6-K 1 jd9-22_6k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 Dated as of September 23, 2003 NETIA S.A. ------------------------------------------------------------------------------- (Translation of registrant's name into English) UL. POLECZKI 13 02-822 WARSAW, POLAND ------------------------------------------------------------------------------- (Address of principal executive office) [Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.] Form 20-F |X| Form 40-F |_| [Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.] Yes |_| No |X| - more - EXPLANATORY NOTE Attached are the following items: 1. Press Release dated August 25, 2003. 2. Press Release dated August 28, 2003. 3. Press Release dated August 29, 2003. 4. Press Release dated September 2, 2003. 5. Press Release dated September 8, 2003. 6. Press Release dated September 15, 2003. 7. Press Release issued only in Poland on August 26, 2003. This current report on Form 6-K is hereby incorporated by reference into our Registration Statement on Form F-3 filed with the Securities and Exchange Commission on May 9, 2001 (File No. 333-13480). FOR IMMEDIATE RELEASE --------------------- Contact: Anna Kuchnio (IR) +48-22-330-2061 Jolanta Ciesielska (Media) +48-22-330-2407 Netia -or- Mark Walter Taylor Rafferty, London +44(0)20-7936-0400 -or- Abbas Qasim Taylor Rafferty, New York +1-212-889-4350 ACQUISITION OF SHARES AND SUBSCRIPTION WARRANTS OF NETIA S.A. ------------------------------------------------------------- WARSAW, Poland - August 25, 2003 - Netia S.A. ("Netia") (WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services, today announced that its management board was informed by Polish Enterprise Fund IV, L.P. (the "Shareholder") that as of August 25, 2003 the Shareholder held: (a) 9,012,520 shares of Netia, and (b) 18,520,889 subscription warrants, entitling the Shareholder to acquire Netia's series J shares. The Shareholder informed Netia that upon conversion of all of its subscription warrants into series J shares, all Netia's shares held by the Shareholder will give right to approximately 6.73% of the total number of votes at the general meeting of shareholders and will represent approximately 6.73% of Netia's outstanding share capital, assuming that all subscription warrants issued by Netia are exercised and exchanged for 64,848,442 series J shares. The number of Netia's subscription warrants set forth above includes 7,220,889 subscription warrants divided into 3,610,445 two-year subscription warrants and 3,610,444 three-year subscription warrants acquired by the Shareholder on August 21, 2003. In addition, Netia was informed by TeliaSonera AB that on August 21, 2003, TeliaSonera AB sold 3,610,445 two-year subscription warrants and 3,610,444 three-year subscription warrants of Netia. Some of the information contained in this news release contains forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. For a more detailed description of these risks and factors, please see Netia's filings with the Securities and Exchange Commission, including its Annual Report on Form 20-F filed with the Commission on June 27, 2003, its Current Report on Form 6-K filed with the Commission on June 30, 2003 and its Current Report on Form 6-K filed with the Commission on August 8, 2003. Netia undertakes no obligation to publicly update or revise any forward-looking statements. # # # FOR IMMEDIATE RELEASE --------------------- Contact: Anna Kuchnio (IR) +48-22-330-2061 Jolanta Ciesielska (Media) +48-22-330-2407 Netia -or- Mark Walter Taylor Rafferty, London +44(0)20-7936-0400 -or- Abbas Qasim Taylor Rafferty, New York +1-212-889-4350 NETIA ANNOUNCES HEADCOUNT REDUCTION ----------------------------------- WARSAW, Poland - August 28, 2003 - Netia S.A. ("Netia") (WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services, today announced that it informed the Local Employment Office in Warsaw of its plan to reduce its headcount by up to 300 employees countrywide by March 31, 2004. The planned headcount reduction is a part of the ongoing process of Netia's reorganization, focused on simplifying its organizational structure and internal processes and aimed at a continuous effort to increase Netia's competitiveness through, among others, cost optimization. Some of the information contained in this news release contains forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. For a more detailed description of these risks and factors, please see Netia's filings with the Securities and Exchange Commission, including its Annual Report on Form 20-F filed with the Commission on June 27, 2003, its Current Report on Form 6-K filed with the Commission on June 30, 2003 and its Current Report on Form 6-K filed with the Commission on August 8, 2003. Netia undertakes no obligation to publicly update or revise any forward-looking statements. # # # FOR IMMEDIATE RELEASE --------------------- Contact: Anna Kuchnio (IR) +48-22-330-2061 Jolanta Ciesielska (Media) +48-22-330-2407 Netia -or- Mark Walter Taylor Rafferty, London +44(0)20-7936-0400 -or- Abbas Qasim Taylor Rafferty, New York +1-212-889-4350 CHANGES IN OWNERSHIP OF NETIA'S SHARES BY MAJOR SHAREHOLDER ----------------------------------------------------------- WARSAW, Poland - August 29, 2003 - Netia S.A. ("Netia") (WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services, today announced that it was informed by Montpelier Asset Management Ltd (the "Shareholder") that as of August 29, 2003, the Shareholder and its subsidiaries jointly held: (c) 20,501,503 shares of Netia, and (d) 5,577,925 subscription warrants, entitling the Shareholder to acquire Netia's series J shares. In addition, Nicholas Cournoyer, Managing Director of Montpelier Asset Management Ltd and the Chairman of Netia's supervisory board, owned 3,000 shares of Netia as of August 29, 2003. The Shareholder informed Netia that upon conversion of all of its subscription warrants into series J shares, all Netia shares held by the Shareholder will give right to approximately 7.45% of the total number of votes at the general meeting of shareholders and will represent approximately 7.45% of Netia's outstanding share capital. Previously, as of June 30, 2003, the Shareholder and its subsidiaries jointly held 33,972,573 Netia shares, representing approximately 9.87% of Netia's then outstanding share capital and 9.87% of the total voting power at Netia's general meeting of shareholders. In addition, Nicholas Cournoyer, Managing Director of Montpelier Asset Management Ltd and the Chairman of Netia's supervisory board, owned 3,000 shares of Netia as of June 30, 2003. 20,501,503 Netia shares held by the Shareholder and its subsidiaries include, among others, 15,178,150 Netia shares held by Consulta Emerging Markets Debt Fund Ltd ("Consulta"), a subsidiary of Montpelier Asset Management Ltd. 15,178,150 Netia shares held as of August 29, 2003 by Consulta give right to approximately 4.41% of the total number of votes at the general meeting of shareholders and represent approximately 4.41% of Netia's outstanding share capital (without taking into account any subscription warrants held by the Shareholder and its subsidiaries). In accordance with information delivered to Netia by the Shareholder, Consulta sold in total 5,773,285 Netia's shares between August 14, 2003 and August 28, 2003. Previously, as of June 30, 2003, Consulta held 20,951,435 Netia shares representing approximately 6.09% of Netia's then outstanding share capital and 6.09% of the total voting power at Netia's general meeting of shareholders. Some of the information contained in this news release contains forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. For a more detailed description of these risks and factors, please see Netia's filings with the Securities and Exchange Commission, including its Annual Report on Form 20-F filed with the Commission on June 27, 2003, its Current Report on Form 6-K filed with the Commission on June 30, 2003 and its Current Report on Form 6-K filed with the Commission on August 8, 2003. Netia undertakes no obligation to publicly update or revise any forward-looking statements. # # # FOR IMMEDIATE RELEASE --------------------- Contact: Anna Kuchnio (IR) +48-22-330-2061 Jolanta Ciesielska (Media) +48-22-330-2407 Netia -or- Mark Walter Taylor Rafferty, London +44(0)20-7936-0400 -or- Abbas Qasim Taylor Rafferty, New York +1-212-889-4350 CORRECTION: CHANGES IN OWNERSHIP OF NETIA'S SHARES BY MAJOR SHAREHOLDER ----------------------------------------------------------------------- WARSAW, Poland - September 2, 2003 - Netia S.A. ("Netia") (WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services, today announced the following correction of information on ownership of Netia's shares by funds managed and advised by Montpelier Asset Management Ltd (the "Shareholder") based on information submitted to Netia on September 1 and September 2, 2003 by the Shareholder. Netia was informed that as of September 1, 2003 the Shareholder and funds managed and advised by the Shareholder jointly held: (e) 21,154,135 shares of Netia, and (f) 5,577,925 subscription warrants, entitling the Shareholder to acquire Netia's series J shares. In addition to 3,000 shares of Netia previously held by Nicholas Cournoyer, Managing Director of Montpelier Asset Management Ltd and the Chairman of Netia's supervisory board, Nicholas Cournoyer also owned as of September 2, 2003, 6,000 subscription warrants, entitling him to acquire Netia's series J shares. The Shareholder informed Netia that upon conversion of all of its subscription warrants into series J shares, all Netia shares held by the Shareholder will give right to approximately 7.64% of the total number of votes at the general meeting of shareholders and will represent approximately 7.64% of Netia's outstanding share capital. In all other respects Netia's press release dated August 29, 2003 on changes in ownership of Netia's shares by major shareholder remains unchanged. Some of the information contained in this news release contains forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. For a more detailed description of these risks and factors, please see Netia's filings with the Securities and Exchange Commission, including its Annual Report