TVN Finance Corporation II AB 4405,000,000 3 10 ⁄4% Senior Notes Due 2017 Guaranteed by TVN S.A

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TVN Finance Corporation II AB 4405,000,000 3 10 ⁄4% Senior Notes due 2017 Guaranteed by TVN S.A. and certain of its subsidiaries Interest payable May 15 and November 15 Issue Price: 98.696% plus accrued interest, if any, from November 19, 2009

The notes will mature on November 15, 2017. Interest will accrue from November 19, 2009, and the first interest payment date will be May 15, 2010. Prior to November 15, 2013, TVN Finance Corporation II AB, the issuer, may redeem all or a portion of the notes at a price equal to 100% of the principal amount plus a ‘make-whole‘ premium. The issuer may redeem some or all of the notes at any time on or after November 15, 2013. The issuer may also redeem up to 35% of the notes using the proceeds of certain equity offerings completed before November 15, 2012. The redemption prices are described on page 135. In addition, the issuer may redeem all, but not part, of the notes at a price equal to 100% of the principal amount plus accrued and unpaid interest upon the occurrence of certain changes in applicable tax law. If the issuer’s direct parent company, TVN S.A., sells certain of its assets or experiences specific kinds of changes in control, the issuer must offer to purchase the notes. The issuer is a special purpose limited liability company organized under the laws of Sweden and a finance subsidiary of TVN S.A. The issuer does not have any operations of any kind and will not have any revenue. As a result, prospective purchasers of the notes should not expect the issuer to participate in servicing the interest and principal obligations on the notes. The notes will be unsecured, rank equally with all of the issuer’s existing and future unsecured senior debt and the issuer will not be permitted to incur subordinated debt. The notes will be guaranteed on a senior basis by the issuer’s parent company, TVN S.A., and by certain of TVN S.A.’s existing and future subsidiaries. The guarantees will be unsecured, rank equally with all of the applicable guarantor’s existing and future unsecured senior debt and senior to all of the applicable guarantor’s existing and future unsecured senior subordinated and subordinated debt. The notes will be structurally subordinated to all existing and future liabilities (including trade payables) of TVN S.A.’s subsidiaries that do not issue guarantees of the notes. See “Risk factors” beginning on page 15 for a discussion of certain risks that you should consider in connection with an investment in the notes. The notes have not been and will not be registered under the Securities Act of 1933, as amended, or the securities laws of any other place. The issuer is offering the notes only to qualified institutional buyers under Rule 144A and to persons outside the United States under Regulation S. The issuer does not intend to register the notes for an exchange offer under the Securities Act. Application has been made to list the notes on the Official List of the Luxembourg Stock Exchange and for admission to trading on the Euro MTF market. Delivery of the notes was made to investors in book-entry form through a common depository of Euroclear and Clearstream on or about November 19, 2009.

Joint book-running managers J.P. Morgan Nomura Book-running manager Calyon Co-managers Nordea Rabobank International UniCredit Group (HVB)

December 18, 2009 In making your investment decision, you should rely only on the information contained in this listing memorandum. We and the initial purchasers have not authorized anyone to provide you with any other information. If you receive any other information, you should not rely on it. We and the initial purchasers are offering to sell the notes only in places where offers and sales are permitted. You should not assume that the information contained in this listing memorandum is accurate as of any date other than the date on the front cover of this listing memorandum.

Table of contents Page Page Summary...... 1 The acquisition of ‘n’ ...... 125 Risk factors ...... 15 Material agreements ...... 127 Use of proceeds ...... 30 Description of other indebtedness . . . . 130 Consolidated capitalization of the TVN Description of the notes ...... 131 Group ...... 31 Book-entry settlement and clearance . . 180 Unaudited pro forma consolidated Tax considerations ...... 185 financial information ...... 32 Transfer restrictions ...... 192 Selected historical financial data ...... 40 Plan of distribution ...... 194 Management’s discussion and analysis Legal matters ...... 197 of financial condition and results of Independent auditors ...... 197 operations ...... 46 Enforceability of judgments ...... 197 Business ...... 90 Listing and general information ...... 199 Management ...... 111 Index to Financial Statements ...... F-1 Major shareholders and related party transactions ...... 120

TVN Finance Corporation II AB is a limited liability company under the laws of Sweden. Its principal executive offices are located at Stureplan 4 c 4 tr, 114 35 Stockholm, Sweden and its telephone number at that address is +46 8 463 1044. TVN S.A. is a joint-stock company under the laws of the Republic of Poland. Its principal executive offices are located at ul. Wiertnicza 166, 02-952 Warszawa and its telephone number at that address is +48 22 856 6060.

This listing memorandum is a document that we are providing only to prospective purchasers of the notes. You should read this listing memorandum before making a decision whether to purchase any notes. You must not: • use this listing memorandum for any other purpose; • make copies of any part of this listing memorandum or give a copy of it to any other person; or • disclose any information in this listing memorandum to any other person. We have prepared this listing memorandum and we are solely responsible for its contents. You are responsible for making your own examination of us and your own assessment of the merits and risks of investing in the notes. You may contact us if you need any additional information. By purchasing any notes, you will be deemed to have acknowledged that: • you have reviewed this listing memorandum; • you have had an opportunity to request any additional information that you need from us; and • the initial purchasers are not responsible for, and are not making any representation to you concerning, our future performance or the accuracy or completeness of this listing memorandum. We are not providing you with any legal, business, tax or other advice in this listing memorandum. You should consult with your own advisors as needed to assist you in making your investment decision and to advise you whether you are legally permitted to purchase the notes.

i You must comply with all laws that apply to you in any place in which you buy, offer or sell any notes or possess this listing memorandum. You must also obtain any consents or approvals that you need in order to purchase any notes. We and the initial purchasers are not responsible for your compliance with these legal requirements.

We are offering the notes in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). These exemptions apply to offers and sales of securities that do not involve a public offering. The notes have not been recommended by any federal, state or foreign securities authorities, nor have any such authorities determined that this listing memorandum is accurate or complete. Any representation to the contrary is a criminal offense.

The notes are subject to restrictions on resale and transfer as described under “Transfer restrictions”. By purchasing any notes, you will be deemed to have made certain acknowledgments, representations and agreements as described in that section of this listing memorandum. You may be required to bear the financial risks of investing in the notes for an indefinite period of time.

Delivery of the notes was made against payment therefor on November 19, 2009, which was the fifth business day following the date of pricing of the notes (such settlement cycle being herein referred to as “T+5”). Under Rule 15c6-1 under the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”), trades in the secondary market generally are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade notes on the date of pricing or the next succeeding business day will be required, by virtue of the fact that the notes initially will settle T+5, to specify an alternative settlement cycle at the time of any such trade to prevent a failed settlement. Purchasers of notes who wish to trade notes on the date of pricing or the next succeeding business day should consult their advisors.

NOTICE TO INVESTORS

NOTICE TO NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER RSA 421 B WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT, ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

NOTICE TO EEA INVESTORS

This listing memorandum has been prepared on the basis that this offering of notes will be made pursuant to an exemption under Directive 2003/71/EC (the “Prospectus Directive”) as implemented in member states of the European Economic Area (“EEA”), from the requirement to produce and publish an listing memorandum which is compliant with the Prospectus Directive, as so implemented, for offers of the notes. Accordingly, any person making or intending to make any offer within the EEA or any of its member states (each a “Relevant Member State”) of the notes which are the subject of the placement referred to in this listing memorandum must only do so in circumstances in which no obligation arises for the issuer to produce and publish an offering memorandum which is compliant with the Prospectus Directive, including Article 3 thereof, as so implemented for such offer. For EEA jurisdictions that have not implemented the Prospectus Directive, all offers of notes must be in compliance with the laws of such jurisdiction.

ii Notes may not be offered and will not be offered to the public in any Relevant Member State except that notes may be offered to: (i) legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; (ii) any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than 343 million and (3) an annual net turnover of more than 350 million, as shown in its last annual or consolidated accounts; (iii) fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) in any Relevant Member State subject to obtaining the prior consent of the issuer; or (iv) in any other circumstances falling within Article 3(2) of the Prospectus Directive; provided that no such offer of notes shall result in a requirement for the publication by the issuer of a listing memorandum pursuant to Article 3 of the Prospectus Directive; For the purposes of this provision the expression an “offer of notes to the public” in relation to any notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe the notes, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State.

NOTICE TO U.K. INVESTORS This listing memorandum is directed only at persons (“relevant persons”) who (i) fall within Article 19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, (ii) fall within Article 49(2)(a) to (d) (high net worth companies, unincorporated associations etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, or (iii) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any notes may otherwise lawfully be communicated or caused to be communicated. This listing memorandum must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this listing memorandum relates is available only to relevant persons and will be engaged in only with relevant persons. Recipients of this offering memorandum are not permitted to transmit it to any other person. The notes are not being offered to the public in the United Kingdom.

NOTICE TO POLISH INVESTORS The notes may not be offered or sold in or into Poland except under circumstances that do not constitute a public offering or distribution of securities under Polish laws and regulations. The notes have not been and will not be registered with the Komisja Nadzoru Finansowego, the Polish Financial Supervision Authority.

NOTICE TO SWEDISH INVESTORS This listing memorandum has been prepared on the basis that this offering of notes will be made pursuant to an exemption under the Swedish Financial Instruments Trading Act (1991:980) from the requirement to prepare and register a prospectus. This listing memorandum has not been nor will it be registered with or approved by the Swedish Financial Supervisory Authority. Accordingly, this listing memorandum may not be made available, nor may the notes described herein be marketed and offered for sale in Sweden, other than in any circumstances which do not require the publication of a prospectus pursuant to the Swedish Financial Instruments Trading Act (1991:980).

FORWARD-LOOKING STATEMENTS This listing memorandum includes statements that are, or may deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the use of forward-looking

iii terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this listing memorandum and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in the “Risk factors” section of this listing memorandum. These factors should not be construed as exhaustive and should be read with the other cautionary statements in the listing memorandum. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those made in or suggested by the forward- looking statements contained in this listing memorandum. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this listing memorandum, those results or developments may not be indicative of results or developments in subsequent periods. Any forward-looking statements, which we make in this listing memorandum, speak only as of the date of such statement, and we undertake no obligation to update such statements. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

PRESENTATION OF FINANCIAL INFORMATION Unless otherwise indicated, financial information contained in this listing memorandum has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”). In this listing memorandum, the term “financial statements” refers to the audited consolidated financial statements of TVN S.A. and its subsidiaries as of and for the years ended December 31, 2007 and 2008 (“audited consolidated financial statements of the TVN Group”), unaudited interim condensed consolidated financial statements of TVN S.A. and its subsidiaries as of and for the three and nine months ended September 30, 2009 (the “unaudited consolidated interim financial statements”) and to the audited consolidated financial statements of the ITI Neovision Group as of and for the year ended December 31, 2008 (“audited consolidated financial statements of the ITI Neovision Group”). The financial information included in this listing memorandum is not intended to comply with the United States Securities and Exchange Commission reporting requirements. For the convenience of the reader, certain złoty amounts as of and for the nine and twelve months ended September 30, 2009 and for the year ended December 31, 2008, have been converted into euro at the rate of PLN 4.2226 per EUR 1.00 (the average National Bank of Poland, or NBP, exchange rate, złoty per euro, on September 30, 2009). You should not view such translations as a representation that such złoty amounts actually represent such euro amounts, or could be or could have been converted into euro at the rates indicated or at any other rate.

MARKET AND INDUSTRY DATA AND FORECASTS This listing memorandum includes market share and industry data and forecasts that we obtained from industry publications and surveys and internal company sources. As noted in this listing memorandum, we have obtained market and industry data relating to our business from providers of industry data, including: • AGB Nielsen Media Research Polska (“AGB”), which is a primary third party source of market share and industry data relating to the Polish television broadcasting industry. AGB is the principal supplier of audience survey and advertising data in Poland. AGB records and analyzes audience preferences with the help of “people meters,” which are electronic devices attached to television sets which measure the viewing habits of people. Consistent with

iv market research conducted for the television industry in other countries, AGB monitors the viewing habits of people which are considered to be representative of Polish television in general; • Expert Monitor, a Polish research company, which monitors and analyzes market data for the television, radio, print, outdoor and internet advertising industries; • Zenith Optimedia, a global media services agency which provides market research with respect to all forms of advertising media; • MediaEdge CIA, which provides estimates of advertising revenue; • Starlink, a Polish media house which provides estimates of the net advertising market; • Readers’ Digest, a global multi-brand media and marketing company; • World Advertising Research Centre, a global advertising institute providing database for global advertising market figures; • comScore Networks, a marketing research company that provides marketing data and services to many internet businesses; • Interactive Advertising Bureau (“IAB”), a trade association for digital advertising which disseminates market research; • Central Statistical Office of Poland (“GUS”), Poland’s chief government executive agency charged with collecting and publishing statistics related to Poland’s economy, population and society, at both national and local levels; • SMG/KRC, a Millward Brown Company, or “SMG/KRC”, a Polish branch of Millward Brown, a global research company. SMG/KRC conducts a Net Track survey in Poland which provides continuous information on Polish internet users; • Megapanel PBI/Gemius, a primary source of information regarding website traffic conducted by Polskie Badania Internetu Sp. z o.o, or “PBI”; and • Egta, a Brussels based trade association of television and radio sales houses that market the advertising space of both public and private broadcasters across Europe. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements or estimates as to our market position, or the TVN Group more generally, which are not attributed to independent sources, are based on market data or internal information currently available to us. While we are not aware of any misstatements regarding our industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk factors” in this listing memorandum.

v GLOSSARY

“access prime time” The period from 4 p.m. to 7 p.m.; “Company“ TVN S.A., and not any of its subsidiaries;

1 “Existing Notes” The existing 9 ⁄2% senior notes due 2013; “free-to-air” Channels which do not require a license or a subscription to be viewed; “guarantors” Collectively, the Company, Neovision Holding B.V., ITI Neovision Sp. z o.o., Grupa Onet Poland Holding B.V. and Grupa Onet.pl S.A., each a “guarantor”; “GRP” A “gross rating point” which, as applied to Poland, is equal to 0.2 million inhabitants in the basic commercial target group (16-49 years old); “initial purchasers” The firms listed on the cover of this listing memorandum; “issuer” or TVN Finance Corporation II AB (whose name was changed from AB “TVN Finance Grundstenen 117095 with effect from December 14, 2009), a limited Corporation II AB” liability company under the laws of Sweden; “ITI Neovision Group” ITI Neovision Sp. z o.o. and its subsidiaries; “key target audience” With respect to our TVN channel, those between 16 and 49 years of age living in urban areas in Poland with a population in excess of 100,000; “‘n’ acquisition” The acquisition by TVN S.A. from ITI Media Group N.V. (“ITI Media”) of the remaining 49% of Neovision Holding B.V. which, through its wholly owned subsidiary ITI Neovision Sp. z o.o., owns and operates the ‘n’ DTH platform;

3 “Notes” 10 ⁄4% senior notes due 2017 offered hereby; “peak time” The period from 6:00 p.m. until 11:00 p.m.; “prime time” The period from 7:00 p.m. until 11:00 p.m.; “portal” A group of websites offering a wide range of services, including thematic services (for example, news, business or entertainment), search engines, e-mail, social media, transaction services and databases; see also “vortal”; “power ratio” With respect to our TVN channel, the ratio of peak time key target audience advertising market share in the television market to peak time key target audience share; “pro forma” Shall be deemed to give effect to the offering of the Notes and the sources and uses of funds as described herein under “Use of proceeds” and to the acquisition of 100% of ‘n’; “search engine“ A tool designed to search for information on the internet; “share of voice” Share of sold GRP for advertising expressed as a percentage of the volume of advertisements in the television market over a given period; “vortal” A website or group of websites that serve as a specialized entry point to a specific market, industry niche, subject area or interest (for example, a news vortal, entertainment vortal or a social network website); and “we”, “us”, “our” TVN S.A. and its consolidated subsidiaries, unless otherwise specified. “TVN Group” and the “group”

vi CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION In this listing memorandum: (i) “PLN” or “złoty” refer to the lawful currency of Poland; (ii) 3, EUR, or euro refer to the single currency of the participating Member States in the Third Stage of European Economic and Monetary Union of the Treaty Establishing the European Community, as amended from time to time; (iii) “US$”, “USD”, “dollars” or “U.S. dollars” refer to the lawful currency of the United States”; and (iv) “SEK” refers to the lawful currency of Sweden. The following tables set forth, for the periods indicated, certain information regarding the noon buying rate for the euro, expressed in złoty per euro. The rates below may differ from the actual rates used in the preparation of our consolidated financial statements and other financial information appearing in this listing memorandum. Our inclusion of the exchange rates is not meant to suggest that the złoty amounts actually represent such euro amounts or that such amounts could have been converted into euro at the rates indicated or at any other rate.

(złoty per euro) Year ended December 31, 2006 2007 2008 Exchange rate at end of period ...... 3.8312 3.5820 4.1724 Average exchange rate during period(1) ...... 3.8960 3.7843 3.5129 Highest exchange rate during period ...... 4.1065 3.9385 4.1848 Lowest exchange rate during period ...... 3.7565 3.5699 3.2026

(1) The average NBP exchange rate, złoty per euro, on the last business day of each month during the applicable period.

Highest Lowest exchange exchange Month and Year rate during rate during (złoty per euro) the month the month January 2009 ...... 4.4392 3.9170 February 2009 ...... 4.8999 4.4366 March 2009 ...... 4.7493 4.4653 April 2009 ...... 4.6462 4.2351 May 2009 ...... 4.4876 4.3362 June 2009...... 4.5518 4.4447 July 2009 ...... 4.4241 4.1605 August 2009...... 4.2046 4.0854 September 2009...... 4.2461 4.0969 October 2009 ...... 4.2640 4.1518 November 2009 ...... 4.2907 4.0909 December 2009 (through December 11, 2009) ...... 4.0954 4.1437

On December 11, 2009, the average NBP exchange rate, złoty per euro, was PLN 4.1076 per 31.00. The following tables set forth, for the periods indicated, certain information regarding the noon buying rate for the U.S. dollar, expressed in złoty per U.S. dollar. The rates below may differ from the actual rates used in the preparation of our consolidated financial statements and other financial information appearing in this listing memorandum. Our inclusion of the exchange rates is not meant to suggest that the złoty amounts actually represent such U.S. dollar amounts or that such amounts could have been converted into U.S. dollar amounts at the rates indicated or at any other rate.

(złoty per U.S. dollar) Year ended December 31, 2006 2007 2008 Exchange rate at end of period ...... 2.9105 2.4350 2.9618 Average exchange rate during period(1) ...... 3.1047 2.7686 2.4061 Highest exchange rate during period ...... 3.3008 3.0400 3.1303 Lowest exchange rate during period ...... 2.8628 2.4260 2.0220

(1) The average NBP exchange rate, złoty per U.S. dollar, on the last business day of each month during the applicable period.

vii Highest Lowest exchange rate exchange rate Month and Year during the during the (złoty per U.S. dollar) month month January 2009 ...... 3.4561 2.8844 February 2009 ...... 3.8978 3.4653 March 2009 ...... 3.7906 3.3330 April 2009 ...... 3.5222 3.1946 May 2009...... 3.3281 3.1543 June 2009 ...... 3.2742 3.1248 July 2009 ...... 3.1852 2.9230 August 2009 ...... 2.9795 2.8460 September 2009 ...... 2.9401 2.7969 October 2009 ...... 2.9237 2.7750 November 2009 ...... 2.9195 2.7367 December 2009 (through December 11, 2009)...... 2.8168 2.7093

On December 11, 2009, the average NBP exchange rate, złoty per U.S. dollar, was PLN 2.7548 per $1.00.

viii Available information For so long as any of the notes are “restricted securities” within the meaning of Rule 144(a)(3) under the U.S. Securities Act, we and the issuer will, during any period in which we are subject to the reporting requirements of Section 13 or 15(d) of the U.S. Exchange Act, or are exempt from the reporting requirements of the U.S. Exchange Act under Rule 12g3-2(b) thereunder, provide to the holder or beneficial owner of such restricted securities or to any prospective purchaser of such restricted securities designated by such holder or beneficial owner, in each case upon the written request of such holder, beneficial owner or prospective purchaser, the information required to be provided by Rule 144A(d)(4) under the U.S. Securities Act. We are not currently subject to the periodic reporting and other information requirements of the U.S. Exchange Act. However, pursuant to the indenture governing the Notes and so long as the Notes are outstanding, we will furnish certain periodic information to holders of the Notes. See “Description of the notes — Certain covenants — Reports.” For so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of that exchange so require, copies of the issuer’s organizational documents, the purchase agreement and the indenture relating to the Notes and the most recent consolidated financial statements published by us may be inspected and obtained at the office of the listing agent in Luxembourg. See “Listing and general information.”

ix Summary

This summary highlights certain information about us and the offering of the Notes. It does not contain all the information that may be important to you. You should read this entire offering memorandum, including the financial statements and related notes and the documents to which we have referred you, before making an investment decision. You should carefully consider the information set out in this listing memorandum under the heading “Risk factors.”

Overview

We are an integrated multi-media company, with leading market positions in television broadcasting and online media and with the most technologically advanced pay TV platform in Poland. We are Poland’s #1 commercial broadcaster and our TVN brand is the most recognized brand in the Polish media market. Our television broadcasting business currently owns and operates eleven television channels. Our online media business operates Onet.pl, the leading internet portal in Poland. In pay TV, we own a controlling stake in the ‘n’ Direct to Home (“DTH”) platform, one of four DTH platforms in Poland and the market leader in High Definition (“HD”) and Video on Demand (“VoD”) services. As described herein, we have entered into a non-binding term sheet with ITI Media Group N.V. (“ITI Media”), the parent company of our majority shareholder, to acquire the remaining non-controlling interest in the ‘n’ DTH platform (the “n’ acquisition”).

TVN, our principal free-to-air channel, is the most successful commercial television station in Poland, based on its audience share and advertising revenues. In an increasingly fragmented Polish television broadcasting market, TVN is the only major station that has gained overall audience share over the last few years. In addition, we offer ten other channels, including thematic channels, to address the fragmentation of audiences and to deliver target audiences to our advertisers. Our thematic channels include our 24 hour news channel, TVN24, the most viewed thematic channel in Poland, as well as a number of other thematic channels, many of which are market leaders with respect to their target audiences. As a direct result of our high quality and innovative programming, as of June 30, 2009, our stations had approximately 23.1% of the peak time nationwide audience share, and our television stations received approximately 35.6% of total gross television advertising expenditure, net of discounts or rebates (“total net television advertising expenditure”). For the nine months ended September 30, 2009, our broadcasting segment accounted for 72% of our total revenues.

Onet.pl is a leading internet portal in Poland and, on a monthly basis, our online media business has over 12 million real users and more than 3.5 billion page views. In addition to Onet.pl, we also operate some of the most popular internet destinations including zumi.pl, Poland’s first web-based location service, tvn24.pl, a leading news vortal in Poland, plejada.pl, an entertainment vortal, and Sympatia.pl, Poland’s leading online dating service. We believe our online media business provides our advertisers highly commercially attractive access to their target audiences. We estimate that approximately 73% of Polish internet users reach our online media each month. The online advertising business consists of display advertising, search engine marketing and directory services. Display advertising represents approximately 48% of the total online advertising expenditure in Poland, net of discounts and rebates (“total net online advertising expenditure”). For the six months ended June 30, 2009, based on management’s estimates, we believe Onet.pl received approximately 14% of the total net online advertising expenditure in Poland, including approximately 30% of the total net online display advertising expenditure. We believe that our market presence and brand loyalty, together with our access to high quality content, will help us maintain our position as the market leader.

The ‘n’ DTH platform is a new generation digital satellite platform launched in October 2006 offering pay TV services in Poland. The ‘n’ DTH platform focuses on the premium and economy segments of the pay TV market with a subscriber base of approximately 572,000 for the premium offering and approximately 159,000 for the pre-paid economy offering as of September 30, 2009. Our premium offering is the most technologically advanced platform in the Polish DTH market with all of its set-top boxes being HD quality, offering the largest variety of HD channels and advanced services, including Personal Video Recorder (“PVR”) and VoD. Our pre-paid economy offering provides low cost access and flexibility to our customers.

1 As we further integrate our multi-media platform across our businesses, we expect to gain increased access to our key target audiences and to diversify our income stream. We have been successful in capturing audience share by use of our high quality content, which we distribute across our multi- media channels. In addition, we have successfully diversified our revenues by adding subscription revenues from the ‘n’ DTH platform and subscription license fees from our thematic channels, which are distributed through cable and DTH operators, as well as from teleshopping. For the nine months ended September 30, 2009, 38.7% of our revenues were derived from non-advertising sources. For the twelve months ended September 30, 2009, we had revenues of PLN 2,035.3 million and Adjusted EBITDA of PLN 683.7 million.

Competitive strengths We believe that the following strengths characterize our business, will drive the realization of our strategic goals and reinforce our competitive position in our markets: • Attractive and resilient Polish market. Despite the global recession, the Polish economy is expected to experience 1.25% GDP growth in 2009 according to the European Commission, which is likely to make the Polish economy the only European economy expected to see economic output expansion in 2009. However, we estimate that net advertising expenditures in Poland will decline at a rate of 14% over the same period, which is disproportionate as compared to GDP growth. As a result of this disconnect, the fact that TV viewing is a primary leisure activity in Poland and the fact that gross rating point (“GRP”) advertising inventory for the major television channels is currently sold out in response to price cuts in the television advertising market, we believe that the advertising market in Poland will start recovering in early 2010. • #1 share in the Polish advertising market. We have developed a portfolio of leading television broadcasting and online media and are one of the most recognized and most respected brands in the Polish market. Our television stations had approximately 23.1% of the peak time nationwide audience share and received approximately 35.6% of the total net television advertising expenditure in Poland for the six months ended June 30, 2009. For the six months ended June 30, 2009, based on management’s estimates, we believe that in the online display advertising market, Onet.pl is the market leader with approximately 30% of the total net online display advertising expenditure and approximately 14% of the total net online advertising expenditure in Poland. • Success in attracting key target audiences. We are able to leverage our high quality content and brands across our integrated multi-media platform to deliver key target audiences to our advertisers. With eleven television channels (including seven thematic channels) and the most popular internet portal (including over 150 thematic services covering news, sport, music and other categories) we are able to capitalize on diverse audiences and deliver commercially attractive targeted groups to our advertisers. In our television broadcasting and online media businesses, we have translated this high audience share into an even higher share of television and online advertising spending. The power ratio for our TVN channel, which is the ratio of our peak time key target audience advertising market share in the television market to peak time key target audience share, was 1.3 in 2008. • Diversified revenue stream. We have been able to diversify our advertising revenue stream by developing additional revenue sources, including subscription revenues from the ’n’ DTH platform, licensing fees, call TV, teleshopping, e-commerce and hosting services. On a historical basis, for the nine months ended September 30, 2009, we derived 38.7% of our revenue from sources other than advertising. We continuously seek to diversify our revenue stream by developing innovative services and offerings across our multi-media platforms. • Highly profitable business with flexible cost structure. Excluding the ’n’ DTH platform, our Adjusted EBITDA margins were 37.5% and 33.6% for the year ended December 31, 2008 and the nine months ended September 30, 2009, respectively. Our Adjusted EBITDA margins are supported by our variable cost structure. On the same basis, we estimate that over 52% of our costs are variable, including our production, programming and marketing costs. Across our integrated platform of different television broadcasting and pay TV channels and various online media websites, we maximize our operational efficiencies by leveraging our

2 broadcasting facilities, programming content and other resources to generate additional revenue at low incremental costs. The ‘n’ DTH platform is at a development stage of its business and for the nine months ended September 30, 2009, reported a loss of PLN 228.0 million. • Experienced management team with a strong track record. We are able to attract and retain experienced, dedicated, ambitious, loyal and talented broadcasting professionals. Our senior management team has extensive experience in the European television broadcasting, online media and pay TV industry. Our senior management team also has an excellent record in the execution of our acquisition and integration strategy and in delivering efficiencies and significant synergies across our businesses.

Strategy Our strategy is to maintain and further strengthen our position as the leading commercial multi- media company in the Polish market. In order to realize our vision, we intend to capitalize on our strengths and pursue the following strategies: • Maintain our position as the #1 TV broadcaster. Based on our market knowledge and experience, we are well placed to understand and anticipate audience preferences. This, in turn, enables us to produce, source, broadcast and distribute popular, attractive and innovative programming content. Our strategy of developing and broadcasting or publishing a mix of high quality local and foreign programming deliver audiences to our advertisers that have the size and demographics that are most attractive to them. • Leverage our market leading positions to take advantage of the recovery in the Polish advertising market and its long-term growth potential. We aim to maintain and further strengthen our position as one of the most important providers of advertising space in Poland. We believe that the Polish advertising market will start recovering in early 2010 and, that we are well-positioned to profit from this recovery as a result of our leading market shares across our broadcast TV and online media brands. Because we market and sell our advertising space based on our ability to reach commercially attractive audiences, we believe that our integrated multi-media operations, market leading positions and ability to reach key target audiences make us a highly attractive partner to advertisers. • Further diversify our media platforms and our revenues. Through the acquisition of a controlling stake in the ’n’ DTH platform, we have obtained an additional source of revenue in the form of subscription fees. We expect to continue identifying opportunities to improve and complement our existing businesses, which will help us to expand and further focus our audience reach and diversify our revenue stream. We continually evaluate the launch or acquisition of new channels and internet portals in Poland and abroad with a view to providing advertisers with additional and more tailored audiences for the presentation and marketing of their products and services. These increased offerings allow us to expand and diversify our revenue stream, both by increasing our total net advertising revenue and by developing secondary revenue sources such as e-commerce, user fees and hosting services. • Further integrate our businesses into a single platform to leverage our brands and increase our margins. We intend to further leverage our brands, high quality content and our promotional capabilities to maximize our operational efficiencies. We are able to leverage our high quality content by distributing it across our various media platforms, including VoD, Pay TV, free-to-air and online. As a result of our multi-media platforms, we are able to gain access to high quality programming on attractive terms from our content providers, including major U.S. film studios. We expect that the completion of the ‘n’ acquisition will provide us with significant distribution and content bargaining power to support our broadcasting business in addition to a diversified revenue stream. In addition, we intend to continue to use our television channels to cross-promote our internet activities and the ‘n’ DTH platform and the Onet.pl portal to cross-promote our television content and the ‘n’ DTH platform.

The ‘n’ acquisition We have entered into a non-binding term sheet, dated November 5, 2009, with ITI Media (the “ ‘n’ Acquisition Term Sheet”) to purchase ITI Media’s remaining 49% equity and debt interest in

3 Neovision Holding B.V., which through its subsidiary, ITI Neovision Sp. z o.o., owns and operates the ‘n’ DTH platform. The purchase price for the transaction is 3188 million, with 3148 million to be paid at closing of the acquisition and the balance of 340 million to be held under an escrow arrangement. The amounts held in the escrow will be released to ITI Media on the earlier of: (i) ITI Neovision Sp. z o.o. reaching break-even Adjusted EBITDA after closing for: (a) two consecutive quarters; or (b) one quarter, if we re-launch and re-brand the ‘n’ DTH platform; (ii) the sale of all or a substantial part of our interest in ITI Neovision Sp. z o.o. to a third party; or (iii) an internal reorganization and/or merger where ITI Neovision Sp. z o.o. ceases to exist in its current form. Upon the closing of the ’n’ acquisition, the existing shareholders’ agreement between us and ITI Media will be terminated and any earn-out provision or contingent liability potentially owed by us thereunder will be cancelled, and we will be the sole owner of the ’n’ DTH platform. We intend to finance the ‘n’ acquisition through an issuance to ITI Media of an additional 3188 million aggregate principal amount of senior notes (the “Additional Notes”) containing substantially the same terms and conditions as the Notes offered hereby. For so long as ITI Media holds any Additional Notes, it will agree not to vote those Additional Notes in matters to be voted on by noteholders. If we are unable to issue the Additional Notes, the parties will consider alternate financing options, including the use of share repurchases, shareholder loans and other financing arrangements. The consummation of the ‘n’ acquisition is subject to the parties entering into mutually satisfactory documentation, obtaining any required corporate, third party or other approvals and, in the case of the Company, compliance with our related party transaction procedures, including the receipt of a fairness opinion from an independent investment banking firm. Certain aspects of the transaction may require consent of the lenders under our parent company’s credit facilities. We expect the closing of the ‘n’ acquisition to occur in the first quarter of 2010. Under the terms of the ‘n’ Acquisition Term Sheet, we also agreed, from November 5, 2009, and pending closing of the ‘n’ acquisition, to fund ITI Neovision Sp. z o.o. as required. If we are unable to complete the ’n’ acquisition, we have the right, pursuant to the procedures set forth in the shareholders’ agreement, to convert into equity the portion of funding ITI Media would have been obligated to provide to ITI Neovision Sp. z o.o. for the period starting on November 5, 2009, if the terms of the ‘n’ Acquisition Term Sheet had not been in effect.

4 Corporate structure The following diagram depicts, in simplified form, our corporate and financing structure after giving effect to the offering of the Notes, and the use of proceeds therefrom. See “Use of proceeds,” “Consolidated capitalization of the TVN Group,” “Description of other indebtedness,” and “Description of the notes” for more detailed descriptions.

ITI Group (2)

Public (1) Shareholders 59.3% 40.7%

TVN S.A.(1)(4) (the Company)

49%

TVN Finance Notes Grupa Onet Corporation ll AB(3) offered Poland Holding 51% (the Issuer) hereby B.V. (4)

Grupa Onet.pl Neovision S.A.(4) Holding B.V. (4)(5)

ITI Neovision Sp. z o.o.(4)(5)

Non - guarantor Non - guarantor Subsidiaries(6) Subsidiaries(6)

Footnotes (1) Our shares are listed on the Warsaw Stock Exchange. (2) 59.3% of our shares are held by entities that are ultimately controlled by International Trading and Investments Holdings S.A., Luxembourg (“ITI Holdings”). Our principal direct majority shareholder is Strateurop International B.V. (3) The issuer has no operations of its own and will not have any revenue other than as may be incidental to its activities as issuer of the Notes. (4) The Notes will be guaranteed on a senior unsecured basis by TVN S.A., Grupa Onet Poland Holding B.V., Grupa Onet.pl S.A., Neovision Holding B.V. and ITI Neovision Sp. z o.o. Under the terms of the indenture governing the Notes, Note guarantees will be required to be provided by those subsidiaries of TVN S.A. whose aggregate unconsolidated Adjusted EBITDA, net income and assets, taken together with the unconsolidated Adjusted EBITDA, net income and assets of TVN SA., comprise at least 90% of consolidated Adjusted EBITDA, consolidated net income and consolidated assets of the TVN Group, respectively. (5) Pursuant to transactions that occurred in June 2008 and March 2009, we acquired a controlling interest in Neovision Holding B.V. which, through its subsidiary, ITI Neovision Sp. z o.o., owns and operates the ‘n’ DTH platform. We have entered into a non-binding term sheet dated November 5, 2009 with ITI Media for the purchase of the remaining 49% interest in Neovision Holding B.V. For more detail, see “Acquisition of ‘n’.” (6) As of September 30, 2009, our non-guarantor subsidiaries accounted for 3.7% of our consolidated revenues, (2.1)% of our consolidated Adjusted EBITDA and 1.2% of our consolidated total assets excluding intercompany balances and transactions of non-guarantor subsidiaries.

5 The offering The summary below describes the principal terms of this offering. The “Description of the notes” section of this listing memorandum contains a more detailed description of the terms and conditions of the notes. Issuer ...... TVN Finance Corporation II AB.

3 Notes ...... 3405,000,000 aggregate principal amount of 10 ⁄4% senior notes due 2017. The issuer may issue additional notes in the future, subject to compliance with certain covenants in the indenture governing the Notes. Maturity ...... The Notes will mature on November 15, 2017. Interest Rates and Payment Dates . . . . The issuer will pay interest on the Notes semi-annually in arrears on May 15 and November 15 of each year, 3 beginning May 15, 2010 at a rate of 10 ⁄4% per annum. Interest will accrue from the issue date of the Notes. Issue price ...... 98.696%. Note guarantees ...... The Notes will be fully and unconditionally guaranteed on a senior unsecured basis by TVN S.A. and certain of its existing subsidiaries which will initially be Grupa Onet Poland Holding B.V., Grupa Onet.pl S.A., Neovision Holding B.V. and ITI Neovision Sp. z o.o. TVN S.A., directly or indirectly, owns 100% of the share capital of Grupa Onet Poland Holding B.V. and Grupa Onet.pl S.A., and 51% of the share capital of Neovision Holding B.V. and ITI Neovision Sp. z o.o. All of the guarantors are included in the consolidated financial statements of TVN S.A. included in this listing memorandum. Note guarantees will be required to be provided by those subsidiaries of the Company whose aggregate unconsolidated Adjusted EBITDA, net income and assets, taken together with the unconsolidated Adjusted EBITDA, net income and assets of the Company, comprise at least 90% of the consolidated Adjusted EBITDA, consolidated net income and consolidated assets of the TVN Group, respectively. If the issuer is unable to make payments on the Notes when they are due, the guarantors will be required to make them instead. Ranking ...... The Notes will be senior unsecured obligations of the issuer and will rank equally in right of payment with all of the issuer’s existing and future senior unsecured indebtedness. The issuer will not be permitted to incur any subordinated debt. Each Note guarantee will be a senior unsecured obligation of the relevant guarantor and will rank equally in right of payment to all existing and future senior unsecured indebtedness of such guarantor. Each Notes guarantee will rank junior in right of payment to any indebtedness with respect to any assets against which a lien has been granted to secure such indebtedness. Each Notes guarantee will rank senior in right of payment to any existing or future indebtedness that is expressly subordinated to that Note guarantee. Each Notes guarantee will rank junior to the existing and future indebtedness and liabilities of our subsidiaries that are not guarantors.

6 Optional Redemption ...... Prior to November 15, 2013, the issuer may redeem all or a portion of the Notes at a price equal to 100% of the principal amount plus a ‘make-whole‘ premium. The issuer may redeem some or all of the Notes at any time on or after November 15, 2013, at a redemption price equal to their principal amount plus a premium declining ratably to par over the term of the Notes, plus accrued and unpaid interest and additional amounts, if any. In addition, prior to November 15, 2012, the issuer may redeem up to 35% of the aggregate principal amount of the Notes with the proceeds of certain public equity offerings at a redemption price equal to 110.75% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date, provided that at least 65% of the original principal amount of the Notes remains outstanding after the redemption and the redemption occurs within 90 days after the closing of such public equity offering. Additional Amounts ...... All payments in respect of the Notes will be made without withholding or deduction for any taxes or other governmental charges. If withholding or deduction is required by law, subject to certain exceptions, the issuer will pay additional amounts so that the net amount you receive is no less than that you would have received in the absence of such withholding or deduction. Tax Redemption ...... If certain changes in the law of any relevant taxing jurisdiction become effective that would impose withholding taxes or other deductions on the payments on the Notes, the issuer may redeem the Notes in whole, but not in part, at any time, at a redemption price equal to their principal amount, plus accrued and unpaid interest and additional amounts, if any, to the date of redemption. Change of Control and Rating Decline. . If we experience a change of control combined with a rating decline, you will have the right to require the issuer to purchase the Notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. See “Description of the notes — Change of control and rating decline.” Certain Covenants ...... The issuer will issue the Notes under an indenture with The Bank of New York Mellon, as trustee. The indenture will, among other things, limit our ability and the ability of our restricted subsidiaries to: • incur or guarantee additional indebtedness; • make investments or other restricted payments; • create liens; • enter into sale and leaseback transactions; • sell assets and subsidiary stock; • pay dividends or make other distributions or repurchase or redeem our capital stock; • engage in certain transactions with affiliates;

7 • enter into agreements that restrict the payment of dividends by subsidiaries or the repayment of intercompany loans and advances; and • engage in mergers or consolidations. These covenants will be subject to a number of important exceptions and qualifications. For more details, see “Description of the notes.” Transfer Restrictions ...... The Notes and the Note guarantees have not been registered under the Securities Act or the securities laws of any other jurisdiction and will not be so registered. The Notes are subject to restrictions on transferability and resale. See “Transfer restrictions.” Holders of the Notes will not have the benefit of any exchange or registration rights. Listing...... The issuer has applied to list the Notes on the Official List of the Luxembourg Stock Exchange for trading on the Euro MTF market. Absence of a Public Market for the Notes ...... Although application has been made to admit the Notes to listing on the Official List of the Luxembourg Stock Exchange and to trading on the Euro MTF market in accordance with its rules, the Notes will be new securities for which there will be no established market. Although the initial purchasers have informed us that they intend to make a market in the Notes, they are not obligated to do so and may discontinue market- making at any time without notice. Accordingly, we cannot assure you that a liquid market for the Notes will develop or be maintained. Tax Considerations...... You should carefully review the information regarding tax considerations relevant to an investment in the Notes under “Tax considerations,” and you are urged to consult your own tax advisors prior to investing in the Notes. Use of proceeds ...... We intend to use the gross proceeds from the Notes offered hereby to redeem or repay certain indebtedness described herein, as additional liquidity for general corporate purposes and to pay certain transaction expenses. See “Use of proceeds.” Governing Law of the Indenture, Notes and Guarantees ...... New York.

8 Risk factors Investing in the Notes involves substantial risks. You should consider carefully all the information in this listing memorandum and, in particular, you should evaluate the specific risk factors set forth in the “Risk factors” section of this listing memorandum before making a decision whether to invest in the Notes.

9 Summary historical and pro forma financial data

TVN Group The following table provides a summary of our historical and pro forma financial data as of and for the periods presented. You should read this data together with the information included under the headings “Risk factors”, “Unaudited pro forma consolidated financial information”, “Selected historical financial data”, “Consolidated capitalization of the TVN Group”, “Management’s discussion and analysis of financial condition and results of operations” and our historical consolidated financial statements and related notes included elsewhere in this listing memorandum. The summary historical consolidated financial information of the TVN Group, as of and for the years ended December 31, 2006, 2007 and 2008, set forth below, was derived from the audited consolidated financial statements and the notes thereto of the TVN Group, prepared in accordance with IFRS, included elsewhere in this listing memorandum. Information provided in the tables below as of and for the years ended December 31, 2006 and 2007 reflects certain changes in presentation introduced by us to the originally issued financial statements for these years due to insignificant restatements, as further described in “Management’s discussion and analysis of financial results and operations — Other factors affecting our results of operations — Change of presentation of financial information.” The summary historical consolidated financial information of the TVN Group, as of and for the nine months ended September 30, 2009, set forth below, was derived from the unaudited interim condensed consolidated financial statements and the notes thereto of the TVN Group as of and for the three and nine months ended September 30, 2009, prepared in accordance with IAS 34, included elsewhere in this offering memorandum. The unaudited pro forma income statement data for the year ended December 31, 2008 and the nine months ended September 30, 2009 presented in the table below assumes that the acquisition of the controlling interest in the ITI Neovision Group and the remaining 49% interest and the consummation of this offering and the application of the net proceeds therefrom as set forth under “Use of proceeds” had occurred at the beginning of the respective periods. The unaudited pro forma balance sheet data as of September 30, 2009 presented in the table below assumes that the acquisition of the remaining 49% interest in the ITI Neovision Group, the consummation of this offering and the application of the net proceeds therefrom as set forth under “Use of proceeds” had occurred on September 30, 2009. The pro forma adjustments are based upon assumptions that we believe are reasonable and do not give effect to any transactions other than those described above. The pro forma assumptions related to the ‘n’ acquisition are preliminary and based on information obtained to date. The actual adjustments will be made as of the closing date of the ‘n’ acquisition and will differ from those reflected in the summary unaudited pro forma financial data presented below and the differences may be material. The pro forma financial information presented below does not purport to represent what our financial position and results of operations actually would have been had the acquisition of the controlling interest and the remaining 49% interest in the ITI Neovision Group and the offering and the net proceeds therefrom as set forth under “Use of proceeds” been consummated during the periods presented and is not indicative of our future performance. For the convenience of the reader, certain złoty amounts as of and for the nine and twelve months ended September 30, 2009, have been converted into euro at the rate of PLN 4.2226 per 31.00 (the average NBP exchange rate, złoty per euro, on September 30, 2009). You should not view such translations as a representation that such złoty amounts actually represent such euro amounts, or could be or could have been converted into euro at the rates indicated or at any other rate.

10 As of and for the As of and for the As of and for the year nine twelve months ended months ended ended December 31, September 30, September 30, (in millions) 2006 2007 2008 2008 2009 2009 2009 PLN PLN PLN PLN PLN PLN 5 (unaudited) (unaudited) Income Statement data Revenue ...... 1,165.0 1,554.7 1,897.3 1,305.0 1,443.0 2,035.3 482.0 Cost of revenue ...... (632.4) (818.4) (967.2) (675.9) (931.1) (1,222.4) (289.5) Cost of programming ...... (420.8) (545.3) (629.5) (437.8) (572.3) (764.0) (180.9) Selling expenses ...... (78.8) (126.5) (151.8) (111.7) (172.1) (212.2) (50.3) General and administration expenses ...... (104.7) (126.0) (148.8) (110.2) (137.2) (175.8) (41.6) Other operating income/(expense), net ...... (0.6) (1.8) 2.4 2.6 (4.0) (4.2) (1.0) Gain on step acquisition ...... — — — — 110.7 110.7 26.2 Operating profit ...... 348.5 482.0 631.9 409.8 309.3 531.4 125.8 Investment income, net ...... 54.1 19.3 81.1 14.9 39.9 106.1 25.1 Finance expense, net ...... (68.3) (204.1) (171.0) (64.8) (133.6) (239.8) (56.8) Share of loss of associate ...... — — (94.4) (19.1) (39.0) (114.3) (27.1) Profit before income tax ...... 334.3 297.2 447.6 340.8 176.6 283.4 67.1 Income tax charge ...... (75.5) (53.9) (83.9) (64.8) (35.3) (54.4) (12.9) Profit for the period ...... 258.8 243.3 363.7 276.0 141.3 229.0 54.2 Profit attributable to: – equity holders of TVN S.A...... 258.8 243.3 363.7 276.0 178.2 265.9 63.0 – non-controlling interests ...... — — — — (36.9) (36.9) (8.7) Balance Sheet data Current assets ...... 592.1 645.5 1,201.4 908.5 707.9 707.9 167.6 Cash and cash equivalents ...... 104.6 110.4 184.9 260.1 81.0 81.0 19.2 Non-current assets...... 1,986.6 2,099.5 2,551.8 2,501.7 3,522.1 3,522.1 834.1 Total assets ...... 2,578.7 2,745.0 3,753.2 3,410.2 4,230.0 4,230.0 1,001.8 Current liabilities...... 314.9 348.1 468.3 437.5 519.1 519.1 122.9 Non-current liabilities ...... 1,026.6 967.1 1,637.9 1,386.1 2,453.6 2,453.6 581.1 Shareholders equity...... 1,237.2 1,429.8 1,647.0 1,586.6 1,585.0 1,585.0 375.4 Non-controlling interest...... — — — — (327.7) (327.7) (77.6) Total equity and liabilities ...... 2,578.7 2,745.0 3,753.2 3,410.2 4,230.0 4,230.0 1,001.8 Cash Flow data Net cash generated from operating activities ...... 437.3 420.0 615.4 455.1 222.6 382.9 90.7 Net cash used in investing activities ...... (762.3) (174.8) (813.4) (549.9) (108.3) (371.8) (88.1) Net cash generated from/(used in) financing activities ...... 348.8 (239.9) 271.5 244.1 (213.5) (186.1) (44.1) Other Data (unaudited) Adjusted EBITDA(1) ...... 399.9 554.1 711.4 468.5 440.8 683.7 161.9 Adjusted EBITDA margin ...... 34.3% 35.6% 37.5% 35.9% 30.5% 33.6% 33.6% Operating margin ...... 29.9% 31.0% 33.3% 31.4% 21.4% 26.1% 26.1%

11 As of and for the For the year ended nine months ended December 31, September 30, (in millions) 2008 2009 2009 PLN PLN 5 Pro forma Financial Information (unaudited) Revenue ...... 2,109.9 1,518.1 359.5 Cost of revenue ...... (1,332.4) (1,028.1) (243.5) Operating Profit ...... 347.0 173.9 41.2 Interest expense ...... 312.5 244.4 57.9 Adjusted EBITDA(1) ...... 518.2 323.9 76.7 AdjustedEBITDAmargin...... 24.6% 21.3%21.3% Operating margin ...... 16.4% 11.5% 11.5% Adjusted EBITDA excluding stock option plan expense ...... 558.3 340.8 80.7 Cash and cash equivalents ...... 618.0 146.4 Total debt(2) ...... 2,915.3 690.4 Total shareholders’ equity and non-controlling interest ...... 1,159.2 274.5 Net debt(2)...... 2,297.3 544.0

Notes: (1) EBITDA is not an IFRS measure and should not be considered as an alternative to IFRS measures of profit/(loss) or as an indicator of operating performance or as a measure of cash flow from operations under IFRS or as an indicator of liquidity. EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments, debt service requirements and capital expenditures. Our presentation of EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under IFRS. For example: • EBITDA does not reflect changes in, or cash requirements for, our working capital needs; • EBITDA does not reflect our interest expense, which will be significant after this offering; • EBITDA does not reflect income taxes on our taxable earnings; and • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacement. Adjusted EBITDA is defined as EBITDA adjusted for finance expense, net (other than interest expense), investment income, share of profit or loss of associates and impairment charges or reversals on property, plant and equipment and intangible assets. We believe that Adjusted EBITDA serves as a useful supplementary financial indicator in measuring the liquidity of media companies, and we have previously reported this measure as “EBITDA” in our reporting to shareholders. Adjusted EBITDA is not an IFRS measure and should not be considered as an alternative to IFRS measures of net profit/(loss), as an indicator of operating performance, as a measure of cash flow from operations under IFRS, or as an indicator of liquidity. You should note that Adjusted EBITDA is not a uniform or standardized measure, that the calculation of EBITDA, accordingly, may vary significantly from company to company, and by itself our presentation and calculation of Adjusted EBITDA may not be comparable to that of other companies. Historical and Pro Forma Adjusted EBITDA are calculated as follows:

For the nine For the twelve For the year ended months ended months ended December 31, September 30, September 30, (in millions) 2006 2007 2008 2008 2009 2009 2009 PLN PLN PLN PLN PLN PLN 5 Historical (unaudited) Profit for the period 258.8 243.3 363.7 276.0 141.3 229.0 54.2 Income tax charge 75.5 53.9 83.9 64.8 35.3 54.4 12.9 Interest expense 92.4 94.8 112.8 75.5 137.6 174.9 41.4 Depreciation and amortization 50.9 71.8 81.4 60.6 131.5 152.3 36.1 EBITDA 477.6 463.8 641.8 476.9 445.7 610.6 144.6 Investment income, net(a) ...... (54.1) (19.3) (81.1) (14.9) (39.9) (106.1) (25.1) Other finance expense, net(b) ...... (24.1) 109.3 58.2 (10.7) (4.0) 64.9 15.4 Impairment ...... 0.5 0.3 (1.9) (1.9) – – – Share of loss of associate ...... – – 94.4 19.1 39.0 114.3 27.1 Adjusted EBITDA ...... 399.9 554.1 711.4 468.5 440.8 683.7 161.9 Stock option plan expense...... 56.9 44.8 40.1 30.6 16.9 26.4 6.3 Adjusted EBITDA, excluding stock option plan expense ...... 456.8 598.9 751.5 499.1 457.7 710.1 168.2

12 Nine months Year ended ended December 31, September 30, (in millions) 2008 2009 2009 PLN PLN 5 Pro forma (unaudited) Loss for the period ...... (108.3) (91.4) (21.6) Income tax charge ...... 58.2 (1.5) (0.4) Interest expense...... 312.5 244.4 57.9 Depreciation and amortization ...... 153.2 150.0 35.5 EBITDA ...... 415.6 301.5 71.4 Investment income, net(a) ...... (61.1)(44.1)(10.4) Other finance expense, net(b) ...... 160.0 67.3 15.9 Impairment ...... 3.3 – – Share of (profit)/loss of associate ...... 0.4 (0.8) (0.2) Adjusted EBITDA ...... 518.2 323.9 76.7 Stock option plan expense ...... 40.1 16.9 4.0 Adjusted EBITDA, excluding stock option plan expense ...... 558.3 340.8 80.7

(a) Investment income, net represents mainly foreign exchange gains/(losses), net (other than those related to debt instruments), interest income on: (i) loans granted, (ii) available for sale financial assets, and (iii) cash and cash equivalents and effect of valuation or settlement of any derivative instrument related to investing activities. (b) Other finance expense, net represents mainly foreign exchange gains/(losses) on debt instruments, valuation and settlement of derivative instruments related to financing activities and valuation of embedded option connected with Existing Notes. (2) We define Total Debt as the carrying value of borrowings arising from bank loans or related party loans (other than loans within the TVN Group) and any other debt securities issued together with accrued interest and excluding any guarantees or letters of credit issued by third parties to secure payments of our obligations. We define Net Debt as Total Debt less cash and cash equivalents. We believe that Total Debt and Net Debt are useful measures of indebtedness that we use on a day to day management of our liquidity. Other companies may use different definitions of Total Debt or Net Debt.

ITI Neovision Group On March 11, 2009, as a result of an agreement with our controlling shareholder ITI Media, which is a wholly owned subsidiary of our ultimate controlling company, ITI Holdings, we took control over Neovision Holding B.V., the parent company of ITI Neovision Sp. z o.o., the owner and operator of the ‘n’ DTH platform. As a result, our financial results for the nine months ended September 30, 2009 are not fully comparable to the financial results for the corresponding period of 2008. Our results for the nine months ended September 30, 2009 include our share of the net loss of ITI Neovision Sp. z o.o., for the period between January 1 and March 11, 2009, and full financial results of ITI Neovision Sp. z o.o., for the period between March 11 and September 30, 2009. The results for the corresponding period of 2008 include our share of the net loss of ITI Neovision Sp. z o.o. for the period between June 25 and September 30, 2008. The following table provides a summary of the historical financial data of ITI Neovision Sp. z o.o. as of and for the periods presented. You should read this data together with the information included under the headings “Risk factors,” “Unaudited pro forma consolidated financial information,” “Selected historical financial data,” “Management’s discussion and analysis of financial condition and results of operations” and the historical consolidated financial statements and related notes included elsewhere in this listing memorandum. The summary historical financial information of the ITI Neovision Group, as of and for the years ended December 31, 2007 and 2008, set forth below, was derived from the audited financial statements and the notes thereto of the ITI Neovision Group, prepared in accordance with IFRS, as adopted by the European Union included elsewhere in this listing memorandum. The summary historical financial information for the ITI Neovision Group as of an for the nine months ended September 30, 2009, set forth below, was derived from the internal management accounts of ITI Neovision Sp. z o.o. and its subsidiaries and excludes effect of any adjustments (including consolidation adjustments), charges or credit accounted for by us in connection with purchase price allocation arising in the acquisition of the controlling interest in the ITI Neovision Group. The summary historical financial information of the ITI Neovision Group does not include the results of Neovision Holding B.V. Neovision Holding B.V. conducts no operating activities and does not prepare consolidated financial statements. The unaudited stand-alone profit for the period of

13 Neovision Holding B.V. for the year ended December 31, 2008 and the period from January 1, 2009 to March 11, 2009 were considered insignificant and as such have not been included.

For the convenience of the reader, certain złoty amounts as of and for the nine months ended September 30, 2009 have been converted into euro at a rate of PLN 4.2226 per 31.00 (the average NBP exchange rate on September 30, 2009). You should not view such conversions as a representation that such złoty amounts actually represent such euro amounts, or could be or could have been converted into euro at the rates indicated or at any other rate. All amounts, unless otherwise indicated, in this table and the related footnotes are shown in millions.

As of and for the As of and for nine year ended months ended December 31, September 30, (in millions) 2007 2008 2009 2009 PLN PLN PLN 5 Unaudited Income Statement data Revenue ...... 106.0 260.9 316.2 74.9 Cost of revenue ...... (219.0) (402.3) (390.9) (92.6) Selling expenses...... (68.3) (106.7) (58.9) (13.9) General and administration expenses ...... (18.3) (20.0) (21.6) (5.1) Other income...... 0.1 0.4 0.8 0.2 Other expenses ...... (0.6) (0.2) (1.8) (0.4) Operating loss ...... (200.1) (267.9) (156.2) (37.0) Financial income ...... 23.7 0.5 (2.7) (0.6) Financial costs ...... (32.1) (173.5) (69.4) (16.4) Share of income/(loss) of joint venture ...... 1.1 (0.5) 0.6 0.1 Loss before income tax ...... (207.4) (441.4) (227.7) (53.9) Income tax charge ...... — — (0.3) (0.1) Loss for the year ...... (207.4) (441.4) (228.0) (54.0) Balance Sheet data Current assets ...... 60.8 100.2 134.1 31.8 Cash and cash equivalents...... 6.6 9.9 4.2 1.0 Non-current assets ...... 262.0 316.7 358.0 84.8 Total assets...... 322.8 416.9 492.1 116.5 Non-current liabilities ...... 422.4 831.7 1,182.3 280.0 Current liabilities ...... 141.9 268.1 220.8 52.3 Equity...... (241.5) (682.9) (911.0) (215.7) Share capital ...... 40.0 40.0 40.0 9.5 Cash Flow data Net cash used in operating activities ...... (172.3) (117.7) Net cash used in investing activities ...... (137.0) (132.4) Net cash generated from financing activities ...... 307.8 253.4 Other data (unaudited) Adjusted EBITDA(1) ...... (180.3) (193.2) (90.6) (21.5)

• EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

• EBITDA does not reflect our interest expense, which will be significant after this offering;

• EBITDA does not reflect income taxes on our taxable earnings; and

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacement.

14 Adjusted EBITDA is defined as EBITDA adjusted for financial costs, net (other than interest expense), investment income, share of profit or loss of joint venture and impairment charges or reversals on property, plant and equipment and intangible assets. We believe that Adjusted EBITDA serves as a useful supplementary financial indicator in measuring the liquidity of media companies, and we have previously reported this measure as “EBITDA” in our reporting to shareholders. Adjusted EBITDA is not an IFRS measure and should not be considered as an alternative to IFRS measures of net profit/(loss), as an indicator of operating performance, as a measure of cash flow from operations under IFRS, or as an indicator of liquidity. You should note that Adjusted EBITDA is not a uniform or standardized measure, that the calculation of EBITDA, accordingly, may vary significantly from company to company, and by itself our presentation and calculation of Adjusted EBITDA may not be comparable to that of other companies.

