6-K 1 mv4-7_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 April 7, 2004 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| EXPLANATORY NOTE Attached are the following items: 1. Press release dated March 12, 2004 2. Press release dated March 22, 2004 3. Press release dated April 1, 2004 4. Press release dated April 1, 2004 5. Press release dated April 2, 2004 6. Press release dated April 5, 2004 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). netia 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 HOLDS EXTRAORDINARY SHAREHOLDERS' MEETING ----------------------------------------------- WARSAW, Poland - March 12, 2004 - Netia SA ("Netia") (WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services today announced that the Extraordinary General Meeting of Shareholders held on March 11, 2004 (the "Meeting") adopted resolutions on: (i) changes in the composition of Netia's supervisory board; and (ii) the remuneration of supervisory board members, made up of the following multiples of average monthly remuneration in the enterprise sector from the last month of the last quarter, announced by the President of the Polish Main Statistical Office in the Official Journal of the Republic of Poland, "Monitor Polski": 1.2 times for supervisory board members; 1.4 times for the vice-chairman and 1.5 times for the chairman. Pursuant to the resolution of the Meeting, Jaroslaw Bauc, Morgan Ekberg and Ewa-Maria Robertson were dismissed as members of Netia's supervisory board as of March 11, 2004. In parallel, pursuant to the resolution of the Meeting, Mark Holdsworth, Hubert Janiszewski, Boguslaw Kasprzyk and Alicja Kornasiewicz were appointed members of Netia's supervisory board. As a result of these changes, Netia's supervisory board currently consists of the following 7 members: Nicholas N. Cournoyer (Chairman of the supervisory board), Mark Holdsworth, Hubert Janiszewski, Boguslaw Kasprzyk, Alicja Kornasiewicz, Richard James Moon and Andrzej Radziminski. The full text of the resolution on remuneration of the supervisory board members is available at Netia's website at www.investor.netia.pl. 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, its Current Report on Form 6-K filed with the Commission on August 8, 2003, its Current Report dated August 13, 2003, its Current Report dated September 23, 2003, its Current Report dated October 1, 2003, its Current Report dated November 4, 2003, its Current Report dated November 6, 2003, its Current Report dated December 29, 2003, its Current Report dated February 3, 2004 and its Current Report dated March 1, 2004. Netia undertakes no obligation to publicly update or revise any forward-looking statements. # # # netia 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 INFORMATION REGARDING THE SALE OF NETIA'S SHARES ------------------------------------------------ WARSAW, Poland - March 22, 2004 - Netia SA ("Netia") (WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services today announced that it has received a notification made by Enterprise Investors Sp. z o. o. on behalf of Polish Enterprise Fund IV, L.P ("Fund") stating that on March 19, 2004 as a result of the settlement of the Fund's sales of Netia's securities listed on the Warsaw Stock Exchange, the Fund has held 9,013,520 of Netia's shares and 10,925,130 of Netia's subscription warrants. Assuming that the Fund exercises its rights to acquire the Netia shares arising from the subscription warrants, the total number of Netia's securities held by the Fund will constitute 4.9% of Netia's share capital and entitle the holder thereof to exercise 19,938,650 votes constituting 4.9% of the total number of votes at Netia's General Meeting of Shareholders. Consequently, the Fund's holding in the total number of votes at Netia's General Meeting of Shareholders has decreased to below 5%. 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, its Current Report on Form 6-K filed with the Commission on August 8, 2003, its Current Report dated August 13, 2003, its Current Report dated September 23, 2003, its Current Report dated October 1, 2003, its Current Report dated November 4, 2003, its Current Report dated November 6, 2003, its Current Report dated December 29, 2003, its Current Report dated February 3, 2004 and its Current Report dated March 1, 2004. Netia undertakes no obligation to publicly update or revise any forward-looking statements. # # # netia 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 SELLS ITS HOLDINGS IN NON-OPERATIVE COMPANIES --------------------------------------------------- WARSAW, Poland - April 1, 2004 - Netia SA ("Netia" or the "Company") (WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services today announced that, in the process of simplifying the Netia group's internal structure, on March 31, 2004, the Company sold to Fiducia Investment Sp. z o.o., with its seat in Warsaw ("Fiducia Investment"), on the basis of share purchase agreements, the following holdings in certain dormant companies: (i) 400 shares, EUR 45.38 par value per share, of Netia Holdings B.V., with its seat in Amsterdam, the Netherlands, constituting 100% of Netia Holdings B.V.'s share capital and giving 100% of the voting power at Netia Holdings B.V.'s general meeting of shareholders. The total par value of the shares sold equals EUR 18,151.21. The total value of the transaction equals PLN 1,000; (ii) 400 shares, EUR 45.38 par value per share, of Netia Holdings II B.V., with its seat in Amsterdam, the Netherlands, constituting 100% of Netia Holdings II B.V.'s share capital and giving 100% of the voting power at Netia Holdings II B.V.'s general meeting of shareholders. The total par value of the sold shares equals EUR 18,151.21. The total value of the transaction equals PLN 1,000; and (iii) 200 shares, EUR 100 par value per share, of Netia Holdings III B.V., with its seat in Amsterdam, the Netherlands, constituting 100% of Netia Holdings III B.V.'s share capital and giving 100% of the voting power at Netia Holdings III B.V.'s general meeting of shareholders. The total par value of the sold shares equals EUR 20,000. The total value of the transaction equals PLN 1,000. The Company's management board announced that, in the process of simplifying the Netia group's internal structure, on March 31, 2004, the Company's subsidiary, Swiat Internet SA ("Swiat Internet"), sold to Fiducia Investment, on the basis of share purchase agreements, the following holdings in certain dormant companies: (i) 835,130 shares, PLN 10 par value per share, of Multinet S.A., with its seat in Warsaw, constituting 100% of Multinet S.A.'s share capital and giving 100% of the voting power at Multinet S.A.'s general shareholders' meeting. The total par value of the sold shares equals PLN 8,351,300. The total value of the transaction equals PLN 1,000; (ii) 435,660 shares, PLN 10 par value per share, of IDS S.A., with its seat in Warsaw, constituting 100% of IDS S.A.'s share capital and giving 100% of the voting power at IDS S.A.'s general shareholders' meeting. The total par value of the sold shares equals PLN 4,356,600. The total value of the transaction equals PLN 1,000; (iii) 40 shares, PLN 50 par value per share, of Pik-Net Sieci Rozlegle Sp. z o.o., with its seat in Warsaw, constituting 100% of Pik-Net Sieci Rozlegle Sp. z o.o.'s share capital and giving 100% of the voting power at Pik-Net Sieci Rozlegle Sp. z o.o.'s general meeting of shareholders. The total par value of the sold shares equals PLN 20,000. The total value of the transaction equals PLN 1,000; (iv) 80,000 shares, PLN 50 par value per share, of Publiczny Dostep do Internetu Sp. z o.o., with its seat in Lodz, constituting 100% of Publiczny Dostep do Internetu Sp. z o.o.'s share capital and giving 100% of the voting power at Publiczny Dostep do Internetu Sp. z o.o.'s general meeting of shareholders. The total par value of the sold shares equals PLN 4,000,000. The total value of the transaction equals PLN 1,000; and (v) 1,368,420 shares, PLN 1 par value per share, of Polska OnLine Holding S.A., with its seat in Warsaw ("Polska OnLine"), constituting approximately 90% of Polska OnLine Holding S.A.'s share capital and giving approximately 90% of the voting power at Polska OnLine Holding S.A.'s general shareholders' meeting. The total par value of the sold shares equals PLN 1,368,420. The total value of the transaction equals PLN 900. By September 30, 2004, Swiat Internet covenanted to offer to Fiducia Investment the remaining 160,000 shares of Polska OnLine for the total price of PLN 100. The Company's management board hereby announces that, in the process of simplifying the Netia group's internal structure, on March 31, 2004, the Company's subsidiary, Polska OnLine, sold to Fiducia Investment, on the basis of share purchase agreements, the following holding in a certain dormant company: 7,649 shares, PLN 700 par value per share, of Polska OnLine Sp. z o.o., with its seat in Warsaw, constituting 100% of Polska OnLine Sp. z o.o.'s share capital and giving 100% of the voting power at Polska OnLine Sp. z o.o.'s general meeting of shareholders. The total par value of the sold shares equals PLN 5,345,300. The total value of the transaction equals PLN 1,000. The Company's management board further announces that: (i) none of the companies whose shares were subject to the above mentioned transactions conducts telecommunications activities; (ii) in each of the nine transactions, the shares sold by the Company, Swiat Internet and Polska OnLine constituted more than 20% of the respective companies' share capitals; and (iii) neither the Company, Swiat Internet, Polska OnLine nor any of their management board or supervisory board members are in any way connected to the purchaser of the shares. 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, its Current Report on Form 6-K filed with the Commission on August 8, 2003, its Current Report dated August 13, 2003, its Current Report dated September 23, 2003, its Current Report dated October 1, 2003, its Current Report dated November 4, 2003, its Current Report dated November 6, 2003, its Current Report dated December 29, 2003, its Current Report dated February 3, 2004, its Current Report dated March 1, 2004 and its Current Report dated March 9, 2004. Netia undertakes no obligation to publicly update or revise any forward-looking statements. # # # netia 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 ISSUES SERIES K SHARES ---------------------------- WARSAW, Poland - April 1, 2004 - Netia SA ("Netia" or the "Company") (WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services, today announced that on March 31, 2004 the Company issued, within its authorised capital, 480,732 ordinary bearer series K shares with a nominal value of PLN 1 each ("Series K Shares") which give the right to 480,732 votes at Netia's general meeting of shareholders, due to the exercise by certain persons authorized thereto of their rights arising from the performance stock option plan adopted by Netia's supervisory board on June 28, 2002, as amended. By resolution No. 218/03 of May 14, 2003, the management board of Krajowy Depozyt Papierow Wartosciowych w Warszawie SA (National Depository of Securities) assigned the Series K Shares with the PLNETIA00097 code. The Series K shares were issued due to the exercise of rights attached to 480,732 ordinary bearer Series III notes, authorising their holders to subscribe for the Series K Shares prior to the Company's shareholders, having a nominal value of 1 grosz (PLN 0.01) each ("Series III Notes"). In connection with the exercise of rights from the Series III Notes, the Company bought and redeemed 480,732 Series III Notes. 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, its Current Report on Form 6-K filed with the Commission on August 8, 2003, its Current Report dated August 13, 2003, its Current Report dated September 23, 2003, its Current Report dated October 1, 2003, its Current Report dated November 4, 2003, its Current Report dated November 6, 2003, its Current Report dated December 29, 2003, its Current Report dated February 3, 2004, its Current Report dated March 1, 2004 and its Current Report dated March 9, 2004. Netia undertakes no obligation to publicly update or revise any forward-looking statements. # # # netia 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 RESOLUTION OF NETIA'S SUPERVISORY BOARD ON THE POTENTIAL CONFLICT OF INTEREST OF ONE OF ITS MEMBERS -------------------------------------------------------------------------------- WARSAW, Poland - April 2, 2004 - Netia SA ("Netia" or the "Company") (WSE: NET), Poland's largest alternative provider of fixed-line telecommunications services announced that its supervisory board adopted today a resolution that if CA IB extends an offer to render advisory services to Netia, Ms. Alicja Kornasiewicz, a Company's supervisory board member, will not take part in any activity related to the selection of an advisor by the Company. Thus, Ms. Alicja Kornasiewicz will not be provided with any information relating to any offers of other advisors received by the Company, selection of the CA IB offer by Netia's management board, motions of the management board on approval of remuneration for the Company advisor and meetings of the supervisory board regarding any issues related to retaining an advisor, except for the final resolutions and agreements adopted or entered into by the Company on the basis thereof. Should the Company retain CA IB, Ms. Alicja Kornasiewicz will also be excluded from the adoption of resolutions relating to granting consent for the Company to carry out the transactions in which CA IB will present its recommendations, and Ms. Kornasiewicz will not participate in the works of the supervisory board dedicated to evaluating the work performed by CA IB for the Company. The resolution was adopted by the supervisory board at the request and with the consent of Ms. Alicja Kornasiewicz, who substantiated her motion by noting that her being the president and managing director of CA IB in Poland as well as a member of the management board of CA IB Corporate Finance GmbH, would place her in a position of a potential conflict of interest if, as Netia's supervisory board member, she were to adopt decisions on the retention and evaluation of the work of a firm in which she holds a key position. 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, its Current Report on Form 6-K filed with the Commission on August 8, 2003, its Current Report dated August 13, 2003, its Current Report dated September 23, 2003, its Current Report dated October 1, 2003, its Current Report dated November 4, 2003, its Current Report dated November 6, 2003, its Current Report dated December 29, 2003, its Current Report dated February 3, 2004, its Current Report dated March 1, 2004 and its Current Report dated March 9, 2004. Netia undertakes no obligation to publicly update or revise any forward-looking statements. # # # netia 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 APRIL 1, 2004 ----------------------------------------- WARSAW, Poland - April 5, 2004 - Netia SA ("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 and options issued by Netia. I. SHARE CAPITAL. As of April 1, 2004, Netia's issued and outstanding share capital was PLN 358,565,500 and represented 358,565,500 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 will be filed on April 7, 2004. II. WARRANTS ISSUED. As of April 1, 2004, Netia issued 14,039,556 series J shares pursuant to the exercise of 11,661,113 two-year subscription warrants and 2,378,443 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 April 2, 2004, the following warrants were traded on WSE: (a) 20,763,108 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 (b) 30,045,778 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. SERIES K SHARES ISSUED AND MOTIONS FOR THEIR ASSIMILATION AND ADMITTANCE TO TRADING. Until April 1, 2004, Netia issued 480,732 series K shares in connection with the exercise of certain options granted under the performance stock option plan adopted by Netia's supervisory board on June 28, 2002, as amended. The total number of series K shares that may be issued under this plan will not exceed 18,373,785 shares. On April 2, 2004, Netia filed the following motions with regard to the issued series K shares: to the Polish National Depository for Securities - to assimilate on April 15, 2004, 480,732 series K shares identified by a code PLNETIA00097 with the remaining Netia's shares identified by a code PLNETIA00014; to the Warsaw Stock Exchange - to admit 480,732 series K shares to trading on the main market following their assimilation by the Polish National Depository for Securities with the remaining Netia's shares. V. 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, in the amount of PLN 352,783,156, reflects the status as of March 1, 2004, and will be amended following the consideration of a motion for the share capital increase to be filed with the court on April 7, 2004. Share capital increases in connection with the exercise of Netia's outstanding warrants and options 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, its Current Report on Form 6-K filed with the Commission on August 8, 2003, its Current Report dated August 13, 2003, its Current Report dated September 23, 2003, its Current Report dated October 1, 2003, its Current Report dated November 4, 2003, its Current Report dated November 6, 2003, its Current Report dated December 29, 2003, its Current Report dated February 3, 2004, its Current Report dated March 1, 2004 and its Current Report dated March 9, 2004. Netia undertakes no obligation to publicly update or revise any forward-looking statements. # # # 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: April 7, 2004 NETIA S.A. By: /S/ WOJCIECH MADALSKI ---------------------------------- Name: Wojciech Madalski Title: President of the Company By: /S/ DARIUSZ SOKOLOWSKI ---------------------------------- Name: Dariusz Sokolowski Title: Registered Proxy

