Exhibit 14.8

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ENERGIS POLSKA Sp. z o.o.

Consolidated financial statements
as at and for the year ended 31 December 2001

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REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders
of Energis Polska Sp. z o.o.

We have audited
    the accompanying consolidated balance sheet of Energis Polska Sp. z o.o.
    and its subsidiaries (the Company) as of 31 December 2001 and the related consolidated statements of income and cash flows for the year then ended.  These financial statements are the responsibility of the Companys
    management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as at 31 December 2001, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in Poland.

Accounting principles generally accepted in Poland vary in certain significant respects from accounting principles generally accepted in the United States of America.  Information relating to the nature and effect of such differences is presented in Note 35 to the consolidated financial statements.



/s/ PricewaterhouseCoopers Sp. z o.o.
PricewaterhouseCoopers Sp. z o.o.

28 May, 2004

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|Energis Polska Sp. z o.o. Group                                                     | 3
|----------------------------------------------------------------------------------- | -
|Consolidated financial statements as at
    and for the year ended 31 December 2001 |  
|                                                                                    |  

Consolidated balance sheet as at 31 December 2001

|                                                        | Note | 31.12.2001PLN | 
|------------------------------------------------------- | ---- | ------------- | 
|                                                        |      |               | 
|ASSETS                                                  |      |               | 
|                                                        |      |               | 
|FIXED ASSETS                                            |      | 436,014,944   | 
|Intangible assets                                       | 6    | 13,494,685    | 
|Computer software and licenses                          |      | 8,210,803     | 
|Other intangible assets                                 |      | 7,140         | 
|Prepayments for intangible assets                       |      | 5,276,742     | 
|                                                        |      |               | 
|Tangible fixed assets                                   | 7,8  | 422,520,259   | 
|Buildings and structures                                |      | 191,629,729   | 
|Plant and machinery                                     |      | 154,185,409   | 
|Other tangible fixed assets                             |      | 4,787,598     | 
|Assets under construction                               |      | 37,354,427    | 
|Prepayments for assets under construction               |      | 34,563,096    | 
|                                                        |      |               | 
|CURRENT ASSETS                                          |      | 239,375,136   | 
|Inventories                                             |      | 19,292        | 
|Raw materials                                           |      | 19,292        | 
|                                                        |      |               | 
|Short-term receivables and claims                       | 9    | 63,912,005    | 
|Trade receivables                                       |      | 1,521,969     | 
|Taxation, state subsidy and social security receivables |      | 62,044,699    | 
|Other receivables                                       |      | 345,337       | 
|                                                        |      |               | 
|Marketable securities                                   | 10   | 36,246,677    | 
|Other securities                                        |      | 36,246,677    | 
|                                                        |      |               | 
|Cash and cash equivalents                               |      | 139,197,162   | 
|Cash in hand                                            |      | 31,078        | 
|Cash at bank                                            |      | 139,166,084   | 
|                                                        |      |               | 
|PREPAYMENTS                                             | 11   | 103,654,455   | 
|Prepaid expenses                                        |      | 103,654,455   | 
|                                                        |      |               | 
|Total assets                                            |      | 779,044,535   | 
|                                                        |      |               | 

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|Energis Polska Sp. z o.o. Group                                                     | 4
|----------------------------------------------------------------------------------- | -
|Consolidated
    financial statements as at and for the year ended 31 December 2001 |  
|                                                                                    |  

Consolidated balance sheet as at 31 December 2001 (cont.)

|                                                    | Note |  | 31.12.2001  |  
|--------------------------------------------------- | ---- |  | ----------- | -
|                                                    | PLN 
|LIABILITIES AND EQUITY                              |      |  |             |  
|                                                    |      |  |             |  
|EQUITY                                              |      |  | 229,224,348 |  
|Share capital                                       | 12   |  | 326,431,000 |  
|Supplementary capital                               | 13   |  | 228         |  
|Accumulated Losses                                  |      |  | (23,321,719 | )
|Net loss for the year                               |      |  | (73,885,161 | )
|                                                    |      |  |             |  
|NEGATIVE GOODWILL ON CONSOLIDATION                  | 14   |  | 4,116,204   |  
|                                                    |      |  |             |  
|SHORT-TERM
      LIABILITIES AND SPECIAL FUNDS      |      |  | 526,640,222 |  
|Short-term liabilities                              |      |  | 526,590,905 |  
|To related entities                                 |      |  | 945,526     |  
|Bank loans (EUR 125,000,000)                        | 15   |  | 440,237,500 |  
|Trade payables                                      |      |  | 3,837,768   |  
|Taxation, customs duty and social security payables |      |  | 964,088     |  
|Wages and salaries payables                         |      |  | 79,595      |  
|Other short-term liabilities                        | 16   |  | 80,526,428  |  
|Special funds                                       |      |  | 49,317      |  
|                                                    |      |  |             |  
|ACCRUALS AND
      DEFERRED INCOME                  |      |  | 19,063,761  |  
|Accruals                                            | 17   |  | 11,093,408  |  
|Deferred income                                     | 17   |  | 7,970,353   |  
|                                                    |      |  |             |  
|Total liabilities and equity                        |      |  | 779,044,535 |  
|                                                    |      |  |             |  

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|Energis Polska Sp. z o.o. Group                                                           | 5
|----------------------------------------------------------------------------------------- | -
|Consolidated financial statements as at
          and for the year ended 31 December 2001 |  
|                                                                                          |  

Consolidated income statement for the year ended 31 December 2001

|                                          | Note             |  | Year ended  |  
|----------------------------------------- | ---------------- |  | ----------- | -
|                                          | 31 December 2001
|                                          | PLN             
|                                          |                  |  |             |  
|Sales                                     | 19               |  | 6,164,681   |  
|Sales of services                         |                  |  | 6,164,681   |  
|                                          |                  |  |             |  
|Operating expenses                        |                  |  | 86,573,747  |  
|Materials and energy used                 |                  |  | 1,896,546   |  
|External services                         |                  |  | 43,949,498  |  
|Taxes and charges                         |                  |  | 2,242,039   |  
|Wages and salaries                        |                  |  | 20,243,404  |  
|Employee benefits                         |                  |  | 1,954,374   |  
|Depreciation and amortisation             |                  |  | 9,461,819   |  
|Other                                     |                  |  | 6,826,067   |  
|                                          |                  |  |             |  
|Loss on sales                             |                  |  | (80,409,066 | )
|                                          |                  |  |             |  
|Other operating income                    | 20               |  | 2,168,743   |  
|Proceeds from sale of fixed assets        |                  |  | 62,399      |  
|Other                                     |                  |  | 2,106,344   |  
|                                          |                  |  |             |  
|Other operating expenses                  | 21               |  | 1,691,411   |  
|Cost of fixed assets sold                 |                  |  | 106,900     |  
|Other                                     |                  |  | 1,584,511   |  
|                                          |                  |  |             |  
|Operating loss                            |                  |  | (79,931,734 | )
|                                          |                  |  |             |  
|Financial income                          | 22               |  | 9,621,334   |  
|Interest received                         |                  |  | 8,429,130   |  
|Other                                     |                  |  | 1,192,204   |  
|                                          |                  |  |             |  
|Financial costs                           | 23               |  | 4,066,116   |  
|Interest payable                          |                  |  | 773,010     |  
|Other                                     |                  |  | 3,293,106   |  
|                                          |                  |  |             |  
|Loss on ordinary activities before tax    |                  |  | (74,376,516 | )
|                                          |                  |  |             |  
|Extraordinary gains                       | 24               |  | 55,337      |  
|                                          |                  |  |             |  
|Extraordinary losses                      | 24               |  | (21,338     | )
|                                          |                  |  |             |  
|Amortisation of goodwill on consolidation |                  |  | 457,356     |  
|                                          |                  |  |             |  
|Loss before tax                           |                  |  | (73,885,161 | )
|                                          |                  |  |             |  
|Tax                                       | 25               |  |            |  
|                                          |                  |  |             |  
|Net loss                                  |                  |  | (73,885,161 | )
|                                          |                  |  |             |  

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|Energis Polska Sp. z o.o. Group                                                           | 6
|----------------------------------------------------------------------------------------- | -
|Consolidated financial statements as at
          and for the year ended 31 December 2001 |  
|                                                                                          |  

Consolidated cash flow statement for the year ended 31 December 2001

|                                                                                                   | Year ended
    2001 |  
|-------------------------------------------------------------------------------------------------- | ------------------- | -
|31 December                                                                                       
|PLN                                                                                               
|                                                                                                   |                     |  
|Cash from operating activities                                                                     |                     |  
|                                                                                                   |                     |  
|Net loss                                                                                           | (73,885,161         | )
|Adjusted for:                                                                                      |                     |  
|Amortisation
    and depreciation, net                                                             | 9,004,463           |  
|Interest
    on trade payables received and paid, net                                              | 730,509             |  
|Losses
    on investing activities                                                                 | 44,501              |  
|Increase
    in inventories                                                                        | 304,695             |  
|Increase
    in receivables and claims                                                             | (54,082,865         | )
|Increase
    in short-term liabilities, excluding loans and borrowings                             | 13,698,241          |  
|Increase
    in accruals and prepayments                                                           | (21,303,246         | )
|Increase
    in deferred income                                                                    | 7,890,829           |  
|                                                                                                   |                     |  
|Net cash from operating activities                                                                 | (117,598,034        | )
|                                                                                                   |                     |  
|Cash flows from investing activities                                                               |                     |  
|Disposal
    of tangible and intangible assets                                                     | 62,399              |  
|Purchase
    of tangible and intangible assets                                                     | (129,468,210        | )
|Payment
    of finance lease liabilities                                                           | (150,634,922        | )
|Purchase
    of other shares and securities (including marketable securities)                      | (36,246,677         | )
|Purchase
    of shares in subsidiaries and borrowings, excluding cash of subsidiaries
    acquired | (7,564,521          | )
|Prepayments
    for tangible and intangible assets                                                 | (39,839,838         | )
|                                                                                                   |                     |  
|Net cash from investing activities                                                                 | (363,691,769        | )
|                                                                                                   |                     |  
|                                                                                                   |                     |  
|Cash flows from financing activities                                                               |                     |  
|                                                                                                   |                     |  
|Long-term
    bank loans raised                                                                    | 446,400,000         |  
|Issue
    of shares                                                                                | 120,036,000         |  
|                                                                                                   |                     |  
|Net cash from financing activities                                                                 | 566,436,000         |  
|                                                                                                   |                     |  
|Increase in cash and cash equivalents                                                              | 85,146,197          |  
|                                                                                                   |                     |  
|                                                                                                   |                     |  
|Cash and cash equivalents at the beginning of the year                                             | 54,050,965          |  
|                                                                                                   |                     |  
|Cash and cash equivalents at the end of year                                                       | 139,197,162         |  
|                                                                                                   |                     |  

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|Energis Polska Sp. z o.o. Group   | 7
|--------------------------------- | -
|Consolidated financial statements |  
|                                 

Notes to the consolidated financial statement

|1. | The Parent Company
|-- | ------------------

Energis Polska Sp. z o.o.
    (hereinafter called the Parent Company or Energis Polska) is the Parent Company of the Group. Energis Polska was formed on 22 November 1999. The Companys registered office is located in Warsaw, ul. Iłżecka
26.

The Parent Company is entered in the Register of Businesses under the number KRS 19194. It was entered in the Register by the District Court in Warsaw, the 20th Business Department of the National Court Register on 12 June 2001.

The Parent
    Companys business is the provision of telecommunication and internet
services and data centre services.

The following
people were on the Parent Companys Management Board during the year:

| |  | George Z. Makowski | Chairman from 1
    January to 31 December 2001;       
| | - | ------------------ | -------------------------------------------------------
| |   |                    |                                                        
| |  | Stephen V. Harris  | Deputy Chairman from 1 January to 31 December
    2001;
| |   |                    |                                                        
| |  | Jarosław Mikos     | Board Member from 1 January to 31 December
    2001;   
| |   |                    |                                                        
| |  | Jaromir Łaciński   | Board Member from 1 January to 21 September
    2001;  
| |   |                    |                                                        
| |  | Bogdan Szafrański  | Board Member from 1 January to 21 September
    2001.  

After 31 December
    2001, the composition of the Parent Companys Management Board underwent
the following changes:

| |  | On 29 January 2002, Mr Stephen V. Harris resigned from the position
of Deputy Chairman and replaced by Mr Jarosław Mikos; Mr Rafał Ciećwierz
was appointed Board Member.                      
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                               
| |  | On 13 March 2002,
        Mr George Z. Makowski was removed from the position of Chairman and was
        replaced by Mr Jarosław
    Mikos; Mr Rafał Ciećwierz was appointed Deputy Chairman.

