(CPT) Carpathian

Operational Highlights

Rory Macnamara, Chairman of Carpathian, said:

"During this demanding period in the global financial and property markets, Carpathian has made substantial progress in stabilising its capital base by restructuring the debt facilities relating to core assets within its portfolio in line with the outcome of the Strategic Review. We have also provided clear limitations on our liabilities regarding the portfolio of non-core assets.

The Board also worked closely with the property adviser to entirely realign the management's incentives with shareholders' interests in order to maximise the potential returns to shareholders over the medium term and to operate the business on the most cost efficient basis.

As a result of the above progress, the Board believes Carpathian is now in a stronger position to successfully navigate through the present difficult economic period in our Central and Eastern Europe markets and deliver cash returns to shareholders with a first distribution expected to be made within the next three months."

Enquiries:

Carpathian PLC Rory Macnamara, Non-executive Chairman Via Redleaf Communications

Carpathian Asset Management Limited 020 3178 2892
Paul Rogers / Balazs Csepregi ir@carpathianam.com
Collins Stewart Europe Limited 020 7523 8350

Bruce Garrow

Redleaf Communications 020 7566 6700

Emma Kane / Adam Leviton / Henry Columbine carpathian@redleafpr.com

Notes to Editors:

Eastern European commercial real estate

warehousing in several countries in Central and Eastern Europe being

currently Croatia, the Czech Republic, Hungary, Poland, Romania, Lithuania

and Latvia

Property Investment Adviser to Carpathian. It is responsible for identifying

acquisition targets, managing transactions and portfolios and development

activity within Central and Eastern Europe. The Company holds a 50 per cent.

interest in CAM, the remaining 50 per cent. is held by UK Real Estate

Management Limited (a company wholly owned by Paul Rogers and Massimo

Marcovecchio)

Chairman's statement

According to the latest IMF report (issued on 10 September 2009), a number of major economies might show signs of recovery from recession, however, that there remain several critical steps and actions to implement within and across countries before its sustainability can be proven. Therefore we remain cautious in relation to the short and medium term macroeconomic outlook.

As indicated previously, global trends have a substantial impact on economies in Central and Eastern Europe where

consumer and property market conditions remain challenging due to very limited liquidity and increased volatility in the financial markets. We believe that some of the economies within the region are better positioned to recover from the current turmoil than some countries in Western Europe based on current macroeconomic performance. Carpathian has the flexibility to focus on the countries and assets which could prove to be the most resilient against the present property market volatility.

Financial results

During the first six months of 2009, the Group's net rental and related income was EUR13.6 million (six months to 30 June 2008: EUR21.2 million). This lower net income mainly reflects the sale of Varyada Shopping Centre in December 2008 and the loss of income on the Interfruct portfolio in Hungary coupled with a 3% decrease in rents across the remaining property portfolio.

Adjusted profit after tax excluding any fair value, goodwill and foreign exchange movements, for the first six months of 2009 was EUR2.4 million (six months to 30 June 2008: EUR7.0 million). The consolidated net loss for the first six months of 2009 was EUR2.6 million against a profit of EUR7.6 million in the first six months of 2008. There is no fair value adjustment of the investment and development portfolio for the first six months of 2009 given that independent property valuations are only performed at year end.

This loss generates negative earnings per share of EUR(1.1) euro cents (six months to 30 June 2008: earnings per share of EUR4.8 euro cents). Operating profit generated approximately EUR1.0 euro cent per share (six months to 30 June 2008: EUR 3.1 euro cents per share).

The deferred tax expense for the period amounts to EUR5.0 million (six months to 30 June 2008: EUR2.3 million). Deferred tax is provided on the excess of the fair values of investment properties over their corresponding tax base values. Whilst fair values have not changed during the period (see above), the excess has increased as a result of the ongoing tax depreciation.

The total cash of the Group as at 30 June 2009 was EUR55.2 million (as at 30 June 2008: EUR84.1 million) and EUR42.6 million as at 31 August 2009. The Group's uncommitted cash position, as at 31 August 2009, was approximately EUR28 million, which equates to EUR12.1 euro cents per share. At the time of our last preliminary announcement, the Group's uncommitted cash as at 27 March 2009 was EUR44.6 million or EUR19.2 euro cents per share. The decrease of EUR16.6 million in the uncommitted cash position is, inter alia, accounted for by the purchase of the property adjoining Promenada (Poldrim) in Warsaw for EUR6.2 million agreed as part of debt restructuring with DPB, a debt repayment of EUR8 million agreed as part of the DPB restructuring together with the payment of arrangement fees and transaction costs.

