conferencing, Inc., el señor Kozuch trabajó en varios roles de marketing, programas de gerenciamiento y de desarrollo de negocios con proveedores de servicios de voz y datos en los EE.UU. y América Latina, incluyendo Winstar Communications, Concert y Avantel (un Joint Venture de MCI en México). El señor Kozuch viaja con frecuencia a Centro y Sur América y es Director Ejecutivo de United Oils Limited SEZC, un desarrollador de plantaciones de palma aceitera con una reserva de suelo de más de 30,000 hectáreas. El señor Kozuch se graduó de la Escuela de Servicio Exterior Edmund A. Walsh de la Universidad de Georgetown, en Washington D.C. Él es un ciudadano y residente estadounidense.

Annual Report 2014 / Informe Annual 2014 3

Profile of Directors / Perfíl de Directores

ConSTAnTInE GonTICAS47 años, es Director No Ejecutivo de United Cacao Limited SEZC y también se desempeña como asesor experimentado del Grupo Blackstone desde el año 2012.

Es un inversionista activo a través de Green Square Capital Limited, su vehículo personal de inversión. Previamente, desde el año 2004 hasta el año 2011, el señor Gonticas fue el Socio Principal de Novator LLP, una compañía de inversiones especializada en el Centro y Este de Europa. Mientras estuvo en Novator, el señor Gonticas financió una serie de inversiones, incluyendo PLAY (una compañía Polaca de telefonía móvil, considerada como una de las más grandes empresas de nueva creación en la región), Netia (una empresa Polaca de telefonía fija) y Forthnet (una compañía de telefonía fija en Grecia). Él ha trabajado como Vicepresidente del Consejo de Supervisión de PLAY y Vicepresidente de los Directorios de Netia y Forthnet. Antes de Novator, el señor Gonticas fue el líder de la banca de inversión en el Centro y Este de Europa, Medio Oriente y África para Merrill Lynch y anteriormente a ello, pasó 12 años en Credit Suisse First Boston. El señor Gonticas es licenciado en Derecho por la Universidad de Oxford. Es ciudadano del Reino Unido y residente en Londres.

RobERTo TELLo44 años, es Director No Ejecutivo de United Cacao Limited SEZC. También es el asesor legal principal de la subsidiaria en el Perú, de propiedad íntegra de la Compañía, Cacao del Perú Norte SAC, en Iquitos, Perú.

Como socio fundador del Estudio Juridico Tello Pereyra Abogados, el señor Tello asesora clientes corporativos y municipalidades localizadas en la Región peruana de Loreto. El señor Tello es un conferencista frecuente para foros y congresos jurídicos en toda América Latina, con una especialización en derecho administrativo. En el Perú, el señor Tello está a la vanguardia del recientemente instituido código de procedimientos penales y ha organizado seminarios de capacitación para jueces y fiscales superiores nombrados por el Gobierno. El señor Tello obtuvo su título de abogado en la Universidad Nacional Mayor de San Marcos y es el Presidente del Consejo de Arbitraje de la Cámara de Comercio de Loreto. El señor Tello es ciudadano peruano y reside en Iquitos, Perú.

ConSTAnTInE GonTICAS Age 47, is a Non Executive Director of United Cacao Limited SEZC and also a Senior Advisor to the Blackstone Group since 2012.

He is an active investor through Green Square Capital Limited, his personal investment vehicle. Previously, from 2004 to 2011, Mr Gonticas was the Managing Partner of Novator LLP, an investment company specializing in Central & Eastern Europe. Whilst at Novator, Constantine sourced a number of investments, including PLAY (a Polish mobile telephony company which is one of the largest ever start-ups in the region), Netia (Polish fixed line telephony) and Forthnet (fixed line telephony in Greece). He has served as Vice Chairman of the Supervisory Board of PLAY and was also Vice Chairman of the Boards of Netia and Forthnet. Before Novator, Mr Gonticas was Head of Investment Banking for Central and Eastern Europe, Middle East and Africa for Merrill Lynch and prior to that spent 12 years at Credit Suisse First Boston. Mr Gonticas has a law degree from Oxford University. He is a UK citizen and resident in London.

RobERTo TELLo Age 44, is a Non Executive Director of United Cacao Limited SEZC. He is also the principal legal counsel for the Company’s wholly owned operating subsidiary, Cacao Del Peru Norte SAC, in Iquitos, Peru.

As the founding partner of Estudio Juridico Tello Pereyra Abogados, Mr. Tello advises corporate clients and municipalities throughout the Peruvian state of Loreto. Mr. Tello is a frequent lecturer for legal forums and congresses throughout Latin America with a specialization in administrative law. In Peru, Mr. Tello is at the forefront of Peru’s newly instituted legal procedural code and has organized training seminars for government appointed superior justices and prosecutors. He earned his law degree from the Universidad Nacional Mayor de San Marcos and is the President of the Council of Arbitration for the Loreto Chamber of Commerce. Mr Tello is a Peruvian citizen and resides in Iquitos, Peru.


4

Profile of Directors / Perfíl de Directores

InTRodUCTIon

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 labour1 and slavery2 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;3

• 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.

InTRodUCCIón

Gracias por ser accionista o tener interés en United Cacao Limited SEZC

(la “Compañía”). Es con su apoyo que estamos en buen camino para

crear la plantación más grande de cacao en el mundo y ser el mayor

productor de cacao a más bajo costo en el mundo. En una industria

plagada por trabajo infantil1 y esclavitud2 en el Oeste de África, vuestra

Compañía ha creado cientos de oportunidades de empleo sostenible,

y últimamente miles, para la gente de la región Amazónica, cuando la

proyección se complete. Las comunidades dentro y alrededor del área

de Tamshiyacu, nuestra área operativa, tienen un derecho humano

fundamental a tener acceso al trabajo, agua limpia, un salario digno

y a un mejor futuro para sus familias - puede estar seguro de que su

Compañía está haciendo de esto una realidad.

A la publicación de esta declaración, su Compañía:

• es propietaria de más de 3,760.5 has de terreno privado,

completamente zonificado y pre-aprobado para propósitos

agrícolas desde el año 1997 bajo el Decreto Legislativo Nº 838,

aprobada por el Presidente, Congreso y Ministro de Agricultura de

ese entonces;3

• tiene más de 1,150 hectáreas sembradas de cacao compuesto

en un 70% por CCN 51 y 30% de finas variedades aromáticas

como TSH-595, IMC-67 y ICS-1. Nosotros mantenemos nuestro

objetivo de lograr 2,000 ha sembradas para finales del año

calendario, haciendo a su Compañía, según nosotros creemos, la

plantación más grande en América Latina. Los árboles que hemos

plantado, aproximadamente 1,111 por hectárea, son originarios

del área del Amazonas y tendrán una vida útil de más de 40 años.

Chairman’s Statement Declaración del Presidente

1 https://www.stopthetraffik.org/campaign/chocolate | 2 http://thecnnfreedomproject.blogs.cnn.com/category/chocolates-child-slaves | 3 The Superior Court of Appeals of Loreto further supported this position with their 3-0 ruling on 26 March 2015. This is the definitive and thus far conclusive legal ruling. / El Tribunal Superior de Apelaciones de Loreto respaldada esta posición con su decisión de 3-0, el 26 de marzo de 2015. Se trata de la resolución judicial definitiva y hasta ahora concluyente.

Chairman’s Statement / Declaración del Presidente

5Annual Report 2014 / Informe Annual 2014

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.

This Chairman’s statement will update you on the Company’s

activities and provide some macro-level observations that, in

our opinion, create and validate the investment thesis for

your Company. As this is our first annual report, we seek to

be as comprehensive as possible to explain our strategy for

current and future shareholders.

CACAo IS An ESSEnTIAL, non-SUbSTITUTAbLE Food InGREdIEnT

The global chocolate confectionary industry has sales of

approximately US$120 billion4 per annum. Cacao is an

essential, non-substitutable ingredient to these sales and

ultimately to the profitability of thousands of consumer

product companies including a handful of globally dominant

confectionary brands. Unlike palm oil, for example, which

faces intense competition from highly subsidized soya or

rapeseed agri-business producers in America or Europe, there

is no natural or chemical substitute to the cacao bean nor

can farmers in the USA, Australia or China grow the crop.

The cacao tree grows in an extremely narrow band around

the Earth’s equator providing a very high geographic barrier

to entry; furthermore, cacao requires abundant, consistent

rainfall to achieve maximum productivity. Only a few countries

on Earth can commercially grow the crop and even fewer are

safe, proven, stable jurisdictions to invest in. Cacao is also less

Nuestro Programa Alianza Producción Estratégica Cacao (“PAPEC”)

también está en buen camino para lograr la siembra de 200 hectáreas

adicionales este año y más adelante, 500 hectáreas en el año 2016.

PAPEC es un programa innovador que permite a los pequeños

agricultores ubicados alrededor de nuestra plantación, el participar en

la industria del cacao y crear un futuro positivo para ellos mismos y sus

familias.

La declaración del Presidente lo actualizará sobre las actividades de la

Compañía y le brindará ciertas observaciones a nivel macroeconómico,

que en nuestra opinión, genera y valida la tesis de inversión de nuestra

Compañía. Como es nuestro primer reporte anual, nosotros buscamos

ser lo más integral posible para explicarles nuestra estrategia a nuestros

accionistas actuales y futuros.

CACAo ES Un InGREdIEnTE CoMESTIbLE, ESEnCIAL y no SUSTITUIbLE

La industria de la confección de chocolate a nivel global, tiene ventas

de aproximadamente US$120 billones4 por año. El cacao es un

ingrediente esencial, no sustituible para estas ventas y últimamente

para la rentabilidad de miles de compañías de productos de consumo,

incluyendo un puñado de marcas de confitería de dominio mundial.

