Dci Advisors Regulatory News (DCI)

26 March 2014

DOLPHIN CAPITAL INVESTORS LIMITED

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

and together with its subsidiaries the "Group")

Trading Update and Preliminary Annual Results

for the year ended 31 December 2013

Dolphin, a leading global investor in the residential resort sector in emerging markets and one of the largest real estate companies on AIM in terms of net assets, is pleased to announce its preliminary results for the year ended 31 December 2013, and provide an update on operational progress since its last trading update of 5 December 2013.

A. Financial highlights: 

· Total Group Net Asset Value ("NAV") as at 31 December 2013 was €604 million and €524 million before and after Deferred Income Tax Liabilities ("DITL") respectively. This represents an increase of €4.6 million (0.78%) and €1.4 million (0.27%), respectively, from the third quarter figures.

· This moderate NAV uplift, the first since Q2 2008, is mainly due to valuation gains in The Porto Heli Collection, Apollo Heights Resort, Lavender Bay Resort and Aristo, counterbalanced by a valuation decrease in Sitia Bay Golf Resort, the effect of regular Dolphin operational and corporate expenses and the depreciation of the Americas properties in Euro terms due to the devaluation of United States Dollar against the Euro.

· Sterling NAV per share as at 31 December 2013 remained stable, compared to the 30 September 2013 figures, and was 78p before DITL and 68p after DITL.

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

- Gross Assets of €859 million.

- Total Debt reduced to €169 million with a Group total debt to total assets value ratio of only 20%.

- €50 million and US$9.17 million of convertible bonds are held at the Company level. The Company has provided corporate guarantees on the US$31 million outstanding Playa Grande Convertible Bonds, and the US$19 million Playa Grande construction loan.

B. Transaction Highlights since last Trading Update of 5 December 2013:

B.1. €100 million preferred equity investment by Colony Capital in the Dolphin Capital Greek Collection

· On 25 March 2014 Dolphin signed a non-binding preliminary agreement (subject to final due diligence, agreement of definitive documentation, certain other pre-conditions, and conditional on Dolphin shareholders' approval) with Colony Capital, acting on behalf of managed and advised funds ("Colony" or the "Investor"), for the issue of a €100 million preferred equity instrument in Dolphin Capital Greek Collection ("DCGC"), a newly incorporated 100% owned Dolphin holding company, which will own Dolphin's shareholding interests in Amanzoe, The Chedi and the Jack Nicklaus Signature Golf Course ("Kilada Hills Golf Resort"), The Nikki Beach Resort & Spa at Porto Heli ("Nikki Beach") and the Aman at Kea.

· Colony is a renowned global real estate investment firm, established in 1991 and has invested US$52 billion since its inception across product types including hospitality, residential, gaming, office and commercial, and currently has approximately US$20 billion of assets under management. Over the years Colony has invested in emblematic properties and brands such as Costa Smeralda in Sardinia, Raffles and Fairmont hotels, the Savoy hotel group, One & Only, Aman Resorts and the Hilton Waikoloa in Hawaii.

· The basic terms of the DCGC preferred equity investment are set out below:

- The preferred equity funds could be drawn down in two equal tranches (Tranche A within six months of closing and Tranche B within eighteen months of closing). The proceeds will be partially invested in the development of the DCGC projects and partially distributed to DCI.

- The preferred equity instrument that would be issued by DCGC would entitle the Investor to a preferred return of 14% per annum on the balance of its investment (i.e. the balance of the amounts actually drawn down, minus any distributions received by the Investor from DCGC) of which a substantial part can be accrued. In addition, the Investor would receive 80% of the free cashflow available for distributions generated by DCGC until the Investor has recouped 100% of its investment (including any accrued and unpaid preferred return). Thereafter the Investor would be entitled to 30% of the free cashflow available for distributions generated by DCGC until the Investor has generated a 2.5x multiple on its investment (including the preferred return received) within six years, at which point the profit sharing will cease.

- The Investor would be granted security over all of the DCGC common shares, and a put option for an amount, if any, that would be required for the Investor to generate the pre-agreed return by the eighth anniversary from closing. The real estate assets of DCGC will not be encumbered by the Investor and DCGC will have the ability to raise up to €130 million of additional senior bank loans for the development of its projects.

- If DCGC fails to make any preferred return cash payment or does not generate the pre-agreed return multiple by the sixth anniversary from closing, the Investor will have the ability to convert the outstanding balance into DCI shares at the lower of market price or 20% discount to NAV per share. The Investor would also be awarded with an amount of 4-year warrants giving the right to subscribe to 40 million DCI shares for each of the two Tranches at a price per share of 50p (representing a total maximum potential NAV per share dilution of c. 3%).

- DCGC has retained an option to repurchase the preferred equity instrument by returning to the Investor an amount equal to a multiple of 1.5x its investment on the second anniversary from closing or an amount linearly adjusted with time to 2.5x until the sixth anniversary.

· The Board of Dolphin and the Investment Manager believe that this is a milestone transaction for Dolphin as its completion would bring the following benefits:

- Establishing a strategic relationship with Colony, one of the world's leading and most respected real estate investors, with significant experience in large scale luxury integrated resorts; and

- Providing additional capital to commence the development of the Kilada Hills Golf Course, the Aman at Kea, and, through the DCGC distributions to DCI, advance the second phase of Playa Grande, and initiate the Ritz Carlton Reserve Phase of Pearl Island, thus potentially unlocking €508 million of additional profit for the Company and its shareholders, after the preferred return payment to the Investor.

Given that the non-binding preliminary agreement entails the award of warrants and a provisional conversion right of the preferred equity issue into DCI common shares at a price which would represent a discount to the Company's NAV per share on a conversion, if the Company enters into a binding agreement with the Investor, it will convene an Extraordinary General Meeting of its Shareholders in order to approve the proposed DCGC transaction. The final detailed terms and conditions of the DCGC preferred equity issue will be included in a Circular, which will be circulated by the Company to its Shareholders in due course.

B.2. Profit Sharing Agreement for 50% of the net profits from Amanzoe Villas future sales

· On 28 January 2014, Dolphin signed an agreement with Archimedia Holdings Corp. ("Archimedia") - the company chaired by John Hunt, a strategic investor who has already acquired three Villas at the Amanzoe Resort - whereby Archimedia was granted an option to acquire a 50% profit share from future sales of Amanzoe Villas.

· Under the terms of the agreement, by making a refundable deposit of €10 million, Archimedia was given the option to acquire a 50% entitlement in the net profits to be realised from the sales of the unsold and unreserved Amanzoe villas, which will be constructed in the current and future development phases of the project, for a total upfront consideration of €26 million in cash. Archimedia will also be contributing 50% to the expected cost for acquiring further land for the future phase villas.

· Dolphin will retain 100% of the receivables generated from the 10 Amanzoe villa reservations or sales concluded to date.

· On 4 March 2014, Archimedia informed the Company of its intention to exercise its investment option and the respective definitive documentation for the 50% profit sharing agreement is currently under preparation by the parties.