KEY FIGURES ----------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------- PLN'000 YTD03 YTD02 3Q03 2Q03 1Q03 4Q02 3Q02 ----------------------------------------------------------------------------------------------------------------------------------- Revenues ** 518,259 456,170 179,134 177,821 161,304 156,822 154,829 y-o-y % change 13.6% 15.8% 15.7% 16.2% 8.8% 6.9% 11.8% EBITDA / Adjusted EBITDA ** 147,756 121,028 53,579 50,575 43,602 34,197 48,689 Margin % 28.5% 26.5% 29.9% 28.4% 27.0% 21.8% 31.4% y-o-y change % 22.1% 147.6% 10.0% 19.7% 44.9% 16.9% 173.9% EBIT (845,720) (194,677) (818,810) (1,373) (25,537) (68,131) (133,136) Margin % (163.2%) (42.7%) (457.1%) (0.8%) (15.8%) (43.4%) (86.0%) Net profit / (loss) (920,263) (823,548) (824,638) (15,367) (80,258) 148,576 (328,131) Total debt - (3,702,559) - - - (161,756) (3,702,559) Cash and cash equivalents 209,551 374,100 209,551 192,642 110,855 132,465 374,100 Capex (108,710) (221,071) (32,184) (39,215) (37,311) (49,477) (56,299) ----------------------------------------------------------------------------------------------------------------------------------- US$'000 * YTD03 YTD02 3Q03 2Q03 1Q03 4Q02 3Q02 ----------------------------------------------------------------------------------------------------------------------------------- Revenues ** 130,219 114,618 45,010 44,680 40,530 39,404 38,903 y-o-y % change 13.6% 15.8% 15.7% 16.2% 8.8% 6.9% 11.8% EBITDA / Adjusted EBITDA ** 37,126 30,410 13,462 12,708 10,956 8,592 12,234 Margin % 28.5% 26.5% 29.9% 28.4% 27.0% 21.8% 31.4% y-o-y change % 22.1% 147.6% 10.0% 19.7% 44.9% 16.9% 173.9% EBIT (212,498) (48,915) (205,736) (345) (6,416) (17,119) (33,452) Margin % (163.2%) (42.7%) (457.1%) (0.8%) (15.8%) (43.4%) (86.0%) Net profit / (loss) (231,228) (206,927) (207,201) (3,861) (20,166) 37,332 (82,447) Total debt - (930,315) - - - (40,643) (930,315) Cash and cash equivalents 52,652 93,997 52,652 48,404 27,854 33,283 93,997 Capex (27,315) (55,547) (8,087) (9,853) (9,375) (12,432) (14,146)