on Form 20-F filed with the Commission on June 27, 2003, its Current Report on Form 6-K filed with the Commission on June 30, 2003 and its Current Report on Form 6-K filed with the Commission on August 8, 2003. Netia undertakes no obligation to publicly update or revise any forward-looking statements. # # # FOR IMMEDIATE RELEASE --------------------- Contact: Anna Kuchnio (IR) +48-22-330-2061 Jolanta Ciesielska (Media) +48-22-330-2407 Netia -or- Mark Walter Taylor Rafferty, London +44(0)20-7936-0400 -or- Abbas Qasim Taylor Rafferty, New York +1-212-889-4350 NETIA'S SHARE CAPITAL AS OF SEPTEMBER 1, 2003 WARSAW, Poland - September 8, 2003 - Netia S.A. ("Netia") (WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services today announced its share capital has increased in connection with the exercise of certain warrants issued by Netia. I. SHARE CAPITAL. As of September 1, 2003, Netia's issued and outstanding share capital was PLN 344,279,063 and represented 344,279,063 shares, PLN 1 par value per share, each share giving right to one vote at Netia's general meeting of shareholders. A motion for the registration of the share capital increase by the Polish court was filed on September 5, 2003. II. WARRANTS ISSUED. As of September 1, 2003, Netia issued 233,851 series J shares pursuant to the exercise of 139,146 two-year subscription warrants and 94,705 three-year subscription warrants by their holders at an issue price of PLN 2.53 per share. Each series J share entitles its holder to one vote at Netia's general meeting of shareholders. Netia's series J shares are publicly traded on the Warsaw Stock Exchange ("WSE") under the same code as all other ordinary shares of Netia i.e. PLNETIA00014. The subscription warrants were exercised in accordance with Netia's Polish prospectus, dated April 17, 2002, as amended. III. OUTSTANDING WARRANTS. As of September 2, 2003, the following warrants were traded on WSE: (g) 32,285,075 two-year subscription warrants were traded on WSE under the ticker "NETPPO2, entitling their holders to subscribe for Netia's series J shares by April 29, 2005; and (h) 32,329,516 three-year subscription warrants were traded on WSE under the ticker "NETPPO3, entitling their holders to subscribe for Netia's series J shares by April 29, 2006. IV. UPDATED INFORMATION ON NETIA'S SHARE CAPITAL. Current information on Netia's share capital increases is constantly updated and made available at the Polish National Depositary for Securities and WSE as well as on Netia's website (www.investor.netia.pl). The share capital as currently registered by the Polish court reflects the status as of July 1, 2003, and will be amended following the consideration of a motion for the share capital increase filed with the court on September 5, 2003. Share capital increases in connection with the exercise of Netia's outstanding warrants will be announced both in Poland and in the U.S. in the form of a press release once a month by the 8th day of each month, and, in addition, each time in the event of an exercise of warrants constituting 5% or more of all warrants issued by Netia. Some of the information contained in this news release contains forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. For a more detailed description of these risks and factors, please see Netia's filings with the Securities and Exchange Commission, including its Annual Report on Form 20-F filed with the Commission on June 27, 2003, its Current Report on Form 6-K filed with the Commission on June 30, 2003 and its Current Report on Form 6-K filed with the Commission on August 8, 2003. Netia undertakes no obligation to publicly update or revise any forward-looking statements. # # # FOR IMMEDIATE RELEASE --------------------- Contact: Anna Kuchnio (IR) +48-22-330-2061 Jolanta Ciesielska (Media) +48-22-330-2407 Netia -or- Mark Walter Taylor Rafferty, London +44(0)20-7936-0400 -or- Abbas Qasim Taylor Rafferty, New York +1-212-889-4350 THE RATIONALE FOR MERGER BETWEEN NETIA AND ITS SUBSIDIARIES ----------------------------------------------------------- WARSAW, Poland - September 15, 2003 - Netia S.A. ("Netia" or the "Company") (WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services today announced the rationale for its merger with Netia's subsidiaries, in connection with the ongoing process of internal consolidation of the Netia group companies (the "Netia Group"). The following announcement is made in accordance with the requirements of the Polish law and follows the announcement of terms of the Company's merger with its subsidiaries (the "Consolidation Plan") on July 22, 2003. REPORT BY THE MANAGEMENT BOARD OF NETIA S.A. PROVIDING THE RATIONALE FOR THE COMPANY'S CONSOLIDATION WITH ITS SUBSIDIARIES This Report by the Company's Management Board is prepared pursuant to Art. 501 of the Polish Commercial Companies Code (the "Code") in connection with a contemplated consolidation by transferring all assets of the following companies (the "Merging Companies") to Netia, the surviving entity, to be effected in accordance with the Consolidation Plan: Netia Telekom S.A. Netia South Sp. z o.o. Netia Telekom Mazowsze S.A. Netia Telekom Warszawa S.A. Netia Telekom Modlin S.A. Netia Telekom Lublin S.A. Netia Telekom Ostrowiec S.A. Netia Telekom aewidnik S.A. Netia Telekom Torun S.A. Netia Telekom W(3)oc(3)awek S.A. Netia Telekom Kalisz S.A. Netia Telekom Pi(3)a Sp. z o.o. Netia Telekom Silesia S.A. Netia Telekom Telmedia S.A. Optimus Inwest S.A. Netia Network S.A. Telekom Building Sp. z o.o. Netia 1 Sp. z o.o. Telko Sp. z o.o. 1. RATIONALE The main rationale justifying the Company's consolidation with the Merging Companies is to optimize the utilization of the assets concentrated in the Netia Group in order to maximize economic results. The simplification of the Netia Group's structure by merging Netia's wholly owned subsidiaries into Netia is further justified by the intention of making the Netia Group management more efficient and increase the efficiency of its consolidated entities. 2. LEGAL GROUNDS FOR THE CONSOLIDATION The consolidation shall be carried out in accordance with Art. 492 ss.1 point 1 of the Code, in connection with Art. 515 ss.1 of the Code, by way of transferring all assets of the Merging Companies to Netia without increasing Netia's share capital, without any conversion of shares and without amending Netia's Statute. As at the date of this report, Netia owns 100% of the share capital of all Merging Companies. 3. ECONOMIC GROUNDS The existing organizational structure of the Netia Group is based on the multi-entity holding structure controlled by Netia S.A. Such structure was justified historically as it was a consequence of the previous telecommunications law, which prevented the concentration of multiple licenses by one entity. Presently, under amended telecommunications law it is no longer necessary to create complex holding structures in order to conduct licensed telecommunications activities. The Netia Group conducts its activities as a functional whole and the existence of individual companies is dependent upon their close mutual cooperation. The contemplated consolidation was preceded by a debt restructuring of the Netia Group as well as changes in the ownership structure of the entities operating within the group through the buy-out of minority shareholders of Netia's subsidiaries and the transfer to Netia of shares in companies indirectly controlled by Netia. Further simplification of the Netia Group structure will result in increased efficiency of the management of Netia Group's policy and operations as well as the management of its resources. The Netia Group's internal consolidation will help increase profitability, reduce general management and financial costs, and increase competitiveness. Efficient management, concentrated assets and simplified structure will result in the strengthening of the Company's position in the market. The contemplated transparent organizational structure will also help increase the Company's value, thus protecting the best interests of the Company's shareholders. 4. CONVERSION RATE FOR THE SHARES Netia's consolidation with the Merging Subsidiaries will be effected without any increase in Netia's share capital, without any conversion of shares and without any amendments to Netia's Statute. In view of the foregoing, the determination of a conversion rate for the shares is unnecessary. Some of the information contained in this news release contains forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. For a more detailed description of these risks and factors, please see Netia's filings with the Securities and Exchange Commission, including its Annual Report on Form 20-F filed with the Commission on June 27, 2003, its Current Report on Form 6-K filed with the Commission on June 30, 2003 and its Current Report on Form 6-K filed with the Commission on August 8, 2003 and a current report dated August 13, 2003. Netia undertakes no obligation to publicly update or revise any forward-looking statements. # # # Press Release issued only in Poland on August 26, 2003 THE DATES ON WHICH THE POLISH ARRANGEMENT PROCEEDINGS OF NETIA S.A. BECAME FINAL AND UNAPPEALABLE. The Management Board of Netia S.A. ("Netia") repeats the information previously made public in connection with the financial restructuring of the Netia group with respect to the dates on which the Polish arrangement proceedings of Netia became final and unappealable. - The court's decision dated August 9, 2002, approving the arrangement plan for Netia S.A. became final and unappealable on December 3, 2002. - The court's decision dated December 4, 2002, approving the arrangement plan for Netia South Sp. z o.o., a subsidiary of Netia, became final and unappealable on December 19, 2002. - The court's decision dated June 25, 2002, approving the arrangement plan for Netia Telekom S.A., a subsidiary of Netia, became final and unappealable on January 2, 2003. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: September 23, 2003 NETIA S.A. By: /S/ WOJCIECH MADALSKI ------------------------------ Name: Wojciech Madalski Title: President of the Company By: /S/ ZBIGNIEW LAPINSKI ------------------------------ Name: Zbigniew Lapinski Title: Chief Financial Officer