The Group's net asset value per share as at 30 June 2009 was EUR81 euro cents compared to EUR169 euro cents a year earlier, preceding the last independent valuation of the property portfolio at the end of 2008.

Board change

On 23 September 2009, Andrew Shepherd joined the Board as an additional Non-Executive Director adding a wealth of experience within the Central and Eastern European property markets.

Business performance and strategy

As concluded as part of the strategic review, the Board continues with its trading strategy to focus on the preservation of value until a return of liquidity enables realisation to occur, with the aim of maximising the distribution of cash proceeds from future disposals. In compliance with the latest rules of AIM, the full version of the Company's Investment Policy will be available shortly on the Company's website (www.carpathianplc.com).

Based on recommendations from our Property Adviser as part of the Strategic Review, we have categorised each of our properties as core or non-core, having assessed any enduring equity value and individual risk profile of each of the assets on a prudent basis. This is set out in more detail in the Property Adviser's Report.

Starting at the beginning of the year we have given priority to restructuring the Group's debt facilities in relation to those parts of the portfolio that the Property Adviser believes are likely to result in the Company realising equity value. During the past six months, the Company has successfully restructured debt facilities with three of the Group's lenders, Deutsche Pfandbriefbank ('DPB'), Anglo Irish Bank ('AIB') and Erste Bank, representing around 83% of its EUR429 million total debt facilities. DPB was formed in mid 2009 by the merger of Hypo Real Estate Bank AG and DEPFA AG.

The EUR235 million DPB restructuring (representing 55% of total debt) delivers a more stable capital structure to the majority of our core assets until the end of 2011 with no loan to value covenant in place for the term. As part of this restructuring, the Company agreed, inter alia, to a debt repayment of EUR8.0 million and the purchase of an income producing property adjoining Promenada for EUR6.2 million (which was added to the security package instead of a direct debt repayment).

The EUR76 million AIB restructuring (representing 18% of total debt) required an investment of EUR3 million (part equity, part mezzanine debt) with full cash sweep in place as part of the transaction. As part of the agreement, AIB agreed to release cash funds of approximately EUR7.5 million held at the Bank from the sales proceeds of Karlovy Vary. The assets within this portfolio are considered non-core with Carpathian's liabilities limited to funds already invested

Under these two new arrangements, EUR133 million of interest-bearing loans and borrowings which are included within current liabilities at 30 June 2009 will become non-current liabilities.

On 25 September 2009, the Company signed an amendment to the EUR40.4 million debt facility with Erste Bank. As part of this agreement, the Loan to Value covenant has been waived until loan maturity in March 2011, while the margin increased from 180bps to 300bps and amortisation has been introduced at EUR500,000 per annum. No equity injection will be required as both the margin increase and amortisation payments are to be covered by rental income. The facility relates to a portfolio of 6 supermarkets in Croatia let to the country's largest retailer Konzum.

Where relevant, the Group, together with its Property Adviser, is also progressing well with other debt restructurings. As already stated, Carpathian has no current plans to inject additional cash in agreeing any further debt restructurings.

The core property portfolio continues to trade satisfactorily with rental levels broadly in line with the Board's expectations as set out in more detail in the Property Adviser's report.

Turning to going concern, the Board has reviewed a detailed cash flow and underlying assumptions for the period until the end of 2011, which projects that the Group and the Company have adequate resources for that period.

During that time the Group will continue to focus on operational efficiencies, maintaining income streams and managing relations with its lenders, with a view to a recovery in market conditions and particularly to some liquidity returning to the property sector.

The Group is exposed to a number of risks, including interest rate risk, currency risk, market risk, credit risk and liquidity risk. The Board has overall responsibility for establishment and oversight of the Group's risk management framework; its policies are established, in conjunction with the Property Adviser, to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.

The Directors recognise that these circumstances represent an uncertainty that casts doubt upon the Group's and Company's ability to continue their operations. However after making suitable enquiries and based on the factors described above and in particular on the recent debt restructurings and the position reached in various discussions with the Group's other bankers, the Directors have a reasonable expectation that the Group and Company have adequate resources to continue their operations for at least the next eighteen months. For these reasons, the Directors continue to adopt the going concern basis in preparing the interim report and accounts.

Dividends

As stated at the time of the preliminary announcement, the Board intends that the Company will make aggregate distributions of not less than 8 pence (EUR9.2 euro cents) per share in cash to shareholders prior to May 2010 with an expectation that the first part of this distribution will be announced prior to 31 December 2009.

