Dci Advisors Regulatory News (DCI)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM THE UNITED STATES OF AMERICA OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

This announcement is not an offer for sale of any securities of Dolphin Capital Investors Limited. Securities of Dolphin Capital Investors Limited, including any offering of its convertible bonds and the shares into which they may be converted, may not be offered or sold in the United States absent registration under United States securities laws or unless exempt from registration under such laws. The offering of Dolphin Capital Investors Limited's securities described in this announcement has not been and will not be registered under United States securities laws, and accordingly, any offer or sale of these securities may be made only in a transaction exempt from registration.

20 March 2013

DOLPHIN CAPITAL INVESTORS LIMITED

("DCI" or "Dolphin" or the "Company"

and together with its subsidiaries the "Group")

Trading Update and Preliminary Annual Results

for the year ended 31 December 2012

Dolphin, a leading global investor in the residential resort sector in emerging markets and one of the largest real estate companies on AIM in terms of net assets, is pleased to announce its preliminary results for the year ended 31 December 2012, and provide an update on operational progress since its last trading update, released on 4 December 2012.

A. Operating Highlights since last Trading Update of 4 December 2012:

FIRST PHASES OF ADVANCED PROJECTS

·; The Porto Heli Collection ("PHC" - www.portohelicollection.com), Greece

Amanzoe (www.amanzoe.com)

- The planned additional enhancements and improvements identified during the first period of Amanzoe operations, following its launch in August 2012, are progressing on schedule. The hotel will open as planned on 26 March 2013 to commence its first full year of operations.

- Amanzoe has been reported on positively by almost all major travel commentators in Europe, Asia and the Americas. The reviews of the resort in the international press and from industry experts and guests continue to be exceptional, resulting in strong reservations momentum for the 2013 season.

- The first Amanzoe Villa will be available to rent to coincide with the reopening of the hotel for the 2013 season and a second will become available in mid-April 2013.

- Construction works on three additional Villas are progressing, while three more are being designed by Ed Tuttle, in consultation with their purchasers.

- The final inspection of Amanzoe by the subsidies approval committee has been completed, and the Company expects to receive the remaining €3.9 million balance payment during the second quarter of 2013.

The Nikki Beach Resort & Spa at Porto Heli ("Nikki Beach" - www.nikkibeachhotels.com)

- A €13.7 million turn-key construction contract was signed on 13 February 2013 between the project owning company and Aristo Greece, while works on site commenced in December 2012, with a view to completing the project in time for the 2014 season.

·; Venus Rock Golf Resort ("Venus Rock" - www.venusrock.com), Cyprus

- Works at the golf course are progressing on schedule and are expected to complete prior to summer 2013 and open for play in September, to allow time for the grass to grow fully.

- The launch of sales of the Golf Phase residential units is planned for the third quarter of 2013, coinciding with opening of the new golf course.

- An additional 17units from the old phases have been sold since the last trading update, mainly to Chinese buyers.

- The tender documents for the second golf course will be completed in April and issued to potential contractors for bidding.

- To date, €24.3 million has been drawn from the €50 million construction loan for the project.

·; Playa Grande Club & Reserve ("Playa Grande" - www.playagrande.com), Dominican Republic

- Renovations on the back nine holes of the Robert Trent Jones Sr Golf Course have commenced based on the designs and under the supervision of Rees Jones.

- Simultaneously, the Aman hotel infrastructure works have been initiated.

- A ground breaking ceremony took place on 11 March 2013 and was attended by the President of the Dominican Republic, Lic. Danilo Medina; the Minister of Tourism; the Minister of Public Works; the Minister of the Presidency; Rees Jones, designer of the golf course renovation; and Adrian Zecha, Founder of Aman Resorts, to celebrate the start of construction of the Aman Golf Resort phase.

- The public beach access and related facilities have been completed and became available to the public in January 2013.

- Final terms have been agreed with the Banco Leon/BHD syndicate for the debt financing of the Aman Hotel and the documentation of the facility agreements is in its final stages.

- Marketing collateral was completed to facilitate the marketing and sales of a limited number of Founder Aman villas, which are being launched this year.

- Infrastructure works were also initiated on the Founders' Phase, which comprises circa 70 lots owned by a number of high net worth individuals ("HNWI's") from the investor group which previously owned the Playa Grande site. The progress made on the area's infrastructure will enable them to start building their homes next to the Aman hotel site and will add value to the project.

·; Pearl Island ("Pearl Island" - www.pearlisland.com), Panama

- The concept design for the Ritz Carlton Reserve hotel with branded residences, on one of the island's 14 private sandy beaches and spread over a land parcel of approximately 50 hectares located next to the Founders' Phase, was completed by Hart Howerton and approved by the Ritz-Carlton organisation.

- The negotiations following the Memorandum of Understanding signed regarding the joint development of a Ritz Carlton Reserve hotel have not yet reached a binding agreement and discussions continue with other regional investors.

- The construction of the Founders' Phase beach club and other facilities, together with the island's airport, infrastructure and roads, is progressing according to plan. The paving of the first 500 metres runway phase of the airport was completed and it is now being expanded to 1,000 metres.

- The sales of villas and condominiums in the Founders' Phase of the project - which Dolphin recently sold and which is contiguous to the Ritz Carlton Reserve phase - continued at an accelerated pace and has now surpassed 70 units. The success of the Founders' Phase adds significant momentum and value to the remainder of the island development, which is retained by Dolphin.

MAJOR PROJECTS

·; Kea Resort obtained its Environmental Impact Study ("EIS") approval on 24 December 2012. Following this milestone, and according to the latest legislation, Kea Resort is the only development of this magnitude and calibre that can be developed on the Cycladic island of Kea, accessible by a one-hour ferry transfer from Athens. The project is planned to include an Aman hotel and Aman branded villas.