(PLN in thousands unless otherwise stated) TIME PERIODS: YTD 03 YTD 02 2Q03 1Q03 ------------------------------------------------------------------------------------------------------------------------------ Telecommunications revenue Direct Voice 246,486 254,515 123,986 122,500 ------------ ------- ------- ------- ------- >> installation fees 495 684 226 269 >> monthly charges 61,657 63,447 31,039 30,618 >> calling charges 184,334 190,384 92,721 91,613 - local calls 62,378 65,605 31,070 31,308 - domestic long-distance calls 36,912 36,498 18,349 18,563 - international long-distance calls 14,497 17,007 7,391 7,106 - fixed-to-mobile calls 59,439 59,139 30,907 28,532 - other 11,108 12,135 5,004 6,104 Indirect Voice 29,280 12,623 15,918 13,362 -------------- ------ ------ ------ ------ Data 21,108 8,993 13,618 7,490 ---- ------ ----- ------ ----- Interconnection revenues 2,871 3,365 1,420 1,451 ------------------------ ----- ----- ----- ----- Wholesale services 24,290 9,497 13,112 11,178 ------------------ ------ ----- ------ ------ Other telecommunications revenues 10,031 2,003 7,230 2,801 --------------------------------- ------ ----- ----- ----- TOTAL TELECOMMUNICATIONS REVENUE 334,066 290,996 175,284 158,782 Other revenue 5,059 10,345 2,537 2,522 TOTAL REVENUES 339,125 301,341 177,821 161,304 OTHER OPERATING INCOME 4,478 - 4,478 - Interconnection charges (62,965) (62,915) (31,944) (31,021) Salaries & benefits (61,610) (61,684) (32,359) (29,251) Legal & financial services (41,855) (33,241) (22,793) (19,062) Cost of rented lines & network maintenance (24,020) (27,006) (15,714) (8,306) Sales & marketing (13,025) (5,886) (5,192) (7,833) Other operating expenses (45,951) (38,270) (23,722) (22,229) EBITDA 94,177 72,339 50,575 43,602 MARGIN (%) 27.8% 24.0% 28.4% 27.0% Depreciation of fixed assets (98,007) (97,286) (49,108) (48,899) Amortization of goodwill 19,381 - 19,381 - Amortization of intangible assets (42,461) (36,594) (22,221) (20,240) EBIT (26,910) (61,541) (1,373) (25,537) MARGIN (%) (7.9%) (20.4%) (0.8%) (15.8%) Net financial (expenses) / income (68,977) (432,284) (14,484) (54,493) (LOSS) / PROFIT BEFORE TAX (95,887) (493,825) (15,857) (80,030) Tax (charges) / benefits 461 (1,325) 609 (148) Minority share in profit of subsidiaries (199) (267) (119) (80) NET LOSS / PROFIT (95,625) (495,417) (15,367) (80,258) MARGIN (%) (28.2%) (164.4%) (8.6%) (49.8%) (Loss) / Profit per share (not in thousands) (0.28) (16.08) (0.04) (0.23) Weighted average number of shares outstanding (not in thousands) 343,591,529 30,817,291 343,606,330 343,576,564

