Final Results

28 December 2012

SOUTH AFRICAN PROPERTY OPPORTUNITIES PLC

('SAPRO' or the 'Group')

Final results for the year ended 30 June 2012

South African Property Opportunities plc (AIM: SAPO), an investment company established to invest in real estate opportunities in South Africa, announces its final results for the year ended 30 June 2012.

David Hunter, Chairman of SAPRO, commented:

 "Although the NAV has fallen, principally as a result of the weakening Rand, this has been a year of significant progress in the Company in the face of continued economic difficulties in South Africa. In particular costs have been reduced and the Company's positioning in various of its partnership arrangements has been improved.

This was manifested in significant sales announced during the year and particularly post the year end at satisfactory prices.

The focus of the Board going forward is to work with the Investment Manager in concluding sales and improving the remaining assets with the aim of delivering cash to our shareholders, and to continue to reduce management and operational costs. A further announcement on this will be made in January 2013.

Obtaining the necessary consents and services remains difficult but these are required before a number of the remaining sites have any real liquidity."

A copy of the results announcement will be available on the Company's website at www.saprofund.com

For further information please contact:

Paul Fincham +44 (0) 20 7886 2713

Robert Naylor +44 (0) 20 7886 2714

Panmure Gordon

Ian Dungate/Suzanne Jones +44 (0) 1624 692600

Galileo Fund Services Limited

Notes:

Note to Editors:

- South African Property Opportunities plc (SAPRO) is a company investing in the South African property market. Its shares were admitted to AIM in October 2006 raising an initial £30 million (before placing expenses). In May 2007 a further £34.2 million (before placing expenses) was raised from new and existing investors.

Chairman's Statement

I can report a year of significant progress by South African Property Opportunities Plc ("SAPRO" or the "Company") against a background of continued economic and real estate market difficulties compounded by the Rand falling around 20% against Sterling. The Report of the Investment Manager in these accounts gives some detail of the market environment.

Performance

Audited Net Asset Value per share ("NAV") was 87 pence as at 30 June 2012 (30 June 2011: 109 pence). Audited EPRA NAV per share, which takes into account the market value of the underlying properties, together with costs of sale and distribution was 87 pence (30 June 2011: 110 pence).

Foreign exchange losses (with the Rand weakening from 10.89/£ to 12.83/£ over the year) accounted for almost 75% of the fall in NAV (16 pence per share), with asset impairment (approximately 5 pence per share) and ongoing costs (approximately 1 pence per share) accounting for the remainder of the fall.

With regard to asset impairment there was an approximate decline of 3% in the portfolio valuation performed by Broll (an affiliate of CBRE) on a sales adjusted basis (in Rand terms) during the year.

Fees and expenses for the last three years are as detailed below:

*Including £6,225,000 paid to the former manager

** Annual fee of £500,000 less decrease in provision for performance fees

Included within other administration fees and expenses are operating costs relating to South Africa, where we have interests in 34 entities. The audit and administration costs for these entities total £473,000. Administration arrangements undertaken in South Africa have improved with a full audit trail now in place and it has been necessary for the Group to have accounts prepared for all entities for the past three years and to have them audited in order to regularise the Group's affairs in South Africa. This exercise added £169,000 of additional costs in the current year. We are working with PwC to review the Group structure in order to endeavour to achieve future efficiencies.

Despite that essential expenditure, I believe it is worth highlighting the achievements of your Board in reducing the cost base of the Company. Management fees in particular are at a level which is a fraction of those paid to the previous investment manager. The incentive fee arrangement put in place with Group Five has proven to be challenging, with no performance fees being earned on the sales reported to date despite prices being achieved at or around Broll valuation. In a spirit of cooperation that enabled the deal to get done, Group Five have waived the agreed brokerage fee in relation to the Starleith and Wedgewood sales, adding to the Company's estimated proceeds.

We are in the process of renewing management arrangements with Group Five and are confident that there will be a reduction in the annual management fee together with revised incentive arrangements.

Annual costs now run at less than 55% of the costs prior to the change of investment manager. The Board keeps costs under constant review and expects costs, including the directors' remuneration, to fall further. In addition, as realisations occur in the new year we expect to be able to further reduce costs as we optimise our complex structure in South Africa and liquidate unnecessary subsidiaries.

Debt levels have fallen with sales proceeds being used to pay down our facilities. Since the year end debt has fallen to ZAR 77.4m (£6.03m at 30 June 2012 exchange rate). This figure represents 100 per cent. of the debt held in our subsidiaries and associates.

Corporate Progress

The considerable effort expended in improving the Company's position in various of its partnership arrangements manifested itself in the announcement in June 2012 of the Gosforth park sale contract, and the announcements, subsequent to the year end, reporting conditional sale agreements at Longland and at the two Sandton sites. Each of these sale agreements required negotiations with our partners primarily because of unsatisfactory legacy structures. The anticipated sales proceeds are broadly in line with Broll valuations. We are especially pleased that Group Five has agreed to relinquish certain of its rights in connection with the Sandton assets, which enabled the deal to proceed.

Assuming all sales are concluded as envisaged, they represent a considerable success for the Company in a difficult market. Group Five and our Executive Directors have shown imagination and resolve in negotiating these transactions. Constructive dialogue and robust legal negotiation as required continue with partners on our remaining projects.

Proceeds received to date have largely been allocated to the repayment of corporate and project debt.

Outlook

The sale activity in the year to 30 June 2012 and the post balance sheet events reflect market interest in good quality large sites with good location, suitable facilities and consents. However, the South African property market is generally weak, which has affected and will continue to affect demand for poorer sites in more challenging locations lacking consents and facilities. Certain of the Company's remaining assets require improvement, including continued realignment of partnership interests and obtaining of key rights and facilities, and our experience is that achieving this can take considerable time. Absent a meaningful upturn in the South African economy, selling these assets at Broll valuation without such consents and facilities will be extremely difficult in the short term to medium term. In the absence of meaningful change, valuations for certain assets will come under pressure.

The focus of the Board and the investment manager is on concluding the reported transactions, delivering cash to our shareholders, reducing costs and taking all possible steps to improve the liquidity of the remaining assets.

I would like to thank my Board colleagues and our investment manager and other advisers for their efforts which have delivered the reported progress.

David Hunter

Chairman

27 December 2012

Report of the Investment Manager

South African Economic Situation

The economic background for the year to 30 June 2012 has been challenging. Inflation, although below the recent peak, remains close to the 6% upper limit of the domestic target range. Interest rates remained flat for the 12 month period to 30 June 2012 at 9% with the expectation of a possible reduction in the months ahead. Gross Domestic Product growth slowed from targeted levels of approximately 3.2% to a more realistic forecast of 2.7% at year end and is expected to slow further to 1.8% for the 2013 calendar year.

Significant increases in utility costs, such as electricity, water and other rates have increased pressure on an already depressed property sector and when combined with petrol price increases, a weakening Rand and persistently high unemployment, the impact on affordability for both tenants and prospective purchasers remains severe.

The above is largely as a result of the prevailing global economy and more recently some political uncertainty in South Africa prompting a downward slide in direct foreign investment. South Africa is certainly not immune to the global economic contagion and the combination of circumstances will simply prolong the long awaited recovery for the property sector.

Despite this, lending criteria has eased over the period at both the private and corporate level. The listed sector is further gaining appetite for investing in developmental opportunities and in some instances in vacant land as opposed to completed yield bearing stock. This change is a consequence of diminished supply.

Embedded images removed - pleaserefer to the Company's website www.saprofund.comfor charts depicting the South African inflation rate and the South African GDP growth rate.

