TP S.A. Reports IAS Consolidated First Half Results

Warsaw, Poland (PROTEXT) - Telekomunikacja Polska S.A. (LSE: TPSAq.L and WSE: TPSAs.WA), Central Europe's largest telephone company reported IAS consolidated results for the first half of 1999. Highlights * First half revenues rose 21.5 percent to approximately PLN 6.2 billion as compared to PLN 5.1 billion in the same period last year. * Operating profit increased 27.2 percent from PLN 1.1 billion in the first half of 1998 to PLN 1.4 billion in the first half of 1999. * Net income for the first half reached PLN 346 million, an increase of 24.9 percent compared to PLN 277 million during last year's first half. * Earnings per share for the reporting period is PLN 0.24. Note to Editors Telekomunikacja Polska S.A. (TP S.A.) is the leading provider of telecommunications services in Poland. TP S.A.'s vision is to maintain its position as the principal operator in Poland by becoming a market-orientated provider of services which actively competes to attract and retain its customers. TP S.A.provides a wide variety of products and services, including fixed, mobile and radio communications, Internet access, data transmission, telecom equipment and magnetic cards. TP S.A.'s growth strategy is based on the rapid expansion of the access network and a gradual re-balancing of its tariffs. As part of the modernization process it is leading in Poland's telecommunications sector, TP S.A. plans to convert all urban switches to a digital system by the year 2000. After concluding the first stage of the privatisation in the fourth quarter of 1998, TP S.A. is focusing on the second stage, which involves the incorporation of a strategic partner, expected to take place before the end of 1999. The strategic partner will provide the expertise and technological advancement to strengthen TP S.A's leadership in the Polish market. Telekomunikacja Polska S.A. Consolidated Balance Sheets As At 31 December 1998 And 30 June 1999 (Unaudited) 31 December 30 June 1998 1999 (in PLN millions) ASSETS Current assets Cash and cash equivalents 3,642 2,434 Marketable securities -- 39 Receivables 2,162 2,348 Current income taxes 258 62 Inventories 205 179 Current assets 6,267 5,062 Fixed assets Property, plant and equipment 17,230 18,199 Intangible assets 475 456 Investments 217 190 Fixed assets 17,922 18,845 Non-current receivables 1 1 Assets 24,190 23,908 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Loans and other borrowings 3,329 2,714 Accrued expenses and other payables 2,849 2,558 Deferred income 224 176 Current liabilities 6,402 5,448 Non-current liabilities Loans and other borrowings 7,209 7,703 Accrued expenses and other payables 329 346 Deferred income 264 261 Deferred income taxes 576 398 Non-current liabilities 8,378 8,708 Minority interest 274 326 Shareholders' equity Common stock 4,200 4,200 Share premium 832 832 Revaluation reserve 2,332 2,332 Retained earnings 1,772 2,062 Shareholders' equity 9,136 9,426 Liabilities and shareholders' equity 24,190 23,908 Telekomunikacja Polska S.A. Consolidated Profit And Loss Accounts For The 6 Months Period Ended 30 June 1998 And 1999 (Unaudited) 6 months ended 30 June 1998 30 June 1999 (in PLN millions) Revenues 5,134 6,162 Employee related expenses (1,280) (1,388) Depreciation and amortisation (903) (1,092) Payments to other operators (479) (618) Purchased services (663) (835) Goods purchased for resale (138) (194) Other operating expenses, net (564) (624) Operating expenses (4,027) (4,751) Operating profit 1,107 1,411 Interest and other charges, net (418) (797) Profit before income tax 689 614 Income tax (343) (323) Minority interest (2) 50 Profit before extraordinary items 344 341 Extraordinary items -- 5 Net income before obligatory dividend 344 346 Obligatory dividend (67) -- Retained income 277 346 Earnings per share (in PLN): Before extraordinary items 0.25 0.24 Extraordinary items -- -- Net income before obligatory dividend 0.25 0.25 Obligatory dividend (0.05) -- Retained income per share 0.20 0.25 Weighted average common stock outstanding (millions) 1,400 1,400 Telekomunikacja Polska S.A. Consolidated Cash Flow Statements For The 6 Months Periods Ended 30 June 1998 And 1999 (Unaudited) 6 months ended 30 June 1998 30 June 1999 (in PLN millions) Cash flows from operating activities Net profit before extraordinary item and obligatory dividend 344 341 Adjustments for: Minority interests 2 (50) Depreciation and amortisation 907 1,097 Foreign exchange, interest and dividend (income)/charges, net 437 873 Obligatory dividend paid (99) - - Result on investment activity (9) (14) Income tax on current period profit 343 323 Net income tax recovered/(paid) (478) (307) Extraordinary item -- 8 Other cash flows from operations, net 3 (73) Decrease/(increase) in receivables 85 (180) (Decrease)/increase in provision for doubtful debts 54 24 Decrease/(increase) in inventories (50) 30 (Decrease)/increase in payables and other short-term liabilities 357 457 (Decrease)/increase in deferred income (118) (121) Net cash flows