Adjusted EBITDA is calculated as follows:

For the For nine year ended months ended December 31, September 30, (in millions) 2007 2008 2009 2009 PLN PLN PLN 5 Historical (unaudited) Loss for the period ...... (207.4) (441.4) (228.0) (54.0) Income tax charge ...... — — 0.3 0.1 Interest expense ...... 22.2 48.5 70.9 16.8 Depreciation and amortization ...... 28.3 54.8 65.6 15.5 EBITDA ...... (156.9) (338.1) (91.2) (21.6) Investment income including exchange (gain)/loss(a) ...... (33.7) 14.2 2.7 0.6 Other finance expense, net(b) ...... 9.9 125.0 (1.5) (0.4) Impairment ...... 1.5 5.2 — — Share of loss of joint venture ...... (1.1) 0.5 (0.6) (0.1) Adjusted EBITDA ...... (180.3) (193.2) (90.6) (21.5)

(a) Investment income including exchange (gain)/loss represents mainly foreign exchange gains/(losses), net (other than net foreign exchange losses related to debt instruments or cash in bank). (b) Other finance expense, net represents mainly net foreign exchange losses on debt instruments, unwinding of interest on programming rights liabilities, guarantee fees and net foreign exchange losses on cash in bank.

15 Risk factors This offering involves a high degree of risk. You should carefully consider the risks described below as well as other information and data included in, or incorporated by reference into, this listing memorandum before making an investment decision. If any of the events described in the risk factors below occur, our business, financial condition, operating results and prospects could be materially adversely affected, which in turn could adversely affect our ability to repay the Notes.

Risks related to our business Our operating results depend on general economic conditions and will be affected by a deterioration in the Polish and global economy The financial turmoil affecting the global financial markets and banking system has resulted in a tightening of credit, a low level of liquidity and a widespread withdrawal of investment funding, in Poland’s neighboring countries across Central and Eastern Europe, which has had an adverse impact on economic growth and caused many of these countries to fall into recession. Additionally, significant fluctuation of currency exchange rates and reduced availability of funding may adversely impact both retail customers and companies, decreasing their confidence levels in the economy and in their own financial health. The results of our operations depend to a large degree on advertising revenue, and demand for advertising is affected by general and regional economic conditions. Adverse economic conditions in the region generally and downturns in the Polish economy specifically have had a negative impact on the Polish advertising industry. We estimate that total net advertising expenditures in Poland will decline at a rate of 14% in 2009, which will have an adverse impact on our revenue and results of operations. Even if the Polish economy does not suffer similar declines to those experienced in other neighboring countries, our customers, many of whom are global companies, could nevertheless reduce global or regional advertising budgets or perceive there to be local weakness and, in any such event, demand for local advertising could be adversely affected. Declines in the level of business activity of our advertising customers may in the future have a material adverse effect on our revenue and results of operations. Moreover, the market power of advertising customers relative to television broadcasters increased, which negatively affected prices and margins realized by television broadcasters.

Our operating results are dependent on the importance of television and the internet as advertising media We generate the majority of our revenue from the sale of advertising airtime on television channels and the internet in Poland. For the year ended December 31, 2008, we derived 77.8% of our total revenue from commercial television and internet advertising. In the advertising market, television and internet compete with various other advertising media, such as newspapers, magazines, radio and outdoor advertising (such as billboard advertising, logo signs and transit advertising). According to Starlink, net expenditures on television advertising in Poland accounted for approximately 49.3% of total net advertising spending in the twelve months ended December 31, 2008, and net internet expenditure (including display and search engine marketing) accounted for approximately 10.3% of total net advertising spending in the twelve months ended December 31, 2008. However, there can be no assurances that the television and internet advertising market will maintain their current positions in the Polish advertising market or that changes in the regulatory environment will not favor other advertising media or other television broadcasters. A further increase in competition among advertising media arising from the development of new forms of advertising media could have an adverse effect on the maintenance and development of our advertising revenue and, consequently, on our business, financial condition, results of operations and cash flow. Our ability to generate advertising revenue depends on our technical reach, the pricing of advertising time, demand for advertising time, our audience share, audience profile, changes in audience preferences, shifts in population and other demographics within Poland, technological developments relating to media, levels of competition from other media operators, cyclical and seasonal trends in the Polish advertising market and shifts in population and other demographics. There can be no assurances that we will be able to respond successfully to such developments. Any decline in the appeal of television or internet generally, or our channels and portals specifically, whether as a result of an increase in the acceptance of other forms of entertainment or a decline in

15 its appeal as an advertising medium could have an adverse effect on our business, financial condition, results of operations and cash flow.

We are subject to intense competition In Poland, the television broadcasting, internet and pay TV markets are highly competitive. In the television broadcasting market, we compete for programming content and audience share with other Polish private television channels, the state-owned and operated terrestrial television channels and other television channels distributed via cable and digital platforms. We compete for television advertising revenue on the basis of our television channels’ broadcast reach, popularity of programming, audience structure and the pricing of advertising airtime. Other television channels may change their content or format to compete directly with our channels for audiences and advertisers. The internet market is also highly competitive. It is attractive to new entrants due to the growing number of internet users, the increasing interest of users in online segment offerings and the increasing interest of advertisers in online marketing services. Our competitors, such as Google, MSN or Yahoo, may have significantly greater resources than we have to build their market position. The policies and behavior of our current and prospective competitors relating to pricing and introduction of new offerings in online advertising services may result in changes in our own pricing and offered services, and this may affect our revenue. In the Polish DTH pay TV market, our ‘n’ DTH platform and our prepaid Telewizja na karte¸ (“TNK”) service currently compete with three other players, two of which have significantly more subscribers than our DTH platforms. Our competitors may be companies that have substantially greater financial, marketing and other resources than we do, and there can be no assurances that they will not in the future engage in more extensive development efforts, launch successful promotional campaigns for their program offerings, adopt more aggressive pricing policies to our detriment or make more attractive offers to our existing and potential advertising or DTH customers. We cannot assure you that we will continue to be able to compete effectively or that we will be capable of maintaining or further increasing our current market share. In addition, the market power of our advertising customers relative to advertising broadcasters may increase, which could have a negative effect on prices in the industry and potentially our results. Our failure to compete successfully in the television broadcasting, internet and pay TV markets could adversely affect our business, financial condition, results of operations and cash flow.

Our programming and internet content may become more expensive to produce or acquire, or we may not be able to develop or acquire programming and internet content that is attractive to our audience The commercial success of our television channels, DTH platforms and websites depends substantially on our ability to develop, produce or acquire programming and internet content that satisfies audience tastes, attracts high audience shares and generates substantial advertising revenue. We cannot assure you that we will continue to develop, produce or acquire such content. The costs of acquiring content attractive to our audiences may increase as a result of increased competition. In addition, our expenditures in relation to the acquisition of locally produced content may increase due to the implementation of new laws and regulations mandating the broadcast of a greater number of locally produced programs. Any such increase could have a material adverse effect on our business, financial condition, results of operations and cash flow.

We rely on intellectual property and proprietary rights, including in respect of content, which may not be adequately protected under current laws or which may be subject to unauthorized use Our products are largely comprised of content in which we own, or have license to, the intellectual property rights, delivered through a variety of media, including broadcast programming, interactive television services, the internet and pay TV. We rely on trademark, copyright and other intellectual property laws to establish and protect our rights over this content. However, we cannot be certain that our intellectual property rights will not be challenged, invalidated or circumvented or that we will successfully renew our intellectual property rights to our content. Even if applied, there can be no assurance that the highest levels of security and anti-piracy measures will prevent piracy. Third parties may be able to copy, infringe or otherwise profit from our rights or content which we own or license, without our, or the right holders’, authorization. These unauthorized

16 activities may be more easily facilitated by the internet. In addition, the lack of internet-specific legislation relating to trademark and copyright protection creates an additional challenge for us in protecting our rights relating to our online businesses and other digital technology rights. The unauthorized use of our content may adversely affect our business by diminishing our reputation in the market, making our media content, including legitimate content, less attractive to advertisers which could, in turn, lead to decreased revenue from our legitimate products.

We are primarily responsible for enforcing our intellectual property rights with respect to our content, which could result in significant expenses and losses of indeterminate amounts of revenue.

We may not be able to source programming content from external suppliers, particularly U.S. studios, if they perceive us or the Polish market as failing to satisfactorily protect against unauthorized uses of media content

Media piracy occurs in many parts of the world, including Poland, and is made easier by technological advances and the conversion of media content into digital formats, which facilitates the creation, transmission and sharing of high quality unauthorized copies, on videotapes and DVDs, from pay-per-view through set top boxes and through unlicensed broadcasts on free TV and the internet. Content we source from external content suppliers, particularly U.S. studios, may be subject to piracy either through us or through a third party, which may have an adverse effect on our business and financial performance by diminishing our reputation in the market and impairing our ability to contract on favorable terms with those and other external content suppliers.

Unauthorized copying and piracy are prevalent in Poland. Certain of our external content suppliers, perhaps supported by trade associations, are sensitive to the risk of piracy relating to their products. For example, the American Motion Picture Marketing Association and the American Motion Picture Export Association monitor the progress and efforts made by various countries to limit or prevent piracy. In the past, some of these trade associations have enacted voluntary embargoes on motion picture exports to certain countries in order to pressure the governments of those countries to become more aggressive in preventing motion picture piracy. In addition, the U.S. government has publicly considered implementing trade sanctions against specific countries that, in its opinion, do not make appropriate efforts to prevent copyright infringements of U.S. produced motion pictures. There can be no assurance that voluntary industry embargoes or U.S. government trade sanctions or similar arrangements will not be enacted with respect to Poland. If enacted, such actions could impact our market share and the amount of revenue that we realize by reducing the availability of external programming and attractive content to advertisers, which would have an adverse effect on our financial performance.

We have dedicated considerable resources to provide a variety of premium services, which may not be successful in generating significant revenue

We offer fee-based enhancements to many of our free services, including e-mail services, personal, advertising, financial news and features, games, music, sports and video on demand. The development cycles for the technologies involved in providing these enhancements are long and generally require significant investments by us. We have previously discontinued certain non- profitable premium services. While we must continue to provide new services that are attractive to our users, we need to continue to develop an effective way to generate revenue for such services. If we cannot generate revenue from these services that exceeds the costs of providing such services, we may experience a material adverse effect on our financial condition, results of operations and cash flow.

We have incurred substantial indebtedness, and we may not be able to pursue new investment or development opportunities

Our interest-bearing liabilities constitute an important component of our financing. On a pro forma basis, as of September 30, 2009, we would have had total debt of PLN 2,915.3 million and, for the nine months ended September 30, 2009, we would have had an interest expense of PLN 244.4 million. Our leverage may limit our ability to contract new debt on more favorable terms and may restrict our ability to finance potential acquisitions or new developments, which could have an adverse effect on our liquidity, business and financial condition.

17 In addition, our commercial and financial flexibility is restricted as a result of the obligations contained in the indenture governing the Notes offered hereby and the terms of the floating rate PLN denominated bonds issued by us on June 23, 2008 (the “PLN Bonds”) and the terms of our secured revolving loan facility (the “Loan Facility”), as they include customary covenants that could adversely affect our ability to finance our future operations and continue to enter into transactions necessary to pursue our business strategy. Any breach of the restrictions or the covenants contained in the indenture governing the Notes offered hereby, our PLN bonds or our Loan Facility, may result in either acceleration of the repayment of the Notes offered hereby, the PLN Bonds or the Loan Facility being declared due and payable prior to maturity, or both, which may have a material adverse effect on our ability to service our other liabilities and consequently may lead to our insolvency.

Other acquisitions and investments we may make in the future, may result in operating losses and may require significant financial and management resources Our business and operations have grown in part through acquisitions. The acquisition and integration of new businesses pose significant risks to our existing operations, including: • additional demands placed on our senior management, who are also responsible for managing our existing operations; • increased overall operating complexity of our business, requiring greater personnel and other resources; • difficulties of expanding beyond our core expertise in the event that we acquire ancillary businesses; • significant initial cash expenditures to acquire and integrate new businesses; and • in the event that debt is incurred to finance acquisitions, additional debt service costs related thereto as well as limitations that may arise under our existing indebtedness. To manage our growth effectively and achieve pre-acquisition performance objectives, we will need to integrate any new acquisitions, implement financial and management controls and produce required financial statements in those operations. The integration of new businesses may also be difficult due to differing cultures or management styles, poor internal controls and an inability to establish control over cash flows. If any acquisition and integration is not implemented successfully, our ability to manage our growth will be impaired and we may have to make significant additional expenditures to address these issues, which could harm our financial position, results of operations and cash flows. Furthermore, even if we are successful in integrating new businesses, expected synergies and cost savings may not materialize, resulting in lower than expected cash flows and profit margins. In addition, prospective competitors may have greater financial resources than we do, and increased competition for target companies may reduce the number of potential acquisitions that are available on acceptable terms.

Our failure to manage growth and diversification of our business could harm us We are continuing to grow and diversify our business. Ensuring that we have control over the growth process requires investment in both the development of our infrastructure as well as our employee base. Our activity depends on information technology (“IT”) solutions to a large extent, at both transactional and reporting levels. Due to the fast pace of our development, we are forced continually to upgrade our existing ITsolutions. These upgrades and improvements in most cases are likely to be complex and resource-consuming and therefore require careful dedication and management of resources. If we are unable to adapt our systems in a timely manner to accommodate our growth, our business may be adversely affected. In addition we may need to increase staff numbers. This growth requires significant time and resource commitments from our senior management. If we are unable to manage a large and geographically dispersed group of employees effectively or to anticipate our future growth and personnel needs, our business may be adversely affected.

18 Interruptions, delays or failures in the provision of our services could damage our brand and harm our operating results Our operations are susceptible to outages due to fire, floods, power loss, telecommunications failures, terrorist attack and similar events. Despite our implementation of network security measures, our services are vulnerable to computer viruses, worms, physical and electronic disruptions, sabotage and unauthorized tampering with our computer systems. We may experience a coordinated “denial of service” attack in the future. We do not have multiple site capacity for all of our services, and some of our systems are not fully redundant in the event of any such occurrence. Failure to execute these changes properly or in a timely manner could result in delays or interruptions to our services, which could result in a loss of users, damage to our brands and harm our operating results. We may not carry sufficient business interruption insurance to compensate us for losses that may occur as a result of any such events, which cause interruptions in our service.

Our businesses are subject to rapid changes in technology and viewer habits The television broadcasting, internet and pay TV industries may be affected by rapid and significant changes in technology. There can be no assurance that the technologies we currently employ will not become obsolete. The introduction of new technologies and broadcasting distribution systems other than analog terrestrial broadcasting, such as digital terrestrial broadcasting, DTH, cable and satellite distribution systems, the internet, video-on-demand and the availability of television programming on portable digital devices, have fragmented television audiences in more developed markets and could adversely affect our ability to retain audience share and attract advertisers as such technologies penetrate our markets. New technologies that enable viewers to choose when and what content to watch, as well as to fast-forward or skip advertisements, may cause changes in consumer behavior that could impact our business. In addition, compression techniques and other technological developments allow for an increase in the number of channels that may be broadcast in our markets and expanded programming offerings that may be offered to highly targeted audiences. Reductions in the cost of launching additional channels could encourage the development of increasingly targeted niche programming on various distribution platforms. If new developments in the television industry occur earlier than we expect, we may be required to commit substantial financial and other resources to the implementation of new technologies, and we may not be able to pass on such costs to advertisers. Onet.pl portal and our thematic portals and vortals construct their market position through operations in the premium segment, putting them in competition with other major Polish portals and with other major websites like Google.pl and other thematic vortals. Our other websites, thematic vortals or thematic parts of Onet.pl, compete for visitors most directly with other thematic vortals, and for advertisers with advertising networks that usually sell advertising space on these competing thematic websites. In addition, we derived the vast majority of our online revenues from display advertising. However, the online advertising business consists of display advertising, search engine marketing and directory services of which display advertising represents approximately 50% of the total net online advertising expenditure. There can be no assurance that our content will continue to be attractive to our key target audiences or that new or existing competitors will not develop more attractive content or that the display advertising market will maintain its share of the total online advertising expenditure in Poland, which may adversely affect our market share. While we use several pricing models, it is likely that our revenue from online advertising would decrease if we were to suffer a decrease in market share or traffic to our sites. We may be required to use significant operational or financial resources to address these issues and to try to maintain the competitiveness of our business, which could adversely affect our financial performance. Following the ‘n’ acquisition, we cannot assure you we will be able to increase or even maintain the market share we currently have in the DTH market. It may be necessary for us to use significant financial resources to maintain the profitability of our business and increase our market share. Although the ‘n’ acquisition demonstrates our willingness to invest in new technologies and platforms, we cannot guarantee that the ‘n’ DTH platform will not become obsolete, which would adversely affect the financial performance of our business. In addition, due to a variety of factors including advances in technology, all of our businesses are subject to increasing competition for the leisure and entertainment time of consumers. Our

19 businesses compete with each other and all other sources of news, information and entertainment, including movies, live events, radio broadcasts, home video products and print media, as well as non-media related leisure activities and providers. Technological advancements, such as video on demand, new video formats, streaming capabilities and downloading via the internet, have increased the number of media and entertainment choices available to consumers and intensified the challenges posed by audience fragmentation. The increasing number of both media-related and non-media-related choices available to audiences could negatively impact not only consumers’ demand for our products and services, but also advertisers’ willingness to purchase advertising services from our businesses. If we do not respond appropriately to further increases in the leisure and entertainment choices available to the consumers or to changes in consumer preferences, this competition could have an adverse effect on our competitive position and revenue.

Our broadcasting licenses may not be renewed and may be subject to revocation We hold several terrestrial and satellite broadcasting licenses. Like all television licenses in Poland, our Polish licenses have been issued for a fixed term. Our terrestrial television license will expire in 2013, while our satellite licenses will expire between 2011 and 2019. The Polish Law on Radio and Television Broadcasting dated December 29, 1992, as amended (the “Broadcasting Law”), is unclear on whether licenses to current license holders will be automatically reissued following the expiry action of such licenses. Consequently, we cannot assure you that our broadcasting licenses will be reissued to us when their terms expire. The loss of any of our licenses or other authorizations or a material modification of the terms of any renewed licenses may have a material adverse effect on our business, financial condition, results of operations and cash flow. Furthermore, no assurances can be given that (i) new licenses will be issued; (ii) licenses awaiting approval will be approved; (iii) existing licenses will be extended on the same terms; or (iv) further restrictions or conditions will not be imposed in the future. Like other Polish television broadcasters, we must comply with the Broadcasting Law, regulations established by the National Broadcasting Council, which we refer to as “KRRiT”, and the terms and conditions of our licenses in order to maintain our licenses. If we are held to be in material breach of the Broadcasting Law or the terms and conditions of our licenses, our licenses may be revoked. In addition, if our activity under our licenses is carried out in a manner that is deemed to conflict with the Broadcasting Law or the terms and conditions of our licenses, and we fail to remedy such conflict within the applicable grace period, our licenses may be revoked. Any revocation of our licenses could adversely affect our business, financial condition, results of operations and cash flow. We compete with existing television broadcasters and potential new market entrants for the grant of terrestrial broadcasting licenses and satellite broadcasting licenses in Poland. These competitors may include larger broadcasters, in particular those from member states of the European Union.

The Broadcasting Law limits the ownership of Polish television broadcasters The Broadcasting Law limits the ability of non-residents of the European Economic Area to acquire and own shares in Polish entities holding television-broadcasting licenses. Under our licenses, we have received a blanket consent from KRRiT which allows non-EEA residents to acquire our shares. Non-EEA residents may hold no more than 49% of our share capital or 49% of the voting rights of our share capital. If non-EEA residents acquire more than 49% of our share capital or control more than 49% of the voting power of our shares, we might be in violation of the Broadcasting Law, the relevant terms of the blanket consent received from KRRiT or our licenses. Violation of applicable laws and regulations, or our licenses including the thresholds imposed by the blanket consent, may result in loss of our licenses, which could adversely affect our business, financial condition, results of operations and cash flow.

The transition to digital broadcasting may require substantial additional investment and may result in additional competition Poland is currently planning the migration from analog terrestrial broadcasting to digital terrestrial broadcasting, which is to be completed by 2013. The specific timing and approach to the migration is subject to change. We can not predict the effect of the migration on our existing operations or predict our ability to receive any additional rights or licenses to broadcast for our existing channels or any additional channels if such additional rights or licenses should be required. Furthermore, we

20 may be required to make substantial additional capital investment and commit substantial other resources to implement digital terrestrial broadcasting. The availability of competing alternative distribution systems, such as DTH platforms, may require us to acquire additional distribution and content rights or result in an increase of competition for existing distribution and content rights. We may not have access to sufficient resources to make such investments when required.

Broadcasting regulations affect the content of our programming and advertising

We are subject to regulations promulgated under the Broadcasting Law, which governs, among other laws, regulations and applicable requirements, the content of television programs and the content and timing of advertising aired on our channels. In particular, the Broadcasting Law requires that a specific portion of the programming content be represented by programs originally produced in the Polish language and European programs. There can be no assurance that more restrictive laws, rules, regulations or policies will not be adopted in the future, including further changes to enable Poland to comply with European Union requirements. Changes to laws, rules, regulations or policies could make compliance more difficult and may force us to incur additional capital expenditures or implement other changes that may adversely affect our business, financial condition, results of operations and cash flow. If we are held to be in material breach of the Broadcasting Law or the terms and conditions of our licenses, our licenses could be revoked. In addition, if our activity under our licenses is carried out in a manner which is deemed to conflict with the Broadcasting Law or the terms and conditions of our licenses, and we fail to remedy such conflict within the applicable grace period, our licenses could be revoked. Any revocation of our licenses could have a material adverse effect on our business, financial condition, results of operations and cash flow. We are routinely subject to new or modified laws and regulations with which we must comply in order to avoid claims, fines and other penalties (including the loss, revocation or suspension of licenses, permits or approvals), which could adversely impact our business, results of operations, financial condition and cash flows.

As a result of our acquisition of Onet and ‘n’, we carry on our balance sheet significant amounts of goodwill and brand with indefinite useful lives. We test whether the goodwill and brand allocated to our online segment have suffered any impairment by estimating the recoverable amount of the new media cash generating unit based on fair value less cost of sale. Similarly, goodwill and other assets recognized provisionally as a result of the ’n’ acquisition will also be subject to an annual impairment test. If any of the key assumptions we use for impairment testing were to change unfavorably, this may have an adverse impact on our financial results.

We are subject to risks relating to fluctuations in exchange rates

A substantial portion of our operating expenses and capital expenditures are, and will be subject to, exchange rate fluctuations. A large proportion of our liabilities and expenses are denominated in foreign currencies, mainly in euro and dollars. Since our revenue is generated primarily in złoty, we are exposed to foreign exchange rate risk with respect to any current or future debt or other liability denominated in any currency other than złoty. If the złoty decreases in value against the currencies in which we have to make payments, our operating and finance expenses and capital expenditures will increase as a percentage of net sales. While we may seek to hedge our foreign currency exposure, we may be unable to enter into such hedging arrangements or may be unable to enter into them at a cost effective rate.

Our success depends on attracting and retaining key personnel

Our success depends substantially upon the efforts and abilities of our key staff and our ability to attract and retain such personnel. Our management team has significant experience in the Polish television broadcasting, online media and pay TV industries and has made an important contribution to our growth and success. The loss of the services of any of these individuals could have an adverse effect on our operations. Although we have been successful in attracting such individuals in the past, competition for highly skilled individuals is intense. There can be no assurance that we will continue to be successful in attracting and retaining such individuals in the future.

21 Frequent changes in tax regulations may have an adverse effect on the Company’s results of operations and financial condition and we may incur additional tax liabilities following a proposed audit of our 2007 financial records by the Polish tax authority Urza¸ d Kontroli Skarbowej (“UKS”) The Polish tax system is characterized by low stability. Tax regulations are frequently amended, often to the detriment of the taxpayers. Tax laws may also need to be amended in order to implement new EU legislation. The frequent changes in regulations governing the taxation of business activities can be unfavorable to the Company and may consequently have a material adverse effect on the Company’s business, financial condition, results of operations and prospects. In practice, tax regulators applying the law rely not only on regulations but also on interpretations thereof made by higher authorities or courts. Such interpretations are also subject to change, or can be replaced by new acts, or remain in force but conflict with other regulations. The lack of consistency is further exacerbated by the lack of clarity of many regulations in the Polish tax system, and, to a limited extent, by the lack of clarity of judicial decisions. Taxes and other similar payments, such as customs duties and foreign currency payments, may be audited by tax authorities and, should any discrepancy be found, interest and penalties may be imposed. Tax returns submitted by the Company and its subsidiaries may be audited by tax authorities for five prior years and some transactions with the Company’s subsidiaries may also be challenged for tax reasons. The Company may be required to pay material additional taxes, as well as interest and penalties. The above factors may have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows. The Polish tax authority, UKS, has informed us of its intention to audit certain financial records for the 2007 financial year. This process is at a very early stage and therefore we cannot predict the outcome, but if an audit determines that our financial results contain any mistakes or irregularities we may incur additional tax liabilities in the current or future taxable years. Such liabilities could adversely affect our business, financial condition, results of operations and cash flow.

We are party to a number of related party transactions We currently depend on ITI Holdings for a number of services and therefore engage in a range of related party transactions. In the year ended December 31, 2008 and the nine months ended September 30, 2009, we entered into related party transactions for which we incurred costs from ITI Holdings or its affiliates, inclusive of an annual advisory fee of up to 33.0 million, of PLN 34.3 million and PLN 27.5 million, respectively, (excluding the purchases of ‘n’ shares, for which we recognized as a consideration an aggregate of PLN 319.6 million (395.0 million) on June 25, 2008 and PLN 452.8 million (346.2 million and 360.0 million as a contingent consideration) in March 2009 (subject to adjustment). In exchange for these payments, we received the benefit of general advisory services, the guarantee of certain of our contractual obligations, leases of office space, rental of equipment, purchases and sales of programming and the services of individuals who are affiliates of ITI Holdings and who are remunerated by us for their services as officers and directors. We have a related party transactions policy which provides that (i) agreements with related parties must be no less favorable to us than the terms which could have been obtained on an arms-length basis with an unrelated party and (ii) that agreements with related parties who are individuals and which have a value in excess of 3150,000, and agreements with related parties who are legal entities and which have a value in excess of 3500,000, must be approved by a vote of our supervisory board, including a majority of our independent directors (with “independent” defined by reference to the “Code of Best Practice for the WSE Listed Companies”). Nevertheless, there is a risk that as circumstances or assumptions change, some of the services we receive from our related parties could be construed to be worth less than what we have agreed to pay. In addition, our dependence on ITI Holdings and its affiliates exposes us to the risk that the services and benefits they provide could be withdrawn in circumstances in which such services and benefits could be difficult or costly to replace. If ITI Holdings were to experience financial difficulties or for any other reason is unable or unwilling to provide the services required by TVN, we may incur additional costs or experience delays in finding replacement providers. Any such termination could therefore have an adverse impact on our business, financial condition, results of operations and cash flows.

22 Risks related to the ‘n’ acquisition We may be unable to complete the ‘n’ acquisition on favorable terms or at all and, even if completed, may be unable to successfully integrate the ‘n’ DTH platform into our business We currently have a 51% shareholding in Neovision Holding B.V., the sole shareholder of ITI Neovision Sp. z o.o., which owns and operates the ‘n’ DTH platform and a new pre-paid digital television service, “Telewizja na karte¸ ” that was established in October 2008. We have entered into the ‘n’ Acquisition Term Sheet relating to the acquisition of the remaining 49% stake in Neovision Holding B.V. as part of our strategy to fully integrate and strengthen our position in the pay TV segment. We may be unable to complete the ‘n’ acquisition on favorable terms or at all, which would impair our ability to fully integrate the ‘n’ DTH platform and the opportunity to grow our market share in the satellite sector. Certain aspects of the ‘n’ acquisition may require the consents of the lenders under the credit facility held by Strateurop International B.V. (“SIB”), our majority shareholder. If we are unable to obtain such consents, we may be unable to complete the ‘n’ acquisition or may have to restructure the acquisition on terms that are less favorable. If the ‘n’ acquisition is not executed and the target not integrated successfully, we may have to make significant additional expenditures, which could harm our business, financial position, results of operations and cash flows. In addition, the ‘n’ acquisition and integration process will require significant time and resource commitments from our senior management, who will also be responsible for managing our existing operations, which may have a detrimental effect on the performance of our existing operations and the acquired operations. Further, the integration may be difficult due to differing cultures or management styles, poor internal controls and an inability to establish control over cash flows. Even if the ‘n’ DTH platform is successfully integrated into our business, expected synergies, costs savings or growth opportunities may not materialize, resulting in lower than expected cash flows and profit margins. In addition, the ‘n’ acquisition will require significant cash expenditures that may decrease our financial resources, both absolutely and relative to our competitors, which may impair our ability to make further acquisitions on favorable terms or at all.

ITI Neovision Sp z o.o. currently operates at a loss and may not generate positive cash flows for the foreseeable future or at all ITI Neovision Sp. z o.o. is currently operating at a loss and there is no assurance that it will generate positive cash flows in the foreseeable future or at all. For the year ended December 31, 2008 and the nine months ended September 30, 2009, the ‘n’ DTH platform had a net loss of PLN 441.4 million and PLN 228.0 million, respectively. We are likely to have to provide financial support to ITI Neovision Sp. z o.o. for the foreseeable future. Under the terms of the ‘n’ Acquisition Term Sheet, we agreed, pending closing of the ‘n’ acquisition and starting from November 5, 2009, to fund ITI Neovision Sp. z o.o. as required. There is no certainty that ITI Neovision Sp. z o.o. will become profitable as quickly as expected, or at all, or that we will recover any of the proceeds we invest in it. The inclusion of ITI Neovision Sp. z o.o. in our results has resulted in costs of revenues and the percentage of net revenues represented by costs of revenues being higher than they would have been had we not acquired that business. Similarly, our selling expenses and general and administrative expenses were each higher due to such acquisition, and can be expected to be higher still if and to the extent we successfully acquire 100% of ‘n’. Moreover, as a result of the consolidation of the ‘n’ business, cash generated from our operations in the first nine months of this year was more than PLN 100 million lower than it would otherwise have been. As we invest in the ‘n’ DTH platform, there is a risk that our costs and expenses will continue to grow, both in absolute terms and as a percentage of our revenues, which could have an adverse affect on our financial condition, results of operations and cash flow.

We may not be able to capitalize on the opportunities available to us as a result of the ’n’ acquisition nor successfully compete in the DTH pay TV segment Following the ‘n’ acquisition, the TVN Group may not, as intended, be able to (i) improve its competitive position through multi-platform promotion, content acquisition and distribution; (ii) capitalize on the near-term window of opportunity that arises from the rapid migration of

23 terrestrial television users to DTH pay TV services; (iii) diversify its revenues by increasing or benefiting from the proportion of revenues generated by subscription fees for the ‘n’ DTH platform; or (iv) maintain its technological advantage over its competitors in the DTH pay TV market. The ‘n’ DTH platform and the prepaid TNK service currently compete with three other players on the Polish DTH pay TV market: (1) Cyfrowy Polsat S.A. (“Polsat”), (2) Canal+ Cyfrowy Sp. z o.o (“Canal+”) and (3) Telekomunikacja Polska (“TP”). The DTH platforms offered by Polsat and Canal+ have significantly more subscribers than the ‘n’ platform and all three competitors may have greater financial resources. Further, there can be no assurances that Polsat, Canal+ or any other current competitor or new entrant into the DTH market will not engage in more extensive development efforts, launch successful promotional campaigns for their platforms, adopt more aggressive pricing policies or aggressively compete for the same program content to our detriment or make more attractive offers to our existing and potential subscribers. Our failure to compete successfully in the DTH pay TV segment could adversely affect our business, financial condition, results of operations and cash flow.

Risks related to the Notes and this offering Our debt service obligations following the issuance of the Notes, together with the PLN Bonds, may restrict our ability to fund our operations We are a highly leveraged company and following this offering, we will have significant debt service obligations under the Notes and the PLN Bonds. Our high leverage has important consequences for our business and results of operations, including but not limited to restricting our ability to obtain additional financing to fund future working capital, capital expenditures, business opportunities and other corporate requirements. In addition, our high leverage may impede our ability to provide further financial support to our unrestricted subsidiaries, because the covenants in the Notes restrict the manner and extent to which we can finance the unrestricted subsidiaries. We may also have a proportionally higher level of debt than certain of our competitors, which may put us at a competitive disadvantage. Therefore, our flexibility in planning for, or reacting to, changes in our business, the competitive environment and the industry in which we operate may be limited. Any of these or other consequences or events could have a material adverse effect on our ability to satisfy our debt obligations and would therefore have potentially harmful consequences for the development of our business and the implementation of our strategic plans.

We may be unable to refinance our existing debt financings or obtain favorable refinancing terms We are subject to the normal risks associated with debt financings, including the risk that our cash flow will be insufficient to meet required payments of principal and interest on debt and the risk that indebtedness will not be able to be renewed, repaid or refinanced when due, or that the terms of any renewal or refinancing will not be as favorable as the terms of such indebtedness. This risk is exacerbated by the recent capital market crisis which has resulted in tightened lending requirements and in some cases the inability to refinance indebtedness. If we were unable to refinance indebtedness on acceptable terms, or at all, we might be forced to dispose of assets on disadvantageous terms, or reduce or suspend operations, any of which would materially and adversely affect our financial condition and results of operations.

Despite our current debt levels, we will be able to incur substantially more debt, which could increase the risks described in this section We have the right to incur substantial debt in the future. Although the indenture governing the Notes will contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions, and additional debt incurred in compliance with these restrictions could be substantial. If new debt is added to our current debt levels, the related risks that we now face would intensify.

Our cash flow and capital resources may not be sufficient for future debt service and other obligations Our ability to make debt service payments under the Notes, the PLN Bonds and other indebtedness will depend on our future operating performance and our ability to generate sufficient cash, which in turn depends in part on factors that are not within our control, including general economic,

24 financial, competitive, market, legislative, regulatory and other factors. If our cash flow and capital resources were to prove insufficient to fund our debt service obligations, we would face substantial liquidity problems. We may be obliged to reduce or delay capital or other material expenditures, restructure our debt, obtain additional debt or equity capital (if available on acceptable terms), or dispose of material assets or businesses to meet our debt service and other obligations. It may not be possible to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all, which may have an adverse effect on our financial position, results of operations and cash flows.

Enforcement of civil liabilities and judgments against the issuer or us or any of our directors or officers may be difficult The issuer is a Swedish limited liability company and TVN S.A. is a Polish public company. Substantially all of our assets and all of our operations are located, and all of our revenues are derived, outside the United States. In addition, all of our directors and officers are non-residents of the United States, and all or a substantial portion of the assets of such persons are or may be located outside the United States. As a result, investors may be unable to effect service of process within the United States upon such persons, or to enforce judgments against them obtained in the United States courts, including judgments predicated upon the civil liability provisions of the United States federal and state securities laws. There is uncertainty as to whether the courts of Sweden or Poland would enforce (i) judgments of United States courts obtained against us or such persons predicated upon the civil liability provisions of the United States federal and state securities laws or (ii) in original actions brought in such countries, liabilities against us or such persons predicated upon the United States federal and state securities laws.

The insolvency laws to which we are subject may not be favorable to unsecured creditors and may limit your ability to enforce your rights under the Notes and the guarantees In the event of an insolvency of any of the guarantors, insolvency proceedings could be initiated in Poland and will be based on Polish insolvency laws. Pursuant to these laws, considering the unsecured nature of your claim against the guarantors, if the guarantors were to be wound up under Polish insolvency laws, their liabilities under the guarantees would be paid only after payment of those of their debts which are given priority under Polish insolvency laws including all secured claims. Such preferred claims would include, among others, all claims which are secured, certain commercial transactions which are given priority under the applicable law, unpaid taxes, social security contributions, employee wages, insolvency procedure costs and secured creditor claims. Notwithstanding the above, upon the request of creditors of a guarantor, a Polish bankruptcy court could declare the note guarantee issued by that guarantor ineffective in relation to the bankruptcy estate if the guarantor is declared bankrupt during the applicable hardening period which may range from 2 to up to 12 months. Also, a Polish court could declare the note guarantee issued by that guarantor ineffective in relation to the creditor if as a result of the creation of such note guarantee, the guarantor becomes insolvent. Furthermore, the effectiveness of the guarantee will be subject to the limitations which arise under various provisions and principles of corporate law, which can require sister or subsidiary guarantors to receive adequate corporate benefit from the financing and govern fraudulent transfer laws. In addition, our insolvency could also impair our ability to maintain our television broadcasting licenses depending on the outcome of any such proceedings before the Polish courts. The issuer is incorporated under the laws of Sweden. Therefore, any insolvency proceedings by or against the issuer are likely to be based on Swedish insolvency laws. An unsecured claim under Swedish law will in a bankruptcy situation rank behind claims with a right of priority according to the Swedish Rights of Priority Act (Sw. Fo¨ rma˚ nsra¨ ttslagen (1970:979)).

The ability of our subsidiaries to guarantee the Notes is limited under Polish and Dutch law and enforcing your rights as a holder of the Notes or under the guarantees may be difficult The laws of Poland and The Netherlands, the jurisdictions in which the guarantors are organized, may limit their ability to guarantee debts. These limitations arise under various provisions and principles of corporate law, which can require sister and subsidiary guarantors to receive adequate corporate benefit from the financing or which prohibit payments to or any other equivalent

25 transaction with the shareholders or affiliates if such payments diminish the guarantor’s assets necessary for maintaining the share capital or in the situation where such payments could be viewed as reimbursement of contributions made for the shares and/or may be regarded as violating the purpose of the guarantors. If these limitations were not observed, the guarantees of the Notes would be subject to legal challenge. In connection with potential local law restrictions, the guarantees will contain language limiting the amount of debt guaranteed. However, it is not clear under Polish and Dutch law to what extent such contractual limitations can remove the risks connected with upstream, cross-stream and third party guarantees. Furthermore, although we believe that the guarantees of the Notes are enforceable (subject to the aforementioned restrictions), there can be no assurance that a third-party creditor would not challenge the guarantees and prevail in court. Finally, in accordance with Polish bankruptcy regulations if the guarantor is declared bankrupt, legal transactions performed by it within one year before filing the bankruptcy petition would have no effect if they were performed gratuitously or for consideration which is significantly below that provided by the guarantor. Such a risk exists in case of a guarantee made for the benefit of a shareholder or an affiliate, especially if it is executed gratuitously. Pursuant to Dutch law, if a legal act performed by a Dutch guarantor is prejudicial to the interests of its creditors, the validity of such legal act may, in certain circumstances, be contested by such creditors or, in the event of the bankruptcy of such guarantor, by the public receiver.

The Notes will be issued by the issuer and guaranteed by the guarantors. The issuer is incorporated under the laws of Sweden. The guarantors are organized under the laws of Poland and The Netherlands. In the event of bankruptcy, insolvency or a similar event, proceedings could be initiated in Sweden, in Poland and in The Netherlands. Your rights under the Notes and the guarantees may thus be subject to the laws of multiple jurisdictions, and there can be no assurance that you will be able to effectively enforce your rights in multiple bankruptcy, insolvency or other similar proceedings. Moreover, such multi-jurisdictional proceedings are typically complex and costly for creditors and often result in substantial uncertainty and delay in the enforcement of your rights.

In addition, the bankruptcy, insolvency, administrative, and other laws of such jurisdictions of organization may be materially different from, or in conflict with, one another and those in other jurisdictions with which you may be familiar in certain areas, including creditors’ rights, priority of creditors, the ability to obtain post-petition interest and the duration of the insolvency proceedings. The application of these various laws in multiple jurisdictions could trigger disputes over which jurisdiction’s law should apply and could adversely affect your ability to enforce your rights and to collect payment in full under the Notes and the collateral securing the obligations under the Notes.

Our operations are in Poland where there is a risk of economic uncertainty, biased treatment and loss of business

Our revenue generating operations are located in Poland, which poses different risks to those posed by investments in more developed markets and which may be more heavily impacted by unforeseen developments in economic, political or social life. The economic and political system, legal and tax regime, standards of corporate governance and business practices in Poland continue to develop. Government policies may be subject to significant adjustments, especially in the event of a change in leadership. This may result in social or political instability or disruptions, potential political influence on the media, inconsistent application of tax and legal regulations, arbitrary treatment before judicial or other regulatory authorities and other general business risks, any of which would have a material adverse effect on our financial positions, results of operations and cash flows.

The issuer is a special purpose vehicle that has no revenue generating operations of its own and will depend on cash received by the Company to make payments on the Notes

The issuer is a special purpose vehicle with the purpose of issuing the Notes and any Additional Notes that may be issued pursuant to the indenture governing the Notes. The issuer has no operations of its own and will not be permitted to engage in any activities other than the issuance of the Notes and Additional Notes to the extent permitted under the indenture, the on-lending of the proceeds from the issuance of the Notes to the Company, the servicing of its obligations under the Notes and certain other activities expressly permitted by the indenture governing the Notes. Following the offering, the issuer will rely on payments to it under the intercompany loan made by

26 the issuer to the Company to make payments of interest and principal when due on the Notes. Other than the intercompany loan to the Company, the issuer will have no assets.

The Notes are structurally subordinated to all obligations of our subsidiaries which are not guarantors of the Notes

The Notes are obligations of the issuer and are effectively subordinated to all debt and other obligations, including trade payables, of our subsidiaries which are not guarantors of the Notes. As of September 30, 2009, our subsidiaries which are not guarantors of the Notes had PLN 3.2 million of total outstanding liabilities (excluding liabilities under the Existing Notes, which will be redeemed in full with a portion of the proceeds from this offering).

The effect of this subordination is that, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding involving a subsidiary which is not a guarantor of the Notes, the assets of the affected entity could not be used to pay you until after all other claims against that subsidiary, including trade payables, have been fully paid.

Covenant restrictions under the indenture impose significant operating and financial restrictions on us and may limit our ability to operate our business and consequently to make payments on the Notes

The indenture governing the Notes will contain covenants that restrict our ability to finance future operations or capital needs or to take advantage of other business opportunities that may be in our interest. These covenants will restrict our ability to, among other things:

• incur or guarantee additional indebtedness;

• make investments or other restricted payments;

• create liens;

• enter into sale and leaseback transactions;

• sell assets and subsidiary stock;

• pay dividends or make other distributions or repurchase or redeem our capital stock;

• engage in certain transactions with affiliates;

• enter into agreements that restrict the payment of dividends by subsidiaries or the repayment of intercompany loans and advances; and

• engage in mergers or consolidations.

Events beyond our control, including changes in general business and economic conditions, may affect our ability to meet these requirements. A breach of any of these covenants could result in a default under the indenture governing the Notes.

We may not be able to repurchase the Notes upon a change of control and rating decline

Upon the occurrence of a change of control and rating decline, we will be required to make an offer to you in cash to repurchase all or any part of your Notes at 101% of their principal amount, plus accrued and unpaid interest. If a change of control and rating decline occurs, we may not have sufficient funds at that time to pay the purchase price for all tendered Notes, particularly if that change of control and rating decline event triggers a similar repurchase requirement for, or results in the acceleration of, any of our other debt, including the PLN Bonds. Any debt agreements we enter into in the future may contain similar provisions. Certain transactions that constitute a change of control and rating decline under our existing and future debt instruments may not constitute a change of control and rating decline under the indenture governing the Notes.

27 Any default by our majority shareholder on its obligations to pay its indebtedness or its failure to otherwise comply with the various covenants in the instruments governing its indebtedness could ultimately lead to a change of control and ratings decline with respect to the Company and the funds borrowed under the Notes to become due and payable

SIB, our direct majority shareholder and a subsidiary of ITI Holdings has substantial indebtedness, secured by a pledge over the Company’s shares. SIB is dependent on dividends and other proceeds from the Company in order to service interest payments on its indebtedness. Accordingly, if TVN for any reason reduces, delays, fails or is otherwise unable to pay dividends or other payments to SIB, including pursuant to the terms of the Notes, SIB could default on its obligations. A downgrading of the Notes could also cause a default under the credit agreement, dated August 31, 2009, governing SIB’s 3320 million credit facilities (the “SIB Credit Facilities”). Any default by SIB under the agreements governing its indebtedness, including a default under the SIB Credit Facilities could ultimately trigger a change of control under the Notes as a result of the exercise of enforcement rights by SIB’s creditors and could also cause the rating agencies to consider the downgrading, suspension or withdrawal of any rating assigned to the Notes. Any such change of control and related downgrade, suspension or withdrawal of their rating would entitle the investors in the Notes to require us to repurchase the Notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. See “Description of the notes — Change of control and rating decline”. We may not be able to repurchase the Notes upon a change of control and rating decline. See “— We may not be able to repurchase the Notes upon a change of control and rating decline.”

The interests of our principal shareholder may conflict with your interests as a holder of the Notes

ITI Holdings, through other entities that it directly or indirectly controls (together, the “ITI Group”), owns, as of October 30, 2009, 59.3% of our issued voting share capital. In addition several members of our supervisory board are also executives of ITI Holdings or of other companies in the ITI Group. As a result, ITI Holdings and these individuals, through their shareholdings or their positions on our supervisory board, have and will continue to have, directly or indirectly, the power to affect our legal and capital structure as well as the ability to elect and change our management and to approve other changes to our operations and to control the outcome of matters requiring action by shareholders. Their interests in certain circumstances may conflict with your interests as holders of the Notes.

You may face foreign exchange risks or tax consequences by investing in the Notes

The Notes are denominated and payable in euro. If you invest in currencies other then euro, an investment in the Notes will entail foreign exchange-related risks due to, among other factors, possible significant changes in the value of the euro relative to such currencies because of economic, political and other factors over which we have no control. Depreciation of the euro against the currency of your investment could cause a decrease in the effective yield of the Notes below their stated coupon rates and could result in a loss to you in the currency of your investment. Investment in the Notes may also have important tax consequences. See “Tax considerations”.

A downgrading of our ratings may adversely affect our ability to raise additional financing

Credit rating agencies have begun to monitor companies much more closely and have made liquidity, and the key ratios associated with it, such as gross leverage ratio, a particular priority. In the event our debt or corporate credit ratings are lowered by the ratings agencies, our ability to raise additional indebtedness may be more difficult and we will have to pay higher interest rates, which may have an adverse effect on our financial position, results of operations and cash flows. In addition, a downgrading of the Notes could cause a default under the SIB Credit Facilities, which, in turn, could result in our change of control. See “— Any default by our majority shareholder on its obligations to pay its indebtedness or its failure to otherwise comply with the various covenants in the instruments governing its indebtedness could ultimately lead to a change of control and ratings decline with respect to the Company and the funds borrowed under the Notes to become due and payable.”

28 Transfers of the Notes will be restricted, which may adversely affect the value of the Notes The Notes have not been and will not be registered under the U.S. Securities Act or any U.S. state securities laws and we have not undertaken to effect any exchange offer for the Notes in the future. You may not offer the Notes in the United States except pursuant to an exemption from, or a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws, or pursuant to an effective registration statement. The Notes and the indenture will contain provisions that will restrict the Notes from being offered, sold or otherwise transferred except pursuant to the exemptions available pursuant to Rule 144A and Regulation S, or other exceptions, under the U.S. Securities Act. Furthermore, we have not registered the Notes under any other country’s securities laws. It is your obligation to ensure that your offers and sales of the Notes within the United States and other countries comply with applicable securities laws. See “Transfer restrictions.”

An active trading market may not develop for the Notes, in which case your ability to transfer the Notes will be more limited The Notes are new securities for which there currently is no market. Although application has been made to list the Notes on the Official List of the Luxembourg Stock Exchange and to admit the Notes to trading on the Euro MTF, we cannot assure you that the Notes will become or remain listed. We cannot assure you as to the liquidity of any market that may develop for the Notes, the ability of holders of the Notes to sell them or the price at which holders of the Notes may be able to sell them. The liquidity of any market for the Notes will depend on the number of holders of the Notes, prevailing interest rates, the market for similar securities and other factors, including general economic conditions and our own financial condition, performance and prospects, as well as recommendations of securities analysts. The initial purchasers have informed us that they intend to make a market in the Notes. However, they are not obligated to do so and may discontinue such market-making at any time without notice. As a result, we cannot assure you that an active trading market for the Notes will develop or, if one does develop, that it will be maintained. The liquidity of, and trading market for, the Notes may also be hurt by declines in the market for high yield securities generally. Such a general decline may be caused by a number of factors, including but not limited to the following: • general economic and business trends; • variations in quarterly operating results; • regulatory developments in our operating countries and the EU; • the condition of the media industry in the countries in which we operate; and • investor and securities analyst perceptions of us and other companies that investors deem comparable in the television broadcasting and online media industries. Such a decline may affect any liquidity and trading of the Notes independent of our financial performance and prospects.

29 Use of proceeds The gross proceeds from the offering of the Notes will be used to redeem or repay the indebtedness described in the table below and as additional liquidity for general corporate purposes. The actual amounts set forth in the table and in the accompanying footnotes are subject to adjustment and may differ at the time of the consummation of the transactions described, depending on several factors, including the amount of our existing debt, differences from our estimate of fees and expenses and any changes made to the sources of the contemplated debt finances. The net proceeds from the offering of the Notes, after deduction of fees and expenses, is approximately 3384.2 million. The Company does not intend to use the proceeds of the offering to finance the ‘n’ acquisition.

Sources (in millions) Uses (in millions) Notes offered hereby(1) ...... 3399.7 Existing Notes(2) ...... 3215.0 Redemption premium(3) ...... 6.8 Loan Facility(4) ...... 26.1 Additional liquidity and general corporate purposes ...... 136.3 Estimated fees and expenses(5).... 15.5 Total Sources ...... 3399.7 Total Uses ...... 3399.7

(1) Represents EUR 405.0 million principal amount at maturity less original issue discount.

1 (2) Upon consummation of this offering, we will send an irrevocable notice of redemption to all holders of the existing 9 ⁄2% senior notes due 2013 issued by TVN Finance Corporation plc. In connection with issuing the notice of redemption, we will deposit the amounts (including the redemption premium and all accrued and unpaid interest up to the redemption date) required to redeem the Existing Notes on the redemption date upon which, subject to the delivery of certain certificates and an opinion of counsel, our obligations under the indenture governing the Existing Notes will be satisfied and discharged. (3) Consists of a redemption premium of 3.167%. As of December 15, 2009, the assumed redemption date, there will be no accrued and unpaid interest. For any redemption date after December 15, 2009, interest will accrue at approximately EUR 56,736 per day up to but not including the redemption date.

(4) EUR 26.1 million to repay all outstanding amounts under our Loan Facility. (5) Reflects our estimate of fees and expenses associated with this offering, including placement and other financing fees and advisory fees.

30 Consolidated capitalization of the TVN Group

The following table sets out the consolidated cash and cash equivalents and the total consolidated capitalization of the TVN Group as of September 30, 2009 on (1) a historical basis, (2) on an adjusted basis to give effect to the offering of the Notes and the application of proceeds therefrom as described under “Use of proceeds”, and (3) on a pro forma basis (as further adjusted to give effect to the ‘n’ acquisition). Except as disclosed in this listing memorandum, there has been no material change in the TVN Group’s capitalization since September 30, 2009. For the convenience of the reader, certain złoty amounts as of September 30, 2009 have been converted into euro at a rate of PLN 4.2226 per EUR 1.00 (the average NBP exchange rate on September 30, 2009). You should not view such conversions as a representation that such złoty amounts actually represent such euro amounts, or could be or could have been converted into euro at the rates indicated or at any other rate. All amounts, unless otherwise indicated, in this table and the related footnotes are shown in millions.

As of September 30, 2009 (unaudited) As adjusted for (in millions) Actual this offering(1) Pro forma(2) PLN PLN 5 PLN 5 Cash and cash equivalents ...... 81.0 628.6 148.9 618.0 146.4 Short-term debt(3) ...... 39.2 11.0 2.6 11.0 2.6 Existing Notes ...... 871.0 — — — — PLN Bonds ...... 498.6 498.6 118.1 498.6 118.1 Loan Facility ...... 109.9 — — — — Notes offered hereby ...... — 1,622.4 384.2 1,622.4 384.2 Additional Notes...... — — — 783.3 185.5 Loans from related parties ...... 525.6 525.6 124.5 — — Total long-term debt(3) ...... 2,005.1 2,646.6 626.8 2,904.3 687.8 Contingent consideration(4)...... 228.8 228.8 54.2 — — Total long-term debt and contingent consideration ...... 2,233.9 2,875.4 681.0 2,904.3 687.8

Sharecapital...... 68.1 68.1 16.1 68.1 16.1 Share premium ...... 606.1 606.1 143.5 606.1 143.5 8%obligatoryreserve...... 23.3 23.3 5.5 23.3 5.5 Other reserves...... 125.2 125.2 29.6 125.2 29.6 Accumulated profit ...... 762.3 703.7 166.7 336.5 79.7 Total shareholders’ equity...... 1,585.0 1,526.4 361.5 1,159.2 274.5 Non-controlling interest ...... (327.7) (327.7) (77.6) — — Total capitalization (including contingent consideration) . . . 3,530.4 4,085.1 967.4 4,074.5 964.9

(1) Reflects proceeds of EUR 399.7 million from the issuance of the Notes offered hereby with nominal value of EUR 405.0 million and issue price of 98.696%, net of estimated offering expenses of EUR 15.5 million. Also reflects the cash payment of PLN 1,074.8 million as a settlement of amounts in respect of (i) the Existing Notes (nominal value of EUR 215.0 million or PLN 907.9 million which equals to carrying value of PLN 871.0 million and unamortized deferred charges of PLN 36.9 million); (ii) premium payable for early redemption of the Existing Notes calculated as 3.167% of nominal value of the Existing Notes (PLN 28.8 million); (iii) the Loan Facility (nominal value PLN 110.0 million which equals to carrying value of PLN 109.9 million and unamortized deferred charges of PLN 0.1 million); and (iv) accrued interest as at September 30, 2009 relating to the Existing Notes and the Loan Facility (PLN 28.2 million). The difference between the amount paid and the carrying amount of liabilities reflected in the balance sheet amounting to PLN 65.7 million (which represents unamortized deferred charges and early redemption premium) less related deferred tax effects of PLN 7.1 million was recorded in accumulated profit (PLN 58.6 million). Such difference will be recognized in the income statement in the period in which the settlement occurs. (2) Assumes in addition to the issuance of Notes and repayment of certain debt as discussed in (1) above the issuance of the Additional Notes with nominal value of EUR 188.0 million and issue price of 100.0%, net of estimated expenses of EUR 2.5 million recalculated to PLN 783.3 million in exchange for (i) acquisition of the remaining 49% equity stake in Neovision Holding B.V. (the sole shareholder of ITI Neovision Sp. z o.o.) with carrying amount of PLN 327.7 million (deficit); (ii) the settlement of the liability relating to the contingent consideration on the acquisition of the controlling interest in Neovision Holding B.V. with the carrying amount of PLN 228.8 million; and (iii) repayment of the ‘n’ shareholders’ loans due to the ITI Group with the carrying amount of PLN 525.6 million. The difference between (i) the nominal amount of new liability assumed and (ii) derecognized amounts of the liabilities and non-controlling interest, amounting to PLN 367.2 million (net deficit) was reflected in accumulated profit. Such difference will be recognized on the date the transaction becomes unconditional and will be reflected either (i) as an adjustment to equity (to the extent it relates to the carrying value of the non-controlling interest and the amount settled); or (ii) as a charge or credit in the income statement (to the extent the settlement amount regarding the contingent consideration will differ from its carrying amount at that date); or (iii) as a charge or credit in the income statement (to the extent it relates to the replacement of financing provided to us by the ITI Group on terms which are substantially different to the terms applied to the current indebtedness). At the date of this listing memorandum we are unable to determine the allocation of the difference between the components discussed. (3) As a result of accrued interest and foreign exchange fluctuations, our total debt has increased by approximately PLN 18.2 million (EUR 4.3 million) as of the date of this listing memorandum. (4) The contingent consideration relates to the supplemental payment to be paid by the TVN Group in accordance with the transaction agreement it entered into with ITI Media Group if and to the extent the ITI Neovision Sp. z o.o. subscriber revenues for the 2010 calendar year exceed PLN 555.6 million, subject to a cap of EUR 60.0 million, as may be adjusted. For more detail, see Note 29 of the interim condensed consolidated financial statements of the TVN Group for the three and nine months ended September 30, 2009.