Review by Property Sector

Commercial

The demand for office space remains location-specific and whilst there is renewed development activity and take-up in some areas, others are plagued by high vacancy levels. Rentals have remained at 2009 levels despite contractual annual escalations approximating 8%. This is due to landlords negotiating rental levels with tenants as opposed to dictating other contractual terms and enforcing the escalation clause. Sustainability is now the bigger concern with rising electricity, water and rate costs predicted at double digit increases over the next five years. This has impacted affordability and is now the key consideration for prospective tenants.

SAPRO Assets in this Sector:

Retail

The retail property market remains reasonably strong and is the top performing sector. The construction of new build properties has slowed significantly over the past 12 months, allowing vacancy levels to remain at acceptable levels. Landlords continue to assist tenants with payment plans where required. The listed sector has been active in buying up completed stock at yields between 7.5% and 8.5%.

SAPRO Assets in this Sector:

Industrial

The industrial sector has performed well over the period, but remains sensitive to market and political forces. Increased manufacturing activity to 30 June 2012 combined with demand for warehouse and distribution units has driven sales of both developed and undeveloped land opportunities in this sector. There is no doubt that the Industrial sector has seen the bulk of the development activity over the past year.

Despite the above, this sector is susceptible to market volatility. A weakening Rand has once again impacted imports over the past few months and with global demand down across the board we have seen a reversion of the progress made over the period.

A drop in international appetite given recent labour unrest and strike activity suggests a slow down once again for the year ahead. In the year to June 2012, industrial rentals in Johannesburg and Durban were up a modest 3% - some 2.5% behind inflation.

SAPRO Assets in this Sector:

Residential

The affordable and low cost sectors of this market continue to be the focus points, yet demand has slowed somewhat based on a lack of government funding and delivery for this largely subsidised product. Housing prices in these segments have seen year on year growth of between 0.8% and 1.2%. Close to 50% of all completed houses last year comprised of dwellings less than 80m².

House price growth remained muted in 2011. Further mild contractions have arisen in the first half of 2012. Negative year on year growth of 0.5% is reported. Standard Bank South Africa saw an average of 11% increase in mortgage applications over the last year which surprisingly indicates improved sentiment.

SAPRO Assets in this Sector:

Outlook

The South African property market remains on target for a protracted recovery over the next few years. The retail sector continues to perform well although supply has slowed. As a result, the listed sector has been active in the buy-out of developed stock of scale.

Industrial activity peaked during the period with developers more buoyant than in previous years. The residential sector has remained depressed with a further slowdown in the affordable sector which was not previously predicted given the political pressure in this area.

Financial sustainability is the key issue going forward. Significantly increased utility and fuel costs add negatively to the affordability concerns of a potential purchaser or tenant. Whilst rental rates have remained steady, operating costs have become the concern.

Economic and political sensitivities remain a concern and will be the deciding factor in the year ahead. Stability around growth, foreign direct employment, interest rates and inflation will be a key determinant in the success of the property sector.

Other Key Financial Indicators and Statistics for the Period Under Review

Embedded images removed - pleaserefer to the Company's website www.saprofund.comfor charts depicting the South African unemployment rate, historical exchange rates for GBP/ZAR and the South African Prime lending rate.

Portfolio Activity

Group Five concluded its twenty months as asset manager as at 30 June 2012. Following an extended period of dealing with legacy issues and of realigning the portfolio in order to maximise the individual asset rights within each sector, the results of our efforts are now bearing fruit. This is evidenced by the more recent RNS announcements on sales progress within the portfolio, which are highlighted in this report.

We have focused on positioning the portfolio in such a manner that all of the assets can be readily available for sale. There is no longer a classification between those assets identified for sale and those identified as an interim hold. We do however continue to maximise the market potential of the assets by progressing the relevant rights and zonings. As such, some assets are more advanced than others and this is shown on the classification table here below;

* Emberton was previously classified as available for sale. Given a change in South African law it became necessary to re-submit applications for zoning and approval purposes, hence the change in classification.

Debt levels and Refinancing Arrangements

We are pleased to report that the level of debt (including third party debt held by associates) within the Group has fallen significantly from R146.4m at 30 June 2011 to R77.4m at 30 November 2012. On-going extension of the residual debt facilities is managed as and when appropriate. At Kindlewood, on-going debt extension capabilities are dependent on achieving predefined sales targets on a bi-annual basis. Failure to achieve such targets will result in the lender requiring a portion of debt to be repaid. At this juncture, we feel we should be able to achieve the target criteria and have sufficient cash reserves should the need to settle arise. Below is a table that represents the movement in debt levels year on year:

* - this debt is not on the Group's balance sheet, as it is held by associates

** - The increased debt profile on this asset is as a result of the restructuring of the overall debt facility following the Phase II sale transaction in 2011. The Company was settled its share of the increased facility in cash.

Valuations

Valuations have seen a marginal decline since the last interim reporting date (4.55%) including sales impact and this was largely attributed to the Longland asset which has seen tenancy levels fluctuating during the period with some resultant recovery risk. Imbonini Phase I also saw a marginal decline due to a slower sales tempo over the period.

As assets are sold, the total value of the portfolio will naturally decline on a consolidated basis. In separating out the true value decline (as opposed to reductions due to sales movement) we can report that Longland and Imbonini Phase I were the only assets that were negatively affected by the Broll valuation exercise since the interim reporting date.

On a portfolio basis, the Broll valuation as at 30 June 2012 was R1,120.2m representing a decrease of R53.4m over the six month period since December 2011 and R94.2m for the full period. We continue to interrogate the valuation results in detail and we are satisfied that the numbers are fair and reasonable. The table below represents a year on year comparison of the portfolio valuation.

Progress Achieved

Despite the protracted adverse economic conditions, Group Five is pleased to announce some steady progress during the period to June 2012 and subsequently - to the date of this report. In line with our update in the previous financial year, it has taken some time to rationalise the various aspects of this portfolio. Legacy planning and zoning issues have seen some real progress in the majority of the assets. In turn, intensive negotiations have taken place with a number of the Company's partners and this prompted some positive momentum on the realisation of assets.

Unfortunately as with any portfolio, there are some relationships and assets that are under strain. African Renaissance has not progressed as we would have liked due to a divergence of opinion between the shareholders. We are reviewing this matter with our legal advisers and it could take a further 18 months to resolve. Likewise, certain of the planning issues pertaining to Brakpan, Clayville and Lenasia are significant and will require further work. Others have seen some steady progress and are likely to be in a far more favourable position by 30 June 2013, including Emberton, Lillianton / Driefontain and Kyalami.

The Investment Manager is pleased to report on the following post balance sheet achievements;

·; The conditional sale of the Starleith property at Broll values. Currently conditional based on certain zoning and governmental requirements but forecast to close in June 2013.

·; The conditional sale of the Wedgewood property at a marginal discount to Broll values. Currently conditional based on certain zoning and governmental requirements but forecast to close in June 2013.

·; The transfer and receipts of the proceeds of the Gosforth Park sales that were concluded during the year. The last remaining transfer of funds is expected by end of January pending completion of the required infrastructure works.

·; The signed share buyback agreement entered into with the Company's partners of the Longmeadow portfolio of assets for the sale of the entire SAPRO shareholding. This is at values marginally in excess of Broll levels and should conclude in March 2013. Such share buyback agreement is conditional upon the sale and purchase agreement for the sale of three plots within the Longmeadow portfolio to a third party purchaser being concluded. This transaction is itself conditional on certain due diligence, a co-operation agreement and governmental requirements.