Major events during the year were as follows:

| |  | The purchase of 100% of shares in Cel Polska Sp. z o.o., providing
telecommunications services in the area of radio data transmission and services
consisting of granting access to an optic fibre point-to-point telecommunications
network;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                
| |  | Extending the
        scope of the agreement with Ericsson Sp. z o.o. to construct
        a telecommunications network to include an additional section of the
        network, covering the north of
    Poland;                             
| |   |                                                                                                                                                                                                                                                
| |  | Signing an agreement with Telekomunikacja
      Polska S.A. related to connecting the networks and providing telecommunications
    services;                                                                                                  
| |   |                                                                                                                                                                                                                                                
| |  | Launching the
        provision of data transmission and internet access services, as well
        as the launch of long-distance voice
    transmission services (Konekt);                                                                  
| |   |                                                                                                                                                                                                                                                
| |  | The connection
        of the Companys optic
      fibre network with the European network of Energis Group and other European
    telecommunication operators;                                                                               
| |   |                                                                                                                                                                                                                                                
| |  | A portion of
        the loans received from the Companys
      shareholders (National Grid International Ltd. and Energis plc) being contributed
    to the share capital;                                                                   



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|Energis Polska Sp. z o.o. Group   | 8
|--------------------------------- | -
|Consolidated financial statements |  
|                                 

|   |                                                                                                                                                            | Transferring by National Grid International Ltd. to National Grid
Poland B.V. its shares in the Company and its rights & obligations resulting
from the loans granted to the Company;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                             |                                                                                                                                                                                      
|   |                                                                                                                                                            | Obtaining long-term finance from a lending
    institution (European Investment Bank);                                                                                               
|   |                                                                                                                                                             |                                                                                                                                                                                      
|   |                                                                                                                                                            | Repaying the
        outstanding portion of the loans from the Companys shareholders
    (National Grid Poland B.V. and Energis plc).                                               
|   |                                                                                                                                                             |                                                                                                                                                                                      
|2. | Information on related entities                                                                                                                            
|   |                                                                                                                                                            
|a) | In accordance with the Memoranda
      of Association of the related entities, the said related entities have
    been established for an unlimited period.
|   |                                                                                                                                                            
|b) | The following related entity
    data was included in the consolidated financial statements:                                                               



| | Entity                                                                         |  | Registered
      office              |  | Business                                                                                                                                                             |  | Interest
      in the share capital and voting rights held by the Parent Company |  | Share
      capital
| | ------------------------------------------------------------------------------ |  | ------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------- |  | -------------------
| | Subsidiaries                                                                   |  |                                      |  |                                                                                                                                                                      |  |                                                                                  |  |                    
| | Cel Polska Sp. z o.o.(hereinafter called the Subsidiary
    or Cel Polska) |  | Warsaw,
        ul. Iłżecka
      26 |  | Provision of telecommunication
      services in the scope of radio data transmission and point-to-point optic
      fibre telecommunication network access services |  | 100%                                                                             |  | 30,437,500 PLN     
| |                                                                                |  |                                      |  |                                                                                                                                                                      |  |                                                                                  |  |                    
| | Telrise Sp. z o.o.                                                             |  | Warsaw
        ul. Iłżecka
      26  |  | Provision of telecommunication
      and Internet services                                                                                                           |  | 100%                                                                             |  | 4,000 PLN          

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3. | Consolidated financial statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The accounting policies
        used in the preparation of the consolidated financial statements as at
        and for the year ended
        31 December 2001 are in accordance with the Accounting Act of 29 September
        1994 (uniform text  Journal of Laws of 1994 No. 121/591 with subsequent
        amendments; hereinafter called the Act) and the Decree
        of the Minister of Finance of 14 June 1995 on the specific rules for
        the preparation of consolidated financial statements by entities other
        than banks (hereinafter called the Decree) which specify,
        among other things, the accounting policies to be used by companies whose
        registered offices or seats of management are within the territory of
    the Republic of Poland.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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|Energis Polska Sp. z o.o. Group   | 9
|--------------------------------- | -
|Consolidated financial statements |  
|                                 

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | The consolidated financial statements
    are prepared on the basis of consolidation documents, comprising:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | 1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | 2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | 3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Consolidated entities use identical
      methods of valuation and preparation of financial statements which are
    in accordance with the Act and the Decree.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | With regard
      to Cel Polska Sp. z o.o., which was purchased on 8 June 2001, for consolidation
      purposes only
      the financial data concerning income statement for the period following
      the date of acquisition were taken into account. Therefore, these data
      differ from the data included in the Cels stand-alone income statement
      for 2001. The financial data concerning balance sheet are consolidated
    as of 31 December 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4. | Going concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The stand-alone
      financial statements which form the basis for these consolidated financial
      statements have been
      prepared on the assumption that the related entities will continue as going
      concerns in the foreseeable future and that there are no circumstances
      which indicate any threat to their continuing in operation. The Group does
      not expect any threats to its continuing in operation in the foreseeable
      future. The cash flow plan for the next 12 months effectively ending May
      2005 provides that the Group will have positive cash flows within 12 months
      of the date of the financial statements being signed. Therefore, the Parent
      Companys Management Board have prepared these financial statements
      on the assumption that the Group will be able to continue as a going concern
      without materially curtailing the scope of its operations in the foreseeable
      future. The financial statements do not contain any adjustments which might
    be necessary if the going concern assumption should prove inappropriate.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|5. | Major accounting policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The subsidiaries have been consolidated
    using the acquisition accounting method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | When consolidating balance sheets
      using the acquisition accounting method, the balance sheets of the subsidiaries
      and the Parent Company are combined on a line-by-line basis by adding together
      like assets, liabilities and equity, following purchase price adjustments.
      The cost of investment in subsidiaries of the Parent Company and the share
      capital of subsidiaries have not been added together. Having adding all
      the relevant items together, consolidation adjustments and eliminations
    are made, in accordance with the Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | When consolidating
      income statements using the acquisition accounting method the income statements
      of the subsidiaries
      and the Parent Company are combined on a line-by-line basis by adding together
      like revenue and expenses. The income statement lines for subsidiaries
      are added together in full, irrespective of the Parent Companys
      proportion of ownership interest in a given subsidiary. Having added all
      the relevant items together, consolidation adjustments and eliminations
    are made, in accordance with the Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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|Energis Polska Sp. z o.o. Group   | 10
|--------------------------------- | --
|Consolidated financial statements |   
|                                 

| |                                                                                                  |                           
| | ------------------------------------------------------------------------------------------------ | --------------------------
| | b)                                                                                               | Consolidation eliminations
| |                                                                                                  |                           
| | The following significant
      items are eliminated from the consolidated financial statements:
| |                                                                                                  |                           

| |                                                                                                                                                                                  | PLN       | 
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | 
| | loans to Cel Polska acquired by the Parent Company*                                                                                                                              | 6,027,698 | 
| | short-term loans granted by the Parent Company to Cel Polska                                                                                                                     | 3,801,256 | 
| |                                                                                                                                                                                  |           | 
| | *
      The long-term loans granted constitute Cel Polska Sp. z o.o.s
      indebtedness to its previous shareholder, purchased by the Parent Company
      on 8 June
    2001.

| |                                                                                                               |                                         
| | ------------------------------------------------------------------------------------------------------------- | ----------------------------------------
| | c)                                                                                                            | Tangible and intangible
    fixed assets
| |                                                                                                               |                                         
| | Tangible and intangible
    fixed assets are stated at cost (purchase price or manufacturing cost).          
| |                                                                                                              
| | Depreciation and amortisation
    is recognised on a straight-line basis.                                    
| |                                                                                                              
| | Annual depreciation
      rates for the principal categories of fixed assets of the Group are as
    follows:
| |                                                                                                              

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Buildings and structures                                             | 5% - 20   | %
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | --------- | -
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Optic fibres (shown
      as part of buildings
    and structures) | 7%  -   8 | %
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Plant and machinery                                                  | 10% - 30  | %
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Vehicles                                                             | 20        | %
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Other                                                                | 2.5% - 20 | %
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                      |           |  
| | Annual amortization rates for intangible
    assets are as follows:                                                                                                                                                                                                                                                                                                                                                                                |                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                      |           |  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Computer software                                                    | 20% - 50  | %
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Licences                                                             | 20% - 30  | %
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                      |           |  
| | Assets under construction are not depreciated.                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                      |           |  
| | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Short-term receivables and claims                                    |          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                      |           |  
| | Receivables are valued at amounts
      due, taking account of the prudence principle, and carried net of write-downs.
      The value of receivables is periodically reviewed and written down, if
    appropriate, to reflect the likelihood of their collection.                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Marketable securities                                                |           |  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                      |           |  
| | Marketable securities are stated
      at the lower of cost (purchase or acquisition price) and the net realisable
      value. If the cost exceeds the net realisable value, the difference is
      charged to financial costs. Any subsequent increases in the value of securities
      which offset previous decreases raise their carrying amounts to the level
    of their original cost. Such increases are credited to financial income.

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|Energis Polska Sp. z o.o. Group   | 11
|--------------------------------- | --
|Consolidated financial statements |   
|                                 

| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------
| | f)                                                                                                                                                                                                                                                                                                                                                                       | Cash and cash equivalents          
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | Cash and cash equivalents are
      assets in the form of local currency and foreign currencies.                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | g)                                                                                                                                                                                                                                                                                                                                                                       | Telecommunication licences         
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | Telecommunications licences received
      from the Minister of Telecommunications are shown as prepayments and amortised
      on a straight-line basis over the period for which the licence was granted,
      commencing from the time the services began to be utilised by customers.                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | h)                                                                                                                                                                                                                                                                                                                                                                       | Prepaid expenses and deferred costs
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | Prepaid expenses and deferred
      costs are recognised in respect of costs relating to future reporting periods.                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | Prepaid expenses and deferred
      costs are recognised in the income statement in correspondence with the
      passage of time. The timing and method of their recognition in the income
      statement should coincide with the nature of the expenses recognised, taking
      account of the prudence principle.                                                 
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | i)                                                                                                                                                                                                                                                                                                                                                                       | Share capital                      
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | The share capital of the Parent
      Company represents the share capital of the Group.                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | Share
        capital is stated at the amount specified in the Companys Memorandum
      of Association and entered in the court register.                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | j)                                                                                                                                                                                                                                                                                                                                                                       | Negative goodwill on consolidation 
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | Negative goodwill on consolidation
      is the negative difference between the cost of acquisition of interest in
      subsidiaries or associates and the corresponding proportion of the ownership
      interest of the Parent Company in the net assets at their market value of
      subsidiaries and associates as at the acquisition date.                     
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | Negative goodwill on consolidation
      is recognised as income over a 5 year period.                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | k)                                                                                                                                                                                                                                                                                                                                                                       | Short-term liabilities             
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | Liabilities are stated at amounts
      due, including interest payable as at the balance sheet date. This interest
      is charged to financial costs.                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | l)                                                                                                                                                                                                                                                                                                                                                                       | Accruals                           
| |                                                                                                                                                                                                                                                                                                                                                                          |                                    
| | Accruals are recognised at amounts
      of likely liabilities which relate to the current reporting period, in particular
      with regard to goods and services provided to the Company by its creditors,
      if the amount of liability can be reliably estimated. Interest payable and
      cost of guarantee related to bank loan is also included in accruals.
| |                                                                                                                                                                                                                                                                                                                                                                         
| | The timing and method of their
      recognition in the income statement should coincide with the nature of the
      expenses recognised, taking account of the prudence principle.                                                                                                                                                                                    

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|Energis Polska Sp. z o.o.
    Group | 12                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|----------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Consolidated financial statements   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                    | m)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                    | Deferred income is recognised
        in accordance with the prudence principle and in particular includes
        amounts received or receivable from creditors in respect of goods or
        services to be provided in future reporting periods, which are credited
        to the income statement in accordance with the passage of time. Deferred
        income comprises unrealized foreign exchange gains. The unrealized foreign
    exchange losses are recognized in the income statement as financial costs.
|                                   
|                                    | n)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                    | Deferred income tax provisions
        are recorded on the basis of timing differences in the recognition of
    revenue and costs under the Act and tax regulations.                                                                                                                                                                                                                                                                                                                                                     
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                    | Deferred tax assets are only
    recorded when it is certain that they will crystallise in the future.                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                   
|                                    | An excess of positive timing
        differences over negative ones, multiplied by the applicable corporation
        tax rate is included as part of mandatory appropriations of profit and
    shown as a deferred tax provision.                                                                                                                                                                                                                                                                                       
|                                   
|                                    | An excess of negative timing
        differences over positive ones, multiplied by the applicable corporation
        tax rate (giving a deferred tax asset) is not shown as part of prepayments
    because it is uncertain whether it will crystallise in the future.                                                                                                                                                                                                                                                   
|                                   
|                                    | o)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                    | Sales revenue is recognised at
        the time services are provided, with the exception of prepaid telecommunication
        services (lease of domestic lines). Prepaid services are recognized in
        the income statement in accordance with provision of services through
        the passage of time. Sales are recognised net of value-added taxes or
    any discounts allowed.                                                                                                                              

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|Energis Polska Sp. z o.o.
    Group                                                 | 13                                                         
|----------------------------------------------------------------------------------- | -----------------------------------------------------------
|Consolidated financial statements
    as at and for the year ended 31 December 2001 |                                                            
|                                                                                    |                                                            
|                                                                                    |                                                            
|6.                                                                                  | Intangible
          assets  movements
    during the year
|                                                                                    |                                                            

|                                          |                                                                  | Computer software and licences |        | Other intangible assets |           | Prepayments for intangible assets |            | Total      | 
|----------------------------------------- | ---------------------------------------------------------------- | ------------------------------ | ------ | ----------------------- | --------- | --------------------------------- | ---------- | ---------- | 
|                                          |                                                                  | PLN                            |        | PLN                     |           | PLN                               |            | PLN        | 
|                                          |                                                                  |                                |        |                         |           |                                   |            |            | 
|Cost as at 1.01.2001                      | 204,346                                                          |                                | 10,200 |                         |          |                                   | 214,546    |           
|Additions:                                |                                                                  |                                |        |                         |           |                                   |            |           
|                                          | - Purchase                                                       | 8,236,191                      |        |                        |           | 5,276,742                         |            | 13,512,933 | 
|                                          | - Value of
    Cel Polskas assets as at the date of acquisition | 84,446                         |        |                        |           |                                  |            | 84,446     | 
|                                          | - reclassification from assets under construction                | 269,538                        |        |                        |           |                                  |            | 269,538    | 
|                                          |                                                                  |                                |        |                         |           |                                   |            |           
|Cost as at 31.12.2001                     | 8794,521                                                         |                                | 10,200 |                         | 5,276,742 |                                   | 14,081,463 |           
|                                          |                                                                  |                                |        |                         |           |                                   |            |           
|Accumulated amortization as at 1.01.2001  | 37,322                                                           |                                |       |                         |          |                                   | 37,322     |           
|Additions:                                |                                                                  |                                |        |                         |           |                                   |            |           
|                                          | - Amortization                                                   | 546,396                        |        | 3,060                   |           |                                  |            | 549,456    | 
|                                          |                                                                  |                                |        |                         |           |                                   |            |           
|Accumulated amortization as at 31.12.2001 | 583,718                                                          |                                | 3,060  |                         |          |                                   | 583,778    |           
|                                          |                                                                  |                                |        |                         |           |                                   |            |           
|Net book value                            |                                                                  |                                |        |                         |           |                                   |            |           
|As at 1.01.2001                           | 167,024                                                          |                                | 10,200 |                         |          |                                   | 177,224    |           
|                                          |                                                                  |                                |        |                         |           |                                   |            |           
|As at 31.12.2001                          | 8,210,803                                                        |                                | 7,140  |                         | 5,276,742 |                                   | 13,494,685 |           
|                                          |                                                                  |                                |        |                         |           |                                   |            |           