31 Unaudited pro forma consolidated financial information The unaudited pro forma consolidated financial information (the “Pro Forma Financial Information”) set forth below comprises a pro forma consolidated balance sheet and pro forma consolidated income statements, which have been derived from our audited consolidated financial statements as of and for the year ended December 31, 2008, the audited consolidated financial statements of the ITI Neovision Group as of and for the year ended December 31, 2008 and our unaudited interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2009, to give effect to the acquisition of the controlling interest and remaining 49% interest in Neovision Holding B.V. as well as the transactions described in the “Use of proceeds” and the notes to the Pro Forma Financial Information. In this pro forma we present the consummation of the ‘n’ acquisition with the issuance of EUR 188.0 million aggregate principal amount of Additional Notes which we believe is the most probable method that we will finance the ‘n’ acquisition. There may be alternative methods to structure the financing of the ‘n’ acquisition which would impact on the accounting implications. For further details of the transactions that resulted in our ownership of a controlling interest in ITI Neovision Sp. z o.o. and of the proposed transaction to acquire the remaining non-controlling stake in ITI Neovision Sp. z o.o., see “The acquisition of ’n.’ ”

Presentation of Pro Forma Financial Information As the acquisition of the controlling interest in the ITI Neovision Group has already been reflected in our September 30, 2009 unaudited condensed consolidated balance sheet as presented in the unaudited interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2009, the unaudited pro forma consolidated balance sheet (the “Pro Forma Balance Sheet”) as of September 30, 2009 has been prepared for the sole purpose of illustrating the effect of the transactions described in the “Use of proceeds” (namely the issuance of the Notes, the issuance of the Additional Notes, the acquisition of a non-controlling interest in Neovision Holding B.V. and the ITI Neovision Group and repayment or refinancing of certain borrowings), such as if these transactions had occurred as of that date. The unaudited pro forma consolidated income statements (the “Pro Forma Income Statements”) have been prepared to illustrate the effects of the combination between the TVN Group and the ITI Neovision Group and the effects of interest charges arising on incremental borrowings from issuance of the Notes and the Additional Notes and applied to the acquisition of the non-controlling interest in the ITI Neovision Group and the settlement of the outstanding contingent consideration and repayment of the Existing Notes and the Loan Facility as if the effects of such combination, incremental borrowings, settlement and repayment had been accounted for through the entire respective periods. To illustrate the effects of the combination with Neovision Holding B.V. on our reported results, we have used the available consolidated financial information of the ITI Neovision Group (the parent company of which, ITI Neovision Sp. z o.o., is a wholly owned subsidiary of Neovision Holding B.V.), which does not include the results of Neovision Holding B.V. Neovision Holding B.V. conducts no operating activities and does not prepare consolidated financial statements. The unaudited stand-alone profit for the period of Neovision Holding B.V. for the year ended December 31, 2008 and the period from January 1, 2009 to March 11, 2009 amounting to EUR 147,000 and EUR 37,000, respectively, were considered insignificant and as such have not been included in the Pro Forma Income Statements. The Pro Forma Financial Information has been prepared in accordance with the accounting principles applied by us and described in the audited consolidated financial statements included elsewhere in this listing memorandum. It is provided for illustrative purposes only and does not purport to represent what our consolidated financial position or consolidated results of operations as of and for the periods presented would actually have been had the transactions described above taken place on the given dates, nor are they necessarily representative of the financial position or results of operations for any future periods. Further, such Pro Forma Financial Information has not been prepared in accordance with the requirements of Regulation S-X of the U.S. securities laws. The pro forma adjustments reflected in the Pro Forma Financial Information and described in the notes thereto are based on preliminary estimates, available information, and assumptions that we believe to be reasonable; however, the amounts actually recorded may be different. No account has been taken within the Pro Forma Financial Information to reflect any future costs or savings that

32 may occur or are expected to occur as a result of the transactions described above. Also, no consideration was given to the effects of foreign exchange gains or losses related to the new debt securities, which are denominated in euro. In addition, as discussed in detail in notes to the unaudited interim condensed consolidated financial statements of the TVN Group as of and for the three and nine months ended September 30, 2009, acquisition accounting with respect to the acquisition of the ITI Neovision Group has been done on a provisional basis. The effects of adjustments to the identifiable assets and liabilities that were recognized based on provisional amounts in our unaudited interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2009 have also been recognized in the Pro Forma Financial Information. It is however possible that additional intangible assets may be recognized or values assigned to assets and liabilities recognized on the acquisition on a provisional basis may be revised which would impact the pro forma adjustments and the pro forma amounts presented in the Pro Forma Financial Information. For further discussion, refer to the notes to the Pro Forma Balance Sheet, note 4 to the Pro Forma Income Statement for the nine months ended September 30, 2009 and note 4 to the Pro Forma Income Statement for the year ended December 31, 2008. For the convenience of the reader, certain złoty amounts for the year ended December 31, 2008 and as of and for the nine months ended September 30, 2009 have been converted into euro at the rate of PLN 4.2226 per EUR 1.00 (the average NBP exchange rate, złoty per euro, on September 30, 2009). You should not view such translations as a representation that such złoty amounts actually represent such euro amounts, or could be or could have been converted into euro at the rates indicated or at any other rate. All amounts in these tables and the accompanying notes are shown in millions. In our opinion, all adjustments necessary to present fairly the Pro Forma Financial Information have been made. The notes to the Pro Forma Financial Information contain a detailed discussion of how the adjustments are presented. The Pro Forma Financial Information should be read in connection with the “Use of proceeds,” “Management’s discussion and analysis of financial condition and results of operations”, the audited consolidated financial statements and the unaudited interim condensed consolidated financial statements included elsewhere in this listing memorandum.

33 Unaudited pro forma consolidated balance sheet

Actual Pro forma September 30, September 30, 2009 Pro forma adjustments 2009 unaudited unaudited unaudited (In millions) (1) (2) (3) (4) PLN PLN PLN PLN PLN 5 ASSETS Property, plant and equipment ...... 728.9 — — — 728.9 172.6 Goodwill ...... 1,695.5 — — — 1,695.5 401.5 Brand ...... 791.6 — — — 791.6 187.5 Other intangible assets ...... 72.1 — — — 72.1 17.1 Non-current programming rights ...... 175.2 — — — 175.2 41.5 Investments in associates ...... 1.3 — — — 1.3 0.3 Available-for-sale financial assets ...... 7.6 — — — 7.6 1.8 Deferred tax asset ...... 44.6 — — — 44.6 10.6 Other non current assets ...... 5.3 — — — 5.3 1.3 Non-current assets ...... 3,522.1 ———3,522.1 834.1 Current programming rights ...... 234.2 — — — 234.2 55.5 Trade receivables ...... 288.4 — — — 288.4 68.3 Derivative financial assets ...... 3.7 — — — 3.7 0.9 Prepayments and other assets ...... 100.6 — — — 100.6 23.8 Cash and cash equivalents ...... 81.0 1,622.4 (1,074.8) (10.6) 618.0 146.4 Current assets ...... 707.9 1,622.4 (1,074.8) (10.6) 1,244.9 294.8 TOTAL ASSETS ...... 4,230.0 1,622.4 (1,074.8) (10.6) 4,767.0 1,128.9 EQUITY AND LIABILITIES Share capital ...... 68.1 — — — 68.1 16.1 Share premium ...... 606.1 — — — 606.1 143.5 8% obligatory reserve ...... 23.3 — — — 23.3 5.5 Other reserves ...... 125.2 — — — 125.2 29.6 Accumulated profit ...... 762.3 — (58.6) (367.2) 336.5 79.7 Total shareholders’ equity ...... 1,585.0 — (58.6) (367.2) 1,159.2 274.5 Non-controlling interest ...... (327.7) — — 327.7 — — 1,257.3 — (58.6) (39.5) 1,159.2 274.5 Existing Notes...... 871.0 — (871.0) — — — PLN Bonds due 2013 ...... 498.6 — — — 498.6 118.1 Loans from related parties ...... 525.6 — — (525.6) — — Loan Facility ...... 109.9 — (109.9) — — — Notes offered hereby ...... — 1,622.4 — — 1,622.4 384.2 Additional Notes ...... — — — 783.3 783.3 185.5 Deferred tax liability ...... 175.5 — (7.1) — 168.4 39.9 Non-current trade payables ...... 41.7 — — — 41.7 9.9 Contingent consideration ...... 228.8 — — (228.8) — — Other non-current liabilities ...... 2.5 — — — 2.5 0.6 Non-current liabilities ...... 2,453.6 1,622.4 (988.0) 28.9 3,116.9 738.1 Current trade payables ...... 196.2 — — — 196.2 46.5 Corporate income tax payable ...... 6.6 — — — 6.6 1.6 Accrued interest on borrowings ...... 39.2 — (28.2) — 11.0 2.6 Derivative financial liabilities ...... 0.7 — — — 0.7 0.2 Other liabilities and accruals ...... 276.4 — — — 276.4 65.5 Current liabilities ...... 519.1 — (28.2) — 490.9 116.3 TOTAL EQUITY AND LIABILITIES ...... 4,230.0 1,622.4 (1,074.8) (10.6) 4,767.0 1,128.9 Total Debt(5) ...... 2,044.3 2,915.3 690.4 Net debt(5) ...... 1,963.3 2,297.3 544.0

Notes: As discussed in Note 29 to our unaudited interim condensed consolidated financial statements for the three and nine months ended September 30, 2009 included elsewhere in this listing memorandum, the acquisition of the controlling stake in the

34 ITI Neovision Group resulted in the recognition of goodwill, intangible assets, other assets, contingent consideration and other liabilities relating to the ITI Neovision Group at their fair value which was determined on a provisional basis. As at the date of this listing memorandum we have not finalized the purchase price allocation. The finalization of the purchase price allocation may result in the recognition of intangible assets that are not currently recognized or adjustments to values of recognized net assets contingent consideration and in consequence adjustments to goodwill which shall be accounted for retrospectively to the extent they reflect the circumstances that existed as of the date of the acquisition of the controlling interest in the ITI Neovision Group. (1) The TVN Group financial information used to prepare the Pro Forma Balance Sheet was extracted from the unaudited interim condensed consolidated financial statements of the TVN Group for the three and nine months ended September 30, 2009, included elsewhere in this listing memorandum. (2) Reflects proceeds of EUR 399.7 million from the issuance of the Notes offered hereby with nominal value of EUR 405.0 million and issue price of 98.696%, net of estimated offering expenses of EUR 15.5 million, all translated at the rate of PLN 4.2226 per 1 euro (the average NBP exchange rate, złoty per euro, on September 30, 2009) and amounting to PLN 1,622.4 million. (3) Reflects the cash payment of PLN 1,074.8 million as a settlement of amounts in respect of (i) the Existing Notes (nominal value of EUR 215.0 million or PLN 907.9 million which equals to carrying value of PLN 871.0 million and unamortized deferred charges of PLN 36.9 million); (ii) premium payable for early redemption of the Existing Notes calculated as 3.167% of nominal value of the Existing Notes (PLN 28.8 million); (iii) the Loan Facility (nominal value PLN 110.0 million which equals to carrying value of PLN 109.9 million and unamortized deferred charges of PLN 0.1 million); and (iv) accrued interest as at September 30, 2009 relating to the Existing Notes and the Loan Facility (PLN 28.2 million). The difference between the amount paid and the carrying amount of liabilities reflected in the balance sheet amounting to PLN 65.7 million (which represents unamortized deferred charges and early redemption premium) less related deferred tax effects of PLN 7.1 million was recorded in accumulated profit (PLN 58.6 million). Such difference will be recognized in the income statement in the period in which the settlement occurs. (4) Reflects the issuance of the Additional Notes with nominal value of EUR 188.0 million and issue price of 100.0% net of estimated expenses of EUR 2.5 million recalculated to PLN 783.3 million using the rate of PLN 4.2226 per 1 euro (the average NBP exchange rate, złoty per euro, on September 30, 2009) in exchange for (i) acquisition of the remaining 49% equity stake in Neovision Holding B.V. (the sole shareholder of ITI Neovision Sp. z o.o.) with carrying amount of PLN 327.7 million (deficit); (ii) the settlement of the liability relating to the contingent consideration on the acquisition of the controlling interest in Neovision Holding B.V. with the carrying amount of PLN 228.8 million; and (iii) repayment of the ‘n’ shareholders’ loans due to the ITI Group with the carrying amount of PLN 525.6 million. The difference between (i) the nominal amount of new liability assumed and (ii) derecognized amounts of the liabilities and non-controlling interest, amounting to PLN 367.2 million (net deficit) was reflected in accumulated profit. Such difference will be recognized on the date the transaction becomes unconditional and will be reflected either (i) as an adjustment to equity (to the extent it relates to the carrying value of the non-controlling interest and the amount settled); or (ii) as a charge or credit in the income statement (to the extent the settlement amount regarding the contingent consideration will differ from its carrying amount at that date); or (iii) as a charge or credit in the income statement (to the extent it relates to the replacement of financing provided to us by the ITI Group on terms which are substantially different to the terms applied to the current indebtedness). At the date of this listing memorandum we are unable to determine the allocation of the difference between the components discussed. (5) We define Total Debt as the carrying value of borrowings arising from bank loans or related party loans (other than loans within the TVN Group) and any other debt securities issued together with accrued interest and excluding any guarantees or letters of credit issued by third parties to secure payments of our obligations. We define Net Debt as Total Debt less cash and cash equivalents. We believe that Total Debt and Net Debt are useful measures of indebtedness that we use on a day to day management of our liquidity. Other companies may use different definitions of Total Debt or Net Debt.

35 Unaudited pro forma consolidated income statements for the nine months ended September 30, 2009

Actual nine months ended Pro forma nine months September 30, ended September 30, 2009 Pro forma adjustments 2009 unaudited unaudited unaudited (In millions) (1) (2) (3) (4) (5) PLN PLN PLN PLN PLN PLN EUR Revenue ...... 1,443.0 83.5 (8.4) — — 1,518.1 359.5 Cost of revenue ...... (931.1) (104.0) 8.2 (1.2) — (1,028.1) (243.5) Selling expenses ...... (172.1) (12.8) 0.2 (2.0) — (186.7) (44.2) General and administration expenses . . . . . (137.2) (4.8) 16.6 — — (125.4) (29.7) Other operating (expense)/income, net . . . . (4.0) — — — — (4.0) (0.9) Gain on step acquisition ...... 110.7 — (110.7) — — — — Operating profit/(loss) ...... 309.3 (38.1) (94.1) (3.2) — 173.9 41.2 Investment income, net ...... 39.9 (18.1) 22.3 — — 44.1 10.4 Finance (expense)/ income, net ...... (133.6) (100.3) 4.2 — (82.0) (311.7) (73.8) Share of (loss)/ profit of associate ...... (39.0) 0.2 39.6 — — 0.8 0.2 Profit/(loss) before income tax ...... 176.6 (156.3) (28.0) (3.2) (82.0) (92.9) (22.0) Income tax (charge)/benefit ...... (35.3) (0.2) 20.8 0.6 15.6 1.5 0.4 Net profit/(loss)(6)(7) ...... 141.3 (156.5) (7.2) (2.6) (66.4) (91.4) (21.6) Adjusted EBITDA(8) ...... 440.8 323.9 76.7 Adjusted EBITDA excluding stock option plan expense(8) ...... 457.7 340.8 80.7

Notes: (1) The TVN Group financial information used to prepare the Pro Forma Income Statement was extracted from the unaudited interim condensed consolidated financial statements of the TVN Group for the three and nine months ended September 30, 2009, included elsewhere in this listing memorandum. (2) Comprised of the financial data of the ITI Neovision Group for the period from January 1 to the acquisition date (March 11, 2009), sourced from the unaudited internal consolidated management accounts of the ITI Neovision Group (such data does not include the results of Neovision Holding B.V. as discussed in the introduction to the Pro Forma Financial Information). (3) This adjustment reflects the reversal of share of loss of associate amounting to PLN 39.6 million and included in the reported amounts of the TVN Group as well as elimination of revenues and expenses of PLN 8.4 million from transactions between the TVN Group and the ITI Neovision Group and interest charges from loans granted to the ITI Neovision Group of PLN 4.2 million recognized in the TVN Group and the ITI Neovision Group accounts, together with associated tax effects, for the period from January 1, 2009 to the acquisition date (March 11, 2009), i.e. the period during which the investment in the ITI Neovision Group was accounted for using the equity method. In addition the adjustment reverses non-recurring charges and credits recognized in our historical financial statements that are directly related to the acquisition of the controlling interest in the ITI Neovision Group. Such non-recurring charges are comprised of (i) transaction costs directly related to the acquisition (PLN 16.6 million) and (ii) loss on settlement of pre-existing loan relationship (PLN 26.5 million) and (iii) the associated tax loss. The non-recurring gain related to the acquisition is comprised of remeasurement of the 25% equity stake in its fair value (PLN 110.7 million). (4) The amount of PLN 2.6 million reflects the effects of the increased depreciation and amortization resulting from the fair value adjustments to certain assets or recognition of new assets upon the acquisition of the ITI Neovision Group including the associated deferred tax effect of PLN 0.6 million. As discussed in the introduction to the Pro Forma Financial Information, assets and liabilities of the ITI Neovision Group were accounted for on a provisional basis. Any adjustment to intangible or tangible assets provisionally recognized or recognition of any new depreciable assets previously not recognized will cause a corresponding adjustment to the depreciation and amortization charges. The amount of charge will depend on the value allocated to specific assets and the estimated remaining useful life of such assets. While estimation of the impact of the additional charges cannot be done at the date of this offering memorandum, a possible range of the additional nine months depreciation and amortization charges has been presented in the following table (millions):

Average remaining life of assets 5 years 7 years 10 years PLN PLN PLN Adjustment to fair value of depreciable asset of PLN 50 million 7.5 5.4 3.8 Adjustment to fair value of depreciable asset of PLN 100 million 15.0 10.7 7.5 Adjustment to fair value of depreciable asset of PLN 150 million 22.5 16.1 11.8

The additional depreciation and amortization will reduce the consolidated net income of the TVN Group. Any reduction in net income will be partially compensated by a reduction of deferred tax liability arising from the difference between the carrying value of assets (after fair value adjustment) and the tax value of assets.

36 (5) Reflects additional interest that would be incurred by the TVN Group if the Notes offered hereby and the Additional Notes were outstanding for the entire period covered by the Pro Forma Income Statement and calculated as follows (millions):

PLN 5 Estimated nominal interest on the Notes offered hereby at 10.75% ...... 138.1 32.7 Estimated nominal interest on the Additional Notes at 10.75% ...... 64.2 15.2 Estimated amortization of transaction costs and issuance discount(a) ...... 9.2 2.2 Estimated new interest expense ...... 211.5 50.1 Less interest expense actually incurred by the TVN Group from the Existing Notes and Loan Facility ...... (81.4) (19.3) Less interest expense actually incurred by the ITI Neovision Group from the debt provided by parties other than the TVN Group and repaid by the TVN Group during 2008 or 2009 or repayable with the issuance of the Additional Notes ...... (35.7) (8.5) Less interest expense recognized in our consolidated financial statements in relation to the unwind of discount on the contingent consideration liability repayable with the Additional Notes...... (12.4) (2.9) Incremental finance expense ...... 82.0 19.4 Tax benefit effect of additional finance expense ...... 15.6 3.7

(a) Amortization of transaction costs relates to both the Notes offered hereby and Additional Notes and amortization of issuance discount relates to the Notes offered hereby.

The tax benefit was calculated using the statutory tax rate of 19% taking into account the likelihood of obtaining tax deductions. The existing indebtedness which will be repayable upon completion of the offer of the Notes and the Additional Notes is predominantly denominated in euro. Similarly, the Notes offered hereby and the Additional Notes will be denominated in euro. Consequently, no adjustments have been made to reverse out the recorded foreign exchange gains or losses (including gains or losses on any hedging instruments used to hedge currency risk) or adjust for any foreign exchange gains or losses on new indebtedness assumed. We will continue to be exposed to foreign exchange rate risk in relation to our borrowings. (6) No adjustment has been made for any non-recurring charges or gains that may arise as a result of recalculation of the amount of contingent consideration pursuant to the expected settlement or otherwise or non-recurrent charges or gains that may arise on settlement of any debt obligations as discussed in Note 3 and Note 4 to the Pro Forma Balance Sheet. (7) The actual net profit amount for the nine months ended September 30, 2009 includes PLN 36.9 million attributable to holders of non-controlling interests in our subsidiaries. Following the acquisition of the non-controlling interest the entirety of our net profit/(loss) will be attributable to our shareholders. (8) EBITDA is not an IFRS measure and should not be considered as an alternative to IFRS measures of profit/(loss) or as an indicator of operating performance or as a measure of cash flow from operations under IFRS or as an indicator of liquidity. EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments, debt service requirements and capital expenditures. Our presentation of EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under IFRS. For example: • EBITDA does not reflect changes in, or cash requirements for, our working capital needs; • EBITDA does not reflect our interest expense, which will be significant after this offering; • EBITDA does not reflect income taxes on our taxable earnings; and • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacement. Adjusted EBITDA is defined as EBITDA adjusted for financial expenses, net (other than interest expense), investment income, share of profit or loss of associates and impairment charges or reversals on property, plant and equipment and intangible assets. We believe that Adjusted EBITDA serves as useful supplementary financial indicator in measuring the liquidity of media companies, and we have previously reported this measure as “EBITDA” in our reporting to shareholders. Adjusted EBITDA is not an IFRS measure and should not be considered as an alternative to IFRS measures of net profit/(loss), as an indicator of operating performance, as a measure of cash flow from operations under IFRS, or as an indicator of liquidity. You should note that Adjusted EBITDA is not a uniform or standardized measure, that the calculation of EBITDA, accordingly, may vary significantly from company to company, and by itself our presentation and calculation of Adjusted EBITDA may not be comparable to that of other companies. Adjusted EBITDA is calculated as follows:

Pro forma for Actual for the the nine nine months ended months ended September 30, September 30, (in millions) 2009 2009 2009 PLN PLN 5 Profit/(loss) for the period ...... 141.3 (91.4) (21.6) Income tax charge...... 35.3 (1.5) (0.4) Interest expense ...... 137.6 244.4 57.9 Depreciation and amortization ...... 131.5 150.0 35.5 EBITDA ...... 445.7 301.5 71.4 Investment income, net ...... (39.9) (44.1) (10.4) Other finance expense, net...... (4.0) 67.3 15.9 Impairment ...... — — — Share of (profit)/loss of associate ...... 39.0 (0.8) (0.2) Adjusted EBITDA...... 440.8 323.9 76.7 Stock option plan expense ...... 16.9 16.9 4.0 Adjusted EBITDA excluding stock option plan expense...... 457.7 340.8 80.7

37 Unaudited pro forma consolidated income statements for the year ended December 31, 2008

Pro forma Actual year ended year ended December 31, December 31, Pro forma adjustments 2008 2008 (unaudited) (unaudited) (In millions) (1) (2) (3) (4) (5) PLN PLN PLN PLN PLN PLN EUR Revenue ...... 1,897.3 260.9 (48.3) — — 2,109.9 499.7 Cost of revenue ...... (967.2) (402.3) 43.7 (6.6) — (1,332.4) (315.5) Selling expenses ...... (151.8) (106.7) 4.6 (10.4) — (264.3) (62.6) General and administration expenses ...... (148.8) (20.0) — — — (168.8) (40.0) Other operating (expense)/ income, net ...... 2.4 0.2 — — — 2.6 0.6 Operating profit/(loss) ...... 631.9 (267.9) — (17.0) — 347.0 82.2 Investment income, net ...... 81.1 0.5 (5.8) — — 75.8 18.0 Finance (expense)/ income, net ...... (171.0) (173.5) 5.8 — (133.8) (472.5) (111.9) Share of (loss)/ profit of associate ...... (94.4) (0.5) 94.5 — — (0.4) (0.1)

Profit/(loss) before income tax ...... 447.6 (441.4) 94.5 (17.0) (133.8) (50.1) (11.9) Income tax (charge)/benefit ...... (83.9) — (2.9) 3.2 25.4 (58.2) (13.8) Profit/(loss) for the period(6)(7)...... 363.7 (441.4) 91.6 (13.8) (108.4) (108.3) (25.6) Adjusted EBITDA(8) ...... 711.4 518.2 122.7 Adjusted EBITDA excluding stock option plan expense(8) . . 751.5 558.3 132.2 Notes: (1) The TVN Group financial information used to prepare the Pro Forma Income Statement was extracted from the audited consolidated financial statements of the TVN Group for the year ended December 31, 2008, included elsewhere in this listing memorandum. (2) Comprised of the financial data of the ITI Neovision Group for the year ended December 31, 2008, sourced from the audited consolidated financial statements of the ITI Neovision Group included elsewhere in this listing memorandum (such data does not include the results of Neovision Holding B.V. as discussed in the introduction to the Pro Forma Financial Information). (3) This adjustment reflects the reversal of the TVN Group’s share of loss of associate amounting to PLN 94.5 million and included in the reported amounts of the TVN Group as well as elimination of revenues and expenses (PLN 48.3 million) from transactions between the TVN Group and the ITI Neovision Group and interest charges from loans granted to the ITI Neovision Group (PLN 5.8 million) recognized in the TVN Group and the ITI Neovision Group accounts, together with associated tax effects and related to period when investment in the ITI Neovision Group was accounted using the equity method. (4) The amount of PLN 13.8 million reflects the effects of the increased depreciation and amortization resulting from the fair value adjustments to certain assets or recognition of new assets upon the acquisition of the ITI Neovision Group including the associated deferred tax effect of PLN 3.2 million. As discussed in the introduction to the Pro Forma Financial Information, assets and liabilities of the ITI Neovision Group were accounted for on a provisional basis. Any adjustment to intangible or tangible assets provisionally recognized or recognition of any new depreciable assets previously not recognized will cause a corresponding adjustment to the depreciation and amortization charges. The amount of the charge will depend on the value allocated to specific assets and the estimated remaining useful life of such assets. While estimation of the impact of the additional charges cannot be done at the date of this offering memorandum, a possible range of the additional annual depreciation and amortization charge has been presented in the following table (millions): Average remaining life of assets 5 years 7 years 10 years PLN PLN PLN Adjustment to fair value of depreciable asset of PLN 50 million 10.0 7.1 5.0 Adjustment to fair value of depreciable asset of PLN 100 million 20.0 14.3 10.0 Adjustment to fair value of depreciable asset of PLN 150 million 30.0 21.4 15.0

38 (5) Reflects additional interest that would be incurred by the TVN Group if the Additional Notes and the Notes offered hereby were outstanding for the entire period covered by the Pro Forma Income Statement and calculated as follows (millions):

PLN 5 Estimated nominal interest on the Notes offered hereby at 10.75% ...... 183.7 43.5 Estimated nominal interest on the Additional Notes at 10.75% ...... 85.3 20.2 Estimated amortization of transaction costs and issuance discount (a) ...... 12.3 2.9 Estimated new interest expense ...... 281.3 66.6 Less interest expense actually incurred by the TVN Group from the Existing Notes and Loan Facility ...... (87.8) (20.8) Less fair value loss actually incurred by the TVN Group on valuation of embedded option related to the Existing Notes being repaid and incurred early redemption charge ...... (23.2) (5.5) Less interest expense actually incurred by the ITI Neovision Group from the debt provided by parties other than the TVN Group and repaid by the TVN Group during 2008 or 2009 or repayable with the issuance of the ITI Group Bond ...... (36.5) (8.6) Incremental finance expense ...... 133.8 31.7

Tax benefit effect of additional finance expense ...... 25.4 6.0

(a) Amortization of transaction costs relates to both the Notes offered hereby and Additional Notes and amortization of issuance discount relates to the Notes offered hereby.

Adjusted EBITDA is defined as EBITDA adjusted for financial expenses, net (other than interest expense), investment income, share of profit or loss of associates and impairment charges or reversals on property, plant and equipment and intangible assets. We believe that Adjusted EBITDA serves as useful supplementary financial indicator in measuring the liquidity of media companies, and we have previously reported this measure as “EBITDA” in our reporting to shareholders. Adjusted EBITDA is not an IFRS measure and should not be considered as an alternative to IFRS measures of net profit/(loss), as an indicator of operating performance, as a measure of cash flow from operations under IFRS, or as an indicator of liquidity. You should note that Adjusted EBITDA is not a uniform or standardized measure, that the calculation of EBITDA, accordingly, may vary significantly from company to company, and by itself our presentation and calculation of Adjusted EBITDA may not be comparable to that of other companies.

Adjusted EBITDA is calculated as follows:

Actual for the Pro forma for year ended the year ended December 31, December 31, (in millions) 2008 2008 2008 PLN PLN 5 Profit/(loss) for the period ...... 363.7 (108.3) (25.6) Income tax charge ...... 83.9 58.2 13.8 Interest expense ...... 112.8 312.5 74.0 Depreciation and amortization ...... 81.4 153.2 36.3 EBITDA ...... 641.8 415.6 98.4 Investment income, net ...... (81.1) (61.1) (14.5) Other finance expense, net ...... 58.2 160.0 37.9 Impairment ...... (1.9) 3.3 0.8 Share of loss of associate ...... 94.4 0.4 0.1 Adjusted EBITDA ...... 711.4 518.2 122.7 Stock option plan expense ...... 40.1 40.1 9.5 Adjusted EBITDA excluding stock option plan expense ...... 751.5 558.3 132.2

39 Selected historical financial data The following table provides a summary of our historical financial data as of and for the periods presented. You should read this data together with the information included under the headings “Risk factors,” “Consolidated capitalization of the TVN Group,” “Unaudited pro forma consolidated financial information,” “Management’s discussion and analysis of financial condition and results of operations” and our historical consolidated financial statements and notes thereto included elsewhere in this listing memorandum. For information on the presentation of financial information included in the table below, see also “Presentation of Financial Information”. The selected historical consolidated financial information of the TVN Group, as of and for the years ended December 31, 2006, 2007 and 2008, set forth below, was derived from the respective audited consolidated financial statements and the notes thereto of the TVN Group, prepared in accordance with IFRS, included elsewhere in this listing memorandum. Information provided in the tables below as of and for the years ended December 31, 2006 and 2007 reflects certain changes in presentation introduced by us to our originally issued financial statements for these years. For a more detailed description see “Management’s discussion and analysis of financial condition and results of operations — Other factors affecting our results of operations — Change of presentation of financial information”. The selected historical consolidated financial information of the TVN Group, as of and for the nine months ended September 30, 2008 and 2009, set forth below, was derived from the unaudited interim condensed consolidated financial statements and the notes thereto of the TVN Group as of and for the three and nine months ended September 30, 2009, prepared in accordance with IAS 34, included elsewhere in this offering memorandum. For the convenience of the reader, certain złoty amounts as of and for the nine and twelve months ended September 30, 2009, have been converted into euro at the rate of PLN 4.2226 per EUR 1.00 (the average NBP exchange rate, złoty per euro, on September 30, 2009). You should not view such translations as a representation that such złoty amounts actually represent such euro amounts, or could be or could have been converted into euro at the rates indicated or at any other rate.

40 As of and for As of and for the As of and for the year the nine twelve months ended months ended ended December 31, September 30, September 30, (in millions) 2006 2007 2008 2008 2009 2009 2009 PLN PLN PLN PLN PLN PLN 5 (unaudited) (unaudited) Income Statement data Revenue ...... 1,165.0 1,554.7 1,897.3 1,305.0 1,443.0 2,035.3 482.0 Cost of revenue ...... (632.4) (818.4) (967.2) (675.9) (931.1) (1,222.4) (289.5) Cost of programming ...... (420.8) (545.3) (629.5) (437.8) (572.3) (764.0) (180.9) Selling expenses ...... (78.8) (126.5) (151.8) (111.7) (172.1) (212.2) (50.3) General and administration expenses ...... (104.7) (126.0) (148.8) (110.2) (137.2) (175.8) (41.6) Other operating income/(expense), net ...... (0.6) (1.8) 2.4 2.6 (4.0) (4.2) (1.0) Gain on step acquisition ...... — — — — 110.7 110.7 26.2 Operating profit ...... 348.5 482.0 631.9 409.8 309.3 531.4 125.8 Investment income, net ...... 54.1 19.3 81.1 14.9 39.9 106.1 25.1 Finance expense, net ...... (68.3) (204.1) (171.0) (64.8) (133.6) (239.8) (56.8) Share of loss of associate ...... - - (94.4) (19.1) (39.0) (114.3) (27.1)

Profit before income tax ...... 334.3 297.2 447.6 340.8 176.6 283.4 67.1 Income tax charge ...... (75.5) (53.9) (83.9) (64.8) (35.3) (54.4) (12.9) Profit for the period ...... 258.8 243.3 363.7 276.0 141.3 229.0 54.2 Profit attributable to: – equity holders of TVN S.A...... 258.8 243.3 363.7 276.0 178.2 265.9 63.0 – non-controlling interests ...... — — — — (36.9) (36.9) (8.7) Balance Sheet data Current assets ...... 592.1 645.5 1,201.4 908.5 707.9 707.9 167.6 Cash and cash equivalents ...... 104.6 110.4 184.9 260.1 81.0 81.0 19.2 Non-current assets...... 1,986.6 2,099.5 2,551.8 2,501.7 3,522.1 3,522.1 834.1 Total assets ...... 2,578.7 2,745.0 3,753.2 3,410.2 4,230.0 4,230.0 1,001.8 Current liabilities...... 314.9 348.1 468.3 437.5 519.1 519.1 122.9 Non-current liabilities ...... 1,026.6 967.1 1,637.9 1,386.1 2,453.6 2,453.6 581.1 Shareholders equity...... 1,237.2 1,429.8 1,647.0 1,586.6 1,585.0 1,585.0 375.4 Non-controlling interest...... — — — — (327.7) (327.7) (77.6) Total equity and liabilities ...... 2,578.7 2,745.0 3,753.2 3,410.2 4,230.0 4,230.0 1,001.8 Cash Flow data Net cash generated from operating activities ...... 437.3 420.0 615.4 455.1 222.6 382.9 90.7 Net cash used in investing activities ...... (762.3) (174.8) (813.4) (549.9) (108.3) (371.8) (88.1) Net cash generated from/(used in) financing activities ...... 348.8 (239.9) 271.5 244.1 (213.5) (186.1) (44.1) Other Data (unaudited) Adjusted EBITDA(1) ...... 399.9 554.1 711.4 468.5 440.8 683.7 161.9 Adjusted EBITDA margin ...... 34.3% 35.6% 37.5% 35.9% 30.5% 33.6% 33.6% Operating margin ...... 29.9% 31.0% 33.3% 31.4% 21.4% 26.1% 26.1% Ratio of earnings to fixed charges(2) ...... 4.62 4.14 4.97 5.51 2.28 2.62 2.62

(1) EBITDA is not an IFRS measure and should not be considered as an alternative to IFRS measures of profit/(loss) or as an indicator of operating performance or as a measure of cash flow from operations under IFRS or as an indicator of liquidity. EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments, debt service requirements and capital expenditures. Our presentation of EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under IFRS. For example: • EBITDA does not reflect changes in, or cash requirements for, our working capital needs; • EBITDA does not reflect our interest expense, which will be significant after this offering; • EBITDA does not reflect income taxes on our taxable earnings; and • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacement.

Adjusted EBITDA is defined as EBITDA adjusted for finance expense, net (other than interest expense), investment income, share of profit or loss of associates and impairment changes or reversals on property, plant and equipment and intangible assets. We

41 believe that Adjusted EBITDA serves as a useful supplementary financial indicator in measuring the liquidity of media companies, and we have previously reported this measure as “EBITDA” in our reporting to shareholders. Adjusted EBITDA is not an IFRS measure and should not be considered as an alternative to IFRS measures of net profit/(loss), as an indicator of operating performance, as a measure of cash flow from operations under IFRS, or as an indicator of liquidity. You should note that Adjusted EBITDA is not a uniform or standardized measure, that the calculation of EBITDA, accordingly, may vary significantly from company to company, and by itself our presentation and calculation of Adjusted EBITDA may not be comparable to that of other companies.

Adjusted EBITDA is calculated as follows:

For the nine For the twelve For the year ended months ended months ended December 31, September 30, September 30, (in millions) 2006 2007 2008 2008 2009 2009 2009 PLN PLN PLN PLN PLN PLN 5 Historical (unaudited) Profit for the period ...... 258.8 243.3 363.7 276.0 141.3 229.0 54.2 Incometaxcharge...... 75.5 53.9 83.9 64.8 35.3 54.4 12.9 Interest expenses...... 92.4 94.8 112.8 75.5 137.6 174.9 41.4 Depreciation and amortization ...... 50.9 71.8 81.4 60.6 131.5 152.3 36.1 EBITDA ...... 477.6 463.8 641.8 476.9 445.7 610.6 144.6 Investment income, net(a) ...... (54.1) (19.3) (81.1) (14.9) (39.9) (106.1) (25.1) Other finance expense, net(b) ...... (24.1) 109.3 58.2 (10.7) (4.0) 64.9 15.4 Impairment ...... 0.5 0.3 (1.9) (1.9) – – – Share of loss of associate...... – – 94.4 19.1 39.0 114.3 27.1 Adjusted EBITDA ...... 399.9 554.1 711.4 468.5 440.8 683.7 161.9 Stock option plan expense ...... 56.9 44.8 40.1 30.6 16.9 26.4 6.3 Adjusted EBITDA, excluding stock option plan expense ...... 456.8 598.9 751.5 499.1 457.7 710.1 168.2

(a) Investment income, net represents mainly foreign exchange gains/(losses), net, (other than those related to debt instruments), interest income on loans granted, available for sale financial assets, and cash and cash equivalents and effect of valuation or settlement of any derivative instrument related to investing activities.

(b) Other finance expense, net represents mainly foreign exchange gains/(losses) on debt instruments, valuation and settlement of derivative instruments related to financing activities and valuation of embedded option connected with Existing Notes. (2) For the purposes of calculating the ratio of earnings to fixed charges, earnings consist of profit for the period before income taxes and fixed charges. Fixed charges consist of interest expense on debt, which includes the amortization of capitalized debt issuance costs and does not include foreign exchange gains or losses on debt.

42 ITI Neovision Group On March 11, 2009, as a result of an agreement with our controlling shareholder ITI Media, which is a wholly owned subsidiary of our ultimate controlling company, ITI Holdings, we took control over Neovision Holding B.V. the parent company of ITI Neovision Sp. z o.o., the owner and operator of the ‘n’ DTH platform. As a result, our financial results for the nine months ended September 30, 2009 are not fully comparable to the financial results for the corresponding period of 2008. Our results for the nine months ended September 30, 2009 include our share of the net loss of ITI Neovision Sp. z o.o., for the period between January 1 and March 11, 2009, and full financial results of ITI Neovision Sp. z o.o., for the period between March 11 and September 30, 2009. The results for the corresponding period of 2008 include our share of the net loss of ITI Neovision Sp. z o.o. for the period between June 25 and September 30, 2008. The following table provides a summary of the historical consolidated financial data of ITI Neovision Sp. z o.o. as of and for the periods presented. You should read this data together with the information included under the headings “Risk factors,” “Management’s discussion and analysis of financial condition and results of operations” and the historical financial statements and related notes included elsewhere in this listing memorandum. The selected historical consolidated financial information of the ITI Neovision Group, as of and for the years ended December 31, 2007 and 2008, set forth below, was derived from the audited consolidated financial statements and the notes thereto of the ITI Neovision Group for the year ended 31 December 2008, prepared in accordance with IFRS, included elsewhere in this listing memorandum. The selected consolidated historical financial information of the ITI Neovision Group does not include the results of Neovision Holding B.V. Neovision Holding B.V. conducts no operating activities and does not prepare consolidated financial statements. The unaudited stand-alone profit for the period of Neovision Holding B.V. for the year ended December 31, 2008 and the period from January 1, 2009 to March 11, 2009 were considered insignificant and as such have not been included. The selected historical financial information of the ITI Neovision Group, as of and for the nine months ended September 30, 2009 and 2008, was derived from the internal management accounts of ITI Neovision Sp. z o.o, and its subsidiaries.

43 As of and for the As of and for nine year ended months ended December 31, September 30, (in millions) 2007 2008 2009 2009 PLN PLN PLN 5 Unaudited Income Statement data Revenue ...... 106.0 260.9 316.2 74.9 Cost of revenue ...... (219.0) (402.3) (390.9) (92.6) Selling expenses...... (68.3) (106.7) (58.9) (13.9) General and administration expenses ...... (18.3) (20.0) (21.6) (5.1) Other income...... 0.1 0.4 0.8 0.2 Other expenses ...... (0.6) (0.2) (1.8) (0.4) Operating loss ...... (200.1) (267.9) (156.2) (37.0) Financial income ...... 23.7 0.5 (2.7) (0.6) Financial costs ...... (32.1) (173.5) (69.4) (16.4) Share of income/(loss) of joint venture ...... 1.1 (0.5) 0.6 0.1 Loss before income tax ...... (207.4) (441.4) (227.7) (53.9) Income tax charge ...... — — (0.3) (0.1) Loss for the year ...... (207.4) (441.4) (228.0) (54.0) Balance Sheet data Current assets ...... 60.8 100.2 134.1 31.8 Cash and cash equivalents...... 6.6 9.9 4.2 1.0 Non-current assets ...... 262.0 316.7 358.0 84.8 Total assets...... 322.8 416.9 492.1 116.5 Non-current liabilities ...... 422.4 831.7 1,182.3 280.0 Current liabilities ...... 141.9 268.1 220.8 52.3 Equity...... (241.5) (682.9) (911.0) (215.7) Share capital ...... 40.0 40.0 40.0 9.5 Cash Flow data Net cash used in operating activities ...... (172.3) (117.7) Net cash used in investing activities ...... (137.0) (132.4) Net cash generated from financing activities ...... 307.8 253.4 Other data (unaudited) Adjusted EBITDA(1) ...... (180.3) (193.2) (90.6) (21.5)

• EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

• EBITDA does not reflect our interest expense, which will be significant after this offering;

• EBITDA does not reflect income taxes on our taxable earnings; and

Adjusted EBITDA is defined as EBITDA adjusted for financial expenses, net (other than interest expense), investment income, share of profit or loss of joint venture and impairment charges or reversals on property, plant and equipment and intangible assets. We believe that Adjusted EBITDA serves as a useful supplementary financial indicator in measuring the liquidity of media companies, and we have previously reported this measure as “EBITDA” in our reporting to shareholders. Adjusted EBITDA is not an IFRS measure and should not be considered as an alternative to IFRS measures of net profit/(loss), as an indicator of operating performance, as a measure of cash flow from operations under IFRS, or as an indicator of liquidity. You should note that Adjusted EBITDA is not a uniform or standardized measure, that the calculation of EBITDA, accordingly, may vary significantly from company to company, and by itself our presentation and calculation of Adjusted EBITDA may not be comparable to that of other companies.

44 Adjusted EBITDA is calculated as follows:

For the For nine months year ended ended December 31, September 30, (in millions) 2007 2008 2009 2009 PLN PLN PLN 5 Historical (unaudited) Loss for the period ...... (207.4) (441.4) (228.0) (54.0) Income tax charge ...... — — 0.3 0.1 Interest expense ...... 22.2 48.5 70.9 16.8 Depreciation and amortization ...... 28.3 54.8 65.6 15.5 EBITDA ...... (156.9) (338.1) (91.2) (21.6) Investment income including exchange (gain)/loss(a) ...... (33.7) 14.2 2.7 0.6 Other finance expense, net(b) ...... 9.9 125.0 (1.5) (0.4) Impairment ...... 1.5 5.2 — — Share of loss of joint venture ...... (1.1) 0.5 (0.6) (0.1) Adjusted EBITDA ...... (180.3) (193.2) (90.6) (21.5)

(a) Investment income, including exchange (gain)/loss represents mainly foreign exchange gains/(losses), net (other than net foreign exchange losses related to debt instruments or cash in bank). (b) Other finance expense, net represents mainly net foreign exchange losses on debt instruments, unwinding of interest on programming rights liabilities, guarantee fees and net foreign exchange losses on cash in bank.

45 Management’s discussion and analysis of financial condition and results of operations The following is a discussion of (i) our results of operations and financial condition as of and for the years ended December 31, 2006, 2007 and 2008 and the nine months ended September 30, 2008 and 2009 and (ii) the results of operations and financial condition of the ITI Neovision Group as of and for the year ended December 31, 2008. The consolidated financial information included for the purposes of this discussion as of and for the years ended December 31, 2006, 2007 and 2008 and the nine months ended September 30, 2008 and 2009 has been prepared in accordance with IFRS. This discussion should be read in conjunction with our “Selected historical financial data” and consolidated financial statements and the notes relating thereto contained elsewhere in this listing memorandum. In addition, some of the information contained in this discussion, including information with respect to our plans and strategies for our business and our plans for future capital expenditures, contain forward-looking statements that involve risks and uncertainties. You should read “Forward-Looking Statements” for a discussion of the risks related to those statements. You should also read “Business” and “Risk factors” for more information about us, including a discussion of certain factors that may affect our business, results of operations, financial condition and cash flows. For the purposes of this section, unless the context otherwise requires, advertising revenue refers to gross advertising revenue, net of discounts and rebates.

Key factors affecting our results of operations Cyclicality of Polish advertising market. Advertising sales in Poland historically have responded to changes in general business and economic conditions, generally growing at a faster rate in times of economic expansion and at a slower rate in times of recession. We cannot predict the likelihood that these trends will continue. In particular, we cannot predict what effect the current global economic crisis may have on the growth rate of the Polish economy or on us. Apart from seasonality as discussed below, since future levels of advertising spending are not predictable with any certainty more than one month in advance, we cannot predict with certainty our future levels of advertising sales. Despite the global recession, the Polish economy is expected to experience 1.25% GDP growth in 2009 according to the European Commission. While the estimated 14% reduction in advertising spending over the same period is disproportionate to the slowdown in economic growth, the advertising market is expected to start recovering in early 2010 given the fact that TV viewing is a primary leisure activity in Poland and the fact that GRP inventory is currently sold out due to price cuts in the television advertising market. Although the Polish advertising market is dominated by spending on television advertising, which accounts for about 50% of total advertising expenditure, the fastest growing segment of the market has been online advertising which gained market share at the expense of print media advertising.

Television broadcasting and production Characteristics of television advertising in Poland. The price at which we sell television advertising generally depends on factors such as demand, audience share and any commercial discounts, volume rebates and agency commissions that the buyer negotiates. Audience share represents the proportion of television viewers watching a television channel’s program at a specific time.

46 Demand for television advertising in Poland depends on general business and economic conditions. As advertising is mostly sold through centralized media buyers who receive volume rebates and agency commissions on sales made through them, most advertising is sold at a considerable reduction to published rates. Commercial discounts represent the difference between rate-card prices for advertising minutes and the gross prices at which those minutes or rating points are actually sold before the deduction, if applicable, of agency commissions and volume rebates. The Polish television advertising market is very competitive. The policies and behavior of our competitors relating to pricing and scheduling may result in changes in our own pricing and scheduling practices, and thus may affect our revenue. Seasonality of television advertising. Television viewing in Poland tends to be seasonal, with the second and fourth quarters attracting a greater number of viewers than the first and third quarters, when television competes with a large number of other leisure activities. During the summer months, when audiences tend to decline, advertisers significantly reduce expenditure on television advertising. Consequently, television advertising sales in Poland tend to be at their lowest during the third quarter of each calendar year. Conversely, advertising sales are typically at their highest during the fourth quarter of each calendar year. During the year ended December 31, 2008, we generated approximately 20.7% of our television segment total advertising revenue in the first quarter, 30.0% in the second quarter, 17.6% in the third quarter and 31.7% in the fourth quarter. Availability of attractive programming content to maximize audience share. The continued success of our advertising sales and the licensing of our channels to digital platform and cable television operators and our success in generating other revenue depend on our ability to attract a large share of our key target audience, preferably during prime time. Our ability to attract a large share of the target audience in turn depends in large part on our ability to broadcast quality programming that appeals to our target audience. According to AGB, our channels captured an average of 20.5% of Poland’s nationwide all-day audience in the nine months ended September 30, 2009, and our TVN channel achieved 24.2% of our key target audience during peak time in the nine months ended September 30, 2009. We believe our substantial market share of Poland’s television viewing audience results from offering attractive programming, which enables us to obtain a larger total audience, as measured by the higher number of gross rating points (“GRPs”) in a more efficient manner, which in turn maximizes the use of advertising airtime. While we believe we have been successful in producing and acquiring programming content that appeals to our key target audience, we continue to compete with other television broadcasters for programming content and to seek to air programming that addresses evolving audience tastes and trends in television broadcasting. Further, while we believe that we are able to produce and source programming content at attractive cost levels, increased competition may require higher levels of expenditure in order to maintain or grow our audience share. Launch of new channels. The success of our thematic channels depends in large part on their ability to profile and target specific audiences that are attractive to advertisers. Accordingly, from time to time, we have launched new channels and disposed of existing channels in response to demand from advertisers. Since January 1, 2006, we have acquired the TVN CNBC channel, launched the TVN Warszawa and Telezakupy Mango 24 channels, disposed of our interest in the Discovery Historia channel and ceased operating the TVN Lingua channel. In so doing we have sought to increase the size and to improve the profile of our audience by attracting more viewers from our target demographic groups in order to increase total net and improve year-on-year results.

Online Characteristics of online advertising in Poland. The price at which we sell online advertising generally depends on factors such as demand, specific advertising format, reach, page views, time spent on the web page, demographics of users of respective websites, and any commercial discounts, volume rebates and agency commissions that the buyer negotiates. Advertising formats range from simple banners displayed on the top of web pages, through animated rich-media advertisements displayed on top of pages, to video-based advertisements. Reach represents the proportion of internet users who visit a particular website at least once during a specific time period. Page views represent the number of page impressions created by users on a particular website. Time spent represents the average time that a user spends on a website or the total time spent by all users visiting this website during a specific period of time. Demographics of users represent their

47 characteristics, including their specific interests. As in the case of television advertising, we sell a significant portion of online advertising through centralized media buyers at a discount to published rates. Commercial discounts represent the difference between the published rates for respective online advertising services and the gross prices at which those services are actually sold before the deduction, if applicable, of agency commissions and volume rebates. The Polish online advertising services market is very competitive. The policies and behavior of our competitors relating to pricing and introduction of new offerings in online advertising services may result in changes in our own pricing and offered services, and this may affect our revenue.

Seasonality of internet advertising. Internet usage and advertising in Poland is constantly growing, but, similar to television, tends to be seasonal, with the second and fourth quarters attracting a greater number of users than the first and third quarters, when the internet competes with a large number of other leisure activities. During the summer months, when there is a relative decline in usage, advertisers reduce expenditure on media advertising, including spending on online advertising services. Consequently, online advertising sales in Poland tend to be at their lowest level during the first or third quarter of each calendar year. Conversely, online advertising and other online marketing services sales are typically at their highest during the fourth quarter of each calendar year. During the year ended December 31, 2008, we generated approximately 19.7% of our total online advertising revenue in the first quarter of 2008, 25.0% in the second quarter, 22.2% in the third quarter and 33.1% in the fourth quarter.

Digital satellite pay television

Characteristics of pay television market in Poland. Demand for pay television services generally depends on the attractiveness of programming content and the extent to which it is offered on an exclusive basis, the prices charged for subscription to the services, the promotions and discounts offered and the ability to use services such as VoD and content available in HD. Digital satellite television services are sold in co-operation with retail networks and tied agency networks, through call centers and the internet. The subscription fees we charge our customers for pay television services depend on the number of channel packages and other services, such as video on demand, to which our subscribers subscribe. We offer our customers discounts or promotional periods, during which we make available to them certain channel packages for reduced prices or for free. The Polish pay television market is very competitive, and some customers switch from one operator to another, depending on promotions offered, exclusive content available or in order to obtain services such as the recorder function or video on demand. We may be forced to change our pricing strategy as well as the services we offer, subject to the policies and behavior of our competitors which may affect our revenue and profit.

Seasonality of pay digital satellite market in Poland. While the pay digital satellite market in Poland is subscription based and revenue per subscriber is therefore not substantially affected by seasonality, growth in the subscriber base is cyclical. Demand for pay digital satellite services is constantly growing, but, similar to television and the internet, tends to be seasonal. The highest number of new subscribers is typically acquired in the fourth quarter. Seasonal increases in the subscriber base also occur prior to major sport events that are not covered by free-to-air channels. These increases are usually followed by higher subscription revenue. Revenue is first recognized immediately after a customer is activated and continues throughout the subscription period.

Availability and cost of attractive programming content. Our ability to increase our digital satellite platform subscriber base depends largely on our ability to acquire and broadcast high quality programming that appeals to existing and potential new subscribers. Apart from popular channels, also available on other digital satellite platforms and cable networks, we also offer channels that are exclusively available to our subscribers. We also broadcast HD content. While we believe that we are able to successfully acquire competitive, high quality content, we continue to compete with other operators for programming that addresses evolving tastes among our current and potential new subscribers. This may affect our revenue and profitability.

Functionality and cost of decoders. Our ability to continue to attract new subscribers and retain existing subscribers depends in part on the superior functionality of the decoders we offer our customers. Such functionality includes the ability to view high definition content, record programs for viewing at a later date and the ability to access video on demand services. We believe we are able

48 to acquire and offer these decoders at attractive prices. However, increasing competition on the pay digital satellite market in Poland may require us to increase expenditures in this area.

Other factors affecting our results of operations Foreign exchange rate exposure. We generate revenue primarily in złoty, while a substantial portion of our operating expenses, borrowings and capital expenditures are denominated in foreign currencies, mainly in euro and, U.S. dollars. The estimated net profit (post-tax) impact on the major euro and U.S. dollar denominated balance sheet items of a euro and U.S. dollar appreciation of 5% against the złoty, with all other variables held constant and without taking into account derivative financial instruments entered into for hedging purposes, is PLN 74.3 million. In September 2008, we entered into a U.S. dollar put and call option to limit the impact on our net results of PLN/USD exchange rate movements in relation to payments for part of our programming rights up until the end of 2009. The hedging strategy based on U.S. dollar put and call options as of September 30, 2009 has a notional value of USD 7.9 million, a maturity date of December 22, 2009, and a PLN/USD corridor between 2.10 and 2.45. We do not use hedge accounting for our U.S. dollar options. The fair value of our U.S. dollar options as of September 30, 2009 was based on valuations by banks we have engaged. In September 2009, we entered into U.S. dollar forward contracts to limit the impact on our net result of PLN/USD exchange rate movements in relation to purchases of the ‘n’ DTH platform’s set-top boxes. The hedging strategy has notional value of USD 30.8 million, maturity dates on October 26, 2009, November 25, 2009 and December 23, 2009 and forward exchange rates of 2.9137, 2.9208 and 2.9277 respectively. The fair value of our U.S. dollar forwards as of September 30, 2009 was based on valuations by banks we have engaged.

Acquisitions and disposals On March 11, 2009, as a result of an agreement with our controlling shareholder ITI Media, which is a wholly owned subsidiary of our ultimate controlling company, ITI Holdings, and Neovision Holding B.V., we took control over ITI Neovision Sp. z o.o., the owner and operator of the ‘n’ DTH platform. Our financial results for the nine months ended September 30, 2009 are not fully comparable to the financial results for the corresponding period of 2008. Our results for the nine months ended September 30, 2009 include our share of the net loss of ITI Neovision Sp. z o.o., for the period between January 1 and March 11, 2009, and full financial results of ITI Neovision Sp. z o.o., for the period between March 11 and September 30, 2009. The results for the corresponding period of 2008 include our share of the net loss of ITI Neovision Sp. z o.o. for the period between June 25 and September 30, 2008. To make the comparison between periods more meaningful, we have specifically identified the impact of this change, where material, in the period to period comparison. On May 29, 2009, Discovery Networks Central and Eastern Europe purchased our share in the Discovery Historia network and assumed complete ownership of this channel. Our financial results for the nine months ended September 30, 2009 are not fully comparable to the financial results for the corresponding periods of 2008. Our results for the nine months ended September 30, 2009 include the financial results of Discovery Historia only for the periods between January 1, and May 31, 2009. Taxation. We are subject to corporate taxation in Poland. Deferred income taxes on our balance sheet relate to timing differences between the recognition of income and expenses for accounting and tax purposes as of the balance sheet date. Our deferred tax assets partly relate to Onet’s tax credit arising from its investment in a special economic zone and non-deductible provisions and accruals. The recognition of deferred tax assets depends on our assessment of meeting conditions of operating in a special economic zone and the likelihood of future taxable profits with respect to which deductible temporary differences and tax-loss carry forwards can be applied.

Change of presentation of financial information In the consolidated financial statements of the TVN Group as of and for the year ended December 31, 2008 and the consolidated financial statements of the TVN Group as of and for the year ended December 31, 2007, the TVN Group changed the presentation of selected items in its consolidated income statement and consolidated balance sheet. Changes in presentation did not affect reported revenue, operating profit, net profit or shareholder’s equity.

49 Reclassifications of comparative data as of and for the year ended December 31, 2007 reflected in the consolidated financial statements of the TVN Group as of and for the year ended December 31, 2008. The effect of reclassifications of comparative data as of and for the year ended December 31, 2007 presented in the consolidated financial statements of the TVN Group as of and for the year ended December 31, 2008, as compared to amounts that were originally reported, is presented in the following table.

As of and for the year ended December 31, 2007 Originally As adjusted for Effect of (in millions) reported reclassification reclassification PLN PLN PLN Consolidated Income Statement Cost of revenue...... (817.9) (818.4) (0.5)(1) Selling expenses ...... (127.0) (126.5) 0.5 (1) Consolidated Balance Sheet Current liabilities ...... 349.1 348.1 (1.0)(2) Non-current liabilities ...... 966.1 967.1 1.0 (2)

(1) Change in the classification of certain costs from selling expenses to cost of revenue.

(2) Change in the classification of portion of other liabilities related to employee benefits.

For the year ended December 31, 2007 Originally As adjusted for Effect of (in millions) reported reclassification reclassification PLN PLN PLN Business segment results Segment result – Television, broadcasting & production segment . . . 492.4 498.5 6.1 (1) – Online segment ...... 19.2 19.4 0.2 (1) – Unallocated ...... (29.6) (35.9) (6.3)(1) Segment result excluding stock option plan expenses – Television, broadcasting & production segment . . . 513.8 519.9 6.1 (1) – Online segment ...... 35.6 35.8 0.2 (1) – Unallocated ...... (22.6) (28.9) (6.3)(1) Adjusted EBITDA (unaudited) – Television, broadcasting & production segment . . . 548.6 554.7 6.1 (1) – Online segment ...... 35.1 35.3 0.2 (1) – Unallocated ...... (29.6) (35.9) (6.3)(1) Adjusted EBITDA excluding stock option plan (unaudited) – Television, broadcasting & production segment . . . 570.0 576.1 6.1 (1) – Online segment ...... 51.5 51.7 0.2 (1) – Unallocated ...... (22.6) (28.9) (6.3)(1)

(1) Change of allocation of overhead costs between segments. Reclassifications of comparative data as of and for the year ended December 31, 2006 reflected in the consolidated financial statements of TVN Group as of and for the year ended December 31 ,2007 The effect of reclassifications of comparative data as of and for year ended December 31, 2006 presented in the consolidated financial statements of the TVN Group as of and for the year ended

50 December 31, 2007, as compared to amounts that were originally reported, is presented in the following table.

As of and for the year ended December 31, 2006 Originally As adjusted for Effect of (in millions) reported reclassification reclassification PLN PLN PLN Consolidated Income Statement Cost of revenue...... (633.2) (632.4) 0.8 (1) Selling expenses ...... (78.0) (78.8) (0.8)(1) Consolidated Balance Sheet Other current assets ...... 515.4 487.5 (27.9)(2) Non-current assets ...... 1,958.7 1,986.6 27.9 (2) Current liabilities ...... 323.9 314.9 (9.0)(3) Non-current liabilities ...... 1,017.6 1,026.6 9.0 (3)

(1) Change in the classification of certain costs from cost of revenue to selling expenses.

(2) Change in the classification of certain programming rights from current to non-current assets.

(3) Change in classification of certain programming rights payables from current to non-current liabilities.

For the purpose of this listing memorandum, the TVN Group analyzed the potential impact of reclassifications introduced to the financial data for the periods ended December 31, 2007 and 2006 as compared to data disclosed in the consolidated financial statements for the respective periods. Management believes that these reclassifications did not have a material impact on the comparability of financial data between periods.