Property Adviser's interest realignment and independence

In May 2009, following conclusion of the strategic review and the decision to continue with the Group's trading strategy, Carpathian initiated discussions with Carpathian Asset Management ("CAM") to renegotiate the management incentive arrangements to ensure complete realignment of interest between shareholders and CAM. The main objective is to ensure successful execution of the trading strategy as stated above to maximise realisations and to deliver substantial and swift operational cost savings including CAM's direct overheads.

The Board has made substantial progress on the negotiation and the documentation of the new incentivisation terms, which are expected to be concluded and announced shortly.

With regard to the independence of our Property Adviser, the Company holds a 50 per cent. interest in CAM, the remaining 50 per cent. is held by UK Real Estate Management Limited (a company wholly owned by Paul Rogers and Massimo Marcovecchio). Rory Macnamara and Rupert Cottrell, Non-executive Chairman and Director respectively, of Carpathian sit on the Board of CAM as Directors and receive no remuneration for this function.

Other corporate matters

As previously announced, the ordinary shares of the Company were redenominated from Sterling to Euros such that the nominal value of the ordinary shares is now EUR0.01. The resolutions providing for this redenomination into Euro were passed at the General Meeting held on 21 July 2009. The ordinary shares were converted at the rate of EUR1.0: £0.8645 and the change took effect on 27 July 2009.

On the same date, EUR173.5 million of the Company's share premium was released to retained earnings.

Outlook

In the current macroeconomic environment the Board remains cautious and follows a very conservative policy with the use of cash funds available within the Group. Now that major debt restructurings are complete and with no further acquisitions or equity injections expected to take place, we continue to focus on delivering substantial operational cost savings by concentrating on the core assets within the portfolio. Based on recent achievements in relation to the objectives set out in the strategic review, the Company is better positioned to maximise value for shareholders over the medium term.

Rory Macnamara

Chairman

28 September 2009

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Carpathian Plc

Half year to 30th June 2009.

Property Investment Adviser's Report

Since the Strategic Review that commenced towards the end of 2008, the management team of the Property Adviser has concentrated on pursuing its strategy proposed to and agreed with the Board and the Company's shareholders.

The main features of this strategy are;

1. Completion of debt negotiations

All negotiations have been undertaken and have either been formally completed with announcements already made, or provisionally completed pending documentation with announcements to follow. All facilities for core investment properties have had reference to loan to value covenants removed.

2. Reducing operational costs

Following invitation from the Board of Carpathian, CAM's management has made proposals to take 100% ownership of CAM and for the reduction of future direct management costs charged to the Company. This has been provisionally agreed and, once fully implemented, the cost reduction will contribute to the Company's sustainability over the medium term.

3. Management alignment

The Board also invited CAM to propose a revised incentive scheme re-aligning the Property Adviser's compensation with shareholders' priorities. The Board is presently in discussions over the final details of the revised incentivisation scheme and would expect to announce the outcome of these discussions together with the cost reduction plan in the near future after consultation with certain major shareholders.

4. Medium term trading

Carpathian's agreed strategy is to protect core assets so that they may realise best value for shareholders within the medium term. Properties are being managed and preparations made to place assets to their best advantage pending future sale opportunities. These preparations have included stabilisation of the debt position on major assets, which greatly assists market differentiation from perceived distressed assets. Currently, market investment activity is being carefully monitored. At present this activity is still very low although the economic growth, debt exposure and stable rental performance shown within some of the CEE markets, notably Poland and the Czech Republic, suggests some prospect for a speedier recovery relative to other (including some western) markets.

Property portfolio

CAM has recommended the risk categorisation of assets as core and non-core to reflect the medium term prospects for retained equity value. This categorisation takes into consideration the property attributes and the status of the debt position of each individual asset. It demonstrates where management focus will be applied and will enable shareholders to anticipate the main contributors of expected future performance. It also highlights the independence of core asset performance from that of non-core assets, due to core assets being held in ring fenced non-recourse companies.

The classification of the properties into core and non-core categories is shown in the tables below, along with the key asset characteristics over the last six month period.

Core portfolio

The first table lists the core investment properties with details of the debt facilities.

CORE PORTFOLIO Country Gross Lettable Area Lender Loan Expiry
Investment properties (sqm)
Loan amount as at 31
Aug 09
(EUR 000's)
Agrokor Portfolio Croatia 31,647 Erste Bank 40,474 Mar-11
Antana Hungary 36,997 Barclays plc 12,011 Nov-09
Gdansk-Osowa Poland 13,167 DPB 22,104 Dec-11
Lodz-Tulipan Poland 9,621 DPB 16,578 Dec-11
Sosnowiec - Centrum Poland 2,162 DPB 3,224 Dec-11
Torun-Kometa Poland 1,958 DPB 4,145 Dec-11
Biedronka/Slupsk Poland 1,220 No debt - -
Promenada Poland 51,165 DPB 103,400 Dec-11
MacroMall Romania 7,489 No debt - -
Total 155,426 201,936

The second table shows a summary of the key performance indicators of the core investment portfolio.