A diferencia del aceite de palma, por ejemplo, lo cual enfrenta una

intensa competencia con los productores agroindustriales de soya

o colza altamente subsidiadas en América o Europa, no hay un

sustituto químico para el cacao, ni los agricultores en Estados Unidos,

Australia o China pueden producirlo. El árbol de cacao crece en una

banda extremadamente estrecha alrededor de la zona ecuatorial,

que provee una muy alta barrera de ingreso de índole geográfico;

además, el cacao requiere de lluvia abundante y consistente para

alcanzar el máximo de productividad. Sólo unos cuantos países en

la Tierra pueden crecer la cosecha comercialmente y aún menos son

jurisdicciones donde se puede invertir de una manera segura, probada

0

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20,000

30,000

40,000

50,000

60,000

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80,000

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2,000

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4,000

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Wor

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World GDP / PBI Mundial ($bn) Cacao Grindings (000 MT) / Moliendas de Cacao (000 TM)

4 29 May 2014 Hardman Report entitled “Giant on a Pinhead”

CACAo dEMAnd IS hIGhLy CoRRELATEd wITh GLobAL GdP GRowTh… LA dEMAndA dE CACAo ESTA ALTAMEnTE RELACIonAdA Con EL CRECIMIEnTo MUndIAL dEL PIb...


6 Annual Report 2014 / Informe Annual 2014

of a traditional “plantation” crop and more of a specialty

orchard crop akin to almonds or pistachios.

Demand can be predicted with a relatively high degree

of confidence by looking at global GDP growth.

The ICCO (International Cocoa Organization) also

provides some useful data points of demand, as

measured by bean grindings:

1980/81 1.558 million tonnes




Based on the above, the world is increasing its cacao

consumption by 734,000 to 873,000 tonnes per decade.

Assuming this trend continues, we can reasonably

expect grindings in 2020 to be approximately 4.6m

tonnes and in 2030 to be somewhere around 5.3m

tonnes. From where will this additional supply originate

from given that cacao production has been declining since

2011?

PRodUCTIon In ThE TRAdITIonAL GRowInG ZonES IS STRUGGLInG The world’s four largest cacao producers are in descending order Cote d’Ivoire, Ghana, Indonesia and Brazil. Collectively, these four nations are producing approximately 3.25 m tonnes of cacao out of a 4.25 m tonne market, roughly 75%. Each of these nations, however, face serious challenges to meet rising global demand, let alone to even maintain levels of current production. It is interesting to note that global cacao production peaked in 2011 at 4.3 m tonnes according to the ICCO. Cacao is certainly unique among commodities in that there is less produced today than

four years ago.

Brazil and Indonesia have ceased to be meaningful exporters to the world market. Due to their booming middle-class populations’ demand for chocolate confectionary product, they are now in fact net importers of cacao from West Africa. In fact, Indonesian cacao production peaked in 2005 and has been falling since then. Brazilian agricultural wages are prohibitively expensive to any expansion of the industry there as

cacao is a labour-intensive crop.

For far too long, the confectionary industry has relied

on poverty-stricken farmers in West Africa surviving on

a few hectares of dismal production to provide the

beans needed for their high-margin sweets. Even worse,

these farmers are effectively taxed at a 50% rate by their

government monopolies which are the sole buyers of

their beans.

y estable. El cacao tiene menos de cultivo tradicional “plantación” y más

de una cosecha de huerto especial, similar a las almendras o los pistachos.

La demanda puede ser predicha con un relativo alto grado de confiabilidad

al mirar el crecimiento global del producto bruto interno.

La ICCO (Organización Internacional de Cocoa) también proporciona

información útil sobre la demanda, al ser medida por moliendas

de grano:

1980/81 1.558 millones de toneladas




A través de una simple observación, el mundo está incrementando

el consumo de cacao de 734,000 a 873,000 toneladas por década.

Asumiendo una tendencia contínua, podemos esperar razonablemente

moliendas en el año 2020 de aproximadamente 4.6 millones de

toneladas de toneladas y para el año 2030 estar en alrededor de

5.3 millones de toneladas. De donde vendrá todo este suministro

adicional considerando que la producción de cacao ha ido disminuyendo

desde el año 2011?

LA PRodUCCIón En LAS ZonAS TRAdICIonALES dE CRECIMIEnTo ESTÁ LUChAndo Los cuatro mayores productores de cacao en el mundo en orden decreciente son Costa de Marfil, Ghana, Indonesia y Brasil. En conjunto, estas cuatro naciones producen alrededor de 3.25m de toneladas de cacao, dentro de un mercado de 4.25m de toneladas, aproximadamente el 75%. Cada una de estas naciones tiene que enfrentar, sin embargo, serios retos para cumplir la creciente demanda global, y mucho menos para incluso mantener los actuales niveles de producción. Es interesante notar que la producción mundial de cacao alcanzó su máximo en el año 2011 a 4.3m de toneladas de acuerdo con la ICCO. Cacao es ciertamente único entre los commodities en los que actualmente hay menos producción que hace

cuatro años.

Brasil e Indonesia han dejado de ser exportadores significativos en el mercado mundial. Debido al boom de demanda de productos de confitería de chocolate por parte de su población de clase media, por lo que actualmente son importadores netos de cacao del Oeste de África. De hecho, la producción de cacao en Indonesia tuvo su punto más alto en el año 2005 y desde ese entonces ha venido cayendo. Los salarios agrícolas en Brasil son prohibitivamente caros para cualquier expansión de la industria, más aún para el cacao, por ser un

cultivo que requiere mano de obra intensiva.

Durante demasiado tiempo, la industria de la confitería se ha apoyado

en los agricultores afectados por la pobreza en África Occidental

que sobreviven en unas pocas hectáreas de pésima producción para

proporcionar los granos necesarios para sus dulces de alto margen.

Y peor aún, éstos agricultores son gravados con eficacia a una tasa del

50% por sus monopolios estatales que son los únicos compradores

de sus granos.



These export monopolies then sell these beans to the

international buyers at a healthy margin; incidentally, it is

because of this export monopoly structure that it can be

safely assumed that no rational corporate investor would

locate a corporate farm in the traditional cacao-producing

countries in West Africa. This export tax regime is also

important in understanding how and why the market

pricing of cacao in the London and New York markets does

not reach the actual producers in West Africa who only see

the local currency cacao price offered by the monopolistic

buying boards. As of publication of this statement, the

international cacao price was in excess of US$3,300 per

tonne however the Ghana cocoa board price of GHS 5,520

(US$1,255) per tonne to farmers was only 38% of the

international price. The Cote d’Ivoire price of CFA 850,000

(US$1,450) per tonne was 44% of the international price.

The poorest citizens of these cacao-producing countries in

effect provide the majority of foreign exchange for their

respective governments. The dismal returns available to

these farmers has unfortunately caused a meaningful

percentage to rely on child labor and slavery as well

documented by CNN and www.stopthetraffik.org. Think

about how your income has increased over the last 15 to

25 years; unfortunately, the economic situation of the West

African cacao farmer has only gotten worse. It is illogical to

expect this type of market relationship arrange to continue

indefinitely. Farmers have other options in West Africa such

as palm oil or rubber. Arguably, rubber is a superior crop to

Estos monopolios de exportación, luego venden estos granos a los

compradores internacionales con un margen saludable; dicho sea

de paso, es porque de esta estructura monopólica de exportación se

puede suponer con seguridad que ningún inversionista corporativo

racional establecería una finca en los países productores de cacao

tradicionales en el África Occidental. Este régimen de impuesto a la

exportación también es importante en la comprensión de cómo y por

qué el precio de mercado del cacao en los mercados de Londres y

Nueva York no llega a los verdaderos productores de África Occidental

quienes sólo ven el precio del cacao en moneda local ofrecido por

las juntas de compra monopolísticas. A partir de la publicación de

esta declaración, el precio internacional del cacao fue de más de

US$3,300 por tonelada; sin embargo, el precio en establecido por el

Directorio de cacao de Ghana de GHS5,520 (US$1,255) por tonelada

a los agricultores era sólo el 38% del precio internacional. El precio

en Costa de Marfil de 850,000 CFA (US$1,450) por tonelada fue de

44% del precio internacional. Los ciudadanos más pobres de estos

países productores de cacao en efecto proporcionan la mayor parte de

las divisas para sus respectivos gobiernos. Los pésimos rendimientos

disponibles para estos agricultores lamentablemente ha causado de

manera significativa el trabajo infantil y la esclavitud como ha sido

bien documentado por la CNN y www.stopthetraffik.org. Piense

en cómo sus ingresos se han incrementado en los últimos 15 a 25

años; desafortunadamente, la situación económica de los agricultores

de cacao de África Occidental sólo ha empeorado. No es lógico

esperar que este tipo de relación de mercado permita que continúe

indefinidamente. Los agricultores tienen otras opciones en el África

Occidental, como el aceite de palma o caucho. Podría decirse que el



grow in West Africa as it is has more consistent production

and copes with the dry season and lower rainfall levels

better than cacao. In Ghana, artisanal gold extraction

has been making meaningful inroads in traditional cacao

growing zones. The expansion of the palm oil industry in

Cote d’Ivoire and Ghana also provides farmers an option

to sell their harvests domestically without intermediary

buyers. Furthermore, the amount of land available to cacao

production is, in fact, decreasing. In Ghana, vast areas of

cacao farms have been converted to gold extraction; the

pollution from this mining only further hastens the decline

in yields for neighboring cacao farms. In Cote d’Ivoire, the

industry has penetrated the last possible growing areas in

the national parks.5 There are very few areas of land left

for the industry to expand into in West Africa let alone the

matter of competition from other crops.

Clearly, these are all long-term trends and there is certainly

tremendous volatility along the way; however, it seems

reasonable to assume that the world’s demand for cacao

already outstrips and will continue to exceed the traditional

production zones’ ability to supply into this demand.

Last month, Ghana announced a serious shortfall in this

year’s production from nearly a 1m tonne estimate to less

than 700,000 tonnes. Whilst surprising, the interesting aspect

of the announcement was the inability to explain why the

shortfall actually happened.