KEY OPERATIONAL INDICATORS ----------------------------------------------------------------------------------------------------------------------------------- 3Q03 2Q03 1Q03 4Q02** 3Q02* ----------------------------------------------------------------------------------------------------------------------------------- NETWORK DATA Backbone (km) 3,850 3,840 3,840 3,840 3,580 Number of connected lines (cumulative) 507,842 503,672 501,512 500,552 503,358 SUBSCRIBER DATA (WITH REGARD TO DIRECT VOICE SERVICES) Subscriber lines (cumulative) 356,140 351,295 345,447 341,160 340,232 Incl. ISDN equivalent of lines 64,122 59,916 56,510 53,288 50,886 Total net additions 4,845 5,848 4,287 928 (1,913) Business net additions 3,251 2,559 2,965 2,429 1,212 Business subscriber lines (cumulative) 114,413 111,162 108,603 105,638 103,209 Business mix of total subscriber lines (cumulative) 32.1% 31.6% 31.4% 31.0% 30.3% ARPU (PLN) ^ 113 119 119 121 121 ARPU per business line (PLN) ^ 205 213 215 222 232 ARPU per residential line (PLN) ^ 70 74 73 75 73 Churn 9,226 8,146 9,879 12,985 13,598 Disconnections of defaulting payers originated by Netia 1,641 1,536 1,683 5,279 5,341 Voluntary churn 7,585 6,610 8,196 7,706 8,257 Incl. internal churn*** 2,941 OTHERS Headcount 1,401 1,430 1,283 1,289 1,283