JUNE 30, DECEMBER 31, 2003 2002 NOTE (UNAUDITED) (AUDITED) ---------- ----------------- ---------------- (PLN) (PLN) ASSETS CURRENT ASSETS Cash and cash equivalents.............................................. 192,642 132,465 Restricted investments, cash and cash equivalents...................... - 254,211 Accounts receivable.................................................... Trade, net of allowance for doubtful accounts of PLN 50,157 and PLN 45,278................................................... 100,838 87,067 Government - value added tax........................................ 9,306 2,374 Other............................................................... 2,495 8,147 Inventories............................................................ 2,537 854 Prepaid expenses....................................................... 16,346 8,260 ----------------- ---------------- TOTAL CURRENT ASSETS................................................... 324,164 493,378 Investments............................................................ 219 1,663 Fixed assets, net...................................................... 4 2,213,389 2,245,917 Intangible assets...................................................... Licenses, net....................................................... 5 611,356 639,176 Computer software, net.............................................. 113,044 112,685 Negative goodwill...................................................... 6 (35,305) - Other long term assets................................................. 1,106 - ----------------- ---------------- TOTAL ASSETS........................................................... 3,227,973 3,492,819 ================= ================

CONVENIENCE TRANSLATION (UNAUDITED) ------------------------------- JUNE 30, DECEMBER 31, NOTE 2003 2002 -------------- --------------- (USD) (USD) ASSETS CURRENT ASSETS Cash and cash equivalents.............................................. 49,438 33,995 Restricted investments, cash and cash equivalents...................... - 65,239 Accounts receivable.................................................... Trade, net of allowance for doubtful accounts of USD 12,872 and USD 11,620........................................... 25,877 22,344 Government - value added tax........................................ 2,388 609 Other............................................................... 640 2,091 Inventories............................................................ 651 219 Prepaid expenses....................................................... 4,195 2,120 -------------- --------------- TOTAL CURRENT ASSETS................................................... 83,189 126,617 Investments............................................................ 56 427 Fixed assets, net...................................................... 4 568,031 576,379 Intangible assets...................................................... Licenses, net....................................................... 5 156,895 164,034 Computer software, net.............................................. 29,011 28,919 Negative goodwill...................................................... 6 (9,060) - Other long term assets................................................. 284 - -------------- --------------- TOTAL ASSETS........................................................... 828,406 896,376 ============== ===============

JUNE 30, DECEMBER 31, NOTE 2003 2002 (UNAUDITED) (AUDITED) ---------- ---------------- --------------- (PLN) (PLN) LIABILITIES CURRENT LIABILITIES Short term liabilities for licenses..................................... 5 228,793 211,247 Accounts payable and accruals........................................... Trade................................................................ 53,270 89,864 Accruals and other................................................... 96,040 85,805 Deferred income......................................................... 8,862 6,956 ---------------- --------------- TOTAL CURRENT LIABILITIES............................................... 386,965 393,872 Long term liabilities for licenses...................................... 5 124,328 112,260 Long term debt.......................................................... 7 - 161,756 Long term installment obligations....................................... 5,416 5,141 Other long term liabilities............................................. 508 - ---------------- --------------- TOTAL LIABILITIES....................................................... 517,217 673,029 Minority interest....................................................... 3,972 17,499 SHAREHOLDERS' EQUITY 8 Share capital (nominal par value of PLN 1 and PLN 6 per share, respectively)........................................................ 344,163 203,285 Share premium .......................................................... 1,572,903 1,713,865 Treasury shares......................................................... (2,812) (2,812) Other reserves.......................................................... 3,816,325 3,819,712 Accumulated deficit..................................................... (3,023,795) (2,931,759) ---------------- --------------- TOTAL SHAREHOLDERS' EQUITY ............................................. 2,706,784 2,802,291 ---------------- --------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............................. 3,227,973 3,492,819 ================ ===============

CONVENIENCE TRANSLATION (UNAUDITED) ------------------------------------ JUNE 30, DECEMBER 31, NOTE 2003 2002 ---------- ----------------- ---------------- (USD) (USD) LIABILITIES CURRENT LIABILITIES Short term liabilities for licenses..................................... 5 58,717 54,213 Accounts payable and accruals........................................... Trade................................................................ 13,671 23,062 Accruals and other................................................... 24,647 22,020 Deferred income......................................................... 2,274 1,785 ----------------- ---------------- TOTAL CURRENT LIABILITIES............................................... 99,309 101,080 Long term liabilities for licenses...................................... 5 31,906 28,810 Long term debt.......................................................... 7 - 41,513 Long term installment obligations....................................... 1,390 1,319 Other long term liabilities............................................. 130 - ----------------- ---------------- TOTAL LIABILITIES....................................................... 132,735 172,722 Minority interest....................................................... 1,019 4,491 SHAREHOLDERS' EQUITY 8 Share capital (nominal par value of PLN 1 and PLN 6 per share, respectively)........................................................ 88,324 52,170 Share premium .......................................................... 403,660 439,836 Treasury shares......................................................... (722) (722) Other reserves.......................................................... 979,399 980,268 Accumulated deficit..................................................... (776,009) (752,389) ----------------- ---------------- TOTAL SHAREHOLDERS' EQUITY ............................................. 694,652 719,163 ----------------- ---------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............................. 828,406 896,376 ================= ================