Other than in “Management’s discussion and analysis of financial condition and results of operations,” the TVN Group has decided to present the following financial data in all sections of this listing memorandum:

k As of and for the year ended December 31, 2008 and as of and for the year ended December 31, 2007 as derived from the consolidated financial statements of the TVN Group as of and for the year ended December 31, 2008, with comparable data;

k As of and for the year ended December 31, 2006, as derived from the comparative financial data included in the consolidated financial statements of the TVN Group as of and for the year ended December 31, 2007.

The ‘Management’s discussion and analysis of financial condition and results of operations‘ has been prepared on the basis of data included in the underlying financial statements, i.e. for the discussion of the year ended December 31, 2008 compared to the year ended December 31, 2007, the data was derived from the consolidated financial statements as of and for the year ended December 31, 2008 and for the discussion of the year ended December 31, 2007 compared to the year ended December 31, 2006, the data was derived from the consolidated financial statements as of and for the year ended December 31, 2007.

Revenue

The following table shows the revenue profile of the Group for the year ended December 31, 2008 and the nine months ended September 30, 2009:

Revenue source Television Digital Unallocated/All other broadcasting satellite and other Period and production pay TV Online reconciling items Total Year ended December 31, 2008 . . . 90% — 11% (1%) 100% Nine months ended September 30, 2009 Unaudited ...... 72% 16% 10% 2% 100%

51 Television broadcasting and production This segment derives revenue primarily from commercial advertising. During 2008 and the nine months ended September 30, 2009, we derived approximately 69% and 54%, respectively, of our total net revenue from television advertising, compared with 69% in the nine months ended September 30, 2008

Commercial television advertising revenue We sell most of our commercial television advertising through media houses and independent agencies. In the current Polish advertising market, advertisers tend to allocate their television advertising budgets between channels based on each channel’s audience share, audience demographic profile and pricing policy as measured by AGB in respect to audience shares and profile indicators, and the industry practice in respect to pricing. In order to provide flexibility to our customers, we offer advertising priced on two different bases. The first basis is rate-card, which reflects the timing and duration of an advertisement. The second basis is cost per GRP. Rate-card pricing. Advertising priced on a rate-card basis is applied to advertisements sold to be scheduled at a specific time. The cost of such advertising is usually higher than the cost per GRP sale method as it is based on the specific key target audience viewership in a particular slot, the length of the advertisement, the time of day, and the season during which the advertisement is shown. Rate- card prices are set on monthly basis and reflect our audience profile and size in particular advertising timeslot. Cost per GRP pricing. Advertising priced on a cost per GRP basis allows an advertiser to specify the number of GRPs that he wants to achieve. We schedule the timing of the airing of the advertisements during such defined period of time, usually one month in advance of broadcast, in a manner that enables us both to meet the advertiser’s GRP target and to maximize the use and profitability of our available advertising time. Generally, we structure GRP packages to ensure higher sales of advertising spots during the daily off-peak period. For example, for each GRP purchased during peak time, the client must purchase at least one GRP during off-peak time. The table below shows the percentages of our advertising revenues that were based on rate card pricing and cost per GRP pricing for the periods presented: Unaudited Year end Nine months ended December 31, September 30, 2007 2008 2008 2009 Company Rate-card pricing ...... 29% 70% 79% 56% Company Cost per GRP pricing ...... 71% 30% 21% 44%

We usually schedule specific advertisements one month in advance of broadcast. Prices that advertisers pay, whether they purchase advertising time on a GRP package or rate-card basis, tend to be higher during peak viewing months such as October and November than during off-peak months such as July and August. Consistent with television broadcasting industry practice, and in order to optimize ratings and revenue, we do not sell all of our legally available advertising time. During 2008 and the nine months ended September 30, 2009, we tended to sell over 92% and 97%, respectively, of peak time advertising spots on our TVN channel and over 63% and 65%, respectively, of non-peak time advertising spots. We record our advertising revenue at the time the relevant advertisement is broadcast. As is common in the television broadcasting industry, we provide advertising agencies and advertisers with an incentive rebate. We recognize advertising revenue net of discounts and rebates.

Subscription fees from satellite and cable operators We also generate revenue from the sale of licenses granting digital satellite platform and cable operators the right to distribute our channels’ programming content to subscribers to their respective services. During 2008 and the nine months ended September 30, 2009, approximately 7% and 9%, respectively, of our total net revenue came from such fees compared with 7% in the nine months ended September 30, 2008. Generally, our agreements with digital platform and cable television operators specify the rates at which we charge the operators for each subscriber to a given digital platform or cable television

52 service who paid for one of our channels during the relevant reporting period, which we refer to as per-subscriber-rate. We calculate the monthly license fee that a digital platform or cable operator pays us by multiplying the applicable per-subscriber-rate by the average number of digital platform or cable subscribers who paid for one of our channels during the relevant reporting period.

Other television broadcasting and production revenue

Other revenue sources include revenue generated from sponsorship, call television, text messages and sales of rights to programming content. We share revenue that we generate from text messages and call television with the corresponding service provider, such as the telecommunications companies.

Online

Online segment derives a substantial portion of revenue from online advertising. During 2008 and the nine months ended September 30, 2009, we derived approximately 9% and 8%, respectively, of our total net revenue from online advertising, compared with 9% in the nine months ended September 30, 2008.

Online advertising revenue

We sell the majority of our online advertising services through media houses. We derive most of our online advertising revenue from the sale of online display advertising through products which include, among others, the display of rich media advertisements, display of text-based links to advertisers’ websites (search engine marketing) and e-commerce based transactions as well as from online directory services.

Online fee revenue

Other revenue sources include revenue generated from a variety of consumer and business fee- based services. These include, among others, revenue from paid thematic services (access to high quality content), sale of premium e-mail accounts, hosting services, registration and sale of internet domains, fees from auction services, classifieds and dating services and sale of internet access. Fee revenue also includes sales of telecommunications services under such brands as OnetSkype, and OnetTelefon.

Digital satellite pay television

This segment derives the majority of its revenue from subscription fees. During the nine months ended September 30, 2009, we derived approximately 15.5% of our total net revenue from ‘n’ DTH platform subscription fees.

Pre-pay and post-pay subscription fees from subscribers to digital satellite platform services

Revenue from subscription fees are monthly fees paid by customers of the ‘n’ DTH platform to access programming packages and VoD services. Subscription revenue depends on the number of subscribers, the type of services to which they subscribe, and the current subscription prices. An individual customer’s fee depends on the number of packages selected and can be increased if the customer opts for VoD services or an optional premium package. We also offer our customers both pre-pay and post-pay subscription fee options. Occasionally the ‘n’ DTH platform runs promotions during which it offers to its subscribers services at discounted prices in order to increase penetration of its services. Discounts granted in a given period, and which relate to the entire customer contract, are recognized proportionately over the contract term.

Activation fees

Activation fees are the one-time fees paid by the ‘n’ DTH platform subscribers upon signing a contract. Activation revenue depends on the number of new customer contracts signed during the applicable period, and the rate of activation fee, which differs depending on the type of set-top box and satellite dish provided to the customer.

53 Other business activity (Unallocated) Revenue in other business activity, not allocated into business segments, primarily includes the sale of goods/teleshopping which accounted for approximately 2% and 3%, respectively of our revenue during 2008 and the nine months ended September 30, 2009, and did not materially change as compared with 2% in the nine months ended September 30, 2008. We generate revenue from sales of products offered in a particular show on Telezakupy Mango 24, our dedicated teleshopping channel or on, our other television channels as well as on the Mango Media internet site. Unallocated revenue also includes revenue from cinema distribution of films we produce.

Our expenses The majority of our operating expenses, 50% and 46%, respectively, in 2008 and the nine months ended September 30, 2009 and 49% in the nine months ended September 30, 2008, were related to acquisition and production of television programming and internet content.

Television broadcasting and production Programming costs Operating expenses of our television broadcasting and production segment consist primarily of amortization of television programming costs, which accounted for 45% and 30%, respectively, of our operating expenses in 2008 and the nine months ended September 30, 2009, compared with 44% in the nine months ended September 30, 2008. Amortization expense includes amortization of production costs for television programs specifically produced by or for us, either under licenses from third parties or under our own licenses and amortization of rights to television programming content produced by third parties and licensed to us. During 2008 and the nine months ended September 30, 2009, we commissioned and produced locally through third parties 19% and 76%, respectively, of our programming content on our TVN channel. During 2008 and the nine months ended September 30, 2009, we acquired 25% and 24%, respectively, of our programming content from third parties. Amortization is based on the estimated number of showings and the type of programming content.

Other costs Other costs of television broadcasting and production consist of broadcasting costs, which mainly consist of rental costs for satellite and terrestrial transmission capacity; staff expenses and share options granted to board members and employees, royalties payable to unions of authors, artists and professionals in the entertainment industry and the Polish Film Institute, depreciation of television and broadcasting equipment, marketing and research costs, rent and maintenance costs for our premises, consulting fees for technical, financial and legal services and a service fee payable to ITI Group pursuant to the Services Agreement, dated July 22, 2004, between us and ITI Group. As part of its annual budgeting process, our supervisory board approves the maximum amount to be paid under the Services Agreement for the forthcoming year. On December 11, 2008, our supervisory board approved a budget of 31.76 million for 2009.

Online Operating costs of our Online segment consist mainly of internet content production and acquisition costs, lease of transmission network, staff expenses and share options granted to board members and employees and marketing and research costs. Costs related to internet content are amortized 100% once the related services or information goes live. Other Online segments’ costs are depreciation of internet equipment, rent and maintenance costs for our premises and other costs.

Digital satellite pay television Our digital satellite pay television segment’s operating expenses consist primarily of programming costs, depreciation of set-top boxes, broadcasting expenses, staff expenses, sales commissions and marketing expenses. This segment’s operating expenses consist primarily of programming costs, which accounted for 13.5% of our cost of revenue in the nine months ended September 30, 2009.

54 Programming costs The ‘n’ DTH platform acquires long-term licenses to broadcast movies, sport events and rights to television channels, for which it pays fixed fees. Such rights are capitalized and amortized over the license term. In the case of other licenses to broadcast television channels, that are usually with respect to channels offered to the ‘n’ DTH platform on a non-exclusive basis, the ‘n’ DTH platform pays fees based on the number of active subscribers multiplied by a fee per subscriber. Such fees are expensed in the period in which they arise. Programming production expenses relate to the channels produced by the ‘n’ DTH platform, as well as to its video-on-demand services.

Depreciation of set-top boxes The set-top boxes that we provide to the ‘n’ DTH platform subscribers remain our property. Customers are obligated to return them after termination of their contracts. We depreciate set- top boxes over their expected useful life of five years.

Sales commissions We pay commissions to the ‘n’ DTH platform distributors and call center for acquiring new subscribers. The amount of commission depends on the number of acquired customers as well as on the type of services to which a customer subscribes to and the length of contract. For meeting certain periodical sales targets we pay additional commissions to the ‘n’ DTH platform distributors.

Other expenses Other segment expenses include payments for decoding cards, payments for print and postage of customer bills and other correspondence, telecommunication charges, fees payable to the Polish Film Institute and royalties payable to unions of authors, artists and professionals in the entertainment industry, provisions for doubtful debts, employee salaries, rent for office space, IT equipment, software maintenance fees, consulting services, marketing services and costs related to the repair and maintenance of set-top boxes.

Other business activity Other business activities’ expenses consist primarily of costs of services and goods sold, broadcasting expenses, staff expenses and marketing and research expenses.

Results of operations Nine months ended September 30, 2009 compared to nine months ended September 30, 2008 Revenue, net. Our net revenue increased by PLN 138.0 million, or 10.6%, to PLN 1,443.0 million in the nine months ended September 30, 2009, from PLN 1,305.0 million in the corresponding period of 2008. Excluding the effects of consolidation of ITI Neovision Sp. z o.o., our net revenue decreased by PLN 71.6 million, or 5.5%, to PLN 1,233.4 million. This decrease resulted primarily from a decrease in advertising revenue of PLN 125.5 million, partly offset by an increase in subscription fees from satellite and cable operators of PLN 44.6 million. Our advertising revenue decreased by PLN 125.5 million, or 12.4%, to PLN 883.1 million during the nine months ended September 30, 2009, from PLN 1,008.6 million in the corresponding period of 2008. This decrease was primarily due to a decrease of PLN 116.7 million, or 15.2% in the advertising revenue of our TVN channel, which recorded an effective decrease of 19.8% in the price of GRPs sold, which was partially offset by a 5.5% increase in the volume of inventory sold. Subscription fees from satellite and cable operators increased by PLN 44.6 million, or 49.3%, to PLN 135.0 million, in the nine months ended September 30, 2009, from PLN 90.4 million in the corresponding period of 2008. The increase in subscription revenue was mostly due to the significantly higher PLN/EUR exchange rate during nine months ended September 30, 2009 compared with corresponding period of 2008. Subscriber fees are primarily denominated in euro. The increase was also partly due to an increase in the number of subscribers for our pay channels, which on average increased by approximately 1.1 million subscribers. Cost of revenue. Cost of revenue increased by PLN 255.2 million, or 37.8% to PLN 931.1 million in the nine months ended September 30, 2009, from PLN 675.9 million in the corresponding period of

55 2008. Excluding the effects of consolidation of ITI Neovision Sp. z o.o., our cost of revenue decreased by PLN 0.8 million, or 0.1%, to PLN 675.1 million in the nine months ended September 30, 2009. We however recorded significant changes in selected cost groups.

In particular, we recorded a decrease of PLN 18.7 million, or 5.3% in the amortization of locally produced content to PLN 331.3 million in the nine months ended September 30, 2009, from PLN 350.0 million in the corresponding period of 2008. This decrease reflects our decision to reduce investment in our TVN channel schedule in June due to the slow down of the advertising market as well as our decision to withdraw from the production of Discovery Historia channel.

Our programming staff expenses decreased by PLN 4.5 million, or 8.7%, to PLN 47.0 million in the nine months ended September 30, 2009, from PLN 51.5 million in the corresponding period of 2008. The decrease was primarily related to a lower stock option program expense.

These decreases were partly offset by an increase in television production and broadcasting equipment depreciation of PLN 11.5 million. This increase results from the capital investments we made in 2008, when we acquired and started to use another high-definition television production vehicle, production equipment for our new series and studio equipment for our new TVN Warszawa channel.

As a percentage of net revenue, our cost of revenue increased in the nine months ended September 30, 2009 to 64.5%, compared to 51.8% in the corresponding period of 2008. Excluding the effects of consolidation of ITI Neovision Sp. z o.o., our cost of revenue as a percentage of net revenue, increased in the nine months ended September 30, 2009 to 54.7%.

Selling expenses. Our selling expenses increased by PLN 60.4 million, or 54.1%, to PLN 172.1 million for the nine months ended September 30, 2009, from PLN 111.7 million in the corresponding period of 2008. Excluding the effects of consolidation of ITI Neovision Sp. z o.o., our selling expenses decreased by PLN 2.7 million, or 2.4% to PLN 109.0 million.

As a percentage of net revenue, our selling expenses increased to 11.9% in the nine months ended September 30, 2009, from 8.6% in the corresponding period of 2008. Excluding the effects of consolidation of ITI Neovision Sp. z o.o., our selling expenses as a percentage of net revenue increased to 8.8% in the nine months ended September 30, 2009.

General and administration expenses. Our general and administration expenses increased by PLN 27.0 million, or 24.5%, to PLN 137.2 million for the nine months ended September 30, 2009, compared with PLN 110.2 million in the corresponding period of 2008. Excluding the effects of consolidation of ITI Neovision Sp. z o.o. and the impact of transaction expenses related to the business combination with ITI Neovision Sp. z o.o., our general and administration expenses decreased by PLN 6.3 million, or 5.7%, to PLN 103.9 million, primarily due to a decrease in staff expenses.

As a percentage of net revenue, our general and administration expenses increased to 9.5% in the nine months ended September 30, 2009, from 8.4% in the corresponding period of 2008. Excluding the effects of consolidation of ITI Neovision Sp. z o.o. and the impact of transaction expenses related to the business combination with ITI Neovision Sp. z o.o., our general and administration expenses were 8.4% of net revenue.

Gain on step acquisition. We provisionally recorded PLN 110.7 million of gain on step acquisition. This income was a result of measuring at fair value our 25% equity investment in ITI Neovision Sp. z o.o. held before taking control over that company.

Operating profit. Operating profit decreased by PLN 100.5 million, or 24.5% to PLN 309.3 million for the nine months ended September 30, 2009, from PLN 409.8 million in the corresponding period of 2008. The decrease results mainly from a decrease in our advertising revenue and the consolidation of the operating losses of ITI Neovision Sp. z o.o. This was partly offset by the recognition of PLN 110.7 million of gain on step acquisition.

Our operating margin including impact of ITI Neovision Sp. z o.o. in the nine months ended September 30, 2009 decreased to 21.4%, from 31.4% in the corresponding period of 2008. Our operating margin excluding the effects of consolidation of ITI Neovision Sp. z o.o. decreased to 27.8%.

56 Investment income, net. We recorded investment income, net of PLN 39.9 million for the nine months ended September 30, 2009, compared to investment income, net of PLN 14.9 million in the corresponding period of 2008.

This increase was primarily due to the recognition of foreign exchange gains of PLN 48.4 million compared with PLN 4.1 million in the corresponding period of 2008. We recognized foreign exchange gains of PLN 20.4 million on loans receivable from ITI Neovision Sp. z o.o. in the period between January 1, 2009 and March 11, 2009. The increase in investment income, net was also partly due to increase in revaluation gains on our U.S. dollar currency options of PLN 6.1 million, reflecting the depreciation of PLN against U.S. dollar during the nine months ended September 30, 2009, investment income from Polish treasury bills of PLN 5.3 million and accrued interest income on loans to associates of PLN 1.6 million. These increases were offset by a fair value loss on loan to associate of PLN 26.5 million, which we recognized on consolidation.

Finance expense, net. We recorded finance expense net of PLN 133.6 million for the nine months ended September 30, 2009, compared to finance expense net of PLN 64.8 million in the corresponding period of 2008.

We recognized foreign exchange losses on our Existing Notes of PLN 10.7 million in the nine months ended September 30, 2009, compared to foreign exchange gains of PLN 40.2 million in the corresponding period of 2008, due to a depreciation of the PLN against the EUR as of September 30, 2009 compared with December 31, 2008. We recognized a net loss of PLN 25.1 million on our euro currency options entered into to hedge potential foreign exchange losses on our Existing Notes. during the nine months ended September 30, 2009, compared to a net loss of PLN 28.3 million in 2008. This decrease represented the revaluation of our PLN/EUR options during the period of January 1 to January 15, 2009 when we settled the options. We also recognized foreign exchange gains of PLN 41.6 million on loans granted to ITI Neovision Sp. z o.o. by its non-controlling shareholder, mainly due to the appreciation of the złoty against the euro between March 11, 2009 and September 30, 2009.

Our interest expense increased by PLN 62.1 million to PLN 137.6 million in the nine months ended September 30, 2009, from PLN 75.5 million in the corresponding period of 2008. This increase was primarily due to PLN 23.3 million increase of interest payable from ITI Neovision Sp. z o.o. to its non- controlling shareholder, and partly due to an increase in interest expense of PLN 19.5 million on our PLN Bonds which we issued in June 2008, as well as PLN 5.7 million increase of interest expense on our Loan Facility. We also recorded an increase in bank and other charges of PLN 4.1 million to PLN 6.1 million, from PLN 2.0 million because of penalty interest on overdue payables that ITI Neovision Sp. z o.o. paid to one of its suppliers.

We recorded a loss of PLN 12.4 million on unwinding of interest on the contingent consideration related to the correction payment that may be payable to ITI Media Group in 2011.

The change in the fair value of options embedded in our Existing Notes in the nine months period ended September 30, 2009 was nil, whereas in the corresponding period of 2008, we recorded a gain of PLN 5.7 million. During the nine months ended September 30, 2009, the trading price of our Existing Notes increased from 84.0 as of December 31, 2008 to 93.05 as of September 30, 2009.

Share of loss of associate. Our share of loss of an associate amounted to PLN 39.0 million in the nine months ended September 30, 2009. This amount represented primarily our share in the net loss of the ‘n’ DTH platform for the period between January 1 and March 11, 2009, which amounted to PLN 39.6 million and was mainly due to unrealized foreign exchange losses on revaluation of euro denominated shareholders’ loans.

Profit before income tax. Our profit before income tax was PLN 176.6 million for the nine months ended September 30, 2009, compared to a profit before income tax of PLN 340.8 million in the corresponding period of 2008. This decrease was primarily due to decrease in operating profit, higher finance expense, net and our share in the net loss of ITI Neovision Sp. z o.o.

Income tax charge. For the nine months ended September 30, 2009, we recorded a total income tax charge of PLN 35.3 million, compared to an income tax charge of PLN 64.8 million in the corresponding period of 2008. This decrease resulted primarily from lower profit before income tax, higher tax deductions recognized under tax relief obtained by Onet in a special economic zone

57 offset by higher net tax impact of other expenses and losses not deductible for tax purposes and revenue not taxable, and the net tax impact of consolidating ITI Neovision Sp. z o.o. Profit for the period. Our profit for the period amounted to PLN 141.3 million in the nine months ended September 30, 2009, compared to a profit of PLN 276.0 million in the corresponding period of 2008. The decrease was primarily due to the decrease in our profit before income tax, partly offset by lower income tax charge. Loss attributable to non-controlling interests. Loss attributable to non-controlling interests represents the share of ITI Neovision Sp. z o.o.’s net loss attributable to its non-controlling shareholder and amounted to PLN 36.9 million in the period between March 11, 2009 and September 30, 2009. Profit attributable to the owners of TVN. Our net profit attributable to the owners of TVN was PLN 178.2 million for the nine months ended September 30, 2009, compared to a net profit of PLN 276.0 million in the corresponding period of 2008. The table below summarizes profit attributable to the owners of the Company and profit attributable to the owners of the Company excluding the impact of revaluation of embedded options we recorded in the nine months ended September 30, 2009 and 2008: Nine months ended September 30, PLN (in millions) 2008 2009 (unaudited) Profit attributable to the owners of TVN S.A...... 276.0 178.2 Impact of embedded options, net of tax ...... (4.6) -

Profit attributable to the owners of TVN S.A. excluding embedded options . . . . . 271.4 178.2

Results by business segment Our business comprises three major business segments: television broadcasting and production, online and digital satellite pay television. We currently report these business segments separately. We rely on an internal management reporting process that provides revenue and operating results for a particular period by segment for making financial decisions and allocating resources. The table below sets forth summarized financial results by segment for the nine months ended September 30, 2008 and 2009.

Television Digital Other broadcasting & satellite pay reconciling production Onlinetelevision** All otheritems*** Total (Unaudited) Nine months ended September 30, PLN (in millions) 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 Revenue from external customers ...... 1,109.3 1,014.6 135.6 130.7 - 231.9 60.1 55.9 - - 1,305.0 1,433.1 Inter-segment revenue . . . 4.8 31.0 6.8 11.3 - 1.6 8.5 25.2 (20.1) (59.2) - 9.9 Total revenue ...... 1,114.1 1,045.6 142.4 142.0 - 233.5 68.6 81.1 (20.1) (59.2) 1,305.0 1,443.0 Segment result ...... 404.0 358.0 19.1 5.5 - (126.9) 12.9 9.0 (26.2) 63.7 409.8 309.3 Segment result excluding stock option plan expense ...... 423.1 369.1 25.5 7.0 - (126.9) 13.6 9.5 (21.8) 67.5 440.4 326.2 Adjusted EBITDA* ...... 446.5 405.7 34.1 26.1 - (67.1) 16.0 12.4 (28.1) 63.7 468.5 440.8 Adjusted EBITDA* excluding stock option plan expense ...... 465.6 416.8 40.5 27.6 - (67.1) 16.7 12.9 (23.7) 67.5 499.1 457.7 Adjusted EBITDA* margin ...... 40.1% 38.8% 23.9% 18.4% - - 23.3% 15.3% - - 35.9% 30.5% Adjusted EBITDA* margin excluding stock option plan expense ...... 41.8% 39.9% 28.4% 19.4% - - 24.3% 15.9% - - 38.2% 31.7%

58 as “EBITDA” in our reporting to shareholders. Adjusted EBITDA is not an IFRS measure and should not be considered as an alternative to IFRS measures of profit/(loss) or as an indicator of operating performance or as a measure of cash flow from operations under IFRS or as an indicator of liquidity. Adjusted EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments, debt service requirements and capital expenditures. Our presentation of adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under IFRS. For example: • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA does not reflect our interest expense, which will be significant after this offering; • Adjusted EBITDA does not reflect investment income and other finance expense; • Adjusted EBITDA does not reflect income taxes on our taxable earnings; • Adjusted EBITDA does not reflect our share of gains or losses of associates; and • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and adjusted EBITDA does not reflect any cash requirements for such replacement. You should note that Adjusted EBITDA is not a uniform or standardized measure, that the calculation of Adjusted EBITDA, accordingly, may vary significantly form company to company, and by itself our presentation and calculation of Adjusted EBITDA may not be comparable to that of other companies. ** Since March 11, 2009. *** Other reconciling items include head-office expenses that arise at the Group level and are not directly allocated to segment expenses and elimination of intersegment expenses. Such expenses include cost of functions such as: financial reporting and budgeting, internal audit, investor relations, legal, administration, IT and central management. Allocation is based on estimated time investment of each function individually in non-segment activities. Adjusted EBITDA for each of our segments is calculated as follows:

Television broadcasting Digital Other & satellite pay reconciling production Online television All other items Total (Unaudited) Nine months ended September 30, PLN (In millions) 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009

Segment result ...... 404.0 358.0 19.1 5.5 — (126.9) 12.9 9.0 (26.2) 63.7 409.8 309.3 Depreciation and amortization ...... 42.5 47.7 15.0 20.6 — 59.8 3.1 3.4 — — 60.6 131.5 Impairment ...... — — — — — — — — (1.9) — (1.9) — Adjusted EBITDA ...... 446.5 405.7 34.1 26.1 — (67.1) 16.0 12.4 (28.1) 63.7 468.5 440.8 Stock option plan expense...... 19.1 11.1 6.4 1.5 — — 0.7 0.5 4.4 3.8 30.6 16.9 Adjusted EBITDA, excluding stock option plan ... 465.6 416.8 40.5 27.6 — (67.1) 16.7 12.9 (23.7) 67.5 499.1 457.7

Television broadcasting and production The table below sets forth the summarized financial results of our television broadcasting and production segment for the nine months ended September 30, 2008 and 2009: (Unaudited) Nine months ended September 30, 2008 2009 Adjusted Adjusted EBITDA% EBITDA% excluding excluding stock stock Adjusted option Adjusted option Adjusted EBITDA plan Adjusted EBITDA plan PLN (In millions) Revenue EBITDA % expense Revenue EBITDA % expense TVN Channel ...... 863.9 397.7 46.0% 47.8% 757.9 298.0 39.3% 40.5% TVN 24 Channel ...... 124.7 43.0 34.5% 37.1% 141.6 72.7 51.3% 52.8% Other television channels ...... 126.9 7.0 5.5% 6.2% 146.1 37.4 25.6% 26.0% Total ...... 1,115.5 447.7 40.1% 41.9% 1,045.6 408.1 39.0% 40.1% Consolidation adjustments (intra segment) . . (1.4) (1.2) - - - (2.4) - - Total segment ...... 1,114.1 446.5 40.1% 41.8% 1,045.6 405.7 38.8% 39.9%

Television broadcasting and production revenue in the nine months ended September 30, 2009 decreased by PLN 68.5 million, or 6.1%, to PLN 1,045.6 million, compared to PLN 1,114.1 million in the corresponding period of 2008. Our TVN channel revenue decreased by PLN 106.0 million, or 12.3%, in the nine months ended September 30, 2009. This decrease was primarily due to a decrease of PLN 116.7 million, or 15.2% in the advertising revenue of our TVN channel, which recorded an effective decrease of 19.8% in the price of GRPs sold, which was partially offset by a 5.5% increase in the volume of inventory sold. TVN 24 increased its revenue by PLN 16.9 million, or 13.6%, mainly due to an increase in subscription fees from satellite and cable operators, which increased by PLN 30.8 million, or 56.5% to PLN 85.3 million, mostly due to a higher PLN/EUR exchange rate in the nine months ended

59 September 30, 2009 compared with the corresponding period of 2008, as subscriber fees are primarily denominated in euro, and partly due to an increase in the number of subscribers of 1.1 million. This was partly offset by a decrease of PLN 10.4 million, or 18.2% in advertising revenue and partly by a PLN 3.1 million or 28.7% decrease in sponsoring revenue. Our other channels’ revenue increased by PLN 19.2 million, or 15.1%, in the nine months ended September 30, 2009. This increase was mainly attributable to an increase of PLN 15.8 million, or 43.8%, in subscription fees from satellite and cable operators. For the reasons stated above, TVN channel’s Adjusted EBITDA decreased by PLN 99.7 million, or 25.1%, to PLN 298.0 million in the nine months ended September 30, 2009, from PLN 397.7 million in the corresponding period and Adjusted EBITDA margin decreased to 39.3% from 46.0% in the corresponding period of 2008. TVN 24 channel Adjusted EBITDA increased by PLN 29.7 million, or 69.1% to PLN 72.7 million in the nine months ended September 30, 2009, from PLN 43.0 million in the corresponding period of 2008. Adjusted EBITDA margin was 51.3% as of September 30, 2009. Adjusted EBITDA on our other channels increased by PLN 30.4 million to PLN 37.4 million. Excluding the start up losses of TVN Warszawa channel which we launched in December 2008, other television channels increased Adjusted EBITDA by PLN 43.8 million to PLN 54.3 million with an Adjusted EBITDA margin of 38.1%.

Online The table below sets forth summarized financial results for our Online segment for the nine months ended September 30, 2008 and 2009:

(Unaudited) nine months ended September 30, 2008 2009 Cash Adjusted Cash EBITDA Adjusted % EBITDA % excluding excluding stock stock option option Adjusted Adjusted plan Adjusted Adjusted plan PLN (in millions) Revenue EBITDA EBITDA % expense Revenue EBITDA EBITDA % expense Onet.pl ...... 128.3 40.4 31.5% 39.6% 121.8 28.3 23.2% 29.1% Other ...... 16.7 (6.2) - - 23.5 (2.2) - - Total ...... 145.0 34.2 23.6% 33.0% 145.3 26.1 18.0% 24.5% Consolidation adjustment (intra segment) . . (2.6) (0.1) - - (3.3) - - - Total segment ...... 142.4 34.1 23.9% 33.7% 142.0 26.1 18.4% 24.9% Total segment — Cash ...... 125.2 42.2 33.7% 33.7% 123.5 30.7 24.9% 24.9%

Online revenue decreased by PLN 0.4 million, or 0.3%, to PLN 142.0 million in the nine months ended September 30, 2009, from PLN 142.4 million in the corresponding period of 2008. Online cash revenue (revenue excluding barter revenue) decreased by PLN 1.7 million, or 1.4%, to PLN 123.5 million primarily due to lower cash advertising revenue in Onet.pl by PLN 7.5 million, or 6.7%, partly offset by higher cash advertising revenue in Zumi.pl by PLN 5.4 million, or 54.5%. The decrease in Onet.pl revenue is partly due to higher revenue base in 2008. The revenue base in 2008 was increased by significant one-off contracts with telecom operators. Excluding the impact of the above mentioned contracts, Onet.pl revenue did not change significantly comparing to the corresponding period of 2008. Revenue of our internet vortals, presented in the table above as ’Other’, increased by PLN 6.8 million, or 40.7%, to PLN 23.5 million in the nine months ended September 30, 2009, from PLN 16.7 million in the corresponding period of 2008, and represented revenue of our products such as Zumi.pl, TVN24.pl and Plejada.pl. Starting from May 2009 there have been adjustments made to the methodology of real users calculations and, as a result, there are no comparatives for the period of four months ended July 2009 data. Our internet portal Onet.pl had on average 12.3 million real users and 3,600 million page views in the period of three months ended July 2009. Average monthly time spent on Onet.pl portal in period of four months ended July 2009 was 62.0 million hours. Segment Adjusted EBITDA decreased by PLN 8.0 million to PLN 26.1 million in the nine months ended September 30, 2009. Adjusted EBITDA margin decreased to 18.4% from 23.9% in the corresponding period of 2008. Online cash Adjusted EBITDA (Adjusted EBITDA excluding barter

60 and stock option plan expenses) was PLN 30.7 million compared to PLN 42.2 million in the corresponding period of 2008. Segment cash Adjusted EBITDA margin was 24.9%, compared to 33.7% in the corresponding period of 2008. Onet.pl Adjusted EBITDA decreased by PLN 12.1 million, or 30.0%. The decrease of Onet.pl Adjusted EBITDA results mainly from a higher advertising revenue base in 2008, which resulted from significant one-off contracts with telecom operators. Onet.pl Adjusted EBITDA was also adversely affected by costs of e-commerce and other portal related new projects. Adjusted EBITDA of our internet vortals presented in the table above as ‘Other’ increased by PLN 4.0 million to a loss of PLN 2.2 million in the nine months ended September 30, 2009. Excluding the start-up losses of Plejada.pl, which we launched in March 2008, vortals classified as ‘Other’ in the table recorded an increase in Adjusted EBITDA of PLN 4.6 million to a positive Adjusted EBITDA of PLN 0.2 million.

Digital satellite pay television The table below sets forth summarized financial results of our digital satellite pay television segment for the nine months ended September 30, 2008 and 2009. We, however, fully consolidated the financial results of our digital satellite pay television segment for the period between March 11, 2009 and September 30, 2009. (Unaudited) nine months ended September 30, 2008 2009 Adjusted Adjusted Adjusted Adjusted PLN (in millions) Revenue EBITDA EBITDA % Revenue EBITDA EBITDA % ‘n’ post paid subscribers . . . . 168.3 (103.3) - 300.6 (86.7) - ‘n’ pre-paid subscribers (Telewizja na karte˛ ) ...... - - - 15.6 (3.9) - Total segment ...... 168.3 (103.3) - 316.2 (90.6) -

The ‘n’ DTH platform revenue increased by PLN 147.9 million, or 87.9%, to PLN 316.2 million in the nine months ended September 30, 2009, from PLN 168.3 million in the corresponding period of 2008. This increase results mainly from an increase in subscription fee revenue, which increased by PLN 151.5 million, or 99.7%, to PLN 303.4 million in the nine months ended September 30, 2009, from PLN 151.9 million in the corresponding period of 2008. This increase is primarily due to a higher average number of subscribers and higher ARPU. The ‘n’ DTH platform post paid subscribers increased by 0.2 million to an average of 0.5 million in the nine month period ended September 30, 2009, from an average of 0.3 million subscribers in the corresponding period in 2008. The ‘n’ DTH platform ARPU increased by PLN 8.7 to PLN 57.6 in the nine months ended September 30, 2009 from PLN 48.9 in the corresponding period of 2008. The ‘n’ DTH platform recorded 0.2 million gross post paid subscriber additions in the nine months ended September 30, 2009, compared to 0.1 million in the nine months ended September 30, 2008. Telewizja na karte˛ (“TNK”) recorded revenue of PLN 15.6 million in the nine months ended September 30, 2009. This revenue comprises mostly revenue from subscription fees and PLN 3.9 million of revenue from sale of TNK set-top boxes mostly in the first quarter of 2009. TNK increased its prepaid subscribers base by 0.2 million in the nine months ended September 30, 2009. As of September 30, 2009, TNK had almost 0.2 million active prepaid subscribers and a subscriber base of almost 0.3 million. In the nine months ended September 30, 2009, TNK recorded ARPU of PLN 9.61. The platform recorded a loss at the Adjusted EBITDA level of PLN 90.6 million in the nine months ended September 30, 2009 compared to loss of PLN 103.3 million in the corresponding period of 2008. This period’s Adjusted EBITDA was adversely affected by the depreciation of PLN against the EUR and PLN against the USD, as the majority of the platform’s costs, including programming and broadcasting expenses, are denominated in euro and dollar.

61 All other The table below sets forth summarized financial results of our “All other” segment for the nine months ended September 30, 2008 and 2009. The segment comprises teleshopping, cinema movies distribution as well as content sales and technical services offered primarily to business entities within TVN Group.

(Unaudited) nine months ended September 30, 2008 2009 Adjusted Adjusted EBITDA % EBITDA % excluding excluding stock stock option option Adjusted Adjusted plan Adjusted Adjusted plan PLN (in millions) Revenue EBITDA EBITDA % expense Revenue EBITDA EBITDA % expense Mango Media ...... 37.3 8.5 22.8% 22.8% 45.2 3.9 8.6% 8.6% Other ...... 32.1 7.5 23.4% 25.5% 36.7 8.5 23.2% 24.4% Total ...... 69.4 16.0 23.1% 24.1% 81.9 12.4 15.1% 15.8% Consolidation adjustment (intra segment) ...... (0.8) - - - (0.8) - - - Total segment ...... 68.6 16.0 23.3% 24.3% 81.1 12.4 15.3% 15.9%

“All other” revenue increased by PLN 12.5 million, or 18.2%, to PLN 81.1 million in the nine months ended September 30, 2009, from PLN 68.6 million in the corresponding period of 2008. Mango Media revenue increased by PLN 7.9 million, or 21.2%, to PLN 45.2 million, primarily due to higher sales volumes. Business units classified as “Other” increased revenue by PLN 4.6 million or 14.3%. Segment Adjusted EBITDA decreased by PLN 3.6 million, or 22.5%, to PLN 12.4 million in the nine months ended September 30, 2009. Adjusted EBITDA margin decreased to 15.3%, from 23.3% in the corresponding period of 2008.

Other reconciling items Other reconciling items consist primarily of consolidation eliminations not allocated to segments, head office expenses and the portion of stock option plan expenses not allocated to business segments. Other reconciling items had a total positive impact on our profit of PLN 63.7 million in the nine months ended September 30, 2009, compared to a negative impact of PLN 26.2 million in the corresponding period of 2008. This is mainly due to the recognition of a gain of PLN 110.7 million from consolidation of an associate.

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007 Revenue, net. Our net revenue increased by PLN 342.6 million, or 22.0%, to PLN 1,897.3 million in 2008, from PLN 1,554.7 million in 2007. This increase resulted primarily from an increase in our advertising revenue of 22.0%, an increase in sponsoring revenue of 32.8% and an increase of 32.8% in subscription fees from satellite and cable operators, as well as an increase of 176.2% in revenue from the sale of goods and services. These increases were offset by a decrease of 33.1% in call television revenue. Excluding the results of Mango Media, our net revenue increased by 20.2% to PLN 1,846.6 million. During 2008, advertising revenue increased by PLN 265.7 million, or 22.0%, to PLN 1,475.3 million, from PLN 1,209.6 million in 2007. This increase was primarily due to an increase in the revenue of our TVN channel which recorded an increase of PLN 187.2 million, or 19.9%, in advertising revenue largely due to an increase in the proportion of rate-card sales to total sales to 70.0%, from 28.7% in 2007. Rate-card prices tend to be higher than GRP prices. We recorded an effective increase of 29.4% in the price of GRPs sold. This was partially offset by a 7.1% decrease in the volume of inventory sold. Our other television channels contributed PLN 37.1 million more in advertising revenue. This increase resulted primarily from increases in advertising revenue of PLN 14.8 million and PLN 13.9 million, in our TVN 7 and TVN 24 channels respectively, mainly due to price increases. Onet.pl increased its advertising revenue 18.1%, or PLN 23.5 million, resulting primarily from increased sales volumes.

62 During 2008, non-advertising revenue increased by PLN 76.9 million, or 22.3% to PLN 422.0 million, from PLN 345.1 million in 2007. The increase was primarily due to a 32.8% increase in sponsoring revenue, a 32.8% increase in subscription fees from satellite and cable operators and a 176.2% increase in the revenue from sale of goods. This increase was partly offset by a 33.1% decrease in call television revenue. Sponsoring revenue increased by PLN 33.7 million, or 32.8%, primarily due to an increase in the number of sponsored shows and a price increase. Subscription fees from satellite and cable operators increased by PLN 31.2 million or 32.8%, primarily due to an increase in the number of subscribers for our pay channels, which on average increased by approximately 1.1 million in 2008 compared with 2007. As prices per subscriber are denominated in euro and dollar, this increase was partly offset by lower PLN/EUR and PLN/USD exchange rates during the year. Our revenue from the sale of goods increased by PLN 26.6 million, or 176.2%, to PLN 41.7 million in 2008, from PLN 15.1 million in 2007. This increase resulted primarily from an increase in the volume of merchandise sold by Mango Media, which more than doubled in 2008 compared to 2007. Excluding the results of Mango Media, our non-advertising revenue increased by 14.1% to PLN 376.0 million. The decrease in call television revenue of PLN 21.1 million, or 33.1% was partly due to our decision to shut down TVN Gra, our call television channel, and partly due to the replacement of call television slots on our TVN channel with our week day morning show Dzien´ Dobry TVN, which resulted in an increase in our aggregated revenue. Cost of revenue. Cost of revenue increased by PLN 148.8 million, or 18.2%, to PLN 967.2 million in 2008, from PLN 818.4 million in 2007. The increase in cost of revenue primarily reflects our decision to strengthen our TVN channel’s spring and autumn schedules to improve our market position in terms of audience share as well as our share of the advertising market. Excluding the results of Mango Media, our cost of revenue increased by 16.2% to PLN 937.1 million. Our amortization of locally produced content increased by PLN 85.1 million, or 20.2%, to PLN 506.7 million in 2008, from PLN 421.6 million in 2007. This increase mainly reflects our decision to broadcast first runs of successful shows such as Got Talent, Who Wants to be a Millionaire, Clever and You Can Dance, and Teraz albo nigdy during the spring and autumn seasons instead of second runs of locally produced shows. We also supported our schedule with more second runs of local productions in comparison with 2007. The average cost per hour of our production has increased partly due to the fact that we now produce relatively more big entertainment shows and drama series, which are relatively more expensive and partly because we have started to produce in high definition. The increase also partly results from expenses related to our news services. In 2008, we recorded expenses related to our news helicopter and new regional units which support our daily evening news program Fakty and other news programs. We also aired more news programs and recorded an increase in the number of live shows broadcast on our TVN 24 news channel, as well as live coverage from events such as the Olympic Games and the EURO 2008 football championships. The increase was also partly due to the launch of our TVN CNBC Biznes channel in August 2007. Our programming staff expenses increased by PLN 18.5 million, or 34.2%, to PLN 72.6 million, from PLN 54.1 million in 2007. The increase in programming staff expenses was partly because we created an in-house film and series script development and production unit to produce films and series where we own all rights. It is also due to an increase in programming-related salaries of 12.8% on average during the year. As a percentage of net revenue, our cost of revenue decreased in 2008 to 51.0% compared to 52.6% in 2007. Selling expenses. Our selling expenses increased by PLN 25.3 million, or 20.0%, to PLN 151.8 million for the twelve months ended December 31, 2008, from PLN 126.5 million in 2007. This increase was partly due to increased marketing of our TVN channel’s spring and autumn programming schedules, partly due to marketing expenses related to the re-launch of our TVN 7 channel and increased marketing of our TVN Turbo channel. We also increased our marketing of Onet.pl and Zumi.pl, mainly using barter arrangements. Staff expenses increased by 34.6%, mainly due to an increase in the number of employees, in particular new sales people hired to sell new channels such as TVN CNBC Biznes and TVN Warszawa, as well as our online directory service, Zumi.pl. Excluding the results of Mango Media, our selling expenses increased by 16.3% to PLN 144.6 million. As a percentage of net revenue, our selling expenses decreased to 8.0% in 2008, compared to 8.1% in 2007.

63 General and administration expenses. Our general and administration expenses increased by PLN 22.8 million, or 18.1%, to PLN 148.8 million, in 2008 compared with PLN 126.0 million in 2007. Excluding the impact of a favorable VAT adjustment made in 2007, our general and administration expenses increased by PLN 20.5 million, or 16.0%. This increase results partly from a PLN 9.8 million increase in personnel costs, driven by an increase in headcount, and a 7.6% increase in salaries on average. The increase in general and administration expenses also results partly from a PLN 5.1 million increase in rental and related costs, as we rented and furnished additional office space to house new business units and incurred higher maintenance costs related to our current premises. This increase is also partly related to changes in accounting estimates related to the calculation of retirement benefits in 2007 as well as the treatment of certain software licenses as operating costs in 2008, when previously these licenses had been treated as assets capitalized in the balance sheet and amortized.

As a percentage of net revenue, our general and administration expenses decreased to 7.8% in 2008, from 8.1% in 2007.

Operating profit. Operating profit increased by PLN 149.9 million, or 31.1%, to PLN 631.9 million for 2008, from PLN 482.0 million in 2007. This increase was primarily due to the increase in revenue partially offset by higher operating expenses. Excluding the results of Mango Media, our operating profit increased by 29.6% to PLN 622.8 million.

Our operating margin in 2008 increased to 33.3%, from 31.0% in 2007.

Investment income, net. We recorded investment income, net of PLN 81.1 million for 2008, compared to investment income, net, of PLN 19.3 million in 2007. This increase results partly from a gain on our USD currency options of PLN 22.7 million, due to a depreciation of the PLN/USD exchange rate during 2008, partly from an increase in interest income of PLN 19.6 million, primarily because of interest income on loans granted to the ‘n’ DTH platform and partly due to interest recognized on treasury bills we purchased in 2008. We also recognized foreign exchange gains of PLN 33.4 million, primarily on EUR denominated loans due to us from the ‘n’ DTH platform, compared with foreign exchange gains of PLN 14.0 million, primarily on acquired programming rights, in 2007.

Finance expense, net. We recorded finance expense, net of PLN 171.0 million for the twelve months ended December 31, 2008, compared to finance expense, net of PLN 204.1 million in 2007.

We recognized a loss on the revaluation of embedded debt prepayment options of PLN 20.4 million in 2008, compared to a loss of PLN 107.6 million in 2007. As of December 31, 2008, the value of these options was nil.

Our interest expense amounted to PLN 112.8 million in 2008, compared to PLN 94.8 million in 2007. The increase results primarily from interest of PLN 24.8 million on our PLN Bonds and partly from the interest expense on our Loan Facility.

We recognized foreign exchange losses on our Existing Notes of PLN 130.6 million in 2008 compared to foreign exchange gains of PLN 58.6 million in 2007. We also recorded a net gain of PLN 100.6 million on our euro currency options entered into to hedge potential foreign exchange losses on our Existing Notes.

Share of loss of associate. Our share of loss of associate amounted to PLN 94.4 million in 2008. This amount represented primarily our share in the net loss of the ‘n’ DTH platform between June 25 and December 31, 2008, which amounted to PLN 94.5 million and comprised primarily our share of the operating losses of PLN 41.6 million and PLN 43.2 million of unrealized foreign exchange losses on revaluation of euro denominated loans due to shareholders of ITI Neovision Sp. z o.o.

Profit before income tax. We recorded a profit before income tax of PLN 447.6 million for 2008, compared to PLN 297.2 million in 2007. This increase resulted primarily from the increase in operating profit and lower loss on our embedded options valuation. Excluding the results of Mango Media and our share of the losses of the ‘n’ DTH platform, our profit before tax was PLN 533.0 million.

Income tax charge. For 2008, we recorded a total income tax charge of PLN 83.9 million, compared to PLN 53.9 million in 2007. Our effective tax rate was 18.7% in 2008, compared to 18.1% in 2007.

64 Net profit. We recorded a net profit of PLN 363.7 million for 2008, compared to PLN 243.3 million in 2007. Excluding the impact of revaluation of embedded options and our share in the net loss of the ‘n’ DTH platform, our net profit increased by PLN 126.2 million, or 38.2%, to PLN 456.7 million in 2008, from PLN 330.5 million in 2007.

Business segment results In the years stated, our business comprised two distinct segments, television broadcasting and production and online, and we currently report these two business segments separately. We rely on an internal management reporting process that provides revenue and operating results for a particular period by segment for making financial decisions and allocating resources. The table below sets forth summarized financial results by segment for the twelve months ended December 31, 2007 and 2008: Television broadcasting & production Online Unallocated Total Twelve months ended December 31, PLN (in millions) 2007 2008 2007 2008 2007 2008 2007 2008 Revenue from external customers ...... 1,399.3 1,700.9 155.4 196.4 - - 1,554.7 1,897.3 Inter-segment revenue ...... 8.1 6.6 7.1 9.8 (15.2) (16.4) - - Total revenue ...... 1,407.4 1,707.5 162.5 206.2 (15.2) (16.4) 1,554.7 1,897.3 Segment result ...... 498.5 635.6 19.4 34.9 (35.9) (38.6) 482.0 631.9 Segment result excluding stock option plan expense ...... 519.9 662.2 35.8 42.7 (28.9) (32.9) 526.8 672.0 Adjusted EBITDA (unaudited)* ...... 554.7 696.4 35.3 55.5 (35.9) (40.5) 554.1 711.4 Adjusted EBITDA* (unaudited) excluding stock option plan expense ...... 576.1 723.0 51.7 63.3 (28.9) (34.8) 598.9 751.5 Adjusted EBITDA* (unaudited) margin ...... 39.4% 40.8% 21.7% 26.9% - - 35.6% 37.5% Adjusted EBITDA* (unaudited) margin excluding stock option plan expense...... 40.9% 42.3% 31.8% 30.7% - - 38.5% 39.6%

* Adjusted EBITDA is defined as segment result adjusted for depreciation and amortization charges and impairment charges or reversals on property, plant and equipment and intangible assets. We believe that adjusted EBITDA serves as a useful supplementary financial indicator in measuring the liquidity of media companies and we have previously reported this measure as “EBITDA” in our reporting to shareholders. Adjusted EBITDA is not an IFRS measure and should not be considered as an alternative to IFRS measures of profit/(loss) or as an indicator of operating performance or as a measure of cash flow from operations under IFRS or as an indicator of liquidity. Adjusted EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments, debt service requirements and capital expenditures. Our presentation of adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under IFRS. For example: • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA does not reflect our interest expense, which will be significant after this offering; • Adjusted EBITDA does not reflect investment income and other finance expense; • Adjusted EBITDA does not reflect income taxes on our taxable earnings; • Adjusted EBITDA does not reflect our share of gains or losses of associates; and • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and adjusted EBITDA does not reflect any cash requirements for such replacement. You should note that Adjusted EBITDA is not a uniform or standardized measure, that the calculation of Adjusted EBITDA, accordingly, may vary significantly form company to company, and by itself our presentation and calculation of Adjusted EBITDA may not be comparable to that of other companies. Adjusted EBITDA for each of our segments is calculated as follows:

Television Broadcasting & Production Online Unallocated Total (Unaudited) Twelve months ended December 31, PLN (In millions) 2007 2008 2007 2008 2007 2008 2007 2008

Segment result ...... 498.5 635.6 19.4 34.9 (35.9) (38.6) 482.0 631.9 Depreciation and amortization ...... 55.9 60.8 15.9 20.6 — — 71.8 81.4 Impairment ...... 0.3 — — — — (1.9) 0.3 (1.9) Adjusted EBITDA...... 554.7 696.4 35.3 55.5 (35.9) (40.5) 554.1 711.4 Stock option plan expense ...... 21.4 26.6 16.4 7.8 7.0 5.7 44.8 40.1 Adjusted EBITDA, excluding stock option plan expense ... 576.1 723.0 51.7 63.3 (28.9) (34.8) 598.9 751.5

Unallocated expenses include head-office expenses that arise at the Group level and are not directly allocated to segment expenses and elimination of intersegment expenses. Such expenses include

65 cost of functions such as: financial reporting and budgeting, internal audit, investor relations, legal, administration, IT and central management. Allocation is based on estimated time investment of each function individually in non-segment activities.

Television broadcasting and production The table below sets forth summarized financial results of our Television broadcasting and production segment for the twelve months ended December 31, 2007 and 2008.

(Unaudited) Twelve months ended December 31, 2007 2008 ADJUSTED ADJUSTED EBITDA % EBITDA % excluding excluding stock stock ADJUSTED ADJUSTED option plan ADJUSTED ADJUSTED option plan PLN (in millions) Revenue EBITDA EBITDA % expense Revenue EBITDA EBITDA % expense TVN channel ...... 1,077.8 494.8 45.9% 48.1% 1,277.0 607.8 47.6% 49.7% TVN 24 ...... 141.1 47.6 33.7% 36.1% 177.2 64.5 36.4% 38.8% Other television channels . . . . . 197.1 14.5 7.4% 7.8% 259.5 23.0 8.9% 9.3% Total ...... 1,416.0 556.9 39.3% 41.3% 1,713.7 695.3 40.6% 42.4% Consolidation adjustment (intra segment) ...... (8.6) (2.2) - - (6.2) 1.1 - - Total segment ...... 1,407.4 554.7 39.4% 40.9% 1,707.5 696.4 40.8% 42.3%

Our television broadcasting and production revenue in 2008 increased by PLN 300.1 million, or 21.3%, to PLN 1,707.5 million, compared to PLN 1,407.4 million in 2007. This increase was primarily due to an increase in the revenue of our TVN channel, which recorded an increase of PLN 187.2 million, or 19.9%, in advertising revenue largely due to an increase in the proportion of rate-card sales to total sales to 70.0%, from 28.7% in 2007. Rate-card prices tend to be higher than GRP prices. We recorded an effective increase of 29.4% in the price of GRPs sold. This was partially offset by a 7.1% decrease in the volume of inventory sold. Sponsoring revenue in our TVN channel increased by PLN 33.2 million, to PLN 107.5 million. TVN 24 increased its revenue by PLN 36.1 million, or 25.6%, mainly due to an increase in subscription fees from satellite and cable operators, which increased by PLN 24.8 million, primarily due to an increase of 1.0 million in the average number of subscribers and partly due to an increase in advertising revenue of PLN 13.9 million. Our other channels’ revenue increased by PLN 62.4 million, partly due to teleshopping activities conducted by Mango Media, which contributed PLN 27.2 million to the increase and partly due to a 24.4% increase in our other channels’ advertising revenue. TVN 7 advertising revenue increased by PLN 14.9 million and TVN Style by PLN 4.3 million. Our TVN CNBC Biznes channel’s revenue increased by PLN 6.9 million. Adjusted EBITDA increased by PLN 141.7 million, or 25.5%, to PLN 696.4 million in 2008, from PLN 554.7 million in 2007. Adjusted EBITDA margin increased to 40.8%, from 39.4% in 2007. Adjusted EBITDA margin excluding stock option plan expenses, increased to 42.3%, from 40.9% in 2007. Our other television channels’ Adjusted EBITDA increased by PLN 8.5 million, or 58.6%. Other television channels recorded a profit of PLN 23.0 million at the Adjusted EBITDA level in 2008, compared to a profit of PLN 14.5 million in 2007. Excluding start up losses of TVN Warszawa other television channels increased Adjusted EBITDA by PLN 16.7 million, or 115.2%, to PLN 31.2 million in 2008 from 14.5 million in 2007. Our other channels’ Adjusted EBITDA in 2008 was also affected by a one-off impairment charge of the programming library.

66 Online segment The table below sets forth summarized financial results of our Online segment for the twelve months ended December 31, 2007 and 2008: (Unaudited) Twelve months ended December 31, 2007 2008 Cash Cash Adjusted Adjusted EBITDA% EBITDA% excluding excluding stock stock option option Adjusted Adjusted plan Adjusted Adjusted plan PLN (in millions) Revenue EBITDA EBITDA% expense Revenue EBITDA EBITDA% expense Onet.pl ...... 162.7 48.9 30.1% 43.8% 187.2 62.0 33.1% 42.7% Other ...... 3.4 (14.8) - - 26.9 (5.8) - Total ...... 166.1 34.1 20.5% 36.4% 214.1 56.2 26.2% 37.6% Consolidation adjustment ...... (3.6) 1.2 - - (7.9) (0.7) - - Total segment ...... 162.5 35.3 21.7% 31.9% 206.2 55.5 26.9% 30.7% Total segment — cash ...... 135.1 51.4 38.0% 38.0% 179.6 68.4 38.1% 38.1%

Online revenue increased by PLN 43.7 million, or 26.9%, to PLN 206.2 million in 2008, from PLN 162.5 million in 2007. Online cash revenue (revenue excluding barter revenue) increased to PLN 179.6 million, from PLN 135.1 million in 2007, partly due to an increase in Onet.pl cash advertising revenue of PLN 21.4 million and partly due to an increase in Zumi.pl cash advertising revenue of PLN 15.5 million. Revenue of our internet vortals presented above as ‘Other’ increased by PLN 23.5 million, or 691.2%, to PLN 26.9 million in 2008, from PLN 3.4 million in 2007, and represented revenue of new products such as Zumi.pl, TVN24.pl and Plejada.pl. Segment Adjusted EBITDA increased to PLN 55.5 million. Online cash Adjusted EBITDA (Adjusted EBITDA excluding barters and stock option plan expenses) was PLN 68.4 million. Segment cash Adjusted EBITDA margin was 38.1% as compared with 38.0% in 2007. Our internet vortals classified as other significantly improved their profitability, with losses decreasing from PLN 14.8 million in 2007 to PLN 5.8 million in 2008, primarily due to improvements in the profitability of Zumi.pl.

Unallocated The unallocated items consist primarily of head office expenses, the portion of stock option plan expenses which are not allocated to television broadcasting and production and online segment and elimination of intersegment revenue and costs. Unallocated loss was PLN 38.6 million in 2008, compared PLN 35.9 million in 2007. The increase is primarily due to a higher level of cross-promotion activities between our segments and a higher level of staff expenses in our general corporate and administration departments, primarily in information technology and accounting and controlling. These increases were partly offset by a reversal of impairment of property, plant and equipment of PLN 1.9 million.