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|Energis Polska Sp. z o.o.
    Group                                                 | 14                                                   
|----------------------------------------------------------------------------------- | -----------------------------------------------------
|Consolidated financial statements
    as at and for the year ended 31 December 2001 |                                                      
|                                                                                    |                                                      
|                                                                                    |                                                      
|7.                                                                                  | Tangible
    fixed assets  movements during the year
|                                                                                    |                                                      

|                                          |                                    |                                                                  | Buildings and structures |            | Plant and machinery |           | Other tangible fixed assets |              | Assets under construction |          | Prepayments for assets under construction |            | Total       | 
|----------------------------------------- | ---------------------------------- | ---------------------------------------------------------------- | ------------------------ | ---------- | ------------------- | --------- | --------------------------- | ------------ | ------------------------- | -------- | ----------------------------------------- | ---------- | ----------- | 
|                                          |                                    |                                                                  | PLN                      |            | PLN                 |           | PLN                         |              | PLN                       |          | PLN                                       |            | PLN         | 
|Cost as at 1.01.2001                      |                                   |                                                                  | 1,267,780                |            | 142,860             |           | 206,237,568                 |              | 488,102                   |          | 208,136,310                               |           
|                                          | Additions:                         |                                                                  |                          |            |                     |           |                             |              |                           |          |                                           |            |            
|                                          |                                    | - Purchase                                                       | 21,686,241               |            | 126,632,866         |           | 3,516,207                   |              | 23,417,787                |          | 34,563,096                                |            | 209,816,197 | 
|                                          |                                    | - Value
    of Cel Polskas assets as at the date of acquisition |                         |            | 9,640,154           |           | 528,748                     |              | 4,283,551                 |          |                                          |            | 14,452,453  | 
|                                          | Transfers to intangible assets     |                                                                 |                          |           |                     |          |                             | (269,538     | )                         |         |                                           | (269,538   | )          
|                                          | Transfers to tangible fixed assets | 172,307,855                                                      |                          | 23,007,293 |                     | 1,332,300 |                             | (196,159,346 | )                         | (488,102 | )                                         |           |            
|                                          | Reclassifications                  | 278,210                                                          |                          | (308,853   | )                   | 30,643    |                             |             |                           |         |                                           |           |            
|                                          | Disposals                          |                                                                 |                          | (739,928   | )                   | (177,842  | )                           | (155,595     | )                         |         |                                           | (1,073,365 | )          
|                                          |                                    |                                                                  |                          |            |                     |           |                             |              |                           |          |                                           |           
|Cost as at 31.12.2001                     | 194,272,306                        |                                                                  | 159,499,312              |            | 5,372,916           |           | 37,354,427                  |              | 34,563,096                |          | 431,062,057                               |           
|                                          |                                    |                                                                  |                          |            |                     |           |                             |              |                           |          |                                           |           
|                                          |                                    |                                                                  |                          |            |                     |           |                             |              |                           |          |                                           |           
|Accumulated depreciation as at 1.01.2001  |                                   |                                                                  | 118,626                  |            | 2,287               |           |                            |              |                          |          | 120,913                                   |           
|                                          | Additions:                         |                                                                  |                          |            |                     |           |                             |              |                           |          |                                           |            |            
|                                          |                                    | - Amortisation                                                   | 2,642,577                |            | 5,637,131           |           | 632,655                     |              |                          |          |                                          |            | 8,912,363   | 
|                                          | Reclassifications                  |                                                                 |                          | (3,767     | )                   | 3,767     |                             |             |                           |         |                                           |           |            
|                                          | Disposals                          |                                                                 |                          | (438,087   | )                   | (53,391   | )                           |             |                           |         |                                           | (491,478   | )          
|                                          |                                    |                                                                  |                          |            |                     |           |                             |              |                           |          |                                           |           
|Accumulated depreciation as at 31.12.2001 | 2,642,577                          |                                                                  | 5,313,903                |            | 585,318             |           |                            |              |                          |          | 8,541,798                                 |           
|                                          |                                    |                                                                  |                          |            |                     |           |                             |              |                           |          |                                           |           
|Net book value                            |                                    |                                                                  |                          |            |                     |           |                             |              |                           |          |                                           |           
|As at 1.01.2001                           |                                   |                                                                  | 1,149,154                |            | 140,573             |           | 206,237,568                 |              | 488,102                   |          | 208,015,397                               |           
|                                          |                                    |                                                                  |                          |            |                     |           |                             |              |                           |          |                                           |           
|As at 31.12.2001                          | 191,629,729                        |                                                                  | 154,185,409              |            | 4,787,598           |           | 37,354,427                  |              | 34,563,096                |          | 422,520,259                               |           
|                                          |                                    |                                                                  |                          |            |                     |           |                             |              |                           |          |                                           |           

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|Energis Polska Sp. z o.o. GroupConsolidated financial statements
      as at and for the year ended 31 December 2001 | 15
|-------------------------------------------------------------------------------------------------------------------- | --
|                                                                                                                     |   

|   |                                     
|-- | ------------------------------------
|8. | Tangible
    fixed assets  by title

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 31.12.2001PLN | 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |               | 
| | The Groups
      own tangible fixed assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 182,735,291   | 
| | Tangible
        fixed assets used under a lease or similar contract and included in the
        Groups
      fixed assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 167,867,445   | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |               | 
| | Total balance-sheet tangible
      fixed assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 350,602,736   | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |               | 
| | Fixed
        assets not amortized or depreciated by the Group, used on the basis of
        a lease or similar contract
      (off-balance-sheet items)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 43,049        | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |               | 
| | Total balance-sheet and off-balance
      sheet fixed assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 350,645,785   | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |               | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |               | 
| | On
        the basis of an agreement of 9 November 2000 for the supply of optic
        fibres
      and co-location of equipment, concluded with P.P. Polskie Koleje
      Państwowe (PKP S.A.), Energis Polska has long-term,
      exclusive rights to use the optic fibres covered by the agreement for a
      period of 15 years from the date of it being signed. The total length of
      the optic fibres received is approximately 5,000 km, and the total fees
      for exclusive rights to use the fibres, granted to Energis Polska for the
      period of 15 years, amounted to USD 42.08m (PLN 169.3m at the date of agreement).
      The net book value of the lease amounted to PLN 167,867,445 as at 31 December
      2001 and is disclosed as buildings and structures.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | Fixed
      assets used on the basis of a lease or similar contract represent the car
      utilised by Cel Polska on the basis of operating lease contract.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|   |                                  
|-- | ---------------------------------
|9. | Short-term receivables and claims

| |                                                                                                                    | 31.12.2001PLN |  
| | ------------------------------------------------------------------------------------------------------------------ | ------------- | -
| | Ageing analysis:                                                                                                   |               |  
| | Current receivables                                                                                                | 64,992,225    |  
| |                                                                                                                    |               |  
| | Gross receivables                                                                                                  | 64,992,225    |  
| |                                                                                                                    |               |  
| | Bad debt provisions                                                                                                | (1,080,220    | )
| |                                                                                                                    |               |  
| | Net receivables                                                                                                    | 63,912,005    |  
| |                                                                                                                    |               |  
| |                                                                                                                    |               |  
| | All the short-term receivables
      and claims disclosed as at 31 December 2001 are denominated in Polish zlotys. |               |  

|      |                       
|----- | ----------------------
|9(a). | Receivable write-downs

| |                                                                                            | 12 months to 31.12.2001PLN | 
| | ------------------------------------------------------------------------------------------ | -------------------------- | 
| |                                                                                            |                            | 
| | As at the
      beginning of the year                                                      |                           | 
| | Increases                                                                                  | 1,080,220                  | 
| |                                                                                            |                            | 
| | As at the
      end of the year                                                            | 1,080,220                  | 
| |                                                                                            |                            | 
| | Including:                                                                                 |                            | 
| | -
      in respect of short-term receivables                                               | 1,080,220                  | 
| |                                                                                            |                            | 
| |                                                                                            | 1,080,220                  | 
| |                                                                                            |                            | 
| |                                                                                            |                            | 
| | Receivables
      are written down taking into account the probability of their repayment. |                            | 
| |                                                                                            |                            | 

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|Energis Polska Sp. z o.o. GroupConsolidated financial statements
      as at and for the year ended 31 December 2001 | 16
|-------------------------------------------------------------------------------------------------------------------- | --
|                                                                                                                     |   

|      |                                                                                                                                                                                                                                                                                                                     
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|9(b). | Taxation, state subsidy and
      social security receivables                                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                     
|      | As at 31 December 2001, taxation,
      state subsidy and social security receivables include mainly VAT receivables
      of PLN 60,715,752 (being mainly connected with purchases of tangible fixed
      assets) and a receivable relating to a deposit for the Customs Office, amounting
      to PLN 1,205,313.

|    |                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10. | Marketable securities                                                                                                                                                           
|    |                                                                                                                                                                                 
|    | As at the balance sheet date,
      securities comprise Treasury bills purchased by the Parent Company at the
      end of December 2001 as a form of a short-term cash deposit.
|    |                                                                                                                                                                                 
|    | The Company sold all the Treasury
      bills at a profit on 2 January 2002.                                                                                                    

|    |                                          
|--- | -----------------------------------------
|11. | Prepaid expenses and deferred
      costs

| |                                                                                                                                                                                             | 31.12.2001PLN | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | 
| |                                                                                                                                                                                             |               | 
| | Licence from the Minister of
      Telecommunications to provide voice transmission services                                                                                                | 88,528,969    | 
| | Licence from the Minister of
      Telecommunications to provide data transmission services                                                                                                 | 3,570,718     | 
| | Licence from the Minister of
      Telecommunications to provide telecommunication services                                                                                                 | 277,073       | 
| | Prepaid interconnection agreement                                                                                                                                                           | 1,437,448     | 
| | Prepaid optic fibre lease contract
      with Energis GmbH                                                                                                                                  | 8,401,845     | 
| | Prepaid insurance                                                                                                                                                                           | 342,658       | 
| | Prepaid rent                                                                                                                                                                                | 128,509       | 
| | Other short-term prepayments                                                                                                                                                                | 967,235       | 
| |                                                                                                                                                                                             |               | 
| |                                                                                                                                                                                             | 103,654,455   | 
| |                                                                                                                                                                                             |               | 
| |                                                                                                                                                                                             |               | 
| | The
        licences from the Minister of Telecommunications to provide voice and
        data transmission
      services were granted to Energis Polska in 2000 for a period of 15 years.
| |                                                                                                                                                                                            
| | On 25 September 2001
      Energis Polska entered into a lease agreement for optic fibres and data
      transmission equipment between Nehnen and Berlin from Energis GmbH.               
| |                                                                                                                                                                                            

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|Energis Polska Sp. z o.o. GroupConsolidated financial statements
      as at and for the year ended 31 December 2001 | 17
|-------------------------------------------------------------------------------------------------------------------- | --
|                                                                                                                     |   

|12. | Share capital                                                                                                                                                                                                                                                                                                                            |               | 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | 
|    |                                                                                                                                                                                                                                                                                                                                          | 31.12.2001PLN | 
|    |                                                                                                                                                                                                                                                                                                                                          |               | 
|    | As at the beginning of the year                                                                                                                                                                                                                                                                                                          | 4,000         | 
|    | Increase resulting
          from the nominal value of shares being increased from PLN 50 to PLN
          500and the shareholders
          covering the resultant difference in accordance with the current proportions
          of voting rights (in %), on the basis of the shareholders Resolution
      No. 2/2001 of 16.02.2001 | 36,000        | 
|    | Increase resulting
          from a portion of loans granted to the Parent Company by its shareholders
          (National Grid International
          Ltd. and Energis plc) being contributed on the basis of the shareholders Resolution
      No. 3/2001 of 16.02.2001                                                              | 326,391,000   | 
|    |                                                                                                                                                                                                                                                                                                                                          |               | 
|    | As at the end of the year                                                                                                                                                                                                                                                                                                                | 326,431,000   | 
|    |                                                                                                                                                                                                                                                                                                                                          |               | 

| |  |                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | By
        16 February 2001 National Grid International Ltd. and Energis plc had
        made
      loans to Energis Polska of PLN 163,195,500 each (PLN 326,391,000
      in total). On 16 February 2001, these loans were converted into Share Capital.                                                                                                                                                     
| |  |                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | On
        the basis of the obligations specified in the Shareholders Agreement
      of 25 January 2000 and the Parent Companys Memorandum of Association,
      National Grid International Ltd. and Energis plc transferred to PKP S.A.
      (the State railway Company being the initial investor) free of charge 8,144
      shares each (16,288 shares in total) with a total value of PLN 8,144,000.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | On
        9 July 2001 National Grid International Ltd. entered into an agreement
        on
      transfer of the Parent Companys shares and an agreement on transfer
      of rights and obligations resulting from loans granted to the Parent Company,
      with National Grid Poland B.V.                                                                                                              
| |  |                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | As
        at 31 December 2001, the Parent Companys share capital consisted
        of 652,862 equal, indivisible shares with a nominal value of PLN 500
      each.                                                                                                                                                                                                                                         
| |  |                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | As
        at 31 December 2001, the Parent Companys shareholders were as
      follows:                                                                                                                                                                                                                                                                                                                      

| |                                                   |                  |  |           | 
| | ------------------------------------------------- | ---------------- |  | --------- | 
| |                                                   | Number of shares |  | Votes (%) | 
| |                                                   |                  |  |           | 
| | National Grid
      Poland B.V. (The Netherlands) | 318,266          |  | 48,7494   | 
| | Energis plc
      (Great Britain)                 | 318,266          |  | 48,7494   | 
| | Polskie
      Koleje Państwowe S.A.               | 16,322           |  | 2,5000    | 
| | P.T. Centrala
      Sp. z o.o.                    | 8                |  | 0,0012    | 
| |                                                   |                  |  |           | 
| |                                                   | 652,862          |  | 100,0000  | 
| |                                                   |                  |  |           | 

