Dci Advisors Regulatory News (DCI)

27 September 2012

DOLPHIN CAPITAL INVESTORS LIMITED

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

and together with its subsidiaries the "Group")

Trading Update and Half Year Results for the period ended 30 June 2012

Proposed placement of new shares

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 release its unaudited half year results for the six months ended 30 June 2012, provide a trading update, and announce a proposed placement of new shares.

A. Transaction highlights since last Trading Update of 12 June 2012:

The Company has recorded significant divestment activity in this period. 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 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.

- 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.

- 41 home and plot sales by Aristo in the three month period ending 31 August 2012, representing a significant increase in sales value compared to the corresponding period in the previous year.

- Two villa reservations at LaVanta, Turkey.

During the period, the Group executed c. €53.3 million of asset sales and divestments. Each of the above transactions is being executed at a premium to NAV as at 30 June 2012. Excluding the Aristo and LaVanta sales, the value of these transactions to Dolphin totals €43.5 million, representing a 48% premium over the corresponding NAV of €29.5 million and a 91% premium over the corresponding cost basis of €22.8 million. The total amount of €43.5 million is expected to be received as follows:

• €11.3million in 2012;

• €22.2million in 2013;

• €7.1million in 2014; and

• €2.9million in 2015.

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. More details on the above transactions are provided in Section G1 of this announcement.

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

- The sale of other components of the Porto Heli Collection;

- The sale of a number of Amanzoe Villas;

- A Joint Venture for the Ritz Carlton Reserve phase of Pearl Island; and

- A Joint Venture for the Aman phase of Playa Grande.

B. Operating Highlights since last Trading Update of 12 June 2012:

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

Amanzoe (www.amanzoe.com)

- Amanzoe welcomed its first guests on 1 August 2012. The resort has been received with great excitement across the international hotel industry, the Aman clientele and the international press.

- Since opening, a prestigious set of guests have enjoyed the facilities and services of Amanzoe and the resort has been serving as the perfect platform to showcase the potential of the Company's portfolio to investors, villa buyers and the press. The feedback received so far confirms that Amanzoe redefines the standard for luxury resorts in the Mediterranean.

- Dolphin's guarantee on the €33 million Amanzoe construction loan and €8 million VAT facility was lifted on 14 September and replaced with a corporate guarantee by Dolphin Capital Holdings One Ltd., the holding company of the Group's 49.8% shareholding in Aristo.

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

- Site preparation works for The Nikki Beach Resort & Spa at Porto Heli commenced this summer. Reconstruction works are expected to commence by the end of 2012 and take approximately 18 months, subject to the completion of an €8 million construction financing facility, which is under discussion with an international bank.

The Seafront Villas (www.theseafrontvillas.com)

- Works to complete the construction of four of the eight Seafront Villas sold in August are expected to start later in the year when the designs are finalised, as per the agreement signed with the purchasers, which awarded the construction contract to Dolphin.

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

- The construction of the new Venus Rock golf course is close to completion. 11 of the course's 18 holes have already been completed to the stage of grass being planted, while, on the remaining seven holes, earth and fine shaping works have been completed, with irrigation installation in progress and grass planting due to commence within the next few weeks. Construction of most of the new course's facilities, such as resting areas and the maintenance area, are also close to completion. The new golf course and all related facilities are expected to be fully operational in spring 2013.

- The renovated golf course will provide night play areas and the required flood lights have been installed and are ready for use.

- The upgrade of the main access road leading to the club houses is progressing well and is due to be completed by the end of the year.

- To date, €21 million has been drawn down from the €50 million construction loan for the project.

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

- The Aman Hotel value engineering process, which is being undertaken to optimise the construction budget of the hotel, is in its final stages.

- The project has already secured debt financing for $16 million of the $19 million targeted 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.

- In order to complete the Aman Golf Resort, including the construction of a 30-room Aman hotel with beach club, the renovation of the golf course and related infrastructure and utilities, and to meet certain other obligations of the project, in addition to the $19 million of targeted debt, Playa Grande will require an estimated $35 million of additional funding over the next two years.

- The marketing and sales of a limited number of Founder Aman villas will only be launched after the hotel has begun construction.

- Construction of the first Golf villa was completed in June 2012. The villa is currently available for rent and has already been booked for most of the high season period.