INCOME STATEMENT (ACCORDING TO IAS), unaudited ------------------------------------------------------------------------------------------------------------------------------- (PLN in thousands unless otherwise stated) TIME PERIODS: YTD 03 YTD 02 3Q03 2Q03 ------------------------------------------------------------------------------------------------------------------------------- Telecommunications revenue Direct Voice 366,549 378,862 120,063 123,986 ------------ ------- ------- ------- ------- >> installation fees 631 973 136 226 >> monthly charges 93,007 94,938 31,350 31,039 >> calling charges 272,911 282,951 88,577 92,721 - local calls 91,212 95,025 28,834 31,070 - domestic long-distance calls 55,399 54,559 18,487 18,349 - international long-distance calls 22,232 25,967 7,735 7,391 - fixed-to-mobile calls 88,428 89,370 28,989 30,907 - other 15,640 18,030 4,532 5,004 Indirect Voice 47,710 22,760 18,430 15,918 -------------- ------ ------ ------ ------ Data 35,760 14,566 14,652 13,618 ---- ------ ------ ------ ------ Interconnection revenues 3,933 4,763 1,062 1,420 ------------------------ ----- ----- ----- ----- Wholesale services 37,437 16,835 13,147 13,112 ------------------ ------ ------ ------ ------ Other telecommunications revenues 18,404 4,703 8,373 7,230 --------------------------------- ------ ----- ----- ----- TOTAL TELECOMMUNICATIONS REVENUE 509,793 442,489 175,727 175,284 Other revenue 8,466 13,681 3,407 2,537 TOTAL REVENUES 518,259 456,170 179,134 177,821 OTHER OPERATING INCOME 4,478 - - 4,478 Interconnection charges (92,217) (95,330) (29,252) (31,944) Salaries & benefits (97,475) (89,803) (35,865) (32,359) Legal & financial services (58,788) (54,687) (16,933) (22,793) Cost of rented lines & network maintenance (38,771) (29,808) (14,751) (15,714) Sales & marketing (18,844) (10,742) (5,819) (5,192) Other operating expenses (68,886) (54,772) (22,935) (23,722) EBITDA / ADJUSTED EBITDA 147,756 121,028 53,579 50,575 MARGIN (%) 28.5% 26.5% 29.9% 28.4% Depreciation of fixed assets (150,451) (152,191) (52,444) (49,108) Amortization of negative goodwill 22,513 - 3,132 19,381 Amortization of intangible assets (65,843) (54,825) (23,382) (22,221) Impairment provision for non-current assets (799,695) (108,689) (799,695) - EBIT (845,720) (194,677) (818,810) (1,373) MARGIN (%) (163.2%) (42.7%) (457.1%) (0.8%) Net financial expenses (74,543) (634,397) (5,566) (14,484) (LOSS) / PROFIT BEFORE TAX (920,263) (829,074) (824,376) (15,857) Tax (charges) / benefits 371 (2,218) (90) 609 Minority share in profit of subsidiaries (371) (7,744) (172) (119) NET LOSS / PROFIT (920,263) (823,548) (824,638) (15,367) MARGIN (%) (177.6%) (180.5%) (460.3%) (8.6%) (Loss) / Profit per share (not in thousands) (2.68) (26.69) (2.40) (0.04) Weighted average number of shares outstanding (not in thousands) 343,658,192 30,854,382 343,789,345 343,606,330

NOTE TO FINANCIAL EXPENSES -------------------------------------------------------------------------------------------------------------------------------- (PLN in thousands unless otherwise stated) TIME PERIODS: YTD 03 YTD 02 3Q03 2Q03 -------------------------------------------------------------------------------------------------------------------------------- Net interest expense (5,945) (320,511) (342) (3,722) Net foreign exchange losses (25,912) (313,886) (5,293) (10,569) Write-off of notes issuance costs due to redemption of notes (41,161) - - - Amortization of discount on installment obligations (419) - (143) (140) Amortization of notes issuance costs (1,265) - - - Other 159 - 212 - EBITDA / ADJUSTED EBITDA RECONCILIATION TO LOSS FROM OPERATIONS -------------------------------------------------------------------------------------------------------------------------------- (PLN in thousands unless otherwise stated) TIME PERIODS: YTD 03 YTD 02 3Q03 2Q03 -------------------------------------------------------------------------------------------------------------------------------- LOSS FROM OPERATIONS (845,720) (194,677) (818,810) (1,373) Add back: Depreciation of fixed assets 150,451 152,191 52,444 49,108 Amortization of intangible assets 65,843 54,825 23,382 22,221 Amortization of negative goodwill (22,513) - (3,132) (19,381) Impairment provision for non-current assets 799,695 108,689 799,695 - EBITDA / ADJUSTED EBITDA 147,756 121,028 53,579 50,575

BALANCE SHEET (ACCORDING TO IAS, unaudited) --------------------------------------------------------------------------------------------------------------------- (PLN in thousands unless otherwise stated) TIME PERIODS SEPTEMBER 30, 2003 DECEMBER 31, 2002 --------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents 209,551 132,465 Restricted investments, cash and cash equivalents - 254,211 Accounts receivable Trade, net 92,300 87,067 Government value added tax 6,760 2,374 Other 3,484 8,147 Inventories 1,297 854 Prepaid expenses 13,449 8,260 TOTAL CURRENT ASSETS 326,841 493,378 Investments 161 1,663 Fixed assets, net 1,590,709 2,245,917 Licenses, net 419,463 639,176 Computer software, net 83,386 112,685 Negative goodwill (32,143) - Other long-term assets 811 - TOTAL NON-CURRENT ASSETS 2,062,387 2,999,441 TOTAL ASSETS 2,389,228 3,492,819 Short-term liabilities for licenses 360,350 211,247 Accounts payable and accruals Trade 43,664 89,864 Accruals and other 81,066 85,805 Deferred income 9,360 6,956 TOTAL CURRENT LIABILITIES 494,440 393,872 Long-term debt - 161,756 Long-term liabilities for licenses 4,509 112,260 Long-term installment obligations 5,560 5,141 Other long-term obligations 508 - TOTAL NON-CURRENT LIABILITIES 10,577 279,157 Minority interest 4,143 17,499 Share capital 344,382 203,285 Share premium 1,572,903 1,713,865 Treasury shares (2,812) (2,812) Other reserves 3,816,325 3,819,712 Accumulated deficit (3,850,730) (2,931,759) TOTAL SHAREHOLDERS' EQUITY 1,880,068 2,802,291 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 2,389,228 3,492,819

CASH FLOW STATEMENT (ACCORDING TO IAS), unaudited ------------------------------------------------------------------------------------------------------------------------------------ (PLN in thousands unless otherwise stated) TIME PERIODS: YTD03 YTD02 3Q03 2Q03 ------------------------------------------------------------------------------------------------------------------------------------ NET (LOSS) / PROFIT (920,263) (823,548) (824,638) (15,367) Depreciation of fixed assets and amortization of licenses and other intangible assets 216,294 207,016 75,826 71,329 Amortization of negative goodwill (22,513) - (3,132) (19,381) Amortization of notes issuance costs 1,265 - - - Amortization of discount on installment obligations 419 - 143 140 Write-off of notes issuance costs 41,161 - - - Interest expense accrued on license liabilities 6,685 15,890 2,338 2,222 Interest expense accrued on long-term debt 3,030 314,951 - 1,903 Minority share in profits of subsidiaries 371 (7,744) 172 119 Increase in long-term assets (811) - 295 (1,011) Other provisions (580) - (2,814) 1,348 Impairment provision for non-current assets 799,695 108,689 799,695 - Foreign exchange losses 27,688 317,397 7,470 11,163 Changes in working capital (7,548) 20,355 10,576 2,325 NET CASH PROVIDED BY OPERATING ACTIVITIES 144,893 153,006 65,931 54,790 Purchase of fixed assets and computer software (108,710) (221,071) (32,184) (39,215) Decrease / (increase) in restricted cash and cash equivalents 259,514 - - 60,221 Purchase of minority shareholdings in a subsidiary (577) - - (577) Purchase of subsidiary, net of received cash 16,648 - (54) 16,702 Increase of investments (405) - 10 (415) Payments for licenses (9,160) - - (9,160) NET CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES 157,310 (221,071) (32,228) 27,556 Proceeds from share issue, net 337 - 219 118 Redemption of notes (204,193) - - - Payments related to restructuring (24,817) (47,042) (18,865) (1,477) Issuance of notes for warrants 508 - - 508 Payments for cancellation of swap transactions - (29,279) - - NET CASH USED IN FINANCING ACTIVITIES (228,165) (76,321) (18,646) (851) Effect of exchange rate change on cash and cash equivalents 3,048 31,540 1,852 292 NET CHANGE IN CASH AND CASH EQUIVALENTS 77,086 (112,846) 16,909 81,787 Cash and cash equivalents at the beginning of the period 132,465 486,946 192,642 110,855 Cash and cash equivalents at the end of the period 209,551 374,100 209,551 192,642