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|Energis Polska Sp. z o.o. Group                                                     | 18
|----------------------------------------------------------------------------------- | --
|Consolidated financial statements as at
    and for the year ended 31 December 2001 |   
|                                                                                    |   

|    |                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|13. | Supplementary capital                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                       
|    | The supplementary capital of PLN 228 constitutes
      the excess of the actual receivables relating to the loans granted to Energis
      Polska contributed by National Grid International Ltd. and Energis plc in
      connection with the increase in the share capital of 16 February 2001, over
      the nominal value of the shares taken up.
|    |                                                                                                                                                                                                                                                                                                                                                       
|14. | Negative goodwill on consolidation                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                       

| |                                                                                                     | SubsidiaryCel Polska Sp. z o.o. | 
| | --------------------------------------------------------------------------------------------------- | ------------------------------- | 
| |                                                                                                     | PLN                             | 
| |                                                                                                     |                                 | 
| | Cost of acquisition                                                                                 | 8,045,541                       | 
| | Net assets
      and borrowings acquired
      (including cash and cash equivalents of PLN 481,020) | 12,619,101                      | 
| |                                                                                                     |                                 | 
| | Negative goodwill on consolidation,
      gross                                                     | 4,573,560                       | 
| |                                                                                                     |                                 | 
| | Amortisation of goodwill as
      at the date of acquisition                                        |                                | 
| | Increases                                                                                           | 457,356                         | 
| |                                                                                                     |                                 | 
| | Amortisation of goodwill as
      at 31.12.2001                                                     | 457,356                         | 
| |                                                                                                     |                                 | 
| | Negative goodwill on consolidation,
      net                                                       | 4,116,204                       | 
| |                                                                                                     |                                 | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|15. | Bank loans                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Short-term liabilities include a long-term
      investment loan of EUR 125,000,000 (PLN 440,237,500), granted to the Parent
      Company on 19 December 2001 by the European Investment Bank, Luxembourg.
      The loan was to be repaid on a one-off basis on 19 December 2008, however
      was repaid early during 2002 as part of owners restructuring exercise and
      has been accordingly categorised as a short-term liability (see Note 34).
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The loan bears a fixed interest rate of 4.93%
      p.a. Interest is payable every six months. The interest charge for the period
      amounts to PLN 723,510.                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | In accordance with
        the loan agreement, the loan is to be used for financing (re-financing)
        expenditure connected with
      designing, constructing and installing structures and plant & machinery
      for the telecommunications network of Energis Polska.                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The loan is secured with a warranty securing
      100% of the future payments (including interest) granted by National Grid
      Group plc, on 12 December 2001. The warranty charge for the period amounts
      to PLN 953,848.                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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|Energis Polska Sp. z o.o. Group                                                           | 19
|----------------------------------------------------------------------------------------- | --
|Consolidated financial statements as at
          and for the year ended 31 December 2001 |   
|                                                                                          |   

|    |                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Foreign exchange gains, which arose on the
      translation of the loan from the European Investment Bank as at 31 December
      2001, amounted to PLN 6,162,500 and are included in deferred income.
|    |                                                                                                                                                                                                        
|16. | Other short-term liabilities                                                                                                                                                                           
|    |                                                                                                                                                                                                        
|    | Other short-term liabilities of PLN 80,526,428
      as at 31 December 2001 comprise mainly trade payables in respect of capital
      investment projects.                                            
|    |                                                                                                                                                                                                        
|17. | Accruals and deferred income                                                                                                                                                                           
|    |                                                                                                                                                                                                        

| |                                           | 31.12.2001PLN | 
| | ----------------------------------------- | ------------- | 
| | Accrued expenses:                         |               | 
| | - services provided not invoiced          | 5,587,163     | 
| | - employee expenses                       | 3,136,960     | 
| | - holiday pay accrual                     | 642,427       | 
| | - other                                   | 1,726,858     | 
| |                                           |               | 
| |                                           | 11,093,408    | 
| | Deferred income:                          |               | 
| | - unrealised foreign exchange
      gains | 6,554,798     | 
| | - prepaid services not provided           | 1,415,555     | 
| |                                           |               | 
| |                                           | 7,970,353     | 
| |                                           |               | 
| |                                           | 19,063,761    | 
| |                                           |               | 

|    |                                                                                 
|--- | --------------------------------------------------------------------------------
|18. | Related party assets put up
      as collateral                                 
|    |                                                                                 
|    | As at 31 December 2001, the Group has not
      put up any assets as collateral.
|    |                                                                                 
|19. | Segmental analysis of 2001
      sales by business segment and geographical area
|    |                                                                                 

| | Segment                                           | Domestic sales |  | Total     | 
| | ------------------------------------------------- | -------------- |  | --------- | 
| |                                                   | PLN            |  | PLN       | 
| |                                                   |                |  |           | 
| | Leased lines and data transmission
      services | 5,910,190      |  | 5,910,190 | 
| | Voice transmission services                       | 11,170         |  | 11,170    | 
| | Internet access services                          | 211,512        |  | 211,512   | 
| | Co-location                                       | 31,809         |  | 31,809    | 
| |                                                   |                |  |           | 
| | Total sales                                       | 6,164,681      |  | 6,164,681 | 
| |                                                   |                |  |           | 
| |                                                   |                |  |           | 

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|Energis Polska Sp. z o.o. Group                                                           | 20
|----------------------------------------------------------------------------------------- | --
|Consolidated financial statements as at
          and for the year ended 31 December 2001 |   
|                                                                                          |   

|    |                       
|--- | ----------------------
|20. | Other operating income
|    |                       

| |                                                                          | 31.12.2001PLN | 
| | ------------------------------------------------------------------------ | ------------- | 
| |                                                                          |               | 
| | Proceeds from sale of fixed assets                                       | 62,399        | 
| | Proceeds from recharge of rental
      and electricity costs to supplier | 1,787,573     | 
| | Other                                                                    | 318,771       | 
| |                                                                          |               | 
| |                                                                          | 2,168,743     | 
| |                                                                          |               | 

|    |                         
|--- | ------------------------
|21. | Other operating expenses
|    |                         

| |                           | 31.12.2001PLN | 
| | ------------------------- | ------------- | 
| |                           |               | 
| | Cost of fixed assets sold | 106,900       | 
| | Receivable write-downs    | 1,080,220     | 
| | Donations made            | 454,500       | 
| | Other                     | 49,791        | 
| |                           |               | 
| |                           | 1,691,411     | 
| |                           |               | 

|    |                 
|--- | ----------------
|22. | Financial income
|    |                 

| |                                 | 31.12.2001PLN | 
| | ------------------------------- | ------------- | 
| |                                 |               | 
| | Bank interest                   | 8,429,130     | 
| | Realised foreign exchange gains | 1,192,204     | 
| |                                 |               | 
| |                                 | 9,621,334     | 
| |                                 |               | 

|    |                
|--- | ---------------
|23. | Financial costs
|    |                

| |                                                                                                                                        | 31.12.2001PLN | 
| | -------------------------------------------------------------------------------------------------------------------------------------- | ------------- | 
| |                                                                                                                                        |               | 
| | Interest payable                                                                                                                       | 773,010       | 
| | Realised foreign exchange losses                                                                                                       | 428,523       | 
| | Unrealised foreign exchange losses                                                                                                     | 1,910,735     | 
| | The cost of the guarantee granted
      by National Grid Group plc as a warranty for the loan from the European
      Investment Bank* | 953,848       | 
| |                                                                                                                                        |               | 
| |                                                                                                                                        | 4,066,116     | 
| |                                                                                                                                        |               | 

* This guarantee was accrued on the daily basis
    and was originally scheduled to be paid in line with the interest payments
schedule. See also note 34.

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|Energis Polska Sp. z o.o. Group                                                       | 21
|------------------------------------------------------------------------------------- | --
|Consolidated financial statements as at
      and for the year ended 31 December 2001 |   
|                                                                                      |   

|    |                    
|--- | -------------------
|24. | Extraordinary items

| |                                                                                   |         |  
| | --------------------------------------------------------------------------------- | ------- | -
| | Fortuitous
        events  damages
      in respect of post-accident car repairs | 55,337  |  
| | Fortuitous
        events  costs
      of post-accident car repairs              | (21,338 | )
| |                                                                                   |         |  
| |                                                                                   | 33,999  |  
| |                                                                                   |         |  

|    |                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|25. | Corporation tax                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                    
|    | The Group is not a
        corporation income tax payer as defined in the Corporation Income Tax
        Act. Therefore, the summary
      table below is based on the stand-alone financial statements of Cel Polska
      and Energis Polska for the year ended 31 December 2001.
|    |                                                                                                                                                                                                                                                                                    
|    | The main differences between the tax base
      and the loss before tax are as follows:                                                                                                                                                                                            

| |                                                                |               |  
| | -------------------------------------------------------------- | ------------- | -
| |                                                                | 31.12.2001PLN |  
| |                                                                |               |  
| | Loss before
      tax                                          | (77,307,633   | )
| | Non-deductible
      costs                                     | 16,695,324    |  
| | Non-taxable
      income                                       | (277,350      | )
| | Surplus of
      tax depreciation over accounting depreciation | (169,844      | )
| | Taxable income
      disallowed for accounting purposes        | 24,110,560    |  
| |                                                                |               |  
| | Net tax
      loss, including:                                 | (36,948,943   | )
| |                                                                |               |  
| | Tax loss of
      Cel Polska                                   | (2,008,417    | )
| | Tax loss of
      Energis Polska                               | (34,940,526   | )
| |                                                                |               |  

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|Energis Polska Sp. z o.o. Group                                                       | 22
|------------------------------------------------------------------------------------- | --
|Consolidated financial statements as at
      and for the year ended 31 December 2001 |   
|                                                                                      |   

|    |             
|--- | ------------
|26. | Deferred tax

| |                                                                                                                                |           
| | ------------------------------------------------------------------------------------------------------------------------------ | ----------
| | 31.12.2001PLN                                                                                                                  |           
| |                                                                                                                                |           
| | Taxable temporary
      differences between the book values of assets and their tax bases, including:                          |           
| |                                                                                                                                | -         
| |                                                                                                                                | -         
| |                                                                                                                                | -         
| |                                                                                                                                | -         
| |                                                                                                                                |           
| | Total taxable
      temporary differences                                                                                      | 7,240,498 
| |                                                                                                                                |           
| | Deferred tax provision
      (at 28%)                                                                                          | 2,027,339 
| |                                                                                                                                |           
| |                                                                                                                                |           
| | Deductible temporary
      differences between the book values of assets and liabilities and their
      tax bases, including: |           
| |                                                                                                                                | -         
| |                                                                                                                                | -         
| |                                                                                                                                | -         
| |                                                                                                                                | -         
| |                                                                                                                                | -         
| |                                                                                                                                |           
| | Total deductible
      temporary differences                                                                                   | 72,221,943
| |                                                                                                                                |           
| | Deferred tax asset
      (at 28%)                                                                                              | 20,222,144
| |                                                                                                                                |           
| | Net deferred tax
      asset (at 28%), including                                                                               | 18,194,805
| |                                                                                                                                |           
| | Energis Polska                                                                                                                 | 15,726,100
| | Cel Polska                                                                                                                     | 2,468,705 
| |                                                                                                                                |           

| |                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As permitted by the Act Energis Polska does
      not recognize the net deferred tax asset because it is unlikely that it
      will crystallize in the year 2002 and the following years.
| |                                                                                                                                                                                           
| | As at 31 December 2001, the Subsidiary did
      not recognize a deferred tax asset as it was more likely than not it would
      not be able to be used in 2002 or in subsequent years.  
| |                                                                                                                                                                                           

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|Energis Polska Sp. z o.o. Group                                                       | 23
|------------------------------------------------------------------------------------- | --
|Consolidated financial statements as at
      and for the year ended 31 December 2001 |   
|                                                                                      |   

|    |                                                                      
|--- | ---------------------------------------------------------------------
|27. | Discontinued operations                                              
|    |                                                                      
|    | During the year, the Group has not discontinued
      any operations.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|28. | Contingent liabilities                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | A few
        former employees lodged claims against the Parent Company as in their
        opinion there were no grounds
      for terminating their employment contracts. The amount of total potential
        claims is immaterial from the perspective of the scale of the Parent
        Companys
      operations. Management considered that these claims should not be provided
      for, because they would not be paid.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | As at the balance sheet date,
      Cel Polska had no contingent liabilities.                                                                                                                                                                                                                                                                                                                                                       

|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|29. | Guarantees and
      pledges                                                                                                                    
|    |                                                                                                                                                 
|    | As at
        31 December 2001, bank guarantees granted by banks to third parties on
        the Groups behalf
      amounted to PLN 1,667,492.

|    |                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------
|30. | Employment level                                                                                       
|    |                                                                                                        
|    | In the year ended 31 December
      2001, the average number of employees (by category) was as follows:
|    |                                                                                                        

| |                             | 2001Number
      of employees | 
| | --------------------------- | ----------------------------- | 
| |                             |                               | 
| | White collar                | 118                           | 
| |                             |                               | 
| | Average number of employees | 118                           | 
| |                             |                               | 

|    |                                                                                               
|--- | ----------------------------------------------------------------------------------------------
|31. | Directors remuneration                                                                       
|    |                                                                                               
|    | Remuneration paid and payable
      (including bonuses paid out of net profit) was as follows:
|    |                                                                                               

| |                          | 2001PLN   | 
| | ------------------------ | --------- | 
| |                          |           | 
| | Management
      Boards  | 4,512,593 | 
| | Supervisory
      Boards |          | 

| |                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------
| | The amount of Management Board remuneration
      includes the costs of cancelling a contract with one of the former Board
      Members.
| |                                                                                                                                          
| | In 2001, members of the Supervisory Board
      were not paid any remuneration.                                                          
| |                                                                                                                                          

|32. | Transactions with Management
      and Supervisory Board members                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                   
|    | During 2001, the Parent Company and its subsidiaries
      did not extend any loans or related benefits to members of its Management
      and Supervisory Boards.
|    |                                                                                                                                                                   