Investment properties
Weighted average lease expiry 3.78 years
Voids by rental value / % EUR1,731k / 7%
Lease expiries within 1 year (value / no. of leases) EUR4,593k / 149

Re-leased space within last year (value / no. of leases) EUR1,525k / 92
NOI growth over the last 12 months 3%
Year to date income collection 96%

Tenant exposure profile:

The top 10 tenants in the core portfolio represent 38% of the total rent.

The remaining 62% comprises 837 tenants paying approximately EUR13.6 million gross rent per annum.

The third table shows the core development assets:

CORE PORTFOLIO Country Land Size (sqm) GLA (sqm) Lender Loan amount Expiry
Development properties (EUR 000's)
Riga Shopping Centre Latvia 8,203 37,742 Nordea 39,000 Jun 17
Baia Mare - Land Romania 125,238 50,517 No debt - -
Satu Mare - Land Romania 26,759 32,112 No debt - -
Total 160,200 120,371 39,000

Within the core investment portfolio, funds required to restructure the debt facility of Promenada in Warsaw were partially utilised with the purchase of an adjoining property (Poldrim) for EUR6.2 million. This asset was offered as collateral to the revised debt facility reducing the capital repayment. The Poldrim property produces an additional net income to the portfolio of approximately EUR591,000 per annum. The property is performing well, and work is underway to unlock further value through a major extension of the prime retail space. It is anticipated that the value enhancing milestones including planning and construction permits and major pre-lets will be attractive to an incoming investor. There are 28 lease expiries in 2009 representing 19% of total rent. Of these, 17 were renewed by the end of July with rent levels above the passing rent, representing 18% of expiring rent.

The Blue Knight portfolio in Poland has 58 lease expiries in 2009, representing 33% of total rent, out of which 41 were renewed by the end of July 2009, representing 21% of total rent. The renewed rent is 1.2% higher than previous rent levels.

Our prime retail development project in the centre of Riga, Latvia is advancing on schedule for completion in the second quarter of 2010. The construction facility contains a 65% pre lease condition releasing the entirety of the remaining funds of approximately EUR25 million under the EUR64 million debt facility. A careful status review of the substantial pre leasing agreed to date is underway and is to be presented to the lender, Nordea. The intended latter phase of the scheme is being re-considered in the light of market conditions.

The Company has recently signed an amendment to the EUR40.4m Erste bank facility used to finance the acquisition of the Agrokor Portfolio which comprises 6 Konzum supermarkets in Croatia. The amendment waives the LTV covenant until loan maturity in March 2011 in return for a margin increase from 180bps to 300bps and the introduction of amortisation of EUR500,000 per annum. No equity injection is expected to be required as both the margin increase and amortisation payments are covered by rental income. The porfolio's tenant is Konzum, the market leader retailer in the country with attractive trading performance also over the last two years. With the facility restructured, we can now concentrate on realising equity from this core asset portfolio.

We are currently negotiating terms of the sale of the Slupsk property in Poland.

The Antana Logistic Park in Budapest has experienced a 50% fall in income following the main tenant not renewing the lease in February 2009. The whole lettable area is leased on short-term periods due to intended redevelopment which has now been suspended. Occupier enquires have increased over the recent period, particularly for larger unit sizes with longer term leases, or alternatively considerations for a purchase of part or whole of the estate. We are in positive discussions with the debt provider, Barclays to complete the restructuring the debt facility shortly.

Within the core investment portfolio, MacroMall in Brasov, Romania, is experiencing severe difficulties with voids and problematic income collection. Resources are being focused on stabilising the situation to recover due but unpaid income. Meanwhile interest has been shown on potentially reconfigured space creating a much needed further anchor store.

Non Core Portfolio

The tables below list the non-core investment properties, the details of their debt facilities and key performance indicators.