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.

caucho es un cultivo superior a desarrollar en África Occidental, ya que

se tiene la producción más consistente, hace frente a la estación seca y

los niveles de lluvia más bajos en mejor medida que el cacao. En Ghana,

la extracción artesanal de oro ha resultado en incursiones significativas

en las zonas tradicionales de cultivo de cacao. La expansión de la

industria del aceite de palma en Costa de Marfil y Ghana también

proporciona a los agricultores una opción de venta a nivel nacional y sin

compradores intermediarios. Además, la cantidad de tierra disponible

para la producción de cacao está, de hecho, disminuyendo. En Ghana,

vastas áreas de las fincas de cacao han cambiado hacia la extracción de

oro; la contaminación de esta minería apresura aún más la disminución

de los rendimientos de las fincas vecinas de cacao. En Costa de Marfil,

la industria ha penetrado en las últimas zonas de cultivo posibles en los

parques nacionales.5 Hay muy pocas extensiones de tierra que quedan

para la expansión de la industria en África Occidental por no hablar de

la cuestión de la competencia de otros cultivos.

Claramente, estas son tendencias de largo plazo y hay ciertamente

gran volatilidad a lo largo del camino; sin embargo, parece razonable

suponer que la demanda mundial de cacao ya es y seguirá superando

la capacidad tradicional de las zonas de producción para abastecer a

esta demanda.

El mes pasado, Ghana anunció un grave déficit en la producción

de este año, estimada de casi 1millón de toneladas a menos de

700,000 toneladas. Aunque sorprendente, el aspecto interesante del

anuncio fue la incapacidad para explicar por qué ocurrió realmente

este déficit.

Un ModELo CoRPoRATIvo dE CACAo

Contrariamente a la opinión de la industria convencional, el cacao está

muy bien adaptado para el cultivo corporativo a gran escala. El cacao

es un cultivo agrícola de alta potencia, con períodos concentrados de

productividad. El árbol de cacao necesita conocimiento especializado

para su cuidado y mantenimiento, en particular, la poda regular

por técnicos capacitados; además, se requiere la aplicación regular

y consistente de los fertilizantes. Más del 75% de la producción del

árbol se concentra en un período de unos pocos meses del año, y esta

producción luego necesita ser exportado a los mercados de destino, a

través de contenedores de 40 pies.

Ninguna de estas características es favorable para los pequeños

agricultores subcapitalizadas en lugares remotos. Este requisito de gran

inversión significa la compra, por adelantado en efectivo, de fertilizantes

y otros insumos agrícolas de los distribuidores locales a costos altos

(si existen distribuidores en la zona). La producción concentrada

significa que todos los ingresos del año se reciben en efectivo en un

corto período de tiempo, lo que usualmente presiona las apremiantes

necesidades de la familia sobre este dinero en efectivo y superan a la

inversión en la cosecha del próximo año. La logística de exportación

significa que por lo general hay toda una serie de intermediarios que

buscan maximizar sus ganancias y estarán felices de tomar ventaja de

la necesidad de un pequeño agricultor de vender rápidamente.

5 http://www.smithsonianmag.com/science-nature/illegal-cocoa-farms-are-driving-out-primates-ivory-coast-180954823/?no-ist



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.

ThE EConoMIC PRoPoSITIon REMAInS CoMPELLInG

Based on costs to date, we feel comfortable that the all-

in cash costs per hectare to maturity are approximately

US$10,500 (excluding land acquisition costs but

including all other costs including fermentation centers,

etc); this capital is deployed over a four-year period. These

numbers include all overhead, all land preparation, fuel,

several million man hours of work, an aggressive fertilization

investment, amongst dozens of other expense categories.

Note that fertilizer, labour costs and fuel represent a

high proportion of this US$10,500 per hectare; speed of

planting is also an important cost determinant. As such,

it’s important to note that this cost per hectare number

is relevant in Peru and would probably be meaningfully

higher in other jurisdictions.

In year three, defined as the third year of the tree’s life

Una finca de cacao corporativa es capaz de invertir adecuadamente,

proporcionar cuidado y mantenimiento regular y consistente, tener

un enfoque científico para la fertilización, aprovechar las mejores

prácticas y manejar las ventas directas a los productores de chocolate,

eliminando numerosos intermediarios de la industria. Esencialmente,

se trata de tener un balance suficientemente grande y estable para

garantizar la máxima productividad. Esto no es diferente a lo que vemos

en la industria de la molienda a nivel mundial, un puñado de grandes

jugadores (cuatro) dominan más del 50% de la capacidad de molienda

mundial. Nos parece un poco irónico que exista una concentración

increíble en la producción de confitería de chocolate y la capacidad

de molienda de cacao. Aún expertos de la industria insisten en que la

producción de cacao debe permanecer en el reino de los pequeños

y pobres agricultores! De hecho, las demandas básicas de agronomía

precisan lo contrario.

LA PRoPoSICIón EConóMICA PERMAnECE ConvInCEnTE

Sobre la base de los costos hasta la fecha, nos sentimos cómodos que

todos los costos incluidos, en efectivo por hectárea hasta el vencimiento

son aproximadamente US$10,500 (excluyendo los costos de adquisición

de tierras, pero que incluye todos los otros costos, incluidos los centros

de fermentación, etc.), este capital se despliega sobre un período de

cuatro años. Estos números incluyen todos los gastos generales, toda la

preparación de la tierra, combustible, varios millones de horas-hombre

de trabajo, una inversión agresiva de fertilización, entre decenas de otras

categorías de gastos. Tenga en cuenta que los fertilizantes, los costos

de mano de obra y combustible representan una alta proporción de

este US$10,500 por hectárea; la velocidad de siembra es también un

determinante importante de costos. Como tal, es importante tener en

cuenta que este importe del costo por hectárea es relevante en Perú

y probablemente sería significativamente mayor en otras jurisdicciones.

En el tercer año, se define como el tercer año de la vida del árbol



(del mes 25 al mes 36 después de la siembra en el vivero), habrá

algo de cacao para la cosecha y venta. En el cuarto año, la hectárea

está libre en el flujo de caja positivo a medida que aumenta la

producción. El pico de producción no será hasta el año siete u

ocho (“madurez”). En la madurez, esperamos alcanzar un mínimo

de 2.5 toneladas de cacao por hectárea, potencialmente superior

a 3 toneladas. Pequeñas fincas corporativas en Ecuador utilizando

material de plantación similares son capaces de lograr regularidad 2.5

toneladas por hectárea. Nosotros esperamos hacerlo mejor, dada la

fuerte inversión en fertilizantes que la Compañía está haciendo en sus

plantaciones.

LA ACTIvIdAd dE CoSEChA yA ESTÁ En MARChA

Si bien ya hemos ido cosechando vainas de la siembra del cuarto trimestre

del 2013, estamos utilizando estos granos húmedos como material de

plántulas para nuestras operaciones de expansión de vivero lo cual es

más eficiente que la venta de estos pequeños volúmenes en el mercado.

Esperamos hacer nuestra primera venta comercial en 2016. Estas cifras

de producción seguirán aumentando hasta aproximadamente el año

2021, cuando la plantación alcanzará su pico de madurez, lo que debería,

como mínimo, ser de 2.5 toneladas por hectárea, pero deberían, según

se espera, estar más cerca de 3.0 toneladas por hectárea. Vale la pena

señalar que los pequeños agricultores de Perú, que tienen la densidad

de árboles adecuada, aplican la atención básica y mantenimiento

y cierta fertilización limitada, logran con regularidad en exceso de

(month 25 to month 36 after planting in the nursery), there

will be some cacao for harvest and sale. In year four, the

hectare is free cash flow positive as production increases.

Peak production will not be until year seven or eight

(“maturity”). At maturity, we expect to achieve a minimum

of 2.5 tonnes of cacao per hectare potentially in excess of

3 tonnes. Smaller corporate estates in Ecuador utilizing

similar planting material are able to regularly achieve

2.5 tonnes per hectare. We expect to do better given the

heavy investment in fertilizer that the Company is making

in its estates.

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

Cacao is a labour intensive crop that generates significant rural employment. / El cacao es un cultivo que requiere mano de obra intensivo que genera bastante empleo en zonas rurales.



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 (a.k.a. Sacha Gold) planting

material from Ecuador, which 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.

To CERTIFy oR noT To CERTIFy

We are often asked when will your production be certified and

how quickly? At the moment we are not entirely convinced

about the value of these certification standards given the

recent market turmoil involving some of these brands. What

has certification done to reduce child labour in the industry?

What has certification done to reduce slavery in the industry?

Cacao farmers are poorer now than they were 10, 20 or 30

years ago – how has certification helped them? Furthermore,

there is a real cash cost of certification for which in our

opinion the current market premia does not compensate

for. We have seen this scenario before in carbon credits where

the market collapsed to a few pennies and in the process

mis-directing significant time and monies and destroying

2.5 toneladas por hectárea. Muchas fincas corporativas en

Ecuador también alcanzan estos niveles. También estamos

muy contentos de iniciar la importación del material ESS

(Sacha Gold) de Ecuador lo cual representa el material

de siembra de la próxima generación y está alcanzando

más de 4.0 toneladas de cacao por hectárea en Ecuador con

excelente resistencia a enfermedades. Esperamos que un

porcentaje significativo de nuestros plantones del 2016 sean

ESS. Esta variedad de clon tiene características de sabor finas

y un rendimiento en su productividad que parece exceder

al CCN 51.