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|Energis Polska Sp. z o.o. Group                                                     | 24                                    
|----------------------------------------------------------------------------------- | --------------------------------------
|Consolidated financial statements as at
    and for the year ended 31 December 2001 |                                       
|                                                                                   
|                                                                                    |                                       
|33.                                                                                 | Transactions with related
    entities

| |                                                  |               | 
| | ------------------------------------------------ | ------------- | 
| |                                                  | 31.12.2001PLN | 
| |                                                  |               | 
| | Liabilities,
      including:                    |               | 
| | National
      Grid Transco plc                  | 945,526       | 
| | National
      Grid Group plc                    | 953,848       | 
| | Energis
      plc                                | 2,926,803     | 
| | Energis
      Squared Ltd.                       | 24,441        | 
| | Polskie
      Koleje Państwowe S.A.              | 34,102        | 
| | Energis
      Switzerland AG                     | 215,066       | 
| |                                                  |               | 
| |                                                  | 5,099,786     | 
| |                                                  |               | 
| | Expenses
      in the financial year, including: |               | 
| | National
      Grid Transco plc                  | 6,760,952     | 
| | National
      Grid Group plc                    | 953,848       | 
| | Energis
      plc                                | 9,453,246     | 
| | Energis
      Squared Ltd.                       | 24,441        | 
| | Polskie
      Koleje Państwowe S.A.              | 5,756,572     | 
| | Energis
      GmbH                               | 218,235       | 
| | Energis
      Switzerland AG                     | 944,818       | 
| |                                                  |               | 
| |                                                  | 24,112,112    | 
| |                                                  |              
| | Cost of
      fixed assets purchased, including: |               | 
| |                                                  |               | 
| | Energis
      Squared Ltd.                       | 12,437,109    | 
| |                                                  |               | 
| |                                                  | 12,437,109    | 
| |                                                  |               | 

|    |                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|34. | Post balance sheet
      events                                                                                                                             
|    |                                                                                                                                                             
|    | The following
        significant changes in the Parent Companys ownership structure
      and the share capital took place subsequent to 31 December 2001:
|    |                                                                                                                                                             
|    | -                                                                                                                                                           
|    | -                                                                                                                                                           
|    |                                                                                                                                                             
|    | As a consequence
        of these changes, as at 28 May 2004, Bates Telecom Poland Ltd owns above
        80% of the Parent
      Companys shares.         
|    |                                                                                                                                                             

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|Energis Polska Sp. z o.o. Group                                                       | 25                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Consolidated financial statements
      as at and for the year ended 31 December 2001 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                     
|                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|35.                                                                                   | Reconciliation
      to United States of America Generally Accepted Accounting Principles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|35. (a)                                                                               | Net
      Income and Shareholders Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                      | The consolidated
        financial statements of the Group are prepared in accordance with the
        Accounting Act of 29 September
      1994 (Polish GAAP). The Groups accounting policies
      have been described below where these differ significantly from accounting
      principles applicable in the United States of America (US GAAP).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                      | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                      | In 2000
        Energis Polska entered into an agreement for the purchase of cross-border
        interconnection services.
      As the agreement was for a certain period of time and Energis Polska was
        required to pay a pre-determined fee per year, this indicated the determinable
        cost of periodic use of these services. In accordance with Groups
        accounting policies and due to the fact that the Group did not use this
        facility for a period of time while the remaining construction of the
        network
      was being completed, the expense of the monthly charge was deferred until
        the time the services began to be utilized by customers. From this time,
        the total portion of the annual cost applicable for the period from date
      of agreement to date of first use was expensed to the Income Statement.
|                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                      | Under US GAAP the total cost of
      these services should be expensed to the Income Statement over the recognised
      useful economic life beginning from when the asset is put in use (i.e. services
      begin to be utilized by customers).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                      | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                      | In accordance with Polish GAAP
      applicable for the year ended 31 December 2001 foreign currency gains resulting
      from the translation of monetary assets and liabilities that are denominated
      in a foreign currency at the balance sheet date were deferred until realized.
      Under US GAAP such foreign currency gains are recognised in the Income Statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                      | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                      | Energis
        Polska recognises Installation Revenue, under Polish GAAP, at the point
        at which the customers service
      goes live, reflecting the timing of the cash inflows and outflows arising
      from installation of the service.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                      | Under
        US GAAP, in accordance with SEC Staff Accounting Bulletin 104 Revenue Recognition in Financial
      Statements such revenue is deferred over the expected term of the
      related customer relationship. As a result an adjustment is required to
      reflect that part of the revenue recognized under Polish GAAP, which should
      be deferred to later period in order to match the revenue stream over the
      customer relationship life.                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                      | In order to calculate this deferred
      revenue adjustment, the recognition period is the length of contract, as
      Energis Polska does not have adequate data to establish history of a longer
      average customer life.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

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|Energis Polska Sp. z o.o. Group                                                     | 26
|----------------------------------------------------------------------------------- | --
|Consolidated financial statements as at
    and for the year ended 31 December 2001 |   
|                                                                                   

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------
| | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Embedded derivatives     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          
| | The Group has entered into lease
      and service agreements that require payments denominated in a currency other
      than the functional currency of the Company or the lessor. Under Polish
      GAAP applicable for the year ended 31 December 2001 there was no requirement
      to separate the embedded derivative instruments from the host contracts
      and record them on the balance sheets at their fair value.                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          
| | Under
        US GAAP, effective January 1, 2001, the Company adopted SFAS No. 133, "Accounting for Derivative
      Instruments and Hedging Activities," and its related amendments (collectively
      referred to as "SFAS 133"). These standards require that all derivative
      instruments be recorded on the balance sheets at their fair value as either
      assets or liabilities. The effect of the adoption of SFAS 133 as of January
      1, 2001, has been disclosed as the cumulative effect of change
      in accounting principle. The effect of the valuation of the embedded
      derivative instruments as of December 31, 2001, has been disclosed as the
      fair value gain on embedded derivatives.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          
| | (v)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Extraordinary
      items
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          
| | Under Polish GAAP the Group recognises
      costs of post-accident car repairs and related damages of PLN 33,999, net,
      as extraordinary items.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          
| | Under
        US GAAP these extraordinary items should be reclassified to other operating
        expenses. The change has
      no effect on the Income Statement for 2001 or on the Shareholder Equity
      as of 31 December 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          
| | (vi)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Deferred
      tax       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          
| | In accordance with Polish GAAP
      Energis Polska did not recognize a surplus of deferred tax assets over liabilities,
      as it was more likely than not that it would not be able to be used in 2002
      or in subsequent years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          
| | Under
        US GAAP, a deferred tax asset would be recognised at the full amount,
        with a valuation allowance
      recorded for amounts which were not more likely than not to be utilized.
        As the valuation allowance would equal 100% of the value of deferred
        tax
      assets, this difference has no effect on the Income Statement for 2001
      or on the Shareholder Equity as of 31 December 2001.                                                                                                                                                                                                                                                                                                 

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|Energis Polska Sp. z o.o. Group                                                     | 27
|----------------------------------------------------------------------------------- | --
|Consolidated financial statements as at
    and for the year ended 31 December 2001 |   
|                                                                                   

| |                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The effect on Group
        net income and shareholders equity is stated below as if the Financial
      Statements had been prepared in accordance with US GAAP

| |                                                                                                                |       |  |             |   |             |  
| | -------------------------------------------------------------------------------------------------------------- | ----- |  | ----------- | - | ----------- | -
|
|
| |                                                                                                                |       |  |             |   |             |  
| | As reported
      in accordance with Polish GAAP                                                               |       |  | (73,885,161 | ) | 229,224,348 |  
| | Cross-border
      interconnection services                                                                    | (i)   |  | 3,378,583   |   | 3,378,583   |  
| | Foreign currency
      translation                                                                             | (ii)  |  | 6,533,510   |   | 6,554,798   |  
| | Installation
      revenue                                                                                     | (iii) |  | (644,840    | ) | (644,840    | )
| | Fair value
      gains on embedded derivatives                                                                 | (iv)  |  | 14,073,646  |   | 14,073,646  |  
| |                                                                                                                |       |  |             |   |             |  
| | As reported
      in accordance with US GAAP, before cumulative effect of change in accounting
      principle |       |  | (50,544,262 | ) | 252,586,535 |  
| |                                                                                                                |       |  |             |   |             |  
| | Cumulative
      effect of change in accounting principle                                                      | (iv)  |  | 5,115,900   |   | 5,115,900   |  
| |                                                                                                                |       |  |             |   |             |  
| | As reported
      in accordance with US GAAP, after cumulative effect of change in accounting
      principle  |       |  | (45,428,362 | ) | 257,702,435 |  
| |                                                                                                                |       |  |             |   |             |  

|        |               | 
|------- | ------------- | 
|35. (b) | Balance Sheet
|        |               | 

| | (i)                                                                                                                                                                                                                                                                                                                                                                             | Telecommunication licenses
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                 |                           
| | Under Polish GAAP applicable for the year ended
      31 December 2001, telecommunication licenses were classified in the Balance
      Sheet as prepayments and written down to the Income Statement on the straight-line
      basis over the period for which the licenses were granted. The prepayments
    for licenses amounted to PLN 92,376,760 as at 31 December 2001.
| |                                                                                                                                                                                                                                                                                                                                                                                 |                           
| | Under US
      GAAP, the licenses should be reclassified from prepayments to intangible
      assets. The change has no effect on the
      Income Statement for 2001 or on the Shareholders Equity as of 31 December
    2001.                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                 |                           
| | (ii)                                                                                                                                                                                                                                                                                                                                                                            | Assets under constructions
| |                                                                                                                                                                                                                                                                                                                                                                                 |                           
| | Under Polish GAAP, intangible assets under
      construction, of PLN 4.110.288, are classified in Tangible fixed assets
    section in the Balance Sheet, which relate to the network operations software.                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                 |                           
| | Under US
      GAAP, these assets should be reclassified in Intangible assets. The change
      has no effect on the Income Statement
    for 2001 or on the Shareholders Equity as of 31 December 2001.                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                 |                           
| | (iii)                                                                                                                                                                                                                                                                                                                                                                           | Cash and cash equivalents 
| |                                                                                                                                                                                                                                                                                                                                                                                 |                           
| | Under Polish GAAP, treasury bills with a maturity
    of less than 3 months, of PLN 36,246,677, are included in Marketable Securities.                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                 |                           
| | Under US
      GAAP, these would be classified in cash and cash equivalents. The change
      has no effect on the Income Statement
    for 2001 or on the Shareholders Equity as of 31 December 2001.                                                                                                                                                                        

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|Energis Polska Sp. z o.o. Group                                                     | 28
|----------------------------------------------------------------------------------- | --
|Consolidated financial statements as at
    and for the year ended 31 December 2001 |   
|                                                                                   

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                  
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------
|        | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                                        | Negative goodwill
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                  
|        | Under Polish GAAP, negative goodwill
      that arose on acquisition of Cel Polska on 8 June 2001, of PLN 4,573,560,
      is recognised in the Income Statement over the period of 5 years.                                                                                                                                                                                                                                               
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                  
|        | Under
        US GAAP, in accordance with the Accounting Principles Board Opinion No.
        16, Business Combinations,
      negative goodwill should reduce the value of the non-current assets acquired.
      As the majority of these assets are also depreciated over 5 years, this
      difference results in an immaterial effect on the Income Statement for 2001
      or on the Shareholders Equity as of 31 December 2001.
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                  
|35. (c) | Statement of Cash
      Flows                                                                                                                                                                                                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                  
|        | Exchange rate changes on cash                                                                                                                                                                                                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                  
|        | Under Polish GAAP applicable for
      the year ended 31 December 2001, the effect of exchange rate changes on
      cash held in foreign currencies was included in operating activities. The
      effect of exchange rate changes on cash for the year ended 31 December 2001
      amounted to PLN 1,910,735.                                                                                                                          
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                  
|        | Under
        US GAAP, in accordance with SFAS No. 95, Statement of Cash Flows,
        the effect of exchange rate changes on cash held in foreign currencies
        should be reported as a
      separate item in the reconciliation of beginning and ending balances of
      cash and cash equivalents.                                                                                                                            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                  
|35. (d) | Statement
      of Changes in Shareholders Equity                                                                                                                                                                                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                  
|        | No statement
        of Changes in Shareholders Equity was required under Polish GAAP
        applicable for the year ended 31 December 2001. In the financial statements
        prepared under US GAAP such statement
      would be included.                                                                                                                                                                                          

---



Energis Polska Sp. z o.o.

Financial statements
  for the period from 22 November 1999 to 31 December 2000



---



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|Energis Polska Sp. z o.o.            | 2
|------------------------------------ | -
|Financial
    statements (unaudited) |  
|                                    

BALANCE SHEET as at 31 December 2000

|                                                        | Note |  | 31.12.2000PLN | 
|------------------------------------------------------- | ---- |  | ------------- | 
|                                                        |      |  |               | 
|ASSETS                                                  |      |  |               | 
|                                                        |      |  |               | 
|Fixed assets                                            |      |  | 208,196,620   | 
|Intangible assets                                       | 4    |  | 177,224       | 
|Computer software                                       |      |  | 167,024       | 
|Other intangible assets                                 |      |  | 10,200        | 
|                                                        |      |  |               | 
|Tangible fixed assets                                   | 5    |  | 208,015,396   | 
|Plant and machinery                                     |      |  | 1,149,154     | 
|Other tangible fixed assets                             |      |  | 140,572       | 
|Assets under construction                               |      |  | 206,237,568   | 
|Prepayments for assets under construction               |      |  | 488,102       | 
|                                                        |      |  |               | 
|Financial fixed assets                                  | 7    |  | 4,000         | 
|                                                        |      |  |               | 
|Current assets                                          |      |  | 62,015,976    | 
|Inventories                                             | 8    |  |              | 
|                                                        |      |  |               | 
|Short-term receivables and claims                       | 9    |  | 7,965,011     | 
|Taxation, state subsidy and social security receivables |      |  | 7,493,166     | 
|Other receivables                                       |      |  | 471,845       | 
|                                                        |      |  |               | 
|Cash and cash equivalents                               |      |  | 54,050,965    | 
|Cash in hand                                            |      |  | 7,315         | 
|Cash at bank                                            |      |  | 54,043,650    | 
|                                                        |      |  |               | 
|Prepayments                                             | 10   |  | 96,473,001    | 
|Prepaid expenses                                        |      |  | 96,473,001    | 
|                                                        |      |  |               | 
|Total assets                                            |      |  | 366,685,597   | 
|                                                        |      |  |               | 
|                                                        |      |  |               | 

The accompanying notes form an integral part of the financial statements.