B. Financial highlights: 

·; Total Group Net Asset Value ("NAV") as at 31 December 2012 was €709 million and €635 million before and after DITL respectively. This represents a decrease of €12 million (1.6%) and €15 million (2.3%), respectively, from the respective pro forma 2012 third quarter figures. The decrease is mainly due to regular operating expenses and the depreciation in value of the Group's properties in the Americas in Euro terms (due to the devaluation of the US dollar against the Euro), although these were partially offset by a small overall valuation gain in other DCI properties. Due to currency fluctuations, however, Sterling NAV per share as at 31 December 2012 before DITL increased to 90p from 89p as at 30 September 2012, while NAV after DITL remained stable at 81p.

·; The Company balance sheet continues to have a strong asset base coupled with low leverage:

- Gross Assets of €910 million.

- Total Debt reduced to €132 million with a Group total debt to asset value ratio of only 14%.

- No bank debt at the Company level. The Company has only provided corporate guarantees on the $40 million Playa Grande Convertible Bonds, and the servicing of Banco Leon loan interest at Playa Grande. The Company is expected to increase its direct debt in the near future through the issue of the Euro Bonds discussed below, under section D.

- The effects of a potential tax on deposits in Cyprus Banks on the cash balances and operations of the Dolphin Group would be negligible.

C. Divestments since last Trading Update of 4 December, 2012:

·; 45 homes and plots were sold by Aristo in the three month period ending 28 February 2013, representing a 298% increase in sales value (from circa €4.9 million to circa €19.7 million) and a 115% increase in sales price per m2 compared to the corresponding period in the previous year.

·; An additional villa was sold at LaVanta for circa €0.2 million.

The Company is currently progressing discussions relating to a number of other joint venture arrangements and sales transactions that involve the following projects:

- The Ritz Carlton Reserve phase of Pearl Island

- Port Kundu project in Turkey

- Amanzoe Villas

- The Jack Nicklaus Signature golf course and The Chedi Hotel of the Porto Heli Collection

- Aman Villas and other components of Playa Grande

- Livka Bay

D. Proposed Issuance of Convertible Bonds

As announced on 14 March 2013, the Company is proposing to issue €50 million of new 5-year, 5.5% coupon unsecured Euro Convertible Bonds (the "Euro Bond Issue") convertible into DCI common shares at an initial conversion price of €0.5737 per Share (representing £0.50 per Share converted into Euros assuming an illustrative fixed exchange rate of £1.00: €1.1474), and up to US$30 million of new 5-year, 7% coupon unsecured US$ Convertible Bonds (the "US$ Bond Issue") convertible into DCI common shares at an initial conversion price of US$0.6717 per Share (representing £0.45 per Share converted into US$ assuming an illustrative fixed exchange rate of £1.00:US$1.4928) (together the "Issue"). The Euro Bond Issue and up to US$28 million of the US$ Bond Issue are being backstopped in agreed proportions by, (i) funds (the "Third Point Funds") under the discretionary management of Third Point LLC, ("Third Point"), and (ii) funds (the "Monarch Funds") under the discretionary management of Monarch Alternative Capital LP ("Monarch"). The Board of Directors has the discretion to allocate up to €23 million of the Euro Bond Issue and US$14 million of the US$ Bond Issue to existing shareholders and new investors (other than the Third Point Funds and the Monarch Funds).

Use of Proceeds

The proceeds of the Euro Bond Issue will be principally used; (i) to provide the Company with further funds to make opportunistic investments in attractive distressed assets or other projects that may be NAV accretive for the Company, and which are intended to generate a significant return multiple on investment, and (ii) to establish and seed a new investment platform to become the holding entity for the Company's existing Americas projects - Playa Grande Club & Reserve and Pearl Island Resort - and to enable the Company to grow in the Americas.

Given the current economic environment, particularly in Greece and Cyprus, there are several opportunities available to acquire land and resort assets in prime locations at a significant discount to both their replacement costs and fair values, at a time when there are currently almost no local or international institutional investors active in the market.

In addition, the Company intends to transfer its Americas projects, Playa Grande and Pearl Island, into a wholly-owned common holding platform ("Dolphin Capital Americas"). Dolphin Capital Americas will be funded; (i) to continue the development of Playa Grande and Pearl Island with the aim of realising significant returns for shareholders, and (ii) to pursue further NAV accretive, attractively-priced or distressed acquisitions in the Americas. Following the formation of Dolphin Capital Americas, the Company will look at optimum alternatives to further capitalise, grow and realise value from the platform.

Given that the proposed initial conversion prices of the Euro Convertible Bonds and US$ Convertible Bonds are less than the prevailing net asset value per share, the Company will convene an extraordinary general meeting of Shareholders to approve the proposed Issue (the "EGM"). The Company has already received non-binding expressions of support for the Issue from existing Shareholders with a combined shareholding in the Company of over 50%. Further details of the Issue have been included in the EGM circular (the "Circular") sent to Shareholders on 15 March 2013.

Basic Terms of the Issue

The basic terms of the Euro Bond Issue are:

·; Coupon - 5.50% per annum, payable semi-annually in arrears in equal instalments on 30 June and 31 December in each year, beginning 30 June 2013 with a short first and final coupon.

·; Maturity date - fifth anniversary of the issue date.

·; Initial conversion price - €0.5737 per Share (representing £0.50 per Share converted into Euros at the fixed exchange rate of £1.00: €1.1474).

The basic terms of the US$ Bond Issue are:

·; Coupon - 7.00% per annum, payable semi-annually in arrears in equal instalments on 30 June and 31 December in each year, beginning 30 June 2013 with a short first and final coupon.

·; Maturity date - fifth anniversary of the issue date.

·; Initial conversion price - US$0.6717 per Share (representing £0.45 per Share converted into US$ at the fixed exchange rate of £1.00:US$1.4928).

Backstop Arrangements

On 14 March 2013, the Company entered into conditional subscription agreements with, (i) the Third Point Funds, and (ii) the Monarch Funds, to backstop the Euro Bond Issue and up to US$28 million of the US$ Bond Issue in agreed proportions. Completion of these subscriptions is subject to the satisfaction of a number of material pre-conditions including, amongst others, the approval of the Issue and the amendment of the Company's investing policy (described further below) at the EGM.