· The latest Dolphin valuation for 100% of the land corresponding to the unsold and unreserved Amanzoe villas plus the land cost of the future phase amounts to €24 million, which compares favourably to the transaction's implied €52 million valuation.

· Under the terms of the profit participation agreement, Archimedia also has a call option to acquire 100% ownership of the Amanzoe leisure facilities, including the Amanzoe hotel and beach club, as well as the project land bank, exercisable within five years after the second anniversary from closing, at an enterprise value, which implies a significant premium to the NAV.

· Dolphin retains a call option to redeem Archimedia's investment during the first two years from closing at a 30% premium p.a.

B.3. Sale of Port Kundu, Turkey

· As reported in the Company's interim results on 24 September 2013, Dolphin signed a preliminary non-binding agreement for the sale of 100% of Pt. Kundu with a local real estate development group on 24 June 2013. After the completion of their due diligence on Pt. Kundu and the renewal of the Pt. Kundu building permits, the parties entered into a final binding agreement on 12 March 2014 for the sale of 100% of the Pt. Kundu project for a cash consideration equal to €9.82 million, of which €175,000 has been already collected by the Company and the remainder is payable by 26 April 2014. An amount of c. €1.4 million will be used to fully repay the existing debt on this asset.

· Although the purchase price agreed represents a 16% discount to the project's most recent valuation of €11.4 million as at 30 June 2013 and a 37% discount to Dolphin's recorded investment cost of €15.7 million, the Company's Board considered that it was in the Company's best interests to monetise this non-core and relatively small portfolio asset, given that there was no intention to commence its development over the short to medium term and in view of the deteriorating economic and investment environment in Turkey.

B.4. Update on Venus Rock sale

· On 17 May 2013, Aristo (49.8% owned by Dolphin) entered into a binding agreement with China Glory Investment Group ("CGIG") for the sale of the Venus Rock project for €241.5 million fixed consideration, plus €48.5 million in conditional deferred consideration.

· According to CGIG's representations to the Aristo management, its delay in meeting the payment deadlines set out under the Venus Rock sales contract, was related to both the Chinese regulatory framework imposing foreign investment control restrictions, as well as the uncertainty with regard to the Cyprus citizenship programme for foreign investors, which emerged as a cornerstone component of CGIG's sales strategy for Venus Rock.

· Last week's reported reduction in the average minimum investment amount needed for the award of a Cypriot passport to €2 million for foreign investors acquiring collectively a large number of real estate properties within the same project, such as Venus Rock, is expected to accelerate the completion of the transaction.

· Aristo and CGIG are under negotiations to amend the Venus Rock sales contract payment terms in order to award a final extension to the purchaser to complete the transaction within a short time frame against the payment of a significant part of the fixed consideration due on the date when the amendment to the contract is executed.

· In the case where CGIG fails to reach a revised agreement with Aristo and make the first payment thereunder, Aristo intends to terminate the original sales contract with CGIG, retain the deposit payments received from CGIG and market the project to alternative investors.

B.5. Dolphin Capital Americas ("DCA")

DCA is Dolphin's wholly owned subsidiary for investment in the Americas region, which owns 100% of Playa Grande, 60% of Pearl Island and 10% of Itacare. DCA aims to further expand its project platform in the region, which is expected to experience significant growth in the coming years, and to realise increased synergies and economies of scale with the existing projects and the regional Zoniro teams.

· Pursuant to the above strategy, DCA has signed a Letter of Intent to acquire one of the largest privately owned islands in the Bahamas (the "Island") through a corporate merger transaction. The Island is spread over 320 hectares, and is situated less than 30 miles from Nassau and 150 miles from the United States. The island already has basic infrastructure and utilities, a paved airstrip of 4,000 feet, 26 miles of roads and a complex of historical buildings.

· Based on the Letter of Intent, DCA would repay c. US$8 million of outstanding loans which encumber the Island and acquire a stake in the Island at a valuation representing a 30% discount to its current asset value and then merge it with DCA, on an NAV for NAV basis. The completion of this transaction would mean that the Island's owners would own approximately 15% of DCA and mark the expansion of the DCA asset base to include a premier resort destination with proximity to the United States market.

· DCA is currently engaged in other discussions for the acquisition of, or merger with additional projects that fit the Company's strategy.

C. Operating Highlights since last Trading Update of 5 December 2013:

C.1. ADVANCED PROJECTS

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

Amanzoe (www.amanzoe.com)

- The Amanzoe hotel completed its first full year of operations, generating a small operating profit as expected.

- The hotel closed for winter maintenance on 8 January 2014 and will reopen on 5 April 2014. Both occupancy and average daily rate for the upcoming period are expected to be higher than 2013.

- Two new reservation agreements have been signed for Amanzoe Villas, bringing the total number of villas sold or reserved to 10 with a total sales value of €61 million. In parallel, continuing interest in Aman villas is being witnessed from potential buyers, many of whom have experienced Amanzoe.

- The construction of the four new hotel beach pavilions adjacent to the Amanzoe Beach Club with direct beach access, is progressing on time and on budget. The pavilions will be operational in time for the 2014 season, further enhancing Amanzoe's luxury offering.

- In addition to two Amanzoe Villas that were added to Amanzoe's rental programme in July 2013, two more will be added during Q2 2014, whilst three more are currently under construction and due to complete for the 2015 season. The designs for two additional villas have been completed and construction is expected to begin by Q4 2014.

- As these villas are expected to be included in the hotel rental pool, there will be an additional nineteen rooms for the 2014 summer season, and a further addition of twenty rooms in 2015, bringing the total available rooms at Amanzoe, including the current thirty eight hotel pavilions, and the upcoming four beach front rooms, to eighty one rooms for the 2015 season.

- Amanzoe continued to receive awards and be profiled in the most prestigious publications of the US, UK, France and Russia. Notably, Amanzoe won the Best European Resort, Best Hotel Spa and Best Small Hotel under 100 Rooms awards of the acclaimed Gallivanter's Guide, and was named as the hotel with the Best Pool in the world by the prestigious Andrew Harper's Hideaway Report. Other publications that featured Amanzoe are the US Travel+Leisure, The Times online and The Sunday Times, Town & Country, Centurion and Asia Wealth magazines, all in articles that showcase the uniqueness of the resort.

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

- Construction is progressing, in line with budget, for the resort to make a soft opening during the 2014 season. A number of marketing and PR activities are planned throughout spring 2014. 

- On 4 March 2014, the project company signed final agreements with a local bank for a €2.7 million bridge facility to be used for the financing of the construction cost input VAT until it is refunded from the Greek State and has started drawing down from this facility.

- The same financial institution has provided a €4.6 million Letter of Guarantee, which enabled the Company to draw down the approved €4.2 million government subsidies for the project on 31 December 2013.

- In order to fund the remaining €5.1 million equity funds required for the completion of the project, Dolphin has extended a corresponding one-year loan facility with an 11% interest charge to the respective project company which is collateralised against SDG's 75% shares in the Nikki Beach. Dolphin has already funded €1 million under this facility.