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

- Following the sale of Pearl Island's Founders Phase- which represents only 7% of the total island size or c. 10% of its total potential profitability - and the signing of an agreement that the buyers of the Founders Phase finance the construction of the key infrastructure of the island (such as the airstrip, service pier, arterial roads and utilities) and complete that phasewithin two years, Dolphin is now focused on developing the next phase of Pearl Island ("Phase 1").

- Phase 1 will occupy approximately 50 hectares of beachfront land (out of the total 1,440 hectares on the island) contiguous tothe Founders Phase, and is planned to comprise a luxury 80-suite Ritz Carlton Reserve hotel and branded residential units for sale.

C. Proposed Placement of New Shares:

The Company has signed a subscription agreement for anissue of €45 million worth of new shares at £0.195 per new share to funds managed by Third Point LLC ("Third Point"). A further subscription for €5 million by the Investment Manager constitutes a condition to the Third Point subscription and the Investment Manager intends such subscription is made immediately following the release of this announcement. The aggregate subscriptions for €50 million shall together be referred to as the "Placement".

Third Point is an SEC-registered investment adviser based in New York, with over $9 billion in assets under management.

Although the capital raise is underwritten, the Board of the Company has the discretion to accept up to €15 million of subscriptions from certain, limited, categories of investors by scaling down Third Point's allocation to a minimum of €30 million worth of new shares. Members of the public will not be eligible to take part in the Placement and any subscriptions from other investors will be subject to a minimum subscription for new shares per investor of €100,000. Participation in the Placement will only be available to: (i) shareholders in the Company, and (ii) other persons to whom participation in the Placement may be lawfully offered pursuant to the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the "Financial Promotion Order") including Investment Professionals as defined in article 19(5) and High Net Worth Companies, as defined in article 49(2) of the Financial Promotion Order. Allocation priority will be broadly based on the shareholding position of prospective investors in the Company. Details of the Placement will not be sent to persons who do not fall within any of these categories, who, therefore, should not rely on such a document nor take any action upon it.

The maximum number of new shares to be issued in the Placement, based on a EUR/GBP 0.7973 fixed exchange rate, is 204,435,897 shares, bringing the pro-forma total outstanding shares of the Company to 642,440,167.

According to the Placement terms, the minimum amount of new shares to be allocated to Third Point is 122,661,530 and the maximum is 183,992,307 implying a 19.09% and 28.64% shareholding in the Company on a pro-forma basis respectively.

While the Company has executed a number of exits since the last trading update and continues to advance discussions for further divestments or joint ventures, the corresponding expected cash receipts into the Company are being spread over a period of time. The Investment Manager and the Board therefore consider that it is in the Company's best interest to proceed with a placement of new shares, to ensure that the Company has adequate cash balances to execute its development programme over the next two years which is expected to entail:

• The construction of the first phase of Playa Grande which includes a 30-room Aman Hotel, an Aman Beach Club, a new Golf Club House, fitness, spa and tennis facilities, 38 Aman villas and the renovation of the existing, legendary Robert Trent Jones Senior Golf Course based on new designs by his son, Rees Jones,

• The development of Phase 1of Pearl Island, the Ritz Carlton Reserve phase,

• The co-development of the Nikki Beach in a joint venture with the Swiss Development Group, and

• The progression of the permitting and designing process for the Company's other Major Projects to bring them to Advanced Project status and improve their potential to generate returns for the Company.

The Investment Manager will waive its annual Management Fees on the proceeds of the Placement, that would otherwise be payable under the investment management agreement. The Company's Board has agreed that Third Point can appoint either one observer or one independent non-executive Director to the Board as long as their shareholding in Dolphin remains above 15%.

The Board of the Company and the Investment Manager believe that securing the Placement proceeds would bring the following strategic benefits:

• Cover the Company's development and operational needs for the coming two years and enable Dolphin to unlock significant potential returns.

• Conclude definitively that Dolphin has weathered the storm and is fully funded, which represents the major reason for the current depressed share price.

• Provide a stronger negotiating position to achieve better deals with project investors, joint venture partners, financiers, construction companies, suppliers, and unit buyers. This would enable Dolphin to continue to build on its current strong momentum of sales and joint venture transactions from a position of strength.

Given that the proposed issue price is less than the prevailing Net Asset Value per Share, the Company will convene a Shareholder EGM to approve the proposed Placement. The Company has already received support for the Placement from existing shareholders with a combined shareholding in the Company of over 50%.Further details of the Placement will be included in the Circular which is expected to be issued by the Company the week of 1 October 2012.