·; An agreement on the share buyback terms and conditions with our partners on Acacia Park, Imbonini I and II. This will result in SAPRO owning 100% of the shares subject to a positive cash flow position and negligible residual risk position in these companies. This will allow us far greater freedom to market and sell these properties accordingly.

·; Conditional sale offers continue to be signed with assets like Acacia Park, Hughes, Imbonini and Kindlewood on an ongoing basis.

Despite the adverse economic conditions, we continue to investigate and pursue a number of leads and deals that are in varying states of closure. Looking ahead we believe we will close out on the current sale contracts of approximately 50% of the portfolio and are optimistic about making further progress in the year to 30 June 2013.

Portfolio Management

African Renaissance

Description: Comprises a 146 hectare vacant development site (mainly residential and commercial rights) east of Pretoria. SAPRO held 65% as at 30 June 2012, although the economic interest is higher as a result of loans provided.

Action taken or underway: On-going differences between the Company's partners have halted progress and our sales ability, despite a fee settlement agreement defining the way forward. This matter is now under legal review and may take a further 18 months to resolve.

The original residential concept for the site has been reworked to create a product that is more conducive to the current market conditions and targets the affordable housing sector.

A retail development scheme has been put together and is currently being marketed.

Sales progress: The retail site continues to attract interest from national developers and institutional investors alike. A number of offers have been received on the retail site during the year under review but these have been rejected by our fellow shareholders.

Interest on the residential site has been minimal given the slowdown in residential activity. In recent months (post 30 June 2012) we have seen some increased appetite from national developers but we will need to resolve partner issues before we can pursue further.

Strategy: Resolve the current impasse between the partners. In the background continue to actively market the retail and residential site to investors and developers. The retail site holds some exciting prospects for sale.

Brakpan

Description: Comprises two vacant development stands totalling 6.64 hectares with approximately 25,000 square metres of developable commercial bulk situated to the east of Johannesburg. SAPRO held 50% as at 30 June 2012.

Action taken or underway: Resolution to the traffic impact assessment has formed the bulk of our workload during the year. We have aligned our site with the other major site developers in the area and formulated an action plan to the roads agency. Once feedback is received and approved we can then progress the final rezoning requirements.

Sales progress: Our Joint Venture partner has indicated an interest to acquire the land once all permissions and zonings are in place. We continue to market to all potential purchasers with an active third party lead underway.

Strategy: Focus remains on obtaining the approvals. Without this, no sale will take place. Continue to market the Brakpan site in parallel.

Clayville

Description: Comprises 49 hectares of vacant land located in Olifantsfontein north of Johannesburg. SAPRO held 100% as at 30 June 2012.

Action taken or underway: Electricity supply issues continue to hinder progress for this asset. Without resolution of these issues, our ability to realise value is extremely limited. We are constantly engaging with council to progress solutions. The alternative of procuring our own electrical substation is not financially viable unless we can enter into a partnership with other developers in the area and these opportunities are now limited.

We have further commenced some geotechnical studies to understand prevailing ground conditions. The knowledge of this will add value to our marketing ability.

Sales progress:None at acceptable prices given the lack of electricity to the site.

Strategy: To resolve electricity supply issues through on-going discussions with the local council and through trying to enter into partnership arrangements with other neighbouring developers. The local council has agreed to reserve any excess electricity supply in the area for our site as and when this arises. This would be subject to us agreeing to implement the distribution infrastructure.

Emberton

Description: Comprises 16.5 hectares of vacant development land (mainly zoned residential with certain commercial rights) in Hillcrest, north of Durban. SAPRO held 100% as at 30 June 2012.

Action taken or underway: We initiated a parallel process between the original town planning ordinance which governed our environmental record of decision (ROD) and the new Property Development Act to ensure our application (a) did not fall between the gaps given the lack of transitional measures between the two sets of legislation and (b) was fast-tracked to avoid lengthy delays in bureaucratic and legal processes.

Similar objections have been received to our revised application and are in the process of being dealt with. Under the new act, the tribunal has a 90 day maximum to respond on our application which provides greater confidence for a July 2013 approval.

Sales progress: Offers have been considered and countered during the year and new deals are currently being proposed.

Strategy: Continue to review offers while progress is made on the planning permissions.

Gosforth Park

Description: Comprises a 42 hectare proclaimed industrial and commercial site south east of Johannesburg. SAPRO held 75% as at 30 June 2012.

Action taken or underway: A number of sale agreements approximating 90% of the total land available for sale were negotiated during the period. Subsequent to the year end, the majority of these have successfully transferred and realised R69.1m net inflow to SAPRO. In June 2012 we commenced the final infrastructure requirements in line with the conditions precedent to the sale agreement which then allow us access to the final tranche of the disposal proceeds. Such infrastructure works have now been completed.

Following transfer of the disposal proceeds, debt in this company was reduced by R24.8m with the residual debt facility of R7.5m in place for the remaining infrastructure works. This will be repaid upon receipt of the final tranche of sale proceeds (R16.1m) once the outstanding consent is in hand. This is expected in the first few months of next calendar year.

Sales progress: "Portion 24" constitutes the remaining land to be sold and measures approximately 36,000m². We have held off on selling this portion pending the completion of the current development works. This would allow us to maximise value for the Company's shareholders.

Strategy: Complete the required infrastructure and consider subdividing the remaining portion into smaller parcels which should in-turn attract higher values.

Hughes

Description: Comprises two adjacent industrial sites in the south east of Johannesburg covering a total of 3.69 hectares. SAPRO held 30% as at 30 June 2012.

Action taken or underway: We continue to actively market the Phase I built units following on from the sale of Phase II last year.

Sales progress: One unit was sold during this financial year. Currently 13 units remain available for sale. One unit is awaiting transfer. If successful, this will leave 12 units for sale.

Strategy: Continue to market Phase I units for sale. This is a slow and steady process but there is some positive movement. Each new sale creates further momentum.

Acacia Park

Description: Comprises twenty-two sectional title mini-industrial units on a serviced stand in Imbonini Phase I. SAPRO held 50% as at 30 June 2012.

Action taken or underway: The focus during the year was to secure sales at achievable prices whilst balancing the interest accumulating on the residual debt. Through certain incentive schemes and appropriate discounting we managed to achieve the following:

·; During the period 9 units were sold, leaving 6 units remaining

·; Currently only 2 units remain as 4 units have been sold post balance sheet.

One of the surrounding embankments collapsed following heavy floods in the area resulting in minor damage to one of the units which was covered by insurance. The rectification works were analysed and have been agreed by the relevant owners and parties. Work is underway to rectify the issues despite on-going rainfall.

Sales progress: Progress has been excellent. As at 30 June 2012, debt levels had been reduced from R24.9m to R1.5m. Subsequent to year end, all debt has now been extinguished for both Acacia Park and Imbonini Phase I.

Strategy: Continue sales momentum and sell last remaining units. Complete bank rectification works to satisfaction of the relevant owners and parties.

Imbonini Phase I

Description: Comprises a 36 hectare zoned industrial estate in Ballito north of Durban. SAPRO held 50% as at 30 June 2012.

Action taken or underway: As per the Acacia update, debt levels were reduced significantly during the year and subsequent to year end have been fully settled.

Negotiations with our Joint Venture partners are underway to enter into a share buyback arrangement at original loan value - approximately R800,000. This transaction is due to be completed before 31 December 2012 and would mean that SAPRO would own 100% of Acacia Park and Imbonini Phase I and II.