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|Energis Polska Sp. z o.o.        | 3
|-------------------------------- | -
|Financial statements (unaudited) |  
|                                

BALANCE SHEET as at 31 December 2000 (cont.)

|                                                    | Note |  | 31.12.2000PLN |  
|--------------------------------------------------- | ---- |  | ------------- | -
|                                                    |      |  |               |  
|LIABILITIES AND EQUITY                              |      |  |               |  
|                                                    |      |  |               |  
|Equity                                              |      |  | (23,317,719   | )
|Share capital                                       | 11   |  | 4,000         |  
|                                                    |      |  |               |  
|Net loss for the period                             | 12   |  | (23,321,719   | )
|Net loss (negative amount)                          |      |  | (23,321,719   | )
|                                                    |      |  |               |  
|Short-term liabilities and special funds            |      |  | 367,627,127   |  
|                                                    |      |  |               |  
|Short-term liabilities                              |      |  | 367,627,127   |  
|Loans, debentures and securities                    | 13   |  | 206,391,228   |  
|Trade payables                                      | 14   |  | 4,214,843     |  
|Other payables                                      | 15   |  | 156,925,557   |  
|Taxation, customs duty and social security payables | 16   |  | 95,499        |  
|                                                    |      |  |               |  
|Accruals and deferred income                        | 17   |  | 22,376,189    |  
|Accruals                                            |      |  | 22,296,665    |  
|Deferred income                                     |      |  | 79,524        |  
|                                                    |      |  |               |  
|Total liabilities and equity                        |      |  | 366,685,597   |  
|                                                    |      |  |               |  
|                                                    |      |  |               |  

The accompanying notes form an integral part of the financial statements.

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|Energis Polska Sp. z o.o.        | 4
|-------------------------------- | -
|Financial statements (unaudited) |  
|                                 |  

|                                                                                                                       |  |      |  |             |  
|---------------------------------------------------------------------------------------------------------------------- |  | ---- |  | ----------- | -
|INCOME STATEMENT
        (The type-of-expenditure format)
  for the period from 22 November 1999
  to 31 December 2000 | 
|                                                                                                                       |  |      |  |             |  
|                                                                                                                       |  | Note |  | 2000PLN     |  
|                                                                                                                       |  |      |  |             |  
|Sales                                                                                                                  |  |      |  |            |  
|                                                                                                                       |  |      |  |             |  
|Operating expenses                                                                                                     |  |      |  | 26,477,125  |  
|Materials and energy used                                                                                              |  |      |  | 275,043     |  
|External services                                                                                                      |  |      |  | 22,880,032  |  
|Taxes and charges                                                                                                      |  |      |  | 465,834     |  
|Wages and salaries                                                                                                     |  |      |  | 1,000,762   |  
|Employee benefits                                                                                                      |  |      |  | 82,923      |  
|Depreciation and amortisation                                                                                          |  |      |  | 158,236     |  
|Other                                                                                                                  |  |      |  | 1,614,295   |  
|Loss on sales                                                                                                          |  |      |  | (26,477,125 | )
|                                                                                                                       |  |      |  |             |  
|Other operating income                                                                                                 |  |      |  | 16          |  
|                                                                                                                       |  |      |  |             |  
|Other operating expenses                                                                                               |  | 19   |  | 22,013      |  
|                                                                                                                       |  |      |  |             |  
|                                                                                                                       |  |      |  |             |  
|Operating loss                                                                                                         |  |      |  | (26,499,122 | )
|                                                                                                                       |  |      |  |             |  
|Financial income                                                                                                       |  | 20   |  | 3,253,221   |  
|Interest received                                                                                                      |  |      |  | 2,802,722   |  
|Other                                                                                                                  |  |      |  | 450,499     |  
|                                                                                                                       |  |      |  |             |  
|Financial costs                                                                                                        |  | 21   |  | 75,818      |  
|                                                                                                                       |  |      |  |             |  
|                                                                                                                       |  |      |  |             |  
|Loss on ordinary activities before tax                                                                                 |  |      |  | (23,321,719 | )
|                                                                                                                       |  |      |  |             |  
|                                                                                                                       |  |      |  |             |  
|Loss before tax                                                                                                        |  |      |  | (23,321,719 | )
|                                                                                                                       |  |      |  |             |  
|                                                                                                                       |  |      |  |             |  
|Tax                                                                                                                    |  | 22   |  |            |  
|                                                                                                                       |  |      |  |             |  
|                                                                                                                       |  |      |  |             |  
|Net loss                                                                                                               |  |      |  | (23,321,719 | )
|                                                                                                                       |  |      |  |             |  

The accompanying notes form an integral part of the financial statements.

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|Energis Polska Sp. z o.o.        | 5
|-------------------------------- | -
|Financial statements (unaudited) |  
|                                 |  

|                                                                                 |                                                                                       |              |             |  
|-------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ------------ | ----------- | -
|CASH FLOW STATEMENT
  for the period from 22 November 1999
  to 31 December 2000 |                                                                                      
|                                                                                 |                                                                                       |              |             |  
|                                                                                 |                                                                                       |              | 2000PLN     |  
|                                                                                 |                                                                                       |              |             |  
|Cash from operating activities                                                   |                                                                                       |              |            
|                                                                                 |                                                                                       |              |             |  
|Net loss                                                                         |                                                                                       | (23,321,719  | )          
|Adjusted for:                                                                    |                                                                                       |              |            
|                                                                                 | Amortisation and depreciation, net                                                    |              | 158,236     |  
|                                                                                 | Other provisions                                                                      |              | 22,013      |  
|                                                                                 | Increase in inventories                                                               |              | (22,013     | )
|                                                                                 | Increase in receivables and claims                                                    |              | (7,965,011  | )
|                                                                                 | Increase in short-term liabilities (excluding loans and bank loans) and special funds |              | 2,783,269   |  
|                                                                                 | Increase in accruals and prepayments                                                  |              | (941,723    | )
|                                                                                 | Increase in deferred income                                                           |              | 79,524      |  
|                                                                                 |                                                                                       |              |             |  
|Net cash from operating activities                                               |                                                                                       | (29,207,424  | )          
|                                                                                 |                                                                                       |              |             |  
|                                                                                 |                                                                                       |              |             |  
|Cash from investing activities                                                   |                                                                                       |              |            
|                                                                                 |                                                                                       |              |             |  
|                                                                                 | Purchase of intangible assets                                                         |              | (214,546    | )
|                                                                                 | Purchase of tangible fixed assets                                                     |              | (10,438,212 | )
|                                                                                 | Purchase of shares in subsidiaries                                                    |              | (4,000      | )
|                                                                                 | Purchase of telecommunication licences                                                |              | (93,225,045 | )
|                                                                                 |                                                                                       |              |             |  
|Net cash from investing activities                                               |                                                                                       | (103,881,803 | )          
|                                                                                 |                                                                                       |              |             |  
|                                                                                 |                                                                                       |              |             |  
|Cash from financing activities                                                   |                                                                                       |              |            
|                                                                                 |                                                                                       |              |             |  
|                                                                                 | Short-term loans received                                                             |              | 206,391,228 |  
|                                                                                 | Payment of finance lease liabilities                                                  |              | (19.255,036 | )
|                                                                                 | Issue of shares and repayable contributions from shareholders                         |              | 4,000       |  
|                                                                                 |                                                                                       |              |             |  
|Net cash from financing activities                                               |                                                                                       | 187,140,192  |            
|                                                                                 |                                                                                       |              |             |  
|                                                                                 |                                                                                       |              |             |  
|                                                                                 |                                                                                       |              |             |  
|Increase in cash and cash equivalents                                            |                                                                                       | 54,050,965   |            
|                                                                                 |                                                                                       |              |             |  
|                                                                                 |                                                                                       |              |             |  
|Cash and cash equivalents at start of period                                     |                                                                                       |             |            
|                                                                                 |                                                                                       |              |             |  
|                                                                                 |                                                                                       |              |             |  
|Cash and cash equivalents at end of period                                       |                                                                                       | 54,050,965   |            
|                                                                                 |                                                                                       |              |             |  

The accompanying notes form an integral part of the financial statements.

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|Energis Polska Sp. z o.o.        | 6
|-------------------------------- | -
|Financial statements (unaudited) |  
|                                 |  

|                                  |             |                                                                                                                                                                                                                   
|--------------------------------- | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NOTES TO THE FINANCIAL STATEMENTS
|                                  |             |                                                                                                                                                                                                                   
|1.                                | The Company
|                                  |             |                                                                                                                                                                                                                   
|                                  | a)          | Energis Polska
          Sp. z o.o. (hereinafter call the
        Company or Energis Polska) was formed on 22 November
        1999 in Warsaw. Its registered office is in Warsaw at ul. Iłżecka
    26.      
|                                  |             |                                                                                                                                                                                                                   
|                                  | b)          | The Companys
    activities consist of providing telecommunications and internet services.                                                                                                                       
|                                  |             |                                                                                                                                                                                                                   
|                                  | c)          | Employment                                                                                                                                                                                                        
|                                  |             |                                                                                                                                                                                                                   
|                                  |             | The average number of employees during the
    financial period was 11 (staff).                                                                                                                                   
|                                  |             |                                                                                                                                                                                                                   
|                                  | d)          | Directors remuneration                                                                                                                                                                                           
|                                  |             |                                                                                                                                                                                                                   
|                                  |             | Remuneration paid to the members of the Management
        Board during the financial period amounted to PLN 371,347. In the current
    financial period, the Supervisory Board did not receive any remuneration.
|                                  |             |                                                                                                                                                                                                                   
|                                  | e)          | The following
          people sat on the Companys
    Management Board during the financial period:                                                                                                             
|                                  |             |                                                                                                                                                                                                                   

| |  |  | Vivienne M. Bracken | Chairman        | from 22 November 1999 to 3 May 2000; 
| |  | - | ------------------- | --------------- | -------------------------------------
| |  |  | Zygmunt M. Miśko    | Member          | from 25 November 1999 to 3 May 2000; 
| |  |  | Edward Z. Mazur     | Member          | from 25 November 1999 to 3 May 2000; 
| |  |  | Steven Marshall     | Chairman        | from 4 May to 20 November 2000;      
| |  |  | George Z. Makowski  | Chairman        | from 21 November to 31 December 2000;
| |  |  | Steven V. Harris    | Deputy Chairman | from 21 November to 31 December 2000;
| |  |  | Jarosław Mikos      | Member          | from 21 November to 31 December 2000;
| |  |  | Jaromir Łaciński    | Member          | from 4 May to 31 December 2000;      
| |  |  | Bogdan Szafrański   | Member          | from 4 May to 31 December 2000.      
| |  |   |                     |                 |                                      

| | f) | Major events during the period were as follows:
| | -- | -----------------------------------------------
| |    |                                                
| |    |                                               
| |    |                                                
| |    |                                               
| |    |                                                
| |    |                                               
| |    |                                                
| |    |                                               
| |    |                                                
| |    |                                               

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|                                          | 7
|----------------------------------------- | -
|Energis Polska Sp. z o.o.                 |  
|Financial statements (unaudited)          |  
|                                          |  
|Notes to the financial statements (cont.) |  

|   |                             
|-- | ----------------------------
|2. | Selected accounting policies

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The accounting
    policies used in the preparation of the financial statements for the period
    from 22 November 1999 to 31 December 2000 are in accordance with the Accounting
    Act of 29 September 1994 (uniform text  Journal of Laws of 1994 No. 121/591 with subsequent amendments), hereinafter referred to as the Act,
    which specifies, among other things, the accounting policies to be applied
    by companies whose registered offices or seats of management are in Poland.

| |                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Certain presentation changes have been included in these financial statements in comparison with the statutory financial statement of Energis Polska Sp. z o.o. for the year ended 31 December 2001 audited in accordance with the Act and auditing standards of National Board of Registered Auditors.

| |                                                                
| | ---------------------------------------------------------------
| | Energis Polska presents costs by type in its income statements.

| |    |                                     
| | -- | ------------------------------------
| | p) | Tangible and intangible fixed assets

| |                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | Tangible and intangible fixed assets are valued at cost (purchase price or the cost of manufacturing), including enlargement or modernisation costs.

| |                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Depreciation
    of tangible fixed assets and amortisation of intangible assets are charged
    in accordance with the Companys annual depreciation schedule which
    includes annual rates and charges.

| |                                                                                     
| | ------------------------------------------------------------------------------------
| | Depreciation and amortisation charges are calculated using the straight line method.

| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Annual depreciation rates for the principal categories of tangible fixed assets are as follows:

| |   |                     |           
| | - | ------------------- | ----------
| |  | plant and machinery | 20%  30%;

| |  | other tangible fixed assets | 20%.
| | - | --------------------------- | ----

| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | Assets under construction are
    not depreciated.                                         
| |                                                                                            
| | Annual depreciation rates for the principal categories of intangible assets are as follows:

| |   |                         |     
| | - | ----------------------- | ----
| |  | right to use copyrights | 20%;

| |  | computer programs | 50%.
| | - | ----------------- | ----

| |    |                       
| | -- | ----------------------
| | q) | Financial fixed assets

| |                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | Shares in other entities are valued at cost less provisions for permanent diminution in value.  The said provisions are charged to financial costs.

| |                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Any permanent increases in the value of financial fixed assets that offset previous decreases in their value raise their carrying amounts to the level of their original cost.  The said increases are credited to financial income.

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|                                          | 8
|----------------------------------------- | -
|Energis Polska Sp. z o.o.                 |  
|Financial statements (unaudited)          |  
|                                          |  
|Notes to the financial statements (cont.) |  
|                                          |  

| | r) | Short-term receivables and claims
| | -- | ---------------------------------

| |                                                                
| | ---------------------------------------------------------------
| | Short-term receivables and claims are stated net of provisions.

| |                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------
| | Receivables are stated at amounts due.  Default interest on overdue receivables is included in the receivables balance and credited to financial income.

| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | Provisions are based on the level of risk associated with individual balances and cover the amount which is not guaranteed or secured.

| |    |            
| | -- | -----------
| | s) | Inventories

| |                                           
| | ------------------------------------------
| | Inventories are stated net of write-downs.

| |                                                                                           
| | ------------------------------------------------------------------------------------------
| | Inventories are valued at the lower of cost (purchase price) and the net realisable value.

| |                                                                   
| | ------------------------------------------------------------------
| | The value of inventory issues is determined using the FIFO method.

| |                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If inventories
    have become obsolete, their levels exceed the Companys needs, their
    prices fluctuate on an exchange or are reduced due to competition or if they
    have been stored for more than one year due to lack of sales opportunities,
    purchase prices of the inventories are written down to the net realisable
    value.

| |                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Stocks of advertising materials purchased in order to be transferred free of charge to trade partners are written down in full as at the balance sheet date.

| |    |                           
| | -- | --------------------------
| | t) | Telecommunication licences

| |                                                                       
| | ----------------------------------------------------------------------
| | Licences from Minister of Communications are presented in prepayments.

| |    |                                     
| | -- | ------------------------------------
| | u) | Long-term and short-term liabilities

| |                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------
| | Liabilities are stated at amounts due, i.e. including interest accrued as at the balance sheet date, which is charged to financial costs.