D. Financial highlights: 

• Total Group Net Asset Value ("NAV") as at 30 June 2012 was €683 million and €613 million before and after deferred income tax liabilities ("DITL"), respectively. This represents a decrease of €406 million (37%) and €371 million (38%), respectively from the first quarter of 2012. Out of the total €406 million decrease, approximately 90% or €360 million was due to the Aristo Exchange and the remaining €46 million was due to a decrease in the valuation of certain Greek and Cypriot assets and regular operational expenses, counterbalanced by the value appreciation of the Americas properties in Euro terms (due to the devaluation of Euro against the US dollar). Excluding the Aristo Exchange, the pro-forma decrease in NAV before DITL would have been 4%.

• Sterling NAV per share as at 30 June 2012 before DITL of 126p and after DITL of 113p. This represents a decrease of 8% and 9% versus 136p and 123p respectively as at 31 March 2012, mainly due to the above reasons and the 3.5% appreciation of Sterling versus Euro over the period.

• The Company's balance sheet, after the completion of the Aristo Exchange and the deconsolidation of the Aristo balance sheet, is significantly less leveraged:

- Gross Assets of €909 million.

- Total Debt of €140 million and Group total debt to asset value ratio of only 15%.

- 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.

E. Strategic Focus

The strategic priorities of the Company are as follows:

• Complete the €50 million Placement.

• Implement the already executed sales and collect the future proceeds.

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

• Continue to sell Amanzoe Villas.

• Begin vertical construction works at Playa Grande allowing pre-sales and marketing to commence.

• Start construction of Nikki Beach.

• Progress Pearl Island's other development phases (such as the Ritz Carlton Reserve phase and the Marina Village phase).

• Continue the construction of the infrastructure and leisure works at Venus Rock Golf Resort (Cyprus) allowing for the launch of the residential sales of the new phases.

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

• Assist Aristo's management in expanding retail and land sales to existing and new markets, in order for Aristo to eventually start generating cash surpluses again to reduce leverage and distribute dividends to Dolphin.

• Subject to having excess cash liquidity 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's Board of Directors, said:

"Although the macro-economic environment continues to present challenges, significant value is being generated by the Company on the ground. We are confident that the momentum gained through the opening of the Amanzoe resort at Porto Heli will be sustained throughout the year. We expect that the completion of the equity raising will ensure that Dolphin enters a new cycle of significant growth and the realisation of returns for shareholders."

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

"In the first half of the year we have made strong progress in delivering against our strategy, with good sales and exit momentum across the portfolio demonstrating the true value of our assets. We have overseen the successful opening of Amanzoe, which is now attracting worldwide attention, and are already benefiting from this showcase of our development expertise and the quality of our product. Against this backdrop, we are pleased to invest further into Dolphin, alongside Third Point, and we look forward to realisingsignificant gains from the deployment of the additional capital."

Conference call for analysts and investors

There will be a conference call at 9.00 a.m. UK time on Thursday, 27 September 2012, which can be accessed using the following dial-in numbers:

International dial-in: + 44(0)20 7136 2051

Password: 6698443

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 €898 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.

F. Chairman's Statement

I am pleased to report Dolphin's half year results for the first half of 2012.

The opening of Amanzoe on 1 August 2012 demonstrated the Company's ability to create top end, luxury resorts that appeal to the most affluent international travellers. The feedback received from everyone who has visited the resort so far is testament to the quality of the product. This flagship component of the first phase of The Porto Heli Collection is now the first villa-integrated Aman resort in Europe and one of the most exclusive destinations in the Mediterranean.

During the period, the Company achieved a high level of sales in spite of the tough economic environment. While the Company continues to advance discussions for further project exits or joint ventures, we consider that it is in the Company's best interests to ensure that Dolphin has adequate cash balances to fully execute its development programme over the next two years by undertaking an equity raise of €50 million. We look forward to welcoming Third Point, a highly regarded international investor, into Dolphin's prestigious shareholding base.

The Company's NAV, before and after DITL, as at 30 June 2012 is reported at €683 million and €613 million, respectively, and the NAV per share before and after DITL in Euro terms was €1.56 and €1.40 respectively, representing a 6% decrease from 31 December 2011. This drop was driven principally by reductions in property valuations in Greece and Cyprus, reflecting the challenging economic environment.

