Dci Advisors Regulatory News (DCI)

 20 September 2011

DOLPHIN CAPITAL INVESTORS LIMITED

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

and together with its subsidiariesthe "Group")

Trading Update and Half Year Results for the period ended 30 June 2011

Dolphin, a leading global investor in the residential resort sector in emerging markets and the largest real estate company on AIM in terms of net assets, is pleased to announce its unaudited half year results for the six months ended 30 June 2011 and provide an update on operational progress.

Operating highlights since last Trading Update of 8 June 2011:

ADVANCED PROJECTS:

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

The Aman at Porto Heli

- Construction works continue to progress on schedule and on budget with the opening of the Aman hotel expected in spring 2012, along with the completion of the first four Aman Villas which are also under construction.

- The building permit for the Aman beach club was issued on 29 June 2011. Works for the construction of the beach club commenced on 19 August 2011.

- To date, the Company has drawn down €15.7 million from the €33 million construction loan for the Aman hotel.

- The final approval of subsidies amounting to €7.8 million for the construction of the Aman at Porto Heli was received on 27 June 2011. On 9 September 2011, the Company applied for the draw-down of the first 50% of these subsidies.

- As the resort takes shape and awareness of the project is spread by word of mouth, there has been a high level of interest in the Aman Villas. So far this summer, more than 30 potential buyers have visited the construction site, resulting in one further sale of an Aman Villa for a base sale price of €5.3 million, and advanced sales discussions on a number of others.

The Nikki Beach Resort at Porto Heli

- The final approval of subsidies amounting to €4.25 million for the construction of the Nikki Beach Resort at Porto Heli was received on 16 June 2011.

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

- Tenders for the construction of the first phase of the 36-hole golf course to replace the existing 18-hole course have been received from six leading international golf contractors, and are in the process of final negotiation. It is expected that a contractor will be selected by the end of September with the aim to mobilise immediately.

- Planning permission was granted on 25 August 2011 for the project's commercial centre, allowing for the development of 14,551 m2 of buildable area on the beachfront section of the project and the redevelopment of the coastal road. Works are scheduled to commence in the first quarter of 2012.

- The sales programme for the new residential units relating to the golf sections of the project is expected to be launched in spring 2012.

- To date, €9.5 million has been drawn from the €50 million construction loan for the project.

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

- Infrastructure works for the first phase of the Aman Golf Resort have commenced with the demolition of the existing dilapidated Occidental Hotel and the clearing of the old hotel site to enable the start of the golf course renovation.

- Designs for the golf course renovation have been completed and permitted and the project team is in the final phase of a tender process with six regional contractors.

- Term sheets have been received from major regional financing institutions, to provide additional funding for the construction of the 30-suite Aman hotel. The project team is in discussions with these regional institutions in order to finalise the loan facility terms.

- The Aman hotel designs, prepared by the world renowned architect John Heah, are in their final stages and currently undergoing value engineering to achieve the most competitive budget possible prior to beginning the hotel's construction.

- A Los Angeles based marketing firm is finalising the marketing and sales collateral for the select release of a limited number of Aman Villas for sale.

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

- Infrastructure and road works on the island are ongoing. Following a tender process, the construction of the first phase of the airstrip to initially accommodate small propeller planes connecting the island with Panama's International Airport has begun and works are expected to be completed during the first quarter of 2012.

- The designs for the beach club, the marina and the first show villas of the Founders' Phase are in their final stages with a view to starting their construction in the first quarter of 2012, together with the remaining infrastructure works.

- The project continues to receive strong interest from potential purchasers completing site visits and two new sales reservations were made, bringing total sales to 14 lots or US$9 million. Once presales progress, the project will finalise financing terms and draw funds from a US$15 million credit facility negotiated with regional banks in order to accelerate the pace of development.

- The project continues to progress discussions with reputable regional developers interested in developing hotels on the island and speeding up the establishment of Pearl Island as an attractive Central America resort destination.

- A comprehensive public relations ("PR") and marketing campaign for Pearl Island was launched in September, promoting Pearl Island as a destination and lifestyle location. As part of this, a new microsite and online portal, www.pearlislandliving.com, was recently launched to provide owners, potential buyers and journalists with constant updates on the project together with imagery, videos and information on the area.

OTHER PROJECTS

·; The Company has executed and fully drawn down a €4 million loan facility with a major local bank for LaVanta in Turkey (Mediterra Resorts, www.mediterraresorts.com). The facility will mainly be invested in completing the construction of the remaining 10 units of the first phase of the project which is expected to take place within the second quarter of 2012.

·; Following a public hearing held on 7 July 2011, Eagle Pine received preliminary approval of its Environmental Impact Study ("EIS"). This paves the way for the award of the planning permit for the golf course and nearly 100,000 buildable m2 of residential space. The formal approval is expected by the end of 2011. Thereafter the submission of the relevant construction and plotting permit applications will follow.