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006 The following analysis has been derived from our consolidated financial statements as of and for the year ended December 31, 2007. Where necessary, in our consolidated financial statements as of and for the year ended December 31, 2008, we have adjusted comparative figures or figures presented in previously issued financial statements to conform to changes in presentation in the current period. No amendments have resulted in changes to previously presented revenue, operating profits, net results or shareholders’ equity. Revenue, net. Our net revenue increased by 33.5% to PLN 1,554.7 million for the twelve months ended December 31, 2007, from PLN 1,165.0 million in the corresponding period of 2006. Excluding the results of Grupa Onet and Mango Media, our net revenue increased by 25.3% to PLN 1,391.2 million, from PLN 1,110.7 million in the corresponding period of 2006. During the twelve months ended December 31, 2007, advertising revenue increased by 28.5% to PLN 1,209.6 million, from PLN 941.6 million in the corresponding period of 2006. Excluding the results of Grupa Onet and Mango Media, our advertising revenue increased by 21.8% to PLN 1,089.6 million, from PLN 894.9 million in the corresponding period of 2006. This increase was primarily due to an average effective price increase of 17% and a 3% increase in the volume of

67 inventory sold. We increased the proportion of rate-card sales from 16% in 2006 to 29% in 2007. Rate-card prices tend to be higher than GRP prices. Our rate-card prices increased by 6% in 2007, whereas the price per GRP increased by 13%. Other channels contributed PLN 20.2 million more in advertising revenue during the twelve months ended December 31, 2007 than in the corresponding period of 2006. During the twelve months ended December 31, 2007, non-advertising revenue increased by 54.5% to PLN 345.1 million, from PLN 223.4 million in the corresponding period of 2006. Excluding the results of Grupa Onet and Mango Media, our non-advertising revenue increased by 39.8% to PLN 301.7 million, from PLN 215.8 million in the corresponding period of 2006. The increase was primarily due to a 52.6% increase in subscription fees from satellite and cable operators which increased to PLN 94.9 million in the twelve months ended December 31, 2007, from PLN 62.2 million in the corresponding period of 2006. The increase in subscription revenue is primarily due to an increase in the number of subscribers for our pay channels, which on average have increased by more than one million subscribers. In addition we recorded a 37.5% increase in sponsoring revenue, mainly due to increased sponsoring of films and locally produced series and talk shows. We also recorded revenue of PLN 26.7 million for services which we provide to the ‘n’ DTH platform, compared to PLN 3.6 million in the corresponding period of 2006, and PLN 4.6 million of revenue for cinema and DVD distribution of our movie Swiadek Koronny. Cost of revenue. Cost of revenue increased by 29.3% to PLN 817.9 million in the twelve months ended December 31, 2007, from PLN 632.4 million in the corresponding period of 2006. Excluding the results of Grupa Onet and Mango Media, our cost of revenue increased by 21.8% to PLN 743.6 million, from PLN 610.6 million in the corresponding period of 2006. This increase was partly due to an increase of PLN 87.7 million in local production amortization, mainly because we broadcast more and better quality local shows, which are relatively more expensive than the average shows broadcast in the prior year, and partly because we launched four new channels in autumn 2006 and in 2007. The increase in cost of revenue was also due to an increase in staff expenses of PLN 22.2 million, of which PLN 4.4 million related to employees who provided services to the ‘n’ DTH platform. In addition we employed over 130 new staff during the course of 2007, mainly to enhance local production, including news. We also recorded an increase of PLN 11.1 million in the amortization of acquired programming and co-production due to more expensive acquired movies and series being broadcast as well as an increase in the number of hours of acquired programming on our TVN and TVN 7 channels, a release to cinemas of our movie Swiadek Koronny in February 2007 and an increase in our royalty expense due to increased revenue. These increases were partially offset by a decrease of PLN 7.3 million in stock option plan expenses. As a percentage of total revenue, our cost of revenue decreased in the twelve months ended December 31, 2007 to 52.6%, compared to 54.3% in the corresponding period of 2006. Excluding the results of Grupa Onet and Mango Media, our cost of revenue was 53.4% of our net revenue compared to 55.0% in the corresponding period of 2006. Selling expenses. Our selling expenses increased by 61.2% to PLN 127.0 million for the twelve months ended December 31, 2007, from PLN 78.8 million in the corresponding period of 2006. Excluding the results of Grupa Onet and Mango Media, our selling expenses increased by 42.2% to PLN 88.9 million, from PLN 62.5 million in the corresponding period of 2006. This increase was partly related to an increase of 45.5% in marketing and research expenses due to increased expenditure on promotion of our spring and autumn schedules on our TVN channel, the relaunch of our TVN Turbo channel and the launch of our new business channel TVN CNBC Biznes. Additionally we recorded an increase of 29.4% in staff expenses mainly due to an increase in the number of employees in sponsoring and sales support departments. These increases were partially offset by a decrease in stock option plan expenses. Impaired accounts receivable increased by PLN 4.1 million due to a higher doubtful debts provision. As a percentage of net revenue, our selling expenses increased to 8.2% in the twelve months ended December 31, 2007, compared to 6.8% in the corresponding period of 2006. Excluding the results of Grupa Onet and Mango Media, our selling expenses were 6.4% of our net revenue compared to 5.6% in the corresponding period of 2006. General and administration expenses. Our general and administration expenses increased by 20.3% to PLN 126.0 million for the twelve months ended December 31, 2007, compared with PLN 104.7 million in the corresponding period of 2006. Excluding the results of Grupa Onet and

68 Mango Media, our general and administration expenses increased by 6.3% to PLN 98.9 million, from PLN 93.0 million in the corresponding period of 2006. This increase was primarily related to an increase in staff expenses of PLN 8.9 million resulting from an increase in the number of employees needed to support our growth and an increase in medical care costs, ITcosts and office supplies. This increase was partially offset by a decrease in stock option plan expenses of PLN 9.1 million. As a percentage of net revenue, our general and administration expenses decreased to 8.1% in the twelve months ended December 31, 2007, from 9.0% in the corresponding period of 2006. Excluding the results of Grupa Onet and Mango Media, our general and administration expenses were 7.1% of our net revenue compared to 8.4% in the corresponding period of 2006. Operating profit. Operating profit increased by 38.3% to PLN 482.0 million for the twelve months ended December 31, 2007, from PLN 348.5 million in the corresponding period of 2006. Excluding the results of Grupa Onet and Mango Media, our operating profit increased by 33.0% to PLN 457.9 million, from PLN 344.3 million in the corresponding period of 2006. This increase was primarily due to the increase in revenue, partially offset by higher operating expenses. Our operating margin in the twelve months ended December 31, 2007 increased to 31.0% from 29.9% in the corresponding period of 2006. Excluding the results of Grupa Onet and Mango Media, our operating margin increased to 32.9% compared to 31.0% in the corresponding period of 2006. Investment income, net. We recorded investment income, net, of PLN 19.3 million for the twelve months ended December 31, 2007, compared to investment income, net, of PLN 54.1 million in the corresponding period of 2006. Due to repayment of the ITI Media Bond on July 31, 2006, we had no accrued interest income on the ITI Media Bond for the twelve months ended December 31, 2007, compared to PLN 34.1 million for the corresponding period of 2006. ITI Media Bond refers to the bond that our indirect controlling shareholder, ITI Media Group B.V., issued to us on December 2, 2003 and which it repaid on July 31, 2006. Additionally we recorded foreign exchange gains of PLN 14.0 million mainly on purchased programming, in the twelve months ended December 31, 2007, compared to foreign exchange gains of PLN 19.4 million, mainly on the ITI Media Bond, in the corresponding period of 2006. In the twelve months ended December 31, 2006, we also recorded an impairment of our investment in Polskie Media in the amount of PLN 6.3 million. Finance expense, net. We recorded finance expense, net of PLN 204.1 million for the twelve months ended December 31, 2007, compared to finance expense net of PLN 68.3 million in the corresponding period of 2006. The substantial increase in our finance expense, net is due to losses of PLN 107.6 million on the revaluation of the embedded options in our Existing Notes, compared to a revaluation gain of PLN 32.7 million in the corresponding period of 2006. The losses are primarily due to a decrease in the price of our Existing Notes from 113 as of December 31, 2006, to 104 as of December 31, 2007. Our interest expense on the Existing Notes amounted to PLN 94.8 million in the twelve months ended December 31, 2007, compared to PLN 92.4 million in the corresponding period of 2006, mainly due to recognition of withholding tax on interest paid of PLN 4.4 million, resulting from a change in the applicable tax regulations. Additionally, we recognized foreign exchange gains on our Existing Notes of PLN 58.6 million in the twelve months ended December 31, 2007, compared to foreign exchange gains of PLN 6.4 million in the corresponding period of 2006, resulting mainly from a strengthening of the złoty to euro exchange rate between December 31, 2006 and December 31, 2007. This was offset by a loss of PLN 54.5 million on fair value changes of financial instruments compared to a loss of PLN 5.3 million in the corresponding period of 2006, because in November 2007 we incurred the cost of early settlement of foreign exchange option collars of PLN 40.7 million. We incurred a guarantee fee of PLN 3.0 million to ITI Group in respect of guarantees issued on our behalf to programming suppliers compared to PLN 7.0 million incurred in the corresponding period of 2006. Profit before income tax. Our profit before income tax decreased by 11.1% to PLN 297.2 million for the twelve months ended December 31, 2007, from PLN 334.3 million in the corresponding period of 2006. This decrease resulted primarily from recognition of the fair value loss on embedded option in our Existing Notes partially offset by a significant increase in operating profit.

69 Income tax charge. For the twelve months ended December 31, 2007, we recorded a total income tax charge of PLN 53.9 million, compared to PLN 75.5 million in the corresponding period of 2006. The effective tax rate decreased to 18.1% for the twelve months ended December 31, 2007 from 22.6% in the corresponding period of 2006. This resulted mainly from Onet’s investment tax relief related to its operations in a special economic zone claimed in the period. Net profit. Our net profit decreased by 6.0% to PLN 243.3 million for the twelve months ended December 31, 2007, from PLN 258.8 million in the corresponding period of 2006. This decrease resulted primarily from the recognition of revaluation losses on the embedded options in our Existing Notes partially offset by a significant increase in operating profit and a decrease in our income tax charge. Excluding the losses on the embedded option, our net profit increased by PLN 98.1 million to PLN 330.5 million.

Business segment results In the years stated, our business comprised two distinct segments, television broadcasting and production and online segment, and we currently report these two business segments. We rely on an internal management reporting process that provides revenue and operating results for the period by segment for making financial decisions and allocating resources. The table below sets forth summarized financial results by segment for the twelve months ended December 31, 2006 and 2007:

Twelve months ended December 31, Television broadcasting & production Online Unallocated Total PLN (in millions) 2006 2007 2006 2007 2006 2007 2006 2007 Revenue from external customers ...... 1,107.4 1,399.3 57.6 155.4 - - 1,165.0 1,554.7 Inter-segment revenue ...... 3.3 8.1 2.2 7.1 (5.5) (15.2) - - Total revenue ...... 1,110.7 1,407.4 59.8 162.5 (5.5) (15.2) 1,165.0 1,554.7 Segment result ...... 372.8 492.4 10.4 19.2 (34.7) (29.6) 348.5 482.0 Segment result excluding stock option plan expenses ...... 408.1 513.8 21.0 35.6 (23.7) (22.6) 405.4 526.8 Adjusted EBITDA* (Unaudited) ...... 418.7 548.6 15.9 35.1 (34.7) (29.6) 399.9 554.1 Adjusted EBITDA* (Unaudited) excluding stock option plan expenses ...... 454.0 570.0 26.5 51.5 (23.7) (22.6) 456.8 598.9 Adjusted EBITDA* (Unaudited) margin...... 37.7% 39.0% 26.6% 21.6% - - 34.3% 35.6% Adjusted EBITDA* (Unaudited) margin excluding stock option plan expenses . . . . . 40.9% 40.5% 44.3% 31.7% - - 39.2% 38.5% * Adjusted EBITDA is defined as segment result adjusted for depreciation and amortization charges and impairment charges or reversals on property, plant and equipment and intangible assets. We believe that adjusted EBITDA serves as a useful supplementary financial indicator in measuring the liquidity of media companies and we have previously reported this measure as “EBITDA” in our reporting to shareholders. Adjusted EBITDA is not an IFRS measure and should not be considered as an alternative to IFRS measures of profit/(loss) or as an indicator of operating performance or as a measure of cash flow from operations under IFRS or as an indicator of liquidity. Adjusted EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments, debt service requirements and capital expenditures. Our presentation of adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under IFRS. For example: • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA does not reflect our interest expense, which will be significant after this offering; • Adjusted EBITDA does not reflect investment income and other finance expense; • Adjusted EBITDA does not reflect income taxes on our taxable earnings; • Adjusted EBITDA does not reflect our share of gains or losses of associates; and • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and adjusted EBITDA does not reflect any cash requirements for such replacement. You should note that Adjusted EBITDA is not a uniform or standardized measure, that the calculation of Adjusted EBITDA, accordingly, may vary significantly form company to company, and by itself our presentation and calculation of Adjusted EBITDA may not be comparable to that of other companies.

70 Adjusted EBITDA for each of our segments is calculated as follows:

Television Broadcasting & Production Online Unallocated Total (Unaudited) Twelve months ended December 31, PLN (In millions) 2006 2007 2006 2007 2006 2007 2006 2007

Segment result ...... 372.8 492.4 10.4 19.2 (34.7) (29.6) 348.5 482.0 Depreciation and amortization ...... 45.9 55.9 5.0 15.9 — — 50.9 71.8 Impairment ...... — 0.3 0.5 — — — 0.5 0.3 Adjusted EBITDA ...... 418.7 548.6 15.9 35.1 (34.7) (29.6) 399.9 554.1 Stock option plan expense ...... 35.3 21.4 10.6 16.4 11.0 7.0 56.9 44.8 Adjusted EBITDA, excluding stock option plan expense ...... 454.0 570.0 26.5 51.5 (23.7) (22.6) 456.8 598.9

(Unaudited) Twelve months ended December 31, 2006 2007 Adjusted Adjusted EBITDA % EBITDA % excluding excluding stock stock option option Adjusted Adjusted plan Adjusted Adjusted plan PLN (in millions) Revenue EBITDA EBITDA % expense Revenue EBITDA EBITDA % expense TVN channel ...... 911.6 380.4 41.7% 44.0% 1,077.7 457.3 42.4% 44.0% TVN 24 ...... 101.8 5.4 5.3% 19.0% 141.1 46.5 33.0% 35.4% Other television channels ...... 97.3 32.9 33.8% 34.6% 188.6 44.8 23.8% 24.0% Total segment ...... 1,110.7 418.7 37.7% 40.9% 1,407.4 548.6 39.0% 40.5%

Our television broadcasting and production revenue in the twelve months ended December 31, 2007 increased by 26.7% to PLN 1,407.4 million compared to PLN 1,110.7 million in the corresponding period of 2006. This increase was primarily due to an 18.2% increase in revenue of our TVN channel, which recorded an increase of PLN 149.3 million in advertising revenue, partly due to an increase in the proportion of rate-card sales to total sales to 29% from 16% in 2006. Rate- card prices tend to be higher than GRP prices. Additionally we recorded an increase of 13% in the price of GRPs sold and a 6% increase in the rate-card price. We sold 3% more of our inventory in 2007 than in 2006. Additionally, our TVN channel recorded a 32% increase in sponsoring revenue in 2007, as compared to 2006, due to an increase in the number of sponsored shows and an increase in sponsoring prices. TVN 24 increased its revenues by 39% mainly due to an increase in advertising revenue of PLN 27.4 million and an increase of PLN 9.1 million in subscription fees from satellite and cable operators, which increased by 22%. Our other channels revenues increased by 93.8% to PLN 188.6 million mainly due to an increase in subscription fees from satellite and cable operators, which increased by PLN 43.3 million in 2007 from PLN 19.8 million in the corresponding period of 2006 and a 34% increase in advertising revenue to PLN 84.3 million. The increase in subscription revenues for all our pay channels was primarily due to an increase in the number of subscribers for our pay channels, which on average have increased by more than one million subscribers. We also recorded revenues of PLN 26.7 million for services which we provide to the ’n’ DTH platform and PLN 4.6 million of revenues for cinema and DVD distribution of our movie Swiadek Koronny. Segment result increased by 32.1% to PLN 492.4 million in the twelve months ended December 31, 2007, from PLN 372.8 million in the corresponding period of 2006. This increase mainly resulted from the increase in revenue. Segment Adjusted EBITDA excluding stock option plan expenses increased by 25.6% to PLN 570.0 million in the twelve months ended December 31, 2007, from PLN 454.0 million in the corresponding period of 2006. Adjusted EBITDA margin, excluding stock option plan expenses, amounted to 40.5% (40.9% in the twelve months ended December 31, 2006). Our TVN channel Adjusted EBITDA, excluding stock option plan expenses, increased by 18.3% to PLN 474.5 million, and the Adjusted EBITDA margin, excluding stock option plan expenses was 44% in 2007 and 2006.

71 Adjusted EBITDA, excluding stock option plan expenses, for TVN 24 increased to PLN 49.9 million, from PLN 19.3 million in the corresponding period 2006. Our other television channels Adjusted EBITDA, excluding stock option plan expenses, increased to PLN 45.3 million, from PLN 33.7 million in 2006.

Online segment The table below sets forth summarized financial results of our Online segment for the twelve months ended December 31, 2006 and 2007:

(Unaudited) Twelve months ended December 31, 2006 2007 Cash Cash Adjusted Adjusted EBITDA % EBITDA % (excluding (excluding stock stock option option Adjusted Adjusted plan Adjusted Adjusted plan PLN (in millions) Revenue EBITDA EBITDA % expense) Revenue EBITDA EBITDA % expense) Onet.pl* ...... 59.8 15.9 26.6% 42.6% 162.1 39.2 24.2% 42.0% TVN24.pl ...... - - - - 0.4 (2.4) - - Other ...... - - - - - (1.7) - - Total segment ...... 59.8 15.9 26.6% 42.6% 162.5 35.1 21.6% 39.4%

* Results for 2006 include only results for the period between August 1, 2006 and December 31, 2006. Online segment revenue were PLN 162.5 million in the twelve months ended December 31, 2007. Onet cash revenue (revenue excluding barter revenue) were PLN 136.3 million, compared to PLN 100.8 million in 2006. Segment Adjusted EBITDA was PLN 35.1 million in the twelve months ended December 31, 2007. Onet cash Adjusted EBITDA (Adjusted EBITDA excluding barters and stock option plan expenses) was PLN 57.2 million and cash Adjusted EBITDA margin was 42.0%.

Results of operations of the ITI Neovision Group Revenue Year ended December 31, 2008 compared to year ended December 31, 2007 Revenue, net. Revenue, net for the year ended December 31, 2008 amounted to PLN 260.9 million, an increase by 146.1% from PLN 106.0 million for the year ended December 31, 2007. The increase in revenue was mainly a result of a dynamic growth in the customer base, which as at December 31, 2008 was 81.2% higher than a year before. Revenue, net increase is also attributable to the launch of new programming packages and increased penetration of premium services. During the year ended December 31, 2008, ITI Neovision Group derived 77.3% of the total net revenue from subscription and VOD services and 11.8% from activation fees, as compared with 69.1% and 23.3% respectively, in the year ended December 31, 2007. Remaining revenue, net consisted mainly of sales of goods for resale (2.5% in 2008 and 0.4% in 2007) and other sales revenue (8.0% in 2008 and 7.2% in 2007), which covered sales of programming rights and provision of technical and other services. Cost of revenue. Cost of revenue increased by 83.7% to PLN 402.3 million for the year ended December 31, 2008 from PLN 219.0 million for the year ended December 31, 2007. This increase is attributable mainly to higher fees for broadcasting television channels (an increase of 86.9% to PLN 168.6 million in the year ended December 31, 2008 from PLN 90.2 million in the year ended December 31, 2007) due to a larger customer base and expansion of the programming content offered to subscribers, increased costs of production of channels and programs (PLN 88.0 million for the year ended December 31, 2008 and PLN 58.9 million for the year ended December 31, 2007) and

72 depreciation of set-top boxes and satellite dishes (PLN 43.5 million for the year ended December 31, 2008 and PLN 20.0 million for the year ended December 31, 2007). Selling expenses. Selling expenses increased by 56.2% to PLN 106.7 million for the year ended December 31, 2008 from PLN 68.3 million for the year ended December 31, 2007. This increase is attributable primarily to increased marketing activities aimed at acquiring new subscribers. General and administration expenses. ITI Neovision Group’s general and administration expenses increased by 9.3% to PLN 20.0 million for the year ended December 31, 2008 from PLN 18.3 million for the year ended December 31, 2007. Operating loss. Operating loss for the year ended December 31, 2008 amounted to PLN 267.9 million, which constitutes an increase of 33.9% compared to a loss of PLN 200.1 million for the year ended December 31, 2007, as a result of contribution of the factors described above. As a percentage of revenue, our operating loss decreased to 102.7% for the year ended December 31, 2008 from 188.8% for the year ended December 31, 2007. This decrease is a result of growth in revenue outpacing growth in cost of revenue and other expenses, which are partly fixed. Financial income. ITI Neovision Group recorded financial income of PLN 0.5 million for the year ended December 31, 2008, compared to PLN 23.7 million for the year ended December 31, 2007, a decrease of 97.9%. This decrease resulted primarily from weakening of PLN against euro between December 31, 2007 and December 31, 2008. In the year ended December 31, 2007 the net foreign exchange gain on loans from related parties amounted to PLN 23.2 million whereas in the year ended December 31, 2008 ITI Neovision recorded net exchange losses on loans in the amount of PLN 118.0 million which are presented in financial costs. Financial costs. ITI Neovision Group recorded financial costs of PLN 173.5 million for the year ended December 31, 2008 compared to financial costs of PLN 32.1 million for the year ended December 31, 2007. This increase of 440.5% was mainly a result of net foreign exchange loss on loans from related parties, as described in the preceding paragraph, and higher interest expense (year ended December 31, 2008: PLN 44.7 million, year ended December 31, 2007: PLN 15.8 million) on an increased amount of loans. Loss before income tax. ITI Neovision Group’s loss before income tax increased by 112.8% to a loss of PLN 441.4 million for the year ended December 31, 2008, compared to a loss of PLN 207.4 million for the year ended December 31, 2007. Loss for the year. Loss for the year increased by 112.8% to a loss of PLN 441.4 million for the year ended December 31, 2008 from a loss of PLN 207.4 million for the year ended December 31, 2007.

Liquidity and capital resources Historical overview We maintain sufficient cash to meet our obligations as they become due and have available to us additional funding through a credit facility. We regularly monitor expected cash flows. We expect that our principal future cash needs will continue to be capital expenditures relating to acquisitions, dividends, share buyback, capital investment in television and broadcasting facilities and equipment, debt service on the PLN Bonds, the refinancing of the Existing Bonds and the launch of new thematic channels. In addition, we expect to use a significant portion of our resources to fund the liquidity requirements and capital expenditures relating to the ‘n’ DTH platform. Under the terms of the ‘n’ Acquisition Term Sheet, we agreed, starting from November 1, 2009, pending closing of the ‘n’ acquisition, to fund ITI Neovision Sp. z o.o. as required. We believe that our cash balances, assets that are liquid and available for sale, cash generated from operations, existing credit facility and approximately 3383.5 from the proceeds of this offering will be sufficient to fund these needs. As of September 30, 2009, we had cash and cash equivalents, financial instruments that are liquid and available for sale and committed unutilized credit facilities totaling PLN 135.8 million, as compared to PLN 532.0 million at December 31, 2008. Historically, our capital requirements have been funded primarily through a combination of (i) cash generated from our operations, (ii) borrowings under credit facilities made available by third parties and debt securities and (iii) shareholder loans.

73 Nine months ended September 30, 2008 and nine months ended September 30, 2009. The table below summarizes our cash flows for the nine month period ended September 30, 2008 and 2009: Unaudited September 30, (in millions) 2008 2009 2009 PLN 5(1) Cash generated from operations ...... 543.8 315.5 74.7 Net cash generated from operating activities ...... 455.1 222.6 52.7 Net cash used in investing activities ...... (549.9) (108.3) (25.6) Net cash generated from/(used in) financing activities...... 244.1 (213.5) (50.6) Increase/(decrease) in cash and cash equivalents ...... 149.3 (99.2) (23.5)

(1) For the convenience of the reader, we have converted złoty amounts for the period ended September 30, 2009 into euro at the rate of PLN 4.2226 per 31.00 (the average NBP exchange rate on September 30, 2009). You should not view such translations as a representation that such złoty amounts actually represent such euro amounts, or could be or could have been converted into euro at the rates indicated or at any other rate.

Cash generated from operations Cash generated from operations decreased by PLN 228.3 million to PLN 315.5 million in the nine month period ended September 30, 2009, from PLN 543.8 million in the corresponding period of 2008. We attribute the decrease primarily to the first time consolidation of the ‘n’ DTH platform, which reduced cash flow from working capital by PLN 58.5 million, decrease in Adjusted EBITDA, excluding the gain on step acquisition of PLN 138.4 million and an increase in payments to acquire programming of PLN 28.5 million net of amortization and capitalization effect on local production. These increases were partly offset by a decrease in our working capital of PLN 94.2 million, excluding the effects of consolidation with ITI Neovision Sp. z o.o.

Net cash generated from operating activities Net cash generated from operating activities includes all cash generated from operations and also reflects cash paid for taxes. Net cash generated from operating activities amounted to PLN 222.6 million for the nine month period ended September 30, 2009, compared to PLN 455.1 million for the corresponding period of 2008. We attribute the decrease to a lower level of cash generated from operations.

Net cash used in investing activities Net cash used in investing activities amounted to PLN 108.3 million in the nine months ended September 30, 2009, in comparison to PLN 549.9 million in the corresponding period of 2008. The decrease in net cash used in investing activities mainly related to a net cash flow of PLN 320.2 million we received from our investment in Polish treasury bills we held, and partly to PLN 9.9 million we received on settlement of currency options limiting our PLN/USD exchange rate exposure and partly due to interest received of PLN 5.4 million. These increases were offset by the cash outflows related to the business combination with ITI Neovision Sp. z o.o. These included PLN 97.7 million which we paid for a controlling stake and PLN 75.3 million in loans we granted to that company. We recorded PLN 248.7 million of payments to acquire property, plant and equipment, which included PLN 117.6 million of payments made by ITI Neovision Sp. z o.o. to acquire set-top boxes. We also recorded PLN 22.6 million of payments to acquire intangible assets.

Net cash used in financing activities Net cash used in financing activities amounted to PLN 213.5 million in the nine months ended September 30, 2009, compared to net cash generated from financing activities of PLN 244.1 million in the corresponding period of 2008. Net cash used in financing activities in the period to September 30, 2009 results primarily from our distributions to shareholders, PLN 194.0 million in the form of a dividend and PLN 62.6 million in the form of a share buyback. We also repaid our overdraft facility, which resulted in a cash outflow of PLN 48.7 million, as well as PLN 78.8 million of interest related to our long-term borrowings. These decreases were partly offset by PLN 101.0 million

74 we received on settlement of currency options hedging our PLN/EUR exchange rate exposure and PLN 69.5 million in loans paid to ITI Neovision Sp. z o.o. by its non-controlling shareholder. Total cash and cash equivalents, excluding restricted cash, that we held as of September 30, 2009 amounted to PLN 81.0 million and, as of December 31, 2008, amounted to PLN 184.9 million. We hold cash and cash equivalents on bank deposit in Poland in złoty, euro and dollar.

Years ended December 31, 2006, 2007 and 2008 The table below summarizes our cash flows for 2006, 2007 and 2008: December 31, (in millions) 2006 2007 2008 2008 Unaudited PLN 5(1) Cash generated from operations ...... 452.4 507.7 726.0 171.9 Net cash generated from operating activities...... 437.3 420.0 615.4 145.7 Net cash used in investing activities ...... (762.3) (174.8) (813.4) (192.6) Net cash generated from/(used in) financing activities . . . 348.8 (239.9) 271.5 64.3 Increase in cash and cash equivalents ...... 23.8 5.3 73.5 17.4

(1) For the convenience of the reader, we have converted złoty amounts for the year ended December 31, 2008 into euro at the rate of PLN 4.2226 per 31.00 (the average NBP exchange rate, złoty per euro, on September 30, 2009). You should not view such translations as a representation that such złoty amounts actually represent such euro amounts, or could be or could have been converted into euro at the rates indicated or at any other rate.

Cash generated from operations Cash generated from operations increased by PLN 218.3 million to PLN 726.0 million in 2008, from PLN 507.7 million in 2007. We attribute the increase primarily to an increase in Adjusted EBITDA of PLN 157.3 million and a decrease in working capital of PLN 34.9 million, partly offset by an increase in unaired locally produced programming inventory of PLN 16.1 million and higher payments to acquire programming rights of PLN 11.7 million. Cash generated from operations increased by PLN 55.3 million to PLN 507.7 million in 2007, from PLN 452.4 million in 2006. We attribute the increase primarily to an increase in Adjusted EBITDA of PLN 154.2 million partially offset by an increase in payments to acquire programming rights of PLN 53.2 million and a decrease in working capital of PLN 61.5 million.

Net cash generated from operating activities Net cash generated from operating activities includes all cash generated from operations and also reflects cash paid for taxes. Net cash generated from operating activities amounted to PLN 615.4 million for 2008, compared to PLN 420.0 million for 2007. We attribute the increase to the increase in cash generated from operations, partially offset by higher tax paid of PLN 22.9 million. Net cash generated from operating activities amounted to PLN 420.0 million for 2007, compared to PLN 437.3 million for 2006. We attribute the decrease to a significant increase in tax payments to PLN 87.7 million, from PLN 15.1 million in 2006.

Net cash used in investing activities Net cash used in investing activities amounted to PLN 813.4 million in 2008, in comparison to PLN 174.8 million in 2007. The increase in net cash used in investing activities mainly related to the acquisition of a minority stake in ‘n’ DTH platform for a total consideration of EUR 95.0 million, but was also partly due to our investment of surplus cash of PLN 349.7 million in Polish government short-term treasury bills. Net cash used in investing activities amounted to PLN 174.8 million in 2007, in comparison to PLN 762.3 million in 2006. Net cash used in investing activities in 2007 included PLN 49.6 million related to the acquisition of Mango Media, and an increase in payments to acquire property plant and equipment of PLN 29.4 million, primarily related to the purchase of our television and broadcasting equipment and software.

75 Net cash generated from financing activities

Net cash generated from financing activities amounted to PLN 271.5 million in 2008, compared to net cash used in financing activities of PLN 239.9 million in the corresponding period of 2007. Net cash generated from financing activities in 2008 represents primarily proceeds from the issuance of PLN Bonds of PLN 498.5 million as well as from our Loan Facility and overdraft facility of PLN 158.6 million, partly offset by a dividend paid of PLN 171.2 million, interest paid on our Existing Notes and PLN Bonds and the repurchase of Existing Notes with a total nominal value of 3 20.0 million.

Total cash and cash equivalents, excluding restricted cash, that we held as of December 31, 2008 amounted to PLN 184.9 million and, as of December 31, 2007, amounted to PLN 110.4 million. We hold cash and cash equivalents on bank deposit in Poland in złoty, euro and dollars.

Cash flow of the ITI Neovision Group for the years ended December 31, 2007 and 2008

The table below summarizes the cash flows of the ITI Neovision Group for the year ended December 31, 2007 and for the year ended December 31, 2008:

December 31, (in millions) 2007 2008 2008 PLN PLN euro(1) Cash used in operations ...... (172.3) (117.7) (27.9) Net cash used in operating activities ...... (172.3) (117.7) (27.9) Net cash used in investing activities ...... (137.0) (132.4) (31.4) Net cash generated from financing activities ...... 307.8 253.4 (60.0) (Decrease)/increase in cash and cash equivalents ...... (1.5) 3.3 0.8

(1) For the convenience of the reader, we have converted PLN amounts for the year ended December 31, 2008 into euro at the rate of PLN 4.2226 per 1.00 (the average NBP exchange rate, PLN per euro, on September 30, 2009). You should not view such translations as a representation that such PLN amounts actually represent such euro amounts, or could be or could have been converted into euro at the rates indicated or at any other rate.

Net cash used in operating activities

Net cash used in operating activities amounted to PLN 117.7 million in the year ended December 31, 2008 in comparison to PLN 172.3 million in the year ended December 31, 2007. The decrease occurred despite the increase in operating loss and is primarily due to the decrease in working capital of PLN 91.0 million for the year ended December 31, 2008. The decrease in working capital was driven primarily by an increase in trade and other payables by PLN 78.3 million and an increase in accruals and deferred income by PLN 47.6 million, partly offset by an increase in receivables by PLN 16.0 million.

Net cash used in investing activities

Net cash used in investing activities amounted to PLN 132.4 million in the year ended December 31, 2008 in comparison to PLN 137.0 million in the year ended December 31, 2007. A decrease in net cash used in investing activities related mainly to decreased payments to acquire property, plant and equipment (including set-top boxes) and intangible assets.

Net cash generated from financing activities

Net cash generated from financing activities amounted to PLN 253.4 million in the year ended December 31, 2008 in comparison to PLN 307.8 million in the year ended December 31, 2007. Net cash generated from financing activities in 2007 and 2008 represents primarily loans received from related parties.

Total cash and cash equivalents that ITI Neovision Group held as of December 31, 2008 amounted to PLN 9.9 million and, as of December 31, 2007, amounted to PLN 6.6 million. ITI Neovision Group holds cash and cash equivalents mainly in PLN.

76 Financing Activities The table below sets forth the components of our gross debts and cash and cash equivalents as of September 30, 2009: Unaudited (in millions) Value Coupon/interest Maturity

PLN Existing Notes (nominal value*) ...... 907.9 9.50% 2013 PLN Bonds (nominal value) ...... 500.0 WIBOR 6m + 2.75% 2013 Loan Facility** ...... 110.0 WIBOR 6m + 1.6%*** 2011 Loans from related parties (nominal value) . . . . . 581.7 9.50% 2015, 2018 Accrued interest on long term debt ...... 39.2 - - Total gross debt ...... 2,138.8 - - Guarantees ...... 35.2 - - Total debt including guarantees ...... 2,174.0 - - Cash at bank and in hand...... 81.0 - - Net debt including guarantees...... 2,093.0 - -

* This value represents outstanding nominal value of our Existing Notes, which amounts to EUR 215.0 million multiplied by the rate of PLN 4.2226 per 31.00 (the average NBP exchange rate, złoty per euro, as of September 30, 2009). ** All outstanding amounts under the Loan Facility will be repaid in full with the proceeds of the Notes offered hereby. *** Margin depends on our consolidated Net debt to Adjusted EBITDA ratio and since October 12, 2009 amounts to 1.6% as net debt to Adjusted EBITDA ratio is greater than 2.5. The ratio of consolidated net debt, defined as total borrowings (nominal amount of principal and accrued interest thereon) including loans from related parties net of cash and cash equivalents (excluding restricted cash), liquid available for sale financial instruments and guarantees issued on our behalf, to our consolidated shareholders’ equity was 1.7x as of September 30, 2009, and 0.6x as of September 30, 2008. Excluding the loans from related parties, the ratio of consolidated net debt to our consolidated shareholder’s equity was 1.2x as of September 30, 2009. Our consolidated net debt to Adjusted EBITDA ratio increased to 3.1 from 1.5 in the nine months ended September 30, 2009. Excluding the effect of loans from related parties, our consolidated net debt to Adjusted EBITDA ratio increased to 2.2. This increase was primarily due to lower cash flow from operating activities, cash outflows related to dividend and share buyback as well as payments related to the acquisition of a controlling stake in ITI Neovision Sp. z o.o. Net debt represents the nominal value of borrowings payable at the balance sheet date including accrued interest and guarantees issued on our behalf less cash and cash equivalents and liquid available for sale financial instruments. Adjusted EBITDA is calculated for the last twelve months and is defined as net profit/(loss), before depreciation and amortization (other than programming rights), impairment charges on property plant and equipment and intangible assets, finance expense, investment income, share of loss of associate and income tax charges. Our current liabilities amounted to PLN 519.0 million at September 30, 2009, compared with PLN 468.3 million at December 31, 2008. This increase was mainly from the recognition of ITI Neovision Sp. z o.o.’s trade payables and partly due to the recognition of ITI Neovision Sp. z o.o.’s programming payables and other liabilities and accruals as of September 30, 2009. Our borrowed funds excluding accrued interest as of September 30, 2009 consisted of PLN 871.0 million of indebtedness represented by the Existing Notes, PLN 498.6 million of indebtedness represented by PLN Bonds, PLN 109.9 million of indebtedness represented by Loan Facility and PLN 525.6 million of indebtedness represented by loans from related parties.

Notes TVN Finance Corporation II AB, a finance subsidiary of the Company, will issue the Notes being offered hereby in an aggregate principal amount of 3405 million at maturity pursuant to an indenture to be dated as of the closing date of this offering. The Notes will mature on November 15, 2017 and bear interest at the rate of 10.75% per annum. Interest is payable semi-annually in arrears on May 15 and November 15 each year. The Notes will be

77 fully and unconditionally guaranteed by TVN S.A., Neovision Holding B.V., ITI Neovision Sp. z o.o., Grupa Onet.pl S.A. and Grupa Onet Poland Holding B.V. Under certain circumstances, TVN S.A.’s other subsidiaries may be required to guarantee the Notes in the future. If the issuer is unable to make payments on the Notes when they are due, the guarantors must make them instead.

Existing Notes

TVN Finance Corporation plc, our wholly owned subsidiary, issued Existing Notes in an aggregate principal amount of EUR 235.0 million pursuant to an indenture dated December 2, 2003, as amended and supplemented by a supplemental indenture dated March 26, 2004, a second supplemental indenture dated June 16, 2004, a third supplemental indenture dated August 31, 2006 and a fourth supplemental indenture dated July 31, 2009.

The Existing Notes mature on December 15, 2013 and bear interest at the rate of 9.5% per annum. Interest is payable semi-annually in arrears on June 15 and December 15 of each year. The Existing Notes are fully and unconditionally guaranteed on a senior unsecured basis by TVN S.A. and Grupa Onet.pl S.A. and ITI Neovision Sp. z o.o. Under certain circumstances, TVN S.A.’s other subsidiaries may be required to guarantee the Existing Notes in the future. If TVN Finance Corporation plc is unable to make payments on the Existing Notes when they are due, the guarantors must make them instead.

On February 8, 2008, we repurchased Existing Notes with a nominal value of 310.0 million for an amount of 310.2 million (PLN 36.6 million). On October 24, 2008, we repurchased Existing Notes with a nominal value of 310.0 million for an amount of 39.4 million (PLN 34.1 million). We accounted for the repurchase as a derecognition of the corresponding part of our Existing Notes liability. On the closing date of this offering, we will send an irrevocable notice of redemption to the holders of the Existing Notes. Holders who tender their notes for redemption will be paid a redemption price equal to 103.167% of the principal amount tendered, together with accrued and unpaid interest up to the redemption date.

PLN Bonds

On June 23, 2008, we issued PLN denominated bonds with a nominal value of PLN 500.0 million (the “PLN Bonds”). We issued 5,000 PLN Bonds of a nominal value of PLN 0.1 million, with a redemption date of June 14, 2013, and with a right for us to request early redemption on either the third or fourth anniversary of the issue. The interest on the PLN Bonds is calculated and paid in cash semi- annually, on the PLN Bonds nominal value, at a variable interest rate equal to 6m WIBOR plus 2.75%.

Loan Facility

The Loan Facility allows us to borrow a maximum of PLN 200.0 million at any time outstanding.

The purpose of the Loan Facility is to finance our general corporate and working capital needs including capital investments and other capital expenditures. The Loan Facility expires on June 30, 2011. The Loan Facility bears interest at six month WIBOR, LIBOR or EURIBOR (depending on loan’s currency) plus margin which is currently 1.6%. The Loan Facility has been secured on TVN S.A.’s trade receivables up to the equivalent of EUR 25.0 million. The Loan Facility is also guaranteed by Grupa Onet. pl S.A., Mango Media Sp. z o.o. and ITI Neovision Sp. z o.o. — TVN S.A.’s subsidiaries.

All outstanding amounts under the Loan Facility will be repaid in full from the proceeds of the Notes.

Financing activities of ITI Neovision Sp. z o.o. for the years ended December 31, 2007 and 2008

As at December 31, 2008 ITI Neovision Sp. z o.o. had the following loans from related parties:

78 December 31, (in millions) 2007 2008 2008 PLN PLN euro1 Loans from N-Vision ...... 54.6 223.9 53.0 Interest accrued N-Vision B.V...... 0.2 14.1 3.3 Loans from Strateurop B.V...... 231.6 269.8 63.9 Interest accrued Strateurop B.V...... 9.0 33.9 8.0 Loans from Neovision Holding B.V...... 79.2 57.0 13.5 Interest accrued Neovision Holding B.V...... 7.0 14.3 3.4 Loans from TVN ...... — 181.3 42.9 Interest accrued TVN ...... — 9.1 2.2 Total ...... 381.6 803.4 190.3

(1) For the convenience of the reader, we have converted PLN amounts for the period ended December 31, 2008 into euro at the rate of PLN 4.2226 per 1.00 (the average NBP exchange rate on September 30, 2009). You should not view such translations as a representation that such PLN amounts actually represent such euro amounts, or could be or could have been converted into euro at the rates indicated or at any other rate. The loans bear interest at a floating annual rate of 12-month EURIBOR plus a margin of 3.5 p.p. (in the case of loans from Neovision Holding B.V.) or 2.375 p.p. (in the case of loans from Strateurop B.V., N-Vision B.V. and TVN). In 2008, the interest rate was 8.25% p.a. The loans are contractually due to be repaid in 2011 (Neovision Holding B.V.), in 2015 (Strateurop B.V. and N-Vision B.V.) or in 2018 (N- Vision B.V.). The loans are denominated in euro. As of December 31, 2008, the total outstanding amount of the loans (including accrued interest) was PLN 803.5 million (2007: PLN 381.5 million) According to the terms of the loan agreements concluded, at the Company’s discretion the payment of interest may be deferred until maturity of each loan. As a result, interest accrued on the loans is presented within non-current liabilities. ITI Neovision Sp. z o.o. can prepay the loans at any time at an amount equal to the principal amount and accrued interest, without any penalty or premium. In accordance with the agreements, the lender may request immediate repayment of a loan in the event of default, which include, among others: non payment of any tranche of the loan, imposition of legal restrictions on the borrower which would prevent it from complying with its obligations under the loan agreement, the borrower suspending or threatening to suspend all or a substantial part of its operations, a petition against the borrower being entered for bankruptcy, reorganization, receivership, liquidation, dissolution or a decree or court order adjudging the borrower bankrupt or insolvent.

Off-balance sheet arrangements As of September 30, 2009, we had no off-balance sheet liabilities.

79 Contractual obligations and commercial commitments The following table summarizes in złoty the contractual obligations, commercial commitments and principal payments we were obligated to make as of September 30, 2009 under our operating leases and other material agreements. The information presented below reflects the contractual maturities of our obligations. These maturities may differ significantly from their actual maturity.

PLN (in millions) 2009 2010 2011 2012 2013 Thereafter Total Operating leases Satellite transponder leases. . . 16.0 82.9 78.1 47.3 32.1 90.9 347.3 Other technical leases ...... 6.6 6.6 6.6 6.6 6.6 - 33.0 Operating leases — other . . . . 15.4 46.8 42.2 40.2 35.6 71.4 251.6 Programming rights...... 54.0 246.5 292.8 276.3 185.5 39.4 1,094.5 Total operating leases ...... 92.0 382.8 419.7 370.4 259.8 201.7 1,726.4 Commitments to purchase equipment and software(2) ...... 94.1 ---- -94.1 Total cash commitments ..... 186.1 382.8 419.7 370.4 259.8 201.7 1,820.5 Barter commitments(1) ...... 3.2---- -3.2 Total cash commitments and other obligations ...... 189.3 382.8 419.7 370.4 259.8 201.7 1,823.7

(1) As of September 30, 2009, pursuant to barter agreements, we had contractual commitments outstanding amounting to PLN 3.2 million, settlement of which will be in form of advertising and is intended to be rendered on arm’s-length terms and conditions and at market prices. (2) Additionally we have an undertaking to invest PLN 215.8 million in the special economic zone in Krakow by December 31, 2017. On September 30, 2009 the remaining commitment amounted to PLN 100.6 million.

Contractual obligations and commercial commitments of ITI Neovision Sp. z o.o. The following table summarizes the contractual obligations, commercial commitments and principal payments that ITI Neovision Sp. z o.o. was obligated to make as of December 31, 2008 under operating leases and other material agreements. The information presented below reflects the contractual maturities of obligations. These maturities may differ significantly from their actual maturity.

Year ending December 31, PLN (in millions) 2009 2010 2011 2012 2013 Thereafter Total Operating leases Satellite transponder leases...... 31.7 31.7 27.1 15.9 15.9 74.0 196.3 Operating leases — office space . . . . 1.5 1.0 0.1 — — — 2.6 Programming rights ...... 74.9 41.6 40.3 23.7 — — 180.5 Total operating leases ...... 108.1 74.3 67.5 39.6 15.9 74.0 379.4 Commitments to purchase equipment and software(1) ...... 56.0 ———— —56.0 Total cash commitments ...... 164.1 74.3 67.5 39.6 15.9 74.0 435.4

(1) ITI Neovision Sp. z o.o. has commitments to purchase set-top boxes which have not been yet delivered as of December 31, 2008.

Share buyback program On October 30, 2008, our shareholders approved a share buyback program to acquire and voluntarily redeem our shares (the “Share Buyback Program”). The Share Buyback Program allows us to purchase up to 35 million shares, but not more than 10% of our share capital as calculated on the last day of the Share Buyback Program. The program ends on December 31, 2009, and our shareholders approved the designation of a maximum amount of PLN 471.8 million to finance the Share Buyback Program. The first tranche of PLN 50.0 million of the Share Buyback Program commenced on November 17, 2008. By January 21, 2009, we purchased in total 3.9 million shares at an average price of PLN 12.81 per share for the total of PLN 50.0 million. The second tranche of PLN 50.0 million of the Share Buyback Program commenced on February 5, 2009. By March 18, 2009,

80 we purchased in total 5.3 million shares at an average price of PLN 9.52 per share for the total of PLN 50.0 million. Since commencing the Share Buyback Program, we have purchased a total of 9.2 million shares at an average price of PLN 10.92 per share for a total of PLN 100.0 million. Redemption of these shares was registered by the court on July 3, 2009. On July 3, 2009 we decreased our share capital of TVN S.A. from PLN 69.9 million to PLN 68.1 million by mean of voluntary redemption of 9.2 million own shares of TVN S.A. giving 9.2 million votes on the shareholders meeting for compensation of PLN 99.7 million. Since March 18, 2009, no purchases were made.

Critical accounting policies We prepare our consolidated financial statements in accordance with IFRS as adopted for use in the European Union. You should examine Note 4 to our condensed consolidated financial statements for the three and nine months ended September 30, 2009 appended to this report for a discussion of critical accounting estimates and judgments. These critical accounting policies are not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by IFRS, with no need for management’s judgment in their application. There are also areas in which the exercise of management’s judgment in selecting an available alternative would not produce a materially different result.

Business combinations Revision to IFRS 3 ‘Business combinations‘ was early adopted by us on January 1, 2009. The revised standard continues to apply the acquisition method to business combinations, with some significant changes. In particular, all payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as liabilities and subsequently remeasured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interests proportionate share of the acquiree’s net assets. All acquisition-related costs are expensed. In step acquisition transactions accounted for under IFRS 3 (Revised) any previously held equity interest in an acquiree or subsidiary is remeasured at fair value and the resulting gain or loss is recognized in the income statement. Following our policy to account for business combinations with entities under common control using acquisition method, the standard was applied to the acquisition of the controlling interest in Neovision Holding B.V. on March 11, 2009. Contingent consideration has been recognized at its fair value at March 11, 2009. Acquisition related costs have been recognized in the income statement, which previously would have been included in the consideration for the business combination. We have chosen to recognize the non-controlling interest at the proportionate share (49%) of the net assets of Neovision Holding B.V. As we have early adopted IFRS 3 (Revised), it is required to early adopt IAS 27 (Revised), ‘Consolidated and separate financial statements‘ at the same time. IAS 27 (Revised) requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will not result in goodwill or gains and losses. The standard also specifies the accounting treatment when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognized in profit or loss. IFRS 3 (Revised) and lAS 27 (Revised) apply prospectively.

Estimated present value of contingent consideration Following the transaction agreement with ITI Media we recognized as at March 11, 2009 a contingent supplemental payment at fair value of PLN 236.4 million. The contractual amount of the supplemental payment is between 30 and 360.0 million and is payable at the beginning of 2011 if and to the extent that ITI Neovision achieves specified operational targets during 2010 such as EBITDA, number of subscribers, average revenue per subscriber and subscription revenue. In the fair valuation of the contingent consideration, we assumed a discount rate of 7.93% and a 100% probability of paying the maximum amount. We provisionally recognized a gain on step acquisition of PLN 110.7 million and goodwill of PLN 742.9 million, which are impacted by the inclusion in the purchase consideration of the fair value of the contingent element.

81 The fair value of the consideration payable, goodwill recognized on the investment and the gain on step acquisition are sensitive to changes in the assumptions used in the valuation. Had the probability of achieving all payment conditions been assessed at 75%, we would have recognized a gain on step acquisition of PLN 53.9 million and goodwill of PLN 627.0 million. As of September 30, 2009 we assumed 100% probability of paying the maximum amount of the contingent consideration. Had the maximum amount of contingent consideration payable been assessed at 75%, we would have recognized a gain on fair value re-assessment of PLN 57.2 million.

Consolidation Subsidiary undertakings, which are those companies in which we, directly or indirectly, have an interest of more than half of the voting rights or otherwise have power to exercise control over the operations, have been consolidated. Subsidiaries are consolidated from the date on which effective control is transferred to us, and are no longer consolidated from the date we cease to have control. We apply the acquisition method of accounting to account for business combinations, including business combinations with entities under common control. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by us. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, we recognize any non-controlling interest in the acquiree at the non-controlling interest’s proportionate share of the acquiree’s net assets. The excess of the sum of consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previously held equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the income statement. All inter company transactions, balances and unrealized surpluses and deficits on transactions between Group companies have been eliminated. Unrealized deficits on transactions between Group companies are eliminated to the extent they are not indicative of an impairment. We treat transactions with non-controlling interests as transactions with equity owners. For purchases of shares from non-controlling interests, the difference between any consideration and the relevant share acquired of the carrying value of the net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Goodwill Goodwill represents the excess of the cost of an acquisition over our share of fair value of net identifiable assets of the acquired subsidiary at the date of acquisition and is carried at cost less accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if there are indicators of possible impairment. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. We classify the Onet.pl brand acquired as an intangible asset with an indefinite useful life and allocate brand and goodwill to our new media cash-generating unit. We test annually whether our on-line cash-generating unit, including goodwill and brand, has suffered any impairment. The recoverable amount of the cash-generating unit is determined based on fair value less cost to sell. We test the total carrying amount of the cash-generating unit and, in case of impairment, write-offs are first made with respect to goodwill. If goodwill is fully impaired, we continue impairment testing of our brand with potential write-offs against the carrying value of brand and other assets allocated to the on-line cash-generating unit. In the annual impairment test performed as at December 31, 2008, the calculation of fair value less cost to sell, in the absence of an active market for similar cash-generating units, was based on discounted free cash flows and involved the use of estimates related to cash flow projections based on financial business plans approved by management covering the period until 2013. Cost to sell was

82 assumed at 1% of the present value of the cash-generating unit. The key assumptions included in the business plans and cash-flow projections beyond 2013 were:

Annual growth rate of the Polish advertising market in 2009-2013 ...... from 0% to 12% Increase in the on-line advertising market as a percentage of the total Polish advertising market in 2009-2013 ...... from 17% to 34.1 % Share of Onet in the on-line advertising market in 2009-2013...... stable Growth of free cash flows in 2014-2021 ...... from 18% declining to 6% Terminal growth ...... 4% Discount rate ...... 12.2%

As at December 31, 2008 fair value less cost to sell of the on-line cash-generating unit exceeded the carrying amount by PLN 144.0 million. In view of the ongoing global liquidity crisis and its potential impact on customers and advertisers we reviewed and amended the key assumptions included in the business plans of the on-line cash generating unit as of March 31, 2009:

Annual growth rate of the Polish advertising market in 2009-2013 from -10% in 2009 to 12% in 2013 Increase in the on-line advertising market as a percentage of the total Polish advertising market in 2009-2013 from 15% to 27.8% Share of Onet in the on-line advertising market in 2009-2013 stable Growth of free cash flows in 2014-2022 from 20% declining to 6% Terminal growth 4% Discount rate 12.4%

We also reviewed and amended other significant business plan assumptions relating to future operating and capital expenditures. Since reviewing the key assumptions included in the business plans as at March 31, 2009 we have not observed any indications for further amendments of the business plan. The revised business plan of the on-line cash generating unit returns a fair value less cost to sell which approximates to the carrying value of the cash-generating unit as of September 30, 2009. We will continue to monitor and amend when appropriate our business plan for the on-line cash-generating unit on a quarterly basis.

Fair valuation of the embedded prepayment options The Group calculates at each reporting date the fair value of the prepayment options embedded in the Existing Notes using the Brace-Ga˛ tarek-Musiela model. Significant inputs into the valuation model are the Senior Notes market price, benchmark bond yields and interest rate cap volatilities. The inputs are based on information provided by Reuters on the valuation date. The Existing Notes market price is quoted by Reuters based on the last value date. In the fair valuation as of September 30, 2009 the Group input into the valuation model a market price of 93.05 based on the last available value date on September 29, 2009. This resulted in a carrying amount value of the embedded options of nil. The last available Existing Notes market price provided by Reuters at the date when our condensed consolidated financial statements for the three and nine month months ended September 30, 2009 were prepared was 94.60 (based on a value date on October 22, 2009). Should this price be input into the valuation model the carrying value of the embedded prepayment options would be PLN 0 million.

Estimated useful life of Onet.pl brand In accordance with IAS 38.90 the TVN Group reviewed factors that need to be considered when assessing the useful life of the Onet.pl brand such as: • the expected usage of the brand and whether the brand could be managed efficiently, • technical, technological, commercial or other types of obsolescence, • the stability of the industry in which the brand operates and changes in the market demand for media services, • expected actions by competitors or potential competitions in the media via internet industry, • the level of maintenance expenditure required to obtain the expected future economic benefits from the brand, • whether the useful life of the brand is dependent on the useful life or other assets.

83 Having considered the above factors, the TVN Group concluded that there is no foreseeable limit to the period over which the Onet.pl brand is expected to generate net cash flows for the TVN Group, therefore the useful life of the Onet.pl brand was assessed as indefinite. Each reporting period, we review whether events and circumstances continue to support an indefinite useful life assessment of the Onet.pl brand. If the reviews result in a change in the useful life assessment from indefinite to finite, this change is accounted for as a change in an accounting estimate.

Programming rights Programming rights include acquired program rights, co-production and production costs. Programming rights are reviewed for impairment every year or whenever events or changes indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its recoverable amount. The individual accounting policies adopted for each of these categories are summarized below:

Acquired program rights Program rights acquired by the TVN Group under license agreements and the related obligations are recorded as assets and liabilities at their present value when the program is available and the license period begins. Contractual costs are allocated to individual programs within a particular contract based on the relative value of each to the TVN Group. The capitalized costs of program rights are recorded in the balance sheet at the lower of unamortized cost or estimated recoverable amount (the higher of its fair value less cost to sell and its value in use). A write down is recorded if unamortized costs exceed the recoverable amount. The program rights purchased by the TVN Group are amortized as follows:

Percentage of Program amortization per Categories Number of runs run 1st 2nd 3rd ACQUIRED PROGRAMMING 1 Movies, incl. Features Films, 1 100 Made for Television or Cable, 2 60 40 whether first run, library or 3 or more 50 35 15 rerun 2 Weekly Fiction Series, 1 100 including dramas, comedies or 2 60 40 serials, first run or 3 or more 60 25 15 library, live action and animation 3 Weekly Non-Fiction Series, 1 100 including documentary series, 2 90 10 docu-soaps, reality and 3 or more 90 10 0 nature 4 Entertainment Documentaries 1 100 One off documentaries of less 2 or more 80 20 0 than timely topics 5 Clips Shows of Comedy material 1 100 26040 3 or more 55 35 10

Programming rights are allocated between current and non-current assets based on estimated date of broadcast. Amortization of program rights is included in cost of revenue.

Capitalized production costs Capitalized production costs comprise capitalized internal and external production costs in respect of programs specifically produced by or for the TVN Group under own licenses or under licenses from third parties.

84 Capitalized production costs are stated at the lower of cost or recoverable amount on a program by program basis. Capitalized production costs are amortized based on the ratio of net revenues for the period to total estimated revenues, and the amortization pattern is determined individually for each program. The majority of programs are amortized as set out below: Percentage of amortization per run Programs with second runs in prime time 60% on first showing, 40% on second showing, or 75% on first showing, 25% on second showing Programs with second runs outside prime time 90% on first showing, 10% on second showing Programs expected to be broadcast once 100% on first showing Fiction series 50% on first showing, 30% on second showing, 20% on third and next showings in total, or 66% on first showing, 20% on second showing, 14% on third and next showings in total

Capitalized production costs are allocated between current and non-current assets based on estimated date of broadcast. Amortization of capitalized production costs is included in cost of revenue.

Co-production Programs co-produced by the TVN Group for cinematic release are stated at the lower of cost or estimated recoverable amount. Program costs are amortized using the individual-film-forecast- computation method, which amortizes film costs in the same ratio that current gross revenues bears to anticipated total gross revenues.

New archive News archives were recognized on business combination and are amortized based on their average usage in minutes per year.

Deferred income tax Deferred income tax is provided in full using the liability method for all temporary differences arising between the tax base of assets and liabilities and their carrying values for financial reporting purposes. Deferred income tax is determined using tax rates (and laws) that have been enacted by the balance sheet date and are expected to apply when the related income tax asset is realized or liability settled. Deferred income tax liability is recognized for all taxable temporary differences arising on investments in subsidiaries, joint ventures and associates, except where the timing of the reversal of the temporary difference is controlled by the TVN Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax asset is recognized for all deductible temporary differences arising on investments in subsidiaries, joint ventures and associates to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized. Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. In the TVN Group’s consolidated financial statements tax assets (both current and deferred) and tax liabilities (both current and deferred) are not offset unless the TVN Group has a legally enforceable right to offset tax asses against tax liabilities.

Accrued liabilities We exercise considerable judgment in recording our accrued liabilities and our exposure to contingent liabilities relating to pending litigation or other outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation as well as other contingent liabilities. Judgment is necessary in assessing the likelihood that a pending claim will succeed or a liability will arise and to quantify the possible range of the final settlement. Where we

85 expect that the occurrence of a contingency is reasonably likely, we accrue an amount for the contingent liability that represents management’s estimate at the balance sheet date considering all anticipated risks and losses up to that date, even if they became known after the balance sheet date but prior to the preparation of the financial statements. Due to the inherent uncertainties in this evaluation process, actual losses may be different from the originally estimated amount accrued.