A CERTIFICAR o A no CERTIFICAR

Se nos pide a menudo cuando se certificará su producción y la

rapidez en que se pueda certificar? Por el momento no estamos del

todo convencidos sobre el valor de estas normas de certificación

dada la reciente turbulencia del mercado involucrando a algunas

de estas marcas. Qué ha hecho la certificación para reducir el

trabajo infantil en la industria? Qué ha hecho la certificación para

reducir la esclavitud en la industria? Los agricultores de cacao son

más pobres de lo que eran hace 10, 20 o 30 años - ¿cómo les

han ayudado la certificación? Además, hay un costo en efectivo

real de la certificación que en nuestra opinión la primas del

mercado actual no compensa adecuadamente. Hemos visto este

escenario antes de los créditos de carbono, donde el mercado

se desplomó a unos pocos centavos y en el proceso que re-



billions of shareholder value. We have also seen this

in the palm oil industry where the much-discussed

global standard provides but a few negligible dollars of

premia to the farm gate price of the crop. It is also

somewhat perplexing for me as your Chairman to believe

that the value proposition of your Company’s products,

ethically-produced well-fermented beans, can only be

appreciated by the potential buyers via someone else’s

rubber stamp. In my humble opinion, cacao buyers clearly

see the value proposition we offer of large-scale consistent

supply and this is evidenced by the numerous requests

for bean samples and site visits that your Company

has received.

The certification market will certainly evolve over the

next few years and we will watch it closely. We are in the

shareholder value creation business, not the feel good

business. As with most things, common sense should

prevail; we operate in full compliance with Peruvian

labour laws and all salaries are paid via electronic deposit

by the TMF Group, a globally-recognized business

outsourcing provider.

orientaron montos de dinero significativos mientras destruyeron

miles de millones de valor para los accionistas. También hemos visto

esto en la industria del aceite de palma en el estándar global muy

discutido, pero ofrece algunos dólares insignificantes de las primas al

precio de salida de la explotación de la cosecha. También es un poco

desconcertante para mí como su Presidente creer que la propuesta de

valor de los productos de su empresa, frijoles producidos éticamente

y bien fermentados, pueda ser sólo apreciado por los compradores

potenciales a través del sello de goma de otra persona. En mi humilde

opinión, los compradores de cacao ven claramente la propuesta de

valor que ofrecemos de un suministro consistente en gran escala y

esto se evidencia por las numerosas solicitudes de muestras de grano

y visitas de campo que su empresa ha recibido.

El mercado de certificación seguramente evolucionará en los

próximos años y vamos a verlo de cerca. Estamos en el negocio de la

creación de valor para los accionistas, y no en el negocio de sentirse

bien. Al igual que con la mayoría de las cosas, el sentido común debe

prevalecer; operamos en el pleno cumplimiento de las leyes laborales

peruanas y los salarios son pagados a través de depósito electrónico

por el Grupo TMF, un proveedor de la subcontratación de negocios a

nivel mundial.

Excellent pod growth on the Company’s early plantings. / Crecimiento excelente de mazorcas en las siembras iniciales de la Compañia.



whERE wILL ThE PRICE oF CACAo bE In FIvE yEARS

Our business model is not predicated on price levels;

our goal is to be the world’s lowest cost producer of high

quality cacao and to be profitable regardless. That being

said, the trailing five year average price for the commodity

has been approximately US$2,800 per tonne yet this

price has been insufficient to produce sufficient beans

for the marketplace, remembering that cacao production

peaked in 2011. Logic dictates that price should adjust to

such a point that production is stimulated. The one caveat

is that in our industry the majority of the farmers do not

see the US Dollar market price but rather a government-

mandated local currency price from the local monopolistic

buying boards as we discussed earlier. The question

then becomes will these buying boards pass along real

average higher US Dollar prices to their impoverished

citizen farmers – history does not provide a positive answer.

Ghana remains under IMF support and dollar income for their

government is a very precious commodity indeed. Both Cote

d’Ivoire and Ghana have also been seriously impacted by

falling oil prices.

What price will cause global cacao production to be

stimulated is a difficult question, but to expect that it may be

over US$4,000 per tonne is, in my view, not unreasonable.

CUÁL SERÁ EL PRECIo dEL CACAo En CInCo AÑoS?

Nuestro modelo de negocio no se basa en los niveles de precios;

nuestro objetivo es ser el productor de cacao de alta calidad a más

bajo costo en el mundo y ser rentable independientemente del

precio internacional. Dicho esto, el precio promedio durante los

últimos cinco años del commodity ha sido de aproximadamente

US$2,800 por tonelada. Sin embargo, este precio ha sido

insuficiente para producir los granos suficientes para el mercado,

recordando que la producción de cacao alcanzó su punto máximo

en 2011. La lógica dicta que el precio debe ajustarse hasta tal

punto que se estimula la producción. La única salvedad es que en

nuestro sector la mayoría de los agricultores no ven el precio del

mercado en dólares sino el precio fijado en moneda nacional por

las entidades gubernamentales monopolísticos a nivel local sobre

lo cual hemos comentado anteriormente. Entonces la cuestión

depende de la actuación de estos compradores monopolísticos y si

pagarán precios mayores en dólares a sus agricultores. La historia

no proporciona una respuesta positiva. Ghana sigue bajo apoyo

del FMI e ingresos en dólares para su gobierno es de hecho un bien

muy preciado. Tanto Costa de Marfil y Ghana también han sido

seriamente afectados por la caída de los precios del petróleo.

Qué precio hará que la producción mundial de cacao estimule el

precio del commodity es una pregunta difícil, pero que puede ser

más de US$4,000 por tonelada es, en mi opinión, muy razonable.



No doubt the commodity price will be volatile, but it seems

logical that the average price over the next five years should be

higher than the average price over the trailing five-year period.

A MARKET-bASEd SoLUTIon To REdUCE PovERTy & ThE nARCo-EConoMy

Our small farmer programme is developing and we are

eager to expand it. We expect to achieve 200 hectares of

planted cacao by the end of this calendar year. An additional

500 hectares is expected to be planted by end of 2016. Over

500 families are expected to be involved in the programme

by the end of 2016. As previously mentioned, our vision

is to expand the PAPEC programme to be equal in size to

the Company’s freehold estate. PAPEC is an important tool

for the Company as it is first and foremost a moral imperative

that we take clear, real action (not words) to improve people’s

lives. Not through donations, but through market-based

self-sufficiency. PAPEC is not a donation; the monies your

Company invests will be repaid with interest from the harvests

of these small farmers.

Also, PAPEC strikes at the heart of the critics’ arguments against

the Company in that there are thousands upon thousands

of impoverished people living in our area. Opponents

of the plantation industry like to create a narrative of a

pristine rainforest ecosystem un-touched by man. The reality

couldn’t be more different! Their empty words and sophistry

will not stop your Company’s actions to improve people’s

standard of living in our operating area. Opponents of the

plantation industry want to ignore these people living in

challenging conditions and pretend they don’t exist. The

reality is that Western demand for tropical hardwoods caused

the original logging of the rainforest (which continues

to this day to supply hardwood floors and furniture to

Western consumers). The only trees left behind were

the ones with no value to Western consumers. Western

demand for cocaine has caused Peru to be the number one

producer of coca, the primary ingredient of cocaine. It is

imperative to have a legitimate, real agricultural economy

in the Amazonian Peru growing market-based crops such as

cacao or palm, not a narcotic-based economy supplying

cocaine to Western consumers. Currently, Peru has over

70,000,000 hectares of forested ground cover. Almost

20,000,000 of this area is permanently protected as a forest

reserve; another 7,500,000 is under active but legal logging

concessions. The cacao and palm oil industries utilize less

than 200,000 hectares of land mass. The narcotics estates

only utilize approximately 75,000 hectares of land yet

coca must be replanted in “fresh soil” every few years or so.

Cacao and palm are permanent crops providing employment

for tens of thousands of people and dependents on a land

mass less than a quarter of one percent of Peru’s forested land

area!

Sin duda, el precio será volátil, pero parece lógico que el

precio promedio en los próximos cinco años superará al precio

promedio de los últimos cinco años.

UnA SoLUCIón dE MERCAdo PARA REdUCIR LA PobREZA y LA nARCo-EConoMÍA

Nuestro programa de pequeños agricultores está en marcha y

estamos ansiosos por expandirlo. Esperamos alcanzar 200 hectáreas

de cacao sembradas a finales de este año calendario. Se espera que

unas 500 hectáreas adicionales se sembrarán para finales de 2016.

Se espera que más de 500 familias participen en el programa a

finales de 2016. Como se mencionó anteriormente, nuestra visión

es expandir el programa PAPEC igual en tamaño que la plantación

de la Compañía. El PAPEC es una herramienta importante para

la compañía, ya que es ante todo un imperativo moral de que

tomamos acción clara, y no solamente hablar de cómo se puede

mejorar la vida de las personas. Y no a través de donaciones, sino

por la autosuficiencia basada en el mercado. El PAPEC no es una

donación. El dinero que su empresa invierte será reembolsado con

interés de las cosechas de estos pequeños agricultores.

También, el PAPEC golpea en el corazón de los argumentos de los

críticos contra la Compañía en que hay miles y miles de personas

pobres que viven en nuestra área. Los opositores a la industria de las

plantaciones buscan crear una narrativa de un ecosistema de selva

virgen sin ninguna intervención humana. La realidad no podría

ser más diferente! Sus palabras vacías y sofismas no detendrán las

acciones de su Compañía para mejorar la calidad de vida de la

gente en nuestra área de operaciones. Los opositores a la industria

de las plantaciones quieren ignorar estas personas que viven en

condiciones difíciles y pretender que no existen. La realidad es

que la demanda occidental de maderas duras tropicales causó la

tala original de la selva (que continúa hasta hoy día para abastecer

los pisos de madera y muebles a los consumidores occidentales).

Los únicos árboles dejados eran los que no tenían valor para los

consumidores occidentales. La demanda occidental de la cocaína

ha causado que el Perú sea el primer productor de hoja de coca,

el principal ingrediente de la cocaína. Es imprescindible contar

con una economía agrícola verdadera y legítimo en la Amazonía

Peruana basada en cultivos de mercado como el cacao o la palma

y no una economía basada en narcóticos que suministra cocaína a

los consumidores occidentales. Actualmente, el Perú cuenta con

más de 70,000,000 ha de cobertura boscosa. Casi 20,000,000

ha están protegidas permanentemente como una reserva

forestal; otras 7,500,000 ha están bajo concesiones madereras

activas pero legales. Las industrias del cacao y la palma de aceite

utilizan menos de 200,000 ha de terreno. Las fincas de narcóticos

solamente utilizan aproximadamente 75,000 ha de tierra pero

la coca debe ser replantado en “tierra fresca” cada pocos años.