·; Preliminary approval was received from the relevant governmental committee for subsidies amounting to €11.2 million and €0.7 million for the construction of the Waldorf Astoria at Sitia Bay and its marina respectively. The formal approval for these subsidies is expected by the end of 2011 and the respective funds will be released according to the project's construction progress.

·; Aristo has generated €9.8 million from the sale of 40 homes and plots in June, July and August 2011, which represent a decrease of 24% in sales value and 25% in number of sales, compared to the same period last year, reflecting the current economic climate.

·; The sale of 100% of the Company's 50% shareholding stake in the Kings Avenue Mall project in Central Paphos at an enterprise value of €39.5 million to a group of local investors, signed on 7 June 2011, was completed and a net cash consideration of €15 million was received, representing a premium of 13% to the project's net asset value (as derived from the independent valuation by Colliers of €75.5 million for 100%) and a premium of 31% to the Company's allocated investment cost of €11.5 million.

Cash Generation Potential of the DCI portfolio:

The Company's current business plan for the Advanced Projects, which represent only four out of the Company's 14 major leisure-integrated residential resort projects, envisages the development and sale of:

1. circa 750,000 residential buildable m2 in total, of which circa 264,000 buildable m2 are planned for their first phases; and

2. over 3.5 million m2 of net sellable land in the form of land plots for sale, of which circa 650,000 m2 are planned for their first phases.

The Aman at Porto Heli (from the Porto Heli Collection) has already begun sales and should be completed by spring 2012. Thereafter the project is expected to become cashflow positive from the Aman Villa sales.

Venus Rock plans to launch sales of its new development segments in spring 2012; Playa Grande plans to release a select number of Aman Villas for sale also in early 2012; Pearl Island has already started Founder Lot sales. All three of these projects have already begun construction and the main infrastructure and leisure facilities of their first phases are expected to be completed by the end of 2013, by which time they are also expected to become cashflow positive from the sales of residences.

As analysed in the "Portfolio characteristics and cash generation potential" section below, the Investment Manager estimates that the first phases of the Advanced Projects have the potential to generate aggregate net cash returns exceeding €550 million over the next six years, through the development and sale of residential units and land plots. This excludes the potential profitability that could be generated from the operations and sale of their leisure components.

All the phases of the four Advanced Projects collectively could generate circa €1.8 billion of net pre-tax cash returns or circa 244p per share, through the development and sale of all their planned residential units and retail land plots over an estimated period of 10 years (2012-2021). These numbers do not take into account any profits from the sale or operations of the leisure components (hotels, golf courses, marinas etc).

The Company's remaining portfolio that could be developed over the next 10-15 years includes the portfolio of Aristo Developers, the largest developer and private land owner in Cyprus, and Dolphin's remaining 10 major leisure-integrated residential resort projects, which are expected to further increase in book value as they complete their permitting and design phases and reach Advanced Project status.

The Investment Manager estimates Dolphin's total portfolio net cash generation potential to be in excess of €4.4 billion over the next 10-15 years.

Financial highlights: 

·; Total Group Net Asset Value ("NAV") as at 30 June 2011 was €1.21 billion and €1.09 billion before and after deferred income tax liabilities ("DITL"), respectively. This represents a decrease of €38 million (3.06%) and €35 million (3.11%), respectively, from the first quarter of 2011 driven mainly by a decrease in the valuation of Aristo assets.

·; Sterling NAV per share as at 30 June 2011 before DITL of 170p and after DITL of 153p. This represents a decrease of 0.97% and 1.02% versus 171p and 155p respectively as at 31 March 2011 mainly due to the decrease in the valuation of the Aristo assets, although this was counterbalanced by the 2.1% appreciation of the Euro versus Sterling during the period.

·; Balance sheet remains robust:

- Gross Assets of €1.76 billion.

- Group cash balance of approximately €35 million as at 19 September 2011.

- No bank debt at the Company level, apart from its corporate guarantees on the PG Bonds, the construction loan for the Aman at Porto Heli and the servicing of Banco Leon loan interest. The Group debt to total asset value ratio remains low at 24%.

- €344 million or approximately 82% of all Group debt is held within Aristo and comprises primarily long-term asset-backed loans.

Strategic Focus

The strategic priorities of the Company remain the same:

1. Invest in the marketing and completion of the construction of the first phases of its four Advanced Projects: The Porto Heli Collection (Greece), Venus Rock Golf Resort (Cyprus), Playa Grande Club & Reserve (Dominican Republic) and Pearl Island (Panama).

The first phases of these projects - which include the completion of their first hotels, golf courses or other leisure facilities, as well as their main infrastructure - will establish them as luxury resort destinations and act as a catalyst for both sales of homes, and project joint ventures or exits. The development of the key facilities of these first phases is estimated to be completed within 2012 and 2013, a period which could coincide with market recovery following the prolonged global economic slowdown of 2007-2011. This should be the beginning of the next phase in Dolphin's evolution as these projects would be in a position to generate net positive cashflows from the sales of residential units and the operation of the projects' leisure components.