Quantitative and qualitative disclosure relating to market risks Our activities expose us to a variety of financial risks, including market risk, credit risk and liquidity risk. Our overall risk management process focuses on the unpredictability of financial markets and aims to minimize potential adverse effects on our financial performance. We use derivative financial instruments to hedge certain risk exposures when we consider hedging instruments to be cost effective. We conduct financial risk management under policies that our management board and supervisory board approve. Our treasury policy establishes the rules to manage financial risk and liquidity, through determination of the financial risk factors to which we are exposed to and their sources. Details of the duties, activities and methodologies used to identify, measure, monitor and report risks as well as forecast cash flows, finance maturity gaps and invest free cash resources are contained in approved supplementary written instructions. The following organizational units within our financial department participate in the risk management process: risk committee, liquidity management team, risk management team, financial planning and analyzing team and accounting and reporting team. The risk committee is composed of the board member responsible for the TVN Group’s financial reporting and heads of the teams within our financial department. The risk committee meets monthly and, based on an analysis of financial risks, recommends financial risk management strategy, which is approved by the management board. The supervisory board approves risk exposure limits and is consulted prior to the execution of hedging transactions. The financial planning and analyzing team measures and identifies financial risk exposure based on information reported by operating units generating exposure. The liquidity management team analyzes risk factors, forecasts our cash flows, and market and macroeconomic conditions and proposes cost-effective hedging strategies. The accounting and reporting team monitors accounting implications of hedging strategies and verifies settlements of the transactions.

Foreign currency risk Our revenue is primarily denominated in złoty. Following consummation of this offering foreign exchange risk will arise mainly from our liabilities with respect to the Notes being offered hereby and related embedded prepayment options, and loans from related parties and contingent consideration, cash and cash equivalents, all of which are denominated in euros and liabilities to suppliers of foreign programming rights, satellite costs and rental costs, all of which are denominated in dollars or euros. Other costs are predominantly denominated in złoty. Our policy with respect to management of foreign currency risks is to cover known risks in a cost efficient manner, and we do not trade in financial instruments. Following evaluation of our exposures, we enter into derivative financial instruments to manage these exposures. We may enter into call options, swaps and forward exchange agreements to manage currency exposures. Regular and frequent reporting to management is required for all transactions and exposures.

Cash flow and fair value interest rate risk Our exposure to interest rate risk arises on interest bearing assets and liabilities. Following consummation of this offering our main interest bearing items will be the Notes being offered hereby, PLN Bonds, loans from related parties and contingent consideration. As the Notes are at a fixed interest rate, we will be exposed to fair value interest rate risk in this respect. Since the Notes will be carried at amortized cost, the changes in fair values of these instruments do not have direct impact on valuation of the Notes in the balance sheet. We issued PLN Bonds with a nominal value of PLN 500.0 million on June 23, 2008. The PLN Bonds are at a variable interest rate linked to WIBOR and therefore expose us to interest rate risk. At September 30, 2009, if WIBOR interest rates had been 50 basis points (“b.p.”) higher/lower with

86 all other variables held constant, post-tax profit for the period would have been PLN 0.6 million lower/higher. As the loans from related parties are at a fixed annual interest rate we are exposed to fair value interest rate risk in this respect. Since the loans from related parties are carried at amortized cost, the changes in fair values of these instruments do not have direct impact on valuation of the instruments in the balance sheet. The carrying value of contingent consideration reflects its present value at the reporting date and is estimated based on assumed cost of debt. As the cost of debt used to determine net present value is linked to 12-month EURIBOR interest rate we are exposed to interest rate risk. At September 30, 2009 if EURIBOR interest rates had been 50 b.p. higher/lower with all other variables held constant, post-tax profit for the period would have been PLN 1.3 million higher/lower due to change in estimation of the contingent payment. Management does not consider it cost effective to use financial instruments to hedge or otherwise seek to reduce interest rate risk.

Credit risk Financial assets, which potentially expose us to concentration of credit risk consist principally of trade receivables and related party receivables and foreign currency options. We place our cash and cash equivalents, bank deposits and foreign currency options with financial institutions that we believes are credit worthy based on current credit ratings. We do not consider our current concentration of credit risk as significant. We perform ongoing credit evaluations of our customers’ financial condition and generally do not require collateral from our customers. We require clients with poor or no history of payments with us, with low value committed spending or assessed by us as not credit worthy to pay before service is rendered. We extend credit to customers with a good history of payments and significant spending which we consider credit worthy based on internal or external ratings. We perform ongoing evaluations of market segments focusing on our customers’ liquidity and creditworthiness and our credit policy is appropriately adjusted to reflect current and expected economic conditions. We define credit exposure as total outstanding receivables (including overdue balances) and we monitor the exposure regularly on an individual basis by paying counterparty. We make the majority of our sales through advertising agencies (57.0% of the total trade receivables as of September 30, 2009), which manage advertising campaigns for advertisers and pay us once they receive payment from the customer. Our top ten advertisers account for 17.0%, and the single largest advertiser for 3.0%, of sales for the nine months ended September 30, 2009. Generally advertising agencies in Poland are limited liability companies with little recoverable net assets in case of insolvency. The major players amongst the advertising agencies in Poland with whom we cooperate are subsidiaries and branches of large international companies of good reputation. To the extent that it is cost- efficient, we mitigate credit exposure with a trade receivable insurance facility from a leading insurance company. We do not expect any significant losses with respect to amounts included in the trade receivables at the balance sheet date from non-performance by our customers as at September 30, 2009. We do not expect any losses with respect to derivative financial assets attributable to credit risk.

Derivative financial instruments and hedging activities We carry derivative financial instruments on our balance sheet at fair value. The method of recognizing the resulting gain or loss is dependent on whether the derivative is designated as a hedging instrument, and, if so, the nature of the item being hedged. We designate certain derivatives as either (i) a hedge of the fair value of a recognized asset or liability (“fair value hedge”), (ii) a hedge of a highly probable forecast transaction (“cash flow hedge”), or (iii) a hedge of a net investment in a foreign operation, on the date a derivative contract is entered into. We record changes in the fair value of derivatives that are designated and qualify as fair value hedges, in the income statements, along with any changes in the fair value of the hedged asset or liability that is attributable to the hedged risk. We apply fair value hedge accounting for hedging

87 foreign exchange risk on borrowings. We recognize the gain or loss relating to the effective and ineffective portion of derivatives in the income statement within finance expense. The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges are recognized in equity. We recognize the gain or loss relating to the ineffective portion immediately in the income statement within finance expense. Where the forecast transaction results in the recognition of a non-financial asset or of a liability, we transfer the gains and losses previously deferred in equity from equity and include them in the initial measurement of the cost of the asset or liability. Otherwise, we transfer amounts deferred in equity to the income statement and classify them as revenue or expense in the same periods during which the hedged forecast transaction affects the income statement (for example, when the forecast sale takes place). Certain derivative transactions, while providing effective economic hedges under our risk management policies, do not qualify for hedge accounting under the specific rules in International Accounting Standard 39 — “Financial Instruments: Recognition and Measurement” (IAS 39). We recognize changes in the fair value of any derivative instruments that do not qualify for hedge accounting under IAS 39 immediately in the income statement. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting under IAS 39, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction ultimately is recognized in the income statement. When a forecast transaction is no longer expected to occur, we transfer the cumulative gain or loss that was reported in equity immediately to the income statement. We document at the inception of the transaction the relationship between hedging instruments and hedged items, as well as our risk management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as hedges to specific assets and liabilities or to specific firm commitments or forecast transactions. We also document our assessment, both at the hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. We separate embedded derivatives from the host contracts and account for these as derivatives if the economic characteristics and risks of the embedded derivative and host contract are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative and the combined instrument is not measured at fair value with changes in fair value recognized in profit or loss.

New accounting pronouncements Certain new accounting standards and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations have been published by IASB since the publication of the annual consolidated financial statements that are mandatory for accounting periods beginning on or after January 1, 2010. Our assessment of the impact of these new standards and interpretations is set out below. Amendment to IFRS 7 Improving Disclosures about financial instruments The amendment was published on March 5, 2009. It requires enhanced disclosures about fair value measurements and liquidity risk. The amendments are applicable retrospectively for annual periods beginning on or after 1 January, 2009. Entities are not required to provide comparative disclosures in the first year of adoption.

Amendments to IFRIC 9 and IAS 39 Embedded Derivatives The amendments were published on March 12, 2009. They clarify the accounting treatment for embedded derivatives when reclassifying financial instruments. The amendments apply retrospectively and are required to be applied for annual periods ending on or after June 30, 2009. These amendments will not affect our financial statements.

IFRS Improvements 2009 On April 16, 2009 the International Accounting Standards Board issued “IFRS Improvements”, which amend 12 standards. The amendments include changes in scope, presentation, recognition and

88 valuation and include terminology and editorial changes. The majority of the amendments is effective from annual periods starting on January 1, 2010, but some changes are effective for annual periods beginning on or after July 1, 2009. We are currently assessing the impact of the changes on our financial statements.

Amendments to IFRS 2 Group Cash-settled Share-based Payment Transactions The amendments were published on June 18, 2009. They clarify the accounting treatment for group cash-settled share-based payment transactions in the separate or individual financial statements of the entity receiving the goods or services when that entity has no obligation to settle the share- based payment transaction. The amendments are effective from annual periods starting on or after January 1, 2010. The amendments will not affect our financial statements.

Amendments to IAS 39 Financial Instruments: Recognition and Measurement: Eligible Hedged Items The amendment was published on July 31, 2008. It provides additional guidance on what can be designated as a hedged item. Entities are required to apply the amendment retrospectively for annual periods beginning on or after July 1, 2009, with earlier application permitted. The amendment will not affect our financial statements.

IFRIC 17 — Distributions of Non-cash Assets to Owners The interpretation was issued on November 27, 2008. IFRIC 17 standardizes practice in the accounting treatment of distribution of non-cash assets to owners. The interpretation clarifies that: (1) a dividend payable should be recognized when the dividend is appropriately authorized and is no longer at the discretion of the entity; (2) an entity should measure the dividend payable at the fair value of the net assets to be distributed; and (3) an entity should recognize the difference between the dividend paid and the carrying amount of the net assets distributed in profit or loss. IFRIC 17 is to be applied prospectively for annual periods beginning on or after July 1, 2009. Earlier application of IFRIC 17 is permitted. The interpretation will not affect our financial statements.

IFRIC 18 — Transfers of Assets from Customers The interpretation was issued on January 29, 2009. IFRIC 18 is particularly relevant to the utility sector as it clarifies the IFRS requirements for agreements in which an entity receives from a customer an item of property, plant and equipment that the entity must then use either to connect the customer to a network or to provide the customer with ongoing supply of goods or services. The interpretation should be applied prospectively to transfers of assets from customers received on or after July 1, 2009. The interpretation will not affect our financial statements.

89 Business

Overview We are an integrated multi-media company, with leading market positions in television broadcasting and online media and with the most technologically advanced pay TV platform in Poland. We are Poland’s #1 commercial broadcaster and our TVN brand is the most recognized brand in the Polish media market. Our television broadcasting business currently owns and operates eleven television channels. Our online media business operates Onet.pl, the leading internet portal in Poland. In pay TV, we own a controlling stake in the ‘n’ DTH platform, one of four DTH platforms in Poland and the market leader in HD and VoD services. As described herein, we have entered into a non-binding term sheet with ITI Media, the parent company of our majority shareholder, to acquire the remaining non-controlling interest in the ‘n’ DTH platform. TVN, our principal free-to-air channel, is the most successful commercial television station in Poland, based on its audience share and advertising revenues. In an increasingly fragmented Polish television broadcasting market, TVN is the only major station that has gained overall audience share over the last few years. In addition, we offer ten other channels, including thematic channels, to address the fragmentation of audiences and to deliver target audiences to our advertisers. Our thematic channels include our 24 hour news channel, TVN24, the most viewed thematic channel in Poland, as well as a number of other thematic channels, many of which are market leaders with respect to their target audiences. As a direct result of our high quality and innovative programming, as of June 30, 2009, our stations had approximately 23.1% of the peak time nationwide audience share, and our television stations received approximately 35.6% of total net television advertising expenditure. For the nine months ended September 30, 2009, our broadcasting segment accounted for 72% of our total revenues. Onet.pl is a leading internet portal in Poland and, on a monthly basis, our online media business has over 12 million real users and more than 3.5 billion page views. In addition to Onet.pl, we also operate some of the most popular internet destinations including zumi.pl, Poland’s first web-based location service, tvn24.pl, a leading news vortal in Poland, plejada.pl, an entertainment vortal, and Sympatia.pl, Poland’s leading online dating service. We believe our online media business provides our advertisers highly commercially attractive access to their target audiences. We estimate that approximately 73% of Polish internet users reach our online media each month. The online advertising business consists of display advertising, search engine marketing and directory services. Display advertising represents approximately 48% of the total net online advertising expenditure in Poland. For the six months ended June 30, 2009, based on management’s estimates, we believe Onet.pl received approximately 14% of the total net online advertising expenditure in Poland, including approximately 30% of the total net online display advertising expenditure. We believe that our market presence and brand loyalty, together with our access to high quality content, will help us maintain our position as the market leader. The ‘n’ DTH platform is a new generation digital satellite platform launched in October 2006 offering pay TV services in Poland. The ‘n’ DTH platform focuses on the premium and economy segments of the pay TV market with a subscriber base of approximately 572,000 for the premium offering and approximately 159,000 for the pre-paid economy offering as of September 30, 2009. Our premium offering is the most technologically advanced platform in the Polish DTH market with all of its set-top boxes being HD quality, offering the largest variety of HD channels and advanced services, including Personal Video Recorder and VoD. Our pre-paid economy offering provides low cost access and flexibility to our customers. As we further integrate our multi-media platform across our businesses, we expect to gain increased access to our key target audiences and to diversify our income stream. We have been successful in capturing audience share by use of our high quality content, which we distribute across our multi- media channels. In addition, we have successfully diversified our revenues by adding subscription revenues from the ‘n’ DTH platform and subscription license fees from our thematic channels, which are distributed through cable and DTH operators, as well as from teleshopping. For the nine months ended September 30, 2009, 38.7% of our revenues were derived from non-advertising sources. For the twelve months ended September 30, 2009, we had revenues of PLN 2,035.3 million and Adjusted EBITDA of PLN 683.7 million.

90 Competitive strengths We believe that the following strengths characterize our business, will drive the realization of our strategic goals and reinforce our competitive position in our markets: • Attractive and resilient Polish market. Despite the global recession, the Polish economy is expected to experience 1.25% GDP growth in 2009 according to the European Commission, which is likely to make the Polish economy the only European economy expected to see economic output expansion in 2009. However, we estimate that net advertising expenditures in Poland will decline at a rate of 14% over the same period, which is disproportionate as compared to GDP growth. As a result of this disconnect, the fact that TV viewing is a primary leisure activity in Poland and the fact that gross rating point (“GRP”) advertising inventory for the major television channels is currently sold out in response to price cuts in the television advertising market, we believe that the advertising market in Poland will start recovering in early 2010. • #1 share in the Polish advertising market. We have developed a portfolio of leading television broadcasting and online media and are one of the most recognized and most respected brands in the Polish market. Our television stations had approximately 23.1% of the peak time nationwide audience share and received approximately 35.6% of the total net television advertising expenditure in Poland for the six months ended June 30, 2009. For the six months ended June 30, 2009, based on management’s estimates, we believe that in the online display advertising market, Onet.pl is the market leader with approximately 30% of the total net online display advertising expenditure and approximately 14% of the total net online advertising expenditure in Poland. • Success in attracting key target audiences. We are able to leverage our high quality content and brands across our integrated multi-media platform to deliver key target audiences to our advertisers. With eleven television channels (including seven thematic channels) and the most popular internet portal (including over 150 thematic services covering news, sport, music and other categories) we are able to capitalize on diverse audiences and deliver commercially attractive targeted groups to our advertisers. In our television broadcasting and online media businesses, we have translated this high audience share into an even higher share of television and online advertising spending. The power ratio for our TVN channel, which is the ratio of our peak time key target audience advertising market share in the television market to peak time key target audience share, was 1.3 in 2008. • Diversified revenue stream. We have been able to diversify our advertising revenue stream by developing additional revenue sources, including subscription revenues from the ’n’ DTH platform, licensing fees, call TV, teleshopping, e-commerce and hosting services. On a historical basis, for the nine months ended September 30, 2009, we derived 38.7% of our revenue from sources other than advertising. We continuously seek to diversify our revenue stream by developing innovative services and offerings across our multi-media platforms. • Highly profitable business with flexible cost structure. Excluding the ’n’ DTH platform, our Adjusted EBITDA margins were 37.5% and 33.6% for the year ended December 31, 2008 and the nine months ended September 30, 2009, respectively. Our Adjusted EBITDA margins are supported by our variable cost structure. On the same basis, we estimate that over 52% of our costs are variable, including our production, programming and marketing costs. Across our integrated platform of different television broadcasting and pay TV channels and various online media websites, we maximize our operational efficiencies by leveraging our broadcasting facilities, programming content and other resources to generate additional revenue at low incremental costs. The ‘n’ DTH platform is at a development stage of its business and for the nine months ended September 30, 2009, reported a loss of PLN 228.0 million. • Experienced management team with a strong track record. We are able to attract and retain experienced, dedicated, ambitious, loyal and talented broadcasting professionals. Our senior management team has extensive experience in the European television broadcasting, online media and pay TV industry. Our senior management team also has an excellent record in the execution of our acquisition and integration strategy and in delivering efficiencies and significant synergies across our businesses.

91 Strategy Our strategy is to maintain and further strengthen our position as the leading commercial multi- media company in the Polish market. In order to realize our vision, we intend to capitalize on our strengths and pursue the following strategies: • Maintain our position as the #1 TV broadcaster. Based on our market knowledge and experience, we are well placed to understand and anticipate audience preferences. This, in turn, enables us to produce, source, broadcast and distribute popular, attractive and innovative programming content. Our strategy of developing and broadcasting or publishing a mix of high quality local and foreign programming deliver audiences to our advertisers that have the size and demographics that are most attractive to them. • Leverage our market leading positions to take advantage of the recovery in the Polish advertising market and its long-term growth potential. We aim to maintain and further strengthen our position as one of the most important providers of advertising space in Poland. We believe that the Polish advertising market will start recovering in early 2010 and that we are well-positioned to profit from this recovery as a result of our leading market shares across our broadcast TV and online media brands. Because we market and sell our advertising space based on our ability to reach commercially attractive audiences, we believe that our integrated multi-media operations, market leading positions and ability to reach key target audiences make us a highly attractive partner to advertisers. • Further diversify our media platforms and our revenues. Through the acquisition of a controlling stake in the ’n’ DTH platform, we have obtained an additional source of revenue in the form of subscription fees. We expect to continue identifying opportunities to improve and complement our existing businesses, which will help us to expand and further focus our audience reach and diversify our revenue stream. We continually evaluate the launch or acquisition of new channels and internet portals in Poland and abroad with a view to providing advertisers with additional and more tailored audiences for the presentation and marketing of their products and services. These increased offerings allow us to expand and diversify our revenue stream, both by increasing our total net advertising revenue and by developing secondary revenue sources such as e-commerce, user fees and hosting services. • Further integrate our businesses into a single platform to leverage our brands and increase our margins. We intend to further leverage our brands, high quality content and our promotional capabilities to maximize our operational efficiencies. We are able to leverage our high quality content by distributing it across our various media platforms, including VoD, Pay TV, free-to-air and online. As a result of our multi-media platforms, we are able to gain access to high quality programming on attractive terms from our content providers, including major U.S. film studios. We expect that the completion of the ‘n’ acquisition will provide us with significant distribution and content bargaining power to support our broadcasting business in addition to a diversified revenue stream. In addition, we intend to continue to use our television channels to cross-promote our internet activities and the ‘n’ DTH platform and the Onet.pl portal to cross-promote our television content and the ‘n’ DTH platform. TELEVISION BROADCASTING AND PRODUCTION SEGMENT Segment Overview For the nine months ended September 30, 2009, this segment accounted for approximately 72% of our revenues and approximately 92.0% of our Adjusted EBITDA. Industry overview Polish television broadcasting industry Poland has the largest population in Central and Eastern Europe, with over 38 million residents. According to AGB, in 2009 approximately 100% of the country’s 13.8 million households had at least one television set, and approximately 23.9% of households had at least a second television set. The Polish television broadcasting market consists of state-owned and private commercial broadcasting sectors with a number of commercial broadcasters broadcasting both at the regional and national levels. According to AGB, as of September 30, 2009, cable television reached 28.7% of the Polish population and satellite television reached 32.2% of the Polish population. Taking that into account we estimate that 42.2% of Polish households receive only terrestrial television signal.

92 Terrestrial viewers receive, on average, five and a maximum of seven Polish language channels, whereas cable and satellite viewers can receive, as of April 2009, up to 138 Polish language channels. Television broadcasting in Poland was started in the 1950s by the state-owned television broadcaster Telewizja Polska S.A., commonly known as “TVP”. TVP broadcasts eight national channels. TVP1 and TVP2 focus on broadcasting Polish entertainment shows, films, series, sports programs, current affairs and news. TVP HD is a high definition version of the Polish public broadcasting channels that was launched in 2008. TVP Info is a news channel launched in 2007 and is devoted to broadcasting national and international news. TVP Kultura was launched in 2005 and broadcasts programs related to art and culture. TVP Sport is a sports channel and was launched in 2006. TVP Historia was launched in 2006 and is a history channel. In addition, TVP operates TV Polonia, a television channel that is available nationally in Poland and internationally, which targets Poles living in the United States, Canada, the rest of Europe and Australia. The programming content of TV Polonia consists of Polish films and series, complemented by sports and news programs. Until 1992, TVP was the sole Polish television broadcaster. Since then, with the opening of the Polish television market to private commercial broadcasters, the number of television channels has increased substantially. Today, the Polish television broadcasting sector comprises of four national broadcasters, a number of smaller regional broadcasters, locally available through satellite and cable, and foreign broadcasters that distribute foreign language (predominantly German and English) channels. For the year ended December 31, 2007, TVP derived approximately 24.0% of its revenue from mandatory license fees that are levied on all households with a television set, with the remainder generated primarily from advertising. The remaining channels are mainly financed through advertising and cable and satellite subscription fees. According to Egta, watching television is a popular leisure activity in Poland with the average viewer watching approximately 210 minutes of television per day in 2008. The table below sets out the average daily television watching time, measured in minutes per person per day, for Poland and for five comparable countries in Western Europe in 2008. Average number Country of minutes Italy ...... 233 Spain ...... 233 Germany ...... 223 France ...... 220 Poland ...... 210 Czech Republic ...... 194

Source: Egta

Polish cable and satellite market According to the Polish National Broadcasting Council’s listings of licensed television channels, there are 10 terrestrial channels, 73 satellite channels and 223 cable channels. The cable television market is undergoing consolidation, but it still consists of approximately 630 operators, which operate over 1,100 networks. UPC, Aster, Vectra and Multimedia are Poland’s largest cable operators with an aggregate 61% share of the Polish cable market as of December 31, 2008. The Polish pay digital satellite market is split between four digital platform operators: (1) Canal+ Cyfrowy Sp. z o.o., operating the Cyfra+ platform, (2) Cyfrowy Polsat S.A., operating the Cyfrowy Polsat platform, (3) ITI Neovision Sp. z o.o., operating the ‘n’ DTH and TNK platforms and (4) Telekomunikacja Polska (“TP”), operating the TP DTH platform. The satellite platform operators offer over 138 Polish language channels as of April 2009, including original Polish channels, channels translated into Polish and hundreds of foreign unencrypted channels. As of September 30, 2009, satellite operators served 4.96 million subscribers or 32.2% of the Polish population, while cable networks reached 4.39 million subscribers, or 28.7% of the Polish population according to AGB. Based on a TGI survey by SMG/KRC Millward Brown in August 2009, we estimate that approximately 13% of total satellite and cable television subscribers own two or more satellite receivers or have both a satellite receiver and access to a cable network. Legislation requires cable network operators in Poland to carry free-to-air terrestrial channels. As a result, our TVN channel is carried by all cable and satellite operators. Our TVN 7 channel is provided

93 to operators free of coverage fees and therefore is also carried by most Polish cable and satellite operators. For our thematic channels (excluding TVN Warszawa), we charge fees to cable and satellite operators.

Polish television advertising market Poland is one of the largest advertising markets in Central and Eastern Europe with a total net advertising expenditure (which is calculated based on net prices for advertising airtime quoted by broadcasters and advertising agencies, after discounts or rebates) of approximately PLN 7,719 million in 2008 (according to Starlink). Data compiled by Starlink indicates that total net advertising expenditures for all Polish media grew by 12.0% in 2008. However, we expect those expenditures to decrease by approximately 14% in 2009. Television advertising is the dominant advertising medium in Poland, accounting for approximately 49.3% of the total net advertising expenditure for the year ended December 31, 2008, according to Starlink. In 2008, total net television advertising expenditure in Poland amounted to approximately PLN 3,803 million, 14.5% higher than in 2007. The following table sets out the percentages of net advertising expenditure in Poland per advertising medium. Year Media 2007 2008 Television ...... 48.2 49.3 Magazines ...... 12.5 11.7 Newspapers ...... 11.3 10.3 Radio ...... 8.2 8.1 Outdoor...... 9.8 9.1 Internet (including display and Search Engine Marketing) ...... 8.9 10.4 Cinema ...... 1.0 1.2 Total...... 100.0 100.0

Source: Starlink. In our experience, the preferred demographic of advertisers in Poland consists of viewers between 16 and 49 years old, living in urban areas with a population in excess of 100,000. These viewers are perceived to have above average income and above average spending power. In addition, we believe that the spending patterns of this audience group are more likely to be influenced by advertising than those of other viewers. According to AGB, gross television advertising expenditure in Poland during peak time represents approximately 56.0% of total gross television advertising expenditure. We believe that advertisers specifically target peak time audiences because they believe that, at such a time, they can reach the largest number of viewers in their preferred demographic group.

Market outlook for television advertising in Poland We believe that, despite the current global economic crisis, net television advertising expenditure in Poland will increase over the long term as a result of several factors, including: • expected GDP growth for Poland; • commercial airtime prices (CPT) on TV that are still 32% lower than in Western Europe and cheaper than in some other Central and Eastern European countries, including the Czech Republic and Hungary, according to 2008 data for EV12 by Egta; • commercial airtime of TVN, TVP1, TVP2 and Polsat that has been sold out in 2009; and • the effectiveness of the television medium in terms of price, reach and impact.

Our television channels In October 1997, we launched our first channel, TVN, a free-to-air channel with terrestrial frequencies. TVN’s programming was initially centered on a comprehensive news program, Fakty,

94 which has steadily gained audience share and, over time, has proved to be the most consistently highly rated TVN show. The TVN channel was the first Polish channel to introduce current affairs programs such as Pod Napie˛ ciem, in 1998, and Uwaga, in 2002, into peak time.

Other significant successes for the TVN channel include the broadcast of internationally successful program formats such as Who Wants to be a Millionaire, Strictly Come Dancing, So You Think You Can Dance, Got Talent! and locally developed series such as Na Wspólnej, 39 i pól and Teraz albo nigdy.

Since the launch of TVN, we believe we have been an industry leader in Poland, and started the trend of offering a wide variety of thematic channels. Broadcasting an array of thematic channels allows us to profile audiences, distribute our content across multiple channels, cross-sell channels and collect additional subscription based revenues. TVN’s broad and increasingly popular thematic channel portfolio has enabled TVN to target several key demographics with particular interests, thereby improving its audience profile and increasing its peak time audience share, both of which are attractive to advertisers. Our ability to share content across multiple channels helps us maximize operational efficiencies and generate additional revenue at low incremental costs.

We currently operate eleven channels. The table below identifies features of each our channels. Our best known channels, TVN, TVN 24 and TVN 7, are described in greater detail below.

Household Channel Launch date Subject matter Signal distribution Availability coverage TVN 1997 entertainment and Free-to-air (FTA) free-to-air 89% news terrestrial, encrypted digital satellite, cable and digital subscriber line (DSL) TVN 24 2001 news encrypted digital license fee based 51% satellite platforms, cable and DSL, internet TVN 7 2002 entertainment encrypted digital free-to-satellite 57% satellite, cable and DSL TVN Meteo 2003 weather encrypted digital license fee based 48% satellite platforms, cable and DSL TVN Turbo 2003 automotive encrypted digital license fee based 50% satellite platforms, cable and DSL TVN Style 2004 health and beauty encrypted digital license fee based 50% satellite platforms, cable and DSL TVN International 2004 entertainment satellite subscription based n/a(1) transmitters abroad cable networks abroad NTL Radomsko(2) 1995 regional one FTA terrestrial free-to-air — transmitter, local cable Telezakupy Mango 24(3) 2003 teleshopping FTA digital free-to-satellite 50% satellite, cable and DSL TVN CNBC Biznes 2007 business encrypted digital license fee based 28% satellite platforms, cable and DSL, internet TVN Warszawa 2008 local news and FTA digital free-to-satellite 17% entertainment satellite, cable and DSL

(1) Statistics reflecting household coverage in the countries in which TVN International is broadcast are not available (2) Acquired by us in 2005 (3) Acquired by us in 2007

95 TVN TVN broadcasts a variety of programs 24 hours a day, seven days a week including news, current affairs, information programs, daily talk shows, games, movies, dramas and docu-crime series. The following table sets out the highest nationwide audience share of what we believe were some of TVN’s most successful programs broadcast during 2009, demonstrating the strength of both our locally produced and our acquired programming:

Top ten programs by nationwide audience share Nationwide audience Date Title Description share (%) June 26, 2009 ...... Fakty Main news bulletin 40.0 October 17, 2009 ...... Got Talent! (Mam talent) General entertainment 36.9 October 21, 2009 ...... Ugly Betty (Brzydula) Series 35.8 October 17, 2009 ...... Norbit Movie 32.2 October 9, 2009 ...... Shrek 3 Movie 31.8 September 22, 2009 . . . . . Detektywi Docu-crime series 31.5 October 3, 2009 ...... Just like heaven Movie 30.9 September 27, 2009 . . . . . Strictly Come Dancing (Taniec z Gwiazdami) General entertainment 30.8 October 09, 2009 ...... Uwagal Current affairs 30.7 April 25, 2009 ...... Who wants to be a Millionaire (Milionerzy) General entertainment 29.5 Source: AGB

Scheduling We tailor our programs to the interests of demographic groups that we believe are attractive to advertisers. We analyze data relating to our audience share in detail, and, by identifying audience interests, behavior and general market trends, we attempt to ensure that our programming remains responsive to the viewing habits of our key target audience. TVN’s scheduling is based on two key commercial schedules introduced during the year: the spring and autumn schedules. This reflects the seasonality of the advertising market, which is strongest during the spring and autumn months. We schedule re-runs and other inexpensive programming content in summer and winter, when our advertising sales tend to be lower. TVN’s programming schedule is designed to maintain viewer loyalty and promote audience flow from program to program, from day to day and from “access prime time” to “prime time”. For example, “access prime time”, from 4:00 p.m. to 7:00 p.m., is “strip programmed,” meaning that a particular program is shown at the same time on each weekday, with a view to securing day-to-day loyalty and increasing audience flow from access prime time to “prime time”, the most commercially attractive programming period. As of September 2009, we scheduled a total of five weekday strip programs (Monday through Friday) in access prime time that included daily talk shows and drama, as well as seven days a week of news and current affairs. Additionally, early prime time, from 8:00 p.m. to 9:30 p.m., is also based on stripped programming, with daily drama and docu-crime series broadcast Monday through Thursday. These stripped programs help to build long-term loyalty of our viewers and an increasingly stable audience share. We reserve prime time for our highest quality programming, including entertainment shows, drama series and feature films.

TVN 7 We launched TVN 7, our free cable and satellite channel, in 2002. TVN 7 benefits from our content, infrastructure and know-how, allowing it to operate on a relatively low-cost basis and allowing us to recover programming costs via incremental advertising revenue. TVN 7 broadcasts 24 hours a day, seven days a week and shows feature films, television series, entertainment and game shows. TVN 7’s programming content complements TVN’s programming content, and by targeting different groups in our key target audience at the same time, we obtain not only a more complete coverage of our key target audience but also avoid having TVN 7 and TVN

96 compete with each other for audiences. Moreover, TVN 7 enables us to use our program archives effectively and, most importantly, increase the frequency of our customers’ advertisements.

TVN 24 TVN 24 currently operates a 24-hour, seven days a week Polish channel devoted exclusively to broadcasting national and international news and current affairs programs of interest to Polish viewers. We produce substantially all of its domestic news content in-house through nine regional centers and our own team of reporters. For coverage of events outside Poland, we have our correspondents in Washington, London, Moscow and Brussels and TVN 24 has entered into agreements with international news services such as Reuters and the Associated Press Televisions News. TVN 24 is available to approximately 7.0 million households on digital satellite platforms operating in Poland, namely Cyfra+, Cyfrowy Polsat, TP and the ‘n’ DTH platform as well as TNK, and over 459 cable operators (out of about 630 cable operators). The major cable operators offering the TVN 24 channel include UPC, Multimedia Polska, Vectra and Aster. We believe that TVN 24’s coverage amounts to approximately 99% of the pay cable and satellite platform digital network subscribers in Poland. Audience market share During the year ended December 31, 2008 and the nine months ended September 30, 2009, we derived approximately 69% and 54%, respectively, of our total revenue from television advertising. We have been able to diversify our advertising revenue stream by developing additional revenue sources, including subscription revenues from the ’n’ DTH platform, licensing fees, call TV, teleshopping, e-commerce and hosting services. In the current television advertising market environment in Poland, advertisers generally allocate their expenditure among channels based on each channel’s targeted audience market share, the demographic audience profile and pricing. In order to maximize our advertising revenue, we seek to increase our audience share among those viewers whom we believe are attractive to advertisers by developing and broadcasting programs targeting them. Television broadcasters and advertisers use audience survey data to determine the number and demographic characteristics of an audience watching a particular program. Audience market share figures are expressed as a percentage of the total number of television viewers during the time of broadcast. Ratings figures generally express actual audience numbers as a percentage of the total population. Our internal analysis of the viewing figures focuses on our audience market share of our key target audiences. In particular, we follow audience market share during peak time, which is the period from 6:00 p.m. until 11:00 p.m., as this is the time period during which advertising rates are the highest.

97 The tables below show our share of nationwide peak time audience (defined as viewers aged four and older) and our share of peak time audience among viewers aged 16-49 compared to that of our major competitors for each year since the beginning of 2006: Nationwide peak time audience share Channel 2006 (%) 2007 (%) 2008 (%) 9 months 2009 (%) TVN Group including (but not limited to:) . . 23.7 24.3 24.7 23.1 TVN...... 20.4 20.0 20.4 18.7 TVN7...... 1.4 1.4 1.6 1.6 TVN24...... 1.3 2.1 1.9 2.0 TVN Meteo ...... 0.0 0.0 0.1 0.1 TVN Turbo ...... 0.3 0.3 0.3 0.3 TVN Style ...... 0.2 0.3 0.3 0.4 TVP 1 ...... 24.6 23.5 22.5 21.5 TVP 2 ...... 19.5 17.7 17.3 17.3 Polsat ...... 17.4 18.6 17.6 15.9 TV4...... 1.9 2.1 1.8 2.2 Others ...... 12.9 13.8 16.1 20.0 Source: AGB

16-49 peak time audience share Channel 2006 (%) 2007 (%) 2008 (%) 9 months 2009 (%) TVN Group including (but not limited to:) . . 25.1 24.4 25.0 23.4 TVN...... 21.6 20.3 20.6 19.1 TVN7...... 1.7 1.7 2.1 1.9 TVN24...... 1.1 1.6 1.3 1.3 TVN Meteo ...... 0.0 0.0 0.1 0.1 TVN Turbo ...... 0.4 0.5 0.5 0.5 TVN Style ...... 0.3 0.4 0.4 0.5 TVP 1 ...... 22.6 21.2 19.9 18.7 TVP 2 ...... 17.7 16.0 15.8 16.3 Polsat ...... 20.0 21.8 20.4 18.3 TV4...... 2.1 2.4 2.3 2.6 Others ...... 12.5 14.1 16.6 20.7 Source: AGB According to AGB, in 2008, our channels captured an aggregate average of 22.0% of Poland’s nationwide all-day television audience.

98 The tables below show our all-day nationwide audience share and our all-day audience share among viewers aged 16-49 compared to that of our major competitors for each year since 2006:

Nationwide all-day audience share Channel 2006 (%) 2007 (%) 2008 (%) 9 months 2009 (%) TVN Group including (but not limited to:) . . 20.8 21.8 22.0 20.5 TVN...... 16.7 16.5 16.7 15.2 TVN7...... 1.4 1.5 1.6 1.6 TVN24...... 2.0 3.0 2.7 2.8 TVN Meteo ...... 0.0 0.0 0.1 0.1 TVN Turbo ...... 0.3 0.3 0.4 0.4 TVN Style ...... 0.3 0.4 0.4 0.4 TVP 1 ...... 24.0 23.2 22.6 21.1 TVP 2 ...... 20.1 18.0 16.8 15.6 Polsat ...... 16.1 16.8 15.4 14.7 TV4...... 2.1 2.1 1.8 2.0 Others ...... 16.9 18.1 21.4 26.1 Source: AGB

16-49 all-day audience share Channel 2006 (%) 2007 (%) 2008 (%) 9 months 2009 (%) TVN Group including (but not limited to:) . . 22.4 22.3 22.8 21.6 TVN...... 18.2 17.3 17.5 16.2 TVN7...... 1.7 1.8 2.0 2.0 TVN24...... 1.5 2.3 2.0 2.1 TVN Meteo ...... 0.0 0.0 0.1 0.1 TVN Turbo ...... 0.5 0.5 0.6 0.6 TVN Style ...... 0.4 0.5 0.6 0.6 TVP 1 ...... 21.2 20.2 19.2 17.7 TVP 2 ...... 18.9 16.8 15.6 14.5 Polsat ...... 18.7 19.9 18.5 17.2 TV4...... 2.3 2.4 2.2 2.4 Others ...... 16.4 18.4 21.7 26.6 Source: AGB

Television advertising Television advertising sales We sell advertising airtime to a broad and diverse group of advertisers that include multinational and national companies. The majority of our advertising revenue generated in 2008 came from advertising agencies representing multiple advertisers, with the balance generated directly pursuant to agreements with individual advertisers. For the twelve months ended December 31, 2008, our ten largest individual advertisers collectively accounted for approximately 24% of our net advertising revenue with no single advertiser accounting for more than 4% of our net advertising revenue. In order to provide flexibility to our advertising customers, we offer advertising priced on (i) cost per GRP, and (ii) rate-card basis. In 2008, 30.1% of our advertising sales on our TVN channel were package sales priced on the basis of cost per GRP compared to 71.3% in 2007. See “Management’s discussion and analysis of financial condition and results of operations.” The majority of our customers commit to minimum spending levels in return for fixed commercial conditions. Advertising priced on a rate-card basis is applied to advertisements scheduled at a specific time. The cost of such advertising is based on the length of the advertisement, the time of the day and the season during which the advertisement is shown. Consistent with industry practice, we provide an incentive rebate on rate-card prices to a number of advertising agencies and their clients.

99 Advertising priced on a cost per GRP package basis allows an advertiser to define the number of GRPs that it wants to achieve within a defined period of time with its advertisement. We usually schedule specific advertisements one month in advance of broadcasting them so that we meet the GRP target that the advertisers set while maximizing the use and profitability of our available advertising programming time. Unlike some of our competitors, we have not engaged in aggressive price reductions as a result of the economic downturn. Rather than as a result of an overall decrease in prices, the minor effective price decreases in 2009 have been primarily a result of (i) the change in the proportions of rate-card to GRP airtime sales from 70%/30%, for the year ended December 31, 2008, to 56%/44%, for the nine month period ending September 30, 2009 and (ii) additional minor discounts applied to GRP packages provided to secure revenue. For a more detailed description of the pricing of advertising airtime, see “Management’s discussion and analysis of financial condition and results of operations — Revenue — Television broadcasting and production — Commercial television advertising revenue.”

Television advertising sales team

Our television advertising sales team consists of approximately 173 employees responsible for sales of our advertising time, sponsorship, campaign planning, after-sales analysis, market research and analysis, development of new products and, most importantly, enhancing relationships with existing and potential advertisers. In addition to providing advice on the scheduling of advertisements on our channels, our sales force works closely with advertisers to design special campaigns, including the sponsorship of particular programs and related cross- promotional opportunities.

Together with the programming department, our advertising sales department obtains television audience ratings data from AGB on a daily basis. They analyze this data and compare it with audience ratings of our competitors to determine the most effective strategy for scheduling advertising slots to reach our advertising clients’ preferred audience in the most efficient manner. In addition, our advertising sales department conducts a wide range of market analyses, focusing on various sectors of the Polish economy and our key target audience. The department is also responsible for ensuring that advertising slots are allocated in accordance with client specifications regarding context and timing.

Development of our television advertising market share

As evidenced by our peak time key target audience market share, we attempt to schedule our programming to attract and retain that group of viewers. Our market share of net television advertising expenditure in Poland reflects our ability to consistently attract key target audiences. According to AGB, TVN Group gained a 40.8% share of the television advertising market (share of voice, ages 16 through 49, in cities with populations over 0.1 million from 6:00 p.m. until 11:00 p.m.) in 2008. During the same period, we had a peak time key target audience share of 32.1%. We believe that this success is due to the combined strength of our peak time key target audience share and our in-house advertising sales and marketing efforts.

With the introduction of thematic channels we are able to deliver specific viewers within the key target audience to our advertising customers, which we believe makes their advertising messages more efficient.

The table below compares our nationwide all-day audience share and our share of net television advertising expenditure (“share of voice”) to that of our main competitors in 2008:

Group All-day share of voice (%) All-day nationwide audience share (%) TVN Group...... 28.7 22.0 TVP Group ...... 37.7 44.7 Polsat Group ...... 26.1 19.0 Others ...... 7.1 14.3 Total...... 100.0 100.0

Source: AGB

100 The table below compares our peak time key target group audience share and our peak time key target group share of net television advertising expenditure to that of our main competitors in 2008: Group Peak time share of voice (%) Peak time key target group audience share (%) TVN Group...... 40.8 32.1 TVP Group ...... 23.2 31.3 Polsat Group ...... 27.4 21.9 Others ...... 8.6 14.7 Total...... 100.0 100.0

Source: AGB The table below compares peak time key target group audience share and peak time key target group share of net television advertising expenditure of the TVN channel to that of its main competitors in 2008: Channel Peak time share of voice (%) Peak time key target group audience share (%) TVN ...... 35.3 26.2 TVP 1 ...... 12.9 15.1 TVP 2 ...... 9.0 12.8 Polsat ...... 23.2 17.8 Others ...... 19.6 28.1 Total...... 100.0 100.0

Source: AGB

Programming sources Programming produced by TVN Group We produce a wide variety of programs, including news and current affairs programs, documentaries, reality, talk and game shows, soap opera shows, movies and drama series. In 2008, we produced approximately 3,175 hours of programming for our TVN channel. To the extent possible, we use our own employees for the production of our programs, but we also hire temporary staff (including screen writers, actors, producers and directors) on a project-by-project basis. Sub-contracting to third party production companies provides us with additional production capacity when needed, thereby reducing overhead costs related to production facilities and equipment. We outsource the production of certain entertainment shows, reality shows and drama series. We tend to work closely with the Polish subsidiaries of internationally recognized programming content producers such as Fremantle Polska Sp. z o.o., Mastiff Media Polska Sp. z o.o., Constantin Entertainment, as well as a wide range of Polish independent programming content producers. In addition to our main news studio in Warsaw, we operate nine regional news offices and provide comprehensive news coverage of Poland. Each regional office can send its reporting crews to any location in Poland and is equipped with the latest transmission facilities. This enables the prompt transfer of video and live coverage of newsworthy events. For the coverage of international events outside Poland, we have entered into agreements with international news agencies such as Reuters, APTN and we have also entered into an agreement with European News Exchange, a non profit organization for the exchange of news footage and transmission services between television broadcasters. We deployed our own news team to cover key events such as the Olympic Games, EURO 2008, 2008 U.S. Presidential Election, the Russia — Georgia conflict and the 2009 European Parliament election. TVN 24 also has permanent foreign correspondents in Moscow, Brussels, London and Washington, D.C.

Acquired foreign programming Broadcasting rights are generally acquired under one of three types of contractual arrangements: (1) output, (2) volume or (3) spot contracts. Output contracts involve the acquisition of the right to broadcast all current and future releases of a particular film studio. Volume contracts involve the acquisition of a specified volume of television programming content. Spot contracts involve the acquisition of the right to broadcast individual series or films.

101 We have contracts concluded with the major Hollywood studios, including Warner Brothers and Paramount Pictures. We are not dependent on any particular distributor, and none of our suppliers accounts for 6.6% or more of our operating costs.

Competition Our main channel, TVN, competes for audiences and, consequently, advertisers with the nationwide channels TVP1, TVP2 and Polsat. Our other channels compete with small regional channels operating in Poland and with channels distributed through satellite and cable. The following table sets out the household penetration of TVN and those of its principal competitors as of December 31, 2008. Household penetration is measured by the ability of a household to detect a television signal, regardless of quality. Approximate household Channel penetration TVP1 ...... 100% TVP2 ...... 100% Polsat ...... 96% TVN...... 87%

Source: AGB According to AGB, during 2008, TVP1, TVP2 and Polsat together accounted for a nationwide all-day audience share of 54.8%. TVN’s market share during this period was 16.7%. The aggregate nationwide all-day audience share of TVP1, TVP2 and Polsat in TVN’s coverage area was 49.8%, while for TVN it was 19.0%. TVP generates approximately 24% (as of 2007) of its revenue from mandatory license fees with the balance primarily from advertising. Therefore, we regard TVP as one of our major competitors. However, unlike other television broadcasters, Polish regulations do not permit TVP to interrupt its programs with advertising. Polsat, launched in 1992, was Poland’s first privately owned television broadcaster. Polsat’s programming includes Polish entertainment shows, films, series, sports and news programs. In March 1997, Polsat launched Polsat 2, an encrypted satellite channel which broadcasts news and current affairs programs. Polsat also broadcasts six thematic channels: Polsat Sport, Polsat Sport Extra, Polsat Sport HD, Polsat Café, Polsat Play and Polsat News. In addition, Polsat holds a 90% shares in Polskie Media S.A., operator of the TV 4 channel, and 100% of the shares in TV Biznes Media Biznes Spółka z o.o., operator of the TV Biznes channel. The remaining Polish audience share is split among over 112 other Polish language cable and satellite channels. According to AGB, these other market participants collectively captured 14.3% of the nationwide all-day audience share in 2008.

ONLINE SEGMENT Segment overview For the nine months ended September 30, 2009, this segment accounted for 9.8% of our total revenues and 5.9% of our Adjusted EBITDA.

Industry Overview Polish internet industry Poland has the largest internet users’ population in Central and Eastern Europe, with 16.7 million users, as of July 2009, based on estimates of Megapanel PBI/Gemius, aged seven and older. According to GUS, in 2008, approximately 59% of the country’s 12.6 million households with at least one person between ages 16 and 74 years old, had a computer, and 48% of households had an internet connection, with 38% of households having broadband access to the internet. Broadband access is defined as a fixed connection to the internet allowing for transfer speeds of 144 kb/s or above.

102 The Polish internet market consists of private commercial internet portals and other thematic websites, i.e. vortals. The majority of these services are targeted to Polish people living in Poland or the Polish community living abroad. Usually the internet is accessed through personal computers, but internet access through mobile devices is also growing. According to comScore Networks, in June 2008, 25% of internet users from the United Kingdom regularly access the internet from their mobile phones. Polish internet portals are mainly financed through advertising and, to a lesser extent, through user fees for paid services. Advertising revenues are primarily derived from (i) display of advertisements, (ii) search based revenues and (iii) online directory services.

Polish internet advertising market Internet advertising is the fastest growing advertising medium in Poland. According to IAB, internet advertising in 2008 amounted to approximately PLN 1,170 million (compared to PLN 743 million in 2007), representing a 57.0% increase. Net advertising market estimates are based on the monitored gross advertising spending information, after deduction of estimated volume of discounts/rebates and VAT. Net advertising market estimates also exclude media barter-based transactions. Estimates of the net value of the internet advertising market in Poland are based on information available to entities focusing on this segment of the advertising market, including IAB Polska and our internal estimates based on our knowledge and understanding of this market. In our experience, the preferred demographic of internet advertisers in Poland consists of internet users between 16 and 49 years old, living in urban areas with a population in excess of 100,000. These users are perceived to have both income and spending power that are above average. In addition, we believe that the spending patterns of this audience group are more likely to be influenced by advertising than those of other viewers.

Market outlook for internet advertising in Poland We believe that internet advertising expenditure in Poland will increase over the long term as a result of several factors, including: • an increase in internet penetration and broadband penetration in Poland and advertising spending per capita to levels comparable to those in Western Europe; • a growing shift in media consumption away from traditional media, in particular print, to the internet; • a growing level of media convergence especially between television, internet and mobile phones; • marketing research development — joint platform for measuring the effectiveness of an advertiser; and • the expected growth in gross domestic product and an increase in consumer spending levels.

Our portals and vortals We own and operate Onet.pl, a leading internet portal in Poland, as well as a number of vortals, including some of the most popular internet destinations for Polish internet users. • Onet.pl has been the leading Polish internet portal since 2000, offering over 150 free and subscription based media and communication services including multimedia content, thematic services (such as Poland’s leading news, business, sport, lifestyle and travel services) and paid services. According to Megapanel PBI/Gemius, as of July 2009, 73.0% of Polish internet users use Onet.pl each month. • TVN24.pl is a news vortal launched in 2007 to allow the TVN24 channel to develop a closer relationship with its viewers who are able to upload film, news and commentary often used as a source of materials for the TVN 24 channel.

103 • Zumi.pl is a yellow pages and maps service designed to locate a wide range of points of interest. Zumi is the most popular yellow pages service in Poland and its number of users per month was 4.5 million as of July 2009. • Plejada.pl is an interactive multimedia site dedicated to show business and celebrities and was launched in March 2008 as a joint project of TVN and Onet.pl. It is available via internet, mobile phones and the ‘n’ DTH platform. • Sympatia.pl is Poland’s leading online dating service with 1.2 million users. In addition to those listed above, we own and operate other vortals that function under their own brands.

Online advertising Online advertising sales We sell the majority of our online advertising services to our final advertising clients through media houses. We derive most of our online advertising revenue from the sale of online display advertising through graphic ad products including the display of rich media advertisements, sponsoring products, video ads, text links and e-mail marketing. In addition to display advertising, we sell online marketing products based on search engine solutions mainly in partnership with Google. Another source of our online advertising revenue relates to online directory services where we sell yellow pages on-line services through our Zumi vortal and through external partnerships with other directory services selling jobs, automotive and other services. Display of advertisements. We generate revenue related to the display of advertisements on the Onet.pl portals and our thematic vortals TVN24.pl, Zumi.pl, Plejada.pl and Sympatia.pl. In order to provide flexibility to our customers, we offer our online advertising services priced on several models, including cost per mille (“CPM”), flat (paid per period of exposure), cost per click (“CPC”), cost per action (“CPA”), CPA-like models and hybrids of the various models. The majority of our online advertising services sales are done on a CPM basis. However, there has recently been a growth in sales based on the CPA model for sales based on transaction revenue, which is generated by facilitating online transactions through the Onet websites. We recognize transaction revenue when there is evidence that qualifying transactions have occurred based on advertisements on our websites, for example, when an order is placed through Onet.pl’s shopping mall, Onet.pl business services and other. Search based revenues. We generate revenues from our partnership with Google. We also monetize our website by placing google ad boxes and search boxes on our services. Online directory services. Revenue also includes revenue from the sale of online directory services on Zumi.pl, including text-based links, banners, rich media and other forms of internet advertising. We primarily price our directory services on flat and CPM models. Online advertising sales team Our internet advertising sales team consists of approximately 182 employees responsible for sales of our online advertising and other internet marketing services, campaign planning, analysis, development of new online marketing services and enhancing relationships with existing and potential advertisers. The sales team works closely with our online segment market research and analysis team. Our internet marketing services sales team includes also regional sales representatives who promote and sell our online marketing services in all the major regions in Poland. Competition Our Onet.pl portal and our thematic vortals construct their market position through operations in the premium segment. internet premium segment consists primarily of large thematic portals, best vortals as well as other internet sites that possess well-known brand, offer high quality content and create sound, attractive and cost-effective advertising environment. The other segment of the internet advertising market consists of a large amount of internet services and sites that are created by individuals. They fail to provide content of high quality and to deliver advertising capacity. Therefore, they are considered to be a non-premium or low-cost segment.

104 Our Onet.pl portal competes in principle with other major Polish portals, like WP.pI, Gazeta.pl and Interia.pl, but also competes with other major websites like Google.pl, Youtube.pl or other major thematic vortals. The following tables set out the reach and number of real users of Onet.pl and those of the top eight Polish websites as of July 2009, and the average number of users during seven-day periods during that month. The reach reflects what percentage of the total population of internet users visited a website at least once during a particular period. The number of real users reflects the number of unique visitors who visited a website at least once during a particular period. The following table presents reach and the number of real users as of July 2009: Websites Type Reach Real users (in thousands) Google pl...... search engine 93.4% 15,625 Onet.pl ...... portal 73.1% 12,233 nasza-klasa.pl ...... social network website 69.7% 11,664 WP.pl ...... portal 64.1% 10,718 Allegro.pl...... e-commerce 62.9% 10,522 Interia.pl ...... portal 60.5% 10,128 Gazeta.pl ...... portal 57.5% 9,624

Source: Megapanel PBI/Gemius, July 2009 The following table sets out the total time spent by users per month on Onet.pl and the top seven Polish websites as of July 2009. For reference it also includes information on the average time spent by a user on a website during the month. The total time spent represents the sum of all of the time the real visitors to a respective website spent there during a month. Total time Average time per users Websites Type (in hours) (in hours: minutes) nasza-klasa.pl ...... social network website 100,707 8:38 Google pl ...... search engine 108,733 6:58 Onet.pl ...... portal 59,771 4:53 WP.pl...... portal 42,065 3:55 Allegro.pl ...... online ecommerce 37,941 3:36 o2.pl ...... portal 28,112 2:59 Interia.pl ...... portal 28,929 2:51 Gazeta.pl ...... portal 14,764 1:32

Source: Megapanel PBI/Gemius, July 2009.

PAY TV SEGMENT Segment overview For the nine months ended September 30, 2009, our pay TV segment generated 16.2% of our total revenues.

Industry Overview Polish pay TV market The pay TV market in Poland consists primarily of cable TV operators and satellite DTH operators. The cable television market is undergoing consolidation, but it still consists of approximately 630 operators, which operate over 1,100 networks. Cable networks in Poland are undergoing a gradual process of digitalization, conducted primarily by the largest operators, which is necessary for the cable operators to offer a range of premium services, including HD channels and VOD. In addition, cable operators have begun to offer pay TV services together with telephony and internet access services, with the aim of attracting new customers, as well as growing ARPU and reducing churn among existing customers. We believe future development of cable operators in Poland will be constrained by the geographical reach of their cable networks and the quality of the cable lines. While the digitalization of cable networks is likely to continue, it will likely only occur in certain

105 parts of the cable networks as the process is capital intensive. UPC, Aster, Vectra and Multimedia are Poland’s largest cable operators with an aggregate 61% of the cable market as of December 31, 2008. The Polish pay digital satellite market is split between four digital platform operators: (1) Canal+ Cyforwy Sp. z o.o., operating the Cyfra+ platform, (2) Cyfrowy Polsat S.A., operating the Cyfrowy Polsat platform, (3) ITI Neovision Sp. z o.o. operating the ‘n’ DTH and TNK platforms and (4) Telekomunickacja Polska (“TP”), operating the TP DTH platform.

Market outlook for pay TV in Poland We believe that satellite DTH pay TV services will develop over the coming years, due to several factors, including: • Penetration of pay TV services among Polish households is estimated to be 69.5% as of June 30, 2009, not adjusting for the estimated 13% of TV households with more than one pay TV service. There remains a significant potential to increase pay TV penetration, as the availability of Polish language free-to-air programming is limited and an increasing number of Polish households have an interest in multi-channel television and financial resources to pay the subscription fees for the service. • The DTH segment of the market is well positioned to benefit from pay TV market growth, as it offers rich content and high quality picture and sound. As opposed to cable and IPTV operators, satellite DTH providers are not constrained by the geographical reach of the network and significant investments are not required to assure sufficient quality of service. • The number of thematic channels available in the market is increasing, including a growing number of HD programs. This has led to an improvement in content quality which attracts new customers, who are looking for a broader television offering. Customers are also attracted by new ways of consuming television content enabled by technological advances, such as PVR functionality and on-demand viewing. • There is strong demand for flat screen HD television sets in Poland. As households decide to replace their old equipment with a new HD television set, they often decide at the same time to subscribe to a pay TV service offering HD content.

Our DTH platform We view the pay TV market as consisting of three broad categories of offerings: economy, mainstream and premium. ITI Neovision Sp. z o.o. operates the ‘n’ DTH platform, which focuses primarily on the premium segment of the pay TV market and “Telewizja na karte” (“TNK”), which provides a pre-paid offering for the economy segment of the market. As of September 30, 2009, the “n’ DTH platform had a subscriber base of approximately 572,000 and TNK had a subscription base of approximately 159,000. The ‘n’ DTH platform, launched in October 2006, offers pay television services in Poland broadcasted over a satellite to its subscribers. In order to receive ‘n’ services, a subscriber needs a satellite dish and a set-top box with an access card offered by ‘n’. Customers usually sign contracts for 12 to 24 months. They select program packages they are interested in and pay appropriate monthly fees. ITI Neovision’s programming offer consists of television channels, either proprietary or licensed from other broadcasters, grouped in thematic packages. ITI Neovision also produces six exclusive television channels focusing on film and sports content. The ’n’ customers may select to use a set-top box equipped with a hard-disk drive, which enables them to use video on demand and personal video recorder services. Video on demand is offered either for a monthly subscription fee or paid per view. Video on demand services include Polish and international movies and TV series. In October 2008, ITI Neovision Sp. z o.o., through its subsidiary Cyfrowy Dom Sp. z o.o., launched the pre-paid satellite DTH service TNK. As of September 30, 2009, TNK had over 159,000 active pre-paid subscribers. TNK sells decoding cards or decoding cards together with simple set-top boxes which allow subscribers to access a number of pay and free-to-satellite television channels for an initial period of three or six months. After the initial period is over, subscribers can only view certain free-to-satellite channels unless they pre-pay additional fees in order to extend access to the entire pay programming offer. There are no formal contracts signed with customers and they are free to pay only in the periods when they want to access the pay programming package.