---



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|                                          | 9
|----------------------------------------- | -
|Energis Polska Sp. z o.o.                 |  
|Financial statements (unaudited)          |  
|                                          |  
|Notes to the financial statements (cont.) |  
|                                          |  

| | v) | Deferred tax
| | -- | ------------

| |                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Deferred income tax provisions are recognised on the basis of timing differences in the recognition of revenue and costs under the Accounting Act and tax regulations.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | An excess of positive timing differences over negative ones, multiplied by the applicable corporation income tax rate, is included in the tax charge and shown as a deferred tax provision.  An excess of negative timing differences over positive ones, multiplied by the applicable corporation income tax rate (giving a deferred tax asset), is shown as part of prepayments only if it is certain that it will crystallise in the future.

| |                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | New reduced corporation income tax rates were introduced on 1 January 1997 as a result of amendments to the Corporation Income Tax Act.  Therefore, the rate of 28% was used in deferred income tax calculations as this is the rate for 2001.

|   |              
|-- | -------------
|3. | Going concern

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | These financial
    statements have been prepared on the assumption that the related entities
    will continue as going concerns in the foreseeable future and that there
    are no circumstances which indicate any threat to their continuing in operation.
    The Company does not expect any threats to its continuing in operation in
    the foreseeable future. The cash flow plan for the next 12 months effectively
    ending May 2005 provides that the Company will have positive cash flows within
    12 months of the date of the financial statements being signed. Therefore,
    the Companys Management Board have prepared these financial statements
    on the assumption that the Company will be able to continue as a going concern
    without materially curtailing the scope of its operations in the foreseeable
    future. The financial statements do not contain any adjustments, which might
    be necessary if the going concern assumption should prove inappropriate.

---



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|Energis Polska Sp. z o.o.                 | 10
|----------------------------------------- | --
|Financial statements (unaudited)          |   
|                                          |   
|Notes to the financial statements (cont.) |   
|                                          |   

|4. | Intangible assets  movements during the financial period
|-- | ---------------------------------------------------------
|   |                                                          

| |                                                       | Computer software and other
      intangible assets | 
| | ----------------------------------------------------- | --------------------------------------------------- | 
| |                                                       | PLN                                                 | 
| | Cost as at 22 November 1999                           |                                                    | 
| | Additions                                             | 214,546                                             | 
| | Disposals                                             |                                                    | 
| |                                                       |                                                     | 
| | Cost as at 31 December 2000                           | 214,546                                             | 
| |                                                       |                                                     | 
| | Accumulated
      amortisation as at 22 November 1999 |                                                    | 
| | Additions                                             | 37,322                                              | 
| | Disposals                                             |                                                    | 
| |                                                       |                                                     | 
| | Accumulated
      amortisation as at 31 December 2000 | 37,322                                              | 
| |                                                       |                                                     | 
| | Net book value                                        |                                                     | 
| | As at 22 November 1999                                |                                                    | 
| |                                                       |                                                     | 
| | As at 31 December 2000                                | 177,224                                             | 
| |                                                       |                                                     | 

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|Energis Polska Sp. z o.o.                 | 11
|----------------------------------------- | --
|Financial statements (unaudited)          |   
|                                          |   
|Notes to the financial statements (cont.) |   
|                                          |   

|5. | Tangible fixed assets  movements during the financial
period
|-- | -------------------------------------------------------------
|   |                                                              

| |                                                       | Plant and machinery |  | Other tangible fixed assets |  | Assets under construction |  | Prepayments for assets under
      construction |  | Total       | 
| | ----------------------------------------------------- | ------------------- |  | --------------------------- |  | ------------------------- |  | ----------------------------------------------- |  | ----------- | 
| |                                                       | PLN                 |  | PLN                         |  | PLN                       |  | PLN                                             |  | PLN         | 
| | Cost
    as at 22 November 1999                       |                    |  |                            |  |                          |  |                                                |  |            | 
| | Additions                                             | 1,267,780           |  | 142,860                     |  | 206,237,568               |  | 488,102                                         |  | 208,136,310 | 
| | Disposals                                             |                    |  |                            |  |                          |  |                                                |  |            | 
| |                                                       |                     |  |                             |  |                           |  |                                                 |  |             | 
| | Cost
    as at 31 December 2000                       | 1,267,780           |  | 142,860                     |  | 206,237,568               |  | 488,102                                         |  | 208,136,310 | 
| |                                                       |                     |  |                             |  |                           |  |                                                 |  |             | 
| | Accumulated
      depreciation as at 22 November 1999 |                    |  |                            |  |                          |  |                                                |  |            | 
| | Additions                                             | 118,626             |  | 2,288                       |  |                           |  |                                                 |  | 120,914     | 
| | Disposals                                             |                    |  |                            |  |                          |  |                                                |  |            | 
| |                                                       |                     |  |                             |  |                           |  |                                                 |  |             | 
| | Accumulated
      depreciation as at 31 December 2000 | 118,626             |  | 2,288                       |  |                          |  |                                                |  | 120,914     | 
| |                                                       |                     |  |                             |  |                           |  |                                                 |  |             | 
| | Net book value                                        |                     |  |                             |  |                           |  |                                                 |  |             | 
| | As
    at 22 November 1999                            |                    |  |                            |  |                          |  |                                                |  |            | 
| |                                                       |                     |  |                             |  |                           |  |                                                 |  |             | 
| | As
    at 31 December 2000                            | 1,149,154           |  | 140,572                     |  | 206,237,568               |  | 488,102                                         |  | 208,015,396 | 
| |                                                       |                     |  |                             |  |                           |  |                                                 |  |             | 
| |                                                       |                     |  |                             |  |                           |  |                                                 |  |             | 

| | 31.12.2000PLN | 
| | ------------- | 

|5.(a) | Assets under construction
|----- | -------------------------

| |                                                                                                      |             | 
| | ---------------------------------------------------------------------------------------------------- | ----------- | 
| | Optic fibres being connected
      to the telecommunications network                                 | 176,180,593 | 
| | Expenditure
      on designing, constructing and assembling network structures and plant & machinery | 25,481,424  | 
| | Expenditure on designing, programming
      and configuring information systems for the network      | 3,154,646   | 
| | Other capital expenditure                                                                            | 1,420,905   | 
| |                                                                                                      |             | 
| |                                                                                                      | 206,237,568 | 
| |                                                                                                      |             | 

| | On
      the basis of the agreement concluded on 9 November 2000 for the supply
        of optic fibres and co-location of equipment with P.P. Polskie Koleje
      Państwowe (PKP), Energis Polska has long term, exclusive right
      of use to the optic fibres covered by the agreement for the period of 15
      years from the date of signing. The total length of the mentioned optic
      fibres is approximately 5,000 km, whereas the total payments in respect
      of the exclusive right of use in the period of 15 years amounts to USD
      42.08
      mln (PLN 169.3m at the date of agreement).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|Energis Polska Sp. z o.o.                 | 12
|----------------------------------------- | --
|Financial statements (unaudited)          |   
|                                          |   
|Notes to the financial statements (cont.) |   
|                                          |   

| | 31.12.2000PLN | 
| | ------------- | 

|6. | Tangible fixed assets  by title
|-- | --------------------------------

| |                                                                                                                                       |           | 
| | ------------------------------------------------------------------------------------------------------------------------------------- | --------- | 
| | Own tangible fixed assets                                                                                                             | 1,289,726 | 
| | Tangible
        fixed assets used under rent, finance lease or similar agreements and
        included in the Companys
      assets |          | 
| |                                                                                                                                       |           | 
| | Total balance-sheet tangible
      fixed assets                                                                                       | 1,289,726 | 
| |                                                                                                                                       |           | 

|7. | Financial fixed assets  movements during the financial
period
|-- | --------------------------------------------------------------

| |                                                            | Shares | 
| | ---------------------------------------------------------- | ------ | 
| |                                                            | PLN    | 
| | Cost as at 22 November 1999                                |       | 
| | Additions                                                  | 4,000  | 
| | Disposals                                                  |       | 
| |                                                            |        | 
| | Cost as at 31 December 2000                                | 4,000  | 
| |                                                            |        | 
| | Permanent diminution in value
      as at 22 November 1999 |       | 
| | Additions                                                  |       | 
| | Disposals                                                  |       | 
| | As at 31 December 2000                                     |       | 
| |                                                            |        | 
| | Net book value                                             |        | 
| | As at 22 November 1999                                     |       | 
| |                                                            |        | 
| | As at 31 December 2000                                     | 4,000  | 
| |                                                            |        | 

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|Energis Polska Sp. z o.o.                     | 13
|--------------------------------------------- | --
|Financial statements (unaudited)              |   
|                                             
|Notes to the financial statements
    (cont.)

|   |                                                                                                                                      
|-- | -------------------------------------------------------------------------------------------------------------------------------------
|8. | Inventories                                                                                                                          
|   |                                                                                                                                      
|   | As at the end of the period, stocks of advertising
      materials amounted to PLN 22,013. These materials were written down in full.

| | 31.12.2000PLN | 
| | ------------- | 

|   |                                  
|-- | ---------------------------------
|9. | Short-term receivables and claims

| |                     |           | 
| | ------------------- | --------- | 
| | Ageing analysis:    |           | 
| | Current receivables | 7,965,011 | 
| | Overdue receivables |          | 
| |                     |           | 
| | Gross receivables   | 7,965,011 | 
| |                     |           | 
| | Bad debt provisions |          | 
| |                     |           | 
| | Net receivables     | 7,965,011 | 
| |                     |           | 

| |                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | Foreign exchange losses which arose on the translation of receivables denominated in foreign currencies as at 31 December 2000 amounted to PLN 19,884.
| |                                                                                                                                                       
| | As at 31 December 2000, the Company
    had not accrued any default interest on short-term receivables and claims.                                    
| |                                                                                                                                                       

| | 31.12.2000PLN | 
| | ------------- | 

|    |            
|--- | -----------
|10. | Prepayments

| |                                                                                |  |            | 
| | ------------------------------------------------------------------------------ |  | ---------- | 
| | Licence from Minister of Communications to provide voice transmission services |  | 89,055,882 | 
| | Licence from Minister of Communications to provide data transmission services  |  | 3,681,061  | 
| | Prepaid interconnection agreement                                              |  | 3,552,396  | 
| | Prepaid rent                                                                   |  | 180,021    | 
| | Prepaid insurance                                                              |  | 3,641      | 
| |                                                                                |  |            | 
| |                                                                                |  | 96,473,001 | 
| |                                                                                |  |            | 

| |                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The licences obtained from Minister of Communications for the voice transmission and data transmission services are for the period of 15 years. Energis Polska has paid them in full in the current financial period.



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|Energis Polska Sp. z o.o.                       | 14
|----------------------------------------------- | --
|Financial statements (unaudited)                |   
|                                               
|Notes to the financial
      statements (cont.)

|    |                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|11. | Share capital                                                                                                                                                                   
|    |                                                                                                                                                                                 
|    | As at 31 December
        2000, the Companys
      share capital amounted to PLN 4,000 and consisted of 80 equal, indivisible
      shares with a nominal value of PLN 50 each.
|    |                                                                                                                                                                                 
|    | The Companys
      share capital remained unchanged throughout the period.                                                                                                     
|    |                                                                                                                                                                                 
|    | As at 31 December
        2000, the Companys
      shareholders were as follows:                                                                                               

| |                                                  |                  |  |           | 
| | ------------------------------------------------ | ---------------- |  | --------- | 
| |                                                  | Number of shares |  | Votes (%) | 
| | P.P. Polskie Koleje Państwowe                  | 34               |  | 42.50     | 
| | Energis plc (Great Britain)                      | 19               |  | 23.75     | 
| | National Grid International Ltd. (Great Britain) | 19               |  | 23.75     | 
| | P.T. Centrala Sp. z o.o.                         | 8                |  | 10.00     | 
| |                                                  |                  |  |           | 
| |                                                  | 80               |  | 100.00    | 
| |                                                  |                  |  |           | 

|    |                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|12. | Net loss                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                              
|    | The net loss for the
      period from 22 November 1999 to 31 December 2000 amounted to PLN 23,321,719. As suggested
      by the Companys Management Board, the loss will be covered with
    the Companys future profits.

|    |                            
|--- | ---------------------------
|13. | Loans, bonds and securities

| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | As at the balance sheet date, Energis Polska had the following liabilities in respect of short-term loans from its shareholders:

| | 31.12.2000PLN | 
| | ------------- | 

| | Lender                           |             | 
| | -------------------------------- | ----------- | 
| | National Grid International Ltd. | 103,195,614 | 
| | Energis plc                      | 103,195,614 | 
| |                                  |             | 
| |                                  | 206,391,228 | 
| |                                  |             | 

| |                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The said liabilities resulted from amounts transferred to the Company under loan agreements signed on 13 December 2000 with National Grid International Ltd. and Energis plc of up to PLN 189,706,838 each (in total: PLN 379,413,676).

| |                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In accordance
    with the loan agreements and on the basis of the Shareholders Agreement of
    25 January 2000, these loans bear no interest rate as the Shareholders intended to swap them for shares in the Companys share capital by 31 December 2001  see
    Note 26.