NON-CORE PORTFOLIO Country Gross Lettable Area Lender Loan Expiry
Investment properties (sqm)
Loan amount as at 31
Aug 09
(EUR 000's)
"Point" Portfolio Czech R/ Hungary 45,340 DPB 54,414 Dec-11
Babilonas Lithuania 21,475 DPB 23,500 Dec-11
Plaza portfolio Hungary 48,374 MKB 44,400 In default
Interfruct portfolio Hungary 94,668 AIB 58,575 Jan-10
Ericsson Office Hungary 8,972 AIB 11,223 Jan-10
Marina Mokotow Poland 2,544 AIB 6,809 Jan-10
Total 221,373 198,921

Investment properties
Weighted average lease expiry 4.32 years
Voids by rental value / % EUR6,912k / 32%
Lease expiries within 1 year (value / no. of leases) EUR2,628k / 103

Re-leased space within 1 year (value / no. of leases) EUR1,650k / 100
NOI growth over the last 12 months (39)%
Year to date income collection 92%
NON-CORE PORTFOLIO Country Land size (sqm) GLA (sqm) Lender Loan amount Expiry

Development properties
Arad Shopping Centre Romania 24,436 529,258 MKB 11,448 Mar 10
Cluj - Land Romania 19,400 47,995 MKB 8,500 Sep 09
Total 43,836 577,253 19,948

CAM is reviewing the available options for each of the assets within the non core portfolio in order to maximize returns without further deploying equity to help the Board to formulate its strategy in relation to these assets. Unaudited Consolidated Statement of Comprehensive Income for the six months ended 30 June 2009
30 June 30 June 30 June 30 June 31 December
Note 2009 2009 2009 2008 2008
Revenue Capital Total Total Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000

Gross rental income 19,048 - 19,048 24,939 47,275
Service charge income 6,485 - 6,485 7,208 15,034
Service charge expense ( 8,152) - ( 8,152) ( 8,411) ( 17,886)
Property operating expenses ( 5,110) - ( 5,110) ( 3,290) ( 7,164)
Other property income 1,357 - 1,357 709 6,079
Net rental and related income 13,628 - 13,628 21,155 43,338

Changes in fair value of 2 - - - - ( 205,833)

investment property
Impairment of goodwill - - - - ( 32,377)

Loss on sale of investment - - - - ( 1,336)

property
Changes in fair value of - 920 920 17 6,709

derivative assets and liabilities
Net foreign exchange gain / - 370 370 ( 1,540) ( 4,001)

(loss)
Administrative expenses ( 2,837) - ( 2,837) ( 4,007) ( 8,235)
Net operating profit / (loss) 10,791 1,290 12,081 15,625 ( 201,735)

before net financing expense
Financial income 2,622 - 2,622 3,496 6,837
Financial expenses ( 11,440) - ( 11,440) ( 12,612) ( 26,094)
Changes in fair value of - ( 1,230) ( 1,230) 4,379 ( 10,986)

interest rate swaps
Net financing expense 4 ( 8,818) ( 1,230) ( 10,048) ( 4,737) ( 30,243)

Net profit / (loss) before tax 1,973 60 2,033 10,888 ( 231,978)

Tax credit / (expense) 435 ( 5,040) (4,605) ( 3,258) 42,730
Profit / (loss) for the period 2,408 (4 ,980) ( 2,572) 7,630 ( 189,248)

and total comprehensive income for the period Attributable to:
Equity holders of the Company ( 2,532) 11,075 ( 183,913)
Non-controlling interest ( 40) ( 3,445) ( 5,335)

Basic and diluted earnings per share for profit attributable to the equity holders of the Company during the period (expressed as cents per share)
Basic earnings per share 5 (1.1) c 4.8 c (79.7) c
Diluted earnings per share 5 (1.1) c 4.8 c (79.7) c

Unaudited Consolidated Statement of Changes in Equity for the six months ended 30 June 2009
Share capital Share premium Minority interest Retained earnings Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000

Balance as at 1 January 2008 3,348 260,386 5,395 122,670 391,799

Total comprehensive income for the period
Profit for the period - - - 7,630 7,630

Transactions with owners recorded directly to equity
Dividends paid and declared - - - ( 9,889) ( 9,889)
Carried interest allocation to - - ( 3,445) 3,445 -

non-controlling shareholders
Balance as at 30 June 2008 3,348 260,386 1,950 123,856 389,540
3,383 263,935 60 ( 76,748) 190,630

Balance as at 1 January 2009

Total comprehensive income for the period
Loss for the period - - - ( 2,572) ( 2,572)

Transactions with owners recorded directly to equity
Loss allocation to minority - - ( 40) 40 -

shareholders
Balance as at 30 June 2009 3,383 263,935 20 ( 79,280) 188,058

Unaudited Consolidated Statement of Financial Position as at 30 June 2009
30 June 30 June 31 December
Note 2009 2008 2008
EUR'000 EUR'000 EUR'000