106 The investment by the Company in the ‘n’ DTH platform has strengthened the competitive position of the TVN Group (i) through multi-platform promotion, content acquisition and distribution and (ii) by enabling the Company to capitalize on a near-term window of opportunity due to the expected further rapid migration of terrestrial TV users to DTH platforms. The investment will also provide the TVN Group with revenue diversification.

Distribution The ITI Neovision Group’s services are distributed primarily through a nationwide network of over 1500 points of sale operated by distribution partners, who have signed agency contracts with us. The agents sign contracts with postpaid customers on our behalf, for which they receive volume based commissions and bonuses, collect activation fees and provide certain after sales services to our customers. We also distribute our services through our call center and online shop on the ‘n’ website. TNK’s prepaid cards are sold to our distribution partners, who subsequently distribute them to retail points of sale. No contracts are signed with TNK customers. Distributors of TNK are not remunerated based on commission schemes, but earn a margin on the purchase and resale of decoding cards.

Security Our products largely comprise content in which we own, or have license to, the intellectual property rights, delivered through a variety of media, including broadcast programming, interactive television services, and the internet. Third parties may be able to copy, infringe or otherwise profit from our rights or content, which we own or license, without our, or the right holders’, authorization. These unauthorized activities may be more easily facilitated by the internet. We have, therefore, implemented several security measures to prevent piracy in the pay TV segment, including the latest Conax CAS 7 conditional access system with pairing of cards and set-top boxes by individually encrypting card-box communications to prevent key sharing.

Competition Besides ITI Neovision, which owns and operates the ‘n’ DTH platform and the prepaid TNK service, there are three other players on the Polish DTH Pay TV market : (1) Cyfrowy Polsat S.A., (2) Canal+ Cyfrowy Sp. z o.o. and (3) Telewizja Polska. The table below presents the number of subscribers of all platforms as of the end of 2006, 2007 and 2008: Number of subscribers (in thousands) Platform 2006 2007 2008 ‘n’(1) ...... 71 272 493* TNK(1) ...... — — 92 Total ‘n’ and TNK ...... 71 272 585 Cyfrowy Polsat(2)...... 1,274 2,068 2,727 Cyfra +(3) ...... 920 1,070 1,380 TP(4)...... 3 40 113 Total market ...... 2,268 3,450 4,805

* As at December 31, 2008, the ‘n’ DTH platform had signed up over 500,000 subscribers of which 493,000 had activated their subscription.

(1) TVN own data; (2) Cyfrowy Polsat Investors’ Center; (3) Publicly available data; (4) Data for TP includes DTH and IPTV subscribers.

OTHER ASPECTS OF OUR BUSINESS Intellectual property We protect the program content that we develop against illegal exploitation by third parties by registering our intellectual property pursuant to applicable property laws. Similarly, we protect our trademarks by registering them with the Polish Patent Office. We have registered the following

107 trademarks: (1) TVN, as three verbal-graphic trademarks and an international verbal-graphic trademark, (2) TVN24, as a verbal trademark and two verbal-graphic trademarks, (3) TVN-24, as a verbal trademark, (4) TVN24.pl, as a verbal and verbal-graphic trademark, (5) TVN siedem, as a verbal and verbal-graphic trademark, (6) iTVN, as a verbal trademark, (7) iTVN Grupa ITI, as a verbal- graphic trademark (which is registered also in Canada), (8) TVN meteo, as a verbal and verbal- graphic trademark, (9) TVN turbo, as a verbal and verbal-graphic trademark, (10) TVN style, as a verbal and verbal-graphic trademarks, (11) TVN med, as a verbal and verbal-graphic trademarks, (12) Onet, as a verbal trademark, (13) Onet.pl, as a verbal-graphic trademark, (14) Sympatia.pl, as a verbal and verbal-graphic trademark, (15) Zumi, as a verbal-graphic trademark, (16) Onet.pl e- mocje, as a verbal-graphic trademark, (17) Tenbit, as a verbal-graphic trademark and (18) Republika www, as a verbal-graphic trademark. We have filed for the registration of the following trademarks: (1) TVN, as a verbal trademark, (2) TVN siedem, as a verbal-graphic trademark, (3) TVN Warszawa, as a verbal trademark and two verbal-graphic trademarks, (4) Plejada, as two verbal-graphic trademarks, (5) Plejada.pl, as a verbal trademark, and (6) TVN media school, as a verbal trademark. We have filed for the renewal of trademark protection for the following trademarks: (1) Onet, as a verbal trademark, and (2) Onet.pl, as a verbal-graphic trademark. Furthermore, we intend to file for the renewal of trademark protection for the Republika www verbal-graphic trademark.

Properties Our properties consist primarily of broadcasting, production and office facilities, all of which are located in Poland. We believe that these facilities are well maintained and in good condition. In addition, we own or have a right of perpetual usufruct to a number of undeveloped plots in Warsaw and we own a plot in Krakow, which is dedicated site for our data center for the Online segment. See also “Major shareholders and related party transactions” below for a description of certain of our leases of office and studio space.

Insurance We are insured under insurance policies that are customary in the television broadcasting industry. Overall, we believe that our business and our assets are adequately insured.

Legal proceedings In the normal course of business, we are subject to various legal proceedings and claims. We do not believe that the ultimate amount of any such pending actions will, either individually or in the aggregate, have a material adverse effect on our business or our financial condition. There are no pending legal proceedings where the amounts claimed against us would exceed 10% of our capital.

Regulation General Television broadcasting in Poland is subject to regulations promulgated under the Polish Constitution as well as under the Broadcasting Law. The National Broadcasting Council (KRRiT) is the constitutional body responsible for the regulation of radio and television broadcasting in Poland as well as enforcement of the Broadcasting Law. KRRiT grants broadcasting licenses and supervises the operations of Polish television broadcasters. Internet activities in Poland are subject to the Act on Providing Services by Electronic Means, dated July 18, 2002, as amended, which implemented the “Directive on Electronic Commerce”. There is no governmental agency exclusively devoted to supervision of this sector. The Polish Office for Electronic Communications supervises and regulates the telecommunication market as a whole. In general, internet operations do not require licenses from any governmental bodies or agencies.

Broadcasting licenses KRRiT issues television broadcasting licenses, as a rule, for periods of ten years. Licenses are not transferable. KRRiT would revoke a license if a broadcaster materially breaches its obligations under

108 the Broadcasting Law or the terms and conditions specified in its license. In addition, KRRiT would revoke a license if a broadcaster’s activity under its license is carried out in a manner that is deemed to conflict with the Broadcasting Law or the terms and conditions of its license and the broadcaster fails to remedy such conflict within the applicable grace period. The renewal of existing terrestrial and satellite licenses are subject to the Broadcasting Law. In July 2009, the analogue licenses of our main free-to-air channel TVN was converted to digital standards. KRRiT decided to grant TVN new frequencies located on the First Terrestrial Digital Multiplex. The license for analogue transmission of TVN has been shortened accordingly to the date of the switch-off, namely July 31, 2013. In addition, the Electronic Communications Office extended TVN’s right to use new frequencies located on the First Terrestrial Digital Multiplex for transmission of TVN up to September 2024. The First Terrestrial Digital Multiplex will be a reconstruction in digital standards of free-to-air analogue television consisting of seven channels: TVP1, TVP2, TVP3, TVN, Polsat, TV4 and TV Puls. The table below sets out the licenses that TVN, ITI Neovision Sp. z o.o. and Neovision UK Ltd. currently hold: Channel Type of license License holder Licensing body Date of expiration TVN ...... Terrestrial broadcast TVN KRRiT July 31, 2013 license TVN Warszawa ...... Satellite broadcast license TVN KRRiT June 29, 2018 TVN International West . . Satellite broadcast license TVN KRRiT May 5, 2018 TVN CNBC Biznes ...... Satellite broadcast license TVN KRRiT August 30, 2017 TVN Style ...... Satellite broadcast license TVN KRRiT July 28, 2014 TVN Turbo ...... Satellite broadcast license TVN KRRiT February 12, 2014 TVN International ...... Satellite broadcast license TVN KRRiT February 10, 2014 TVN Meteo ...... Satellite broadcast license TVN KRRiT June 26, 2013 TVN 7 ...... Satellite broadcast license TVN KRRiT February 25, 2012 TVN24 ...... Satellite broadcast license TVN KRRiT September 26, 2011 religia.tv(1) ...... Satellite broadcast license ITI Neovision KRRiT November 15, 2017 nFilm1 ...... Satellite broadcast license ITI Neovision KRRiT July 27, 2019 nFilm2 ...... Satellite broadcast license ITI Neovision KRRiT October 11, 2019 nSPORT...... Satellite broadcast license ITI Neovision KRRiT December 26, 2016 N-Surround HD/Classic Satellite broadcast license ITI Neovision KRRiT November 13, 2018 Radio ...... MGM HD ...... Satellite broadcast license Neovision UK Ltd. Ofcom Indeterminate Wojna i Pokój ...... Satellite broadcast license Neovision UK Ltd. Ofcom Indeterminate

(1) religia.tv is in the process of being spun-off from the ‘n’ DTH platform to ITI. Under our licenses, and in accordance with the Broadcasting Law, we must notify KRRiT of, among other matters, acquisitions of interests in other companies in the media industry, the appointment of members to management and supervisory boards. We believe that we are currently in compliance with the terms of our licenses, the Broadcasting Law and all relevant corresponding laws and regulations.

Restrictions on foreign ownership Foreign ownership of television broadcasters is restricted by the Broadcasting Law. At present, licenses may be granted to: • persons having Polish citizenship and residing in Poland as well as entities having their seat in Poland; • foreign persons and foreign entities as well as subsidiaries of such foreign entities having their place of residence or seat located within the EEA; or • entities located in Poland with non-EEA resident ownership provided that: (i) such ownership does not exceed 49% of the entity’s share capital, (ii) voting rights owned or controlled by non-EEA residents or subsidiaries of such residents do not exceed 49% of the total voting rights of any such company, and (iii) the constitutional documents of any such company provide that the majority of the members of its management and supervisory board must have Polish citizenship and reside in Poland.

109 Moreover, acquisitions of shares of Polish broadcasters by non-EEA residents are subject to the prior consent of KRRiT. In accordance with the KRRiT decision dated September 22, 2004, we have received a blanket consent that allows non-EEA residents to acquire our shares, provided that non-EEA residents may not own or control more than 49% of our share capital and 49% of the voting rights. See “Risk factors”, above for further details. Foreign ownership of internet portal operations is not restricted or regulated by any law or regulation. The only restrictions regarding ownership of new media companies derive from Polish competition regulations.

Restrictions on programming and advertising The Broadcasting Law also regulates the content of programming aired by television broadcasters. It sets forth minimum requirements for the broadcast of programming originally produced in the Polish language and programming of European origin. In addition, each broadcaster is required to ensure that 10% of its programming is obtained from independent producers. Broadcasting licenses granted by KRRiT set out more specific conditions in relation to the type of programming aired by television broadcasters. Each of our licenses requires us to broadcast our programs for a minimum number of hours per day. These licenses prescribe certain minimum hours for specific types of content, such as news, education and entertainment programs. Polish broadcasting laws and regulations impose restrictions on advertising. Currently, broadcasters are allowed to devote 15% of total airtime per day to advertising, with the amount of advertising airtime per hour limited to 12 minutes. In addition, there are restrictions with respect to advertisements for certain types of products, such as alcohol or pharmaceuticals. Advertisement of tobacco is prohibited. There are no specific regulations imposed on the content of the services carried in our new media operations, other than those applicable in Poland to the media in general. In the case of advertising, our new media operations are bound by the same restrictions as our television operations with respect to advertisements for certain types of products, such as alcohol, prescription drugs and tobacco.

110 Management We are committed to ensure that our corporate governance is transparent and meets applicable Polish and international standards. We comply with the “Best Practices for WSE Listed Companies”, adopted by the Warsaw Stock Exchange on July 4, 2007 and effective as of January 1, 2008. In accordance with Polish corporate law, we conduct our decision-making process through general meetings of shareholders, a management board and a supervisory board. These governing bodies are governed by the applicable provisions of the Polish Companies Commercial Code, our Articles of Association and internal rules of procedure of the management board and the supervisory board. The management board is responsible for the day-to-day management of our business. The management board must have at least three members, including a president and at least one vice-president. The members of the management board are appointed by the supervisory board for a renewable term of three years, and may be removed or suspended by the supervisory board only for just cause. Resolutions of the management board are passed by a simple majority of votes of the members present at a meeting where there is a quorum or by a written resolution without holding a meeting, provided that all members of the management board have been notified of the content of any such proposed resolution. The president of the management board casts the deciding vote in the event of a tie. Our Articles of Association provide that the presence of at least half of the members of the board constitute a quorum. The principal function of the supervisory board is to supervise the Company’s operations. The supervisory board may consist of between seven and eleven members, elected for a renewable joint three year term of office. The terms of the members of the current supervisory board, who were appointed as of May 15, 2009 by the resolution of an annual shareholders’ meeting held on that day, will terminate upon the approval of our 2012 financial statements by the annual general shareholders’ meeting. Our Articles of Association provide that the presence of at least half of the members of the supervisory board constitutes a quorum. Resolutions of the supervisory board may be passed either by the vote of a simple majority of votes of the members present at a meeting, where there is a quorum or by a written resolution, provided that all members have been duly notified. The functions of the supervisory board also include (i) examining the financial statements, and the management board’s report, (ii) representing the Company in contracts and disputes with members of the management board, (iii) granting the consent to the management board for entering into essential transactions, (iv) approving regulations governing the management board, (v) granting consent to increase our authorized share capital and (vi) approving our annual financial statements for publication. Our supervisory board includes four independent board members. For a discussion of our supervisory board’s related parties policy, see “Major shareholders and related party transactions” herein. The management board must report to the supervisory board on a regular basis and must obtain the prior consent of the supervisory board for certain matters which are set out in our Articles of Association. In particular, the supervisory board reviews our annual statutory accounts, reports prepared by the management board and proposals by the management board as to distribution of profits. In addition, the supervisory board appoints our auditors and approves our and each of our subsidiaries’ annual budgets. Generally, however, the supervisory board is not permitted to make management decisions or interfere with the day-to-day management of our business.

111 Management board

Currently our management board consists of four members. The following table sets out the name, age, position, year of appointment and the year in which current appointment term expires for each of the members of our management board.

Year first Year appointed for the Year term Name Age Position appointed current term expires Markus Tellenbach . . 49 President 2009 2009 2014 Chief Executive Officer Piotr Walter ...... 42 Vice-President 1999 2007 2014 Television and Broadcasting Łukasz Wejchert . . . . 36 Vice-President Online 2006 2007 2014 Rafał Wyszomierski. . 40 Interim Chief Financial 2009 2009 2010 Officer

Markus Tellenbach has been our President and Chief Executive Officer since September 2009. Since June 2008, he has been a member of the supervisory board of SKY Deutschland AG and, in March 2009, was named Chairman of SKY Deutschland AG’s supervisory board. In 2007, Mr. Tellenbach founded Convers Media Services Ltd. and continues to serve as the Chairman of its supervisory board. Mr. Tellenbach joined SBS Broadcasting SA in 2001 as Chief Operating Officer and became Chief Executive Officer in August 2002. Prior to joining SBS Broadcasting, Mr Tellenbach was Chief Executive Officer of KirchPayTV GmbH & Co. and Chief Executive Officer of Premiere World, Germany’s leading pay TV operator. From 1994 to 1999, Mr Tellenbach served as Managing Director of Vox Fernsehen, a national commercial broadcaster in Germany jointly owned by Bertelsmann, Canal Plus and News Corporation.

Piotr Walter has been Vice-President of the Company’s management board and Head of Television Broadcasting since August 2009. From 1991 to 2000 he worked in ITI Group companies, where he started his career as a Video Editor, subsequently becoming a Producer. In 1998, he became Vice President of ITI Film Studio’s management board, and was appointed Vice President of the management board in charge of Marketing and On-air Promotion in 1999. In July 2001 he took over, succeeding his father Mariusz Walter, the position of President of the management board and general director of TVN and remained in that position until August 2009. In June 2008, Piotr Walter was appointed as a member of the supervisory board of ITI Neovision Sp. z o.o. Since August 2006, he has been a member of the supervisory board of Onet.pl and was named Chairman of Onet.pl’s supervisory board in July 2007. He graduated from Columbia College in Chicago. He also studied at the International Institute for Management Development in Lausanne, at the University of Warsaw (Journalism) and at the Film School in Łódz´ (Film Directing).

Łukasz Wejchert has been our Vice-President, responsible for our Online business segment, since August 2006. He is also the Chief Executive Officer of Onet pl. and serves on the board of directors of ITI Holdings. Prior to joining us, he worked for the ITI Group which he joined in 1997. He has been a member of the board of directors of ITI Holdings S.A., the majority shareholder of the Company, since September 2008, and a supervisory board member of ITI Neovision Sp. z o.o. since April 2009. Aldona Wejchert, Łukasz Wejchert’s stepmother, is a member of the supervisory board of the Company. He started his professional career in 1995 at ING Bank. Łukasz Wejchert is the son of Jan Wejchert, until recently the Executive Chairman of ITI Holdings S.A. Mr. Wejchert is a graduate of the Finance and Economy Faculty at Portobello Business College (Dublin).

Rafał Wyszomierski has been a member of our management board and our interim Chief Financial Officer since September 2009. He joined the Company in February 2005 as a financial director responsible for the accounting and tax team. In 1995 he started his career in Pricewater- houseCoopers in Warsaw. From 1999 to 2000 he worked for PricewaterhouseCoopers in Luxembourg. After his return to Poland he became the senior manager in financial services provided for asset management funds. Rafał Wyszomierski graduated from Warsaw University of Technology and has an MBA from the School of Warsaw University of Technology.

112 On May 13, 2009, six members of our management board (Tomasz Berezowski, Olgierd Dobrzytiski, Waldemar Ostrowski, Adam Pieczynski, Jaroslaw Potasz and Piotr Tyborowicz) informed the supervisory board of their resignation as a result of changes in the structure of TVN’s management. On August 12, 2009, Edward Miszczak submitted his resignation, with effect as of August 31, 2009, from the management board and from his position as vice-president of the management board of the Company. These seven individuals continue to be employed as directors within the Group. On 31 August 2009, Karen Burgess resigned from our management board and the positions of Vice- President and Chief Financial Officer. She is no longer employed with the Group.

Share based payments All members of our management board participate in stock option plans introduced in December 2005 (“stock option plan I”) and July 2006 (“stock option plan II”). Under the terms of stock option plan I, awards of share options were made in four tranches between December 2005 and December 2008, subject to certain vesting conditions being met. Under the terms of stock option plan II, awards of share options were made in four tranches between July 2006 and April 2008. All tranches have been already granted, subject to certain vesting conditions being met. The remuneration and related party transactions committee recommended and the supervisory board approved the number of options granted to management board members. Further details of the stock options plans are presented below. The table below summarizes the number of share options allocated to each of the management board members as at September 30, 2009: Total number of Total number of options granted up to options vested up to Name September 30, 2009 September 30, 2009 Markus Tellenbach ...... 0 0 Piotr Walter ...... 458,080 458,080 Łukasz Wejchert ...... 577,065 577,065 Rafał Wyszomierski ...... 154,650 103,100

The following table presents shares owned directly or indirectly by our management board members as of September 30, 2009: Name Number of shares Markus Tellenbach...... 0 Piotr Walter ...... 0 Łukasz Wejchert...... 515,805 Rafał Wyszomierski ...... 18,299

Supervisory board Our Articles of Association include independence criteria for supervisory board members. An independent supervisory board member is defined as a person who meets all of the following criteria: (a) is not our employee; (b) has not been our management board member during the three years preceding appointment to our supervisory board; (c) is not a person close to a member of our supervisory or management boards or a senior officer employed by us; (d) does not obtain any compensation from us or our affiliated companies other than supervisory board related compensation; (e) holds less than 5% of our shares; (f) is not a person close to any of our shareholders who hold 5% or more of our shares (applicable to those shareholders who are natural persons); and

113 (g) is not an employee or a member of a governing body of any of our shareholders who hold 10% or more of our shares, or is not connected with such shareholder in any other substantial manner. Currently our supervisory board consists of eleven members. The following table sets out the name, age, position, year of first appointment and the year of the appointment for current term for each of the members. Year appointed for the Year first current Name Age Position appointed term* Wojciech Kostrzewa . . . 49 Chairman of the supervisory board 2005 2009 Member of the related party transactions and remuneration committee Bruno Valsangiacomo. . 54 Deputy Chairman of the supervisory board 1999 2009 Member of the audit committee Arnold Bahlmann . . . . . 55 Independent member of the supervisory 2005 2009 board Member of the related party transactions and remuneration committee Romano Fanconi...... 44 Member of the supervisory board 2004 2009 Pawel Gricuk...... 44 Independent member of the supervisory 2005 2009 board Member of the audit committee Member of the related party transactions and remuneration committee Pawel Kosmala ...... 58 Member of the supervisory board 2008 2009 Wieslaw Rozlucki . . . . . 61 Independent member of the supervisory 2007 2009 board Member of the audit committee Andrzej Rybicki...... 61 Member of the supervisory board 2006 2009 Aldona Wejchert . . . . . 40 Member of the supervisory board 2007 2009 Gabriel Wujek...... 57 Member of the supervisory board 2008 2009 Michal Broniatowski. . . 55 Independent member of the supervisory 2009 2009 board

* Term expires at the General Shareholders Meeting at which the 2012 consolidated financial statements of the Company are approved. Wojciech Kostrzewa is the President and Chief Executive Officer of ITI Holdings, which positions he has held since January 2005. Between 1988 and 1991 he was employed at the Kiel Institute for the World Economy as a Research Economist. From 1989 to 1991 he was an advisor to the Polish Minister of Finance, Prof. L. Balcerowicz. Between 1990 and 1995 he held the position of President of the Polish Development Bank. In 1996, he was appointed as Deputy President of BRE Bank S.A. and was made President of the same in May 1998, a post which he held until November 2004. Between January 2002 and November 2004, he was an executive member of the regional management board of Commerzbank AG where he was responsible for the all operations of Commerzbank in Central and Eastern Europe. Mr. Kostrzewa sat on the supervisory boards of MTU Moje Towarzystwo Ubezpieczeniowe S.A., an insurance company, and Hochtief Construction AG, a construction company, until April 2006. He has served on the supervisory boards of Onet.pl and ITI Neovision Sp. z o.o. since 2005 and 2006, respectively. Since 2007 he has also been the Vice President of the Polish Confederation of Private Employers Lewiatan. He is also a Member of the Polish Business Roundtable. He is an economics graduate from Kiel University in Germany. Bruno Valsangiacomo is the Managing Partner of FFC Fincoord Finance, Coordinators Ltd., Zurich, an investment banking and advisory firm he founded in 1991. He joined ITI Holdings in 1991 as Founding Shareholder and holds the position of Executive Vice Chairman of ITI Holdings. He has been a member of the Executive Committee of ITI Group and a supervisory board member of ITI Neovision Sp. z o.o. since 2006. He was also appointed to the supervisory board and audit committee of TVN. He is an experienced entrepreneur and investor in various industries. He started his career in corporate banking and worked at major institutions in Switzerland such as UBS (1972 to 1982) and

114 Banque Paribas (1982 to 1991) for 20 years. He has successfully structured, negotiated, launched and implemented several complex businesses and ground-breaking financial transactions. Since 1991 his strong entrepreneurial focus is media and entertainment in Poland however he also specializes in other industries such as finance, FMCG, pharma and construction engineering. He is a graduate of the School of Economics and Administration in Zurich. Arnold Bahlmann is a senior advisor to Permira, one of Europe’s largest private equity funds, and sits on its industrial advisory board. Transactions which he has arranged have involved SBS Broadcasting, of which he was a member of the supervisory board from October 2005 to July 2007, and ProSiebenSat 1. For more than 20 years he worked in various positions within Bertelsmann AG, starting in 1982 as Head of Strategic Planning of the Ariola Group, which later merged with RCA to create BMG, as President of Premiere GmbH, the German pay TV operator and as a Member of the Executive Board of Bertelsmann AG and Chief Strategic Officer responsible for major transactions, such as the sale of AOL Europe, Mediaways and Springer. He ended his career at Bertelsmann AG in 2003 as President and Chief Executive Officer of Bertelsmann Springer and a member of the executive board of Bertelsmann AG. He also serves as a member of the supervisory board of YOC AG a mobile marketing company, Senator Entertainment AG, Business Gateway AG, Freenet AG and Telegate AG. Previously, he has also served on the boards or supervisory boards of Ha¨ ring Service Company, Debitel AG, Source Media Inc. and Germany 1 Acquisition Limited. He was appointed Chairman of ITI Neovision Sp. z o.o. in April 2009 and has sat on the supervisory board of the Company since May 2005. He graduated from Cologne University, where he also obtained a doctorate. Romano Fanconi, joined the ITI Group in 1995 and holds the position of Corporate Secretary. He heads the Corporate Administration Services in the ITI Group responsible for company administration, contract management, tax structures, due diligence coordination, financial analysis, preparation of business plans and other support services. He is a Managing Partner of FFC Fincoord Finance Coordinators Ltd., which he joined in 1995. He has been a member of the supervisory board since 2004. Previously he has held various positions at UBS and Credit Suisse. He sits on the economic advisory board to the council of the community of Brunnen, Switzerland. He holds a Bachelors degree from the Lucerne School of Economics, Business and Administration. Pawel Gricuk, is the President of Petrolinvest S.A., which he joined in 2005. He has also been Chairman of Embayugneft, and Vice Chairman of Petrolinvest Gas and a director of Occidental Res., since 2005. He worked at J.P.Morgan in London from 1993 to 2005. He also serves as a member of the supervisory board of Bioton S.A. He has been a member of the supervisory board since May 2005. He is an economics graduate from the University of Lodz and also graduated from the Beijing University of Foreign Studies. Pawel Kosmala has acted as Vice President of ITI Corporation Sp. z o.o. since 2001. In 1974 he started his professional career at Paged, a foreign trade company. Between 1987-1992 he was a commercial counselor to the Polish Embassy in the Republic of Ireland. From 1992 to 1995 he served as President of Seabridge Poland, an international shipping company. In 1995 he joined ITI Holdings as President of Chio Lilly Snack Foods, a leading Polish potato chips and snack food producer. Between 2001 and 2006 he was President of Grupa Onet.pl S.A. He has been a member of the board of directors of ITI Holdings S.A. since June 2007. He currently also sits on the supervisory boards of Legia Warszawa SSA, a soccer club, and Pascal SA, a publishing company. He is a graduate from SGGW in Warsaw and completed finance and HR seminars for senior executives at London Business School. Wieslaw Rozlucki, PhD is a consultant. He graduated from the Foreign Trade Faculty of the Warsaw School of Economics in 1970. He has a PhD in Economic Geography from the Polish Academy of Sciences and between 1973 and 1989, he worked there as a researcher. During 1979-1980 he studied, as a British Council scholar, at the London School of Economics. Between 1990 and 1994, he was an adviser to the Polish Minister of Finance, a director of the Capital Markets Department in the Ministry of Privatization of Poland and a member of the Polish Securities and Exchange Commission. Between 1991 and 2006, during five terms, Dr. Rozlucki was the President of the management board of the Warsaw Stock Exchange. He was also the Chairman of the supervisory board of the National Depository for Securities and a board member of the World Federation of Exchanges and the Federation of European Securities Exchanges. Dr. Rozlucki, has been actively engaged in the corporate governance movement in Poland. He is the Chairman of the Programming Council of the Polish Institute of Directors, Harvard Business Review Polska. He is also a member of supervisory

115 boards of large public companies including Telekomunikacja Polska and BPH Bank. He runs a strategic and financial consultancy and acts as a senior adviser to Rothschild Polska and Warburg Pincus International.

Andrzej Rybicki is the Chief Executive Officer as well as the Chairman of the board of directors, of the Advanced Digital Broadcast Holdings S.A. group of companies (“ADB Group”). He founded the ADB Group in 1995. Prior to that, Mr. Rybicki held several technical, business and marketing positions at Nokia Corp. and Salora OY between 1974 and 1978, Blonder-Tongue Laboratories, Inc. between 1979 and 1988, and was an engineering director at General Instruments Corp. between 1988 and 1990. From 1990 to 1996, Mr. Rybicki served as marketing director for STMicroeletronics’ Asia Pacific region, where he initiated and led the effort of business and product development of the world’s first highly integrated, complete chipset for digital TV set-top boxes. He is also a director of Vidiom Systems Inc. He has been a director of the Company since May 2006. He obtained an MSc in Electronics Engineering from the Technical University of Poznan.

Aldona Wejchert has been the Chairman of the supervisory board of Multikino S.A. since 2005. She is also the Chairman of the supervisory boards of ITI Film Studio Sp. z o.o. and ITI Cinema Sp. z o.o., board member of the TVN charity Foundation Nie jestes´ sam and member of the trust board of the National Museum in Warsaw. Between 1996 and 2003, she was the managing director and vice- president of Multikino Sp. z o.o., the first multiplex operator in Poland, and from 2003 to 2005 served as the president thereof. She is also a current member of the management board of the Politikos Foundation an educational and charitable foundation. She graduated from the Warsaw School of Economics and extended her business education at London Business School in the United Kingdom.

Gabriel Wujek is a partner in the law firm Radzikowski, Szubielska i Wspólnicy sp.k., which is part of the New York-based law firm Chadbourne & Parke LLP. Since 2006 he has sat on the supervisory board of Multimedia Polska S.A. Between January 2004 and December 2007, he was the managing partner of Chadbourne & Parke LLP’s Warsaw office. Between 1990 and 2003, he was managing partner of the Warsaw office of Altheimer & Gray, a law firm based in Chicago. Between 1986 and 1990, he was deputy director and director of the legal department at the Ministry of Foreign Economic Relations of the Republic of Poland. From 1980 to 1985, he was the legal adviser of the commercial department of the Polish Embassy in New York City. From 1973 to 1999 he was member of the Faculty of Foreign Trade at the Warsaw School of Economics. He is an arbitrator at the Arbitration Court of the Polish National Chamber of Commerce and at the Arbitration Court at the Polish Confederation of Private Employers Lewiatan. Mr. Wujek is a graduate of the Faculty of Law and Administration of the Warsaw University, a doctor of law and the author of numerous publications on commercial and business law and international investments.

Michal Broniatowski was appointed to the supervisory board on October 28, 2009. He previously served as an independent director and independent member of the supervisory board of the ITI Group from 1994 to 2005, and as a member of the board of Onet from 2001 to 2005. From August 2003 to May 2009, he was global services director and member of the board of Interfax International Information Group (“IIIG”), an international news and information company operating in Russia, former Soviet Union states, China and major countries in Central and Eastern Europe, and he is now Chairman of the board of Interfax Central and Eastern Europe Ltd, a sales company of IIIG. Between January 2003 and June 2003, he was development director of Edipresse Polska, the Polish branch of the Swiss publishing house Edipresse. Between September 2002 and December 2002, he was Director of the “Przekoj” weekly at Edipresse Polska, which is a leading weekly opinion publication. From April 2002 to August 2002, he served as a consultant to the communications division of Telekomunikacja Polska S.A., Poland’s largest telecoms operator. From January 2001 to March 2003, he held the positions of ITI Management Vice-President and new media director within the ITI Group. Since July 2009 he has been the Chief Executive Officer of both Polski Terminal Finansowy Ltd and Mount Tonenigs Ltd. In July, 2009 he served as a consultant to ITI Neovision Sp. z o.o. He has a Master of Arts, Spanish Language and Culture (Iberystyka) from the University of Warsaw, and has undertaken further study at the London Business School, University of Columbia and the University of Michigan.

116 Board committees We have established two supervisory board committees, an audit committee and a remuneration and related party transaction committee, each comprised of three supervisory board members, of which two are independent board members.

Audit committee Our audit committee responsibilities are defined in the Audit Committee Charter approved by the supervisory board. The audit committee oversees the financial reporting process to ensure the balance, transparency and integrity of published financial information and reviews the effectiveness of our internal control and risk management system as well as the effectiveness of the internal audit function. Additionally, the audit committee recommends to the supervisory board the appointment of the external auditor and assesses its performance. In performing its duties, the audit committee maintains an effective working relationship with the supervisory board, management board, management and the external and internal auditors. The audit committee consists of three supervisory board members — currently Wieslaw Rozlucki (chairman), Pawel Gricuk and Bruno Valsangiacomo. Two of its members are independent board members, and the members have appropriate qualifications and experience in accounting and finance. The audit committee meets regularly. The Chief Financial Officer and representatives of external and internal audit attend the meetings by invitation. In 2008 the audit committee met six times.

Remuneration and related party transaction committee The remuneration and related party transaction committee’s responsibilities are clearly set out in our supervisory board regulations and include reviewing related party transactions, reviewing compensation of management and supervisory board members and making recommendations on these to the supervisory board. The committee currently comprises Wojciech Kostrzewa (chairman), Arnold Bahlmann and Pawel Gricuk. The committee was established on June 17, 2005 and met three times during 2008 to review our stock option plan, management board members remuneration and various related party transactions. Details of our stock option plan are presented below, and details of related party transactions, are presented in “Major shareholders and related party transactions”, below.

Share ownership The table below sets out shares held by each of the supervisory board members as of September 30, 2009: Name Number of shares Wojciech Kostrzewa ...... 100,000 Bruno Valsangiacomo ...... 660,417 Arnold Bahlmann ...... 106,330 Romano Fanconi ...... 32,000 Pawel Gricuk ...... - Pawel Kosmala...... - Wieslaw Rozlucki ...... - Andrzej Rybicki ...... - Aldona Wejchert ...... - Gabriel Wujek ...... - Michal Broniatowski ...... -

Termination benefits of management board members Some members of our management board are entitled to receive severance payments after being notified that their services contracts are to be terminated. They have entered into non-competition agreements with us which entitle them to continued compensation following their termination, which is calculated on the level of the remuneration they received during an agreed period

117 immediately prior to their termination. None of our supervisory board members are entitled to any benefits upon termination of their service.

Employees

As of September 30, 2009, we had 2,941 full-time employees. Of that number, 437 were employed in management and administration, 1,160 in production and programming, 78 in the marketing department, 378 in the technical department and 888 in the sales department. The increase over the number of employees we had as of December 31, 2008 results mainly from adding ‘n’ DTH platform employees. None of our employees is a member of a trade union nor do they fall within the scope of any collective bargaining or similar arrangement. We believe that our relations with our employees are good.

As of December 31, 2008, we had 2,304 full-time employees. Of that number, 357 were employed in management and administration, 1,061 in production and programming, 78 in the marketing department, 371 in the technical department and 437 in the sales department. The increase over 2007 results mainly from an increase in the number of staff to support further growth of our business.

As of December 31, 2007, we had 1,798 full-time employees. Of that number, 320 were employed in management and administration, 830 in production and programming, 73 in the marketing department, 290 in the technical department and 285 in the sales department.

As of December 31, 2006, we had 1,162 full-time employees. Of that number, 210 were and administration, 683 in production and programming, 73 in the in the technical department and 196 in the sales department.

Stock option plan

On December 27, 2005, our supervisory board approved the rules related to our stock option plan I. On June 8, 2006, the General Meeting of Shareholders approved the related conditional increase of share capital and issuance of subscription warrants.

On July 26, 2006, our supervisory board approved the rules related to our stock option plan II, as part of the acquisition of Grupa Onet. On September 26, 2006, the General Meeting of Shareholders approved the related conditional increase of share capital and issuance of subscription warrants.

Stock option plan II replaced the previously existing Grupa Onet stock option plan.

The stock option plans are designed to motivate highly qualified personnel, including top management, key employees and co-workers, our management board members and management board members of our subsidiaries to contribute to the value of the Company over the long term perspective by granting them rights to purchase series “C” and “E” shares. A total of up to 9,870,000 series “C” and 8,781,675 series “E” shares will be issued in order to enable participants to exercise their rights to purchase shares. The deadline for the issue of series “C” and series “E” shares is December 31, 2014.

The exercise price of the options in a given tranche is determined in the stock option plan rules. Stock option plan participants will have the right to exercise their options in a given tranche at the following prices upon service vesting conditions being met:

Stock option plan I

Stock option plan participants had the right to exercise the following remaining number of options in a given tranche as of September 30, 2009:

Tranche Number of options Exercise price Service vesting period C1 ...... 383,560 PLN 8.66 vested C2 ...... 1,645,980 PLN 9.58 vested C3 ...... 3,479,210 PLN 10.58 vested Total ...... 5,508,750

118 Stock option plan II Stock option plan participants had the right to exercise the following remaining number of options in a given tranche as of September 30, 2009: Tranche Number of options Exercise price Service vesting period E1 ...... 217,730 PLN 8.66 vested E2 ...... 282,135 PLN 9.58 vested E3 ...... 1,337,516 PLN 10.58 vested E4 ...... 2,441,065 PLN 11.68 vested E4 ...... 2,833,670 PLN 11.68 until January 1, 2010 Total ...... 7,112,116

The exercise prices for Cl and El series shares were based on our share price as of December 31, 2004, increased by 10.5%. The exercise price for each of the C2/E2, C3/E3 and E4 series is based on the price of the previous series, increased in each case by an additional 10.5%. The total cost of stock option plan I is PLN 74.1 million and has been accounted for in the period starting from the fourth quarter of 2005 through the end of 2008. In this regard we recognized operating expenses of PLN 43.6 million in 2006, PLN 21.4 million in 2007 and PLN 8.5 million in 2008. The total cost of stock option plan II is PLN 110.1 million. Of the total fair value of options granted with respect to E series, the value of PLN 70.8 million, less the part attributable to vested options granted under the original share option scheme existing in Grupa Onet that was modified at acquisition and included in the cost of acquisition, has been accounted for in the period starting from July 31, 2006 and ending March 31, 2009. The balance of PLN 39.3 million, relating to E options granted on December 18, 2007, will be accounted for in the period starting from December 18, 2007 and finishing December 31, 2009. We recognized operating expenses of PLN 23.4 million in 2007, PLN 31.6 million in 2008 and will recognize PLN 21.7 million in 2009.

119 Major shareholders and related party transactions

The issuer The issued and paid up share capital of the issuer amounts to SEK 500,000 and is divided into 5,000 ordinary shares with nominal value equal to SEK 100. The Company owns all of the issued share capital of the issuer.

Major shareholders of the Company The share capital of the Company amounts to PLN 68.1 million and is divided into 340,382,157 ordinary shares. The table below sets forth, as of September, 30 2009, the beneficial ownership of the ordinary shares of TVN S.A.

Number of % of Share Number of Shareholder shares capital votes % of Votes Strateurop International B.V.(1) ...... 180,355,430 52.99% 180,355,430 52.99% N-Vision B.V.(1) ...... 13,418,400 3.94% 13,418,400 3.94% Cadizin Trading & Investment(1) ...... 8,131,477 2.39% 8,131,477 2.39% ITI Impresario(1) ...... 1,400 0.00% 1,400 0.00% Other shareholders ...... 138,475,450 40.68% 138,475,450 40.68% TOTAL: ...... 340,382,157 100.00% 340,382,157 100.00%

(1) Entities controlled by ITI Holdings.

Pursuant to the Polish Commercial Companies Code, shareholders may participate in the general meeting of shareholders and may exercise their voting rights in person or by written proxy. Each share is entitled to one vote at the general meeting of shareholders. Pursuant to the Polish Commercial Companies Code, one or more shareholders representing at least 1/20 of the share capital may request an extraordinary general meeting of shareholders and submit particular matters for the agenda of the next meeting. Such request may be filed with the management board in writing or in electronic form. Such extraordinary general meeting should be called within two weeks from the filing of the request. Submitting particular matters for the agenda of the next meeting should be made at least 21 days (for public companies) before the proposed date of the next general meeting of shareholders. If the management board does not convene the extraordinary general meeting of shareholders within two weeks following the filing of the request, then the requesting shareholders may convene such meeting, after obtaining the approval of the registry court. The registry court shall appoint the chairman of such meeting.

Related party transactions We are a party to various agreements and other arrangements with members of the ITI Group, indirect shareholders of such companies, or certain companies of such shareholders. In the Company’s opinion all of such transactions were entered into on an arm’s length basis (i.e. on standard market terms) and follow from the ordinary course of business of the Company and the related parties. Our supervisory board has adopted a policy aimed at regulating transactions between us and related parties. Related parties would include our major shareholders and their affiliates, our supervisory and management board members, and our employees and their respective immediate family members. The related party transactions policy provides that the terms of each agreement between us and a related party shall be no less favorable to us than terms which could have been obtained in a transaction on an arm’s-length basis with an unrelated party. The related party transactions policy also provides that (i) agreements that have a value in excess of 3 0.2 million and are concluded with related parties who are individuals and (ii) agreements that have a value in excess of 30.5 million with related parties that are legal entities must be approved by a resolution passed by a majority vote of our supervisory board, including the affirmative vote of a majority of the independent members of our supervisory board, with “independent” being defined by reference to the “Best Practices for WSE Limited Companies” of the Warsaw Stock Exchange.

120 Furthermore, in a shareholders meeting held on May 10, 2005, we established a related party transaction and remuneration committee of the supervisory board (the “Related Party Transaction and Remuneration Committee”). The responsibilities of the Related Party Transaction and Remuneration Committee are, among other things reviewing the terms and conditions of related party transactions to ensure that such transactions are in accordance with our policies for related party transactions.

Management, financial and other services On July 22, 2004, we entered into a services agreement (the “Services Agreement”) with ITI Services AG (“ITI Services”), a member of the ITI Group, for certain management, sales, financial advisory and other services. The Services Agreement was further amended on April 28, 2005, December 23, 2005, and October 23, 2006 to cover the services provided by ITI Corporation and Market Link Sp. z o.o. (“Market Link”), members of the ITI Group, to TVN S.A. and Grupa Onet.pl S.A. Under the Services Agreement, ITI Services, ITI Corporation and Market Link have agreed to provide us with certain services related to sales and procurement, market and industry research, information technology, accounting and financial management, human resources, legal, investor relations and other areas. We, ITI Services and ITI Corporation review the scope and quality of the services annually. Under the Services Agreement, we have agreed to pay ITI Services, ITI Corporation and Market Link an annual services fee in the amount of up to 33 million in consideration for (i) the above-referenced services and (ii) an annual guarantee fee equal to 3% of the amount of any of our or our subsidiaries’ obligations guaranteed or otherwise financially supported by or on behalf of ITI Services. In addition, we have agreed to reimburse ITI Services and ITI Corporation and Market Link for reasonable costs and expenses that they incur in connection with the provision of the services or guarantees. However, for so long as the terms of our indenture for the Notes offered hereby limits the annual fees that we pay to the ITI Group to 33 million, the aggregate amount of the services fee, the guarantee fee, the amounts paid for the reimbursement of costs and expenses and any other amounts we pay to ITI Services, together with any other fees and related expenses we or any restricted subsidiary (as defined in the Indenture) pay to any member of the ITI Group, is limited to 33 million. As part of its annual budgeting process, our supervisory board approves the maximum amount to be paid under the Services Agreement for the forthcoming year. On December 11, 2008, our supervisory board approved a budget of 31.76 million for 2009.

Lease of office and studio space We lease land, office and studio space pursuant to lease and sublease agreements from certain ITI Group companies, most significantly, Poland Media Properties SA and Diverti Sp. z o.o.

Sublease of premises On March 14, 1997, we entered into a sublease agreement with ITI Poland Sp. z o.o. for 3,850 square meters of space, expiring on March 31, 2007, relating to the premises at ul. Augustówka 3 in Warsaw. This agreement was terminated on October 24, 2006 and replaced with the following agreements: • a sublease agreement, dated October 24, 2006, with Brel-An Sp. z o.o. and ITI Poland Sp. z o.o., subleasing business premises located at Augustówka 3, Warsaw, for a period of 10 years (from November 1, 2006 until October 31, 2016), for a monthly fee of 362,618 and an annual tax fee of PLN 74,400. • a lease agreement, dated October 24, 2006, with ITI Poland Sp. z o.o. leasing a television studio located at Augustówka 3, Warsaw for a period of 10 years (from November 1, 2006 until October 31, 2016) with a monthly fee in the amount of 312,375. Poland Media Properties is the legal successor of ITI Poland Sp. z o.o. Since April 1, 2009, we have subleased 2,001 square meters from Poland Media Properties S.A. at Powin´ ska 4 Street, Warsaw, for a period of seven years (until December 31, 2016) for a monthly rent of 330,017.

121 Lease of premises from Diverti Sp. z o.o. (legal successors of Media Business Centre Sp. z o.o.) On October 27, 2003, we entered into two lease agreements with Media Business Centre Sp. z o.o. for a total of 3,993 square meters of space relating to premises at ul. Wiertnicza 166 in Warsaw. We use these premises for all our activities. On August 11, 2006 these agreements were terminated and replaced by an agreement for 10 years with Multikino S.A. The rights and obligations resulting from the agreement with Multikino were transferred to Diverti Sp. z o.o., a company incorporated as a result of a spin-off from Multikino S.A. During the period 2003 — 2009, this agreement was amended several times to reflect additional space we occupied and, by the end of October 2009, the total amount of rental space was 9,946 square meters. The monthly fee under this agreement is 30.2 million, which covers office and studio space as well as parking places, plus a maintenance fee of PLN 0.3 million.

Investment in the ‘n’ DTH platform On June 25, 2008, and March 11, 2009, we completed two transactions that resulted in our ownership of a controlling interest in ITI Neovision Sp. z o.o. For further details on our initial investments in the ‘n’ DTH platform and our possible acquisition of the remaining interest in the ITI Neovision Group, see “The acquisition of ‘n’”.

Transactions with ITI Neovision Sp. z o.o. As of March 11, 2009, ITI Neovision Sp. z o.o. was fully consolidated in the TVN Group’s consolidated financial statements and, therefore, no longer considered a related party of the TVN Group.

Services ITI Neovision Sp. z o.o. distributes our channels on the ‘n’ DTH platform and on the TNK service. Our total revenue from the distribution license fees for our channels amounted to PLN 16 million in the nine months ended September 30, 2009. We broadcast the ‘n’ DTH platform and TNK advertising spots on our television channels, as well as advertise the services on our internet sites. Our total revenue from advertising of ‘n’ and TNK amounted to PLN 1.2 million in the nine months ended September 30, 2009. We provide broadcasting services to ITI Neovision Sp. z o.o. (including playout, uplink, back up systems, multiplexing), archive services, IT support and maintenance and television scheduling services. We also rent television production equipment to ITI Neovision Sp. z o.o., with rental prices based on a commercial price list. Additionally, we sub-rent studio space and equipment to ITI Neovision Sp. z o.o., and sublicense production software mainly to support the nSport channel. We also provide ITI Neovision Sp. z o.o. with television production services (including realization, graphics, cameramen, editing) and lease television equipment and other facilities of our regional offices. Our total revenue from services provided by ITI Neovision Sp. z o.o. amounted to PLN 16.5 million in 2009. We granted ITI Neovision Sp. z o.o. the limited exclusive sublicense to use the Pay TV and SVOD rights to the motion pictures from Paramount Pictures’ existing library as well as certain of Paramount’s future productions. The sublicense agreement includes exhibition rights within the territory of Poland and in the Polish language over a period of five years commencing January 1, 2009, with an optional extension term of two additional years. The transaction was conducted on an arm’s length basis. ITI Neovision Sp. z o.o. produced sport news programs for both TVN 24 and TVN Fakty news bulletin for a remuneration of PLN 1.1 million. In 2009, ITI Neovision Sp. z o.o. provided decoder recovery and collection services for TVN Med as to complete the close down of the channel for PLN 1 million.

Loan agreements with ITI Neovision Sp. z o.o. On June 25, 2008, in connection with the purchase of a minority stake in Neovision Holding B.V., we purchased a corresponding pro-rata interest in the loans granted to ITI Neovision Sp. z o.o. having a nominal value of 335.3 million in the aggregate. The loans have nominal values of 325.1 million,

122 34.5 million and 35.7 million and are due for repayment on December 31, 2015, April 5, 2011 and July 19, 2011, respectively. Between June 25, 2008 and March 30, 2009, we also granted to ITI Neovision Sp. z o.o. additional loans in the total amount of 315.2 million, which are due for repayment on June 30, 2015. On March 31, 2009, in connection with the acquisition of an additional 26% (minus one share) stake in Neovision Holding B.V. to take our stake to 51%, we purchased a corresponding pro-rata interest in the loans granted to ITI Neovision Sp. z o.o. with a nominal value of 318.9 million, which expire on December 31, 2015. Between March 31, 2009 and September 30, 2009, we additionally granted to ITI Neovision Sp. z o.o. loans in the total amount of 318.8 million which are due for repayment on June 30, 2015 and December 31, 2015. All loans bear interest at 9.5% per annum. The amount of all loans outstanding as of September 30, 2009 was 395.5 million or PLN 403.3 million (including accrued interest).

Loan agreements with Neovision Holding B.V. In 2009, we signed loan agreements with Neovision Holding B.V. for the total amount of 334.1 million. This amount includes 38.9 million of loans purchased on March 31, 2009, in connection with an increase of 26% (minus one share) of our stake in Neovision Holding B.V. to 51%. The loans bear interest at 9.5% per year and are due for repayment on December 31, 2015. The amount of all loans outstanding as of September 30, 2009 was 35.8 million or PLN 151.2 million (including accrued interest).

Loan agreements with GOPH B.V. In connection with our purchase of 82.3% of GOPH B.V. from the ITI Group, we granted a loan of 316.9 million to GOPH B.V. The loan bears interest at 6.63% per year and is due for repayment on December 31, 2016. Between January 1, 2006, and September 30, 2009, we signed further loan agreements for PLN 0.2 million and 328,000 with maturity dates on December 31, 2010. The amount of all loans outstanding as of September 30, 2009 was PLN 94.6 million (including accrued interest).

Loan agreement with Mango Media On November 5, 2007, we entered into a loan facility agreement with Mango Media Sp. z o.o. pursuant to which we agreed to provide a loan to Mango Media for PLN 4.0 million. The loan will mature on December 31, 2010. As at September 30, 2009, the outstanding balance on the loan was PLN 4.0 million.

Existing Notes guarantee fee agreement with Grupa Onet On August 31, 2006 we signed a Third Supplemental Indenture Guarantee Fee Agreement with Grupa Onet.pl S.A. Based on this agreement Grupa Onet.pl S.A. acts as a guarantor and as such has all of the rights and is subject to all of the obligations and agreements of a guarantor under the indenture governing the Existing Notes. We pay a fee of 30.5 million per year to Grupa Onet.pl S.A. for the guarantee.

Existing Notes guarantee fee agreement with ITI Neovision Sp. z o.o. On July 31, 2009 we signed a Fourth Supplemental Indenture Guarantee Fee Agreement with ITI Neovision Sp. z o.o. Based on this agreement ITI Neovision Sp. z o.o. acts as a guarantor and as such has all of the rights and is subject to all of the obligations and agreements of a guarantor under the indenture governing the Existing Notes. We pay an annual fee of 31.175 million to ITI Neovision Sp. z o.o. for the guarantee.

Guarantee fee agreement with Grupa Onet.pl S.A. On June 30, 2008, we signed a Loan Facility Guarantee Fee Agreement with Grupa Onet.pl S.A. Based on this agreement Grupa Onet.pl S.A. acts as guarantor of the Loan Facility up to a maximum amount of PLN 270 million. Following an amendment to this agreement on July 1, 2009, we pay an annual guarantee fee to Grupa Onet.pl S.A. in the amount of 0.5% of the maximum amount of the Loan Facility, being PLN 1.35 million. This agreement will expire on June 30, 2011, or upon the termination or replacement of the Loan Facility.

123 Guarantee fee agreement with Mango Media On June 30, 2008, we signed a Loan Facility Guarantee Fee Agreement with Mango Media. Based on this agreement Mango Media acts as guarantor of the Loan Facility up to a maximum amount of PLN 270 million. Following an alteration to this agreement on July 1, 2009, we pay an annual guarantee fee to Mango Media in the amount of 0.5% of the maximum amount of the Loan Facility, being PLN 1.35 million. This agreement will expire on June 30, 2011, or upon the termination or replacement of the Loan Facility.

Guarantee fee agreement with ITI Neovision Sp. z o.o. On July 31, 2009, we signed a Loan Facility Guarantee Fee Agreement with ITI Neovision Sp. z o.o. Based on this agreement, ITI Neovision Sp. z o.o. acts as a guarantor of the Loan Facility up to a maximum amount of PLN 270 million with effect from July 14, 2009. We pay an annual guarantee fee to ITI Neovision Sp. z o.o. in the amount of 0.5% of the maximum amount of the Loan Facility, being PLN 1.35 million. This agreement will expire on June 30, 2011, or upon the termination or replacement of the Loan Facility.

Loan agreements entered into by related parties Strateurop International In 2007, Strateurop International B.V. entered into two loan agreements with ITI Neovision Sp. z o.o. for a total amount of 385.0 million. The loans bear interest at a floating annual rate of 12-month EURIBOR plus a margin of 2.375% per year. The outstanding balance of the loans as at September 30, 2009 was 364.7 million and they are due for repayment on December 31, 2015.

N-Vision In 2007 and 2008, N-Vision B.V. entered into three loan agreements with ITI Neovision Sp. z o.o. for a total amount of 3100.0 million. The outstanding balance of the loans as at September 30, 2009 was 352.2 million and the loans are due for repayment on December 31, 2015 and 2018. On September 9, 2008, N-Vision B.V. entered into a loan agreement with Cyfrowy Dom Sp. z o.o. for 310.0 million. The outstanding balance of the loan as at September 30, 2009 was 31.8 million and the loan is due for repayment on December 31, 2015.

Guarantee agreements entered into by related parties ITI Holdings has entered into guarantee fee arrangements in relation to programming deals with Warner Bros. and Dreamworks. The amount ITI Holdings guarantees is USD 25.0 million in relation to the Warner Bros. arrangement, pursuant to an agreement entered into on October 6, 1999, and USD 8.0 million in relation to the Dreamworks arrangement, pursuant to an agreement entered into on May 8, 2000.

Management compensation agreements with the ITI Group A number of our management board members have entered into separate agreements with the ITI Group, whereby the ITI Group has agreed to award such members additional incentive compensation for any medium term value creation in the TVN Group.

124 The acquisition of ‘n’

Initial investments in the ‘n’ DTH platform On June 25, 2008, we acquired from the parent company of our majority shareholder, ITI Media, 25% of the share capital plus one share of Neovision Holding B.V., a company registered in Amsterdam, The Netherlands, which is the sole shareholder of ITI Neovision Sp. z o.o. and owns and operates the ‘n’ DTH platform in Poland, for a total cash consideration of 395 million. The consideration of 395 million included a pro-rata share of shareholder loans (the ‘n’ Shareholder Loans) granted to ITI Neovision Sp. z o.o. and the option to purchase a controlling stake in Neovision Holding B.V.’s share capital at market value, after three or four years from our initial investment. We classified our investment as an investment in an associate and accounted for it using the equity method. In our consolidated financial statements, we split the total investment between investment in an associate and the ‘n’ Shareholder Loans. The value attributed initially to the investment in an associate reflects the purchase price paid to ITI Media less the fair value of the ‘n’ Shareholder Loans acquired. We estimated the fair value of the ‘n’ Shareholder Loans receivable based on a valuation model with the key inputs being credit spread and market interest rates. Before March 11, 2009, we had significant influence on, but no control over, ITI Neovision Sp. z o.o. operations. Accordingly, the investment was classified as an investment in an associate and accounted for using the equity method with the recognition of 25% share of the associate’s net results. On March 11, 2009, we and ITI Media entered into a preliminary agreement (“Preliminary Agreement”) under which the parties agreed that we would increase our direct ownership interest in Neovision Holding B.V. and our indirect ownership of ITI Neovision Sp. z o.o. to an aggregate of 51% of each company’s shares for the price of 346.2 million. We subsequently entered into a transaction agreement (the “Transaction Agreement”) and amendments to the Shareholders Agreement with ITI Media and Neovision Holding B.V. implementing the Preliminary Agreement. On March 31, 2009, (1) along with ITI Media, we caused Neovision Holding B.V. to repurchase 20,000 of its shares at a buy-back price equal to the par or nominal value of those shares, (2) we made new ‘n’ Shareholder Loans to Neovision Holding B.V. and ITI Neovision Sp. z o.o. in the aggregate amount of 330.1 million, (3) Neovision Holding B.V. and ITI Neovision Sp. z o.o. paid to ITI Media and N-Vision B.V. the aggregate amount of 327.8 million as a repayment of a portion of the outstanding ‘n’ Shareholder Loans plus the payment of the buy-back price of the repurchased Neovision Holding B.V. shares, settled on April 1, 2009, (4) ITI Media was released from its obligation to pay 32.3 million as its future funding obligations as a shareholder of ITI Neovision Sp. z o.o. and with respect to its on-going obligation to pay for all of Religia.tv channel operating and other costs and (5) ITI Media provided us with a power of attorney to ensure that, pending completion of the actions described in the next paragraph, we can at all times exercise voting rights over Neovision Holding B.V.’s shares owned by ITI Media which, when combined with the Neovision Holding B.V.’s shares already owned by us, represent 51% of all Neovision Holding B.V.’s shares. Following the completion of the actions taken on March 31, 2009, we own shares of Neovision Holding B.V. and, through our ownership interest in Neovision Holding B.V., indirectly own shares of ITI Neovision Sp. z o.o. representing 50.0005% of each company’s shares and also own 52.4% of the ‘n’ Shareholder Loans. On August 4, 2009, Neovision Holding B.V. repurchased an additional 390 of its shares at a buy-back price equal to the par or nominal value of those shares and canceled the 20,390 repurchased shares which it held. As a result, we directly own shares in Neovision Holding B.V. and, through that ownership interest, indirectly own shares of ITI Neovision Sp. z o.o. representing 51% of each company’s shares. The Transaction Agreement also provides that Religia.tv channel will, no later than December 31, 2009, be formally separated from ITI Neovision Sp. z o.o., with ITI Media being responsible for any associated costs and liabilities pre- and post-separation. This understanding has been reaffirmed in the ‘n’ Acquisition Term Sheet. The Transaction Agreement provides that we will pay ITI Media a correction payment if and to the extent that the ‘n’ DTH platform subscriber revenues for the 2010 calendar year exceed PLN 555.6 million. The amount of the correction payment will be computed as 30.3214 for each PLN 1.00 in excess of the foregoing threshold amount. ITI’s right to receive this correction payment is also contingent upon the ‘n’ DTH platform reaching or exceeding certain specified targets during the

125 2010 calendar year with respect to Adjusted EBITDA, numbers of subscribers and ARPU. In order to trigger a correction payment ITI Neovision Sp. z o.o. would need to be profitable at the Adjusted EBITDA level, have in excess of 0.8 million post paid subscribers, ARPU should exceed PLN 60.48 and post paid subscription revenue should not be lower than PLN 555.6 million. The amount of the correction payment is subject to a 360 million cap. The cap amount will be reduced if and to the extent that, prior to the end of 2010 calendar year, ITI Media sells all or a part of its remaining ownership interest in Neovision Holding B.V. or ITI Neovision Sp. z o.o. to a third party where the purchase price paid by the third party reflects the ‘n’ DTH platform having an equity value that is less than the amount specified in the Transaction Agreement (which amount reflects our investment in, and the resulting equity value of, the ‘n’ DTH platform). We have the option to pay up to one-half of the correction payment in the form of our shares, with the balance paid in cash. Consistent with us becoming the direct majority shareholder of Neovision Holding B.V. and the indirect majority shareholder of ITI Neovision Sp. z o.o., the board of directors of Neovision Holding B.V. and the supervisory board of ITI Neovision Sp. z o.o. have been reorganized so that a majority of the members of each body are persons nominated by us. The Shareholders Agreement as amended remains in effect, however we are now the majority shareholder and the option granted to us in the Shareholders Agreement to acquire a 51% direct ownership interest in Neovision Holding B.V. is deemed to have been exercised pursuant to the transactions described above. The direct costs relating to the acquisition amounted to PLN 16.6 million and included mainly legal, valuation and professional consulting fees, and have been fully expensed in the nine months ended September 30, 2009. These agreements were entered into on an arm’s length basis and were approved by the majority of our independent Supervisory Board members and we received fairness opinions on the transactions entered into.

