Half Yearly Report

SOUTH AFRICAN PROPERTY OPPORTUNITIES PLC

('SAPRO' or the 'Group')

Interim results for the six months ended 31 December 2010

South African Property Opportunities plc (AIM: SAPO), an investment company established to invest in real estate opportunities in South Africa, announces its unaudited interim results for the six months ended 31 December 2010.

Matrix Paul Fincham +44 (0)20 3206 7175

MHP Communications Tim McCall (office) +44 (0)20 3128 8100

(mobile) +44 (0)7753 561862

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

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

Introduction

I am pleased to report South African Property Opportunities plc's ("SAPRO's" or "the Company's") unaudited interim results for the six months ended 31 December 2010.

This period has seen the new fund manager come on board and the business is now firmly focused on delivering on the strategic review that we set out in July.

Financial results

As at 31 December 2010, the NAV of the Group, calculated in accordance with International Financial Reporting Standards ("IFRS") stood at £75.0 million (120.4 pence per share), down 0.9% from £75.7 million (121.5 pence per share) as at 30 June 2010. As discussed before, IFRS does not permit the recognition of increases in land value of certain types of property that are held for development and accordingly, the IFRS NAV shows these properties at cost.

The board of directors of the Company (the "Board") is also publishing, as in previous results an adjusted NAV that incorporates open market property valuations in accordance with guidelines produced by the European Public Real Estate Association ("EPRA"). The EPRA NAV, reflecting the increase in value net of the associated tax, was £79.3 million (127.3 pence per share), down 5.3% from £83.7 million (134.4 pence per share) as at 30 June 2010.

These property valuations have again been carried out by CBRE.

The fall in both the NAV and the EPRA NAV is primarily due to the High Court judgment referred to below. On a like-for-like basis (in Rand terms), there has again been a marginal fall in values, reflecting the current property market conditions.

Ongoing management arrangements

With the appointment of Group Five as the Investment Manager for the Group, we have in place the operational organisation that, we believe, puts us in a strong position to deliver on our strategic aims for the Group and to drive shareholder value.

The combination of the stability and lower cost base means the Board is looking forward with confidence.

Status of litigation

Judgment was delivered on 30 March 2011 by the High Court in favour of Proteus in all material respects.  SAPRO has been ordered to pay the following amounts:

·; £5,074,180 in respect of the performance fee to 30 June 2009 and additional unpaid management fees to 31 March 2010;

·; approximately £360,000 for interest on such sums; and

·; Proteus' costs, which are yet to be assessed, but are expected to be less than £600,000.

As a result of the judgment, the Board of Directors estimates that the full amount of the claim as it now stands (including interest and costs) and additional management fees payable for the period after 31 March 2010 is in aggregate £6,400,000, which is reflected in these accounts.

The Company will be seeking permission to appeal this judgment from the Court of Appeal.

Investments

The investment manager has begun to implement the Company's strategy to dispose of certain properties while retaining others for further improvement and later sale as announced earlier in the year.

Despite the slow market conditions significant progress has been made on certain of the assets as identified for sale. The Company is in negotiation with reputable buyers on entire properties, while others like Gosforth Park continue to attract strong interest from developers and end users where numerous conditional offers for purchase have been received. With certain of the joint venture projects the Company is engaged in negotiations with our joint venture partners to buy out SAPRO's interest.

Currently the Company is not engaged in any additional construction work on any of the properties, other than Gosforth Park where additional road infrastructure spend (circa GBP900,000) is due to commence in order to unlock further plots for sale.

Activity to secure development rights and required permissions continues to make progress on various sites, most notably on Longmeadow, Sandton, Starleith, Driefontein, Emberton and Waltloo.

The letting of all completed retail, office, industrial and residential units continues to be challenging in the current market conditions where rental rates are under pressure and generally revised down from previous projections in order to reduce vacancy rates. SAPRO continues to hold a small proportion of completed rentable properties in its portfolio, with the majority of residential and industrial units being held for sale. The hospitality, retail and office properties at the Longpoint development are identified as an interim hold.

Valuations

The South African property market continues to show early signs of recovery with increasing rental activity and limited new development at a nodal level.

SAPRO's portfolio of properties maintained its value over the last 6 months without material change, reflecting the relatively static market conditions.

Determination of valuations continues to be difficult in these market conditions due to lack of comparable transactions, however, the board is confident that the carrying values as determined by CBRE are reflective of expected realisations and development value inherent in the projects

Outlook and project business plans

Your Board continues to work with the new investment manager to develop strategies for each of the developments and, where appropriate, to sell the developments that have been identified for sale. Whilst transactions in South Africa, especially in the current market, take time to complete, we are confident that we will be able to implement our strategy.