Despite challenging conditions in the markets and economies in which we operate, three of the Company's four advanced projects - the Porto Heli Collection in Greece, Venus Rock in Cyprus and Pearl Island in Panama - are now on track to complete their first phases, which we believe will establish them as luxury resort destinations and enable them to realise significant sales and returns from both their first and future phases. As Dolphin's real estate portfolio continues to mature, we remain confident in the Company's ability to take advantage of improved market conditions to generate significant returns for shareholders.

Andreas N. Papageorghiou

Chairman

Dolphin Capital Investors Limited

27 September 2012

G. Investment Manager's Report

Our team's prime focus in 2012 was the successful launch of operations at Amanzoe, as well as the execution of sales, divestments and joint ventures, in order to realise profits from our portfolio and demonstrate its true value. 

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 is already serving as a showcase of Dolphin's development capabilities, profit potential and vision.

Following the opening of Amanzoe, the Investment Manager is organising a DCI Investor Conference to be held at the resort on 1 and 2 October 2012. This event will be an excellent opportunity for Dolphin's existing and new investors to experience Amanzoe, visit the other components of the Porto Heli Collection, better understand the profit potential of the Dolphin portfolio, spend time with the management and discuss Dolphin's next steps and future objectives.

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

The proposed Placement of the new shares will ensure that the Company has adequate cash balances to execute its development programme. We consider that this decisive strengthening of cash balances will allow the Company to make faster progress across its real estate portfolio and to negotiate future sales from a stronger and more strategic position. On the back of the momentum we have built in our market, our robust liquidity position and balance sheet, and the support of Third Point, we plan to revive the Dolphin story to the worldwide investor community.

G1. Investments and Divestments

In line with our previously stated strategy, no new investments were made in 2012.

During 2012, the Group executed c. €69.2 million of asset sales and divestments, bringing the total asset sales by Dolphin since its inception to €468 million.

• The Porto Heli Collection (www.portohelicollection.com), Greece

Amanzoe

- The level of interest in the Aman Villas is increasing as potential buyers experience Amanzoe. A number of potential buyers have visited and stayed at the hotel, resulting in two further reservations of Aman Villas for a total base price of €14 million, depending on the final designs. There are currently advanced discussions for more Villa sales.

Nikki Beach

- Following the Memorandum of Understanding signed on 10 May 2012, Dolphin signed an agreement on 24 September 2012 with an affiliate of Swiss Development Group ("SDG"), an international luxury resort investor (www.sdg.ch), for the sale of a 75% stake in the resort.

- The transaction comprises an upfront fixed payment of €3.15 million, a variable payment relating to the amount of the construction loan achieved, a 20% promote on the returns realized by SDG from the project in excess of a 20% IRR, and the award to Dolphin of the contract for the management and construction of the Nikki Beach.

- The total expected consideration, excluding the promote, is €6.8 million, implying an asset valuation of €9.1 million versus a NAV of €7.7 million and a cost basis of €5 million.

- A €225,000 deposit has already been received. A further €1 million is due on 30 September and a €1.9 million payment is due on 31 October 2012. The balance of the consideration is payable in stages depending on the conclusion of the development loan and the pace of the project construction.

The Seafront Villas

- Dolphin signed an agreement for the sale of the eight remaining Seafront Villa shell structures on 6 August 2012 with a group of international individual investors. The total minimum net consideration agreed for this sale is €12 million versus a NAV of €11.1 million and a cost basis of €8.4 million. Dolphin is entitled to a 35% profit participation over and above a €2 million profit on the sales generated by the purchasers from the further sale of four of the eight villas. Moreover it is agreed that Dolphin will undertake the construction contract for the completion of the Villas. A €1 million deposit has been paid upon signing, a payment of €2 million is due by 6 November 2012, a payment of €3 million is due upon the release of the existing mortgages on the Villas, a payment of €4 million is due on completion of the construction of the Villas and the €2 million balance is due at the sale of the Villas or at maximum on the third anniversary signing the deal. Following this sale, only the show villa remains unsold from this phase of The Porto Heli Collection.

• Pearl Island

- Dolphin sold its 60% shareholding in Pearl Island's Founders Phase, to a regional investor group led by Mr. Alberto Vallarino, one of Panama's most reputable investors and owner of the Bristol Hotel, Panama City and the Buena Aventura Resort, the most established resort on mainland Panama. The consideration for the sale was a cash payment of $6 million (50% paid at closing on 14 September 2012 and 50% one year from closing) and a commitment to invest an additional c. $35 million of development capital within a maximum period of 2 years in order to complete the Founders Phase and the island's basic infrastructure.