Sales progress: Progress has been slow during the past 12 months. A number of leads and offers were signed but these largely fell through. One sale occurred during the year. Approximately 27% of this phase is still to be sold. One offer is under consideration at present.

Strategy: To continue to find buyers at market related values and to follow up on the electrical rebate with the local municipality. Such rebate will take time to procure.

Imbonini Phase II

Description: Comprises a 77 hectare site in close proximity to Imbonini Phase I and currently zoned industrial following our compliance with the DFA requirement. SAPRO held 50% as at 30 June 2012.

Action taken or underway: All planning requirements have been met. The DFA approval deadline to commence construction works is set for December 2012. The Imbonini Board has a plan in place to ensure the requisite approval is obtained.

As per the above a share buyback arrangement is currently being negotiated with our joint venture partners. This will see SAPRO own 100% by the end of the calendar year, subject to minimal residual risk and a cash positive company.

Sales progress:A few leads have been followed but nothing has materialised to date. We continue to market to national developers and institutional funds given the size of the land parcel.

Strategy:Significant bulk infrastructure costs of circa R130m are required to unlock the site for development which makes it difficult to market. A renewed approach of potentially dividing the land parcel into smaller components will be adopted in the next financial year. Servicing can then be done on a piece-meal basis which may help affordability. In parallel, the focus on finding a single purchaser will continue.

Kindlewood

Description: Comprises two adjoining projects (Kindlewood phases 1 and 2) with a combined area of 5.3 hectares. Phase one comprises forty-one completed upper income single family homes in a gated suburban community north of Durban. Fourteen of the forty-one houses have been sold. Phase 2 is a difficult site due to the gradient of the land. SAPRO held 89% as at 30 June 2012.

Action taken or underway: A variety of sales techniques were employed during the year combining discounts, incentive schemes, rate holidays and others. Whilst the year has seen some sales activity, the residential market remains under pressure and the typology of unit versus price mix is not ideal.

Sales progress:There were 2 sales achieved during the year and 3 offers are currently subject to financing conditions. Should these units transfer successfully, then 22 units remain for sale from the original 41 units.

Strategy: Continue to sell completed houses at achievable prices and find a developer interested in acquiring the Phase 2 site.

Kyalami

Description: Comprises an 8.9 hectare residential site in Kyalami, north of Johannesburg. SAPRO held 90% as at 30 June 2012.

Action taken or underway: Environmental extensions are currently being sought given the delay in the development of the site.

Sales progress:During the year we commenced a process to increase densities on the site in order to enhance attractiveness for the market and the end product typology. Such density approvals should be achieved by this financial year end and we hope to be in a position to go to market shortly thereafter. We do continue to have dialogue with interested parties, albeit at values below our expectation.

Strategy: To conclude the process to increase the densities on the site, to rework development feasibilities and to actively market the site.

Lenasia

Description: Comprises a 13 hectare commercial development site in Lenasia, south of Johannesburg. SAPRO held 100% as at 30 June 2012.

Action taken or underway: The year has been spent trying to resolve the traffic impact issues that negatively affect our rezoning and rights ability. New traffic studies were undertaken, the results of which were in fact more positive than the previous findings. Such studies have been documented and submitted to council for their approval. Once approved, we will have satisfied all our requirements to achieve final rezoning.

Sales progress:Sporadic interest in our phasing approach for parts of the site where we have some rights and a small supply of electricity. Such enquiries have been below acceptable values however.

Strategy: Trying to phase the land so as to get an early sale of the one portion which has electricity capacity. Once the traffic impact assessment is approved, we will be in a position to market at more realistic values.

Lilianton/Driefontain

Description: Comprises 11.0 hectares of vacant development land (mainly residential with future plans to rezone a portion for commercial rights) east of Johannesburg. SAPRO held 100% as at 30 June 2012.

Action taken or underway: We have completed all approvals for the site, yet have held back on proclamation of the site to avoid increased rates and taxes.

Sales progress:The market is showing interest but due to the size of the land parcel and given the downward trend of the residential sector and lack of bank finance for vacant land, the offering and sales prices are unattractive. Most of the purchasers are looking for SAPRO to enter into joint venture arrangements with them to avoid an upfront land purchase and to ensure adequate feasibility.

Strategy: Potential opportunity is to pursue sub-division into smaller land parcels (but this takes substantial time). Such activity will allow us to market to a wider developer audience. Given its residential nature we equally need to be patient and await market uplift.

Longland

Description: Comprises a commercial, residential and retail mixed use site in Fourways, Johannesburg. The project has two phases with phase one comprising 12,769 square metres of hotel and commercial space and phase two the development of the remaining undeveloped land. Phase one now includes a City Lodge hotel on a long term land lease and a standalone office and retail building (5,979 square metres). SAPRO held 49.2% as at 30 June 2012.

Action taken or underway: Negotiations with a number of interested parties took place during the year. An agreement in principle was reached with a prospective purchaser for the acquisition of certain of the vacant land parcels. At this juncture, we managed to negotiate a contemporaneous share buyback arrangement with our joint venture partners for the purchase of the complete SAPRO share component conditional on the secured land sale being achieved. Both deals are in turn conditional upon a variety of factors, including due diligence aspects, governmental approvals and other more minor considerations. The due diligence period is currently underway and should all conditions be satisfied (which we remain positively disposed to) then we anticipate the sale to conclude in March 2013.

Sales progress:Share sale agreement signed.

Strategy: Ensure all conditions and governmental approvals are fulfilled and to return value to shareholders.

Starleith

Description: A centrally situated residential site in Sandton, Johannesburg with commercial development potential. SAPRO held 50% interest as at 30 June 2012. Group Five held a 25% interest as at 30 June 2012 and will be a party to their component of the proceeds from the sale.

Action taken or underway: During the period, we negotiated the sale of this property with a number of interested parties. Post year end, we managed to secure a formal offer for the purchase of this site conditional upon the purchase of Wedgewood in a simultaneous transaction. The formal sale agreements have subsequently been concluded and are conditional upon a variety of factors including rezoning and governmental conditions. We remain positively disposed that this sale will conclude around June 2013.

Sales progress:Sale and purchase agreement signed and binding between the parties.

Strategy: Ensure all conditions and governmental approvals are fulfilled and to return value to shareholders.

Waltloo

Description: Comprises six serviced stands on 4.3 hectares of industrial site east of Pretoria.

Action taken or underway: This asset has been sold.

Sales progress: This asset has been sold.

Strategy: Property sold.

Wedgewood

Description: A centrally situated residential development site in Sandton, Johannesburg with commercial potential. SAPRO held a 79% interest as at 30 June 2012. Group Five held a 10.5% interest as at 30 June 2012 and will be a party to their component of the proceeds from the sale.

Action taken or underway: During the period, we negotiated the sale of this property with a number of interested parties. Post year end, we managed to secure a formal offer for the purchase of this site conditional upon the purchase of Starleith in a simultaneous transaction. The formal sale agreements have subsequently been concluded and are conditional upon a variety of factors including rezoning and governmental approvals. We remain positively disposed that this sale will conclude around June 2013.

Sales progress:Sale and purchase agreement signed and binding between the parties.

Strategy: Ensure all conditions and governmental approvals are fulfilled and to return value to shareholders.

Group Five Property Developments (Pty) Limited

Investment Manager

27 December 2012

Report of the Directors

The Directors hereby submit their annual report together with the audited consolidated financial statements of South African Property Opportunities plc (the "Company") and its subsidiaries (the "Group") for the year ended 30 June 2012.

The Company

The Company is incorporated in the Isle of Man and holds a portfolio of property interests in South Africa.