2. Complete the zoning and permitting of Dolphin's other Major Projects, which will see them upgraded to Advanced Project status. This will enable Dolphin to either exit those projects at a significant multiple to cost, or to develop them and realise their full cash return potential.

3. Expand Aristo's retail and land sales, which are closely correlated to market recovery, to existing and new markets. The short to medium term objective is for Aristo to start generating cash surpluses again in order to reduce leverage and distribute dividends to Dolphin.

4. Realise project joint ventures and exits to increase the Company's liquidity and further demonstrate the true value of its real estate portfolio.

5. Maintain a healthy cash balance and, subject to having excess cash liquidity from project exits and/ or development cashflows in the short to medium term, opportunistically buy back DCI shares in an effort to narrow the trading discount to NAV.

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

"Against one of the most challenging economic environments ever seen in Greece and Cyprus, Dolphin's portfolio has shown great resilience, thanks to its low leverage and its appeal to international investors. Dolphin's flagship projects should soon provide tangible evidence of the strong returns that shareholders can expect when the infrastructure and leisure elements are in place."

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

"During the first eight months of 2011 we continued to progress the construction, permitting and financing of the Advanced Projects, with the goal to complete their first phases, establish them as luxury resort destinations and generate positive project cashflows from retail sales, joint ventures or exits."

Conference call for analysts and investors

There will be a conference call at 09:30 a.m. (UK time) on Tuesday 20 September 2011, which can be accessed using the following dial-in numbers:

International dial-in: +44 (0)20 7136 6283

Password: 3241405

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 the largest real estate investment company 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 establishing sophisticated leisure-integrated residential resorts.

Since its inception in 2005, Dolphin has raised €890 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.

In April 2007, Dolphin acquired Aristo Developers Plc, one of the largest holiday home developers in south-east Europe. This enabled Dolphin to combine its real estate investment expertise with Aristo's leading development experience and local market knowledge.

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 more than 60 smaller holiday home projects through Aristo in Cyprus and Greece.

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

Chairman's Statement

During the first half of 2011, Dolphin continued to demonstrate strong operational progress.

The Aman at Porto Heli in Greece, in particular, achieved excellent progress and is on track and budget for its planned opening in spring 2012, when it will become one of the most exclusive, luxury destinations in the Mediterranean.

In these uncertain times, the Board and the Investment Manager have continued to actively manage Dolphin's financing needs to ensure that all requirements are met. The Aman at Porto Heli in Greece and the first phase of Venus Rock in Cyprus are fully funded by regional bank facilities for the completion of their first phases, which is a considerable achievement taking into account the recent economic downturn in these markets. In addition, the Company completed the placing of US$40 million of convertible bonds, to partially finance the development of the Playa Grande Club & Reserve (in the Dominican Republic), and Pearl Island (in Panama), as well as other projects.

During the period we also announced the appointment of Professor Christopher Pissarides to the Board as an independent, non-executive Director. Professor Pissarides is a highly renowned economist and Nobel Prize laureate. It is a great honour to have such an eminent and insightful academic on the Dolphin Board as we embark upon the next exciting stage in the Company's evolution. We are already benefiting from his involvement and I very much look forward to continuing to work alongside him.

The Board, together with the Investment Manager, remains committed to successfully navigate the current economic turmoil, and to position Dolphin strongly to crystallise good returns for shareholders upon an anticipated future market recovery.

Andreas N. Papageorghiou

Chairman

Dolphin Capital Investors Limited

20 September 2011

Investment Manager's Report

The effects of the various sequential crises that took place over the past few years - namely the 2008 global financial downturn, the ensuing resort industry contraction and the more recent European peripheral countries' sovereign debt crisis - have, by default, made it more difficult for Dolphin to raise development financing for its projects, generate sales, conclude opportunistic early asset exits and ultimately realise cash returns for its shareholders.

The widespread optimism experienced at the beginning of 2011 has been essentially reversed, due to challenges faced by the European economies and other continued global uncertainties, including the pace of the US economic recovery.

Against this backdrop, the team focused on ensuring Dolphin continues to make progress in the current market conditions and is also in an optimum position to realise strong cash returns when the markets recover by:

·; Maintaining a strong balance sheet and low leverage ratio;

·; Progressing the construction of the four Advanced Projects, namely The Porto Heli Collection, Venus Rock Golf Resort, Playa Grande Club & Reserve and Pearl Island, to bring those projects to cashflow positive status;

·; Progressing the permitting and design of the entire portfolio to bring it to Advanced status and speed up its saleability or development potential;

·; Working to improve the operating efficiency and profitability of Aristo Developers through continued cost reductions and innovative marketing and sales, to increase market share and penetrate new markets.