Third Point is an SEC-registered investment adviser based in New York, with over US$11.8 billion in assets under management. Pursuant to the Company's share issuance in October 2012, funds under the discretionary management of Third Point currently hold approximately 20.08% of the Company's issued share capital.

Monarch is an SEC-registered private investment firm with nearly US$5.5 billion in assets under management.

Pursuant to these backstopping arrangements, the Company has the discretion to accept; (i) up to €23 million of subscriptions in relation to the Euro Bond Issue, and (ii) up to US$14 million of subscriptions in relation to the US$ Bond Issue from certain, limited categories of existing DCI shareholders and new investors by scaling down the allocations of the Third Point Funds and the Monarch Funds. The Circular sets out the terms on which eligible DCI shareholders and new investors may participate in the Issue.

E. Amendment to the Company's Investing Policy

As also announced on 14 March 2013, the Company's AIM admission document dated 5 December 2005 provided that Greece, Cyprus, Turkey and Croatia, together with their neighbouring countries, would comprise the Company's "Primary Investment Region". As announced by the Company on 14 June 2008, this policy was varied to enable the Company to invest capital into other geographies outside the Primary Investment Region that demonstrate similar value upside characteristics provided, however, that such investments would not exceed 5% of the Company's last reported NAV at the time of investment.

Given that the proposed formation and further seeding of the Dolphin Capital Americas platform is expected to significantly add to the future growth and returns of the Company, the Board has, subject to Shareholder approval, resolved that the Americas should constitute the Company's "Secondary Investment Region" and that, provided that investments in the Secondary Investment Region will not exceed one third of the Company's last reported NAV at the time an investment is made, there should be no further restrictions on the funds invested in the Secondary Investment Region. A resolution will be proposed at the Company's EGM to approve this proposed amendment to the Investing Policy.

F. Directorate Appointment

Mr David B. Heller was appointed on 14 March 2013 to the Board of DCI as a non-executive director. Mr Heller was nominated for appointment by Third Point LLC pursuant to the terms of clause 8 of the subscription agreement dated 25 September 2012 entered into between the Company and various funds managed by Third Point LLC.

Mr Heller is a private investor whose holdings include stakes in the Philadelphia 76ers and the Standard East Village hotel. He is a former Co-Head of the Goldman Sachs Global Securities Division where he sat on the firm's Management Committee, Risk Committee, Business Practices Committee and Finance Committee. David joined Goldman in 1989 in New York as an equity derivatives trader. He worked for Goldman in Japan from 1993-1998, initially as an equity derivatives trader and latterly as the co-head of Goldman's Japanese equity business. David transferred to London in 1999 to become the global head of equity derivatives trading and returned to New York in 2002. In 2006 he was named global head of equity trading. He retired from Goldman in March 2012.

Following the appointment of David B. Heller, the number of members of the Board increased to seven.

G. Strategic Focus

The main strategic priorities of the Company for 2013 are summarised as follows:

1) Conclude the issue of the new Convertible Bonds.

2) Continue the sale of Amanzoe Villas.

3) Progress the development of the Aman Golf Resort at Playa Grande.

4) Promote and sell the Founder Aman Villas at Playa Grande.

5) Follow up on the completion of the Founders' phase infrastructure works and leisure facilities at Pearl Island and complete a JV agreement to develop the Ritz Carlton Reserve phase of the project.

6) Assist Aristo's management in increasing retail sales to China, Russia and the UK allowing it to return to net cash generation, reducing leverage and distributing dividends to Dolphin.

7) Implement agreed sales and collect the future proceeds.

8) Successfully complete the additional divestment negotiations currently underway and initiate new ones to further demonstrate the true value of the portfolio.

9) Pursue further NAV accretive, attractively-priced or distressed acquisitions in eastern Mediterranean and the Americas.

10) Advance construction of Nikki Beach.

11) Continue the construction of the infrastructure and leisure works at Venus Rock allowing for the successful launch of sales of the residential component of the new phases in autumn 2013.

12) Advance the zoning and permitting of Dolphin's other Major Projects, enabling the Company to sell them - either partially or wholly - at a profit, or develop them and realise their full cash return potential.

Commenting, Andreas N. Papageorghiou, Chairman of Dolphin Capital Investors, said:

"2012 was a transformational year for Dolphin, with the successful launch of our flagship resort, Amanzoe, and good progress on our other Advanced Projects. The equity placing last year and the proposed convertible bonds issue demonstrate the Company's ability to attract blue chip strategic investors to support the execution of its development programme and be able to take advantage of attractive investment opportunities in our target regions."

Miltos Kambourides, Founder and Managing Partner of Dolphin Capital Partners, added:

"While the launch of Amanzoe was the highlight of the year, 2012 also saw a number of successful sales across our portfolio, which both generated strong returns on investment and underlined the valuations of our properties. We are happy to start 2013 with a strong balance sheet to complete the first phases of our Advanced Projects and turn them into cash generating assets, and to selectively take advantage of attractive new investment opportunities that can add significant potential value to the Company."

H. Analyst Meeting and Conference Call

Dolphin is today, 20 March 2013, hosting an investor and analyst meeting at:

FTI Consulting

Holborn Gate

26 Southampton Buildings

London

WC2A 1PB

The presentation will commence at 11:00 with tea and coffee served from 10:45.

There will also be a conference call facility, which can be accessed using the following details:

Pin number: 4556153

London Dial-in number: +44 (0)20 7136 2056

GreeceDial-in number: 00800 3315 3071

There will be a recording of the conference call for anyone who is unable to attend the call. Please contact Kirsty Allan at FTI if you would like to be sent this.