The Chedi & Jack Nicklaus Signature Golf Course

- As reported on 5 December 2013, the project has qualified under the Strategic Investment Incentive legislation which applies to investments in excess of €100 million and entitles the project to formal support from the Greek government for its implementation. This should speed up the approval process for any outstanding entitlements, significantly increase the total residential buildable area for sale and provide certain tax allowances to the project company.

- Since approval, the team has been preparing the respective Strategic Environmental Impact Study in accordance with Strategic Investments approval requirements, and will submit it to the relevant authorities in the next few weeks.

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

- Renovation works on the back nine holes of the Robert Trent Jones Sr. Golf Course have been completed as scheduled by Rees Jones, the son of the original designer. The seeding and grassing process is underway and marks the last stage of renovation of the back nine holes, which will be ready for play by the summer of 2014.

- The mock-up pavilion is almost complete and planned to be delivered with all fit-out and furniture, fixtures and equipment in April.

- The construction contract for the Aman pavilions, the main resort lobby and the service buildings has been awarded to local contractors, and vertical construction, has been initiated with a view to completing the Aman Resort by mid-2015.

- The project has to date drawn down c. US$7 million from the US$19 million debt facility for the development of the Aman Golf Resort. An amount of c.US$9 million of Dolphin equity has been deposited with the financing bank which will be drawn down on a 40/60 basis with the debt facility in order to complete the Aman hotel which is currently under construction.

- Reflecting the improved macro and real estate recovery in the United States, two new sales of Aman Villas have been executed. Based on the strong interest received to date from high net worth individuals primarily from the East Coast of the United States, it is expected that the remaining four Aman Founder villas (out of the seven recently released for sale) will all be sold well before the Aman hotel opening.

- DR Beachfront, the investor group which previously owned the Playa Grande site, has completed all the infrastructure works on its site adjacent to the Aman resort to enable the construction of homes for its owners and is nearing completion of a 15-key luxury boutique hotel which will complement the Aman resort offering. This development was featured in the Vogue April 2013 edition.

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

- The design and value-engineering process is advancing for the construction of an 80-room resort in order to reach the target budget. Discussions are ongoing with potential equity joint venture partners for this phase of the Pearl Island project. Execution of final facility agreements with a regional bank is pending finalization of the resort budget, which is planned for the end of April 2014.

- The regional investor group that acquired the Founders Phase has completed the beach club and is advancing the marina and the final phases of infrastructure of that phase. The first group of lots has been delivered to their purchasers, and construction of the turn-key villas and condos is underway. The sale of lots and turn-key product continues to maintain momentum, demonstrating the ongoing strength of demand for luxury residential product in Panama.

C.2. MAJOR PROJECTS

· Apollo Heights Resort

- An agreement was signed on 22 January 2014 between the Governments of the Republic of Cyprus and the United Kingdom opening the way for development within land areas in Cyprus which fall under the jurisdiction of the Sovereign British Areas ("SBAs"). This is a very favourable development for Apollo Heights, which is located predominantly within the SBAs, and represents a major step towards the project obtaining residential building zoning in the near future. This would significantly increase the value of the 4.6 million m2 site which is currently recorded at a very large discount compared to both valuations of other large-sized projects in Cyprus and the agreed sales price for Venus Rock.

· Sitia Bay Resort

- The Environmental Impact Study and the master plan were approved for the coastal residential zone adjacent to the planned Waldorf Astoria Hotel for the development of up to 20,435 m2 of buildable area. Final approval from the relevant ministries is pending and is expected within Q2 2014.

· Livka Bay Resort

- On 10 March 2014, Livka Bay Resort received a permit for a 121-berth marina and auxiliary facilities. The marina is part of the second phase of the project development concept and will complement the hotel and residential development already permitted for the first phase.

· LaVanta

- One more villa was sold at LaVanta.

D. Aristo Developers (a 49.8% subsidiary of DCI)

The reduction in real estate market activity triggered by the March 2013 banking crisis in Cyprus persisted over the whole of 2013 and significantly affected the appetite of both international (primarily Chinese and Russian) and local buyers. During 2013, Aristo generated €20 million in sales, 61% lower than the corresponding €52 million of sales realised during 2012, with Chinese buyers representing over 74%, Russian buyers 16% and others 10%.

The 2013 sales performance - which was also severely impacted by the fact that Aristo stopped making sales in its best-selling Venus Rock project in view of its sale agreement with CGIG - has been the lowest since 2007 when Dolphin initially acquired a shareholding interest in the company and has significantly impacted Aristo's operating cashflow. However, this is expected to be counterbalanced by the expected collection of payments due under the Venus Rock transaction, as reported under B.4above.

The recently reported change in policy setting to the average minimum investment amount needed for the award of a Cypriot passport to €2 million for foreign investors acquiring collectively a large number of properties within the same project, such as Venus Rock, also presents a significant opportunity for Aristo to boost its sales performance by promoting its numerous large-sized projects, which are expected to attract affluent non-EU buyers who would like to obtain a European passport.

In a further effort to generate additional liquidity, leveraging its extensive portfolio of readily developed properties, projects under construction and land holdings, Aristo has recently completed a strategic review of its operations and organisational structure and is implementing a specific actions programme in order to:

1. Improve the company's internal and external sales networks, marketing collateral and sales teams, with the target of increasing sales velocity, volume and efficiency.

2. Divest Aristo's larger assets through a formal process undertaken by the Citi EMEA Real Estate group, which was engaged by Dolphin Capital Holdings Two Ltd (the parent company of the Aristo group in which Dolphin owns a 49.8% stake) to run a competitive process to attract investors to invest in a platform that would include Venus Rock (in the case where the sale to CGIG is not completed), Eagle Pine, and other large real estate projects owned by both Aristo and third parties.

E. Strategic Focus

The strategic priorities of the Company are as follows:

1. Complete the preferred equity issue in the DCGC that will enable to draw down funds for the development of Kilada Hills Golf Resort and the Aman at Kea and speed up the development of the next phases of other Advanced Projects.

2. Complete other agreed sales of projects and residential units.

3. Increase the pace of sales of Amanzoe Villas and enhance the operational performance of the resort.

4. Progress the development of the Aman Golf Resort and sell all the remaining Founder Aman Villas at Playa Grande.

5. Launch operations and pursue sales at the Nikki Beach.

6. Assist Aristo's management in increasing retail sales during the current challenging period and complete the Venus Rock transaction using the sales proceeds generated to reduce Aristo's leverage and distribute dividends to Dolphin.

7. Grow DCA and capitalise on the recovery and strong prospects of the North and Latin American markets.

8. Opportunistically pursue add-on acquisitions to existing projects.

9. Continue capitalising on the expertise of Zoniro and Aristo coupled with the new immigration legislation in Greece and Cyprus to expand the Company's portfolio and generate additional income.