We are particularly pleased with the progress achieved at The Aman at Porto Heli. The Aman hotel, which should be completed within spring 2012, is expected to become not only the most exclusive resort in Greece, but a landmark for the next generation of luxury resorts in the Mediterranean. Furthermore, it will serve as a showcase of the Dolphin business model. Five Aman Villas have already been pre-sold at price levels validating the Company's expectations on the project's profitability. We expect to achieve more sales over the coming months as the resort nears completion and Aman Resorts' management team becomes more involved.

Construction is also progressing well on all three remaining Advanced Projects and we are confident that, upon the completion of the first phases of the four Advanced Projects over the coming two years, the Company will be able to offer upscale residential units in some of the most attractive resort destinations in its respective markets and thereby realise significant residential sales and cash returns during the expected market recovery.

Portfolio characteristics and cash generation potential

The Advanced Projects spread over 3,737 hectares of land, out of which 656 hectares represent the first phases of these developments. The total residential capacity of these projects is approximately 750,000 buildable m2, of which circa 264,000 m2 are planned for their first phases.

In addition to the built product and leisure facilities, the four Advanced Projects have the ability to sell over 3.5 million m2 of land in the form of retail land plots; circa 650,000 m2 of which are included in the first phases of Venus Rock Golf Resort and Pearl Island.

The Advanced Projects are planned to also include 12 luxury hotels, four 18-hole championship golf courses and two marinas, of which the following will be completed in their first phases:

- the first Aman residential resort in Europe (The Aman at Porto Heli), the first Aman golf-integrated resort worldwide (Playa Grande) and the first Nikki Beach resort in eastern Mediterranean (The Nikki at Porto Heli);

- two golf courses in Venus Rock Golf Resort designed by Tony Jacklin and one in Playa Grande Club & Reserve renovated by Robert Rees Jr.; and

- a marina at Pearl Island which is planned to be expanded upon development of the further phases of the project.

The Aman at Porto Heli (from the Porto Heli Collection) has already begun sales and should be completed by spring 2012. Thereafter the project is expected to become cashflow positive through the Aman Villa sales.

Venus Rock plans to launch sales of its new development segments in spring 2012; Playa Grande plans to release a select number of Aman Villas for sale also in early 2012; Pearl Island has already started Founders' Lot sales. All these three projects have already commenced construction and the main infrastructure and leisure facilities of their first phases are expected to be completed by the end of 2013, by which time these projects are also expected to become cashflow positive from the sales of residences.

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

·; more than €550 million of net cash returnsor circa 76p per share, from the development and sale of their first phases alone (which represents circa only 33% of their estimated total profitability) over a period of approximately six years (2012-2017).

·; circa €1.8 billion of net cash returns, or circa 244p per share, through the development and sale of all their planned residential units and retail land plots over an estimated period of 10 years (2012-2021).

These numbers do not take into account any profits from the sale or operation of the leisure components (hotels, golf courses, marinas etc).

Basic Assumptions:

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

- 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.

- All leisure facilities are assumed to be built upfront, and sold at cost (minus any non-refundable subsidies granted) upon exiting the project. No returns are assumed from the operation and sales of the projects' leisure components.

- 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.

- The residual values for the landbank in all projects reflect the latest independent valuations of the respective land by Colliers.

- 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.

Dolphin's remaining portfolio includes:

·; Its other 10 major leisure-integrated residential resort projects, spread over 2,133 hectares of land and conservatively expected to build and sell at least 665,000 residential buildable m2 i.e. 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 net cash generation potential to be in excess of €1.6 billion spread over the next 15 years.

·; Aristo Developers, the largest developer and private land owner in Cyprus, with currently more than 150,000 buildable m2 of residential product in stock or under construction and circa 280,000 m2 in the form of readily available land plots with a total listed sales potential of over €290 million. In addition, Aristo holds a vast portfolio of land assets with the potential to sell over 630,000 residential buildable m2 once fully developed. The Investment Manager estimates the total net cash generation potential of Aristo (excluding Venus Rock and Eagle Pine) to be in excess of €1 billion spread over the next 15 years.

Based on the above, the Investment Manager estimates Dolphin's total portfolio net cash generation potential to be in excess of €4.4 billion spread over the next 15 years.

Development update

1. The Porto Heli Collection ("PHC"), Greece

Progress within 2011:

Construction works at The Aman at Porto Heli resort are continuing to progress on schedule. The General Manager and other key staff are expected to be appointed prior to the end of 2011, ahead of the opening which is scheduled for spring 2012. The construction of the first four Aman Villas is underway and their completion is anticipated concurrently with the opening of the hotel. The design of the fifth Aman Villa sold during the summer is also progressing.

Works also started on the Aman beach club on 19 August 2011, after the project received the required building permit on 29 June 2011. The beach club will include a restaurant, changing rooms, covered lounging areas and a large swimming pool along the beach.