Against this background, your Board continues to have confidence in the Group's assets and the strategy to deliver value.

David Hunter

Chairman

30 March 2011

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

Company Balance Sheet

Consolidated Statement of Changes in Equity

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 5 January 2011 at the Company's adjourned annual general meeting a resolution was passed, which approves the re-registration of the Company as a company incorporated under the Companies Act 2006 (as amended) of the Isle of Man. South African Property Opportunities plc and its subsidiaries (the "Group") investment objective is to achieve capital growth from an opportunistic portfolio of real estate assets in South Africa.

Proteus Property Partners Limited (the "Investment Manager") was originally appointed as the Company's manager. Group Five Property Developments (Pty) Limited ("Group Five"), was appointed as the replacement investment manager on 4 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 original placing of 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 fund raising 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 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.

Company profit

In accordance with the provisions of Section 3 of the Isle of Man Companies Act 1982, no separate income statement has been presented for the Company. The amount of the Company's profit for the period recognised in the Consolidated Income Statement is £879,853 (31 December 2009: £4,644,116).

2 Summary of significant accounting policies

Except as described below, the accounting policies applied by the Group in the preparation of these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 30 June 2010.

These interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) IAS 34: Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 30 June 2010.

The interim financial statements for the six months ended 31 December 2010 are unaudited. The comparative interim figures for the six months ended 31 December 2009 are also unaudited.

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 and the requirements of the Isle of Man Companies Acts 1931 to 2004. The preparation of financial statements in conformity with IFRS requires the use of accounting estimates. It also requires management to exercise its judgement in the process of applying the Company and Group's accounting policies.

The most significant area requiring estimation and judgement by the Directors is the valuation of the inventory and the resulting calculation of the performance fee liability (see note 6).

Standards, amendments and interpretations to existing Standards relevant to the group that are not effective and have not been early adopted by the Group.

·; IFRS 9, 'Financial instruments', issued in November 2009. This standard is the first step in the process to replace IAS 39, 'Financial instruments: recognition and measurement'. IFRS 9 introduces new requirements for classifying and measuring financial assets and is likely to affect the Group's accounting for its financial assets. The standard is not applicable until 1 January 2013 but is available for early adoption. However, the standard has not yet been endorsed by the EU. The Group is yet to assess IFRS 9's full impact.

·; 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. However, the standard has not yet been endorsed by the EU. 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 Group will apply the revised standard from 1 July 2011 subject to endorsement by the EU. When the revised standard is applied, the Group and the Company will need to disclose any transactions between its subsidiaries and its associates.

3 Segment Information

The chief operating decision-maker has been identified as the Board. The Board reviews the Group's internal reporting in order to assess performance and allocate resources. It has determined the operating segments based on these reports. The Board considers the business on a project basis by sector. The sectors are Residential, Mixed Use and Industrial.

Tables removed - please refer to the Company's website www.saprofund.com for the segment reporting for the period ended 31 December 2010 and a comparative table for the period ended 31 December 2009.

*Other refers to income and expenses of the Group not specific to any specific sector such as fees of the investment manager and income on un-invested funds. Other assets comprise cash at bank of £6,264,000 (31 December 2009: £9,795,000) and other assets £89,000 (31 December 2009: £267,000).

The entity is domiciled in the Isle of Man. All of the reported revenue, £576,676 (31 December 2009: £525,217), is from external customers located in South Africa.

The total of non-current assets other than financial instruments and deferred tax assets is £32,564,921 (30 June 2010: £29,472,470) and all of these are located in South Africa.

Revenues of £181,201 (ZAR: 2,017,544) (2009: £nil (ZAR: nil)) are derived from a single external customer and is attributable to Kindlewood.

4 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:

5 Cost of sales

6 Investment Manager's fees

Annual fees

During the period there was a transition of investment manager from Proteus Property Partners Limited to Group Five Property Developments (Pty) Limited this occurred with effect from 21 October 2010.

For the period to 20 October 2010 Proteus Property Partners Limited was entitled to a management fee of 2% per annum of the net asset value of the Group payable quarterly in advance.

From 21 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 to 31 December 2010 paid to Proteus Property Partners Limited amounted to £513,774 (31 December 2009 £796,811) and to Group Five Property Developments (Pty) Limited £118,591 (31 December 2009: £nil). Additional management fees (and associated costs) in relation to earlier periods payable to Proteus Property Partners Limited amounted to £1,145,802 (see note 23).