SEPTEMBER 30, DECEMBER 31, 2003 2002 NOTE (UNAUDITED) (AUDITED) ---------- -------------------- ------------------- (PLN) (PLN) ASSETS CURRENT ASSETS Cash and cash equivalents.............................................. 209,551 132,465 Restricted investments, cash and cash equivalents...................... - 254,211 Accounts receivable.................................................... Trade, net of allowance for doubtful accounts of PLN 56,143 and PLN 45,278................................................... 92,300 87,067 Government - value added tax........................................ 6,760 2,374 Other............................................................... 3,484 8,147 Inventories............................................................ 1,297 854 Prepaid expenses....................................................... 13,449 8,260 -------------------- ------------------- TOTAL CURRENT ASSETS................................................... 326,841 493,378 Investments............................................................ 161 1,663 Fixed assets, net...................................................... 4 1,590,709 2,245,917 Intangible assets...................................................... Licenses, net....................................................... 5 419,463 639,176 Computer software, net.............................................. 83,386 112,685 Negative goodwill...................................................... 7 (32,143) - Other long term assets................................................. 811 - -------------------- ------------------- TOTAL ASSETS........................................................... 2,389,228 3,492,819 ==================== ===================

CONVENIENCE TRANSLATION (UNAUDITED) -------------------------------------- SEPTEMBER 30, DECEMBER 31, NOTE 2003 2002 ------------------ ------------------ (USD) (USD) ASSETS CURRENT ASSETS Cash and cash equivalents.............................................. 52,652 33,283 Restricted investments, cash and cash equivalents...................... - 63,874 Accounts receivable.................................................... Trade, net of allowance for doubtful accounts of USD 14,107 and USD 11,377........................................................... 23,192 21,877 Government - value added tax........................................ 1,699 596 Other............................................................... 875 2,047 Inventories............................................................ 326 215 Prepaid expenses....................................................... 3,379 2,075 ------------------ ------------------ TOTAL CURRENT ASSETS................................................... 82,123 123,967 Investments............................................................ 40 418 Fixed assets, net...................................................... 4 399,686 564,315 Intangible assets...................................................... Licenses, net....................................................... 5 105,395 160,601 Computer software, net.............................................. 20,952 28,314 Negative goodwill...................................................... 7 (8,076) - Other long term assets................................................. 204 - ------------------ ------------------ TOTAL ASSETS........................................................... 600,324 877,615 ================== ==================

SEPTEMBER 30, DECEMBER 31, NOTE 2003 2002 (UNAUDITED) (AUDITED) ---------- -------------------- ------------------- (PLN) (PLN) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short term liabilities for licenses..................................... 5 360,350 211,247 Accounts payable and accruals........................................... Trade................................................................ 43,664 89,864 Accruals and other................................................... 81,066 85,805 Deferred income......................................................... 9,360 6,956 -------------------- ------------------- TOTAL CURRENT LIABILITIES............................................... 494,440 393,872 Long term liabilities for licenses...................................... 5 4,509 112,260 Long term debt.......................................................... 8 - 161,756 Long term installment obligations....................................... 5,560 5,141 Other long term liabilities............................................. 508 - -------------------- ------------------- TOTAL LIABILITIES....................................................... 505,017 673,029 Minority interest....................................................... 4,143 17,499 SHAREHOLDERS' EQUITY 9 Share capital (nominal par value of PLN 1 and PLN 6 per share, respectively)........................................................ 344,382 203,285 Share premium .......................................................... 1,572,903 1,713,865 Treasury shares......................................................... (2,812) (2,812) Other reserves.......................................................... 3,816,325 3,819,712 Accumulated deficit..................................................... (3,850,730) (2,931,759) -------------------- ------------------- TOTAL SHAREHOLDERS' EQUITY ............................................. 1,880,068 2,802,291 -------------------- ------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............................. 2,389,228 3,492,819 ==================== ===================

CONVENIENCE TRANSLATION (UNAUDITED) ------------------------------------------ SEPTEMBER 30, DECEMBER 31, NOTE 2003 2002 ---------- -------------------- ------------------- (USD) (USD) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short term liabilities for licenses..................................... 5 90,542 53,078 Accounts payable and accruals........................................... Trade................................................................ 10,971 22,579 Accruals and other................................................... 20,369 21,560 Deferred income......................................................... 2,352 1,748 -------------------- ------------------- TOTAL CURRENT LIABILITIES............................................... 124,234 98,965 Long term liabilities for licenses...................................... 5 1,133 28,207 Long term debt.......................................................... 8 - 40,643 Long term installment obligations....................................... 1,397 1,292 Other long term liabilities............................................. 128 - -------------------- ------------------- TOTAL LIABILITIES....................................................... 126,892 169,107 Minority interest....................................................... 1,041 4,397 SHAREHOLDERS' EQUITY 9 Share capital (nominal par value of PLN 1 and PLN 6 per share, respectively)........................................................ 86,530 51,078 Share premium .......................................................... 395,212 430,630 Treasury shares......................................................... (707) (707) Other reserves.......................................................... 958,900 959,751 Accumulated deficit..................................................... (967,544) (736,641) -------------------- ------------------- TOTAL SHAREHOLDERS' EQUITY ............................................. 472,391 704,111 -------------------- ------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............................. 600,324 877,615 ==================== ===================