To date, the Company has drawn down €15.7 million from the €33 million construction loan for the Aman hotel. In parallel, a final approval was received on 27 June 2011 for subsidies amounting to €7.8 million for the construction of the Aman at Porto Heli. On 9 September 2011 the Company applied on for the draw-down of the first 50% of the subsidy funds to be released upon an audit of the construction progress by the relevant governmental committee which is expected to be finalized by the end of 2011.

The Company has received a further payment of €2.9 million from the sale of shares in The Aman at Porto Heli to Archimedia (the owner of 14.29% of the Aman at Porto Heli and the holder of an option to exchange its project share participation for three Aman Villas). The sales consideration was increased due to the expansion of one of the Aman Villas, while the remaining payment of €9.1 million - which could be further increased depending on the final size and features of the three exchangeable Aman Villas - was deferred at a 7% coupon until the opening of the Aman hotel.

As the construction works progress and the resort is taking shape, strong interest for the Aman Villas was demonstrated as news on the project spread by word of mouth. So far this summer season more than 30 potential buyers visited the construction site, resulting to one more Aman Villa sale for a base sales price of €5.3 million and to a number of other advanced sales discussions.

The financing of the Nikki Beach Resort at Porto Heli has also progressed, with a term sheet signed on 20 May 2011 with a major European bank for a €10.5 million long term asset backed construction facility. In parallel, the project received on 16 June 2011 a final approval for subsidies amounting to €4.25 million. Following the finalisation of the bank financing, the Nikki Beach Resort at Porto Heli will be fully funded and the project will enter the construction stage with no further equity requirements from the Company.

2. Venus Rock Golf Resort, Cyprus

Progress within 2011:

Works for the construction of the 36-hole golf course to replace the existing 18-hole course commenced in April 2011, with the relocation of utility networks, clearance of vegetation and excavation works around the area of the new golf course.

The works will be carried out in a phased manner, allowing an 18-hole golf course to remain open for use at all times in order to accommodate the existing Secret Valley golf club members, and the residents of the 300 homes already sold.

Tenders have been received from leading international golf contractors, and are in the process of final negotiation. It is expected that a contractor will be selected by the end of September with the aim of starting construction immediately.

On 25 August 2011, Venus Rock received the anticipated planning permission for the beachfront development to include a 14,551m2 commercial centre and the redevelopment of the coastal road. Works are expected to be initiated within Q1 2012.

An application has been made to the relevant authorities regarding the lotting and building permit for the new golf residential developments on 9 February 2011. This application, along with the application for the construction permit for the desalination plant, is expected to be approved by the first quarter of 2012.

Formal launch of the sales programme for the project is targeted for spring 2012, after receiving the final lotting and building permits and significantly advancing the construction of the golf course and other key infrastructure elements.

To date €9.5 million has been drawn from the €50 million construction loan for the project.

3. Playa Grande Club & Reserve, Dominican Republic

Progress within 2011:

John Heah has been appointed as new lead architect of the Playa Grande Aman Golf Resort, the first golf-integrated Aman resort in the world. The masterplan and the concept architectural design for the key project components have already been prepared and approved by Aman Resorts

Infrastructure works for the first phase of the Aman Golf Resort have commenced with the demolition of the existing dilapidated Occidental Hotel and the clearing of the old hotel site to enable the start of the golf course renovation. Designs for the golf course renovation have been completed and permitted and the project is in the final phase of a tender process with six regional contractors. The renovation works will begin shortly after a selection has been made.

The Aman hotel designs are currently being finalized and, in parallel, undergoing value engineering to achieve the most competitive budget possible prior to beginning the hotel's construction.

A Los Angeles based marketing firm is finalizing the marketing and sales collateral for the select initial release of a limited number of Aman Villas for sale.

The US$40 million Playa Grande convertible bonds were issued and listed on the Open Market of the Frankfurt Stock Exchange on 31 March 2011, and Dolphin has received the full loan proceeds.

In addition to part of the convertible bonds proceeds, the Company is looking to finance the Aman Golf Resort with a combination of local bank debt, equity and very limited pre-sales. In that regard, term sheets were received from major regional financing institutions for funding part of the 30-suite Aman hotel. The project team is in discussions with the banks to finalise the loan facility terms.

4. Pearl Island, Panama

Progress within 2011:

Following a tender process, the construction of the first phase of the airstrip to initially accommodate small propeller planes connecting the island with Panama's International Airport has begun and the works are expected to be completed during the first quarter of 2012.

The designs for the beach club, the marina and the first show villas of the Founders Phase are in their final stages with a view to starting their construction in the first quarter of 2012 together with the remaining infrastructure works.

The PR and marketing activities for the first Founders' phase of the project are continuing. A full scale PR and marketing campaign for Pearl Island was launched in September, focusing on promoting Pearl Island as a high-end destination and lifestyle location. A new microsite and online portal, www.pearlislandliving.com, was recently launched to provide owners, potential buyers and journalists with constant updates on the project, together with imagery, videos and information on the area.