During the period, pursuant to the investment management agreements, the investment managers were also entitled to recharge to the Group all and any costs and disbursements reasonably incurred by them in the performance of their duties including costs of travel save to the extent that such costs were staff costs or other internal costs of the relevant investment manager. Accordingly, the Company is responsible for paying all the fees and expenses of all valuers, surveyors, legal advisers and other external advisers to the Company in connection with any investments made on its behalf. All amounts payable to the investment managers by the Company are paid together with any value added tax, if applicable.

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 annum, but adjusted so as to exclude any dividends paid during the period.

During the period 21 October 2010 to 31 December 2010 and according to the terms of the revised Investment Management Agreement, Group Five Property Developments (Pty) Limited is entitled to a performance fee based upon the uplift in value of disposed assets over a benchmarked value.

Performance fees payable for the period ended 31 December 2010 amounted to £nil (31 December 2009: £nil). Performance fees payable in relation to earlier performance fee periods payable to Proteus Property Partners Limited amounted to £4,961,732 (see note 23).

7 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 £20,000 each, which increased to £40,000 on 1 October 2009; and the Chairman £50,000, which increased to £75,000 on 1 October 2009.

Executive Directors' fees

The Executive Directors received annual basic salaries of £20,000, increased to £40,000 with effect from 1 October 2009. Pursuant to the terms of their respective service agreements, Craig McMurray and John Chapman are entitled to incentive payments of, respectively, 1.5 per cent. and 0.5 per cent. of (a) all sums distributed to shareholders, and (b) all net proceeds of disposals which have not yet been distributed at the time of termination of their respective agreements. The agreements also contain change of control provisions which, from the fourth anniversary of each executive's appointment, trigger payments of the same percentages of any offer price if the Company is acquired. The fees due under the change of control provision are scaled back by 25 per cent. each year if the change of control occurs prior to the fourth anniversary of each executive's appointment.

All directors' remuneration, fees and expenses

Total fees, basic remuneration and expenses paid to the Directors for the period ended 31 December 2010 amounted to £144,010 (31 December 2009: £143,821). This was split as £91,062 to Non-executive Directors (2009: £76,208) and £52,948 to Executive Directors (2009: £67,613) and Directors' insurance cover amounted to £23,962 (31 December 2009: £13,808).

8 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:

9 Basic and diluted (loss)/earnings per share

Basic (loss)/earnings per share is calculated by dividing the (loss)/profit attributable to equity holders of the Group by the weighted average number of shares in issue during the period.

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

10 Investments in subsidiaries and associates

10.1 Investments in subsidiaries

Since inception and for efficient portfolio management purposes, the Company established the following subsidiary company:- 

SAPSPV Holdings RSA (Pty) Limited is a direct subsidiary of the Company. SAPSPV Holdings RSA (Pty) Limited was incorporated on 20 October 2006 with a share capital of ZAR 101 and share premium of ZAR 24,999,899.

During the period there has been no change in the Company's investment in the direct subsidiary.

The direct and indirect subsidiaries held by SAPSPV Holdings RSA (Pty) Limited are as follows:-

* this also represents the percentage of ordinary share capital and voting rights held - 2010

** the Group controls the company by means of direct control of the board

10.2 Investment in associates

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

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, interest was charged at a rate of South African Prime up to 30 June 2010

The fair value of these loans approximate their carrying value at 31 December 2010.

11 Intangible assets

12 Inventories

Non-current assets

* impairment is included in cost of sales in the income statement where the net realisable value is lower than the cost (see below)

Current assets

* impairment is included in cost of sales in the income statement where the net realisable value is lower than the cost (see below).

During the period, the Group capitalised costs of £1,348,515 (ZAR 15,014,766) (year ended 30 June 2010: the Group acquired land and capitalised costs of £7,548,896 (ZAR 90,715,089)), in order to improve it for future re-sale, and accordingly it was classified as inventory. Borrowing costs of £293,762 (ZAR 3,270,830) (2010: £702,467 (ZAR 8,441,541)) have been included in capitalised costs.

At 31 December 2010 the net realisable values of Emberton, Kyalami, Lenasia and Starleith were lower than cost, therefore their inventory values have been impaired to a value of £16,517,284 (ZAR 171,200,000) (30 June 2010: £14,929,929 (ZAR 171,200,000)). The net realisable value has been derived as fair value less cost to sell.