NINE-MONTH NINE-MONTH THREE-MONTH THREE-MONTH PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, 2003 2002 2003 2002 2002 NOTE (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (AUDITED) ----- -------------- ------------- ------------- ------------ ------------ (PLN) (PLN) (PLN) (PLN) (PLN) REVENUE Telecommunication services revenue Direct voice services....................... 366,549 378,862 120,063 124,347 503,058 Installation fees......................... 631 973 136 289 1,162 Monthly fees.............................. 93,007 94,938 31,350 31,491 126,366 Calling charges........................... 272,911 282,951 88,577 92,567 375,530 Local calls........................... 91,212 95,025 28,834 29,420 126,276 Domestic long distance calls.......... 55,399 54,559 18,487 18,061 72,447 International long distance calls..... 22,232 25,967 7,735 8,960 33,747 Fixed-to-mobile....................... 88,428 89,370 28,989 30,231 118,388 Other................................. 15,640 18,030 4,532 5,895 24,672 Indirect voice.............................. 47,710 22,760 18,430 10,137 34,628 Data........................................ 35,760 14,566 14,652 5,573 20,468 Interconnection revenue..................... 3,933 4,763 1,062 1,398 6,248 Wholesale services.......................... 37,437 16,835 13,147 7,338 23,769 Other telecommunication revenue............. 18,404 4,703 8,373 2,700 8,557 ------------ ------------ ------------ ------------ ------------ 509,793 442,489 175,727 151,493 596,728 Other revenue................................. 8,466 13,681 3,407 3,336 16,264 ------------ ------------ ------------ ------------ ------------ TOTAL REVENUE.................................. 518,259 456,170 179,134 154,829 612,992 OTHER OPERATING INCOME........................... 4,478 - - - - COSTS Interconnection charges.......................... (92,217) (95,330) (29,252) (32,415) (126,088) Salaries and benefits............................ (84,772) (77,313) (31,958) (24,739) (105,218) Social security costs............................ (12,703) (12,490) (3,907) (3,380) (18,152) Legal and financial services..................... (58,788) (54,687) (16,933) (21,446) (72,255) Sales and marketing expenses..................... (18,844) (10,742) (5,819) (4,856) (20,816) Cost of rented lines and network maintenance..... (38,771) (29,808) (14,751) (2,802) (45,470) Depreciation of fixed assets .................... (150,451) (152,191) (52,444) (54,905) (194,634) Amortization of negative goodwill................ 22,513 - 3,132 - - Amortization of other intangible assets.......... (65,843) (54,825) (23,382) (18,231) (74,046) Impairment provision for non-current assets...... 6 (799,695) (108,689) (799,695) (108,689) (149,353) Other operating expenses......................... (68,886) (54,772) (22,935) (16,502) (69,768) ------------ ------------ ------------ ------------ ------------ LOSS FROM OPERATIONS............................. (845,720) (194,677) (818,810) (133,136) (262,808) Financial expense, net........................... 10 (74,543) (634,397) (5,566) (202,113) (417,570) ------------ ------------ ------------ ------------ ------------ LOSS BEFORE INCOME TAX........................... (920,263) (829,074) (824,376) (335,249) (680,378) Income tax benefit / (charge).................... 371 (2,218) (90) (893) (1,903) ------------ ------------ ------------ ------------ ------------ LOSS BEFORE MINORITY INTEREST.................... (919,892) (831,292) (824,466) (336,142) (682,281) Minority share in (profits) / losses of subsidiaries............................... (371) 7,744 (172) 8,011 7,309 ------------ ------------ ------------ ------------ ------------ NET LOSS......................................... (920,263) (823,548) (824,638) (328,131) (674,972) ============ ============ ============ ============ ============ BASIC AND DILUTED LOSS PER SHARE (not in thousands)............. 11 (2.68) (26.69) (2.40) (10.61) (17.89) ============ ============ ============ ============ ============

CONVENIENCE TRANSLATION (UNAUDITED) ------------------------------------------------------------------------ NINE-MONTH NINE-MONTH THREE-MONTH THREE-MONTH YEAR PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED ENDED SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER DECEMBER 30, 30, 30, 30, 31, NOTE 2003 2002 2003 2002 2002 ---- ------------- ------------- ------------- ------------- ------------- (USD) (USD) (USD) (USD) (USD) REVENUE Telecommunication services revenue Direct voice services..................... 92,100 95,193 30,167 31,244 126,398 Installation fees....................... 159 244 34 73 292 Monthly fees............................ 23,369 23,854 7,877 7,913 31,751 Calling charges......................... 68,572 71,095 22,256 23,258 94,355 Local calls......................... 22,918 23,876 7,245 7,392 31,728 Domestic long distance calls........ 13,920 13,709 4,645 4,538 18,203 International long distance calls... 5,586 6,525 1,943 2,251 8,479 Fixed-to-mobile..................... 22,218 22,455 7,284 7,596 29,746 Other............................... 3,930 4,530 1,139 1,481 6,199 Indirect voice............................ 11,988 5,719 4,631 2,547 8,701 Data...................................... 8,985 3,660 3,682 1,400 5,143 Interconnection revenue................... 988 1,197 267 351 1,570 Wholesale services........................ 9,407 4,230 3,303 1,844 5,972 Other telecommunication revenue........... 4,624 1,182 2,104 678 2,150 ---------- ---------- ---------- ---------- ---------- 128,092 111,181 44,154 38,064 149,934 Other revenue........................................ 2,127 3,438 856 839 4,087 ---------- ---------- ---------- ---------- ---------- TOTAL REVENUE 130,219 114,619 45,010 38,903 154,021 OTHER OPERATING INCOME.................................. 1,125 - - - - COSTS Interconnection charges........................ (23,171) (23,953) (7,350) (8,145) (31,681) Salaries and benefits.......................... (21,300) (19,426) (8,030) (6,216) (26,437) Social security costs.......................... (3,192) (3,138) (982) (849) (4,561) Legal and financial services................... (14,771) (13,741) (4,255) (5,389) (18,155) Sales and marketing expenses................... (4,735) (2,699) (1,462) (1,220) (5,230) Cost of rented lines and network maintenance... (9,742) (7,490) (3,706) (704) (11,425) Depreciation of fixed assets .................. (37,803) (38,240) (13,177) (13,796) (48,904) Amortization of negative goodwill.............. 5,657 - 787 - - Amortization of other intangible assets........ (16,544) (13,775) (5,875) (4,581) (18,605) Impairment provision for non-current assets.... 6 (200,933) (27,309) (200,933) (27,309) (37,527) Other operating expenses....................... (17,308) (13,762) (5,763) (4,146) (17,530) ---------- ---------- ---------- ---------- ---------- LOSS FROM OPERATIONS........................... (212,498) (48,914) (205,736) (33,453) (66,034) Financial expense, net......................... 10 (18,730) (159,401) (1,399) (50,783) (104,920) ---------- ---------- ---------- ---------- ---------- LOSS BEFORE INCOME TAX......................... (231,228) (208,315) (207,135) (84,235) (170,954) Income tax charge.............................. 94 (558) (22) (225) (478) ---------- ---------- ---------- ---------- ---------- LOSS BEFORE MINORITY INTEREST.................. (231,134) (208,873) (207,157) (84,460) (171,432) Minority share in (profits) / losses of subsidiaries............................. (94) 1,946 (44) 2,013 1,836 ---------- ---------- ---------- ---------- ---------- NET LOSS....................................... (231,228) (206,927) (207,201) (82,447) (169,596) ========== ========== ========== ========== ========== BASIC AND DILUTED LOSS PER SHARE (not in thousands)........... 11 (0.67) (6.71) (0.60) (2.67) (4.50) ========== ========== ========== ========== ==========