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

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

"There are encouraging signs of value stabilisation in our core operating markets which, together with the continuous permitting and development advances achieved in our portfolio, have led to the latest reported NAV uplift. In 2013, we continued to make good progress on our key developments and in 2014 we look forward to capitalising on the additional expected liquidity, the various legislative reforms and our proven track record to deliver the highest quality developments in our regions and crystallise returns for shareholders."

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

"We are particularly pleased with the performance of Amanzoe, which was cashflow positive for Dolphin in 2013. We remain focused on delivering our other key development projects, such Nikki Beach, Playa Grande, Pearl Island, Kilada Golf Resort and Kea, on budget and on time so that they also become cash generative for the Company. We are confident that, following the completion of a number of strategic transactions, including the €100 million preferred equity investment announced today, we will be better placed than ever before to unlock value for shareholders as we take full advantage of the upturn in the global economy."

F. Conference call for analysts and investors

There will be a conference call at 09:00 a.m. UK time on 26 March 2014, which can be accessed using the following dial-in numbers:

Pin number: 9329871

London Dial number: +44 (0)20 3427 1902

Greece Dial number: 00800 128 801

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 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 53* million m2 of prime coastal developable land and comprises 13* large-scale, leisure-integrated residential resorts under development in Greece, Cyprus, Croatia, Turkey, the Dominican Republic and Panama and a 49.8% strategic shareholding in Aristo Developers Ltd, the largest developer and private land owner in Cyprus.

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

____

* Excluding Venus Rock

G. Chairman's Statement

I am pleased to report Dolphin's preliminary annual results for the year ended 31 December 2013.

Since the last Annual Report, significant progress has been made in terms of development, operations, and project exits that underpin the value of the portfolio. The value of Amanzoe, Dolphin's flagship project, has been demonstrated once again by the recent Villa sales and the Archimedia profit sharing agreement signed during the period, while the attractiveness of the Company's Greek projects is underpinned by the provisional DCGC preferred equity raise of €100 million sponsored by Colony Capital, a highly-respected international real estate investor.

The completion of the DCGC preferred equity raise would mark the establishment of a strategic relationship with one of the world's leading real estate investors, and will enable the Company to commence the construction of the Jack Nicklaus Signature Golf course in Kilada and the Aman at Kea (subject to the finalization of the resort's design and the issue of the final building permits), as well as making further progress at Playa Grande and initiating the Ritz Carlton Phase of Pearl Island. This development progress will significantly enhance Dolphin's portfolio of completed leisure projects, diversify its residential real estate product offering and result in Dolphin becoming a cashflow positive company.

We are also optimistic that the Venus Rock transaction will be completed soon, boosting Aristo's operational cashflow, significantly deleveraging the company and, together with the organizational changes that are being implemented, paving the way for a new era of sales growth and improved financial performance for the Aristo Group.

During the year, the portfolio has achieved important permitting advances, especially for Scorpio Bay Resort, and Kilada Hills Golf Resort. Kilada Hills Golf Resort has already been inducted under the Strategic Investments scheme and Scorpio Bay is expected to also qualify under such scheme and receive a significant increase in its total residential buildable area for sale.

The Company's NAV before DITL, as at 31 December 2013 is reported at €604 million and the NAV per share before DITL in Euro terms was €0.94, representing a 14.8% decrease from 31 December 2012. This drop was driven principally by the reduction in the value of the Venus Rock project, the fair value of which has been adjusted to reflect the purchase price agreed with CGIG. The Venus Rock valuation adjustment resulted in a decrease in NAV before DITL of €60 million (8.4%) from 31 December 2012.

In addition to the Venus Rock sale impact, underlying real estate values predominantly decreased due to a valuation discount in the Aristo portfolio in the aftermath of the March 2013 Cyprus' banking crisis. Operating and permitting progress led to revaluation gains in Playa Grande Club & Reserve, Pearl Island, The Porto Heli Collection components, Apollo Heights Polo Resort, Lavender Bay Resort and Scorpio Bay resort.

Further to the €339 million of sales and divestments agreed by the Group within 2013, we remain committed to generating value through active management of operations, construction, retail sales and divestments, while leveraging opportunities to expand the Company's portfolio and revenue sources, in order to maximise value for shareholders.

Andreas N. Papageorghiou

Chairman

Dolphin Capital Investors Limited

26 March 2014

H. Investment Manager's Report

The global fundamentals of our sector remained strong during 2013, with both international tourism and wealth continuing to grow, even though economic activity in two of our primary markets, Greece and Cyprus, continued to face significant challenges.

During the year, our team focused on executing divestments, while delivering tangible progress in the permitting, operation and construction of all key portfolio projects. Since the last annual report, €361 million of sales/divestments were signed including:

· Retail sales at Amanzoe, Aristo, Playa Grande and LaVanta;

· The sale of Venus Rock to CGIG; and

· The 50% profit participation agreement with regard to the Amanzoe Villas.

Should the DCGC preferred equity issue to Colony be completed, the Company could have six fully funded projects (including Amanzoe, Kilada Hills Golf Resort, the Aman at Kea, the Nikki Beach, the first two phases of Playa Grande and the second phase of Pearl Island), which are expected to generate returns of €917 million to the Company, after deducting the DCGC Investor's preferred return and the repayment of construction bank loans.

Although the overall economic conditions remain challenging in both Greece and Cyprus, with the most notable effect on the Dolphin Group businesses being the scarcity of senior bank debt to finance the construction of the development portfolio, the business climate is slowly, but steadily improving in both regions, assisted by the legislative reforms implemented during the past year by both the Greek and the Cypriot governments.

In particular, the introduction of the Strategic Investment incentive legislation in Greece, which should be applicable to most of our local projects due to their quality, size and potential impact on the local economy, speeds up and improves zoning entitlements and building permits for Dolphin's residential resort projects in the country. In Cyprus, the decision by the Ministerial Council to reduce the investment amount requirements for the award of Cypriot citizenship to €2 million for buyers of real estate is expected to significantly increase sales momentum and margins at Aristo and increase the value and saleability of its larger projects, such as Venus Rock and Eagle Pine. Significant value will also be unlocked through the expected zoning of the Apollo Heights Resort, following the agreement reached by the Cypriot and UK governments to permit development projects falling within the SBAs.

As already reported, efforts are being made to attract additional income for Dolphin through Zoniro Greece's involvement in external projects, capitalising on its unique know-how in the fields of permitting and mid-market residential sales. To this end, Zoniro has been enriching its pipeline of investment immigration real estate projects in Greece, under the Aristo brand, to maximise synergies and reap the benefits from existing campaigns in international markets. A number of existing home developments are being selected and rebranded, and Zoniro has taken over their promotion, marketing and sales strategy and management on an exclusive basis for non-EU markets, while the company is in discussions for the provision of marketing and/or permitting services in a number of additional projects.

In parallel, Dolphin Capital Americas, Dolphin's wholly owned subsidiary for the Americas region, has made significant progress towards acquiring or merging with some of the top luxury developments in that region to diversify the portfolio, following the continued economic and real estate markets recovery in the North and Latin America.