El cacao y la palma son cultivos permanentes que proporcionan

empleo a decenas de miles de personas y dependientes en una masa

de tierra menos de un cuarto de un por ciento de la superficie forestal

del Perú!



PERÚ ES EL PRodUCToR dE CACAo dE MEnoR CoSTo A nIvEL MUndIAL

Su Compañía opera en el Perú porque tiene las mejores condiciones y

entorno operativo para la siembra del cacao. (Nos gusta el ceviche, pero

no es por eso que estamos en el Perú.) Ningún otro lugar en la Tierra tiene

la combinación única de factores de precipitaciones suficientes, título de

dominio absoluto, estructura de costos competitiva y la disponibilidad

de material superior de alto rendimiento. Es importante destacar que

el Perú es un país clasificado con grado de inversión por las agencias

internacionales de calificación crediticia.

No es lógico esperar que la inversión de capital incrementará en África

Occidental dado las juntas de compra monopolísticas del gobierno

que imponen más o menos un impuesto de exportación del 50% en la

producción local. Mientras que hay otros países de África que cuentan

con condiciones de cultivo adecuadas, la realidad de estos entornos

operativos, la presencia de Ébola, el débil estado de derecho y la falta

de cualquier título de propiedad, hacen que éstas zonas son

jurisdicciones difíciles, si no imposibles, en que uno puede operar.

Hemos visto que la gran mayoría de las empresas de aceite de palma en

estos países también fallan. La producción de cacao en Ghana alcanzó

su punto máximo hace varios años y la producción en Costa de Marfil

parece haber tocado techo, con un crecimiento marginal en el mejor de

los casos.

Con respecto al sudeste de Asia, Malasia antes era un exportador

principal de cacao en la década de los 1980, pero hoy prácticamente

carece de producción. La producción de cacao de Indonesia alcanzó su

punto máximo en 2005 y ha disminuido desde entonces. El año pasado,

Indonesia, de hecho, se convirtió en un importador neto de cacao debido

a la demanda de confitería de su gran y creciente población de clase

media. Indonesia ahora debe importar cacao de África occidental. La

producción de cacao del sudeste de Asia sufre de material clonal de edad

y un conjunto de habilidades en descenso. La producción de cacao en el

sudeste de Asia, en nuestra opinión, está en declive terminal y no es fácil

ver cómo esto va a dar la vuelta.

LoRETo ES LA MEjoR ZonA PARA EL CACAo

La compañía opera en la región Loreto ya que el cacao es originario

de la zona y cuenta con excelentes condiciones climatológicas

para la siembra de cacao. El cacao es un árbol que requiere de mucha

humedad, por lo que necesita la lluvia natural. Curiosamente, nuestra

finca está cerca de donde el río Napo se fusiona con el Amazonas; en

el lado ecuatoriano del río Napo, hay cerca de 100,000 ha de cacao la

mayoría de los cuales rinden por encima de 2.5 toneladas por año.

La precipitación en nuestra área es perfectamente consistente en

aproximadamente 2,500 mm por año uniformemente dispersos

por todo el año; muy superior a la de África occidental, que es de

aproximadamente 1,600 mm por año, con un periódo de sequía

de tres a cuatro meses. Con respecto a la logística, existe servicio de

barcaza regular, eficiente, y de bajo costo desde nuestra plantación a los

puertos fluviales interiores de Pucallpa o Yurimaguas a US$20 por

PERU IS ThE woRLd’S Low-CoST CACAo PRodUCER

Your Company is in Peru because of the world’s

best operating and growing environment for cacao.

Nowhere else on Earth has the unique combination

of factors of sufficient rainfall, freehold title, competitive

cost structure and availability of superior, high-

yielding planting material. Importantly, Peru is an

investment grade rated country by the international

credit rating agencies.

It is illogical to expect investment capital to expand in

West Africa given the monopolistic government buying

boards which impose roughly a 50% export tax on local

production. Whilst there are other countries in Africa

with have suitable growing conditions, the reality of

these operating environments, presence of Ebola, weak

rule of law and lack of any proper land title, make these

challenging, if not impossible, jurisdictions in which

to operate. We have seen the vast majority of palm oil

ventures in these countries also fail. Cacao production in

Ghana peaked several years ago and production in Cote

d’Ivoire appears to have plateaued, with growth marginal

at best.

With respect to Southeast Asia, Malaysia was previously

a leading cacao exporter in the 1980s but today it has

virtually zero production. Indonesian cacao production

peaked in 2005 and has declined ever since then. Last

year, Indonesia, in fact, became a net cacao importer

due to confectionary demand from its large and growing

middle-class population. Indonesia now must import cacao

from West Africa. Southeast Asia cacao production suffers

from old clonal material and a declining skill set. Cacao

production in Southeast Asia, in our opinion, is in terminal

decline and it is not easy to see how this will turn around.

LoRETo IS ThE PREMIER LoCATIon FoR CACAo

Your Company operates in Loreto as it is the indigenous

home of cacao with superb growing rainfall conditions.

Cacao is a water-hungry tree and it needs natural

consistent rainfall. Interestingly, our estate is close to

where the Napo River merges with the Amazon; on

the Ecuadorean side of the Napo River, there are

nearly 100,000 hectares of cacao many yielding

above 2.5 tonnes per annum. The rainfall in our area

is perfectly consistent at approximately 2,500mm

per annum evenly-dispersed throughout the year;

far superior to that in West Africa which is approximately

1,600mm per annum with a three to four month dry

season. With respect to logistics, there is efficient, regular,

and low-cost barge service from our estate to the interior



tonelada (asegurado) para un viaje de cuatro días. A partir de

estos puertos fluviales a las instalaciones de Dubai Ports (propiedad

de contenedores en Lima) es un viaje de camión de un día a

US$50 por tonelada.

Nos complace informar que nuestra elección de un lugar de

producción ha sido validado por varios otros grupos locales

e internacionales que están iniciando proyectos de cacao en

el estado.

RESoLUCIonES jUdICIALES ConCLUyEnTES

Tenemos el agrado de informar que el 26 de marzo de 2015, la

Corte Superior de Apelaciones de Loreto resolvió en forma unánime

a favor de su empresa con respecto al litigio que había sido detallada

en el Documento de Admisión AIM de la Compañía, validando

plenamente la posición jurídica de la Compañía.

ACTIvIdAdES dE FInAnCIACIón y PoSICIón

El 2 de diciembre de 2014, la compañía recaudó US $10,000,000

(antes de comisiones y gastos) a través de un listado en el mercado

AIM de la Bolsa de Valores de Londres (“AIM”). Posteriormente, el

19 de junio de 2015, la Compañía obtuvo una cotización secundaria

en la Bolsa de Valores de Lima (Bolsa de Valores de Lima, o “BVL”).

Los saldos de efectivo y cuentas por cobrar a partir del cierre del

ejercicio 2014 fueron de US $7,760,041 millones. La Compañía no

tiene endeudamiento e informó que no hubo ingresos durante el

periódo del informe. La pérdida total para el año concluido al 31

de diciembre 2104 fue de US$2,981,983 dólares (una pérdida por

acción de 23 centavos de dólar), en comparación con una pérdida

de US$695,855 (una pérdida por acción de 14 centavos de dólar)

river ports of Pucallpa or Yurimaguas at approximately US$20

per tonne (insured) for a four-day journey. From these river

ports to the Dubai Ports-owned container facility in Lima is a

one-day truck journey at US$50 per tonne.

We are pleased to report that our choice of a production

location has been validated by several other local and

international groups that are initiating cacao projects in

the state.

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)

The community welcomes President Humala on 13 June 2015. / La comunidad da la bienvenida al Presidente Humala el 13 de junio 2015.



para el año concluido al 31 de diciembre 2013. Los activos netos

de el período fueron de US$15,480,358 en comparación con los

US$1,906,766 dólares en el año anterior.

PEnSAMIEnToS FInALESLa empresa esta aplicando un modelo corporativo para el cacao que ha sido pionera en el Ecuador y el Perú durante las ultimas dos décadas. Estamos utilizando los materiales clonales de última generación e innovando constantemente nuestras prácticas en el campo; nuestro equipo es excelente y, sin duda, el mejor equipo de campo de cacao en el mundo.

Es esencial que el mundo utilice la tierra de manera eficiente:

• Utilizar las especies de cacao de mayor rendimiento disponible;

• Operar en áreas con suficiente precipitación; y,

• Operar bajo las normas laborales éticas.

No tiene ningún sentido que la industria del cacao se expanda en África Occidental donde los rendimientos por hectárea son de 500 kg/año cuando una hectárea en el Perú puede rendir más de 2,500 kg por año. La gran mayoría del cacao producido en el mundo, principalmente en África occidental, se hace de manera ineficiente, utilizando materiales clonales con mas de 50 años de edad en zonas con precipitaciones insuficientes y prácticas laborales terribles. El mercado va a adaptarse y cambiar y su empresa está a la vanguardia de este cambio. Tenemos una significativa ventaja

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 ThoUGhTSYour 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



del precursor en un commodity poco conocido.

Existen numerosas barreras a la entrada que rodean nuestro modelo de negocio. Algunos son obvios, como los requisitos de lluvia del árbol y la limitada disponibilidad de tierras en África Occidental y Asia. Algunos son un poco más complejos, en el que el cacao es una especie arbórea mucho más intensivo para plantar dado los requisitos de alta densidad de siembra y de injertación lo cual reduce drásticamente el ritmo de plantación en comparación al aceite de palma, por ejemplo. Un grupo multinacional grande centrado en el aceite de palma busca sembrar entre 5,000 ha a 15,000 ha por año; la tasa de plantación más rápida para el cacao, a nuestra estimación, es de alrededor de 1,500 ha por año, independiente de la disponibilidad de capital. La complejidad de una finca de cacao también requiere una base de gestión especializada con una pasión por el cultivo.