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.......... 9 (171,866) 171,866 - - - - Issuance of series J shares, net of related costs.............................. 337 - - - - 337 Coverage of losses from previous years in individual entities*.................... - (312,828) - 309,239 3,589 - Effect of full consolidation of certain subsidiaries............................... - - - - (2,297) (2,297) Net loss..................................... - - - - (920,263) (920,263) ----------- ----------- ----------- ----------- ------------- ---------- BALANCE AS AT SEPTEMBER 30, 2003 (UNAUDITED)............................... 344,382 1,572,903 (2,812) 3,816,325 (3,850,730) 1,880,068 =========== =========== =========== =========== ============= ========== *The coverage of losses from the previous years in the individual subsidiaries' financial statements was recordd 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. SHARE SHARE TREASURY ACCUMULATED SHAREHOLDERS' CAPITAL PREMIUM SHARES DEFICIT DEFICIT ------------ ------------- ------------ ---------------- ---------------- (PLN) (PLN) (PLN) (PLN) (PLN) BALANCE AS AT DECEMBER 31, 2001 (AUDITED) .......... 203,285 1,713,865 (3,611) (2,256,787) (343,248) Exchange of shares with minority shareholder........ - - 799 - 799 Net loss............................................ - - - (823,548) (823,548) ------------ ------------- ------------ ---------------- ---------------- BALANCE AS AT SEPTEMBER 30, 2002 (UNAUDITED)........ 203,285 1,713,865 (2,812) (3,080,335) (1,165,997) ============ ============= ============ ================ ================

NINE-MONTH NINE-MONTH THREE-MONTH THREE-MONTH YEAR PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED ENDED SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER DECEMBER 30, 30, 30, 30, 31, 2003 2002 2003 30, 2002 2002 NOTE (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (AUDITED) ---- ----------- ----------- ----------- ----------- ---------- (PLN) (PLN) (PLN) (PLN) (PLN) Cash flows from operating activities: NET LOSS (920,263) (823,548) (824,638) (328,131) (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............... 216,294 207,016 75,826 73,136 268,680 Amortization of negative goodwill....................... 7 (22,513) - (3,132) Amortization of notes issuance costs.................... 1,265 - - - 127 Amortization of discount on installment obligations..... 419 - 143 - - Write-off of notes issuance costs....................... 8 41,161 - - - - Interest expense accrued on license liabilities......... 6,685 15,890 2,338 5,387 22,595 Interest expense accrued on long term debt and restricted cash................................... 3,030 314,951 - 109,520 220,428 Minority share in profits / (losses) of subsidiaries.... 371 (7,744) 172 (8,011) (7,309) Impairment provision for non-current assets............. 4, 6 799,695 108,689 799,695 108,689 149,353 Increase in long term assets............................ (811) - 295 - - Other provisions........................................ (580) - (2,814) - - Foreign exchange losses on translation of long term debt and restricted investments....................... 27,688 317,397 7,470 88,412 195,914 Changes in working capital.............................. (7,548) 20,355 10,576 24,773 23,660 ----------- ----------- ----------- ----------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES............... 144,893 153,006 65,931 73,775 198,476 Cash flows provided by / (used in) investing activities: Purchase of fixed assets and computer software.......... (108,710) (221,071) (32,184) (56,299) (270,548) Decrease / (increase) of restricted cash and cash equivalents.................................. 8 259,514 - - - (197,744) Purchase of subsidiary, net of received cash............ 16,648 - (54) - - Purchase of minority shareholdings in subsidiary........ (577) - - - - Payments for licenses................................... (9,160) - - - - Increase of investments................................. (405) - 10 - - ----------- ----------- ----------- ----------- ---------- NET CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES... 157,310 (221,071) (32,228) (56,299) (468,292) Net cash used in financing activities: Redemption of notes..................................... (204,193) - - - - Payments related to financial restructuring............. (24,817) (47,042) (18,865) (14,151) (80,394) Issuance of notes for warrants.......................... 508 - - - - Net proceeds from share issuance........................ 337 - 219 - - Payments for cancellation of swap transactions.......... - (29,279) - - (29,279) ----------- ----------- ----------- ----------- ---------- NET CASH USED IN FINANCING ACTIVITIES................... (228,165) (76,321) (18,646) (14,151) (109,673) EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS.................................. 3,048 31,540 1,852 5,838 25,008 NET CHANGE IN CASH AND CASH EQUIVALENTS................. 77,086 (112,846) 16,909 9,163 (354,481) Cash and cash equivalents at beginning of period........ 132,465 486,946 192,642 364,937 486,946 ----------- ----------- ----------- ----------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD.............. 209,551 374,100 209,551 374,100 132,465 =========== =========== =========== =========== ==========

NINE-MONTH NINE-MONTH THREE-MONTH THREE-MONTH PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER SEPTEMBER 30, DECEMBER 31, 2003 2002 30, 2003 2002 2002 (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (AUDITED) ----------------- ---------------- -------------- --------------- --------------- (PLN) (PLN) (PLN) (PLN) (PLN) Income taxes paid / (reimbursed) (356) 1,663 (723) - 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: NINE-MONTH NINE-MONTH PERIOD ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, 2003 2002 2002 (UNAUDITED) (UNAUDITED) (AUDITED) ----------------- ---------------- -------------- (PLN) (PLN) (PLN) 25,770 50,036 52,952