H.1. Market Dynamics

International tourist arrivals grew by 5% in 2013, reaching a record 1,087 million arrivals, according to the latest UNWTO World Tourism Barometer. Despite global economic challenges, international tourism results were well above expectations, with an additional 52 million international tourists travelling the world in 2013.

According to the same report, Europe led this growth in absolute terms, welcoming an additional 29 million international tourist arrivals in 2013, raising the total tourist arrivals to 563 million. This level of growth significantly exceeded the forecast for 2013 and is double the region's average for the period between 2005 and 2012. By sub-region, Central and Eastern Europe and Southern Mediterranean Europe experienced the best results.

The key points for Dolphin's markets are as follows:

· In Greece, international tourist arrivals, according to Tourism Research Institute, reached 17.9 million in 2013, representing a historical record and an increase of almost 15.4% compared to 2012. 2014 is expected to set a new record.

· In Cyprus, tourist arrivals during 2013 amounted to 2.4 million, representing a slight decrease compared to 2012, as reported by the Statistical Service of the Republic of Cyprus. Nevertheless, it is encouraging to note that, despite the banking crisis that occurred in early 2013, tourist arrivals remained broadly stable. Tourist arrivals and receipts are expected to improve significantly in 2014, according to the Cyprus Tourism Organization (CTO).

· In the Americas region, the Central Bank of the Dominican Republic reported that total tourist arrivals in the country during 2013 recorded a 3.8% increase compared to 2012, reaching a total number of almost 5.6 million.

· In Panama, based on the data provided by the National Institute of Statistic and Census, the total number of visitors for 2013 was approximately 2.1 million, indicating a 2.6% increase compared to 2012.

· The outlook for travel and tourism in the Dominican Republic and Panama in 2014 is very positive with tourist arrivals expected to grow by 3.0% and 4.0% respectively according to the World Travel & Tourism Council.

· In Croatia, foreign tourist arrivals for 2013 reached 12.3 million, representing a 4% increase compared to 2012, according to the Croatian Bureau of Statistics. Due to the fact that the major markets within Europe are experiencing improving domestic economic conditions, particularly Croatia's top four countries for arrivals (Germany, Slovenia, Italy and Austria), annual growth of around 5% is expected in 2014.

· In Turkey, the country's Statistical Institute reported that the number of foreign visitors rose by 9.8% from a year earlier to 34.9 million in 2013. According to World Tourism Organization data, Turkey is ranked as the sixth most visited country in the world. Provided that recent domestic tension fully settles, 2014 expectations are optimistic.

Another relevant metric that has an impact on the purchase of luxury residential real estate is the continued growth of wealth across the globe. The Wealth Report and the Wealth X reports have published the following findings, supporting this trend:

a) In 2013 the growth in the number of high and ultra-high net worth individuals ("UHNWIs", individuals with US$30 million or more in net assets) across the globe reached all-time highs in terms of their wealth and population. There are now c. 200,000 UHNWIs across the world, an increase of 6.3% since 2012, with a combined wealth of US$27.8 trillion and with a desire to differentiate themselves in terms of lifestyle choices.

b) Property is one of the most popular asset classes in which to invest, accounting for 24% of UHNWIs' investment portfolios. Over 40% of survey respondents said their clients had increased their allocation to property last year, with 47% expecting it to rise further in 2014. Just over a fifth of UHNWIs, on average, are considering buying a new home in 2014, although the figure rises to almost a third of UHNWIs living in Russia and the CIS. This is a positive indication for Dolphin's core markets of Greece and Cyprus, where new schemes are being implemented to grant long-term residence visas or citizenship to non-EU real estate buyers or lessees who invest a certain amount of money in the purchase or lease of real estate.

H.2. Updated Portfolio characteristics and cash generation potential

The Portfolio

A summary of Dolphin's current investments is presented below. As of 28 February 2014, the net invested amount is €507* million.

*Including amounts paid in shares but excluding the Venus Rock Golf Resort

*Including amounts paid in shares but excluding the Venus Rock Golf Resort

**Excluding DCI corporate bonds.

Exits

Cash Generation Potential of the Dolphin portfolio:

The Advanced Projects, excluding Venus Rock due to the ongoing sale process to CGIG, are spread over 2,733 hectares of land, of which 403 hectares represent the current phases of these developments. The total unsold residential capacity of these projects is approximately 470,000 buildable m2, of which circa 110,000 m2 are planned for their current phases.

The plans for the current phases of the Advanced Projects include the development of five luxury hotels such as 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); as well as a golf course in Playa Grande designed by Robert Trent Jones, Senior and renovated by his son Rees Jones and the Jack Nicklaus Signature Golf Course at Kilada.

Dolphin's remaining portfolio includes:

• 10 major leisure-integrated residential resort projects, spread over 2,156 hectares of land on which it is conservatively expected to build and sell c. 689,000 residential buildable m2, representing only a c. 3% building coefficient. These projects are expected to further increase in value as they complete their permitting and design phase and reach Advanced Project status.

• Residual developable land as, under the current plans, not all the land of the Major Projects will be developed.

• Aristo Developers, the largest developer and private land owner in Cyprus, which currently has c. 67,000 buildable m2 of residential product in stock or under construction and c. 314,000 land m2 in the form of readily available land plots with a total listed sales potential of over €140 million. In addition, Aristo holds an additional vast portfolio of land assets with the potential to sell over 900,000 residential buildable m2 once fully developed. Dolphin retains a strategic 49.8% shareholding in Aristo.

Based on the above, the Investment Manager estimates Dolphin's total project portfolio cash return potential to be in approximately €3.9 billion, or c. 512p per share. This excludes: (i) any dividends or divestment revenues from Aristo due to its nature as a development company with on-going operations and a diverse portfolio of real estate projects (as opposed to the other single-project Dolphin subsidiaries), as well as (ii) the dividends expected to be received from the Venus Rock transaction upon its completion.

The gross cash returns potential of each project is summarised in the following table:

• The cash generation potential assumes the full development of each project and its exit through retail sales of the residential portfolio and land plots, as well as the sale of its leisure components at a multiple to their expected terminal NOI and does not include inflation assumptions or interim project exits. Cost assumptions cover future development, marketing, sales, branding and agency expenses and do not include already incurred expenses for land acquisition and development as well as respective financing costs, management and performance fees, or corporate income taxes.

• 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 at 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.

I. Finance Director's Report

Net Asset Value ('NAV')

The reported NAV as at 31 December 2013 is presented below:

___________

Notes:

1. Total NAV variation percentages have been calculated using the proforma consolidated balance sheet as at 31 December 2012 (adjusted to reflect Venus Rock fair value equal to the sales price agreed with CGIG)

2. Euro/GBP rate 0.83478 as at 31 December 2013, 0.81737 as at 31 December 2012 and 0.85482 as at 30 June 2013.

3. Euro/USD rate 1.3766 as at 31 December 2013, 1.3215 as at 31 December 2012 and 1.3007 as at 30 June 2013.

4. NAV per share has been calculated on the basis of 642,440,167 issued shares as at 31 December 2013, 31 December 2012 and as at 30 June 2013.