Two new sales reservations were made, bringing the total sales to 14 lots or US$9 million and representing approximately 41% of the first 34 lots released. Once pre-sales progress further, the project will finalise financing terms and draw funds from a $15 million credit facility negotiated with regional banks which, in combination with additional equity and pre-sales, will accelerate the pace of development.

On 20 May 2011, the Company signed a mandate letter with Inter-American Development Bank ("IADB"), for the financing of an 80-suite Ritz Carlton Reserve hotel, which is part of the project's second phase. IADB has agreed to lead the hotel financing with an amount of approximately US$18.5 million and to syndicate an additional US$3.6 million. IADB has commenced its due diligence process, before submitting the project for Board and credit-committee approval. The Company is also in discussions with regional developers interested to fund the equity requirements of that project to speed up the establishment of Pearl Island as an attractive Central America resort destination.

Investment / Divestments within 2011

In line with our stated strategy, no new investments were made in 2011, and €75 million of sales were achieved:

·; A strategic sale of the Group's 50% shareholding stake in the Kings Avenue Mall project in Central Paphos at an enterprise value of €39.5 million was signed on 7 June 2011 with a group of local investors. The purchasers have paid the Company a cash consideration of €15 million and have assumed the Company's €24.5 million of bank loans and other liabilities relating to this project. The net consideration of €15 million represented a premium of 13% to the project's net asset value (as derived from the independent valuation by Colliers of €75.5 million for 100%) and a premium of 31% to the Company's allocated investment cost of €11.5 million.

·; €22 million from the sale of 99 homes and plots by Aristo for the first eight months of 2011, which represents a decrease of 23% and 26% respectively, compared to the same period last year.

·; US$9million from the sale of 14 lots in the first Founders' phase of Pearl Island.

·; An Aman Villa at the Aman at Porto Heli was sold for a base sale price of €5.3 million.

·; €0.4 million from the sale of two homes at LaVanta, Turkey.

With the above sales, the total asset sales achieved by Dolphin so far have exceeded €390 million, a figure that is higher than the reported NAV of the respective assets sold.

Aristo (www.aristodevelopers.com)

During the first eight months of 2011, Aristo leveraged its strong asset base, stock of units and expertise to mitigate the poor market conditions by offering attractively priced completed or semi-completed units and land plots for sale in various areas in Cyprus.

Additionally, the series of mainly exclusive, agreements signed with a number of overseas leading agents and major tour operators aim to capitalize on the increased flow of Russian tourists who visited Cyprus this summer because of the turmoil in alternative destinations such as Egypt, Tunisia, Libya and Syria.

The company enhanced its presence in Russia by increasing the size of the local team and expanding the range of marketing activities and customer targeting. Additionally, following the signs of expected recovery of buying appetite from the UK, Aristo has increased its presence by participating in exhibitions and specially targeted events across the country.

In addition to expanding its sales efforts, Aristo continued to minimise costs by restructuring or lengthening the debt service profile of its financial obligations, downsizing certain departments, and narrowing the focus onto a smaller number of projects.

Sales performance

In the first eight months of 2011, due to the recent downturn, Aristo generated €22 million of gross retail sales, which was 23% lower than 2010. This figure corresponds to 99 units (homes and lots), a 26% decrease from the respective period of 2010. We hope to counterbalance any further potential slowdown in retail sales through larger asset sales such as the recently completed Kings Avenue Mall transaction.

Even though the aggregate of the sales achieved during the first eight months of 2011 is lower than the respective period of 2010, the average selling price per m2 was increased by 11%, while demand from Russian clients is growing relative to others.

Market Dynamics

The recent escalation of the sovereign debt crisis in Greece, where Dolphin has 22% of its portfolio in terms of latest real estate values, has fuelled discussions in the international media of a possible default and/or Greece's exit from the Eurozone. Even though the impact of such eventualities on the domestic economy would be admittedly detrimental, it is not anticipated that they will necessarily impact Dolphin's business model in a negative way since, like other export-driven sectors, our pricing and sales essentially rely on external, and not domestic, demand. On the contrary, despite the country's poor public finances, Greek tourism has witnessed impressive growth in 2011. Meanwhile, the Greek debt crisis has been a catalyst in the adoption of a faster entitlement process for development projects, reduced construction costs for the projects that Dolphin has under development and is expected to lower the operational expenses for our Greek resorts.

As far as Cyprus is concerned, while the existing correlation with the Greek economy might raise concerns, it should be noted that the former has a healthier and relatively small-scaled economy capable of containing the spill-over effects of the Greek crisis.

In general, the most important observations for our industry are as follows:

·; Tourist arrivals in Greece from January to August 2011 recorded more than a 10% increase compared to the corresponding period of 2010. The year end figures for 2011 are expected to be in excess of 16 million, reaching or surpassing the historic record year of 2007. This performance reinforces the view that the inherent competitive advantages that make Greece one of the world's top tourist destinations remain unaffected, despite the negative publicity. It is also worth noting that in 2011 the Greek islands were voted by the readers of Conde Nast Traveller magazine as the World's Best Islands and the third most popular destination in all categories.