SIX-MONTH SIX-MONTH THREE-MONTH THREE-MONTH YEAR ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED DECEMBER 31, JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003 JUNE 30, 2002 2002 NOTE (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (AUDITED) ----- -------------- -------------- --------------- -------------- ------------- (PLN) (PLN) (PLN) (PLN) (PLN) REVENUE Telecommunication services revenue Direct voice services.................... 246,486 254,515 123,986 126,829 503,058 Installation fees...................... 495 684 226 332 1,162 Monthly fees........................... 61,657 63,447 31,039 31,579 126,366 Calling charges........................ 184,334 190,384 92,721 94,918 375,530 Local calls........................ 62,378 65,605 31,070 31,862 126,276 Domestic long distance calls....... 36,912 36,498 18,349 18,681 72,447 International long distance calls.. 14,497 17,007 7,391 8,534 33,747 Fixed-to-mobile.................... 59,439 59,139 30,907 30,218 118,388 Other.............................. 11,108 12,135 5,004 5,623 24,672 Indirect voice........................... 29,280 12,623 15,918 7,850 34,628 Data..................................... 21,108 8,993 13,618 4,868 20,468 Interconnection revenue.................. 2,871 3,365 1,420 1,665 6,248 Wholesale services....................... 24,290 9,497 13,112 6,354 23,769 Other telecommunication revenue.......... 10,031 2,003 7,230 973 8,557 --------- --------- --------- --------- --------- 334,066 290,996 175,284 148,539 596,728 Other revenue.............................. 5,059 10,345 2,537 4,542 16,264 --------- --------- --------- --------- --------- TOTAL REVENUE............................... 339,125 301,341 177,821 153,081 612,992 OTHER OPERATING INCOME........................ 4,478 - 4,478 - - COSTS Interconnection charges....................... (62,965) (62,915) (31,944) (31,833) (126,088) Salaries and benefits......................... (52,814) (52,574) (28,036) (22,292) (105,218) Social security costs......................... (8,796) (9,110) (4,323) (4,286) (18,152) Legal and financial services.................. (41,855) (33,241) (22,793) (15,118) (72,255) Sales and marketing expenses.................. (13,025) (5,886) (5,192) (2,905) (20,816) Cost of rented lines and network maintenance.. (24,020) (27,006) (15,714) (12,796) (45,470) Depreciation of fixed assets ................. (98,007) (97,286) (49,108) (48,513) (194,634) Amortization of negative goodwill............. 19,381 - 19,381 - - Amortization of other intangible assets....... (42,461) (36,594) (22,221) (18,303) (74,046) Impairment provision for fixed assets......... - - - - (149,353) Other operating expenses...................... (45,951) (38,270) (23,722) (21,602) (69,768) --------- --------- --------- --------- --------- LOSS FROM OPERATIONS.......................... (26,910) (61,541) (1,373) (24,567) (262,808) Financial expense, net........................ 9 (68,977) (432,284) (14,484) (224,607) (417,570) --------- --------- --------- --------- --------- LOSS BEFORE INCOME TAX........................ (95,887) (493,825) (15,857) (249,174) (680,378) Income tax benefit / (charge)................. 461 (1,325) 609 (676) (1,903) --------- --------- --------- --------- --------- LOSS BEFORE MINORITY INTEREST................. (95,426) (495,150) (15,248) (249,850) (682,281) Minority share in (profits) / losses of subsidiaries............................ (199) (267) (119) (160) 7,309 --------- --------- --------- --------- --------- NET LOSS...................................... (95,625) (495,417) (15,367) (250,010) (674,972) ========= ========= ========= ========= ========= BASIC AND DILUTED LOSS PER SHARE (not in thousands)........... 10 (0.28) (16.08) (0.04) (8.11) (17.89) ========= ========= ========= ========= =========

CONVENIENCE TRANSLATION (UNAUDITED) ----------------------------------------------------------------------------- SIX-MONTH SIX-MONTH THREE-MONTH THREE-MONTH YEAR ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED DECEMBER 31, NOTE JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003 JUNE 30, 2002 2002 --------- -------------- -------------- --------------- --------------- --------------- (USD) (USD) (USD) (USD) (USD) REVENUE Telecommunication services revenue Direct voice services.................. 63,256 65,318 31,820 32,548 129,102 Installation fees.................... 127 176 58 85 298 Monthly fees......................... 15,823 16,283 7,966 8,104 32,430 Calling charges...................... 47,306 48,859 23,796 24,359 96,374 Local calls...................... 16,008 16,836 7,974 8,177 32,407 Domestic long distance calls..... 9,473 9,367 4,709 4,794 18,592 International long distance calls 3,720 4,365 1,897 2,190 8,661 Fixed-to-mobile.................. 15,254 15,177 7,932 7,755 30,382 Other............................ 2,851 3,114 1,284 1,443 6,332 Indirect voice......................... 7,514 3,239 4,085 2,015 8,887 Data................................... 5,417 2,308 3,495 1,249 5,253 Interconnection revenue................ 737 864 364 427 1,603 Wholesale services..................... 6,234 2,437 3,365 1,631 6,100 Other telecommunication revenue........ 2,575 514 1,856 250 2,196 -------------- -------------- --------------- --------------- --------------- 85,733 74,680 44,985 38,120 153,141 Other revenue............................ 1,298 2,655 651 1,166 4,174 -------------- -------------- --------------- --------------- --------------- TOTAL REVENUE 87,031 77,335 45,636 39,286 157,315 OTHER OPERATING INCOME...................... 1,149 - 1,149 - - COSTS Interconnection charges..................... (16,159) (16,146) (8,198) (8,169) (32,359) Salaries and benefits....................... (13,554) (13,492) (7,195) (5,721) (27,002) Social security costs....................... (2,257) (2,338) (1,109) (1,100) (4,658) Legal and financial services................ (10,741) (8,531) (5,849) (3,880) (18,543) Sales and marketing expenses................ (3,343) (1,511) (1,332) (746) (5,342) Cost of rented lines and network maintenance................................ (6,164) (6,931) (4,033) (3,284) (11,669) Depreciation of fixed assets ............... (25,152) (24,967) (12,603) (12,450) (49,950) Amortization of negative goodwill........... 4,974 - 4,974 - - Amortization of other intangible assets..... (10,897) (9,391) (5,703) (4,697) (19,003) Impairment provision for fixed assets....... - - - - (38,329) Other operating expenses.................... (11,793) (9,821) (6,088) (5,544) (17,905) -------------- -------------- --------------- --------------- --------------- LOSS FROM OPERATIONS........................ (6,906) (15,793) (351) (6,305) (67,445) Financial expense, net...................... 9 (17,702) (110,939) (3,717) (57,642) (107,163) -------------- -------------- --------------- ------------------------------- LOSS BEFORE INCOME TAX...................... (24,608) (126,732) (4,068) (63,947) (174,608) Income tax charge........................... 118 (340) 156 (173) (488) -------------- -------------- --------------- --------------- --------------- LOSS BEFORE MINORITY INTEREST............... (24,490) (127,072) (3,912) (64,120) (175,096) Minority share in (profits) / losses of subsidiaries.......................... (51) (69) (31) (42) 1,876 -------------- -------------- --------------- --------------- --------------- NET LOSS.................................... (24,541) (127,141) (3,943) (64,162) (173,220) ============== ============== =============== =============== =============== BASIC AND DILUTED LOSS PER SHARE (not in thousands)........ 10 (0.07) (4.13) (0.01) (2.08) (4.59) ============== ============== =============== =============== ===============