5. NAV before DITL includes the 49.8% DITL of Aristo.

Consistent with the Company's valuation policy, the entire portfolio was revalued as at 31 December 2013 which resulted in a net increase in the overall portfolio valuation. More specifically there were revaluation gains in The Porto Heli Collection components, Playa Grande Club & Reserve, Pearl Island, Scorpio Bay, Apollo Heights Polo Resort and Lavender Bay Resort. Another factor that contributed to NAV growth was the gain from the acquisition of an additional 31% stake in Plaka Bay Resort. NAV decline during 2013 was broadly driven by a valuation markdown in Sitia Bay Golf resort, a small reduction in the Aristo portfolio, as well as the regular Dolphin operational and corporate expenses and the depreciation of the Americas properties in Euro terms due to devaluation of United States Dollar against the Euro by 4.3%. NAV after DITL further decreased due to the increase of income tax rates in Greece (26% from 20%) and Cyprus (12.5% from 10%).

Sterling NAV per share before DITL as at 31 December 2013 decreased by 4.0% to 78p, compared to the proforma 31 December 2012, as the effect of the above factors was partially counterbalanced by c. 2.1% Sterling devaluation versus the Euro, during the period.

The reduction in the NAV after DITL resulted in an accounting loss of €112 million, for the year ended 31 December 2013, implying a loss per share of €0.17. The proforma loss per share, adjusted to reflect Venus Rock fair value equal to the sales price agreed with CGIG, is reduced to €0.09.

The 31 December 2013 reported NAV is primarily based on new valuations conducted by Colliers International for Playa Grande Club & Reserve, Pearl Island, Port Kundu Resort, La Vanta Resort and Livka Bay Resort. The valuations on the Company's portfolio in Greece and Cyprus were conducted by American Appraisal (www.american-appraisal.com).

Financial position

_______

*Consolidated statement of financial position has been adjusted to reflect Venus Rock sale price

**Amounts include the 49.8% DITL of Aristo

The Company's NAV before DITL, after deducting from total consolidated assets, non-controlling interests of €25 million, other liabilities of €77 million and total debt of €177 million, is set at €604 million as at 31 December 2013.

The Company's consolidated assets total €882 million and include €632 million of real estate assets, €204 million of investments in equity accounted investees, €46 million of other assets and cash. The €632 million figure represents the fair market valuation of Dolphin's real estate portfolio (both freehold and leasehold interests) as at 31 December 2013, assuming 100% ownership. The €204 million figure represents the 49.8% investment in Aristo and the 25% stake in Nikki Beach. The €39 million of other assets comprise mainly €8 million of VAT receivable, €4 million of deferred income tax assets, and €4 million other receivables from customers and JV partners.

The Company's consolidated liabilities total at €254 million and comprise €77 million of other liabilities as well as €177 million of interest-bearing loans and finance lease obligations, out of which €50 million and US$9.17 million convertible bonds are held at Company level. The remaining loans are held by Group subsidiaries and are non-recourse to Dolphin (except for the US$31 million Playa Grande convertible Bond and the US$19 million Playa Grande construction loan which are guaranteed by the Company). The €77 million of other payables comprise mainly €24 million of option contracts to acquire land, €7.6 million deferred income from government grants and €5.1 million advances from villa sales.

The consolidated financial statements have been audited by KPMG.

Panos Katsavos

Finance Director

Dolphin Capital Partners

26 March 2014

Consolidated statement of comprehensive income

For the year ended 31 December 2013

Consolidated statement of financial position

As at 31 December 2013

Consolidated statement of changes in equity

For the year ended 31 December 2013

Consolidated statement of cash flows

For the year ended 31 December 2013

1. REPORTING ENTITY

Dolphin Capital Investors Limited (the 'Company') was incorporated and registered in the British Virgin Islands ('BVIs') 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 the Americas, 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 consolidated financial statements of the Company as at 31 December 2013 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.

2. basis of preparation

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union ('EU').

The consolidated financial statements were authorised for issue by the Board of Directors on 24 March 2013.

b. Basis of measurement

The consolidated financial statements have been prepared under the historical cost convention, with the exception of property (trading properties, only on a business combination) and available-for-sale financial assets, which are stated at their fair values and investments in associates and jointly controlled entities, which are accounted for in accordance with the equity method of accounting.

c. Adoption of new and revised Standards and Interpretations

As from 1 January 2013, the Company adopted all changes to IFRS, which are relevant to its operations. This adoption did not have a material effect on the financial statements of the Group.

The following Standards, Amendments to Standards and Interpretations have been issued but are not yet effective for annual periods beginning on 1 January 2013. Those which may be relevant to the Company are set out below. The Company does not plan to adopt these Standards early.

(i) Standards and Interpretations adopted by the EU

· IFRS 10 ''Consolidated Financial Statements'' (effective for annual periods beginning on or after 1 January 2014).

· IFRS 11 ''Joint Arrangements'' (effective for annual periods beginning on or after 1 January 2014).

· IFRS 12 ''Disclosure of Interests in Other Entities'' (effective for annual periods beginning on or after 1 January 2014).

· Transition Guidance - Amendments to IFRS 10, 11 and 12 (effective for annual periods beginning on or after 1 January 2014).

· Investment Entities - Amendments to IFRS 10, 12 and IAS 27 (effective for annual periods beginning on or after 1 January 2014).

· IAS 28 (Revised) ''Investments in Associates and Joint ventures'' (effective for annual periods beginning on or after 1 January 2014).

· IAS 32 (Amendments) ''Offsetting Financial Assets and Financial Liabilities'' (effective for annual periods beginning on or after 1 January 2014).

· IAS36 (Amendments) "Recoverable Amount Disclosures for Non-Financial Assets" (effective for annual periods beginning on or after 1 January 2014).

· IAS39 (Amendments) "Notation of Derivatives and Continuation of Hedge Accounting" (effective for annual periods beginning on or after 1 January 2014).

(ii) Standards and Interpretations not adopted by the EU

· IFRS 7 (Amendments) ''Financial Instruments: Disclosures'' - ''Disclosures on transition to IFRS 9'' (effective for annual periods beginning on or after 1 January 2015).

· IFRS 9 ''Financial Instruments'' (effective for annual periods beginning on or after 1 January 2015).

· IFRS 9 ''Financial Instruments: Hedge accounting and Amendments to IFRS 9, IFRS 7 and IAS 39)'' (effective for annual periods beginning on or after 1 January 2015).

· IFRS 14 ''Regulatory Deferral Accounts'' (effective for annual periods beginning on or after 1 January 2016).

· Improvements to IFRSs 2010-2012 (effective for annual periods beginning on or after 1 July 2014).

· Improvements to IFRSs 2011-2013 (effective for annual periods beginning on or after 1 July 2014).

