Condensed Consolidated Unaudited Financial Statements for the Six Months Ended 30 June 2011

DIRECTORS’ COMMENTARY

1 DISTRIBUTABLE EARNINGS
The Group has achieved consolidated distributable earnings of 9.77 euro cents per share and accordingly, the Board declared an interim dividend of 9.77 euro cents per share in respect of the six month period ended 30 June 2011. This strong performance represents a 17% increase over the 8.35 euro cents per share distributed for the comparable prior interim period.
2 OTHER HIGHLIGHTS
On 20 June 2011, the Company was admitted to trading on the regulated market of the Bucharest Stock Exchange. The Bucharest Stock Exchange is a regulated European market that makes the Company’s shares accessible to Romanian investors, including Romanian institutional investors. Although the Romanian institutions do not have high levels of capital under management yet, this is expected to significantly change over time. Further, the regulated nature of the Bucharest Stock Exchange paves the way for a potential listing on a major European exchange.
In June 2011, the Company raised euro28.8 million through a private placement that was heavily oversubscribed. The proceeds will be used to fund the Group’s investment and development pipeline. This private placement extended the Company’s shareholder base.
Liquidity in the trading of the Company’s shares has further improved during this period.
3 PROPERTY ACQUISITIONS AND DEVELOPMENT
As reported in the 2010 Annual Report following the year-end, the Group has acquired land adjacent to Carrefour Property’s operating property in Ploiesti and has reached preliminary agreement with Carrefour Property to redevelop the combined properties into a 50,000 m2 regional shopping centre. Since then Carrefour Property’s board has approved the transaction and significant progress has been made in securing bank financing and agreeing pre-leases with tenants.
The Group also acquired land adjacent to its retail asset in Brasov that borders a Carrefour hypermarket. The combined property is being redeveloped into a 5,300 m2 strip mall. Tenants have been secured and the re-development is under way. During the period, the Group exercised its option to acquire a 7,000 m2 underperforming galleria linked to Retail Park Auchan Pitesti that will be redeveloped into a value centre. As a significant step in the redevelopment plan, the Group concluded an agreement with Auchan to extend the hypermarket area by a further 3,500 m2, of which 1,042 m2 is related to the acquired galleria.
This extension will result in this hypermarket being one of the largest in Romania outside of the capital city. It is expected that this will strengthen Auchan’s leading position in the Pitesti area and contribute to the re-generation of the galleria.
The Group finalised and opened the first phase of the extension of Promenada Mall Braila consisting of a 10 screen Cinema City complex and a large entertainment area including an ice rink (Cinema City is the largest cinema operator in Central and Eastern Europe). Further extensions and re-configurations are ongoing and are expected to include the addition of several large international fashion retailers.
In June 2011, the Group finalised the refurbishment of the Brasov office building and is currently in negotiations with three potential tenants to lease the refurbished property.
4 DEBT
In April 2011, the Group repaid the euro6.8 million Alpha Bank loan facility that was due for repayment and replaced this in June 2011 with a euro9.5 million revolving facility from Unicredit Bank. The new revolving facility carries an interest rate of 1 month Euribor plus 3.0% and matures on 31 May 2012 when, at the Group’s option, the facility is convertible into a term loan repayable on 31 December 2014. The new facility remains undrawn.
5 PROSPECTS
NEPI’s property portfolio continues to perform well supported by the length of its lease profile and tenants with strong corporate covenants. The Group is actively pursuing further acquisition and investment opportunities and is in negotiations to conclude three transactions, which include a sizeable office acquisition, a land acquisition and a joint venture shopping centre development.
By order of the Board
Martin Slabbert
Chief executive officer
Victor Semionov
Financial director
10 August 2011

NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

BASIS OF PREPARATION
The condensed unaudited consolidated financial statements have been prepared in accordance with the recognition and measurement criteria of the International Financial Reporting Standards (IFRS), its interpretations adopted by the International Accounting Standard Board (IASB), the presentation and the disclosure requirements of IAS 34 Interim Financial Reporting and the Listing Requirements of the JSE. The accounting policies adopted are consistent with those of the prior year. These condensed consolidated interim financial results have not been reviewed or reported on by the Company’s auditor.
INVESTMENT PROPERTY
Investment property are those held either to earn rental income or for capital appreciation or both. After initial recognition investment property are measured at fair value. Fair value is determined annually by external independent professional valuators with appropriate and recognised professional qualifications and recent experience in the location and category of property being valued.
PAYMENT OF INTERIM DIVIDEND
The board has approved and notice is hereby given of a dividend per share of 9.77 euro cents for the six months ended 30 June 2011. The salient dates for the dividend are set out below:

No dematerialisation or rematerialisation of share certificates, nor transfer of shares between sub-registers in the Isle of Man, South Africa and Romania will take place between Monday, 5 September 2011 and Friday, 9 September 2011.
Shareholders on the South African sub-register will receive dividends in South African cents of 99.79078 per share, based on an exchange rate of 10.2140 South African Rand per euro.