- The Founders Phase, spread over 105.5 hectares of land, represents only 7% of the Pearl Island land area and only c. 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 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 c. $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 c. $16 million and a premium of 87% to its allocated cost basis of c. $12 million.

- The prominence of the new investor and its network of sales within Panama is expected to help establish Pearl Island as the premier luxury island resort in Central America and enable Dolphin to realise significant profits from the development and sale of the remaining phases of the island, where it continues to retain a 60% shareholding.

• Aristo Developers (www.aristodevelopers.com), Cyprus

- 114 homes and plots were sold by Aristo in the eight month period ending 31 August 2012 for €25 million, representing a 23% increase in value, and a 28% increase in the number of units compared to the corresponding period in the previous year.

• Mediterra Resorts (www.mediterraresorts.com), Turkey

- Two new villa reservations were made during the period for a consideration of €0.4 million, in addition to the two villa sales executed previously in 2012 for an additional €0.4 million.

G2. 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 3,627 hectares of land, of which 590 hectares represent the first phases of these developments. The total unsold residential capacity of these projects is approximately 710,000 buildable m2, of which circa 290,000 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 2.9 million m2 of land in the form of land plots.

The Advanced Projects are planned to include 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 (all the figures per share in this section are on the basis of the pro-forma outstanding shares following the Placement):

• More than €530 million of net cash returns or circa 64p per share, from the development and sale of their first phases alone (which represents circa 37% of their estimated total profitability) over an average period of approximately six years.

• Over €1.4 billion of cash, or circa 175p 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 (2012-2023).

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 c. 662,000 residential 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 €1.27 billion, or circa 153p 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 c. 45,000 buildable m2 of residential product in stock or under construction and c. 324,000 m2 in the form of readily available land plots with a total listed sales potential of over €170 million. In addition, Aristo holds an additional vast portfolio of land assets with the potential to sell over 680,000 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 €4.15 billion, or c. 500p 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 annual management and performance fees at the DCI level.

• 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 2014 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 ("Leisure Sales") 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.

G3. Advanced Projects development update

1. The Porto Heli Collection, Greece

Progress within 2012:

Construction of Amanzoe was completed on budget at the end of June 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 a number of supportive newspaper and magazine articles have been published during the summer.

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

The operations team comprises to date over 190 people, mostly from the local community and Amanzoe is the first resort featured in the Aman Resorts' web site (www.amanresorts.com).

The introductory rates range between €825 to €925 per room per night (excluding taxes) and those are expected to increase in the 2013 season.

After receiving the first 50% subsidy payment in early March 2012, the Company filed an application for the remaining 50% of the total approved subsidies of €7.8 million on 30 March 2012. The required inspection of the Project and confirmation of its completion is expected to take place in October so that the subsidy can be collected by the end of 2012.

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 is in the process of finalising the relevant documentation for the completion of the conversion. Following the conversion, Archimedia's shareholding in Amanzoe will be reduced from 14.29% to 7.86%.

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 ongoing 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.

Site preparation works commenced this summer for Nikki Beach, where Dolphin retains a 25% shareholding. Reconstruction works are expected to commence within 2012, subject to securing the appropriate debt financing facility, and complete within approximately 18 months.

Following the recent sale of eight Seafront Villas, works for their construction are set to start later in the year when the designs are finalised, as per the agreement signed by the new owners of the properties.

2. Venus Rock Golf Resort, Cyprus

Progress within 2012:

Venus Rock new golf course construction is close to completion and expected to be operational in spring 2013. 11 new holes out of the 18 have already been planted, while earth and fine shaping works on the remaining seven holes have been completed, with irrigation installation in progress and planting due to commence within the following weeks. Most of the new course facilities construction, such as the resting areas, and the maintenance area are also close to completion.

The renovated golf course will provide night play areas and the necessary flood lights have been installed and are ready for use. Finally, the infrastructure construction effort focuses on the upgrade of the main access road leading to the club houses and is expected to be complete by the end of the year.

During 2012 so far, ten units have been sold at Venus Rock for a total consideration of €3.8 million, six of which were bought by Chinese clients.

To date, €21 million has been drawn from the €50 million construction loan for the project.

3. Playa Grande Club & Reserve, Dominican Republic

Progress within 2012:

The Aman Hotel value engineering process to optimise the construction budget of the hotel is in its final stages.