For further information, please contact:

Notes to Editors

Dolphin (www.dolphinci.com) is a leading global investor in the residential resort sector in emerging markets and one of the largest real estate investment companies quoted on AIM in terms of net assets. Dolphin seeks to generate strong capital growth for its shareholders by acquiring large seafront sites of striking natural beauty in the eastern Mediterranean, Caribbean and Latin America and developing sophisticated leisure-integrated residential resorts.

Since its inception in 2005, Dolphin has raised €948 million of equity, has become one of the largest private seafront landowners in Greece and Cyprus and has partnered with some of the world's most recognised architects, golf course designers and hotel operators.

Dolphin's portfolio is currently spread over approximately 63 million m2 of prime coastal developable land and comprises 14 large-scale, leisure-integrated residential resorts under development in Greece, Cyprus, Croatia, Turkey, the Dominican Republic and Panama and a 49.8% strategic participation in Aristo Developers Ltd, which is one of the largest holiday home developers in south east Europe with more than 60 smaller holiday home projects in Cyprus.

Dolphin is managed by Dolphin Capital Partners, an independent real estate private equity firm.

I. Chairman's Statement

I am pleased to report Dolphin's preliminary annual results for the year ended 31 December 2012.

2012 was a very active year for Dolphin, marked by significant operational progress at our Advanced Projects. The highlight for the year was the successful launch and first period of operation of our flagship resort project, Amanzoe, which has set a new benchmark for leisure-integrated resorts in Europe. Amanzoe, the first villa-integrated Aman resort in Europe and one of the most exclusive destinations in the Mediterranean, is set to reopen on 26 March for the 2013 season, following the completion of certain improvements identified during its first operational period, and we anticipate a profitable first full year of operations.

During the period, the Company also achieved important permitting advances for Kea Resort, where the second Aman in Greece is planned to be developed. Relevant permits were also achieved at Plaka Bay Resort and Sitia Bay Resort, where the zoning of the projects' beach front land area was increased. This has propelled the three projects closer to the advanced stages of development. In parallel, and in addition to the €98 million of sales and divestments recorded by the Group within the year, Dolphin continues to advance discussions for project exits or joint ventures at project levels, in order to further add to its cash reserves and underpin its asset valuations.

2012 was a pivotal year due to two further major events:

(1) The Aristo exchange, by which Dolphin and Mr. Theodore Aristodemou, CEO of Aristo and previously Dolphin's largest shareholder with a 34.89% holding, agreed to the exchange of 34.14% of Mr Aristodemou's shareholding in Dolphin for a direct 50.2% participation in Aristo on a NAV for NAV basis, previously 100% owned by Dolphin; and

(2) An equity raise of €50 million in October 2012, with the addition of Third Point, a highly regarded international investor, into Dolphin's notable shareholding base.

We remain committed, as a top priority, to ensuring that Dolphin has adequate cash balances to fully execute its development programme and to take advantage of any opportunities presented by the current economic climate to add additional NAV accretive assets to its portfolio with the potential to generate significant cash returns. In order to facilitate this, we announced on 14 March 2013 the issue, subject to shareholder approval, of €50 million of Euro Bonds whose proceeds will be primarily directed to new acquisitions and up to US$28 million of US$ Convertible Bonds to seek to partially refinance the existing Playa Grande Bonds that the Company issued in 2011.

The Company's NAV, before and after DITL, as at 31 December 2012 is reported at €709 million and €635 million, respectively, and the NAV per share before and after DITL in Euro terms was €1.10 and €0.99 respectively.

In conclusion, 2012 was a transformational year for Dolphin and I am confident that we will see further positive growth in 2013.

Andreas N. Papageorghiou

Chairman

Dolphin Capital Investors Limited

20 March 2013

J. Investment Manager's Report

While global equity markets improved in 2012, economic activity in our core markets, particularly in Greece and Cyprus, continued to struggle. Against this macroeconomic backdrop, our team focused on delivering tangible progress through the successful completion and opening of its first resort, Amanzoe, and executing sales, divestments and agreeing joint ventures to demonstrate the value within the portfolio.

The opening of Amanzoe this summer was, as expected, a very gratifying and important stage in the Company's development, representing the first of our luxury resorts to come to market. The resort has been very well received by guests and is already serving as a showcase of Dolphin's development capabilities, profit potential and vision.

As further described below, sales activity has gained significant momentum during the year, with a number of transactions executed, each at a premium to both respective investment cost and NAV, which further strengthens our confidence in the value of our portfolio.

The placement of shares in October 2012 and the proposed issue of the Euro and US$ Bonds ensure that the Company has adequate cash balances to execute its development programme and make selective acquisitions which we would expect to be complementary and to create synergies with Dolphin's existing portfolio.

J.1. Market Dynamics

According to the UNWTO World Tourism Barometer, international tourist arrivals (overnight visitors) grew by 4% in 2012 surpassing a record 1 billion tourists globally for the first time in history (with international arrivals reaching 1.035 billion, up from 996 million in 2011) and are anticipated to continue to grow further in 2013.

International tourist arrivals to Europe, the most visited region in the world, were up by 3% - a very positive result in view of the economic situation. Accounting for slightly over half of all international arrivals worldwide, Europe reached 535 million tourist arrivals in 2012, some 17 million more than in 2011.

International tourist arrivals in Greece, according to the Hellenic Statistics Authority, reached 16.4 million in 2012, which represents a 9.5% increase from 2011. Regardless of the economic crisis, the tourism sector remains relatively unharmed, with international tourist arrivals steadily increasing since 2009. Close to 17 million tourist arrivals are forecast for 2013 which, if achieved, will set a new record for the sector.

The Greek parliament will soon ratify new legislation regarding strategic investments, providing -amongst others - long term residency for non-EU citizens who proceed with a property purchase of a minimum of €300,000, subject to specific conditions. The respective draft bill has been submitted before the parliament earlier this month and is expected to be enacted shortly and will have a significant impact on international second home sales in the country, as was experienced in Cyprus last year when a similar legislation was passed.