Assets Non-current assets
Investment property 2 571,945 774,487 551,155
Goodwill 12,767 35,401 13,600
Intangible assets - 29 -
Costs relating to future 66 332 65

acquisitions
Investments in equity accounted 191 - 191

investees
Other investments 7,452 7,452 7,452
Loans receivable 25,086 33,000 25,177
Deferred income tax assets 5,576 1,999 2,955
623,083 852,700 600,595

Current assets
Trade and other receivables 22,606 18,552 15,711
Loans receivable 8,200 - 8,200
Cash and cash equivalents 55,150 84,116 63,853
Financial assets 9,088 10,876 8,030
95,044 113,544 95,794

Total assets 718,127 966,244 696,389

Equity
Issued capital 6 3,383 3,348 3,383
Share premium 6 263,935 260,386 263,935
Retained earnings ( 79,280) 123,856 ( 76,748)
Total equity attributable to 188,038 387,590 190,570

equity holders of the parent
Non-controlling interest 20 1,950 60
Total equity 188,058 389,540 190,630

Liabilities Non-current liabilities
Interest-bearing loans and 11 141,056 257,477 197,835

borrowings
Other payables 8,833 - 7,884
Deferred income tax liabilities 34,463 79,520 26,816
184,352 336,997 232,535

Current liabilities
Trade and other payables 33,073 21,857 29,927
Interest-bearing loans and 11 287,817 206,031 219,304

borrowings
Provisions 17,942 2,127 18,827
Dividends payable - 9,692 -
Derivative liabilities 6,885 - 5,166
345,717 239,707 273,224

Total liabilities 530,069 576,704 505,759

Total equity and liabilities 718,127 966,244 696,389

Unaudited Consolidated Statement of Cash Flows for the six months ended 30 June

30 June 30 June 31 December
Note 2009 2008 2008
EUR'000 EUR'000 EUR'000

Cash flows from operating activities
Cash generated from operations 7 8,505 1,483 27,582
Income taxes received / (paid) 516 ( 849) ( 1,088)
Net cash generated from operating 9,021 634 26,493

activities Cash flows from investing activities
Capital expenditure on investment (14,277) ( 6,394) ( 23,805)

property
Capital expenditure on intangible - ( 11) 18

assets
Investment in unconsolidated - - ( 191)

entities
Loan advances to unconsolidated 91 ( 12,800) ( 13,149)

entities
Cash received on disposal of - - 11,979

investment property
Interest received 252 887 2,748
Acquisition of subsidiaries ( 4,150) ( 602) -
Net cash used in investing ( 18,083) ( 18,920) ( 22,400)

activities Cash flows from financing activities
New bank loans raised 12,037 43,982 100,843
Interest paid ( 10,984) ( 12,105) ( 25,078)
Repayments of borrowings ( 694) ( 3,403) ( 74,625)
Dividends paid - ( 10,589) ( 25,897)
Net cash generated from / (used 359 17,885 ( 24,757)

in) financing activities
Net decrease in cash and cash ( 8,703) ( 401) ( 20,664)

equivalents
Cash and cash equivalents at the 63,853 84,517 84,517

beginning of the period
Cash and cash equivalents at the 55,150 84,116 63,853

end of the period

Notes to the

Unaudited

Consolidated

Financial Statements 1 General information

Carpathian PLC (the "Company") is a company domiciled and incorporated in the Isle of

Man on 2 June 2005 for the purpose of investing in the retail property market in

Central and Eastern Europe. On 24 July 2009 the Company re-registered as a company

governed by the Isle of Man Companies Act 2006 and redenominated the par value of it's

ordinary shares from pounds Sterling 0.01 to Euro 0.01.

The Interim Report of Carpathian PLC for the six months ended 30 June 2009, comprises

the Company and its subsidiaries (together referred to as the "Group").

The consolidated financial statements include the share capital of the Company

denominated in pounds Sterling, translated to Euro at the exchange rates ruling at the

dates of issue. As from 24 July 2009 the share capital will be denominated in Euro,

converted from pounds Sterling, based on the exchange rate prevailing on that date.

The Company's registered address is IOMA House, Hope Street, Douglas, Isle of Man IM1

1AP. 2 Significant

accounting policies

(a) The interim report for the six months ended 30 June 2009 is unaudited and has been

prepared based on the accounting polices set out in the statutory accounts for the

year ended 31 December 2008.

(b) Changes in accounting policies

(i) Functional and

presentational

currency

The functional currency of the consolidated financial statements is the Euro as it is

the currency of the primary economic environment in which the Group operates. In prior

periods the consolidated financial statements were presented in pounds Sterling.

Following the redenomination of the share capital to Euro, this Interim Report and all

future financial information will be presented in Euro.