·; Cyprus has also seen an impressive increase in tourist arrivals of 13% for the period January 2011 to July 2011 and tourism to Dolphin's other Mediterranean markets (Croatia and Turkey) has also showed significant growth. Factors contributing to this growth include an increase in the percentage of the Russian and Chinese population joining the international travel market, an overall increase in world tourism, and events such as the recent political turbulence in Egypt, Libya, Syria and Tunisia shifting tourism over to our markets.

·; According to Global Blue Perspectives Q2 reports, focusing on Russia, the number of Russians that had a holiday in foreign resorts during the summer of 2011 is estimated to have increased by 30% to 40% compared to last summer. Greece and Cyprus are expected to continue to be among the main destinations benefiting from this trend due to their flight connections, low prices and proximity to Russia, compared to Spain and Portugal.

·; Strong growth in tourism was also witnessed in Dolphin's Central American/Caribbean markets. Tourist arrivals in Panama for the first six months of 2011 reached 965,213, an increase of 11.1% from the same period of 2010. Panama's economy expanded 9.7% during the first three months of 2011 from a year earlier, based on data published by the government statistics agency, after growing 7.5% in 2010. Panama is one of Latin America's top-performing economies and the focus remains on sectors in which the government believes it has competitive advantages including tourism - which is currently the single largest contributor to the country's GDP - construction and banking.

·; On similar lines, tourist arrivals in the Dominican Republic increased by 3.5% to three million for the first seven months of the year, reaffirming its position as the top tourist destination in the Caribbean. GDP is expected to expand by 5.5% in 2011 boosted in part by expansion in tourism and the real estate sector.

Outlook

Dolphin's primary focus remains on completing the construction of the first phases of the four Advanced Projects. These include their first hotels, golf courses or other leisure facilities, as well as their main infrastructure. The completion of these elements will establish them as luxury resort destinations and act as a catalyst for both retail sales of homes, and potentialproject joint ventures or exits. The development of the key facilities of these first phases is estimated to be completed within 2012 and 2013, a period which could coincide with a market recovery following the prolonged slowdown of 2007 - 2011 associated with the global economic crisis. This should be the beginning of a new period for Dolphin's evolution as these projects would then be in a position to generate net positive cashflows from the sales of residential units and the operation of the projects' leisure components.

The Portfolio

A summary of Dolphin's current investments is presented below. As of 19 September 2011, the net invested amount is €730 million.

*Including amounts paid in shares.

Exits

Finance Director's Report

Net Asset Value ('NAV')

The reported NAV as at 30 June 2011 is presented below:

Notes:

1. Euro/GBP rate 0.89823 as at 30 June 2011.

2. NAV per share has been calculated on the basis of 638,837,814 issued shares as at 30 June 2011.

The 30 June 2011 reported NAV is primarily based on new valuations conducted by Colliers International on the Porto Heli Collection, Pearl Island, Plaka Bay, Kea Resort and the Aristo portfolio, which were revalued to reflect either permitting advances or valuation changes due to market conditions.

Underlying NAV predominantly increased due to permitting advances at Pearl Island and Kea Resort. These increases were, however, offset by reductions in other asset valuations, principally within the Aristo portfolio, which reflect the on-going challenging market conditions and, to a lesser extent, the depreciation of the Americas properties in Euro terms due to the devaluation of the US dollar against the Euro during the period and regular Company operational, corporate and management expenses.

Sterling NAV per share decreased in the six month period ended 30 June 2011 by 1.7% driven in addition to the reasons mentioned above, by the issuance of 11,128,586 new DCI shares and the transfer of 306,681 own shares, held in treasury, to settle Grupo Eleta's deferred consideration for the Pearl Island transaction. The decrease was counterbalanced by the 4.8% appreciation of Sterling versus the Euro, during the period.

The next full portfolio valuation will be as at 31 December 2011.

A solid financial position

The Company's NAV before DITL, after deducting from total consolidated assets, non-controlling interests of €39 million, other liabilities of €89 million and total debt of €430 million is set at €1,206 million as at 30 June 2011.

The reduction in the NAV after DITL resulted to an accounting loss of €56 million for the six month period ended 30 June 2011 implying a loss per share of €0.09.

The consolidated financial statements have been reviewed by KPMG.

The Company's consolidated assets total €1.76 billion and include €1.66 billion of real estate assets and €63 million of other assets. The €1.66 billion figure represents Colliers' fair market valuation of Dolphin's real estate portfolio (both freehold and leasehold interests) as at 30 June 2011, assuming 100% ownership. The €63 million of other assets comprise mainly €28 million of Aristo trade receivables, €11 million of VAT receivable, €7.7 million receivable from Archimedia and €4 million of deferred income tax assets.