TOTAL SHARE SHARE TREASURY OTHER ACCUMULATED SHAREHOLDERS' NOTE CAPITAL PREMIUM SHARES RESERVES DEFICIT EQUITY ------ ----------- ------------- --------- ----------- --------------- --------------- (PLN) (PLN) (PLN) (PLN) (PLN) (PLN) BALANCE AS AT DECEMBER 31, 2002 (AUDITED).... 203,285 1,713,865 (2,812) 3,819,712 (2,931,759) 2,802,291 Registration of series H shares.............. 312,626 25,831 - (338,457) - - Transfer of shares issuance costs up to the amount of share premium......... - (25,831) - 25,831 - - Decrease of nominal value of shares.......... 8 (171,866) 171,866 - - - - Issuance of series J shares, net of related costs.............................. 118 - - - - 118 Coverage of losses from previous years in individual entities*.................... - (312,828) - 309,239 3,589 - Net loss..................................... - - - - (95,625) (95,625) ----------- ------------- --------- ----------- --------------- --------------- BALANCE AS AT JUNE 30, 2003 (UNAUDITED)...... 344,163 1,572,903 (2,812) 3,816,325 (3,023,795) 2,706,784 =========== ============= ========= =========== =============== =============== *The coverage of losses from the previous years in the individual subsidiaries' financial statements was recorded based on the following shareholders resolutions: the resolution no. 2, of annual shareholdings' meeting of Netia S.A. dated June 12, 2003; the resolution no. 2, of annual shareholdings' meeting of Netia Telekom S.A. dated June 13, 2003; and the resolution no. 2, of annual shareholdings' meeting of Netia South Sp. z o.o. dated June 13, 2003; and was recorded in the consolidated financial statements of the Company after the elimination of certain intercompany transactions. TOTAL SHARE SHARE TREASURY OTHER ACCUMULATED SHAREHOLDERS' CAPITAL PREMIUM SHARES RESERVES DEFICIT DEFICIT ------------ ------------- ------------ ------------ ---------------- ---------------- (PLN) (PLN) (PLN) (PLN) (PLN) (PLN) BALANCE AS AT DECEMBER 31, 2001 (AUDITED) .. 203,285 1,713,865 (3,611) - (2,256,787) (343,248) Net loss.................................... - - - - (495,417) (495,417) ------------ ------------- ------------ ------------ ---------------- ---------------- BALANCE AS AT JUNE 30, 2002 (UNAUDITED)..... 203,285 1,713,865 (3,611) - (2,752,204) (838,655) ============ ============= ============ ============ ================ ================

SIX-MONTH SIX-MONTH THREE-MONTH THREE-MONTH YEAR ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED DECEMBER 31, JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003 JUNE 30, 2002 2002 NOTE (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (AUDITED) ---- ------------- --------------- -------------- --------------- ------------ (PLN) (PLN) (PLN) (PLN) (PLN) Cash flows from operating activities: NET LOSS (95,625) (495,417) (15,367) (250,010) (674,972) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation of fixed assets and amortization of licenses and other intangible assets.............. 140,468 133,880 71,329 66,816 268,680 Amortization of negative goodwill...................... 6 (19,381) (19,381) Amortization of notes issuance costs.................... 1,265 - - - 127 Amortization of discount on installment obligations.... 276 - 140 - - Write-off of notes issuance costs...................... 7 41,161 - - - - Interest expense accrued on license liabilities........ 4,347 10,503 2,222 5,534 22,595 Interest expense accrued on long term debt and restricted cash.................................. 3,030 205,431 1,903 102,436 220,428 Minority share in profits / (losses) of subsidiaries... 199 267 119 160 (7,309) Impairment provision for long term assets.............. 4 - - - - 149,353 Increase in long term assets........................... (1,106) - (1,011) - - Other provisions....................................... 2,234 - 1,348 - - Foreign exchange losses on translation of long term debt and restricted investments...................... 20,218 228,985 11,163 125,199 195,914 Changes in working capital............................. (18,124) (4,418) 2,325 (928) 23,660 NET CASH PROVIDED BY OPERATING ACTIVITIES.............. 78,962 79,231 54,790 49,207 198,476 Cash flows provided by / (used in) investing activities: Purchase of fixed assets and computer software......... (76,526) (164,772) (39,215) (72,710) (270,548) Decrease / (increase) of restricted cash and cash equivalents................................. 7 259,514 - 60,221 - (197,744) Net cash received on purchase of subsidiary............ 16,702 - 16,702 - - Purchase of minority shareholdings in subsidiary....... (577) - (577) - - Payments for licenses.................................. (9,160) - (9,160) - - Increase of investments................................ (415) - (415) - - NET CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES.. 189,538 (164,772) 27,556 (72,710) (468,292) Net cash used in financing activities: Redemption of notes.................................... (204,193) - - - - Payments related to financial restructuring............ (5,952) (32,891) (1,477) (12,404) (80,394) Issuance of notes for warrants......................... 508 - 508 - - Net proceeds from share issuance....................... 118 - 118 - - Payments for cancellation of swap transactions......... - (29,279) - - (29,279) NET CASH USED IN FINANCING ACTIVITIES.................. (209,519) (62,170) (851) (12,404) (109,673) EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS................................. 1,196 25,702 292 11,645 25,008 NET CHANGE IN CASH AND CASH EQUIVALENTS................ 60,177 (122,009) 81,787 (24,262) (354,481) Cash and cash equivalents at beginning of period....... 132,465 486,946 110,855 389,199 486,946 CASH AND CASH EQUIVALENTS AT END OF PERIOD............. 192,642 364,937 192,642 364,937 132,465