CONVENIENCE TRANSLATION (UNAUDITED) ------------------------------------------------------------------ NINE-MONTH NINE-MONTH THREE-MONTH THREE-MONTH YEAR PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED ENDED SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER DECEMBER 30, 30, 30, 30, 30, NOTE 2003 2002 2003 2002 2002 ------ ------------ ---------- ----------- ---------- ---------- (USD) (USD) (USD) (USD) (USD) Cash flows from operating activities: NET LOSS (231,228) (206,927) (207,201) (82,447) (169,596) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation of fixed assets and amortization of licenses and other intangible assets............... 54,347 52,015 19,052 18,377 67,509 Amortization of negative goodwill....................... 7 (5,657) - (787) - - Amortization of notes issuance costs.................... 318 - - - 32 Amortization of discount on installment obligations..... 105 - 36 - - Write-off of notes issuance costs....................... 8 10,342 - - - - Interest expense accrued on license liabilities......... 1,680 3,993 587 1,354 5,678 Interest expense accrued on long term debt and restricted cash................................... 761 79,135 - 27,518 55,385 Minority share in profits / (losses) of subsidiaries.... 94 (1,946) 44 (2,013) (1,836) Impairment provision for non-current assets............. 4, 6 200,933 27,309 200,933 27,309 37,527 Increase in long term assets............................ (204) - 74 - - Other provisions........................................ (146) - (707) - - Foreign exchange losses on translation of long term debt and restricted investments....................... 6,957 79,751 1,877 22,215 49,226 Changes in working capital.............................. (1,896) 5,115 2,658 6,225 5,945 --------- --------- --------- --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES............... 36,406 38,445 16,566 18,538 49,870 Cash flows provided by / (used in) investing activities: Purchase of fixed assets and computer software.......... (27,315) (55,547) (8,087) (14,146) (67,979) Decrease / (increase) of restricted cash and cash equivalents........................................... 8 65,206 - - - (49,686) Purchase of subsidiary, net of received cash............ 4,183 - (14) - - Purchase of minority shareholdings in subsidiary........ (144) - - - - Payments for licenses................................... (2,302) - - - - Increase of investments................................. (102) - 3 - - --------- --------- --------- --------- --------- NET CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES... 39,526 (55,547) (8,098) (14,146) (117,665) Net cash used in financing activities: Redemption of notes..................................... (51,306) - - - - Payments related to financial restructuring............. (6,236) (11,820) (4,740) (3,556) (20,200) Issuance of notes for warrants.......................... 128 - - - - Net proceeds from share issuance........................ 85 - 55 - - Payments for cancellation of swap transactions.......... - (7,357) - - (7,357) --------- --------- --------- --------- --------- NET CASH USED IN FINANCING ACTIVITIES................... (57,329) (19,177) (4,685) (3,556) (27,557) EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS............................... 766 7,925 466 1,466 6,284 NET CHANGE IN CASH AND CASH EQUIVALENTS................. 19,369 (28,354) 4,249 2,302 (89,068) Cash and cash equivalents at beginning of period........ 33,283 122,351 48,403 91,695 122,351 --------- --------- --------- --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD.............. 52,652 93,997 52,652 93,997 33,283 ========= ========= ========= ========= =========

CONVENIENCE TRANSLATION (UNAUDITED) ----------------------------------------------------------------------------------- NINE-MONTH NINE-MONTH THREE-MONTH THREE-MONTH PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER SEPTEMBER 30, DECEMBER 31, 2003 2002 30, 2003 2002 2002 ----------------- ---------------- -------------- --------------- --------------- (USD) (USD) (USD) (USD) (USD) Income taxes paid (89) 418 (182) - 320 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) ------------------------------------------------- NINE-MONTH NINE-MONTH PERIOD ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, 2003 2002 2002 ----------------- ---------------- -------------- (USD) (USD) (USD) 6,475 12,572 13,305

DECEMBER 31, PURCHASE OF SEPTEMBER 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 - 154 5,006 (179) 90,407 Land............................ 17,058 - - - - 17,058 Long term ground lease.......... 5,406 - - - - 5,406 Transmission network ........... 1,482,820 - 3,557 80,757 - 1,567,134 Switching system................ 980,488 - 10,722 178,374 - 1,169,584 Base stations................... 13,898 - - - - 13,898 Machinery and equipment......... 187,789 3,473 131 (122,178) (1,377) 67,838 Office furniture and equipment.. 108,210 4,516 4,248 32 (16,874) 100,132 Vehicles........................ 15,339 782 371 - (1,723) 14,769 ---------- ---------- ---------- ---------- ---------- ---------- 2,896,434 8,771 19,183 141,991 (20,153) 3,046,226 Network under construction...... 199,679 58,207 2,448 (141,991) (10,381) 107,962 ---------- ---------- ---------- ---------- ---------- ---------- 3,096,113 66,978 21,631 - (30,534) 3,154,188 ========== ========== ========== ========== ========== ========== ACCUMULATED DEPRECIATION DECEMBER 31, DEPRECIATION SEPTEMBER 30, 2002 EXPENSE TRANSFERS DISPOSALS 2003 (AUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) ----------- ------------- ------------ ------------ -------------- (PLN) (PLN) (PLN) (PLN) (PLN) Buildings.......................... 10,299 7,656 (130) (179) 17,646 Long term ground lease............. 361 91 - - 452 Transmission network............... 267,709 70,145 (736) - 337,118 Switching system................... 201,458 47,787 17,958 - 267,203 Base stations...................... 13,356 542 - - 13,898 Machinery and equipment............ 42,795 7,952 (17,092) (1,325) 32,330 Office furniture and equipment..... 66,118 15,560 - (8,358) 73,320 Vehicles........................... 12,308 718 - (1,064) 11,962 ---------- ---------- ---------- ---------- ---------- 614,404 150,451 - (10,926) 753,929 ========== ========== ========== ========== ==========

ACCUMULATED IMPAIRMENT DECEMBER 31, SEPTEMBER 30, 2002 IMPAIRMENT DISPOSALS 2003 (AUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) ----------- ----------- ---------- ------------ (PLN) (PLN) (PLN) (PLN) Buildings ................................................ - 13,477 - 13,477 Land...................................................... - 4,638 - 4,638 Long term ground lease.................................... - 606 - 606 Transmission network...................................... 186,618 294,496 - 481,114 Switching system ......................................... 16,668 - 253,006 236,338 Machinery and equipment................................... - 9,518 - 9,518 Office furniture and equipment............................ 8,116 6,555 6,555 (8,116) Vehicles.................................................. - 1,427 - 1,427 211,402 567,055 (8,116) 770,341 Network under construction................................ 24,390 25,200 (10,381) 39,209 235,792 592,255 (18,497) 809,550 For further details regarding impairment charge see Note 6 "Impairment of non current assets" NET BOOK VALUE SEPTEMBER 30, DECEMBER 31, 2003 2002 (UNAUDITED) (AUDITED) ----------------- ---------------- (PLN) (PLN) Buildings .............................................................. 59,284 75,127 Land.................................................................... 12,420 17,058 Long term ground lease.................................................. 4,348 5,045 Transmission network.................................................... 748,902 1,028,493 Switching system........................................................ 649,375 762,362 Base stations........................................................... - 542 Machinery and equipment................................................. 25,990 144,994 Office furniture and equipment.......................................... 20,257 33,976 Vehicles................................................................ 1,380 3,031 ----------------- ---------------- 1,521,956 2,070,628 Network under construction.............................................. 68,753 175,289 1,590,709 2,245,917

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

NINE-MONTH NINE-MONTH YEAR ENDED PERIOD ENDED PERIOD ENDED SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, 2003 2002 2002 (UNAUDITED) (UNAUDITED) (AUDITED) ------------------ ------------------- ----------------- (PLN) (PLN) (PLN) Interest income.................................................. 8,435 12,018 14,804 Foreign exchange gains........................................... 7,252 39,154 30,892 Interest expense................................................. (14,380) (332,529) (244,505) Foreign exchange losses.......................................... (33,164) (353,040) (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.............. (419) - - Other............................................................ 159 - - ------------------ ------------------- ----------------- (74,543) (634,397) (417,570) ================== =================== =================

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