· IFRIC 21 ''Bank Levies'' (effective for annual periods beginning on or after 1 January 2014).

d. Use of estimates and judgments

The preparation of consolidated financial statements in accordance with IFRS requires from Management the exercise of judgement, to make estimates and assumptions that influence the application of accounting principles and the related amounts of assets and liabilities, income and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are deemed to be reasonable based on knowledge available at that time. Actual results may deviate from such estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements are described below:

Work in progress

Work in progress is stated at cost plus any attributable profit less any foreseeable losses and less amounts received or receivable as progress payments. The cost of work in progress includes materials, labour and direct expenses plus attributable overheads based on a normal level of activity. The Group uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at each statement of financial position date.

Revenue recognition

The Group applies the provisions of IAS18 for accounting for revenue from sale of developed property, under which income and cost of sales are recognised upon delivery and when substantially all risks have been transferred to the buyer.

Provision for bad and doubtful debts

The Group reviews its trade and other receivables for evidence of their recoverability. Such evidence includes the customer's payment record and the customer's overall financial position. If indications of irrecoverability exist, the recoverable amount is estimated and a respective provision for bad and doubtful debts is made. The amount of the provision is charged through the consolidated statement of comprehensive income. The review of credit risk is continuous and the methodology and assumptions used for estimating the provision are reviewed regularly and adjusted accordingly.

Income taxes

Significant judgement is required in determining the provision for income taxes. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Fair value of property

An external, independent valuation company, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, values the Group's investment property every six months. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably and willingly.

Impairment of intangible assets

Intangible assets are initially recorded at acquisition cost and are amortised on a straight-line basis over their useful economic life. Intangible assets that are acquired through a business combination are initially recorded at fair value at the date of acquisition. Intangible assets with indefinite useful life are reviewed for impairment at least once per year. The impairment test is performed using the discounted cash flows expected to be generated through the use of the intangible assets, using a discount rate that reflects the current market estimations and the risks associated with the asset. When it is impractical to estimate the recoverable amount of an asset, the Group estimates the recoverable amount of the cash-generating unit in which the asset belongs to.

e. Functional and presentation currency

The consolidated financial statements are presented in euro (€), which is the functional currency of the Group, rounded to the nearest thousand.

3. Determination of fair values

A number of the Group's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Property, plant and equipment

The fair value of land and buildings classified as property, plant and equipment is based on market values. The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably and willingly. The market value of land and buildings classified as property, plant and equipment is based on the appraisal reports provided by independent property valuers.

Investment property

The fair value of property is determined by using valuation techniques. The Directors have appointed Colliers International and American Appraisal, internationally recognised firms of surveyors to conduct valuations of the Group's acquired properties to determine their fair market value. These valuations are prepared in accordance with generally accepted appraisal standards, as set out by the American Society of Appraisers (the 'ASA'), and in conformity with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation and the Principles of Appraisal Practice and Code of Ethics of the ASA and the Royal Institute of Chartered Surveyors ('RICS'). Furthermore, the valuations are conducted on an 'as is condition' and on an open market comparative basis. Property valuations are prepared at the end of June and December of each year. Where necessary, the Group undertakes quarterly valuations on selected projects.

The valuation analysis of properties is based on all the pertinent market factors that relate both to the real estate market and, more specifically, to the subject properties. The valuation analysis of a property typically uses four approaches: the cost approach, the direct sales comparison approach, the income approach and the residual value approach. The cost approach measures value by estimating the Replacement Cost New or the Reproduction Cost New of property and then determining the deductions for accrued depreciation that should be made to reflect the age, condition and situation of the asset during its past and proposed future economic working life. The direct sales comparison approach is based on the premise that persons in the marketplace buy by comparison. It involves acquiring market sales/offerings data on properties similar to the subject property. The prices of the comparables are then adjusted for any dissimilar characteristics as compared to the subject's characteristics. Once the sales prices are adjusted, they can be reconciled to estimate the market value for the subject property. Based on the income approach, an estimate is made of prospective economic benefits of ownership. These amounts are discounted and/or capitalised at appropriate rates of return in order to provide an indication of value. The residual value approach is used for the valuation of the land and depends on two basic factors: the location and the total value of the buildings developed on a site. Under this approach, the residual value of the land is calculated by subtracting from the estimated sales value of the completed development, the development cost.

Each of the above-mentioned techniques results in a separate valuation indication for the subject property. Then a reconciliation process is performed to weigh the merits and limiting conditions of each approach. Once this is accomplished, a value conclusion is reached by placing primary weight on the technique, or techniques, that are considered to be the most reliable, given all factors.

Trading properties

The fair value of trading properties acquired in a business combination is determined based on their estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the trading properties.

Available-for-sale financial assets

The fair value of available-for-sale financial assets that are listed on a stock exchange is determined by reference to their quoted bid price at the reporting date. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same and discounted cash flow analysis, making maximum use of market inputs and relying as little as possible on entity specific inputs. Equity investments for which fair values cannot be measured reliably are recognised at cost less impairment.

Trade and other receivables

The fair value of trade and other receivables, excluding construction work in process, is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date.

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases, the market rate of interest is determined by reference to similar lease agreements.

4. Significant subsidiaries

As at 31 December 2013, the Group's most significant subsidiaries 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 25.4).

** On 24 September 2012, the Company disposed of its 75% holding in Portoheli Hotel and Marina S.A. via the disposal of its 75% holding in Single Purpose Vehicle Five Limited('SPV5') see note 25.4).

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

5. Significant accounting policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all periods presented in these consolidated financial statements unless otherwise stated.

5.1 Subsidiaries

Subsidiaries are those entities, including special purpose entities, controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

5.2 Transactions eliminated on consolidation

Intra-group balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated to the extent of the Group's interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

5.3 Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable.

The Group measures goodwill at the acquisition date as the fair value of the consideration transferred, plus the recognised amount of any non-controlling interests in the acquiree, plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss. The interest of non-controlling shareholders in the acquiree is initially measured at the non-controlling shareholders' proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

5.4 Associates and jointly controlled entities

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity. Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Associates and jointly controlled entities are accounted for using the equity method (equity accounted investees) and are initially recognised at cost. The Group's investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Group's share of the income and expenses and equity movements of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group's share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

5.5 Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of the business, use in the production or supply of goods or services or for administration purposes. Investment property is initially measured at cost and subsequently at fair value with any change therein recognized in profit or loss.

Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss. When an investment property that was previously classified as property, plant and equipment is sold, any related amount included in the revaluation reserve is transferred to retained earnings.

When the use of property changes such that it is reclassified at property, plant and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting.

A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value. Lease payments are accounted for as described in accounting policy 5.9.

5.6 Property, plant and equipment

Land and buildings are carried at fair value, based on valuations by external independent valuers, less subsequent depreciation for buildings. Revaluations are carried out with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the statement of financial position date. All other property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Increases in the carrying amount arising on revaluation of property, plant and equipment are credited to fair value reserves in shareholders' equity. Decreases that offset previous increases of the same asset are charged against that reserve; all other decreases are charged to the consolidated statement of comprehensive income.