Currency and debt

The Group does not hedge its exposure in its Rand assets and liabilities. Debt facilities are typically secured on individual properties and are Rand denominated.

Divestment strategy

Following a strategic review the Company intends to dispose of the Group's portfolio where acceptable returns can be generated and return excess capital to shareholders.

Results and dividends

The results and position of the Group at the year end are set out on pages 23 to 49 of the financial statements.

The Directors intend to manage the Group's affairs to achieve shareholder returns through capital growth rather than income, and accordingly there can be no certainty that any dividend will be paid. However the Directors reserve the right to make dividend distributions to holders of Ordinary Shares if and when it is considered appropriate. The Directors do not intend to declare a dividend at this time (2011: £nil).

Directors

The Directors who served during the year and up to the date of this Report were as follows:

Directors and other interests

Save as disclosed above and as detailed in note 8, none of the Directors had any interest during the year in any material contract for the provision of services which was significant to the business of the Company.

Independent auditor

PricewaterhouseCoopers LLC, being eligible, has indicated its willingness to continue in office.

Corporate governance

The Directors recognise the importance of sound corporate governance. The Directors are responsible for overseeing the effectiveness of the internal controls of the Company designed to ensure that proper accounting records are maintained, that the financial information on which business decisions are made and which is issued for publication is reliable and that the assets of the Group are safeguarded.

The Board has established the following committees with specific areas of responsibility.

Audit Committee

The Audit Committee comprises David Saville (Chairman), David Hunter and Stephen Coe. The Audit Committee meets at least twice a year and is responsible for ensuring that the financial performance of the Group is properly reported on and monitored, including reviews of the annual and interim financial statements, results announcements, internal control systems and procedures and accounting policies.

Nomination Committee

The Nomination Committee comprises David Saville (Chairman) and David Hunter. The Nomination Committee is responsible for ensuring that the Board consists of members with the range of skills and qualities to meet its principal responsibilities in a way which ensures that the interests of stakeholders are protected and promoted, and the requirements of the AIM rules are complied with.

Remuneration Committee

The Remuneration Committee comprises David Saville (Chairman), David Hunter and Stephen Coe. The Remuneration Committee meets as required and is responsible for determining and agreeing the remuneration for all members of the Board.

Management Engagement Committee

The Management Engagement Committee comprises John Chapman (Chairman), David Hunter and Craig McMurray. The Management Engagement Committee meets as required and is responsible for reviewing the performance of the Investment Manager and for ensuring that the Company's management contract is competitive and reasonable for the Company's shareholders. It is also responsible for reviewing the performance of other third party service providers.

On behalf of the Board

David Saville

Director

27 December 2012

Directors' Biographies

The Company has a board of five Directors, all of whom are independent of the Company's Investment Manager and other service providers. Details of the Directors are as follows:

David Hunter - Chairman

David Hunter is a UK-based property fund consultant. For twenty years up to 2005 he was a leading property fund manager ultimately responsible for €10bn of property assets across Europe for Arlington Property Investors. David is a fellow of the Royal Institution of Chartered Surveyors, a former President of the British Property Federation, and a member of the Bank of England Property Forum.

John Chapman 

John Chapman is a member of the New York State Bar and the CFA Institute. He is currently a director of a number of other quoted investment funds.

Craig McMurray

Craig McMurray is the managing director of Bridgehead Capital Management (Pty) Limited, a real estate company managing commercial property in South Africa including Bridgehead Real Estate Fund Limited. Previously Craig was head of Credit Projects at Standard Bank of South Africa Limited.

David Saville

David Saville is an Isle of Man based property fund manager currently managing a number of property sector investment vehicles with investments predominantly in the UK and Australia. From 1992 to 2001 David was the Managing Director of Saville Gordon Estates Plc, which he was instrumental in repositioning as a FTSE 250 property company specialising in industrial property. David is a member of the Royal Institution of Chartered Surveyors. 

Stephen Coe

Stephen qualified as a Chartered Accountant with Price Waterhouse in 1990 and remained in audit practice, specialising in financial services, until 1997. From 1997 to 2003 he was a director of the Bachmann Group of fiduciary companies and Managing Director of Bachmann Fund Administration Limited, a specialist third party fund administration company. From 2003 to 2006 Stephen was a director with Investec in Guernsey and Managing Director of Investec Trust (Guernsey) Limited and Investec Administration Services Limited. He became self employed in August 2006 and is a director of a number of listed and unlisted investment funds and offshore companies including Raven Russia Limited, European Real Estate Investment Trust Limited, Kolar Gold Limited and Trinity Capital PLC (and serves as Chairman of the Audit Committee for these companies). He has been involved with offshore investment funds and managers since 1990 with significant exposure to property, debt, emerging markets and private equity investments.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

The Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards ("IFRSs") (as adopted by the European Union). In preparing those financial statements it is the Directors' responsibility to:

·; select suitable accounting policies and then apply them consistently;

·; make judgements and estimates that are reasonable and prudent;

·; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business; and

·; prepare financial statements which give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period.

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

On behalf of the Board

David Saville

Director

27 December 2012

Independent Auditor's Report to the members of South African Property Opportunities plc

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements (the 'financial statements') of South African Property Opportunities plc and its subsidiaries (the "Group") which comprise the consolidated balance sheet as at 30 June 2012 and the consolidated income statement, the consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes.

Directors' Responsibility for the Financial Statements

The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with applicable Isle of Man law and International Financial Reporting Standards as adopted by the European Union and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. This report, including the opinion, has been prepared for and only for the company's members as a body in accordance with our engagement letter dated 29 August 2012 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion the financial statements give a true and fair view of the financial position of the Group as at 30 June 2012, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

PricewaterhouseCoopers LLC

Chartered Accountants

Isle of Man

27 December 2012

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

* On 7 January 2011, the Company was re-registered as a company under the Isle of Man Companies Act 2006 (see note 17).

Consolidated Cash Flow Statement

Notes to the Financial Statements

1 General information

South African Property Opportunities plc (the "Company") was incorporated and registered in the Isle of Man under the Isle of Man Companies Acts 1931 to 2004 on 27 June 2006 as a public limited company with registered number 117001C. On 7 January 2011 with the approval of Shareholders in general meeting, the Company was re-registered as a company under the Isle of Man Companies Act 2006 with registered number 006491v. South African Property Opportunities plc and its subsidiaries' (the "Group") investment objective is to achieve capital growth from a portfolio of real estate assets in South Africa.

Group Five Property Developments (Pty) Limited ("Group Five"), was appointed as the investment manager on 4 October 2010 with management fees payable with effect from 21 October 2010. The Company's administration is delegated to Galileo Fund Services Limited (the "Administrator"). The registered office of the Company is Millennium House, 46 Athol Street, Douglas, Isle of Man, IM1 1JB.

Pursuant to a prospectus dated 20 October 2006 there was an authorisation to place up to 50 million shares. Following the close of the placing on 26 October 2006, 30 million shares were issued at a price of 100p per share.

The shares of the Company were admitted to trading on the AIM Market of the London Stock Exchange ("AIM") on 26 October 2006 when dealings also commenced. On the same date the shares of the Company were admitted to the Official List of the Channel Islands Stock Exchange (the "CISX").

As a result of a further fundraising in May 2007, 32,292,810 shares were issued at a price of 106p per share, which were admitted to trading on AIM on 22 May 2007.

The Company's agents and its investment manager perform all functions, other than those carried out by the Board's executive and non-executive directors. The Group has two employees.

Financial year end

The financial year end of the Company is 30 June in each year.