The project has already secured debt financing for $16 million out of the $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.

In order to complete the Aman Golf Resort, comprising a 30-key Aman hotel with beach club, the renovation of the golf course and related infrastructure and utilities, and to meet certain other obligations of the project, in addition to the $19 million of targeted debt, Playa Grande requires c. $35 million of additional funding to be invested over the next two years.

The marketing and sales of a limited number of Founder Aman villas will only be launched after the hotel has begun construction to maximise sales success. Following the completion of Dolphin's new proposed equity placement, such construction is expected to be initiated by the end of 2012, starting with the award of the Aman Resort's infrastructure contract.

Construction of the first Golf villa has been concluded in June 2012. The villa is currently available for lease and has already been booked for most of the high season period, indicating the significant level of interest for luxury residential product in the area.

 4. Pearl Island, Panama

Progress within 2012:

As summarised in section G1, 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 c. $35 million of development capital within a maximum period of two years in order to complete some of the island's key infrastructure and to complete the Founders Phase.

Dolphin will maintain its 60% ownership in Zoniro, the project's development company, thus continuing its involvement in infrastructure and utilities master development, both for the Founders Phase and the entire island.

Following the sale of the Founders Phase, Dolphin is now focused on completing the architectural designs, permitting, budgeting and financing for Phase 1 of Pearl Island, which is intended to comprise a luxury an 80-suite Ritz Carlton Reserve hotel together with a branded residential product for sale. Dolphin is progressing joint venture discussions with regional investors to co-invest in this phase and remains very optimistic about the potential return generation of Phase 1 and other future phases now that the Founders Phase is on track to be completed over the next two years, establishing Pearl Island as a destination.

G4. Aristo Developers

In the first eight months of 2012, Aristo continued to navigate challenging market conditions by focusing on expanding its sales programme in to new markets, restructuring its financial obligations and growing its market share in Russia.

In 2012, China emerged as a strong new market as a result of a recent change in legislation introduced by the Cypriot Government which entitles any person (and their immediate family) who buys a property of a value exceeding €300,000 to a Cyprus permanent residence and providing them an entry point to the European Union. Due to the depth of the Chinese market, this is expected to unlock significant profit potential, and Aristo has intensified its sales effort in China with:

• The opening in June of a second sales office in China, based in Beijing, in addition to the one operating in Shanghai;

• The creation of a dedicated Chinese language section in its website (http://www.aristodevelopers.com/cn/); and ,

• The preparation of high quality marketing material in Mandarin.

Despite the adverse economic conditions and the financial uncertainty in Cyprus, traditional markets such as Russia continued to make residential purchases. Additionally, the political unrest in the Middle East created a surge of demand from the region, and Aristo is putting additional effort to increase its presence in the region.

Sales performance

During the first eight months of 2012, Aristo generated €25 million of gross retail sales through the sale of 114 residential units and plots. This represents a 23% increase compared to the corresponding period last year in terms of gross revenues and a 28% increase in terms of homes and lots sold.

Despite the challenging economic environment, the Cypriot real estate market has experienced some recovery during the past few months, with demand shifting back from local to overseas buyers.

Over 2012, the company has witnessed an encouraging increase in sales from key international markets including Russia, China and the Middle East and plans to further capitalise on this momentum during the remainder of the year.

Aristo Developers Restructuring

As announced on 28 March 2012, Dolphin and Mr. Theodore Aristodemou, at that time Dolphin's largest shareholder with a 34.89% holding and the CEO of Aristo Developers ("Aristo"), Dolphin's 100% owned and largest subsidiary, agreed to the exchange of Mr. Aristodemou's 34.14% shareholding in Dolphin for a direct 50.25% participation in Aristo (the "Aristo Exchange").

The Aristo Exchange was completed on 22 June 2012 resulting in Dolphin's shareholding in Aristo being reduced from 100% to 49.8%, and Mr. Aristodemou's shareholding in Dolphin, reduced from c. 232 million shares to c. 5 million shares (representing 1.14% of the reduced Dolphin share capital). As part of the Aristo Exchange, Dolphin retained 100% of the small operations and asset portfolio of Aristo in Greece, and Mr. Aristodemou acquired ownership of 256 residential plots within Aristo's Venus Rock project.

G5. Market Dynamics

Despite the non-favorable economic climate, according to the 2012 UNWTO World Tourism Barometer, international tourist arrivals worldwide grew at a rate of 5% in the first four months of 2012, building on the continued growth trend that started in 2010.