from operating activities 1,778 2,408 Cash flows from investing activities Proceeds from sale of fixed assets 2 2 Capital expenditures (2,476) (2,549) Dividends received 12 6 Proceeds from sale of marketable securities 3 1,286 Purchase of marketable securities (107) (1,303) Purchase of investments (81) (1) Other cash flows applied in investing activities (8) (15) Net cash flows applied in investing activities (2,655) (2,574) Cash flows from financing activities Proceeds from non-current loans and borrowings 697 586 Proceeds from current loans and borrowings 319 857 Proceeds from issuance of short-term commercial papers 1,231 481 Proceeds from increase in share capital of Centertel 71 102 Redemption of short-term commercial papers (853) (868) Repayment of non-current loans and borrowings (195) (690) Repayment of current loans and borrowings (180) (1,222) Interest paid (268) (442) Other cash flows used in/generated by financing activities, net (8) (39) Net cash flows from financing activities 814 (1,235) Effects of exchange rate changes on cash and cash equivalents (2) 193 Net decrease in cash and cash equivalents (65) (1,208) Cash and cash equivalents at the beginning of period 487 3,642 Cash and cash equivalents at the end of period 422 2,434 Transformation for IAS purposes TPSA maintains its accounts in accordance with the accounting principles and practices employed by enterprises in Poland as is required by the Accounting Act. The financial statements set out above reflect certain adjustments not reflected in TPSA's consolidated financial statements prepared under Polish Accounting Standards to present these financial statements in accordance with IAS, except for non-compliance with IAS 29. The adjustments to the consolidated financial statements prepared under Polish Accounting Standards ("PAS") are set out below: Net profit Net profit Net assets Net assets 1H 1998 1H 1999 as at as at 31.12.98 30.06.99 (in PLN millions) Consolidated PAS 441 426 9,576 9,673 Distribution from profit for the benefit of employees (124) (164) (273) (164) Foreign exchange gains net effect (49) 7 12 19 Assets received free of charge (5) -- (172) (172) Capitalisation of borrowing costs -- 104 -- 104 Deferred tax effects 17 (30) (4) (34) Other (3) 3 (3) -- Consolidated IAS 227 346 9,136 9,426 (a) Bonuses paid out of net profit In line with Polish business practice, shareholders are allowed to distribute profits for the benefit of employees to pay additional bonuses or to increase social fund designed for the welfare of employees. Such distributions are recorded in the statutory financial statements as movements on shareholders' equity. In these financial statements such distributions were recharacterized and recognised as an expense of the year to which the profit distribution related. (b) Foreign exchange gains In accordance with Polish Accounting Standards unrealised foreign exchange gains are in the statutory financial statements deferred until realised. In these financial statements these gains are accounted for as an income. (c) Assets received free of charge Investment contributions received from local authorities in the form of telephone infrastructure representing contributions to the cost of network construction are in the statutory financial statements credited to profit and loss account when the ownership of these assets is transferred to TPSA. In these financial statements such donated assets are deferred and amortised over the useful life of the related assets. (d) Capitalisation of borrowing costs According to Polish Accounting Standards only costs of specific borrowings related to financing of construction of specifically identified qualifying assets during their construction period can be capitalised; in the absence of specific borrowings or after the construction of specifically identified assets is completed, borrowing costs are expensed. For the purpose of these financial statements weighted average capitalisation rate for all borrowings was applied to the outstanding balance of construction in progress. (e) Deferred tax effects As a consequence of adjusting PAS financial statements prepared in accordance with PAS by items b) and d) above, deferred tax position has been changed. Items a) and c) do not affect deferred tax position as no temporary differences arise in their respect. ots Original Text Service: Telekomunikacja Polska S.A. Internet: http://www.newsaktuell.de Contact: Victoria Kemanian, +44-171-417-9185, or Ranjana Panikar, +44-171-417- 4185, both of Grandfield-McBride for TP S.A.; or Can Onen, +1- 212-983-1702 of Anne McBride Company for TP S.A. Zenon Komar, +48-22-828-5085, or Richard Moskalewicz, +48-22-661-7426, both of TP S.A. Subscribers please note that material bearing the slug "PROTEXT" is not part of CTK's news service and is not to be published under the "CTK" slug. Protext is a commercial service providing distribution of press releases from clients, who are identified in the text of Protext reports and who bear full responsibility for their contents. PROTEXT