2 Summary of significant accounting policies

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

2.1 Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates (see note 2.2). It also requires management to exercise its judgement in the process of applying the Group's accounting policies.

These financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet its liabilities as and when they fall due for the foreseeable future. See note 2.2 for further information.

a) New and amended standards adopted by the Group

The Group has adopted the following new and amended standards as of 1 July 2011:

·; Annual improvements to IFRSs, effective 1 January 2011, were issued by the IASB as part of the IASB's programme of annual improvements resulting in amendments to 7 standards. The amendment to IAS 34 'Interim Financial Reporting' has been considered in the preparation of the interim results and the other improvements have not had a significant effect on the Group.

·; Revised IAS 24 (Revised), 'Related party disclosures', issued in November 2009. It supersedes IAS 24, 'Related party disclosures', issued in 2003. IAS 24 (Revised) is mandatory for periods beginning on or after 1 January 2011. Earlier application in whole or in part is permitted. The revised standard clarifies and simplifies the definition of a related party and removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. The revised standard has not had a significant effect on the Group.

b) Standards, amendments and interpretations to existing standards relevant to the Group, that are not yet effective and have not been early adopted by the Group

·; Annual improvements to 2011, (issued May 2012 effective 1 January 2013, were issued by the IASB as part of the 'annual improvements process' resulting in amendments to 5 standards. The improvements are not expected to have a significant effect on the Group.

·; IFRS 9, 'Financial instruments', addresses the classification, measurement and recognition of financial assets and liabilities. IFRS 9 was issued in November 2009 and October 2010. It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of the fair value change due to an entity's own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The Group is yet to assess IFRS 9's full impact and intends to adopt IFRS 9 no later than the accounting period beginning on or after 1 January 2015, subject to endorsement by the EU.

·; IFRS 10, 'Consolidated financial statements', issued in May 2011. This standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. The Group is yet to assess IFRS 10's full impact and intends to adopt IFRS 10 no later than the accounting period beginning on or after 1 January 2013, subject to endorsement by the EU.

·; IFRS 12, 'Disclosure of interests in other entities', issued in May 2011. This standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The Group is yet to assess IFRS 12's full impact and intends to adopt this IFRS 12 no later than the accounting period beginning on or after 1 January 2013, subject to endorsement by the EU. It is not expected to have a significant impact on the Group.

·; IFRS 13, 'Fair value measurement', issued in May 2011. This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP. This standard is applicable for periods beginning on or after 1 January 2013. The Group is yet to assess IFRS 13's full impact. This standard has not yet been endorsed by the EU.

·; IAS 1, 'Financial statement presentation' regarding other comprehensive income, issued in June 2012. The main change resulting from these amendments is a requirement for entities to group items presented in 'other comprehensive income' (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The amendments do not address which items are presented in OCI. This standard is applicable for periods beginning on or after 1 July 2012. However the standard has not yet been endorsed by the EU. The Group is yet to assess IAS 1's full impact.

·; IAS 28 (revised 2011), 'Associates and joint ventures' effective 1 January 2013, includes the requirements for associates and joint ventures that have to be equity accounted following the issue of IFRS 11. The Group is yet to fully assess IAS 28's impact and intends to adopt IAS 28 no later than the accounting period beginning on or after 1 January 2013, subject to endorsement by the EU.

2.2 Critical accounting estimates and assumptions

Management makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are addressed below.

(a) Going concern

These financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet its liabilities as and when they fall due for the foreseeable future.

The Directors have prepared forecasts that indicate that the Group will be able to meet its financial obligations from existing cash resources and the projected sales proceeds from sale of inventory.

(b) Estimated impairment of inventory, investment in associates and loans to associates

The Group obtains third party semi-annual valuations performed by Broll. These are used in conjunction with the strategic plan for each development in order to determine any impairment of inventory, investments in associates and loans to associates.

During the year there were impairment charges in relation to investment in associates (see note 11.1), loans due from associates (see note 11.2) and inventory (see note 13).

(c) Estimated impairment of goodwill

The Group tests annually for whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2.7. The recoverable amount of the cash generating unit has been determined using fair value less cost to sell. This calculation requires the use of estimates, see note 12 for further details.

2.3 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The consolidated financial statements are presented in Pound Sterling, which is the Company's functional and the Group's presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated income statement.

(c) Group companies

The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

(ii) income and expenses for each income statement are translated at average exchange rates; and

(iii) all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to other comprehensive income. When a foreign operation is partially disposed or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

2.4 Revenue and expense recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of inventory in the ordinary course of the Group's activities and rental income received or receivable in relation to operating leases. Revenue is shown net of value added tax.

The Group recognises revenue from the sale of inventory on the transfer of title.

Operating lease income in respect of rents is recognised in the income statement on a straight-line basis over the period of the lease and relates to leases in which a significant portion of the risks and rewards of ownership are retained by the Group, as lessor, and are classified as operating leases.

Interest income is recognised in the financial statements on a time-proportionate basis using the effective interest method.

Interest expense for borrowings is recognised in the financial statements using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the period.

Expenses are accounted for on an accruals basis.

2.5 Basis of consolidation

Subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The Group also assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control. De-facto control may arise in circumstances where the size of the Group's voting rights relative to the size and dispersion of holdings of other shareholders give the Group the power to govern the financial and operating policies, etc.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

Transactions and non-controlling interests

The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised gains/losses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Associates

Associates are those entities in which the Group has a significant influence, but no control, generally accompanying a shareholding of between 20 per cent. and 50 per cent. of the voting rights. Associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group's investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss. The consolidated financial statements include the Group's share of its associates' profits or losses, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group's share of losses exceeds its interest in an associate, the carrying amount of that interest (including any long-term investment) 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 associate.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

2.6 Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The Group has determined that its chief operating decision-maker is the Board of the Company.

The Board reviews the Group's internal reporting in order to assess performance and allocate resources. Based on this internal reporting to the Board, it has been determined that there is only one operating segment, property development in the Republic of South Africa.

2.7 Intangible assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the identifiable net assets (including intangible assets) of the acquired subsidiary.

Goodwill is carried at cost less accumulated impairment losses. Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is subsequently not reversed.

2.8 Financial assets and financial liabilities

The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. The Board determine the classification of its financial assets at initial recognition.

At 30 June 2012 and 2011 the Group did not have any financial assets at fair value through profit or loss or available for sale. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date which are classified as non-current assets. The Group's loans and receivables comprise 'loans due from associates', 'trade and other receivables' and 'cash at bank' in the balance sheet (notes 11.2, 14 and 15).

The Group classifies its financial liabilities in the following categories: at fair value through profit or loss and other liabilities. At 30 June 2012 and 2011 the Group did not have any financial liabilities at fair value through profit or loss. Other liabilities comprise 'loans from third parties', 'trade and other payables' and 'borrowings' in the balance sheet (notes 19, 20 and 21).

2.9 Inventories

Land and buildings that are being developed for future sale are classified as inventory at their deemed cost, which is the carrying amount at the date of classification. Building costs and borrowing costs in relation to inventory are capitalised. Land and building for development is subsequently carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less selling expenses.

2.10 Loans and receivables

Loans and receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.

A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts to be received. Significant financial difficulties of the counterparty, probability that the counterparty will enter bankruptcy or financial reorganisation, and default in payments are considered indicators that the amount to be received is impaired. Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

2.11 Cash and cash equivalents

Cash and cash equivalents comprise cash deposited with banks and other short-term highly liquid investments with original maturities of three months or less.

2.12 Trade and other payables

Trade and other payables are recognised initially at fair value and subsequently at amortised cost using the effective interest method.