Queremos agradecer a todo nuestro personal, que han trabajado para el éxito que la Compañía ha tenido hasta ahora. Queremos agradecer a nuestros accionistas, que comparten nuestra visión de crear la finca de cacao mas destacado en el mundo. El resto de 2015 será un período emocionante para la compañía mientras continuamos a sembrar la finca. Tenemos mucha ilusión de mantenerlos actualizados

sobre nuestro progreso en los próximos meses.

dennis nicholas MelkaPresidente Ejecutivo30 de junio 2015

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 nicholas MelkaExecutive Chairman30 June 2015




20

United Cacao Limited SEZC and its Subsidiaries

United Cacao Limited SEZC y sus Subsidiarias

Annual Financial Statements For the year ended 31 december 2014

Cuentas Anuales Correspondientes al Año finalizado el 31 de diciembre 2014

Independent auditors’ report

Inscrita en la partida 11396556 del Registro de Personas Jurídicas de Lima y Callao Miembro de Ernst & Young Global

Independent auditors’ report

Paredes, Zaldívar, Burga & Asociados Sociedad Civil de Responsabilidad Limitada

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.

United Cacao Limited SEZC and its Subsidiaries / United Cacao Limited SEZC y sus Subsidiarias


Independent auditors’ report (continued)Independent auditors’ report (continued)

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 Lima, Peru, June 28, 2015 Countersigned by: Manuel Díaz C.P.C.C. Registration N°30296



Consolidated statements of financial position As of December 31, 2014 and 2013

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

United Cacao Limited SEZC and Subsidiaries

Consolidated statements of financial position As of December 31, 2014 and 2013

Note 2014 2013 US$ US$ Assets

Current assets

Cash 4 5,949,459 743,620

Other accounts receivable, net 6 1,810,582 21,935

Inventory, net 7 65,296 1,948

Prepaid expenses 92,541 6,165 ___________ ___________

7,917,878 773,668 ___________ ___________

Non-current assets

Land, agriculture machinery, vehicles, equipment

and constructions in progress, net 8 6,392,266 1,010,231

Biological assets 9 1,722,976 171,053 ___________ ___________

8,115,242 1,181,284 ___________ ___________

Total assets 16,033,120 1,954,952 ___________ ___________

Liabilities and shareholders’ equity, net

Current liabilities

Trade and other accounts payable 10 445,734 32,003

Accounts payable to related parties 5(c) 107,028 16,183 ___________ ___________

Total liabilities 552,762 48,186 ___________ ___________

Shareholders’ equity, net 11

Issued capital 18,430 6,595

Additional capital 18,613,436 2,510,215

Other reserves 566,743 125,853

Accumulated losses (3,718,251) (735,897) ___________ ___________

Total shareholders’ equity, net 15,480,358 1,906,766 ___________ ___________

Total liabilities and shareholders’ equity, net 16,033,120 1,954,952 ___________ ___________

Independent auditors’ report (continued)Independent auditors’ report (continued)

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 Lima, Peru, June 28, 2015 Countersigned by: Manuel Díaz C.P.C.C. Registration N°30296



Consolidated statements of comprehensive income For the years ended as of December 31, 2014 and 2013




Note 2014 2013 US$ US$

Pre-operating expenses

Administrative expenses 14 (2,876,639) (673,072) ___________ ___________

Pre-operating loss (2,876,639) (673,072)

Other expenses

Exchange rate difference, net 3 (105,344) (21,783) ___________ ___________

Loss before income tax (2,981,983) (694,855)

Income tax - - ___________ ___________

Total comprehensive loss (2,981,983) (694,855) ___________ ___________

Loss per share 16 (0.23) (0.14) ___________ ___________



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Note 2014 2013 US$ US$

Pre-operating expenses

Administrative expenses 14 (2,876,639) (673,072) ___________ ___________

Pre-operating loss (2,876,639) (673,072)

Other expenses

Exchange rate difference, net 3 (105,344) (21,783) ___________ ___________

Loss before income tax (2,981,983) (694,855)

Income tax - - ___________ ___________

Total comprehensive loss (2,981,983) (694,855) ___________ ___________

Loss per share 16 (0.23) (0.14) ___________ ___________

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Consolidated statements of cash flows For the years ended as of December 31, 2014 and 2013




2014 2013

US$ US$

Operating activities -

Net loss (2,981,983) (694,855) ___________ ___________

Reconciliation of net loss to cash used in operating activities:

Share based payments provision, note 14(a) 336,505 125,853

Allowance for VAT impairment, note 14(a) 129,387 25,975

Depreciation, note 8(d) 4,312 619

Write-off of seeds, note 14(a) 3,542 1,189

Other, net (5,665) (1,189)

Net changes in assets and liabilities accounts:

(Increase) in other accounts receivable (1,918,034) (47,910)

(Increase) in inventory (63,348) (1,948)

(Increase) in prepaid expenses (86,376) (6,165)

Increase in trade and other accounts payable 413,731 29,755

(Decrease) increase in payable to related parties 90,845 16,183 ___________ ___________

Net cash used in operating activities (4,077,084) (552,493) ___________ ___________

Investment activities -

Acquisition of land, machineries, vehicles and equipment, note 8 (5,541,221) (1,018,107)

Additions to biological assets (1,305,880) (163,796)

Disposal of lands, note 5(a) 14,968 - ___________ ___________

Net cash used in investment activities (6,832,133) (1,181,903) ___________ ___________

Financing activities -

Capital contributions, net 16,115,056 2,471,079

Loans received from related parties, note 5(a) 73,464 964,964

Loans granted to related parties, note 5(a) (3,584,110) (377,175)

Collections (payments) from/to related parties, note 5(a) 3,510,646 (587,789) ___________ ___________

Net cash provided by financing activities 16,115,056 2,471,079 ___________ ___________

Net increase in cash 5,205,839 736,683

Cash at the beginning of the year 743,620 6,937 ___________ ___________

Cash at the end of the year 5,949,459 743,620 ___________ ___________

Non-cash transaction:

Depreciation and share-based payment reserve capitalized as land

and biological asset, respectively 246,043 7,257



Notes to the consolidated financial statements As of December 31, 2014 and 2013


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:

Ownership in capital as of December 31, 2014 __________________________________________

Incorporated in Direct Indirect % %

Investment holding

Grupo Cacao del Perú Limited British Virgin

Islands 100.00 -

Agricultural operations (cacao cultivation)

Cacao del Perú Norte S.A.C. (previously

“Plantaciones de Loreto Sur S.A.C.”) Perú 99.99 0.01

Cooperativa de Cacao Peruano S.A.C. (previously

“Plantaciones de Loreto Norte S.A.C.”) Perú 99.99 0.01

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).





2014 2013

US$ US$

Operating activities -

Net loss (2,981,983) (694,855) ___________ ___________

Reconciliation of net loss to cash used in operating activities:

Share based payments provision, note 14(a) 336,505 125,853

Allowance for VAT impairment, note 14(a) 129,387 25,975


Write-off of seeds, note 14(a) 3,542 1,189

Other, net (5,665) (1,189)

Net changes in assets and liabilities accounts:

(Increase) in other accounts receivable (1,918,034) (47,910)

(Increase) in inventory (63,348) (1,948)

(Increase) in prepaid expenses (86,376) (6,165)

Increase in trade and other accounts payable 413,731 29,755

(Decrease) increase in payable to related parties 90,845 16,183 ___________ ___________

Net cash used in operating activities (4,077,084) (552,493) ___________ ___________

Investment activities -

Acquisition of land, machineries, vehicles and equipment, note 8 (5,541,221) (1,018,107)

Additions to biological assets (1,305,880) (163,796)

Disposal of lands, note 5(a) 14,968 - ___________ ___________

Net cash used in investment activities (6,832,133) (1,181,903) ___________ ___________

Financing activities -

Capital contributions, net 16,115,056 2,471,079

Loans received from related parties, note 5(a) 73,464 964,964

Loans granted to related parties, note 5(a) (3,584,110) (377,175)

Collections (payments) from/to related parties, note 5(a) 3,510,646 (587,789) ___________ ___________

Net cash provided by financing activities 16,115,056 2,471,079 ___________ ___________

Net increase in cash 5,205,839 736,683

Cash at the beginning of the year 743,620 6,937 ___________ ___________

Cash at the end of the year 5,949,459 743,620 ___________ ___________

Non-cash transaction:

Depreciation and share-based payment reserve capitalized as land

and biological asset, respectively 246,043 7,257



Notes to the consolidated financial statements (continued)


2

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).





3

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.


2

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).





4

- 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


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.





5

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.


4

- 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


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


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.





6

(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.





7

(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.


6

(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.





8

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.





9

Land is not be depreciated. Depreciation is calculated on a straight-line basis over the estimated

useful lives of the assets as follows:

Years

Agriculture machinery 4

Vehicles 5

Furniture and fixtures 10

Computer equipment 4

Other equipment 10

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.


8

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.





10

(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.





11

(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.


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.


10

(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.





12

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.





13

- 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.


12

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.





15

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:

2014 2013 S/. S/.

Asset

Cash 5,450,697 105,297

Other accounts receivable 13,822 12,340 ___________ ___________

5,464,519 117,637 ___________ ___________

Liabilities

Trade and other accounts payable 1,000,503 55,156

Payable to related parties - 18,303 ___________ ___________

1,000,503 73,459 ___________ ___________

Net asset position 4,464,016 44,178 ___________ ___________

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.


14

- 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



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.