(ii) Presentation of

financial statements

The Group applies revised IAS1 Presentation of Financial Statements (2007), which

became effective as of 1 January 2009. As a result, the Group presents in the

consolidated changes in equity all owner changes in equity, whereas non-owner changes

in equity are presented in the consolidated statement of comprehensive income. The

presentation has been applied in these condensed interim financial statements as of

and for the six months ended 30 June 2009.

Comparative information has been re-presented so that it also is in conformity with

the revised standard. Since the change in accounting policy only impacts presentation

aspects, there is no impact on earnings per share.

(iii) Investment

property

The Group applies revised IAS 40 Investment Property (2008), which became effective as

of 1 January 2009. As a result, the Group's development properties are now classified

as investment property and are recognised initially at cost and subsequently at fair

value. Cost includes all costs directly associated with the purchase and construction

of development properties and attributable interest. Fair value is independently

determined by professionally qualified valuers at market value at the Balance Sheet

date. Gains or losses arising from changes in fair value of investment properties are

included in the Statement of Comprehensive Income in the year in which they arise.

This presentation has been applied in these condensed interim financial statements as

of and for the six months ended 30 June 2009.

The Group's policy is to fair value investment properties annually at 31 December; as

a result no fair value adjustments have been recognised in the Unaudited Consolidated

Statement of Comprehensive Income for the six months ended 30 June 2009.

Comparative information has been re-presented so that it is in conformity with the

revised standard. As development properties were impaired as at 31 December 2008 and

were devalued at that date to their market value, there has been no impact on the

earnings per share of the comparative periods resulting from the re-presentation under

the revised IAS 40. 3 Operating segments

The Group has 2 reportable segments, as described below, which are the Groups strategic business units. The

strategic business units are managed separately because they represent the varying strategic objectives of

the Group. For both of these strategic business units the Board reviews internal management accounts on at

least a quarterly basis.

Core assets are those which are considered to retain significant enduring equity value, to protect on a

prudent basis. All other assets are classified as non-core.

Information about

reportable segments

For the six months

ended 30 June 2009
Core Non-core Other and Total
adjustments
EUR'000 EUR'000 EUR'000 EUR'000

External revenues:

Net rental and 10,831 5,527 (2,730) 13,628

related income

Reportable segment 8,003 (2,276) (3,694) 2,033

profit / (loss)

before tax

Reportable segment

assets:

Investment property 300,653 271,292 - 571,945
Other assets 49,433 18,395 78,354 146,182
Total Assets 350,086 289,687 78,354 718,127

Interest bearing

loans and borrowings
Due within one (121,311) (166,506) - (287,817)

year
Due after more (83,630) (57,426) - (141,056)

than one year

Other liabilities (42,360) (27,742) (31,094) (101,196)
Total liabilities (247,301) (251,674) (31,094) (530,069)

4 Net financial

expense
30 June 30 June 31 December

EUR'000 EUR'000 EUR'000

Interest income from 366 1,578 2,659

financial

institutions

Interest income from 2,256 1,918 4,178

related party

Financial income 2,622 3,496 6,837
Net interest ( 10,841) ( 12,235) ( 25,378)

expenses on bank

borrowings

Finance costs ( 391) 170 ( 535)

amortised

Unwinding of ( 208) ( 547) ( 181)

unrealised direct

issue costs of

borrowings

Financial expenses (11,440) (12,612) (26,094)
Changes in fair ( 1,230) 4,379 ( 10,986)

value of interest

rate swaps 5 Earnings per share

Basic earnings per

share

The calculation of basic earnings per share at 30 June 2009 was based on the loss

attributable to ordinary shareholders of EUR2,532,071 and a weighted average number of

ordinary shares outstanding during the six months ended 30 June 2009 of 230,641,630,

calculated as follows:

(Loss) / profit 30 June 30 June 31 December

attributable to

ordinary

shareholders

EUR'000 EUR'000 EUR'000

(Loss) / profit for ( 2,572) 7,630 ( 189,248)

the period

Non-controlling 40 3,445 5,335

interest

(Loss) / profit ( 2,532) 11,075 ( 183,913)

attributable to

ordinary

shareholders

Weighted average

number of ordinary

shares

1 January 230,641,630 229,363,349 229,363,349
Effect of shares - - 1,278,281

issued on 16 July

2008

Weighted average 230,641,630 229,363,349 230,641,630

number of ordinary

shares

Basic earnings per (1.1) c 4.8 c (79.7) c

share

Diluted earnings per

share

The calculation of diluted earnings per share at 30 June 2009 was based on the loss

attributable to ordinary shareholders of EUR2,532,071 and a weighted average number of

ordinary shares outstanding during the six months ended 30 June 2009 of 230,641,630,

calculated as follows:

(Loss) / profit 30 June 30 June 31 December

attributable to

ordinary

shareholders

(diluted)

EUR'000 EUR'000 EUR'000

(Loss) / profit for ( 2,572) 7,630 ( 189,248)

the period

Non-controlling 40 3,445 5,335

interest

(Loss) / profit ( 2,532) 11,075 ( 183,913)

attributable to

ordinary

shareholders

Weighted average

number of ordinary

shares for the

purposes of diluted

earnings per share

Weighted average 230,641,630 229,363,349 230,641,630

number of ordinary

shares

Effect of dilutive - - -

potential ordinary

shares : share

options

Weighted average 230,641,630 229,363,349 230,641,630

number of ordinary

shares for the

purposes of diluted

earnings per share

Diluted earnings per (1.1) c 4.8 c (79.7) c

share 6 Share capital and

share premium
Number of Ordinary EUR'000
Shares of
1 pence each

Authorised:

At 31 December 2008 350,000,000 4,116

and 30 June 2009
Number of shares Share capital Share premium
issued and fully EUR'000 EUR'000
paid

Issued:

Ordinary Shares of

1p each

Balance at 31 232,148,175 3,383 263,935

December 2008 and 30

June 2009 7 Notes to the Cash

Flow Statement
30 June 30 June 31 December

Cash generated from EUR'000 EUR'000 EUR'000

operations

(Loss) / profit for ( 2,572) 7,630 ( 189,248)

the period

Adjustments for:

Increase / 310 ( 5,120) 3,554

(decrease) in fair

value of financial

instruments

Unwinding of 391 547 181

unrealised direct

issue costs of

borrowings

Net other finance 9,557 9,384 19,073

income

Decrease in fair - - 205,819

value of investment

and development

property

Costs relating to - 63 330

future acquisitions

written off

Provisions ( 885) 1,248 830
Impairment of 491 - 32,377

goodwill

Income tax expense 5,020 3,269 ( 50,024)
Profit on disposal - - 3,678

of investment

property

Operating cash flows 12,312 17,021 26,570

before movements in

working capital

(Increase) / ( 4,463) ( 193) 7,081

decrease in

receivables

Increase / 656 ( 15,345) ( 6,069)

(decrease) in

payables

Cash generated from 8,505 1,483 27,582

operations
8 Acquisition of

subsidiary

On 30 June 2009, the Group acquired 100% of the voting equity of

Poldrim Sp. z o.o. a company incorporated and owning investment

property in Poland, for a consideration of EUR6.2 million. A

summary of the acquisition is shown below:

EUR'000

Assets

Investment property 6,512
Trade and other 62

receivables

Deferred income tax 29

assets

Cash and cash 104

equivalents

Liabilities

Trade and other (146)

payables

Net assets 6,561
Goodwill (341)
Total consideration 6,220

Satisfied by:

Cash 6,220

The carrying value of investment property includes a fair value

uplift of EUR0.9 million; all other assets and liabilities are

included at their carrying values immediately before the

combination.

During the period ended 30 June 2009, Poldrim contributed a loss

of EUR0.04 million to the Group's loss.

If the acquisition had occurred on 1 January 2009, it is

estimated that the Group's consolidated revenue would have

increased by EUR0.3 million and the Group's loss would have

decreased by EUR0.28 million.

9 Dividends
30 June 31 December

EUR'000 EUR'000

Dividends paid - 15,505

during the period

10 Capital commitments

The Group has entered into contracts for professional services

amounting to EUR26.4 million (31 December 2008: EUR 36.1

million).

11 Events after the

Balance Sheet date

On 24 July, the Company re-registered as a company governed by

the Isle of Man Companies Act 2006 and redenominated the par

value of it's ordinary shares from pounds Sterling 0.01 to Euro

0.01. On the same date, EUR173,520,000 of the Company's share

premium was released to retained earnings.

On 31 July, the Group completed the restructuring of all its

debt facilities, totalling EUR235 million, with Hypo Real Estate

(recently renamed Deutsche Pfandbriefbank AG.).

On the same date, the Group also completed the restructuring of

its entire debt facilities with Anglo Irish Bank.

Under these two new arrangements, EUR133 million of

interest-bearing loans and borrowings which are included within

current liabilities at 30 June became non-current liabilities.
A detailed description of both restructurings, together with an

update on the Group's other facilities, is included in the

Property Adviser's Report above.

This information is provided by RNS The company news service from the London Stock Exchange

IR EADNXAFXNEAE