The cost of self-constructed assets includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and appropriate proportion of production overheads.

Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of items of property, plant and equipment, except in the cases where the depreciation charge constitutes part of the cost of other asset and is included in its carrying amount. Freehold land is not depreciated.

The annual rates of depreciation are as follows:

Buildings 3%

Machinery and equipment 10% - 33.33%

Motor vehicles and other 10% - 20%

The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in profit or loss as incurred.

5.7 Trading properties

Trading properties (inventory) are shown at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of the business less the estimated costs of completion and the estimated costs necessary to make the sale. Cost of trading properties is determined on the basis of specific identification of their individual costs and represents the fair value paid at the date that the land was acquired by the Group.

5.8 Work in progress

Work in progress is stated at cost plus any attributable profit less any foreseeable losses and less amounts received or receivable as progress payments. The cost of work in progress includes materials, labour and direct expenses plus attributable overheads based on a normal level of activity.

5.9 Leased assets

Leases under the terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Property held under operating leases that would otherwise meet the definition of investment property may be classified as investment property on a property-by-property basis. Such property is accounted for as if it were a finance lease and the fair value model is used for the asset recognised. Minimum lease payments on finance leases are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

5.10 Trade and other receivables

Trade and other receivables are stated at their cost less impairment losses (see accounting policy 5.21).

5.11 Available-for-sale financial assets

The Group classifies its investments in equity securities as available-for-sale financial assets. Investments intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, are classified as available for sale. These are included in non-current assets unless management has the express intention of holding the investment for less than 12 months from the reporting date or unless they will need to be sold to raise operating capital, in which case they are included in current assets. Unrealised gains and losses arising from changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income and then in equity. When available-for-sale financial assets are sold or impaired, the accumulated fair value adjustments are included in profit or loss. In respect of available-for-sale equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve.

5.12 Cash and cash equivalents

Cash and cash equivalents comprise cash deposited with banks and bank overdrafts repayable on demand. Cash equivalents are short-term, highly-liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows.

5.13 Share capital and premium

Share capital represents the issued amount of shares outstanding at their par value. Any excess amount of capital raised is included in share premium. External costs directly attributable to the issue of new shares, other than on a business combination, are shown as a deduction, net of tax, in share premium from the proceeds. Share issue costs incurred directly in connection with a business combination are included in the cost of acquisition.

5.14 Own shares

When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, in net of any tax effects, is recognised as a reduction from equity. Repurchased shares are classified as own shares and are presented as a reduction from total equity. When own shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to share premium.

5.15 Dividends

Dividends are recognised as a liability in the period in which they are declared and approved and are subtracted directly from retained earnings.

5.16 Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value, less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on an effective interest basis.

5.17 Trade and other payables

Trade and other payables are stated at their cost.

5.18 Prepayments from clients

Payments received in advance on development contracts for which no revenue has been recognised yet, are recorded as prepayments from clients as at the statement of financial position date and carried under creditors. Payments received in advance on development contracts for which revenue has been recognised, are recorded as prepayments from clients to the extent that they exceed revenue that was recognised in profit or loss as at the statement of financial position date.

5.19 Provisions

A provision is recognised in the consolidated statement of financial position when the Group has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

5.20 Expenses

Investment manager fees, management incentive fees, professional fees, selling, administration and other expenses are accounted for on an accrual basis. Expenses are charged to the consolidated statement of comprehensive income, except for expenses incurred on the acquisition of an investment property, which are included within the cost of that investment. Expenses arising on the disposal of an investment property are deducted from the disposal proceeds.

5.21 Impairment

The carrying amounts of the Group's assets, other than investment property (see accounting policy 5.5) and deferred tax assets (see accounting policy 5.29), are reviewed at each statement of financial position date to determine whether there is any indication of impairment. If any such indication exists, the assets' recoverable amount is estimated. The recoverable amount is the greater of the net selling price and value in use of an asset. In assessing value in use of an asset, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the consolidated statement of comprehensive income. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units and then, to reduce the carrying amount of the other assets in the unit on a pro rata basis.

5.22 Revenue recognition

Revenue comprises the invoiced amount for the sale of goods and services net of value added tax, rebates and discounts. Revenues earned by the Group are recognised on the following bases:

Income from land and buildings under development

The Group applies IAS 18, Revenue, for income from land and buildings under development, according to which revenue and the related costs are recognised in profit or loss when the building has been completed and delivered and all associated risks have been transferred to the buyer.

Construction contracts

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the statement of financial position date, as measured by the proportion that contract costs incurred for work performed to date compared to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer.

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

5.23 Finance income and costs

Finance income comprises interest income on funds invested, dividend income and gains on the disposal of and increase in the fair value of financial assets at fair value through profit or loss. Interest income is recognised as it accrues in the consolidated statement of comprehensive income, using the effective interest method.

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and losses on the disposal of and reduction in the fair value of financial assets at fair value through profit or loss.

The interest expense component of finance lease payments is recognised in profit or loss using the effective interest method.

5.24 Foreign currency translation

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in the consolidated statement of comprehensive income.

5.25 Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to euro at exchange rates at the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to euro at exchange rates at the dates of the transactions.

The income and expenses of foreign operations in hyperinflationary economies are translated to euro at the exchange rate at the reporting date. Prior to translating the financial statements of foreign operations in hyperinflationary economies, their financial statements for the current period are restated to account for changes in the general purchasing power of the local currency. The restatement is based on relevant price indices at the reporting date.

Foreign currency differences are recognised directly in equity in the foreign currency translation reserve. When a foreign operation is disposed of, in part or in full, the relevant amount in the foreign currency translation reserve is transferred to the consolidated statement of comprehensive income.

5.26 Segment reporting

A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Segment results that are reported to Group's chief operating decision maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

5.27 Earnings per share

The Group presents basic and diluted (if applicable) earnings per share ('EPS') data for its shares. Basic EPS is calculated by dividing the profit or loss attributable to shareholders of the Company by the weighted average number of shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to shareholders and the weighted average number of shares outstanding for the effects of all dilutive potential shares.

5.28 Net asset value ('NAV') per share

The Group presents NAV per share by dividing the total equity attributable to owners of the Company by the number of shares outstanding as at the statement of financial position date.

5.29 Income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the consolidated statement of comprehensive income, except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the statement of financial position date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the statement of financial position method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities; such changes to the tax liabilities will impact tax expense in the period that such a determination is made.

5.30 Government grants

Government grants are recognised when there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Government grants on non-current assets acquisitions are recorded as deferred income on a systematic and rational basis over the useful life of the asset. Government grants that relate to expenses are recognised in profit or loss as revenue.

5.31 Comparatives

Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.

6. Segment reporting

The Group has one operation, investing in real estate, and three reportable segments as shown below, which represent the geographical regions in which the Group operates.