In Cyprus, tourist arrivals for the year 2012, totalled circa 2.5 million compared to 2.4 million in the corresponding period of 2011, recording an increase of 3%, as reported by the Statistical Service of the Republic of Cyprus.

These figures are likely to grow further and translate into further international home sales, following the new legislation which, subject to certain requirements, grants permanent residence to non-EU citizens making a minimum investment of €300,000 in property on the island. In addition, the new Cypriot President, Mr Anastasiades, is focused on implementing other initiatives to grow the real estate sector and has established a new National Financial Council headed by Nobel Laureate in economics and DCI Board Director Mr Christopher Pissarides. 

In Croatia, foreign tourist arrivals for 2012 amounted to 11.8 million, representing a 19% increase compared to 2011, according to the Croatian Ministry of Tourism

In Turkey, foreign tourist arrivals for 2012 amounted to 31.8 million, representing a 1% increase compared to 2011, according to the Turkish Ministry of Tourism.

Moving on to the Americas, six years on from the first signs of the financial crisis, the Caribbean looks to have weathered the storm. Both sales volumes and prices in the region were negatively affected by the downturn, but a spike in enquiries at the end of 2012 may indicate that 2013 will see strengthening activity in the region.

Long-favoured by US, Canadian and northern European buyers, the Caribbean is increasingly popular with the rising number of HNWIs from Russia, the Commonwealth of Independent States and Latin America.

More specifically, the US Central Intelligence Agency (CIA) reported that in Dominican Republic total tourist arrivals in 2012 recorded a 6% increase compared to 2011, reaching a total number of 4.6 million.

In Panama, the total number of visitors was 2 million, indicating a 4.1% increase in comparison to 2011.

Further related to Dolphin's sector, the prime global residential market has seen a strong return to growth over the past three years following the downturn experienced in 2008 and early 2009 and, as reported by Knight Frank, branded residences have been at the forefront of this process. The demand for prime property, especially through cross-border transactions which tend to favour branded residences, has benefited from the recovery in the fortunes of the world's wealthy since 2009.

J.2. Divestments, Investments and Capital Events

During 2012, the Group executed circa €98 million of asset sales and divestments, each at a premium to NAV.

Excluding the Aristo and LaVanta sales, the value of these transactions to Dolphin totalled circa€46million, representing a 56%premium over the corresponding NAV of €29.5million and a 110% premium over the corresponding cost basis of €22million.

The aggregate consideration will likely be higher than the above reported figures, as these do not include incentive fees, profit sharing potentially payable to the Company and further involvement of the Company into construction and management as per the agreements signed.

In summary, the following transactions have been executed:

·; The sale of Dolphin's entire 60% shareholding in Pearl Island's Founders Phase, including a commitment from the buyer to invest in completing the key infrastructure of the island (such as the airstrip, service pier, arterial roads and utilities) and all Founders Phase facilities (such as beach club and marina) within two years.

·; The sale of a 75% stake in the Nikki Beach Resort & Spa at Porto Heli, with Dolphin being awarded the contract for the management and construction of the project, providing further future profit potential for the Company.

·; The sale of all eight remaining Seafront Villas shell structures in the Porto Heli Collection, including an agreement for the completion of their construction by the Company.

·; Two reservations for large Amanzoe Villas, one of which will occupy two adjacent lots that were originally intended for smaller villas in the masterplan.

·; 186 home and plot sales by Aristo representing an 89% increase in sales value compared to 2011.

·; Two villa sales at LaVanta, Turkey.

The aggregate consideration will likely be higher than the above reported figures, as these do not include incentive fees, profit shares potentially payable to the Company and further involvement of the Company into construction and management as per the agreements signed.

In addition, the Company is currently in discussions relating to a number of other transactions that include:

·; Potential divestments of phases of the Advanced Projects or whole projects.

·; Potential investments in distressed opportunities both in Cyprus and Greece where due to economic circumstances, there are many NAV accretive assets available for sale, from distressed sellers as well as the Americas, where Dolphin Capital Americas is well positioned to capitalize on the available opportunities.

On 25 October 2012, 204,435,897 new common shares of €0.01 each in the capital of the Company were admitted to trading on AIM in connection with the Company's €50 million fundraising. Although the fundraising was fully underwritten by funds managed by Third Point and the Manager, the Company had the discretion to accept up to €15 million worth of subscriptions from certain existing shareholders, by scaling down Third Point's allocation. Following significant demand by existing shareholders, which resulted in the issue being oversubscribed by more than four times, €15 million worth of shares were issued to certain existing shareholders of the Company.

J.3. Updated Portfolio characteristics and cash generation potential

Cash Generation Potential of the Dolphin portfolio:

Following the exits achieved during the period, the forecast cash generation potential of Dolphin's real estate portfolio has been updated accordingly.

The Advanced Projects are spread over 3,737hectares of land, of which 582 hectares represent the first phases of these developments. The total unsold residential capacity of these projects is approximately 720,000 buildable m2, of which circa 310,000 m2 are planned for their first phases. In addition to the built product and leisure facilities, the four Advanced Projects have the potential to sell over 3.4million m2 of land in the form of land plots.

The Advanced Projects are planned to include up to 11 luxury hotels and four 18-hole championship golf courses and one marina, of which the following are included in their first phases:

• The first Aman residential resort in Europe (Amanzoe), the first Aman golf-integrated resort worldwide (Playa Grande), the first Nikki Beach resort in the eastern Mediterranean, and the first Ritz Carlton Reserve resort in Central America (Pearl Island); and,

• Two golf courses in Venus Rock designed by Tony Jacklin and one in Playa Grande designed by Robert Trent Jones, Senior and renovated by his son Rees Jones.

As summarised in the table below, the Investment Manager estimates that the Advanced Projects alone have the potential to generate for Dolphin the following returns:

• More than €550million of net cash returns or circa 70p per share, from the development and sale of first phases alone (which represents circa 37% of their estimated total profitability) over an average period of approximately six years.