SUPPLEMENTAL DISCLOSURES: SIX-MONTH SIX-MONTH THREE-MONTH THREE-MONTH YEAR ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED DECEMBER 31, JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003 JUNE 30, 2002 2002 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (AUDITED) ----------------- ---------------- -------------- --------------- --------------- (PLN) (PLN) (PLN) (PLN) (PLN) Income taxes paid 367 1,663 367 1,663 1,273 NON-CASH INVESTING ACTIVITIES: The Company incurred the following liabilities at the end of each period that were related to fixed asset or construction in progress additions: SIX-MONTH SIX-MONTH YEAR ENDED PERIOD ENDED PERIOD ENDED DECEMBER 31, JUNE 30, 2003 JUNE 30, 2002 2002 (UNAUDITED) (UNAUDITED) (AUDITED) ----------------- ---------------- -------------- (PLN) (PLN) (PLN) 31,611 66,329 52,952

CONVENIENCE TRANSLATION (UNAUDITED) ------------------------------------------------------------------------ NOTE SIX-MONTH SIX-MONTH THREE-MONTH THREE-MONTH YEAR ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED DECEMBER 31, JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003 JUNE 30, 2002 2002 ----- -------------- --------------- -------------- -------------- ----------- (USD) (USD) (USD) (USD) (USD) Cash flows from operating activities: NET LOSS (24,541) (127,141) (3,943) (64,162) (173,220) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation of fixed assets and amortization of licenses and other intangible assets............. 36,049 34,358 18,305 17,147 68,953 Amortization of negative goodwill..................... 6 (4,974) (4,974) Amortization of notes issuance costs.................... 325 - - - 32 Amortization of discount on installment obligations... 71 - 36 - - Write-off of notes issuance costs..................... 7 10,563 - - - - Interest expense accrued on license liabilities....... 1,116 2,695 570 1,420 5,799 Interest expense accrued on long term debt and restricted cash................................. 778 52,721 488 26,289 56,570 Minority share in profits / (losses) of subsidiaries.. 51 69 31 42 (1,876) Impairment provision for long term assets............. 4 - - - - 38,329 Increase in long term assets.......................... (284) - (259) - - Other provisions...................................... 573 - 346 - - Foreign exchange losses on translation of long term debt and restricted investments..................... 5,189 58,765 2,865 32,129 50,277 Changes in working capital............................ (4,651) (1,134) 597 (238) 6,072 -------- -------- -------- -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES............. 20,265 20,333 14,062 12,627 50,936 Cash flows provided by / (used in) investing activities: Purchase of fixed assets and computer software........ (19,639) (42,286) (10,064) (18,660) (69,432) Decrease / (increase) of restricted cash and cash equivalents......................................... 7 66,600 - 15,455 - (50,748) Net cash received on purchase of subsidiary........... 4,286 - 4,286 - - Purchase of minority shareholdings in subsidiary...... (148) - (148) - - Payments for licenses................................. (2,351) - (2,351) - - Increase of investments............................... (107) - (107) - - -------- -------- -------- -------- -------- NET CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES. 48,641 (42,286) 7,071 (18,660) (120,180) Net cash used in financing activities: Redemption of notes................................... (52,403) - - - - Payments related to financial restructuring........... (1,527) (8,441) (379) (3,183) (20,632) Issuance of notes for warrants........................ 130 - 130 - - Net proceeds from share issuance...................... 30 - 30 - - Payments for cancellation of swap transactions........ - (7,514) - - (7,514) -------- -------- -------- -------- -------- NET CASH USED IN FINANCING ACTIVITIES................. (53,770) (15,955) (219) (3,183) (28,146) EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS............................. 307 6,596 75 2,989 6,418 NET CHANGE IN CASH AND CASH EQUIVALENTS............... 15,443 (31,312) 20,989 (6,227) (90,972) Cash and cash equivalents at beginning of period...... 33,995 124,967 28,449 99,882 124,967 -------- -------- -------- -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD............ 49,438 93,655 49,438 93,655 33,995 ======== ======== ======== ======== ========

SUPPLEMENTAL DISCLOSURES: CONVENIENCE TRANSLATION (UNAUDITED) ----------------------------------------------------------------------------------- SIX-MONTH SIX-MONTH THREE-MONTH THREE-MONTH YEAR ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED DECEMBER 31, JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003 JUNE 30, 2002 2002 ----------------- ---------------- -------------- --------------- --------------- (USD) (USD) (USD) (USD) (USD) Income taxes paid 94 427 94 427 327 NON-CASH INVESTING ACTIVITIES: The Company incurred the following liabilities at the end of each period that were related to fixed asset or construction in progress additions: CONVENIENCE TRANSLATION (UNAUDITED) ------------------------------------------------- SIX-MONTH SIX-MONTH YEAR ENDED PERIOD ENDED PERIOD ENDED DECEMBER 31, JUNE 30, 2003 JUNE 30, 2002 2002 ----------------- ---------------- -------------- (USD) (USD) (USD) 8,112 17,022 13,589