The Company's consolidated liabilities total €636 million and include €117 million of DITL, €89 million of other liabilities as well as €430 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 Aman at Porto Heli construction facility, the Playa Grande convertible Bond and the servicing of Banco Leon loan interest which are guaranteed by the Company). The total Group debt of €421 million is 82% accounted for by Aristo. The total expected debt service obligations of Aristo for the remainder of 2011 are estimated at €18 million and are expected to be covered by Aristo's operational cash flow. The €89 million of other payables comprise mainly €19 million of advances from customers relating to contractual construction works in progress by Aristo and €23 million of deferred land payments, €21 million of which could materialise at the end of 2013.

Aristo pro forma financials

Aristo's pro forma consolidated statement of comprehensive income (adjusted to exclude gains/losses from revaluation and negative goodwill from acquisitions) for the six-month period ended 30 June 2011 and 30 June 2010 is as follows:

In terms of accounting results, excluding asset revaluations, Aristo reported an operating after tax loss of €5.3 million versus a loss of €2.6 million in the six-month period ended 30 June 2010. Operating results have been affected by the significant drop in sales in 2009/2010 which resulted in a decrease in units delivered in 2011. This was partially offset by the lower administrative/selling expenses incurred as a consequence of restructuring efforts undertaken to reduce the company's operational overheads.

Greece & Cyprus

As part of the austerity measures implemented by the Greek and Cypriot governments in an effort to increase their annual tax revenues and reduce their primary budget deficits, a large number of amendments have been introduced in their national tax frameworks. The more significant changes for the Company relate to the annual real estate taxes that are levied on property owners in both Greece and Cyprus.

In Greece, although the relevant legislation has been amended a couple of times from 2008 to date, the tax rates applicable to corporations have remained stable and only the basis (the taxable value) on which the annual real estate tax is charged has been increased. The annual real estate tax incurred by the Company for its Greek real estate holdings since 2008 remains stable at around €440,000.

In Cyprus, the local administration has also amended the annual real estate tax framework on August 2011 (effective from 2012), by doubling the applicable marginal tax rate from 0.4% to 0.8%, but leaving the tax basis, which is calculated on the basis of the value of the respective real estate assets in 1980, unchanged. The Company expects that this recent increase will result to an additional circa €600,000real estate tax charge for Aristo in 2012, bringing its total annual real estate tax bill to circa €1.2 million.

Panos Katsavos

Finance Director

Dolphin Capital Partners

20 September 2011

Condensed consolidated interim statement of comprehensive income

For the six-month period ended 30 June 2011

Condensed consolidated interim statement of financial position

As at 30 June 2011

Condensed consolidated interim statement of changes in equity

For the six-month period ended 30 June 2011

Condensed consolidated interim statement of cash flows

For the six-month period ended 30 June 2011

Notes to the condensed consolidated interim financial statements

1. REPORTING ENTITY

Dolphin Capital Investors Limited (the 'Company') was incorporated and registered in the British Virgin Islands on 7 June 2005. The Company is a real estate investment company focused on the early-stage, large-scale leisure-integrated residential resorts primarily in south-east Europe, and managed by Dolphin Capital Partners Limited (the 'Investment Manager'), an independent private equity management firm that specialises in real estate investments primarily in south-east Europe. The shares of the Company were admitted to trading on the AIM market of the London Stock Exchange ('AIM') on 8 December 2005.

The condensed consolidated interim financial statements of the Company as at and for the six-month period ended 30 June 2011 comprise the financial statements of the Company and its subsidiaries (together referred to as the 'Group') and the Group's interests in associates and jointly controlled entities.

The consolidated financial statements of the Group as at and for the year ended 31 December 2010 are available at www.dolphinci.com.

2. STATEMENT OF COMPLIANCE

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting'. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2010. They are presented in Euro (€), rounded to the nearest thousand.

These condensed consolidated interim financial statements were approved by the Board of Directors on 19 September 2011.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2010.

4. ESTIMATES

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2010.

5. Significant SUBSIDIARIES

As at 30 June 2011, the Group's most significant company holdings were the following:

The above shareholding interest percentages are rounded to the nearest integer.

6. Segment reporting

The Group has one business and geographical segment focusing on achieving capital growth through investing in residential resort developments primarily in south-east Europe.

7. Taxation

8. LOSS per share

Basic loss per share

Basic loss per share is calculated by dividing the profit attributable to owners of the Company by the weighted average number of common shares outstanding during the period.

Weighted average number of common shares outstanding

Diluted loss per share

Diluted loss per share is calculated by adjusting the number of common shares outstanding to assume conversion of all dilutive potential shares. As at 30 June 2011 and 30 June 2010, the diluted loss per share is the same as the basic loss per share, due to the fact that neither warrants nor other convertible shares, with a conversion right to be exercised during the period, existed.

9. Investment property

10. Property, plant and equipment