• Over €1.5billion of cash, or circa 189p per share, through the development and sale of all their planned residential units and retail land plots and the sales and operational profits of their leisure components (hotels, golf courses, marinas etc.) over an estimated period of 12 years (2013-2024).

Dolphin's remaining portfolio includes:

• 10 major leisure-integrated residential resort projects, spread over 2,160 hectares of land and conservatively expected to build and sell circa 662,000residential buildable m2, representing only a circa 3% building coefficient. These projects are expected to further increase in book value as they complete their permitting and design phase and reach Advanced Project status. The Investment Manager estimates their cash generation potential to be in excess of €1.23 billion, or circa 157p per share, spread over the next 12 years.

• Residual developable land, as under the current plans not all the land of the Major Projects will be developed in the next 12 years. Such land is estimated to have a residual building coefficient of circa 1.45 million buildable m2 and a future value of circa €1.16 billion (based on an estimated average value of €800 per buildable m2).

• Aristo Developers, the largest developer and private land owner in Cyprus, with currently circa 72,000 buildable m2 of residential product in stock or under construction and circa 318,000 m2 in the form of readily available land plots with a total listed sales potential of circa €95 million. Aristo also holds an additional vast portfolio of land assets with the potential to sell over 676,000 residential buildable m2 once fully developed. Dolphin retains a strategic 49.8% participation in Aristo. The Investment Manager estimates that, upon market recovery, Aristo will have a dividend capacity in excess of €30 million per year.

Based on the above, the Investment Manager estimates Dolphin's total portfolio cash generation potential to be in approximately €4.2 billion, or circa 529p per share, over the next 12 years. This cash generation estimate is summarised in the following table. 

Basic Assumptions

- All cost assumptions cover future development, marketing, sales, branding and agency costs and do not include already incurred expenses for land acquisition and development.

- The above cash returns do not include DCI overhead costs.

- For the Other Phases of the Advanced Projects and for the Major Projects, the above cash returns do not include financial costs.

- Following the sale of the Founders Phase of Pearl Island, the First Phase of Pearl Island is the Ritz Carlton Reserve phase.

- No inflation adjustments have been made.

- Cash returns are calculated on a before corporate income tax basis. Actual taxes would depend on the jurisdiction of each project and the structure of each specific sale transaction.

- Residential units are assumed to be developed on a "sell and build basis", apart from minor investments in "show" units.

- No interim project exits have been assumed.

- Dividends are assumed to be distributed upon Aristo achieving significant positive cashflows from 2015 onwards and are assumed to stabilize at €30 million (for 100%). The Aristo Terminal Value is calculated at 8X on its estimated annual dividends. These dividends exclude the financial returns of Venus Rock and Eagle Pine.

- Net Operating Income is calculated over a period ranging from 6 to 10 years depending on the project. The sale of the Leisure components assumes that the hotels, golf courses and other leisure components are sold in years 6 to 10 at a multiple to their NOI ranging from 8X to 10X.

- All statements are based on future expectations rather than on historical facts and are forward looking statements that involve a number of assumptions, risks and uncertainties. The Company and the Investment Manager cannot give any assurance that such statements will prove to be correct. Any forward looking statements made by or on behalf of the Company are made only on a best estimate basis as of the date they are made and they do not constitute future earnings, revenues or profits forecasts or guidance. Neither the Company nor the Investment Manager undertake to update forward looking statements to reflect any changes in expectations, events, conditions or circumstances upon which such statements are made.

J.4. Advanced Projects development update

1. The Porto Heli Collection, Greece

Progress since last annual report:

Construction of Amanzoe was completed on budget at the end of June 2012 and the resort welcomed its first guests on 1 August 2012. The feedback to date has been overwhelmingly positive, both for the facilities and the level of the services provided, and the reviews of the resort in the international press and from industry experts and guests continue to be exceptional.

Since opening, many prestigious guests have enjoyed the facilities and services of Amanzoe and the hotel has served as the perfect platform to showcase the potential of the Company's portfolio to the public, real estate investors, potential purchasers of villas and the press.

As planned, the hotel will reopen to guests for its first full year of operations on 26 March 2013, with rates ranging reopen to between €1,100 to €1,400 per room per night (excluding taxes), representing a circa 40% increase compared to the introductory rates in 2012. The operations team in high season comprises over 190 people, mostly from the local community.

After receiving the first 50% subsidy payment in early March 2012, the Company filed an application for the remaining 50% of the total approved subsidy of €7.8 million on 30 March 2012. The final inspection of the Amanzoe by the subsidies approval committee has been completed, and the Company expects to receive the remaining €3.9 million balance within the second quarter of 2013.

On 3 August 2012 Dolphin received a Conversion Notice from Archimedia to convert 6.43% of its shares in Amanzoe in exchange for an Aman Villa and on 27 December 2012 a further Notice for the conversion of the remaining 7.86% of its shares for two other Aman Villas. Following the conversions, Archimedia's shareholding in Amanzoe will be reduced from 14.29% to 0% and Dolphin's shareholding will increase to 100% of the project.

To date, seven Aman Villas have been sold or reserved, two of which were reserved after the opening of Amanzoe. Construction of three villas is on-going and construction for the remaining villas sold will be initiated as soon as the final designs are dispatched by Ed Tuttle, the project's architect, following consultation with the future owners. One of the villas newly reserved will be constructed on two adjacent lots planned for smaller villas so, in effect, eight out of the total 36 lots have been sold.

A €13.7 million turn-key construction contract was signed on 13 February 2013, between the owners of the Nikki Beach company (75% Swiss Development Group, 25% DCI) and Aristo Greece, and works on site have commenced in December 2012, with a view to completing the project in time for the 2014 season. The Company is in on-going discussions with two local banks for the conclusion of a €6 - 8 million long term construction loan to partly finance the development of the project; the respective discussions are expected to conclude within the second quarter of 2013.