2.13 Taxation

The Company is resident for taxation purposes in the Isle of Man and is subject to income tax at a rate of zero per cent. The Group is liable for tax in the Republic of South Africa on the activities of its subsidiaries and associates.

The tax expense represents the sum of the tax currently payable, which is based on taxable profits for the year. The Group's liability is calculated using tax rates enacted or substantially enacted at the balance sheet date.

Deferred tax is recognised using the balance sheet 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 they probably will not reverse in the foreseeable future. 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.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences 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.

2.14 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

Borrowing costs directly attributable to assets in the course of construction are capitalised.

2.15 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

2.16 Dividends

Dividends are recognised as a liability in the year in which they are declared and approved.

3 Risk management in respect of financial instruments

The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk. The financial risks relate to the following financial instruments: loans and receivables and other liabilities as detailed in note 2.8.

Foreign currency risk

Foreign currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. The Group's operations are conducted in jurisdictions which generate revenue, expenses, assets and liabilities in currencies other than Pound Sterling ("the functional currency of the Company"). As a result the Group is subject to the effects of exchange rate fluctuations with respect to these currencies. The currency giving rise to this risk is the South African Rand.

The Group's policy is not to enter into any currency hedging transactions.

The table below summarises the Group's exposure to foreign currency risk in respect of its financial instruments:

At 30 June 2012, had the Pound strengthened/weakened by 5 per cent. against the South African Rand, with all other variables held constant, the impact on equity of the above financial instruments would be an increase/decrease of £201,000 (30 June 2011: 20 per cent. currency movement, increase/decrease £466,000).

Included in the income statement is a foreign exchange loss of £9,583,188 (2011: gain £3,040,456) which includes a loss of £9,555,041 (2011: gain £3,032,036) arising on the translation of the loan from the Company to its direct subsidiary, SAPSPV Holdings RSA (Pty) Limited; a loan which is denominated in South African Rand. On consolidation, the corresponding foreign exchange gain (2011: loss) arising on translation of this loan in SAPSPV Holdings RSA (Pty) Limited from the functional currency of South African Rand to the presentation currency of Pound Sterling is included in the foreign currency translation reserve within equity.

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Group.

The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date. This relates also to financial assets carried at amortised cost.

At the reporting date, the Group's financial assets exposed to credit risk amounted to the following:

The Group manages its credit risk by monitoring the creditworthiness of counterparties regularly. Cash transactions and balances are limited to high-credit-quality financial institutions. Loans due from associates relate to project investments in land.

Included within loans due from associates are loans which have been impaired, see note 11.2. The market value of the inventory held by these associates has been considered when determining the impairment in the loans.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its obligations as they fall due. The Group currently manages its liquidity risk by maintaining sufficient cash and banking facilities as indicated by its cashflow forecasts. The Group's liquidity position is monitored by the Board of Directors (see note 2.2(a)).

The residual undiscounted contractual maturities of financial liabilities are as follows:

Interest rate risk

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group is exposed to interest rate risk from the cash held in interest bearing accounts at floating rates or short term deposits of one month or less, on loans due from associates, loans from third parties and on borrowings. The Company's Board of Directors monitor and review the interest rate fluctuations on a continuous basis and act accordingly.

During the year ended 30 June 2012 should interest rates have decreased by 100 basis points, with all other variables held constant, the shareholders' equity and profit for the year would have been £99,000 (2011: 100 basis points, £128,000) lower.

Capital risk management

The Company's primary objective when managing its capital base is to safeguard its ability to continue as a going concern whilst disposing of the Group's portfolio where acceptable returns can be generated and returning excess capital to shareholders.

Capital comprises share capital and reserves.

No changes were made in respect of the objectives, policies or processes in respect of capital management during the years ended 30 June 2011 and 2012.

4 Segment Information

The entity is domiciled in the Isle of Man. All of the reported revenue, £3,493,058 (2011: £968,213) is from South Africa.

The total of non-current assets other than financial instruments is £7,571,793 (2011: £9,365,244) and all of these are located in South Africa.

Revenue of £1,605,220 (ZAR: 19,753,200) was derived from the sale of Waltloo (30 June 2011: £181,040 (ZAR 2,017,544) attributable to Kindlewood).

5 Operating leases

The Group leases out certain parts of its inventory under operating leases whilst it is in the process of seeking a buyer. The future minimum lease payments receivable by the Group under non-cancellable leases are as follows:

6 Cost of sales

7 Investment Manager's fees

Annual fees

During the prior year, there was a transition of investment manager from Proteus Property Partners Limited to Group Five Property Developments (Pty) Limited. This occurred with effect from 4 October 2010, with fees payable to the new investment manager from 21 October 2010.

For the period to 20 October 2010 Proteus Property Partners Limited was entitled to a management fee of 2 per cent. per annum of the net asset value of the Group payable quarterly in advance. Management fees for the year ended 30 June 2012 paid to Proteus Property Partners Limited amounted to £nil (30 June 2011: £513,775). Additional management fees (and associated costs) in relation to earlier periods payable to Proteus Property Partners Limited amounted to £nil (30 June 2011: £749,842).

From 4 October 2010 Group Five Property Developments (Pty) Limited became the investment manager and a revised Investment Management Agreement came into operation. Their fee as investment manager is £500,000 per annum payable monthly in arrears. Management fees for the year ended 30 June 2012 paid to Group Five Property Developments (Pty) Limited were £500,090 (ZAR 6,153,908) (30 June 2011: £383,899 (ZAR 4,278,252)).

During the year, pursuant to the investment management agreements the investment manager was also entitled to recharge to the Group all and any costs and disbursements reasonably incurred by it in the performance of its duties, including costs of travel save to the extent that such costs are staff costs or other internal costs of the relevant investment manager.

Sales fee

From 21 October 2010 and according to the terms of the revised Investment Management Agreement, Group Five Property Developments (Pty) Limited is entitled to a sales fee of up to 3 per cent. of the gross proceeds on disposal of the Group's projects (such fee is net of external brokerage costs incurred). These fees are payable on sale and have been considered when determining the net realisable value of the inventory (see note 13). Sales fees payable for the year ended 30 June 2012 payable to Group Five Property Developments (Pty) Limited amounted to £13,579 (ZAR 167,097) (30 June 2011: £nil (ZAR nil)).

Performance fees

During the period to 20 October 2010, Proteus Property Partners Limited was eligible to receive a performance fee which would be payable by reference to the increase in net asset value per share above a hurdle based on the issue price per share increased at a rate of 12 per cent. per annum, but adjusted so as to exclude any dividends paid during the period. Performance fees payable in relation to earlier performance fee periods payable to Proteus Property Partners Limited amounted to £nil (30 June 2011: £4,961,792).

The Group has accrued a performance fee due to Group Five Property Developments (Pty) Limited based upon the market value of the portfolio which only becomes payable on the eventual sale of these assets so long as the sales values are better than certain agreed benchmarks. The reduction in performance fees accrued for the year ended 30 June 2012 amounted to £151,464 (ZAR 1,863,854) (30 June 2011: increase £383,670 (ZAR 4,275,700)).

8 Other administration fees and expenses

Included within other administration fees and expenses are the following:

Directors' remuneration

The maximum amount of basic remuneration payable by the Company by way of fees to the Non-executive Directors permitted under the Articles of Association is £200,000 per annum. All Directors are each entitled to receive reimbursement of any expenses incurred in relation to their appointment. The Non-executive Directors (excluding the Chairman) were entitled to receive an annual fee of £40,000 each and the Chairman £75,000. Stephen Coe was also entitled to additional remuneration of £30,000 in December 2011 for his work.