4. FIXED ASSETS AND NETWORK UNDER CONSTRUCTION DECEMBER 31, PURCHASE OF JUNE 30, 2002 ADDITIONS SUBSIDIARY TRANSFERS DISPOSALS 2003 ASSETS AT ADJUSTED COST (AUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) ---------------- -------------- ---------------- -------------- --------------- -------------- (PLN) (PLN) (PLN) (PLN) (PLN) (PLN) Buildings........................ 85,426 - 292 3,589 (179) 89,128 Land............................. 17,058 - - - - 17,058 Long term ground lease........... 5,406 - - - - 5,406 Transmission network ............ 1,482,820 - - 25,755 - 1,508,575 Switching system................. 980,488 - 9,037 142,832 (184) 1,132,173 Base stations.................... 13,898 - - - - 13,898 Machinery and equipment.......... 187,789 2,299 5,235 (98,724) (1,013) 95,586 Office furniture and equipment... 108,210 566 4,269 32 (505) 112,572 Vehicles......................... 15,339 378 371 - (1,185) 14,903 ---------------- -------------- ---------------- -------------- --------------- -------------- 2,896,434 3,243 19,204 73,484 (3,066) 2,989,299 Network under construction....... 199,679 43,856 132 (73,484) (10,381) 159,802 ---------------- -------------- ---------------- -------------- -------------- --------------- 3,096,113 47,099 19,336 - (13,447) 3,149,101 ================ ============== ================ ============== =============== ============== ACCUMULATED DEPRECIATION DECEMBER 31, DEPRECIATION JUNE 30, 2002 EXPENSE TRANSFERS DISPOSALS 2003 (AUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) -------------- ---------------- -------------- --------------- -------------- (PLN) (PLN) (PLN) (PLN) (PLN) Buildings..................................... 10,299 3,455 - (179) 13,575 Long term ground lease........................ 361 59 - - 420 Transmission network.......................... 267,709 50,378 - - 318,087 Switching system.............................. 201,458 25,933 13,877 (184) 241,084 Base stations................................. 13,356 542 - - 13,898 Machinery and equipment....................... 42,795 6,908 (13,877) (986) 34,840 Office furniture and equipment................ 66,118 10,232 - (107) 76,243 Vehicles...................................... 12,308 500 - (654) 12,154 -------------- ---------------- -------------- --------------- -------------- 614,404 98,007 - (2,110) 710,301 ============== ================ ============== =============== ============== The transfers recorded in the first half of 2003 between machinery and equipment and switching system and transmission network relate to the reclassifications of the radio access equipment items. IMPAIRMENT CHARGE DECEMBER 31, JUNE 30, 2002 2003 (AUDITED) DISPOSALS (UNAUDITED) ------------------ -------------- --------------- (PLN) (PLN) (PLN) Transmission network............................................... 186,618 - 186,618 Switching system .................................................. 16,668 - 16,668 Office furniture and equipment..................................... 8,116 - 8,116 ------------------ -------------- --------------- 211,402 - 211,402 Network under construction......................................... 24,390 (10,381) 14,009 ------------------ -------------- --------------- 235,792 (10,381) 225,411 ================== ============== ===============

NET BOOK VALUE JUNE 30, DECEMBER 31, 2003 2002 (UNAUDITED) (AUDITED) ---------------- ----------------- (PLN) (PLN) Buildings ................................................................. 75,553 75,127 Land....................................................................... 17,058 17,058 Long term ground lease..................................................... 4,986 5,045 Transmission network....................................................... 1,003,870 1,028,493 Switching system........................................................... 874,421 762,362 Base stations.............................................................. - 542 Machinery and equipment.................................................... 60,746 144,994 Office furniture and equipment............................................. 28,213 33,976 Vehicles................................................................... 2,749 3,031 ---------------- ----------------- 2,067,596 2,070,628 Network under construction................................................. 145,793 175,289 ---------------- ----------------- 2,213,389 2,245,917 ================ =================

JUNE 30, 2003 DECEMBER 31, 2002 (UNAUDITED) (AUDITED) ---------------- ------------------ (PLN) (PLN) 10% Senior Notes due 2008 ("2002 Notes") .................................. - 161,756 ---------------- ------------------ - 161,756 ================ ==================

SIX-MONTH SIX-MONTH YEAR ENDED PERIOD ENDED PERIOD ENDED DECEMBER 31, JUNE 30, 2003 JUNE 30, 2002 2002 (UNAUDITED) (UNAUDITED) (AUDITED) ---------------- --------------- ---------------- (PLN) (PLN) (PLN) Interest income.................................................. 6,246 8,054 14,804 Foreign exchange gains........................................... 9,457 32,362 30,892 Interest expense................................................. (11,849) (217,077) (244,505) Foreign exchange losses.......................................... (30,076) (255,623) (218,634) Amortization of notes issuance costs ............................ (1,265) - (127) Write-off of notes issuance costs due to early redemption of notes (See Note 7).......................................... (41,161) - - Amortization of discount on installment obligations.............. (276) - - Other............................................................ (53) - - ---------------- --------------- ---------------- (68,977) (432,284) (417,570) ================ =============== ================

SIX-MONTH SIX-MONTH PERIOD THREE-MONTH THREE-MONTH PERIOD ENDED ENDED PERIOD ENDED PERIOD ENDED YEAR ENDED JUNE 30, JUNE 30, JUNE 30, JUNE 30, DECEMBER 31, 2003 2002 2003 2002 2002 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (AUDITED) ---------------- ---------------- ---------------- --------------- ----------------- Net loss.............................. (95,625) (495,417) (15,367) (250,010) (674,972) Weighted average number of shares in 343,591,529 30,817,291 343,606,330 30,817,291 37,730,692 issue (not in thousands) ........... Basic loss per share (not in (0.28) (16.08) (0.04) (8.11) (17.89) thousands).................................................... Weighted average number of shares in issue for the periods ended June 30, 2003 and December 31, 2002 includes 312,626,040 (not in thousands) series H shares issued on December 23, 2002. Weighted average number of shares in issue (not in thousands) excludes 601,881, 468,648 and 468,648 treasury shares as at June 30, 2002, December 31, 2002 and June 30, 2003, respectively. No diluted loss per share was computed in the period ended June 30, 2003, the year ended December 31, 2002 and the period ended June 30, 2002 as the effect of the stock options plans and issuance of warrants were anti-dilutive during those periods, if applicable. 11. SEGMENTAL REPORTING The following tables contain segment information for the Company's telecommunications business and other business (primarily radio communications services and sales of equipment through Uni-Net). SIX-MONTH SIX-MONTH PERIOD ENDED PERIOD ENDED YEAR ENDED JUNE 30, JUNE 30, DECEMBER 31, 2003 2002 2002 (UNAUDITED) (UNAUDITED) (AUDITED) ------------------ ----------------- ------------------ (PLN) (PLN) (PLN) Revenue Telecommunications.................................. 334,066 290,996 596,728 Other businesses.................................... 5,059 10,345 16,264 ------------------ ----------------- ------------------ 339,125 301,341 612,992 (Loss) / income from operations Telecommunications.................................. (27,632) (62,703) (263,295) Other businesses.................................... 722 1,162 487 ------------------ ----------------- ------------------ (26,910) (61,541) (262,808) All operations and revenues are derived and conducted within Poland.

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