16

5. Transactions and balances with related parties

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

2014 2013 US$ US$

Revenue -

Income from disposal of lands (d) 14,968 - ___________ ___________

Expenses -

Management operating services (e), 20,487 34,999 ___________ ___________

Operating cash granted/(collected) -

Plantaciones de Pucallpa S.A.C. 1,780,871 170,290

Plantaciones de Ucayali S.A.C. 1,379,952 184,783

Servicios Ripio S.A.C 262,160 -

Grupo Palmas del Peru S.A.C. 87,219 3,986

Industrias de Palma Aceitera S.A.C. 51,255 -

Plantaciones del Peru Este S.A.C. 10,709 18,116

Plantaciones de San Francisco S.A.C. 10,064 -

Plantaciones de Masisea S.A.C 1,006 -

Plantaciones de Loreto S.A.C. 524 -

Cacao de Requena Este S.A.C. 60 -

Cacao de Requena Oeste S.A.C. 60 -

Plantaciones de Napo Norte S.A.C. 60 -

Plantaciones de Napo S.A.C. 60 -

Plantaciones de Napo Sur S.A.C. 60 -

Plantaciones de Marin S.A.C. 42 -

Plantaciones de Loreto Este S.A.C. 8 -

Cash collected from related parties (3,584,110) (377,175) ___________ ___________

- - ___________ ___________

Operating cash received /(paid) -


Plantaciones Loreto S.A.C. 27,189 -

Plantaciones de Pucallpa S.A.C. 21,793 108,696

Servicios Ripio S.A.C. 16,728 119,848

Plantaciones de Ucayali S.A.C. 7,009 168,841


Industrias de Palma Aceitera S.A.C. 34 21,053

East Pacific Capital Limited - 474,020

Plantaciones de Tamshiyacu S.A.C. - 41,667

Plantaciones de Loreto Este S.A.C - 20,280

Grupo palmas del Perú S.A.C. - 6,546

Cash paid to related parties (73,464) (964,964) ___________ ___________

107,028 16,183 ___________ ___________





17

(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 –

Bonus Share-based

payment US$ US$

2014

Dennis Melka (Executive Chairman) 30,000 65,219

Anthony Kozuch (Executive Director) - 78,394

Constantine Gonticas (Non-Executive Director) 2,614 -

Roberto Tello (Non-Execuive Director) 653 - ___________ ___________

33,267 143,613 ___________ ___________

2013

Dennis Melka (Chairman) - 49,471

Anthony Kozuch (Executive Director) 3,000 15,042 ___________ ___________

3,000 64,513 ___________ ___________


16

5. Transactions and balances with related parties

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

2014 2013 US$ US$

Revenue -

Income from disposal of lands (d) 14,968 - ___________ ___________

Expenses -

Management operating services (e), 20,487 34,999 ___________ ___________

Operating cash granted/(collected) -

Plantaciones de Pucallpa S.A.C. 1,780,871 170,290

Plantaciones de Ucayali S.A.C. 1,379,952 184,783

Servicios Ripio S.A.C 262,160 -

Grupo Palmas del Peru S.A.C. 87,219 3,986

Industrias de Palma Aceitera S.A.C. 51,255 -


Plantaciones de San Francisco S.A.C. 10,064 -

Plantaciones de Masisea S.A.C 1,006 -

Plantaciones de Loreto S.A.C. 524 -

Cacao de Requena Este S.A.C. 60 -


Plantaciones de Napo Norte S.A.C. 60 -

Plantaciones de Napo S.A.C. 60 -

Plantaciones de Napo Sur S.A.C. 60 -

Plantaciones de Marin S.A.C. 42 -

Plantaciones de Loreto Este S.A.C. 8 -

Cash collected from related parties (3,584,110) (377,175) ___________ ___________

- - ___________ ___________

Operating cash received /(paid) -


Plantaciones Loreto S.A.C. 27,189 -

Plantaciones de Pucallpa S.A.C. 21,793 108,696

Servicios Ripio S.A.C. 16,728 119,848

Plantaciones de Ucayali S.A.C. 7,009 168,841


Industrias de Palma Aceitera S.A.C. 34 21,053

East Pacific Capital Limited - 474,020

Plantaciones de Tamshiyacu S.A.C. - 41,667

Plantaciones de Loreto Este S.A.C - 20,280

Grupo palmas del Perú S.A.C. - 6,546

Cash paid to related parties (73,464) (964,964) ___________ ___________

107,028 16,183 ___________ ___________




18

6. Other accounts receivable, net

(a) This item is made up as follows:

2014 2013 US$ US$

Accounts receivable from broker (b) 1,806,238 -

Tax credit of VAT (c) 155,362 25,975

Guarantee deposit for operating lease 2,348 2,505

Advances to suppliers (d) - 11,911

Other 1,996 7,519 __________ __________

1,965,944 47,910

Less:

Allowance for impairment of other accounts receivable (c) (155,362) (25,975) __________ __________

1,810,582 21,935 __________ __________

(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.




Not

es to

the

cons

olid

ated

fina

ncia

l sta

tem

ents

(con

tinue

d)

19

8.

Land

, agr

icul

ture

mac

hine

ry, v

ehic

les,

equ

ipm

ent

and

cons

truc

tion

s in

pro

gres

s, n

et

(a)

The

mov

emen

t and

com

posi

tion

of th

is it

em is

as

follo

ws:

20

14

2013

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

___

____

____

____

__

La

nd

Agr

icul

ture

m

achi

nery

V

ehic

les

Furn

itur

e an

d fix

ture

s C

ompu

ter

equi

pmen

t O

ther

eq

uipm

ent

Con

stru

ctio

n in

pr

ogre

ss (e

) To

tal

Tota

l

US$

U

S$

US$

U

S$

US$

U

S$

US$

U

S$

US$

Cos

t

Bala

nce

as o

f Jan

uary

1

863,

250

48,0

00

60,0

43

535

4,08

9 42

,190

-

1,01

8,10

7 -

Add

ition

s (b

) 2,

846,

489

888,

539

527,

279

4,49

0 10

,768

12

2,94

3 1,

140,

713

5,54

1,22

1 1,

018,

107

Dis

posa

ls

(15,

685)

-

- -

- -

- (1

5,68

5)

-

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

Bala

nce

as o

f Dec

embe

r 31

3,

694,

054

936,

539

587,

322

5,02

5 14

,857

16

5,13

3 1,

140,

713

6,54

3,64

3 1,

018,

107

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

Acc

umul

ated

dep

reci

atio

n

Bala

nce

as o

f Jan

uary

1

- 2,

800

3,79

2 4

540

740

- 7,

876

-

Char

ge fo

r th

e pe

riod

(d)

- 74

,505

57

,547

31

9 3,

158

7,97

2 -

143,

501

7,87

6

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

Bala

nce

as o

f Dec

embe

r 31

-

77,3

05

61,3

39

323

3,69

8 8,

712

- 15

1,37

7 7,

876

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

Net

cos

t 3,

694,

054

859,

234

525,

983

4,70

2 11

,159

15

6,42

1 1,

140,

713

6,39

2,26

6 1,

010,

231

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

__

____

____

(b)

Dur

ing

2014

, the

Com

pany

acq

uire

d 71

7 he

ctar

es o

f agr

icul

tura

l lan

d fo

r a

tota

l cos

t am

ount

ing

to U

S$74

,613

(3,1

60 h

ecta

res

durin

g th

e ye

ar 2

013

for

a to

tal c

ost a

mou

ntin

g to

US$

142,

274)

. Add

ition

s in

the

cost

of

land

als

o in

clud

e co

sts

for

appr

oxim

atel

y U

S$2,

772,

000

(US$

721,

000

durin

g 20

13) r

elat

ed to

the

prep

arat

ion

and

adap

tatio

n in

ord

er to

use

the

land

as

a gr

owin

g fie

ld.

Add

ition

ally

, the

Com

pany

acq

uire

d m

achi

nerie

s an

d ve

hicl

es fo

r an

am

ount

of a

ppro

xim

atel

y U

S$1,

416,

000,

suc

h as

truc

ks, m

otor

cycl

es a

nd v

ans

(US$

108,

000

durin

g 20

13).

(c)

The

Com

pany

kee

ps in

sura

nce

cont

ract

s on

thei

r m

ain

asse

ts, i

n ac

cord

ance

with

the

polic

y es

tabl

ishe

d by

Man

agem

ent.

In M

anag

emen

t’s o

pini

on, i

ts in

sura

nce

polic

ies

are

cons

iste

nt w

ith in

dust

ry p

ract

ice.

The

ris

k of

pote

ntia

l los

ses

for

clai

ms

cons

ider

ed in

the

insu

ranc

e po

licy

is r

easo

nabl

e co

nsid

erin

g th

e ty

pe o

f ass

ets

held

.

(d)

Dur

ing

the

peri

ods

pres

ente

d, th

e de

prec

iatio

n w

as a

lloca

ted

as fo

llow

s:

2014

20

13

U

S$

US$

Land

13

9,18

9 7,

257

Adm

inis

trat

ive

expe

nses

, not

e 14

4,

312

619

__

____

____

__

____

____

14

3,50

1 7,

876

__

____

____

__

____

____

(e)

Cons

truc

tion

in p

rogr

ess

corr

espo

nd to

dis

burs

emen

ts r

elat

ed to

the

cons

truc

tion

of r

oads

nec

essa

ry fo

r tr

ansp

orta

tion

from

and

to th

e pl

anta

tions

as

wel

l as

to c

osts

incu

rred

in th

e ca

mps

of t

he o

pera

ting

loca

tions

.

(f)

As

of D

ecem

ber

31, 2

014

and

2013

, Man

agem

ent h

as a

sses

sed

the

reco

vera

ble

amou

nt o

f its

long

-ter

m a

sset

s an

d di

d no

t fin

d an

y im

pair

men

t ind

icat

or.


18

6. Other accounts receivable, net


2014 2013 US$ US$

Accounts receivable from broker (b) 1,806,238 -

Tax credit of VAT (c) 155,362 25,975

Guarantee deposit for operating lease 2,348 2,505

Advances to suppliers (d) - 11,911

Other 1,996 7,519 __________ __________

1,965,944 47,910

Less:

Allowance for impairment of other accounts receivable (c) (155,362) (25,975) __________ __________

1,810,582 21,935 __________ __________

(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.

