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 telephonecompany reported IAS consolidated results for the first half of1999. Highlights * First half revenues rose 21.5 percent to approximately PLN6.2 billion as compared to PLN 5.1 billion in the same periodlast year. * Operating profit increased 27.2 percent from PLN 1.1 billionin the first half of 1998 to PLN 1.4 billion in the first half of1999. * Net income for the first half reached PLN 346 million, anincrease of 24.9 percent compared to PLN 277 million during lastyear'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 providerof telecommunications services in Poland. TP S.A.'s vision is tomaintain its position as the principal operator in Poland bybecoming a market-orientated provider of services which activelycompetes to attract and retain its customers. TP S.A.provides awide variety of products and services, including fixed, mobileand radio communications, Internet access, data transmission,telecom equipment and magnetic cards. TP S.A.'s growth strategyis based on the rapid expansion of the access network and agradual re-balancing of its tariffs. As part of the modernizationprocess it is leading in Poland's telecommunications sector, TPS.A. plans to convert all urban switches to a digital system bythe year 2000. After concluding the first stage of theprivatisation in the fourth quarter of 1998, TP S.A. is focusingon the second stage, which involves the incorporation of astrategic partner, expected to take place before the end of 1999.The strategic partner will provide the expertise andtechnological advancement to strengthen TP S.A's leadership inthe Polish market.

Telekomunikacja Polska S.A.

Consolidated Balance Sheets As At 31 December 1998 And 30June

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 June1999

(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 June1999

(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

9071,097 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

343323 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

1,7782,408 Cash flows from investing activities Proceeds from sale of fixed assets

22 Capital expenditures

(2,476)(2,549) Dividends received

126 Proceeds from sale of marketable securities

31,286 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 697586 Proceeds from current loans and borrowings

319857 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

4873,642 Cash and cash equivalents at the end of period

4222,434 Transformation for IAS purposes TPSA maintains its accounts in accordance with the accountingprinciples and practices employed by enterprises in Poland as isrequired by the Accounting Act. The financial statements set outabove reflect certain adjustments not reflected in TPSA'sconsolidated financial statements prepared under PolishAccounting Standards to present these financial statements inaccordance with IAS, except for non-compliance with IAS 29. The adjustments to the consolidated financial statementsprepared under Polish Accounting Standards ("PAS") are set outbelow:

Net profit Net profit Net assets Netassets

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 areallowed to distribute profits for the benefit of employees to payadditional bonuses or to increase social fund designed for thewelfare of employees. Such distributions are recorded in thestatutory financial statements as movements on shareholders'equity. In these financial statements such distributions wererecharacterized and recognised as an expense of the year to whichthe profit distribution related. (b) Foreign exchange gains In accordance with Polish Accounting Standards unrealisedforeign exchange gains are in the statutory financial statementsdeferred until realised. In these financial statements thesegains are accounted for as an income. (c) Assets received free of charge Investment contributions received from local authorities inthe form of telephone infrastructure representing contributionsto the cost of network construction are in the statutoryfinancial statements credited to profit and loss account when theownership of these assets is transferred to TPSA. In thesefinancial statements such donated assets are deferred andamortised over the useful life of the related assets. (d) Capitalisation of borrowing costs According to Polish Accounting Standards only costs ofspecific borrowings related to financing of construction ofspecifically identified qualifying assets during theirconstruction period can be capitalised; in the absence ofspecific borrowings or after the construction of specificallyidentified assets is completed, borrowing costs are expensed. Forthe purpose of these financial statements weighted averagecapitalisation rate for all borrowings was applied to theoutstanding balance of construction in progress. (e) Deferred tax effects As a consequence of adjusting PAS financial statementsprepared in accordance with PAS by items b) and d) above,deferred tax position has been changed. Items a) and c) do notaffect deferred tax position as no temporary differences arise intheir respect. ots Original Text Service: Telekomunikacja PolskaS.A. Internet: http://www.newsaktuell.de Contact: VictoriaKemanian, +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, bothof TP S.A.

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