On 6 August 2012, the Company signed an agreement for the sale of eight out of the nine remaining Seafront Villas to part of the Mindcompass Overseas Limited group of entities. The total base net consideration agreed for this sale was €12 million with the Company also entitled to a 35% profit participation on the sales generated by the purchaser from the further sale of four villas above a purchase price of €2 million. It was also agreed that the Company will undertake the construction contract for the completion of the villas and €1.5 million has been paid to date. The Company and the purchasers agreed an amendment to the Sale of Shares Agreement to provide that an amount of €8 million would become payable in five interest-bearing instalments (at 6% per annum) starting from June 2013 and that the Company's profit participation in the sale of five villas will be set at 50%.

Aristo Greece's in-house design team is working with the buyers on new designs, while works for their construction are set to start later in the year.

2. Venus Rock Golf Resort, Cyprus

Progress since last annual report:

Venus Rock's new golf course construction is set to be completed in summer 2013, allowing time for the grass to grow fully and to be open for play in September 2013. The official launch of the project is planned during the same period, aiming to take advantage of the strong momentum around the course completion of the course.

The design of the new golf course, which also has integrated night play areas, has paid special attention to the protection of the existing flora and fauna. In addition to the large amount of transplanted trees, the course has a limited amount of grassy areas and a 13,000 m2 lake which is used both for irrigation purposes and as a habitat for local birds.

During 2012 the construction works were executed by a well-known international golf contractor in cooperation with Aristo's construction teams, and were mainly focused on tree transplanting, bulk earthworks, fine-shaping of the course and also on the reconstruction of the 3km access road to the club houses. As per the approved design, pedestrian and bicycle lanes have been included in the construction.

Today most of the construction activity is focused finalising various buildings related to the maintenance facilities, golf academy and driving ranges.

During 2012, 31 units have been sold at Venus Rock for a total consideration of circa €16 million, 25 of which were bought by Chinese clients.

To date, €24.3 million has been drawn from the €50 million construction loan for the project.

3. Playa Grande Club & Reserve, Dominican Republic

Progress since last annual report:

Renovations on the back nine holes of the Robert Trent Jones Sr Golf Course have commenced, based on the designs and under the supervision of his son Rees Jones. Simultaneously the project has started the construction infrastructure works for the Aman Hotel.

To celebrate the start of construction of the Aman Golf Resort phase, a ground breaking ceremony took place on 11 March 2013 and was attended by the President of the Dominican Republic, Lic. Danilo Medina; the Minister of Tourism; the Minister of Public Works; the Minister of the Presidency; Rees Jones, golf course renovation designer; and Adrian Zecha, the Founder of Aman, Resorts, to celebrate the start of construction of the Aman Golf Resort.

The public beach access and related facilities have been completed and became available to the public in February 2013.

The project has already secured debt financing for $16 million out of a $19 million targeted debt facility for the construction of the Aman Hotel from a local bank syndicate, with the remaining $3 million expected to be provided in the near future by regional financial institutions. Terms have been agreed with the syndicate headed by Banco Leon and BHD and the documentation of the facility agreements is in its final stages.

Marketing material was completed to facilitate the marketing and sales of a limited number of Founder Aman Villas, which are being launched this year.

Infrastructure works were also initiated on the Founders' Phase, which comprises circa 70 lots where a number of high net worth individuals from the investor group which previously owned the Playa Grande site. The infrastructure progress will enable them to start building their homes next to the Aman Hotel site and will add value to the project.

Playa Grande is one of the few luxury resorts currently under construction in the Caribbean and the opening of the Aman Golf Resort is expected to coincide with a recovery in the residential resort sector following the global economic downturn that began in 2008.

4. Pearl Island, Panama

Progress since last annual report:

On 5 September 2012 Dolphin sold its 60% shareholding in Pearl Island's Founders Phase, to a regional investor group for a consideration of $6 million and a commitment to invest an additional circa $35 million of development capital within a maximum period of two years in order to complete some of the island's key infrastructure and the Founders' Phase.

The Founders' Phase, spread over 105.5 hectares of land, represents only 7% of the Pearl Island land area and only circa 10% of the project's potential profitability generation, and involves the development of a beach club, recreation centre, 40-berth marina, approximately 200 residential units for sale and associated infrastructure and utilities.

Approximately $13 million capital from the $35 million Founders' Phase budget is committed to be invested in common facilities and infrastructure such as an airstrip, service pier, roads and utilities on the remaining 93% of the island that Dolphin continues to own and control.

The $6 million cash payment for 60% of the Founders' Phase and the purchaser's commitment to invest circa $13 million capital into the area of the island remaining under Dolphin ownership, imply an exit valuation of $23 million for the Founders' Phase, which represents a premium of 46% to its pro rata NAV of circa$16 million and a premium of 87% to its allocated cost basis of circa $12 million.

Following the transaction, Dolphin retained its 60% ownership in Zoniro, the project's development company, thus continuing to manage the overall development both for the Founders Phase and the remainder of the island.

The construction of the Founders' Phase, comprising the airport, infrastructure, roads, beach club and other facilities, is progressing according to plan. The paving of the first 500 metre runway phase of the airport was completed and is now being extended to 1,000 metres.

The sales of villas and condos in the Founders' Phase of the project - which Dolphin recently sold and which is contiguous to the Ritz Carlton Reserve - continued at an accelerated pace. The success of the Founders' Phase is expected to add significant momentum and value to the remainder of the island development, which is retained by Dolphin.

The project continues discussions with regional investor groups for the joint development of a Ritz Carlton Reserve hotel with branded residences on one of island's 14 private sandy beaches over a land parcel of approximately 50 hectares, located next to the Founders' Phase and representing circa3.5% of the island.

The concept design for the Ritz Carlton Reserve hotel was completed by Hart Howerton and approved by the Ritz Carlton organisation. 