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|Energis Polska Sp. z o.o.                     | 15
|--------------------------------------------- | --
|Financial statements (unaudited)              |   
|                                             
|Notes to the financial statements
    (cont.)



| | 31.12.2000PLN | 
| | ------------- | 

|    |               
|--- | --------------
|14. | Trade payables

| |                                    |           | 
| | ---------------------------------- | --------- | 
| | Maturity profile:                  |           | 
| | Current payables (up to 3 months): | 4,214,843 | 
| | Overdue payables                   |          | 
| |                                    |           | 
| |                                    | 4,214,843 | 
| |                                    |           | 

| |                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------
| | Foreign exchange gains which arose on the translation of payables denominated in foreign currencies as at 31 December 2000 amounted to PLN 43,084.
| |                                                                                                                                                   
| | As at 31 December 2000, the Company
    had not accrued any default interest on short-term liabilities.                                           

|    |               
|--- | --------------
|15. | Other payables

| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | Other payables represent the amount due in respect of optic fibre agreement, of PLN 156,925,557.

|    |                                                    
|--- | ---------------------------------------------------
|16. | Taxation, customs duty and social security payables
|    |                                                    
|    | Payables relating to:                              

| | - | personal income tax     | 41,746 | 
| | - | ----------------------- | ------ | 
| | - | other (social security) | 53,753 | 
| |   |                         |        | 
| |   |                         | 95,499 | 
| |   |                         |        | 

|17. | Accruals and deferred income
|--- | ----------------------------
|    |                             
|    | Accruals:                   

| | -                | accrual for a liability in respect of construction and assembly works relating to the telecommunications network construction | 16,322,594 | 
| | ---------------- | ----------------------------------------------------------------------------------------------------------------------------- | ---------- | 
| | -                | services provided, not invoiced                                                                                               | 5,974,071  | 
| |                  |                                                                                                                               |            | 
| |                  | 22,296,665                                                                                                                    |           
| |                  |                                                                                                                               |           
| | Deferred income: |                                                                                                                               |           
| | -                | prepaid services not provided                                                                                                 | 58,236     | 
| | -                | unrealised foreign exchange gains                                                                                             | 21,288     | 
| |                  |                                                                                                                               | 79,524     | 
| |                  |                                                                                                                               |            | 
| |                  |                                                                                                                               | 22,376,189 | 
| |                  |                                                                                                                               |            | 



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|Energis Polska Sp. z o.o.Financial statements (unaudited) | 16
|--------------------------------------------------------- | --
|                                                          |   
|Notes to the financial statements (cont.)                 |   
|                                                          |   

|18.    | Contingent liabilities                                                                                                                                                                                                                                                                                       
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                              
|18.(a) | Default
      interest                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                              
|       | According
        to the Polish Civil Code, default interest on the late settlement of
        liabilities may be charged
      within up to 3 years after the settlement of the principal liability. It
        is practically impossible to assess the Companys potential liability
      in that respect.
|       |                                                                                                                                                                                                                                                                                                              
|18.(b) | Guarantees                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                              
|       | As at 31 December 2000, the amount
      of bank guarantees granted to third parties in the name of the Company was
      PLN 1,662,427.                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                              
|18.(c) | Disputable amounts                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                              
|       | In March 2001, claims for damages
      were filed against the Company, arising from an agreement concluded in 2000
      by and between Energis Polska and Triad Group plc (Great Britain) for the
      provision of advisory services in the area of information system implementation.                   
|       |                                                                                                                                                                                                                                                                                                              
|       | By the date of the preparation
      of these financial statements, no court proceedings had been instituted
      against the Company in relation to the said issue.                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                              
|       | Due to the doubts over the circumstances
      of the claim described above, it is impossible to estimate the potential
      liability of the Company arising from this claim.                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                              

|    |                                    | 2000PLN  
|--- | ---------------------------------- | ---------
|    |                                    |          
|19. | Other operating expenses           |          
|    | Write-downs of inventories         | 20,313   
|    | Donations made                     | 1,700    
|    |                                    |          
|    |                                    | 22,013   
|    |                                    |          
|    |                                    |          
|20. | Financial income                   |          
|    | Interest received                  | 2,802,722
|    | Realised foreign exchange gains    | 450,406  
|    | Other                              | 93       
|    |                                    |          
|    |                                    | 3,253,221
|    |                                    |          
|    |                                    |          
|21. | Financial costs                    |          
|    | Realised foreign exchange losses   | 53,894   
|    | Unrealised foreign exchange losses | 18,958   
|    | Other                              | 2,966    
|    |                                    |          
|    |                                    | 75,818   
|    |                                    |          

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|Energis Polska Sp. z o.o.Financial statements (unaudited) | 17
|--------------------------------------------------------- | --
|                                                          |   
|Notes to the financial statements (cont.)                 |   
|                                                          |   

|    |                                                                                                      | 2000PLN     |  
|--- | ---------------------------------------------------------------------------------------------------- | ----------- | -
|    |                                                                                                      |             |  
|22. | Corporate income tax                                                                                 |             |  
|    | Loss before tax                                                                                      | (23,321,719 | )
|    | Non-deductible costs                                                                                 | 2,420,973   |  
|    |                                                                                                      |             |  
|    | Tax loss                                                                                             | (20,900,746 | )
|    |                                                                                                      |             |  
|    |                                                                                                      |             |  
|23. | Deferred income tax                                                                                  |             |  
|    | Total taxable temporary differences                                                                  |             |  
|    | Deferred tax provision (at 28%)                                                                      |            |  
|    |                                                                                                      |             |  
|    |                                                                                                      |            |  
|    |                                                                                                      |             |  
|    | Tax losses to be utilised                                                                            | (20,900,746 | )
|    | Provisions temporarily disallowed under tax
      regulations                                        | (1,142,472  | )
|    | Unrealised foreign exchange losses                                                                   | (18,958     | )
|    |                                                                                                      |             |  
|    | Total deductible temporary differences                                                               | (22,062,176 | )
|    |                                                                                                      |             |  
|    | Deferred tax asset (at 28%)                                                                          | (6,177,409  | )
|    |                                                                                                      |             |  
|    | Net deferred tax asset                                                                               | (6,177,409  | )
|    |                                                                                                      |             |  
|    | As permitted by the Accounting Act, the Company
      decided not to recognise a deferred tax asset. |             |  
|    |                                                                                                      |             |  

|24. | Companies in which Energis
      Polska holds at least 20% of shares |     |  |                             
|--- | -------------------------------------------------------------------- | --- |  | ----------------------------
|    |                                                                      |     |  |                             
|    | Company                                                              |     |  | Telrise Sp. z o.o.          
|    | Status                                                               |     |  | Subsidiary                  
|    | Registered office                                                    |     |  | Warsaw, ul. Emilii Plater 53
|    | Interest                                                             | %   |  | 100                         
|    | Share of total number of voting
      rights                         | %   |  | 100                         
|    | Result for the period to 31 December
      2000                      | PLN |  |                            

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|Energis Polska Sp. z o.o.Financial statements (unaudited) | 18
|--------------------------------------------------------- | --
|                                                          |   
|Notes to the financial statements (cont.)                 |   
|                                                          |   

|25.    | Transactions with related
      parties
|------ | ---------------------------------------
|       |                                        
|25.(a) | Transactions
      with related parties
|       |                                        

| | Company                                                            | P.P. Polskie
          Koleje
  Państwowe |  | Energis plc |  | National Grid
      International Ltd. | 
| | ------------------------------------------------------------------ | ------------------------------------------- |  | ----------- |  | -------------------------------------- | 
| |                                                                    | PLN                                         |  | PLN         |  | PLN                                    | 
| |                                                                    |                                             |  |             |  |                                        | 
| | Trade payables as at the balance
      sheet date                  | 6,100                                       |  | 2,322,745   |  | 1,285,284                              | 
| | Liabilities in respect of loans
      as at the balance sheet date |                                             |  | 103,195,614 |  | 103,195,614                            | 
| | Costs of mutual transactions
      during the period               | 6,100                                       |  | 7,467,131   |  | 11,650,332                             | 

|       |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|25.(b) | Transactions with Management
          Board                                                                                                      
|       |                                                                                                                                                   
|       | Advance
        payments to the members of the Companys Management Board in respect
      of future remuneration amounted to PLN 122,652.        
|       |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|26.    | Post-balance-sheet events                                                                                                                         
|       |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       | The following
        significant events affecting the Companys financial position occurred
      between the 31 December 2000 and 30 March 2001:
|       |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                   | Loan agreements
          with the Companys
      shareholders, National Grid International Limited and Energis plc, for up
      to PLN 157,435,163 each (in total: PLN 314,870,326), signed on 10 January
      2001. According to the agreements, amounts received in respect of the said
      loans are to be devoted to the current financing of the Companys
      working capital, whereas there are agreements in place to swap part or all
      of the debt to National Grid International Limited and Energis plc for shares
      in the Companys share capital by 31 December 2001;
|       |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                   | Shareholders resolutions of 1 February
      2001 on increasing the Companys share capital by PLN 326,427,000
      up to PLN 326,431,000;                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                   | Shareholders resolution
          of 27 February 2001 on the commencement of activities aimed at transforming
          Energis Polska
      from a limited liability company to a joint stock company.                                                                                                                                                                                                                                                                                                                                                                                            

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|Energis Polska Sp. z o.o.                     | 19
|--------------------------------------------- | --
|Financial statements (unaudited)              |   
|                                             
|Notes to the financial statements
    (cont.)

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|27.     | Reconciliation to United States of America Generally Accepted Accounting Principles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | Energis
      Polska owns 100% subsidiary, Telerise Sp. z o.o. (Telrise). Telrise is not consolidated, as it
      does not meet the thresholds required for consolidation under Polish GAAP.
      As a result, financial fixed assets of PLN 4 thousand, representing share
      capital of Telrise, are included in the balance sheet of Energis Polska.
      Taking into consideration that Telrise was dormant and its balance sheet
      consisted of cash of PLN 4 thousand and the share capital of PLN 4 thousand,
      the consolidation would effect with the reclassification of PLN 4 thousand
      from financial fixed assets to cash. The change has no effect on the Income
      Statement for 2000 or on the Shareholders Equity as of 31 December
    2000.
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | The financial
      statements of the Company are prepared in accordance with the Accounting
      Act of 29 September 1994 (Polish
      GAAP). The Companys accounting policies have been described
      below where these differ significantly from accounting principles applicable
    in the United States of America (US GAAP).                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|27. (a) | Net
    Income and Shareholders Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | In accordance with Polish GAAP
      applicable for the period ended 31 December 2000 foreign currency gains
      resulting from the translation of monetary assets and liabilities that
      are denominated in a foreign currency at the balance sheet date were deferred
      until realized. Under US GAAP such foreign currency gains are recognised
    in the Income Statement.                                                                                                                                                                                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | In accordance with Polish GAAP
      Energis Polska did not recognize a surplus of deferred tax assets over
      liabilities, as it was more likely than not that it would not be able to
    be used in 2001 or in subsequent years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | Under US
      GAAP, a deferred tax asset would be recognised at the full amount, with
      a valuation allowance recorded
      for amounts which were not more likely than not to be utilized. As the
      valuation allowance would equal 100% of the value of deferred tax assets,
      this difference has no effect on the Income Statement for 2000 or on the
    Shareholder Equity as of 31 December 2000.                                                                                                                                                                                                                                                                                                                                                                 
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | Under Polish
      GAAP the accounting treatment of advertising materials is the same as for
      other types of inventory
      i.e. they are recognised as assets and written down to their net realisable
    value (NRV).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | Under US
      GAAP any payments made for advertising costs, including advertising materials
      would be expensed
      as incurred. However, this difference has no effect on the Income Statement
      for 2000 or on the Shareholders Equity as of 31 December 2000, as
      under Polish GAAP it was determined that the NRV of advertising materials
    in zero and they were written off.                                                                                                                                                                                                                                                                                                                                                                                 



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|Energis Polska Sp. z o.o.                     | 20
|--------------------------------------------- | --
|Financial statements (unaudited)              |   
|                                             
|Notes to the financial statements
    (cont.)

|        |                                                                                                                                                                                                                                                                                                         |                           
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------
|        | (iv)                                                                                                                                                                                                                                                                                                    | Prepayments               
|        |                                                                                                                                                                                                                                                                                                         |                           
|        | Under Polish GAAP applicable for
      the period ended 31 December 2000 all prepayments were included in the
    current assets, without the split on the short-term and the long-term part.                                                                                                          
|        |                                                                                                                                                                                                                                                                                                         |                           
|        | Under US
      GAAP part of prepayments should be reclassified to other long-term assets.
      This difference has no
      effect on the Income Statement for 2000 or on the Shareholders Equity
    as of 31 December 2000.                                                                        
|        |                                                                                                                                                                                                                                                                                                         |                           
|27. (b) | Balance
    Sheet                                                                                                                                                                                                                                                                                      
|        |                                                                                                                                                                                                                                                                                                         |                           
|        | (i)                                                                                                                                                                                                                                                                                                     | Telecommunication licenses
|        |                                                                                                                                                                                                                                                                                                         |                           
|        | Under Polish GAAP applicable for
      the period ended 31 December 2000, telecommunication licenses were classified
      in the Balance Sheet as prepayments and written down to the Income Statement
    on the straight-line basis over the period for which the licenses are granted.             
|        |                                                                                                                                                                                                                                                                                                         |                           
|        | Under US
      GAAP the licenses should be reclassified from prepayments to intangible
      assets. The change has no
      effect on the Income Statement for 2000 or on the Shareholders Equity
    as of 31 December 2000.                                                                        
|        |                                                                                                                                                                                                                                                                                                         |                           
|        | (iv)                                                                                                                                                                                                                                                                                                    | Assets under constructions
|        |                                                                                                                                                                                                                                                                                                         |                           
|        | Under Polish GAAP, intangible assets
      under construction are classified in Tangible fixed assets section in the
    Balance Sheet, which relate to the network operations software.                                                                                                               
|        |                                                                                                                                                                                                                                                                                                         |                           
|        | Under US
      GAAP, these assets should be reclassified in Intangible assets. The change
      has no effect on the Income
      Statement for 2000 or on the Shareholders Equity as of 31 December
    2000.                                                                                        
|        |                                                                                                                                                                                                                                                                                                        
|27. (c) | Statement
    of Cash Flows                                                                                                                                                                                                                                                                            
|        |                                                                                                                                                                                                                                                                                                        
|        | Exchange rate changes on cash                                                                                                                                                                                                                                                                          
|        |                                                                                                                                                                                                                                                                                                        
|        | Under Polish GAAP applicable for
      the period ended 31 December 2000, the effect of exchange rate changes
    on cash held in foreign currencies is included in operating activities.                                                                                                              
|        |                                                                                                                                                                                                                                                                                                        
|        | Under US
      GAAP, in accordance with SFAS No. 95, Statement of Cash Flows,
      the effect of exchange rate changes on cash held in foreign currencies
      should be reported as a
      separate item in the reconciliation of beginning and ending balances of
    cash and cash equivalents.
|        |                                                                                                                                                                                                                                                                                                        
|27. (d) | Statement
    of Changes in Shareholders Equity                                                                                                                                                                                                                                                       
|        |                                                                                                                                                                                                                                                                                                        
|        | No statement
      of Changes in Shareholders Equity
      was required under Polish GAAP applicable for the period ended 31 December
      2000. In the financial statements prepared under US GAAP such statement
    would be included.                                                            
|        |                                                                                                                                                                                                                                                                                                        

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