Executive Directors' fees

The Executive Directors received annual basic salaries of £40,000. Pursuant to the terms of their service agreements, Craig McMurray and John Chapman are entitled to incentive payments of, respectively, 1.5 per cent. and 0.5 per cent. of all sums distributed to shareholders. Their services agreements also provide for payments of the same percentages, following termination of their employment, for distributions paid or payable from cash generated during their employment.

All directors' remuneration and fees

Total fees and basic remuneration (including VAT where applicable) paid to the Directors for the year ended 30 June 2012 amounted to £288,667 (30 June 2011: £263,563) and was split as below. Directors' insurance cover amounted to £42,517 (30 June 2011: £49,252).

9 Income tax expense

The tax on the Group's profit before tax is higher than the standard rate of income tax in the Isle of Man of zero per cent. The differences are explained below:

There are tax losses carried forward in the underlying subsidiaries of £29,177,327 (ZAR: 374,278,000) (30 June 2011: £23,017,308 (ZAR: 250,548,000)). There is no expiry date for the carrying forward of these losses. For prudence, tax losses are not carried as deferred tax assets in the consolidated balance sheet until the losses have been approved by the South African Revenue Service and the realisation of the related tax benefit through future taxable profits is probable.

10 Basic and diluted loss per share

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Group by the weighted average number of shares in issue during the year.

The Company has no dilutive potential ordinary shares; the diluted earnings per share is the same as the basic earnings per share.

11 Investments in and loans to associates

11.1 Investments in associates

The Group's share of the results of its principal associates, all of which are unlisted, and its aggregated assets (including goodwill) and liabilities, is as follows:

The Group's share of losses made by associates not recognised in the financial statements as the carrying value of the investment is £nil, is as follows:

11.2 Loans due from associates

The loans due from associates are as follows:

* repayable after the senior debt funding provided by Investec Bank Limited has been repaid in full.

** repayment date is four years + one day following the receipt of the Recordal from the Development Facilitation Act, 1995 (DFA) Tribunal approving the planning application.

*** repayable as and when the directors of Imbonini Park Phase 2 (Pty) Limited resolve that repayment shall be effected, provided there are sufficient cash reserves available to do so and proportionately to each shareholder.

**** repayable at the discretion of the directors of Blue Waves Properties 2 (Pty) Ltd.

The fair value of these loans approximates their carrying value.

12 Intangible assets

The above goodwill relates entirely to the Group's investment in the shares of Living 4 U Developments (Pty) Ltd (the African Renaissance development). The recoverable amount of this cash generating unit has been determined using fair value less cost to sell. The recoverable amount has been assessed as £8.103,429 (ZAR 103,948,359). The key assumption used to determine the fair value less cost to sell is the third party valuation of the land held and is valued at £10,407,166 (ZAR 133,500,000) at 30 June 2012. Considering all factors within the calculation of the recoverable amount of this cash generating unit, the recoverable amount would have to fall by £1,006,497 (ZAR 12,911,042) before impairment would be required.

13 Inventories

Non-current assets

Current assets

During the year, the Group capitalised costs of £279,831 (ZAR 3,443,483) (30 June 2011: £2,911,803 (ZAR 32,449,710)), in order to develop these assets for future re-sale, and accordingly they were classified as inventory. Borrowing costs of £27,768 (ZAR 341,705) (30 June 2011: £36,056 (ZAR 401,815)) have been included in the capitalised costs.

At 30 June 2012 the net realisable values of Brakpan, Driefontein, Emberton, Kindlewood, Kyalami, Lenasia, Starleith and Wedgewood were lower than cost, therefore, their inventory values have been impaired to a value of £30,398,192 (ZAR 389,938,890) (30 June 2011: Brakpan, Driefontein, Emberton, Kindlewood, Kyalami, Lenasia and Starleith were impaired to a value of £26,428,214 (ZAR 287,676,400)). Net realisable value has been assessed using valuations determined by Broll less estimated selling expenses. Included within these selling expenses is a 3 per cent. sales fee due to the Investment Manager on disposal of inventory (see note 7).

The Directors consider all inventories to be current in nature. It is not possible to determine with accuracy when specific inventory will be realised, as this will be subject to a number of issues such as availability of finance and delays due to obtaining permits.

Security

At 30 June 2012, there are four first rank mortgages secured over the inventory held by Clayville, Driefontein, Kindlewood and Lenasia which totals £11,973,614 (ZAR 153,593,930) (30 June 2011: Gosforth Park and Kindlewood £20,949,040 (ZAR 228,034,495)) (See note 21).

14 Trade and other receivables

In October 2011, the Company settled all disputes with its former manager and administrator, in relation to outstanding performance fees and management fees, by paying the former manager £5.78 million and exchanging mutual releases. This money was held in escrow at 30 June 2011.

The fair value of trade and other receivables approximates their carrying value.

15 Cash at bank

Included within the bank deposit balances figure is an amount of £63,440 (ZAR 813,790) (30 June 2011: £459,339 (ZAR 5,000,000)) represented by bank guarantees retained by the bank under fixed deposit (detailed below). This is the only figure excluded from the above balances for analysing the movements of cash and cash equivalents in the cash flow statement.

Bank guarantees

The subsidiary SAPSPV Holdings RSA (Pty) Ltd has a contingent liability of £63,440 (ZAR 813,790) in connection with senior debt obligations of its associate Imbonini Park (Pty) Ltd.

16 Share capital

The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

Business Venture Investments No 1269 (Pty) Limited (the Wedgewood development) has issued preference shares ZAR 100 to its minority holders. The holders of the preference shares are entitled to the first ZAR 22,000,000 (£1,715,039) in dividends declared by Business Venture Investments No 1269 (Pty) Limited.

17 Share premium

On 7 January 2011, the Company was re-registered as a company under the Isle of Man Companies Act 2006. All reserves are now considered to be distributable.

18 Net asset value ("NAV") per share

The NAV per share is calculated by dividing the net assets attributable to equity holders of the Group by the number of ordinary shares in issue.

The Group publishes an adjusted NAV that is calculated in accordance with the guidelines of the European Public Real Estate Association ("EPRA"). The primary difference between EPRA and IFRS is that, in general, under IFRS the Group's development properties are classified as inventory and held at cost while EPRA permits the incorporation of open market valuations. In order to produce the EPRA numbers the Group has retained Broll's Johannesburg office to conduct semi-annual valuations. The EPRA numbers incorporate the Broll valuations and are net of tax.

The below figures also take into consideration any profit share agreements with development partners, commission due on sale of properties (see note 7) and incentive fees due to the Executive Directors (see note 8).

19 Loans from third parties

The loans from third parties are as follows:

* in relation to their combined ownership of 25 per cent. of Crimson King Properties 378 (Pty) Limited and the Gosforth Business Estate development.

** in relation to its 50 per cent. interest in subsidiary company, Madison Park Properties 40 (Pty) Limited, and the Brakpan development.

*** in relation to its 10 per cent. interest in subsidiary company, Madison Park Properties 34 (Pty) Limited, and the Kyalami Residential Estate development.

**** in relation to its 25 per cent. interest in subsidiary company, Breeze Court 31 (Pty) Limited, and the Starleith development.

All of the above loans are unsecured and carry no fixed terms of repayment.

The fair value of these loans approximate their carrying value.

20 Trade and other payables

The fair value of trade and other payables approximates their carrying value.

21 Borrowings

Non-current liabilities

Current liabilities

Terms and debt repayment schedule