Not

es to

the

cons

olid

ated

fina

ncia

l sta

tem

ents

(con

tinue

d)


Uni

ted

Cac

ao L

imite

d SE

ZC

and

its

Subs

idia

ries

/ U

nite

d C

acao

Lim

ited

SEZ

C y

sus

Sub

sidi

aria

s



20

9. Biological assets

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

2014 2013 US$ US$

Balance as of January 1, 171,053 -

Preparing plantable lands (b) 1,445,069 171,053

Share-based payment reserve, note 12(b) 106,854 - __________ __________

Balance as of December 31 1,722,976 171,053 __________ __________

(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


2014 2013 US$ US$

Trade payables (b) 349,908 19,376 _________ _________

Other:

Vacation payable 45,493 6,566

Taxes and contributions 27,775 3,711

Social benefits 7,099 2,350

Wages payable 2,334 -

Other 13,125 - _________ _________

95,826 12,627 _________ _________

445,734 32,003 _________ _________





21

(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:

2014 2013 Class of shares Number Number

Ordinary shares (previously Class A shares) 4,500,000 4,500,000

Ordinary shares (previously Class A-1 shares) 6,020,000 2,095,000

Ordinary shares (previously Class A-2 shares) 2,910,000 -

Public ordinary shares issuance, note 1(c) 5,000,000 - ___________ ___________

18,430,000 6,595,000 ___________ ___________ 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:

Nominal

value Ordinary

shares issued Share capital

Share premium

US$ Number US$ US$

As of January 1, 2013 - - -

Class A ordinary shares issued (i) 0.001 4,500,000 4,500 417,310

Class A-1 ordinary shares issued (ii) 0.001 2,095,000 2,095 2,092,905 ___________ ___________ ___________

As of December 31, 2013 6,595,000 6,595 2,510,215

Class A-1 ordinary shares issued (ii) 0.001 3,925,000 3,925 3,888,575

Class A-2 ordinary shares issued (iii) 0.001 2,910,000 2,910 3,480,591

New Ordinary Shares Issued (v) 0.001 5,000,000 5,000 8,734,055 ___________ ___________ ___________

As of December 31, 2014 18,430,000 18,430 18,613,436 ___________ ___________ ___________


20

9. Biological assets

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

2014 2013 US$ US$

Balance as of January 1, 171,053 -

Preparing plantable lands (b) 1,445,069 171,053

Share-based payment reserve, note 12(b) 106,854 - __________ __________

Balance as of December 31 1,722,976 171,053 __________ __________

(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


2014 2013 US$ US$

Trade payables (b) 349,908 19,376 _________ _________

Other:

Vacation payable 45,493 6,566

Taxes and contributions 27,775 3,711

Social benefits 7,099 2,350

Wages payable 2,334 -

Other 13,125 - _________ _________

95,826 12,627 _________ _________

445,734 32,003 _________ _________





22

(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:

Closing

Subscription

Shares Number

Aggregate

Purchase Price

US$

16 August 2013 (Initial) 550,000 550,000

26 December 2013 (first additional) 1,545,000 1,545,000

15 January 2014 (second additional) 3,925,000 3,892,500

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:

Closing Subscription

Shares Number Aggregate

Purchase Price US$

28 April 2014 (initial) 2,828,327 3,385,733

30 May 2014 (additional) 81,673 97,768


transaction costs.





23

(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).


Shares Number Net Proceeds US$

2 December 2014 5,000,000 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.


22

(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:

Closing

Subscription

Shares Number

Aggregate

Purchase Price

US$

16 August 2013 (Initial) 550,000 550,000

26 December 2013 (first additional) 1,545,000 1,545,000

15 January 2014 (second additional) 3,925,000 3,892,500


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:


Shares Number Aggregate

Purchase Price US$

28 April 2014 (initial) 2,828,327 3,385,733

30 May 2014 (additional) 81,673 97,768


transaction costs.





24

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

2014 2013 ____________________________ ____________________________

Number of

share options

Weighted average

exercise price Number of

share options

Weighted average

exercise price

Outstanding at the beginning of

the year 1,000,000 1.00 - -

Granted during the year 1,140,000 1.82 1,000,000 1.00 __________ _____ __________ _____

Outstanding at the end of the

year 2,140,000 1.43 1,000,000 1.00 __________ _____ __________ _____

Exercisable at the end of the

year 685,000 1.34 200,000 1.00 __________ _____ __________ _____

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:

2014 2013

Weighted average share price 1.82 1.00

Weighted average share exercise price 1.43 1.00

Expected volatility 41.10% 39.5%

Expected life 10 years 10 years

Risk free rate 2.42% 2.8%

Expected dividend yield 0% 0%

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.





25

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.


24

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

2014 2013 ____________________________ ____________________________

Number of

share options

Weighted average

exercise price Number of

share options

Weighted average

exercise price

Outstanding at the beginning of

the year 1,000,000 1.00 - -

Granted during the year 1,140,000 1.82 1,000,000 1.00 __________ _____ __________ _____

Outstanding at the end of the

year 2,140,000 1.43 1,000,000 1.00 __________ _____ __________ _____

Exercisable at the end of the

year 685,000 1.34 200,000 1.00 __________ _____ __________ _____

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:

2014 2013

Weighted average share price 1.82 1.00

Weighted average share exercise price 1.43 1.00

Expected volatility 41.10% 39.5%

Expected life 10 years 10 years

Risk free rate 2.42% 2.8%

Expected dividend yield 0% 0%

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.





26

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.





27

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


2014 2013 US$ US$

Services provided by third parties (b) 1,500,909 394,587

Personnel expenses (c) 682,652 122,334

Provision for share based payments, note 12(b) 336,505 125,853

Allowance for VAT impairment, note 6(b) 129,387 25,975

Taxes 15,511 2,515


Write-off of seeds 3,542 1,189

Other (d) 203,821 - __________ __________

2,876,639 673,072 __________ __________

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

2014 2013 US$ US$

Advisory services 524,685 9,181

Travel expenses 328,213 18,000

Legal services 251,754 33,243

Other labor services 105,127 100,825

Payroll services 100,030 8,030

Accounting and administrative services 84,045 131,666

Bank expenses 22,519 30,021

Other 84,536 63,621 __________ __________

1,500,909 394,587 __________ __________


26

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.





28

(c) Personnel expenses are made up as follows:

2014 2013 US$ US$

Wages and salaries 390,932 80,150

Ordinary benefits 84,914 13,515

Social security contributions 38,338 7,233

Vacation expenses 29,845 6,758

Other 138,623 14,678 _________ _________

682,652 122,334 _________ _________

Average number of employees -

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

2014 2013

Administrative 31 10

Workers 182 - _______ _______

213 10 _______ _______

(d) The item is made up as follows:

2014 2013 US$ US$

Office and sundry supplies 101,287 -

Environment management activities 36,503 -

Machinery spare parts 12,759 -

Insurance 14,550 -

Other 38,722 - ________ ________

203,821 - ________ ________ 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.





29

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:

2014 2013

Net loss attributable to equity holders of the parent for basic and

diluted earnings (numerator) (2,981,983) (694,855)

Weighted average number of ordinary shares for basic and diluted

earnings per share (denominator) (*) 12,745,429 5,071,164 ___________ ___________

Basic and diluted loss per share (average) (0.23) (0.14) ___________ ___________

(*) 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.


28

(c) Personnel expenses are made up as follows:

2014 2013 US$ US$

Wages and salaries 390,932 80,150

Ordinary benefits 84,914 13,515

Social security contributions 38,338 7,233

Vacation expenses 29,845 6,758

Other 138,623 14,678 _________ _________

682,652 122,334 _________ _________

Average number of employees -

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

2014 2013

Administrative 31 10

Workers 182 - _______ _______

213 10 _______ _______

(d) The item is made up as follows:

2014 2013 US$ US$

Office and sundry supplies 101,287 -

Environment management activities 36,503 -

Machinery spare parts 12,759 -

Insurance 14,550 -

Other 38,722 - ________ ________

203,821 - ________ ________ 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.





30

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:

Change in S/. rates (Increase) decrease of net loss for the

year ended at 31 December _______________________________________ 2014 2013

US$ US$

%

+5 74,638 789

+10 149,276 1,579

-5 (74,638) (789)

-10 (149,276) (1,579)

(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.





31

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.


30

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:

Change in S/. rates (Increase) decrease of net loss for the

year ended at 31 December _______________________________________ 2014 2013

US$ US$

%

+5 74,638 789

+10 149,276 1,579

-5 (74,638) (789)

-10 (149,276) (1,579)

(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.




32

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).


United Cacao Limited and its Subsidiaries


2nd Annual Football Tournament (The Cacao Cup 2014) - 1st December 2014.

El 2o Campeonato Anual de Fútbol (La Copa Cacao 2014) - 1 de diciembre 2014.

Parade for the 131 Anniversary of Tamshiyacu – December 8th, 2014.

Desfile por el 131 Aniversario de Tamshiyacu - 8 de Diciembre de 2014.

Donation of Educational Materials and others – January 27, 2014

Donación de Materiales Educativos y Otros – 27 de Enero de 2014.

First Anniversary Celebration – April 26th, 2014.

Celebración del Primer Aniversario – 26 de Abril de 2014.

Beauty Contest ‘Miss Tamshiyacu’ – September 1st, 2014.

Certamen de Belleza ‘Miss Tamshiyacu’ - 1 de Setiembre de 2014.

Community Snapshots / Fotos de la ComunidadThe Company maintains an active community engagement programme. Please visit our website for more pictures and information.

La Compañia maintiene un programa de iniciativas comunitarias. Favor de visitar nuestra pagina web para mayor informacion y fotos.


32

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).

www.unitedcacao.com

informe anual 2014 annual report 2014 desarollando … · fermentación y asegurar un cacao en seco...

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