In general, the most important observations for the countries we are invested in are as follows:

• Tourist arrivals in Greece from January to August 2012 remained at par with 2011. While in anticipation of the year-end figures for 2012, it is apparent that, despite the negative economic climate, tourism, one of the country's main profit-generating sectors, has remained intact.

• For a second year in a row, Cyprus has seen an increase in tourist arrivals of 3.5% for the period January to August 2012. Amongst the factors contributing to the increase are the unsettled political situation in the Middle East and North African region and the continuing strong presence of Russian and Chinese travellers.

• In Turkey, tourist arrivals in the first quarter of 2012 fell by 6%, compared to the previous year. The drop in tourism chiefly derives from a decline in the number of tourists from North America and Western Europe - regions which previously composed the majority of the Turkish tourism clientele. While the number of tourists from Western countries falls, more and more tourists from Arab countries visit Turkey every year.

• Tourist arrivals in Panama from January to May 2012, reached almost 950,000, an increase of 4.7% from the same period last year. Panama is one of Latin America's top-performing economies and the focus remains on sectors in which the government has competitive advantages, including tourism - which is currently the single largest contributor to the country's GDP. The country's economy has expanded by 7.5% during the January to May period, based on data published by the National Institute of Statistics and Census, after growing at 10.6 % in 2011.

• The number of tourists visiting the Dominican Republic by air from January to August 2012 has reached 3.3 million, an increase of 7.3% from the same period last year and GDP has expanded by 4.5% in 2012 to date. The Dominican Republic now ranks as the second most popular destination, after Cancun (Mexico), for USA travellers headed to the Caribbean and Latin America.

More relevant to the Dolphin business is the growth of high net worth individuals, the potential buyers of high end villas. According to the report by Wealth-X, the global UHNWI intelligence due diligence firm, the world's UHNWI (individuals with net worth in excess of $30 million) population grew to a figure of 187,500. It is forecast that in the next five years the world's UHNW population will grow by an annual average of c. 4% and the wealth attributable to them is expected to grow by 5.5% per annum.

In that respect, according to Bain & Company, global luxury goods sales are defying initial concerns over Eurozone turmoil and fears of a cool down in emerging markets, and are expected to exceed €200 billion in 2012, representing a growth of 6% over 2011.

G6. Strategic Outlook

With the newly opened Amanzoe hotel establishing itself as the best luxury hotel in Greece and probably the entire Eastern Mediterranean, and with good momentum in the execution of a number of sales or joint ventures, we remain optimistic for the remainder of 2012 and beyond.

Our objectives for the remainder of 2012 are to:

·; Complete Dolphin's proposed Placement of €50 million to ensure the Company can complete its development program and accelerate returns to shareholders;

·; Begin construction of Nikki Beach;

·; Begin construction at Playa Grande;

·; Pursue the sale and construction of additional Amanzoe Villas;

·; Potentially execute the sale of one or more components from the Porto Heli Collection;

·; Conclude more Joint Ventures for Pearl Island or Playa Grande;

·; Conduct additional investor events and roadshows both in Europe and in the USA to revive interest in the Dolphin stock.

Our longer term objectives remain in line with our past stated strategy to:

1. Complete the first phases of the Advanced Projects to establish them as luxury resort destinations and act as a catalyst for both retail sales of homes, and potential project joint ventures or exits;

2. Advance the zoning, permitting, design and branding of the other Major Projects to turn them into Advanced projects and improve their profit generation or exit potential;

3. Partially or wholly sell the other Major Projects or the additional phases of the Advanced Projects or develop them and realise their full cash return potential;

4. Make Dolphin a cashflow positive company with organic growth potential;

5. Return capital to shareholders through share buybacks or dividends;

6. Reduce Dolphin's current trading discount to NAV and improve the liquidity of its shares ;

7. Expand the Dolphin portfolio and create more synergies;

8. Realize the most of the c. €4.15 billion cash return potential of the portfolio; and

9. Create goodwill value for the Dolphin brand. 

H. The Portfolio

A summary of Dolphin's current investments is presented below. As of 31 August 2012, the net invested amount is €525 million.

*Including amounts paid in shares.

** The full Seafront Villas are included in the table until the collection of the deferred consideration from their sale.