Security

At 31 December 2010, there are two first rank mortgages secured over the inventory held by Gosforth Park and Kindlewood which totals £23,317,469 (ZAR 241,683,233) (30 June 2010 Gosforth Park and Kindlewood £20,723,716 (ZAR 237,636,779)) (see note 20 for details).

13 Trade and other receivables

The loan from the Company to SAPSPV Holdings RSA (Pty) Limited bears interest at the Prime Rate as published by the Reserve Bank of South Africa from the date of the advance to the date of repayment, which interest shall be compounded monthly in arrears on the last working day of each month.

This loan is repayable as and when the directors of SAPSPV Holdings RSA (Pty) Limited resolve that repayment shall be effected, provided there are sufficient cash reserves available to do so and that prior approval has been obtained from the Exchange Control Division of the South African Reserve Bank but in no case later than 30 June 2013.

The fair value of the loan approximates its fair value at 31 December 2010.

14 Cash at bank

Group

Included within the bank deposit balances figure is an amount of £482,397 (ZAR 5,000,000) (30 June 2010: £436,037 (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 £482,397 (ZAR 5,000,000) (30 June 2010: £436,037 (ZAR 5,000,000)) in connection with senior debt obligations of its associate Imbonini Park (Pty) Ltd.

Company

15 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 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 (£2,122,548) in dividends declared by Business Venture Investments No 1269 (Pty) Limited.

16 Share premium

17 Net asset value per share

Group

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.

18 Loans from third parties

Group

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 Madison Park Properties 36 (Pty) Ltd and the Waltloo Industrial Park development

*** in relation to its 50 per cent interest in Madison Park Properties 40 (Pty) Ltd and the Brakpan development

**** in relation to his prospective interest in Madison Park Properties 34 (Pty) Ltd and the Kyalami Residential Estate development

***** in relation to its 25 per cent interest in Breeze Court 31 (Pty) Ltd 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 at 31 December 2010.

19 Trade and other payables

Group

Company

20 Borrowings

Current liabilities

Group

Two developments have bank loans which are secured by their inventory (see note 12).

Terms and debt repayment schedule:

The fair value of the borrowings approximate their carrying value at 31 December 2010.

21 Contingent liabilities and commitments

As at 31 December 2010 the Group has the following contingent liabilities and commitments:

- contingent liabilities which have corresponding bank guarantees are detailed separately in note 14.

22 Related party transactions

Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence over the other party in making financial or operational decisions.

Group

Both Investment Managers, Proteus Property Partners Limited and Group Five Property Developments (Pty) Limited, and the Directors of the Company are considered to be related parties by virtue of their ability to make operational decisions for the Company. Fees for the year ended 31 December 2010 are disclosed in notes 6 and 7 respectively.

On 4 October 2010 Group Five Property Developments (Pty) Limited was appointed as Investment Manager to the Company. Group Five Property Developments (Pty) Limited is a related party to Group Five Construction (Pty) Limited, which is a partner in the Sandton and Starleith developments. There is a loan in respect of the Sandton development which is disclosed in note 18.

Related party transactions with associates are disclosed in note 10.

Company

Related party transactions with subsidiaries are disclosed in note 13.

23 Post balance sheet events

Subsequent to 30 June 2010 agreements were signed for the sale of two units at the Gosforth development. The two sales totalled £402,017 (ZAR 4,166,866) but have not transferred.

Subsequent to 30 June 2010 SAPRO accepted an offer from the development partners to purchase the western portion of the Waltloo property (approximately 22,000 square metres or 50 per cent of the entire development) at the value included in the third party valuation performed at 30 June 2010. Sales proceeds are £955,147 (ZAR 9,900,000) but have not yet been transferred.

On 5 January 2011 at the Company's adjourned annual general meeting a resolution was passed, which approves the re-registration of the Company as a company incorporated under the Companies Act 2006 (as amended) of the Isle of Man. Re-registration will enable the Company, amongst other things, to return capital more efficiently through share buybacks and other means.

From 1 February 2011 new terms are being negotiated on the loan from Nedbank (Imperial Bank) (see note 20) and therefore the loan is considered to be repayable on demand.

In relation to the claim brought by Proteus against the Company for alleged unpaid performance and management fees, judgment was delivered on 30 March 2011 by the High Court in favour of Proteus in all material respects.  As a result of the judgment, the Board of Directors estimates that the full amount of the claim as it now stands (including interest and costs) and additional management fees payable for the period after 31 March 2010 are in aggregate £6,400,000. The Company will be seeking permission to appeal this judgment from the Court of Appeal.