J.5. Aristo (www.aristodevelopers.com)

2012 was a significantly improved year for Aristo Developers, with the company's total sales exceeding its budget and reaching €51.8 million. Sales accelerated at the end of the year, reaching levels not seen since June 2008 and resulting in the company selling most of its stock of completed units, allowing Aristo to bring new projects to the market.

The three month period ending 28 February 2013 was even more encouraging with 45 homes and plots sold, representing a 298% increase in sales value (from circa €4.9 million to circa €19.7 million) and 115% increase in sales price per m2 compared to the corresponding period in the previous year.

The main reason for this success is growing demand from Chinese consumers and the successful implementation of the marketing strategy to capitalise on legislation entitling any person acquiring property at prices over €300,000 to a Cypriot permanent residence visa.

Throughout the year, Aristo's sales and marketing team focused its efforts on building and maintaining sales momentum in the Chinese market. In additionally, the company's employees in its Chinese offices increased its activities in targeting this promising clientele base by extending cooperation agreements with new agents and re-packaging the Aristo product to suit the Chinese audience, all of which resulted in €28.2 million of sales to Chinese clients during 2012.

Aristo has also been working to leverage this abovementioned legislation to unlock the significant potential of buyers coming from countries currently in political unrest in the region, such us Iran, Syria and Egypt, where there is an increasing demand for this residence-permit related real estate product.

Sales performance

In 2012, Aristo generated €51.8million of sales, 89% higher than 2011, with Chinese buyers representing 54%, Russians 23%, Cypriots 9%, UK 3% and others 10% of sales.

The direct sales realised by the in-house sales team represented 29%, whilst indirect sales coming through agents accounted for 71%. It is worth noting the increasing numbers of enquiries coming through the new Aristo website, which is operating in five different languages and resulted in 12sales representing 6% of the total.

The Aristo budget for 2013 aims to build on the positive momentum and the target is for sales to grow by an additional 50% over the 2012 results.

J.6. The Portfolio

A summary of Dolphin's current investments is presented below. As of 31 December 2012, the net invested amount is €554 million.

*Including amounts paid in shares.

**Excluding Venus Rock and Eagle Pine

***Includes DCI's 49.8% ownership of Aristo

Exits

J.7. Finance Director's Report

Net Asset Value

Consistent with the Company's valuation policy, Colliers International ("Colliers") performed a valuation of the entire portfolio as at 31 December 2012 which resulted to a small net increase in the overall portfolio valuation. Namely, there were revaluation gains in the Porto Heli Collection components, Kea Resort, Plaka Bay which were partly counterbalanced by reductions in the valuation of assets in Greece and Cyprus, where development is less advanced, reflecting local market conditions.

The factors that contributed to a net reduction in NAV compared to 2011 are mainly Dolphin's regular fixed operational, corporate and management expenses and the depreciation of the Americas properties in Euro terms due to the devaluation of the dollar against the Euro by 1.9%.

Sterling NAV per share decreased by 35% mainly driven by the issuance of 204,435,897 new common shares from the Company's last €50 million capital raise at GBP0.195 per share in October 2012.

The reported NAV as at 31 December 2012 is presented below:

Notes:

1. Euro/GBP rate 0.83783 as at 31 December 2011 and 0.81737 as at 31 December 2012.

2. Euro/USD rate at 1.295 as at 31 December 2011 and 1.321 and 31 December 2012.

3. NAV per share has been calculated on the basis of 438,004,270 issued shares as at 31 December 2011 and 642,440,167 issued shares as at 31 December 2012.

4. NAV before DITL amounts include the 49.8% of Aristo

5. Total NAV variation percentages have been calculated using the pro forma consolidated balance sheet as at 31 December 2011(adjusted to include Aristo Exchange transaction)

The Aristo Exchange was completed on 22 June 2012 and took place on a NAV for NAV basis. The respective DCI NAV per share remained unchanged after the completion of the transaction.

Financial Position

NOTE: Consolidated statement of financial positionas at 31 December 2011 has been adjusted to include Aristo Exchange transaction

*Amounts include the 49.8% DITL of Aristo

The Company's NAV before DITL but after, non-controlling interests of €32 million, other liabilities of €56 million and total debt of €140 million are deducted is set at €709 million as at 31 December 2012.

The Company's NAV after DITL, is set at €635 million as at 31 December 2012 down from a pro forma NAV after DITL of €650 million as at 31 December 2011. This reduction, together with the Company's fixed operating expenses, resulted in an accounting loss of €41 million, for the year ended 31 December 2012 implying a loss per share of €0.07.

The Company's consolidated assets total €937 million and include €580 million of real estate assets €285 million of investments in equity accounted investees (mainly Aristo) and €72 million of other assets and cash. The €580 million figure represents Colliers' fair market valuation of Dolphin's real estate portfolio (both freehold and leasehold interests) as at 31 December 2012, assuming 100% ownership. The €285 million figure represents the 49.8% investment in Aristo and the 25% investment in Nikki beach. The €50 million of other assets comprise mainly €18 million of VAT receivable, €4 million of grants receivable and €3 million of deferred income tax assets.

The Company's consolidated liabilities total €196 million and comprise €56 million of other liabilities as well as €140 million of interest-bearing loans and finance lease obligations all of which are held by Group subsidiaries and are non-recourse to Dolphin (except for the Playa Grande convertible Bond and the servicing of Banco Leon loan interest at Playa Grande which are guaranteed by the Company). The €56 million of other payables comprise mainly €4.5 million payable to the former majority shareholder of Playa Grande Holdings and €23 million of deferred land payments.

The consolidated financial statements have been audited by KPMG.

Following the Eurogroup statement issued on the subject of Cyprus on March 16, a provisional agreement was reached involving a 6.75% one off levy on all deposits under €100,000 and a 9.9% levy on deposits in excess of €100,000. These measures were not ratified by the Cypriot Parliament in its plenary session on March 19. However, even if these had been enacted, the potential effect on the cash balances and operations of the Dolphin Group would be negligible.

Panos Katsavos

Finance Director

Dolphin Capital Partners

20 March 2013