Exits as at 26 September 2012

I. Finance Director's Report

Net Asset Value ('NAV')

The reported NAV as at 30 June 2012 is presented below:

Notes:

·; Euro/GBP rate 0.80531 as at 30 June 2012.

·; NAV per share has been calculated on the basis of 438,004,270 issued shares as at 30 June 2012 (excluding 227,044,080 treasury shares acquired in June 2012 in the context of the Aristo Exchange)

·; NAV before DITL amounts include the 49.75% DITL of Aristo as at 30 June 2012

·; Total NAV variation percentages have been calculated using the pro-forma consolidated balance sheet as at 31 December 2011

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.

The 30 June 2012 reported NAV is primarily based on new valuations conducted by Colliers International on the Porto Heli Collection, Sitia Bay Golf Resort, and the Aristo portfolio, which were updated to reflect current market conditions.

Underlying NAV predominantly decreased due to the reductions in property valuations in Greece and Cyprus, and regular Company operational, corporate and management expenses. These decreases were, however, partially offset by the appreciation of the Americas properties in euro terms due to the devaluation of the euro against the US dollar during the period.

Sterling NAV per share before DITL decreased in the six month period ended 30 June 2012 by 9.4% driven in addition to the reasons mentioned above, by 3.9% devaluation of euro versus the sterling, during the period.

Aristo NAV on a stand-alone basis for the six month period ended 30 June 2012 recorded a drop of approximately €27 million mainly due to reduced valuations of investment property driven primarily by the deteriorating outlook of the Cypriot economy.

The next full portfolio valuation will be as at 31 December 2012.

Financial position

*amounts include the 49.8% DITL of Aristo

The Company's NAV before DITL, after deducting from total consolidated assets, non-controlling interests of €36 million, other liabilities of €68 million and total debt of €149 million is set at €683million as at 30 June 2012 (including the 49.8% DITL of Aristo).

Accounting loss of the Company for the six-month period ended 30 June 2012 amounted to €11 million, implying a loss per share of €0.01.

The Company's pro-forma consolidated assets total €936 million and include €607 million of real estate assets, €292 million of investments in equity accounted investees, €37 million of other assets and cash. The €607 million figure represents Colliers' fair market valuation of Dolphin's real estate portfolio (both freehold and leasehold interests) as at 30 June 2012, assuming 100% ownership. The €292 million figure represents the 49.8% investment in Aristo. The €26 million of other assets comprise mainly €13 million of VAT receivable and €3 million of deferred income tax assets.

The Company's pro forma consolidated liabilities total €217 million and comprise €68 million of other liabilities, as well as €149 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 €68 million of other payables comprise mainly a €15 million obligation relating to Playa Grande Holdings and €23 million of option contracts to acquire land, €22.4 million of which are exercisable at the end of 2013.

The consolidated financial statements have been reviewed by KPMG.

Notable changes in Debt position

• Following the Aristo Exchange the consolidated debt of the Company was reduced by circa €337 million or c. 75% and consequently the Company's debt to asset ratio dropped from 27% to 15%. In the context of this transaction circa €16 million of Aristo's loans were taken over by Dolphin (through its wholly-owned subsidiary owning Apollo Heights in Cyprus) as an offset against an equal net receivable by Aristo from DCI. The Company has not provided any bank or other guarantees in favor of Aristo.

• Dolphin's guarantee on the €33 million Amanzoe construction loan and €8 million VAT facility was lifted on 14 September 2012 and replaced with a corporate guarantee by Dolphin Capital Holdings One Ltd., the holding company of the Group's 49.8% in Aristo.

Panos Katsavos

Finance Director

Dolphin Capital Partners

27 September 2012

Condensed consolidated interim statement of comprehensive income

For the six-month period ended 30 June 2012

Condensed consolidated interim statement of financial position

As at 30 June 2012

Condensed consolidated interim statement of changes in equity

For the six-month period ended 30 June 2012

Condensed consolidated interim statement of cash flows

For the six-month period ended 30 June 2012

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 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 2012 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 2011 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 2011. They are presented in euro (€), rounded to the nearest thousand.

These condensed consolidated interim financial statements were approved by the Board of Directors on 26 September 2012.

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 2011.

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 and uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2011.

5. Significant SUBSIDIARIES

As at 30 June 2012, the Group's most significant company holdings were the following:

*On 22 June 2012, the Company exchanged 50% of its holding in these companies for the acquisition of 227 million own shares, under the Aristo exchange agreement (see note 22.4).

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