Acquisition of remaining interest in ‘n’ We have entered into the ‘n’ Acquisition Term Sheet to purchase ITI Media’s remaining 49% equity and debt interest in Neovision Holding B.V., which through its subsidiary, ITI Neovision Sp. z o.o., owns and operates the ‘n’ DTH platform. The purchase price for the transaction is 3188 million, with 3148 million of this to be paid at closing and the balance of 340 million to be held under an escrow arrangement. The amounts held in the escrow will be released to ITI Media on the earlier of: (i) ITI Neovision So. z o.o. reaching break-even Adjusted EBITDA after closing for: (a) two consecutive quarters; or (b) one quarter, if we re-launch and re-brand the ‘n’ DTH platform; (ii) the sale of all or a substantial part of our interest in ITI Neovision Sp. z o.o. to a third party; or (iii) an internal reorganization and/or merger where ITI Neovision Sp. z o.o. ceases to exist in its current form. Upon the closing of the ’n’ acquisition, the existing shareholders’ agreement between us and ITI Media will be terminated and any earn-out provision or contingent liability potentially owed by us thereunder cancelled, and we will be the sole owner of the ’n’ DTH platform. We intend to finance the ‘n’ acquisition through an issuance to ITI Media of 3188 million aggregate principal amount of Additional Notes containing substantially the same terms and conditions as the notes offered hereby. For so long as ITI Media holds any Additional Notes, it will agree not to vote those Additional Notes in matters to be voted on by noteholders. If we are unable to issue the Additional Notes, the parties will consider alternate financing options, including the use of share repurchases, shareholder loans and other financing arrangements. The consummation of the ‘n’ acquisition is subject to the parties entering into mutually satisfactory documentation, obtaining any required corporate, third party or other approvals, and, in the case of the Company, compliance with our related party transaction procedures, including the receipt of a fairness opinion from an independent investment banking firm. Certain aspects of the transaction may require consent of the lenders under our parent company’s credit facilities. We expect the closing of the ‘n’ acquisition to occur in the first quarter of 2010. Under the terms of the ‘n’ Acquisition Term Sheet, we also agreed, from November 5, 2009, pending closing of the ‘n’ acquisition, to fund all of ITI Neovision Sp. z o.o.’s costs. If we are unable to complete the ’n’ acquisition, we have the right, pursuant to the procedures set forth in the shareholders’ agreement, to convert into equity the portion of funding ITI Media would have been obligated to provide to ITI Neovision Sp. z o.o. for the period starting on November 5, 2009, if the terms of the ‘n’ Acquisition Term Sheet had not been in effect.

126 Material agreements

Acquired programming content The following are descriptions of two of our most important programming agreements.

Warner Bros. programming agreement On December 23, 2008, we entered into a free television license and basic subscription television license agreement with Warner Bros. International Television Distribution Inc. (“Warner”), pursuant to which Warner granted us an exclusive limited license for a period of approximately five years (expiring after the last license period particular to each program type) to exhibit Warner programs, including feature films, movies, miniseries and TV series in standard definition and high definition in Poland. The license fee payable is dependent on the type and length of the relevant programming. Warner has the option to terminate the agreement if we materially breach our obligations under the agreement or under any other agreement with Warner.

Paramount Pictures programming agreement On July 24, 2009 we entered into an amended and restated television license output agreement with Paramount Pictures Global (“Paramount”) and DW (Netherlands) BV (“DWN”), pursuant to which Paramount and DWN granted us a limited license to transmit free/basic and pay licensed programming for a period of approximately five years (expiring after the last license period particular to each program type) to exhibit Paramount programs, including feature films, movies, miniseries and TV series in standard definition and high definition in Poland. Both parties have the option to terminate the agreement, if either party materially breaches its obligations under the agreement.

Copyright agreements We have copyright agreements with organizations of writers, actors and filmmakers which govern the terms under which we may broadcast programming content produced by third parties.

License agreement with ZAiKS On August 11, 2006, we entered into a license agreement with ZAiKS, an association of writers and composers in Poland. Pursuant to the terms of the license agreement, we are entitled to broadcast programming content protected by ZAiKS, in consideration for payment of a monthly royalty fee equal to a percentage of the revenue of TVN generated from broadcasting activities (such as advertising airtime sales, sponsorship, audiotele and teleshopping). The agreement may be terminated by either party with three months’ notice. ZAiKS has the right to terminate the agreement with immediate effect if we default on our obligations under the agreement.

License agreement with ZASP On July 24, 2001, we entered into an agreement with ZASP, a union of Polish actors. The agreement regulates the broadcasting of programs involving actors represented by ZASP and the payment of royalties to such actors. The fee due under this agreement is calculated and payable on a monthly basis depending on the type and length of the relevant programs. The agreement may be terminated by either party with three months’ notice.

General Agreement with SFP On August 28, 2009, we entered into an agreement with SFP, an association of Polish filmmakers. The agreement regulates the value and the manner of payment of the fees for broadcasting audio- visual programs. The consideration is set as a lump-sum fee on all revenues of TVN generated from its activity, including that from commercial advertisements, sale of airtime, sponsored programs, audio-text services and all other revenues directly connected with TVN’s broadcasting activity. The agreement is for an unspecified term and may be terminated by either party with three months’ notice.

127 Agreements for satellite and cable television transmission We have an agreement with Eutelsat S.A. relating to the provision of satellite transponders capacity. In addition, we have license agreements with satellite and cable operators for the distribution of our television channels through their networks. The agreements with satellite and cable providers typically provide for terms ranging from five to ten years and may be renewed for additional periods with the consent of the parties involved. From time to time, we negotiate or renegotiate the terms of these license agreements and generally seek to renegotiate the terms of our contracts with satellite and cable providers well in advance of their expiration dates.

Satellite transponder agreement with Eutelsat S.A. (“Eutelsat”) We entered into satellite transponder capacity lease agreements, pursuant to which Eutelsat agreed to provide us satellite transponder capacity on its satellites on an exclusive basis in Poland. Allotment agreements entered into by us or ITI Neovision Sp. z o.o. with Eutelsat provide us with allotted capacity on an exclusive full-time basis on designated transponders. These allotment agreements will expire on September 14, 2011, December 31, 2014, April 19, 2018 and August 31, 2018.

License agreement with Cyfrowy Polsat S.A. (previously Telewizja Polsat S.A.) On February 14, 2003 we entered into an agreement with Cyfrowy Polsat S.A. (previously Telewizja Polsat S.A). The agreement grants a non-exclusive license for the distribution of the TVN and TVN 7 channels in Poland. The agreement is valid until February 29, 2012.

License agreement with Cyfrowy Polsat S.A. On May 30, 2006 we entered into an agreement with Cyfrowy Polsat S.A. The agreement grants a non-exclusive license for the distribution of the TVN 24, TVN Meteo, TVN Turbo and TVN Style channels in Poland. The agreement is valid until February 29, 2012.

License agreement with Canal+ Cyfrowy sp. z o.o. On February 10, 2004 we entered into an agreement with Canal+ Cyfrowy sp. z o.o. The agreement grants a non-exclusive license for the distribution of the TVN and TVN 7 channels in Poland. The agreement is valid until May 31, 2010 and provides for automatic extension for a further three years unless terminated within the prescribed notice period.

License agreement with Canal+ Cyfrowy sp. z o.o. On December 12, 2005 we entered into an agreement with Canal+ Cyfrowy sp. z o.o. The agreement grants a non-exclusive license for the distribution of the TVN 24, TVN Meteo, TVN Turbo, TVN Style and TVN CNBC Biznes channels in Poland. The agreement is valid until December 31, 2010.

License agreement with Aster sp. z o.o. On January 2, 2007 we entered into an agreement with Aster sp. z o.o. The agreement grants a non- exclusive license for the distribution of the TVN 24, TVN Meteo, TVN Turbo, TVN Style, TVN CNBC Biznes and TVN Warszawa channels in Poland. The agreement is valid until December 31, 2011.

License agreement with Vectra S.A. On October 30, 2003 we entered into an agreement with Vectra S.A. The agreement grants a non- exclusive license for the distribution of the TVN 24, TVN Meteo, TVN Turbo and TVN Style channels in Poland. The agreement is concluded for an unspecified term and may be terminated by either party with one year’s notice. After negotiations, which ended in July 2009, an annex to this agreement is being finalized, which is intended amend the agreement to provide for a fixed term scheduled to expire in July 31, 2014.

License agreement with UPC Polska sp. z o.o. On June 6, 2007 we entered into an agreement with UPC Polska sp. z o.o. The agreement grants a non-exclusive license for the distribution of the TVN 24, TVN Meteo, TVN Turbo, TVN Style and TVN

128 CNBC Biznes channels in Poland. The agreement is valid until December 31, 2009 and provides for automatic extension for further periods of one year unless terminated within the prescribed notice period.

License agreement with Multimedia Polska S.A. On February 28, 2006 we entered into an agreement with Multimedia Polska S.A. The agreement grants a non-exclusive license for the distribution of the TVN 24, TVN Meteo, TVN Turbo, TVN Style and TVN CNBC Biznes channels in Poland. The agreement is valid until February 28, 2014.

Other Signal distribution agreement with TP EmiTel sp. z o.o. (TP EmiTel) terrestrial network On 20 April 2009 we entered into an agreement with TP EmiTel regarding signal distribution services through a terrestrial network in analogue technology for the purposes of broadcasting the TVN channel. TP EmiTel provides us with broadcasting services through its own television broadcast stations. The agreement was concluded for a specified term until the expiry of our licence to broadcast the TVN channel, i.e. until 31 July 2013. Either party may terminate the agreement with six months notice.

129 Description of other indebtedness

Existing Notes On December 2, 2003, TVN Finance Corporation plc, a wholly owned subsidiary of the Company, issued 3235.0 million aggregate principal amount of Existing Notes, which are guaranteed by us. As of September 30, 2009, 3215 million aggregate principal amount of the Existing Notes was outstanding.

1 The Existing Notes accrue interest at the rate of 9 ⁄2% per annum and mature on December 15, 2013. Interest on the Existing Notes is payable on June 15 and December 15 of each year, commencing on June 15, 2004. The Existing Notes will be redeemed and repaid in full with the proceeds of the Notes offered hereby.

PLN Bonds On May 26, 2008 the Company entered into an agreement on the issue of PLN bonds with Bank Pekao, Bank Handlowy and BRE Bank. Pursuant to this agreement, the issuer may issue bonds with a maximum nominal aggregate value of PLN 1,000 million. This maximum nominal aggregate value may be raised to PLN 2,000 million by the issuer. As part of this program, on June 23, 2008, we issued PLN denominated bonds with a nominal value of PLN 500 million. We issued 5,000 bonds of a nominal value of PLN 0.1 million, with a redemption date of June 14, 2013, and with a right for us to request early redemption on either the third or fourth anniversary of the issue. The interest on the bond is calculated and paid in cash semi-annually, on the Bond nominal value, at a variable interest rate equal to 6m WIBOR plus 2.75%.

Loan Facility The Loan Facility expires on June 30, 2011. The Loan Facility bears interest at six month WIBOR, LIBOR or EURIBOR (depending on loan’s currency) plus margin which is currently 1.6%. The Loan Facility has been secured on TVN S.A.’s trade receivables up to the equivalent of 325 million. The Loan Facility is also guaranteed by Grupa Onet.pl S.A., Mango Media Sp. z o.o. and ITI Neovision Sp. z o.o., TVN S.A.’s subsidiaries. The Loan Facility will be repaid in full with the proceeds of the Notes offered hereby.

Loan agreements with related parties We are party to loan agreements with affiliates of ITI Holdings and other related parties. See “Major shareholders and related party transactions—Related party transactions.”

130 Description of the notes The Issuer will issue the Notes under an indenture to be dated as of the closing date of this offering (the “Indenture”) among, inter alia, it, the Company, the Subsidiary Guarantors and The Bank of New York Mellon, as trustee (the “Trustee”). A copy of the form of the Indenture is available upon request to the Issuer. You will find the definitions of capitalized terms used in this “Description of the notes” under the heading “Certain definitions.” For purposes of this “Description of the notes,” references to “we,” “our” and “us” refer only to the Company and its Restricted Subsidiaries; references to the “Issuer” refer only to TVN Finance Corporation II AB; and references to the “Company” refer only to TVN S.A., the direct parent of the Issuer, and not to its subsidiaries. Application has been made to list the Notes on the Official List of the Luxembourg Stock Exchange and for admission and trading on the Euro MTF market. We can provide no assurance that our application will be accepted. If and so long as the Notes are listed on the Luxembourg Stock Exchange, we will maintain a listing, paying and transfer agent in Luxembourg. This “Description of the notes” is intended to be a useful overview of the material provisions of the Notes and the Indenture. Since this “Description of the notes” is only a summary, you should refer to the Indenture for a complete description of our obligations and your rights.

General The Notes The notes: • will be general senior unsecured obligations of the Issuer, which is a finance subsidiary of the Company; • will be entitled to the benefit of the senior unsecured Note Guarantees, as described further below under “— The Note Guarantees;” • will be offered in an aggregate principal amount of 3405.0 million at maturity; • mature on November 15, 2017; • will be issued in denominations of 350,000 and any integral multiple of 31,000 in excess thereof; and • will be represented by one or more registered Notes in global form, but in certain circumstances may be represented by registered Notes in definitive form. See “Book-entry, delivery and form.”

Interest Interest on the Notes will compound semi-annually and:

3 • accrue at the rate of 10 ⁄4% per annum; • accrue from the date of issuance or the most recent interest payment date to which interest has been paid; • be payable in cash semi-annually in arrears on May 15 and November 15, commencing on May 15, 2010; • be payable to the holders of record of the Notes on May 1 and November 1 immediately preceding the related interest payment dates; and • be computed on the basis of a 360-day year comprised of twelve 30-day months. The Indenture will allow the Issuer to issue additional Notes from time to time (the “Additional Notes”), subject to any such issuance complying with the covenant described below under the heading “— Certain covenants — Limitation on Indebtedness.” The Notes and any Additional Notes subsequently issued under the Indenture will be treated as a single class for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Unless the context requires otherwise, references to the “Notes” for all purposes of

131 the Indenture and this “Description of the notes” include any Additional Notes that are actually issued.

The Note Guarantees The obligations of the Issuer under the Notes and the Indenture (including the repurchase obligation of the Issuer resulting from a Change of Control Triggering Event) will be fully and unconditionally guaranteed, on an unsecured senior basis, by the Company and Subsidiaries of the Company whose aggregate unconsolidated EBITDA, net income and assets, taken together with the unconsolidated EBITDA, net income and assets of the Company, comprise at least 90% of Consolidated EBITDA, Consolidated Net Income and consolidated assets of the Company, respectively. Under certain circumstances, additional Subsidiaries may be required to provide Note Guarantees in the future. See “— Certain covenants — Future Note Guarantors”. The Guarantors will agree to pay, in addition to the amount stated above, all costs and expenses (including counsel fees and expenses) Incurred by the Trustee or the holders of the Notes in enforcing any rights under the Note Guarantees. Each Note Guarantee: • will be senior, unsecured obligation of the Guarantor ranking equally in right of payment to all of its existing and future senior unsecured obligations; • will rank junior to any other Indebtedness with respect to any assets against which a Lien has been granted to secure such other Indebtedness; • will rank junior to all Indebtedness of the Company’s Subsidiaries that are not Guarantors; and • will be senior in right of payment to all existing and future Subordinated Obligations of the Company, if any. The Note Guarantees will provide that, in the event of default in the payment of principal or premium, if any, interest, Additional Amounts, if any, and any other payment obligations in respect of the Notes (including any obligation to repurchase the Notes), legal proceedings may be instituted directly against the Guarantor without first proceeding against the Issuer. The Note Guarantees will be released upon the full and final payment and performance of all obligations under the Indenture and the Notes. So long as no Event of Default has occurred and is continuing, the Note Guarantee of any Subsidiary will be released where the Subsidiary is disposed of in compliance with the terms of the Indenture (including the covenants described under the captions “— Certain covenants — Limitation on sales of assets and Subsidiary stock” and “— Certain covenants — Limitation on sale of capital stock of Restricted Subsidiaries”) so long as (a) such Subsidiary is simultaneously and unconditionally released from its obligations in respect of any other Indebtedness of the Company or any Restricted Subsidiary and (b) the proceeds from such sale or disposition are used for the purposes permitted or required by the Indenture. A Subsidiary will also be released from its obligations under the Indenture and its Note Guarantee if the Company designates the Subsidiary as an Unrestricted Subsidiary in compliance with the terms of the Indenture.

Subsidiaries As of the date of the Indenture, all of the Company’s Subsidiaries, including the Issuer, will be “Restricted Subsidiaries.” However, under the circumstances described below under the definition of Unrestricted Subsidiaries, the Company will be permitted to designate certain of its subsidiaries as “Unrestricted Subsidiaries.” Unrestricted Subsidiaries will not be subject to any of the restrictive covenants in the Indenture.

Form of Notes The Notes will be represented initially by global notes in registered form. Notes initially offered and sold in reliance on Rule 144A under the U.S. Securities Act (“Rule 144A”) will be represented by one global Note (the “U.S. Global Note”), and Notes initially offered and sold in reliance on Regulation S under the U.S. Securities Act (“Regulation S”) will be represented by a second global Note (the

132 “International Global Note”). The combined principal amounts of the U.S. Global Note and the International Global Note (together, the “Global Notes”) will at all times equal the outstanding principal amount of the Notes represented thereby.

The Global Notes will be deposited with and registered in the name of a nominee for a common depositary (the “Common Depositary”) for Euroclear and for Clearstream. Interests in the Global Notes will be shown on, and transfers thereof will be effected only through, records maintained in book-entry form by Euroclear and Clearstream. Such beneficial interests in the Notes are referred to as “Book-Entry Interests.”

Holders of Book-Entry Interests will be entitled to receive definitive notes in registered form (“Definitive Notes”) in exchange for their holdings of Book-Entry Interests only in the limited circumstances set forth in “Book-entry, delivery and form — Issuance of definitive registered notes” below. Title to the Definitive Notes will pass upon registration of transfer in accordance with the provisions of the Indenture. In no event will Definitive Notes in bearer form be issued.

Payments on the Notes

Principal, premium, if any, interest and Additional Amounts, if any, on the Global Notes will be payable, and the Global Notes may be exchanged or transferred, at the corporate trust office or agency of the Trustee in London, except that, at the option of the Issuer, payment of interest may be made by electronic transfer or check mailed to the address of the holders of the Notes as such address appears in the Note register. Payment of principal, premium, if any, interest and Additional Amounts, if any, on the Notes in global form registered in the name of or held by the Common Depositary or its nominee will be made in immediately available funds to the Common Depositary or its nominee, as the case may be, as the registered holder of such Global Note. For so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange so require, holders of the Notes will be able to receive payment of principal, premium, if any, interest and Additional Amounts, if any, on the Notes at the specified office of the Paying Agent in the Grand Duchy of Luxembourg, subject to the right of the Issuer to mail payments in accordance with the terms of the Indenture. The Issuer will pay interest on the Notes to Persons who are registered holders of the Notes at the close of business on the record date immediately preceding the interest payment date for such interest.

Global clearance and settlement under Book-Entry system

Initial settlement for the Notes will be made in euro.

Book-Entry Interests owned through Euroclear or Clearstream accounts will follow the settlement procedures applicable to conventional eurobonds in registered form. Book-Entry Interests will be credited to the securities custody accounts of Euroclear and Clearstream participants on the Business Day following the settlement date against payment for value on the settlement date.

The Book-Entry Interests will trade through participants of Euroclear or Clearstream and will settle in same-day funds.

Since the purchase determines the place of delivery, it is important to establish at the time of trading of any Book-Entry Interests where both the purchaser’s and seller’s accounts are located to ensure that settlement can be made on the desired value date.

Paying Agent and Registrar

The Trustee will initially act as Principal Paying Agent for the Notes. The Issuer may change the Paying Agent or Registrar for the Notes without prior notice to the holders of the Notes. The Bank of New York Mellon (Luxembourg) S.A. will act as Registrar and as Paying Agent for the Notes. The Issuer, the Company or any of its Subsidiaries may act as Paying Agent or Registrar for the Notes; provided that, for so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange so require, the Issuer will appoint a Person located in Luxembourg who is acceptable to the Trustee as an additional paying agent for the Notes. In the event that a Paying Agent is replaced, the Issuer will provide notice thereof in accordance with the procedures described under “— Notices.”

133 For as long as the Notes remain outstanding, the Issuer and the Company also agree that, on the implementation of the European Union savings tax Directive (as defined under “— Payment of Additional Amounts”), adopted by the ECOFIN Council of the European Union (the Council of EU finance and economic ministers) at its meeting on June 3, 2003, they will ensure that they maintain a paying agent for the Notes in a member state, if any, that is not obliged to withhold or deduct tax pursuant to that directive.

For so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange so require the Issuer will publish notice of the change of the Paying Agent and Registrar in a daily newspaper with general circulation in Luxembourg (which is expected to be the Luxemburger Wort). The Issuer will also post notices of the change of the Paying Agent and Registrar on the website of the Luxembourg Stock Exchange (www.bourse.lu).

Transfer and exchange

A holder of the Notes may transfer or exchange Notes in accordance with the Indenture which shall provide that, for so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange so require, holders of Notes will be able to transfer Notes at an office of the specified transfer agent in Luxembourg. The Registrar and the Trustee for the Notes may require a holder of the Notes, among other things, to furnish appropriate endorsements and transfer documents, and the Issuer may require such holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuer is not required to transfer or exchange any Note selected for redemption, nor to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed. The registered holder of the Notes will be treated as the owner of it for all purposes. No service charge will be made for any registration of transfer or exchange of Notes, but the Issuer may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith.

The Notes in global form may be transferred only to a successor of the Common Depositary.

In case of a partial transfer of a Definitive Note, a holder of such Note will receive new Notes through the transfer agent.

Book-Entry Interests will be subject to certain restrictions on transfer and certification requirements as described under “Transfer and exchange.”

All transfers of Book-Entry Interests between participants in Euroclear or participants in Clearstream will be effected by Euroclear or Clearstream pursuant to customary procedures and subject to the applicable rules and procedures established by Euroclear or Clearstream and their respective participants. See “Book-entry, delivery and form.”

Subject to certain restrictions on transfer and certification requirements, as described under “Transfer and exchange,” a Book-Entry Interest in a U.S. Global Note may be transferred to a Person who takes delivery thereof in the form of a Book-Entry Interest in an International Global Note, and vice versa, by means of an instruction originated through Euroclear or Clearstream, as applicable. Any Book-Entry Interest that is so transferred will, upon transfer, cease to be a Book- Entry Interest in the first-mentioned Global Note and become a Book-Entry Interest in the other Global Note and will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to Book-Entry Interests in such other Global Note for as long as it remains such a Book- Entry Interest. In connection with such transfer, appropriate adjustments will be made to reflect a decrease in the principal amount of the first-mentioned Global Note and a corresponding increase in the principal amount of the other Global Note, as applicable.

Subject to the restrictions on transfer described under “Transfer restrictions,” Notes may be transferred, in whole or in part, in denominations of 350,000 and any integral multiple of 31,000 in excess thereof. In connection with any such transfer, the Indenture will require the transferor to, among other things, furnish appropriate endorsements and transfer documents, to furnish information regarding the account of the transferee with Euroclear or Clearstream, to furnish certain certificates and to pay any taxes, duties and governmental charges in connection with such transfer.

134 Notwithstanding the foregoing, the Issuer is not required to register the transfer of any Definitive Note in registered form: (1) for a period of 15 calendar days prior to any date fixed for the redemption of the Notes; (2) for a period of 15 calendar days immediately prior to the date fixed for selection of Notes to be redeemed in part; (3) for a payment period of 15 calendar days prior to the record date with respect to any interest payment date; or (4) that the registered holder of Notes has tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer or an Asset Disposition Offer.

Mandatory redemption The Issuer is not required to make any mandatory redemption payments or sinking fund payments with respect to the Notes.

Optional redemption Except as described below or under “— Optional tax redemption,” the Notes are not redeemable until November 15, 2013. On and after November 15, 2013, the Issuer may redeem all or, from time to time, a part of the Notes upon not less than 30 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount) plus accrued and unpaid interest on the Notes, if any, to the applicable redemption date (subject to the right of holders of record of the Notes on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period beginning on November 15 of the years indicated below: Year Percentage 2013 ...... 105.375 2014 ...... 102.688 2015 and thereafter ...... 100.000%

Prior to November 15, 2012, the Issuer may on any one or more occasions redeem up to 35% of the original principal amount of the Notes with the Net Cash Proceeds of one or more Public Equity Offerings at a redemption price of 110.75% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record of the Notes on the relevant record date to receive interest due on the relevant interest payment date); provided that (1) at least 65% of the original principal amount of the Notes remains outstanding after each such redemption; and (2) the redemption occurs within 90 days after the closing of such Public Equity Offering and must be made in accordance with certain procedures set forth in the Indenture. At any time prior to November 15, 2013, the Issuer may redeem Notes, in whole but not in part, at its option, at a price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued but unpaid interest, if any, to, the redemption date (subject to the right of holders of record of the Notes on the relevant record date to receive interest due on the relevant interest payment date). Such redemption may be made upon not less than 30 nor more than 60 days’ notice delivered to each holder of Notes being redeemed in accordance with the provisions set forth under “— Notices” and otherwise in accordance with the procedures set forth in the Indenture. “Applicable Premium” means on any redemption date, the greater of: (1) 1.0% of the principal amount of such Note; and (2) the excess of (i) the present value on such redemption date of (A) the redemption price of the Notes on November 15, 2013, (such redemption price being that described in the first paragraph above), plus (B) all required remaining scheduled interest payments due on the Notes through November 15, 2013, computed using a discount rate equal to the Bund Rate plus 50 basis points, over (ii) the outstanding principal amount of such Note on such

135 redemption date. The calculation of the Applicable Premium will be made by the Issuer or on behalf of the Issuer by such Person as the Issuer shall designate; provided, however, that such calculation shall not be a duty or obligation of the Trustee. “Bund Rate” means the yield to maturity at the time of computation of direct obligations of the Federal Republic of Germany (Bund or Bundesanleihen) with a constant maturity (as officially compiled and published in the most recent financial statistics that have become publicly available at least two Business Days (but not more than five Business Days) prior to the redemption date (or, if such financial statistics are not so published or available, any publicly available source of similar market data selected by the Issuer in good faith)) most nearly equal to the period from the redemption date to November 15, 2013; provided, however that if the period from the redemption date to November 15, 2013 is not equal to the constant maturity of the direct obligations of the Federal Republic of Germany for which a weekly average yield is given, the Bund Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of direct obligations of the Federal Republic of Germany for which such yields are given, except that if the period from such redemption date to November 15, 2013 is less than one year, the weekly average yield on actually traded direct obligations of the Federal Republic of Germany adjusted to a constant maturity of one year shall be used. Notice of early redemption will be published in accordance with the procedures under “— Notices.” If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Notes are registered at the close of business on such record date, and no additional interest will be payable to beneficial holders whose Notes will be subject to redemption by the Issuer. In the case of any partial redemption, the Trustee will select the Notes for redemption in compliance with the requirements of the principal securities exchange (currently expected to be the Luxembourg Stock Exchange), if any, on which the Notes are listed or, if the Notes are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion will deem to be fair and appropriate, although no Note of 350,000 in aggregate principal amount or less will be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to that Note will state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued and delivered to the Common Depositary, or in the case of Definitive Notes, issued in the name of the holder thereof upon cancellation of the original Note. The Trustee will not be liable for selections made by it under this paragraph.

Optional tax redemption The Notes may be redeemed, at the option of the Issuer, in whole but not in part, at any time, upon giving not less than 30 nor more than 60 days’ notice (in accordance with the procedures set forth in “— Notices”) to each holder of the Notes (which notice will be irrevocable), at a price equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon, if any, to the redemption date, and Additional Amounts (as defined below under “— Payment of Additional Amounts”), if any, which otherwise would be payable, if as a result of: (i) any amendment to, or change in, the laws (or any regulations or rulings promulgated thereunder) of a Relevant Taxing Jurisdiction (as defined below under “— Payment of Additional Amounts”) which becomes effective on or after the date of this listing memorandum or in the case of a Future Note Guarantor after the date such entity makes payment on the Notes; or (ii) any amendment to or change in an official interpretation or application regarding such laws, regulations or rulings which becomes effective on or after the date of this listing memorandum or in the case of a Future Note Guarantor after the date such entity makes payment on the Notes, the Issuer, with respect to the Notes, or a Guarantor, with respect to its Note Guarantee, is, or on the next interest payment date in respect of the Notes, would be, required to pay Additional Amounts in respect of any Note pursuant to the terms and conditions thereof, which obligation cannot be avoided by the taking of reasonable measures available to it; provided, however, that (a) no such

136 notice of redemption may be given earlier than 90 days prior to the earliest date on which the Issuer or a Guarantor, as the case may be, would be obligated to pay such Additional Amounts were a payment in respect of the Notes or a Note Guarantee then due and payable and (b) at the time such notice is given, such obligation to pay such Additional Amounts remains in effect. Prior to the giving of any notice of redemption pursuant to this provision, the Company will deliver to the Trustee (a) an Officers’ Certificate stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred and (b) an Opinion of Counsel qualified under the laws of the Relevant Taxing Jurisdiction to the effect that the circumstances described above exist.

Payment of Additional Amounts All payments made by the Issuer, the Company or a Guarantor (each, a “Payor”) under, or with respect to, the Notes, or a Note Guarantee will be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities related thereto) (collectively, “Taxes”) unless the Payor is required to withhold or deduct such Taxes by law or by the official interpretation or administration thereof. If the Payor is required to withhold or deduct any amount for or on account of Taxes imposed or levied by or on behalf of (i) the United Kingdom, the Grand Duchy of Luxembourg or Poland, (ii) any jurisdiction in which such Payor is organized or otherwise considered to be resident for tax purposes, (iii) any jurisdiction from or through which payment on the Notes or any Note Guarantee is made or (iv) any political subdivision or taxing authority of any of the foregoing (any of the aforementioned being a “Relevant Taxing Jurisdiction”) from any payment made under or with respect to the Notes or any Note Guarantee, the Payor will pay such additional amounts (“Additional Amounts”) as may be necessary so that the net amount received by each holder of a Note (including Additional Amounts) after such withholding or deduction will not be less than the amount such holder would have received if such Taxes had not been required to be withheld or deducted; provided, however, that the foregoing obligation to pay Additional Amounts does not apply to: (1) any present or future Taxes that would not have been so imposed but for the existence of any present or former connection between the relevant holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of power over the relevant holder, if the relevant holder is an estate, nominee, trust, partnership or corporation) and the Relevant Taxing Jurisdiction (other than the mere receipt of such payment or the ownership or holding of such Note or enforcement of rights thereunder or under a Note Guarantee or the receipt of payments in respect thereof); (2) any estate, inheritance, gift, sales, excise, transfer, personal property tax or similar tax, assessment or governmental charge; (3) any present or future Taxes payable otherwise than by deduction or withholding from payments of principal of, premium, if any, or interest on, such Note; (4) any Taxes that would not have been so imposed if the holder of the Notes had made a declaration of non-residence or any other claim or filing for exemption to which it is entitled (provided, however, that (x) such declaration of non-residence or other claim or filing for exemption is required by the applicable law of the Relevant Taxing Jurisdiction as a precondition to exemption from the requirement to deduct or withhold such Taxes and (y) at least 30 days prior to the first payment date with respect to which such declaration of non-residence or other claim or filing for exemption is required under the applicable law of the Relevant Taxing Jurisdiction, the relevant holder at that time has been notified (in accordance with the procedures set forth in “— Notices”) by the Payor or any other person through whom payment may be made that a declaration of non-residence or other claim or filing for exemption is required to be made); (5) any Taxes imposed as a result of the presentation of a Note for payment (where presentation is required) more than 30 days after the relevant payment is first made available to the holder of such Note (except to the extent that the holder would have been entitled to Additional Amounts had the Note been presented on the last day of such 30-day period);

137 (6) any withholding or deduction imposed on a payment to an individual and required to be made pursuant to the European Union Directive on the taxation of savings income (the “Directive”) which was adopted by the ECOFIN Council of the European Union on June 3, 2003, or any law implementing or complying with, or introduced to conform to, the Directive; (7) any Taxes which could have been avoided by the presentation (where presentation is required) of the relevant Note to another Paying Agent in a member state of the European Union; or (8) any combination of the above. No Additional Amounts will be paid where, had the beneficial owner of the Note been the holder of the Note, it would not have been entitled to payment of Additional Amounts by reason of clauses (1) through (8) inclusive above. The Payor will (i) make any required withholding or deduction and (ii) remit the full amount deducted or withheld to the Relevant Taxing Jurisdiction in accordance with applicable law. The Payor will use all reasonable efforts to obtain certified copies of tax receipts evidencing the payment of any Taxes so deducted or withheld from each Relevant Taxing Jurisdiction imposing such Taxes and will provide such certified copy to each holder of a Note. The Payor will attach to each certified copy a certificate stating (x) that the amount of any withholding Taxes evidenced by the certified copy was paid in connection with payments in respect of the principal amount of the Notes then outstanding and (y) the amount of such withholding Taxes paid per 31,000 principal amount of the Notes. The Indenture will also provide that, if a Payor conducts its business in any jurisdiction (an “Additional Taxing Jurisdiction”) other than a Relevant Taxing Jurisdiction and, as a result, is required by the laws of such Additional Taxing Jurisdiction to deduct or withhold any amount on account of taxes imposed by such Additional Taxing Jurisdiction from payments under the Notes or the Note Guarantees, as the case may be, which would not have been required to be so deducted or withheld but for such conduct of business in such Additional Taxing Jurisdiction, the Additional Amounts provision described above shall be considered to apply to such holders of Notes as if references in such provision to “Taxes” included taxes imposed by way of deduction or withholding by any such Additional Taxing Jurisdiction (or any political subdivision thereof or taxing authority therein). At least 30 days prior to each date on which any payment under or with respect to the Notes or a Note Guarantee is due and payable (unless such obligation to pay Additional Amounts arises shortly before or after the 30th day prior to such date, in which case it shall be promptly thereafter), if the Payor will be obligated to pay Additional Amounts with respect to such payment, the Payor will deliver to the Trustee an Officers’ Certificate stating the fact that such Additional Amounts will be payable, the amounts so payable and will set forth such other information necessary to enable the Trustee to pay such Additional Amounts to holders of Notes on the payment date. Each such Officers’ Certificate shall be relied upon without any liability until receipt of a further Officers’ Certificate addressing such matters. The Payor will pay any present or future stamp, court or documentary taxes, or any other excise or property taxes, charges or similar levies which arise in any jurisdiction from the execution, delivery or registration of the Notes or any other document or instrument referred to therein (other than a transfer of the Notes), or the receipt of any payments with respect to the Notes or any Note Guarantee, excluding any such taxes, charges or similar levies imposed by any jurisdiction outside the United Kingdom, Poland, the Grand Duchy of Luxembourg or any other jurisdiction in which a Payor or a Paying Agent is located, other than those resulting from, or required to be paid in connection with, the enforcement of the Notes or any Note Guarantee or any other such document or instrument following the occurrence of any Event of Default with respect to the Notes. The foregoing obligations will survive any termination, defeasance or discharge of the Indenture and will apply mutatis mutandis to any jurisdiction in which any successor Person to a Payor is organized or any political subdivision or taxing authority or agency thereof or therein. Whenever in the Indenture or in this “Description of the notes” there is mentioned, in any context, the payment of principal, premium, if any or interest, or any other amount payable under or with

138 respect to any Note and the Note Guarantees, such mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

Ranking The Notes will be general unsecured senior obligations of the Issuer that will rank equally in right of payment with all existing and future senior Indebtedness of the Issuer and senior in right of payment with all existing and future Subordinated Obligations of the Issuer. The payment of principal, premium, if any, and interest on the Note Guarantees and any other payment obligations in respect of the Note Guarantees will rank equally in right of payment to any existing or future senior Indebtedness of the Guarantors. As a result of Indebtedness Incurred under Credit Facilities being permitted to be secured, holders of the Notes may recover less under the Note Guarantee of any Guarantor than creditors of the Guarantor who are holders of secured Indebtedness Incurred under Credit Facilities in the event of an insolvency, bankruptcy, reorganization, receivership or similar proceedings relating to the Guarantor. Moreover, payments under the Note Guarantees will be structurally subordinated to the liabilities of non-guarantor Subsidiaries of the Company.

Change of Control and Rating Decline If a Change of Control Triggering Event occurs, each registered holder of Notes will have the right to require the Company to repurchase all or any part (equal to 350,000 and any integral multiple of 31,000 in excess thereof) of such holder’s Notes at a purchase price in cash equal to 101% of the principal amount of the Notes plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record of Notes on the relevant record date to receive interest due on the relevant interest payment date). Within 30 days following any Change of Control Triggering Event, the Company will provide notice (the “Change of Control Offer”) in accordance with the procedures described under “— Notices” stating: (1) that a Change of Control Triggering Event has occurred and that holders have the right to require the Company to purchase such holder’s Notes at a purchase price in cash equal to 101% of the principal amount of such Notes plus accrued and unpaid interest, if any, premium, if any, and Additional Amounts, if any, to the date of purchase (subject to the right of holders of record of Notes on a record date to receive interest on the relevant interest payment date) (the “Change of Control Payment”); (2) the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed) (the “Change of Control Payment Date”); (3) the circumstances and relevant facts regarding the Change of Control; and (4) the procedures determined by the Company, consistent with the Indenture that a holder of Notes must follow in order to have its Notes repurchased. On the Change of Control Payment Date, the Company will, to the extent lawful: (1) accept for payment all Notes or portions of Notes (in denominations of 350,000 and any integral multiple of 31,000 in excess thereof) properly tendered under the Change of Control Offer; (2) deposit with the Principal Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes so tendered; and (3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company. The Principal Paying Agent will promptly either (x) pay to the holder of Notes against presentation and surrender (or, in the case of partial payment, endorsement) of the Notes in global form or (y) in the event that the Notes are in the form of Definitive Notes, mail to each holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and

139 deliver (or cause to be transferred by book entry) to the holder of Notes in global form a new Note or Notes in global form or, in the case of Definitive Notes, mail to each holder of Notes a new Note in definitive form equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of 350,000 and any integral multiple of 31,000 in excess thereof. If the Change of Control Payment Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest, if any, will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to holders of Notes who tender pursuant to the Change of Control Offer. The provisions described above that require the Company to make a Change of Control Offer following a Change of Control Triggering Event will be applicable whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control Triggering Event, the Indenture will not contain provisions that permit the holders of Notes to require that the Company repurchases or redeems the Notes in the event of a takeover, recapitalization or similar transaction. The Company will not be required to make a Change of Control Offer upon the occurrence of a Change of Control Triggering Event if another party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. The Company will comply, to the extent applicable, with any applicable securities laws or regulations, including any securities or other applicable laws of Sweden, Poland and the Grand Duchy of Luxembourg and the requirements of the Luxembourg Stock Exchange or any other securities exchange on which the Notes are listed, in connection with the repurchase of Notes pursuant to this covenant. To the extent that the provisions of any securities or other applicable laws or regulations conflict with provisions of the Indenture, the Company will comply with the applicable laws and regulations and will not be deemed to have breached its obligations described in the Indenture by virtue of the conflict. The Company’s ability to repurchase Notes pursuant to a Change of Control Offer may be limited by a number of factors. The Company’s future Indebtedness may also contain prohibitions of certain events that would constitute a Change of Control Triggering Event or require such Indebtedness to be repurchased upon a Change of Control Triggering Event. Moreover, the exercise by the holders of Notes of their right to require the Company to repurchase the Notes could cause a default under such Indebtedness, even if the Change of Control Triggering Event itself does not, due to the financial effect of such repurchase on the Company. Finally, the ability of the Company and any Subsidiary Guarantor to pay cash to the holders of Notes upon a repurchase may be limited by the existing financial resources of the Company and its Subsidiaries. There can be no assurance that sufficient funds will be available when necessary to make any required repurchases. Even if sufficient funds were otherwise available, the terms of future Indebtedness may prohibit the Company’s prepayment of Notes before their scheduled maturity. Consequently, if we are not able to prepay the amounts outstanding under such other Indebtedness containing similar restrictions or obtain requisite consents, as described above, the Company will be unable to fulfill its repurchase obligations if holders of Notes exercise their repurchase rights following a Change of Control Triggering Event, resulting in a default under the Indenture. A default under the Indenture may result in a cross-default under all future Indebtedness. The Change of Control provisions described above may deter certain mergers, tender offers and other takeover attempts involving the Issuer, the Company and any Subsidiary Guarantor by increasing the capital required to effectuate such transactions. The definition of “Change of Control” includes a disposition of all or substantially all of the property and assets of the Company and its Restricted Subsidiaries taken as a whole to another Person unless certain conditions are satisfied. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve a disposition of “all or substantially all” of the property or assets of a Person. In addition, it should be Noted that recent case law suggests that, in the event that incumbent directors are

140 replaced as a result of a contested election, issuers may nevertheless avoid triggering a change of control under a clause similar to clause (2) of the definition of “Change of Control”, if the outgoing directors were to approve the new directors for the purpose of such change of control clause. As a result, it may be unclear as to whether a Change of Control has occurred and whether a holder of Notes may require the Company to make an offer to repurchase the Notes as described above.

Certain covenants Limitation on Indebtedness The Company will not, and will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness; provided, however, that the Company, any Subsidiary Guarantor that is a corporation and the Issuer may Incur Indebtedness if on the date thereof: (1) the Leverage Ratio for the Company and its Restricted Subsidiaries is less than 5.50 to 1.00; and (2) no Default or Event of Default will have occurred or be continuing or would occur as a consequence of Incurring the Indebtedness or transactions relating to such Incurrence. The first paragraph of this covenant will not prohibit the Incurrence of the following Indebtedness: (1) Indebtedness of the Company and of its Restricted Subsidiaries Incurred under one or more Credit Facilities in an aggregate principal amount up to 3100.0 million at any one time outstanding; (2) Indebtedness of the Company owing to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by the Company or any Restricted Subsidiary; provided, however, that: (a) if the Company is the obligor on such Indebtedness, then, except for all obligations owing to a Subsidiary Guarantor that is a corporation, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes and the Note Guarantee of the Company; (b) if a Subsidiary Guarantor is the obligor on such Indebtedness, then, except for all obligations owing to the Company or another Subsidiary Guarantor that is a corporation, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes and the relevant Note Guarantee of the Subsidiary; and (c) (i) any subsequent issuance or transfer of Capital Stock or any other event which results in any such Indebtedness being beneficially held by a Person other than the Company or a Restricted Subsidiary; and (ii) any sale or other transfer of any such Indebtedness to a Person other than the Company or a Restricted Subsidiary of the Company shall be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be; (3) Indebtedness represented by the Note Guarantees; (4) Indebtedness represented by (a) the Notes issued on the Issue Date and (b) any Indebtedness (other than the Indebtedness described in clauses (1), (2), (3), (6), (8), (9) and (10)) outstanding on the Issue Date; (5) Indebtedness of a Restricted Subsidiary Incurred and outstanding on the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred (a) to provide all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired by the Company or (b) otherwise in connection with, or in contemplation of, such acquisition); provided, however, that at the time such Restricted Subsidiary is acquired by the Company, the Company would have been able to Incur 31.00 of additional Indebtedness pursuant to the first paragraph of this covenant after giving effect to such acquisition and the Incurrence of such Indebtedness pursuant to this clause (5);

141 (6) Indebtedness under Currency Agreements and Interest Rate Agreements; provided that in the case of Currency Agreements, such Currency Agreements are related to business transactions of the Company or its Restricted Subsidiaries entered into in the ordinary course of business and not for speculative purposes or in the case of Currency Agreements and Interest Rate Agreements, such Currency Agreements and Interest Rate Agreements are entered into for bona fide hedging purposes of the Company or its Restricted Subsidiaries (as determined in good faith by the Management Board or senior management of the Company);

(7) Indebtedness of the Company or any of its Restricted Subsidiaries represented by Capitalized Lease Obligations, mortgage financings or purchase money obligations with respect to assets other than Capital Stock or other Investments, in each case Incurred for the purpose of financing or refinancing all or any part of the purchase price or cost of construction or improvements of property used in the business of the Company or any Restricted Subsidiary, in an aggregate principal amount not to exceed the greater of (A) 340.0 million and (B) 16.0% of Consolidated Net Tangible Assets at any time outstanding;

(8) Indebtedness Incurred in respect of workers’ compensation claims, self-insurance obligations, performance, surety and similar bonds and completion guarantees provided by the Company or a Restricted Subsidiary in the ordinary course of business;

(9) Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, Incurred or assumed in connection with the disposition of any business or assets (including a public offering, sale or other disposition of Capital Stock of the Company or a Restricted Subsidiary), provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with such disposition;

(10) Indebtedness arising from a bank or other financial institution honoring a check, bankers draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided, however, that such Indebtedness is extinguished within five Business Days of Incurrence;

(11) any Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (11) or clause (5) or Incurred pursuant to the first paragraph of this covenant;

(12) Indebtedness of the Company or any of its Restricted Subsidiaries represented by mortgage financings Incurred for the purpose of financing the development of the MBC Krakow Building not to exceed 350.0 million at any one time outstanding;

(13) Subordinated Shareholder Loans Incurred by the Company;

(14) Indebtedness represented by Additional Notes in an aggregate principal amount not to exceed 3200.0 million issued to finance or refinance the Neovision Acquisition; provided, however, that such Indebtedness may not be Incurred at any time after May 1, 2010; and

(15) in addition to the items referred to in clauses (1) through (14) above, Indebtedness of the Company and its Restricted Subsidiaries in an aggregate principal amount at any time outstanding which, when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause (15) and then outstanding, will not exceed 375.0 million.

For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this covenant:

(1) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in the first and second paragraphs of this covenant, the Company, in its sole discretion, will classify such item, or any portion of such item, of Indebtedness on the date of Incurrence, and may from time to time reclassify such item, or any portion of such item, of Indebtedness, and only be required to include the amount and type of such Indebtedness in one of such clauses and may divide such Indebtedness and classify, or reclassify, it under more than one type of Indebtedness described in such clauses;

142 (2) the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with IFRS; and (3) the amount of any Indebtedness shall be counted only once and any obligations arising under any Guarantee, Lien, letter of credit or similar instrument supporting such Indebtedness shall not be double counted. Neither (i) the accrual of interest, accrual of dividends, the accretion of accreted value, the payment of interest in the form of additional Indebtedness and the payment of dividends in the form of additional shares of Preferred Stock nor (ii) the treatment of commitments not treated as Indebtedness on the Issue Date but reclassified as Indebtedness thereafter due to a change in accounting principles, will be deemed to be an Incurrence of Indebtedness for purposes of this covenant. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value of the Indebtedness in the case of any Indebtedness issued with original issue discount and (ii) the principal amount or liquidation preference thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. In addition, the Company will not permit any of its Unrestricted Subsidiaries to Incur any Indebtedness or issue any shares of Disqualified Stock, other than Non-Recourse Debt. If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be Incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be Incurred as of such date under this “Limitation on Indebtedness” covenant, the Company shall be in Default of this covenant). For purposes of determining compliance with any euro-denominated restriction on the Incurrence of Indebtedness, the euro-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is Incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable euro-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such euro-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Company or any of its Subsidiaries may Incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

Limitation on Restricted Payments The Company will not, and will not permit any of its Restricted Subsidiaries, directly or indirectly, to: (1) declare or pay any dividend or make any distribution on or in respect of Capital Stock of a Restricted Subsidiary except: (a) dividends or distributions payable solely in Capital Stock of such Restricted Subsidiary (other than Disqualified Stock); and (b) dividends or distributions payable to the Company or another Restricted Subsidiary (and, if such Restricted Subsidiary has shareholders other than the Company or other Restricted Subsidiaries, to its other shareholders on a pro rata basis); (2) purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company or any direct or indirect parent of the Company held by Persons other than the Company or a Restricted Subsidiary (other than in exchange for Capital Stock of the Company (other than Disqualified Stock)); (3) purchase, repurchase, prepay, repay, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund

143 payment, any Subordinated Obligations (other than the purchase, repurchase, prepayment or repayment or other acquisition of (x) Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase or acquisition and (y) any Indebtedness of the Company or any Subsidiary Guarantor wholly owned by the Company owing to the Company or any other wholly owned Subsidiary Guarantor); or (4) make any Restricted Investment in any Person; (any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Restricted Investment referred to in clauses (1) through (4) (inclusive) shall be referred to herein as a “Restricted Payment”), if at the time the Company or such Restricted Subsidiary makes such Restricted Payment: (a) a Default shall have occurred and be continuing (or would result therefrom); or (b) the Company is not able to Incur an additional 31.00 of Indebtedness pursuant to the first paragraph under the “— Limitation on Indebtedness” covenant after giving effect, on a pro forma basis, to such Restricted Payment; or (c) the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made subsequent to December 2, 2003, plus the amount of any dividend paid or any distribution made on or in respect of the Capital Stock of the Company except dividends or distributions payable solely in Capital Stock of the Company (other than Disqualified Stock), would exceed the sum of: (i) 50% of Consolidated Net Income for the period (treated as one accounting period) from December 2, 2003 to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which financial statements are in existence (or, in the event Consolidated Net Income for such period is a deficit, then minus such deficit); (ii) the aggregate Net Cash Proceeds received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock), Subordinated Shareholder Loans or other capital contributions subsequent to December 2, 2003 (other than Net Cash Proceeds received from an issuance or sale of such Capital Stock to a Subsidiary of the Company or an employee stock ownership plan, option plan or similar trust established by the Company or any of its Subsidiaries to the extent such sale to an employee stock ownership plan, option plan or similar trust is financed by loans from or guaranteed by the Company or any of its Subsidiaries unless such loans have been repaid with cash on or prior to the date of determination); (iii) the amount by which Indebtedness of the Company is reduced on the Company’s balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to December 2, 2003 of any Indebtedness of the Company convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or other property, distributed by the Company upon such conversion or exchange); and (iv) the amount equal to the net reduction in Restricted Investments made by the Company or any of its Restricted Subsidiaries in any Person resulting from: (A) repurchases or redemptions of such Restricted Investments by such Person, proceeds realized upon the sale of such Restricted Investment to an unaffiliated purchaser, repayments of loans or advances or other transfers of assets (including by way of dividend or distribution) by such Person to the Company or any Restricted Subsidiary of the Company not to exceed, in the case of any Person, the amount of Restricted Investments previously made by the Company or any Restricted Subsidiary in such Person; or (B) the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the definition of “Investment”) not to

144 exceed, in the case of any Unrestricted Subsidiary, the amount of Investments previously made by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary, which amount in each case under this clause (iv) was included in the calculation of the amount of Restricted Payments; provided, however, that no amount will be included under this clause (iv) to the extent it is already included in Consolidated Net Income. The provisions of the preceding paragraph will not prohibit: (1) any purchase or redemption of Capital Stock, Subordinated Obligations or Subordinated Shareholder Loans of the Company made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or guaranteed by the Company or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination); provided, however, that (a) such purchase or redemption will be excluded in subsequent calculations of the amount of Restricted Payments and (b) the Net Cash Proceeds from such sale will be excluded from clause (c)(ii) of the preceding paragraph; (2) any purchase or redemption of Subordinated Obligations of the Company or a Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Subordinated Obligations of the Company or a Subsidiary Guarantor that qualifies as Refinancing Indebtedness (other than with respect to clauses (2) and (4) of the definition of “Refinancing Indebtedness”); provided, however, that such purchase or redemption will be excluded in subsequent calculations of the amount of Restricted Payments; (3) so long as no Default or Event of Default has occurred and is continuing, any purchase or redemption of Subordinated Obligations from Net Available Cash to the extent permitted under “— Limitation on sales of assets and Subsidiary stock” below; provided, however, that such purchase or redemption will be excluded in subsequent calculations of the amount of Restricted Payments; (4) dividends paid within 180 days after the date of declaration if at such date of declaration such dividends would have been permitted under this covenant; provided, however, that such dividends will be included in subsequent calculations of the amount of Restricted Payments; (5) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of the Company that is contractually subordinated to the Notes (i) following a Change of Control Triggering Event or (ii) out of the Net Available Cash of an Asset Disposition, in either case, to the extent required by the agreements governing such subordinated Indebtedness; provided that prior to or simultaneously with such purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, the Issuer has made the Change of Control Offer or Asset Disposition Offer, as applicable, in accordance with the covenants described under “—Change of Control and Rating Decline” and “—Limitation on sales of assets and Subsidiary stock” and has completed the repurchase or redemption of all Notes validly tendered for payment in connection with such Change of Control Offer or Asset Disposition Offer; provided, however, that the amount of any such repurchase or redemption will be included in subsequent calculations of the amount of Restricted Payments; (6) purchases of Equity Interests of the Issuer or any parent company of the Issuer to cover grants of options under any equity plan, equity subscription agreement, stock option agreement, employment agreement, shareholders’ agreement or similar agreement of the Company and/or its Restricted Subsidiaries; provided that the aggregate cash price paid for all such Equity Interests purchased pursuant to this clause (6) (and not yet issued pursuant to option grants) may not exceed in any calendar year 33.0 million; provided, however, that the amount of any such repurchase or redemption will be included in subsequent calculations of the amount of Restricted Payments;

145 (7) so long as no Default or Event of Default has occurred and is continuing, the purchase, redemption or other acquisition, cancellation or retirement for value of Capital Stock, or options, warrants, equity appreciation rights or other rights to purchase or acquire Capital Stock of the Company or any Restricted Subsidiary held by any existing or former employees or management of the Company or any Restricted Subsidiary or their assigns, estates or heirs, in each case in connection with the repurchase provisions under employee stock option or stock purchase agreements or other agreements to compensate management employees; provided that such redemptions or repurchases pursuant to this clause will not exceed 33.0 million in the aggregate during any calendar year and 36.0 million in the aggregate for all such redemptions and repurchases; provided, however, that the amount of any such repurchase or redemption will be included in subsequent calculations of the amount of Restricted Payments;

(8) repurchases of Capital Stock deemed to occur upon the exercise of stock options, warrants or other convertible securities if such Capital Stock represents a portion of the exercise price thereof or withholding tax thereon; provided, however, that such repurchases will be excluded from subsequent calculations of the amount of Restricted Payments;

(9) so long as no Default or Event of Default has occurred and is continuing (or would result therefrom), the declaration and payment by the Company of dividends or distributions on the shares of the Company in an amount not to exceed in any fiscal year 6% of Net Cash Proceeds received by the Company from any Public Equity Offering;

(10) any purchase, repurchase or redemption of Capital Stock of Neovision Holding B.V. as a part of the Neovision Acquisition; or

(11) so long as no Default has occurred or is continuing or would be caused thereby, other Restricted Payments in an aggregate amount not to exceed 325.0 million since the date of the Indenture.

The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment. The fair market value of any cash Restricted Payment shall be its face amount and any non-cash Restricted Payment shall be determined conclusively by the Management Board acting in good faith whose resolution with respect thereto shall be delivered to the Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of international standing if such fair market value is estimated to exceed 315.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by the covenant “— Restricted Payments” were computed, together with a copy of any fairness opinion or appraisal required by the Indenture.

The Indenture will also provide that payments of dividends and distributions on the Company’s Capital Stock may constitute an Event of Default if paid or made in circumstances when the payment, if included within the definition “Restricted Payments” would have been prohibited by this covenant.

As of September 30, 2009, the Company would have been able to make Restricted Payments in the amount of 330.8 million pursuant to clause (c) of the first paragraph of this covenant.

Limitation on Liens

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur or suffer to exist any Lien (other than Permitted Liens) upon any of its property or assets (including Capital Stock owned by it), whether owned on the date of the Indenture or acquired after that date, securing any Indebtedness, unless contemporaneously with the Incurrence of the Liens effective provision is made to secure the Indebtedness due under the Indenture, the Notes and the Note Guarantees, equally and ratably with (or prior to in the case of Liens with respect to Subordinated Obligations) the Indebtedness secured by such Lien for so long as such Indebtedness is so secured.

146 Limitation on Sale/Leaseback Transactions The Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any Sale/ Leaseback Transaction unless: (1) the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Sale/Leaseback Transaction at least equal to the fair market value (as evidenced by a resolution of the Management Board) of the property subject to such transaction; (2) the Company or such Restricted Subsidiary could have Incurred Indebtedness in an amount equal to the Attributable Indebtedness in respect of such Sale/Leaseback Transaction pursuant to the covenant described under “— Limitation on Indebtedness;” (3) the Company or such Restricted Subsidiary could have created a Lien on the property subject to such Sale/Leaseback Transaction without securing the Notes by the covenant described under “— Limitation on Liens”; and (4) the Sale/Leaseback Transaction is treated as an Asset Disposition and all of the conditions of the Indenture described under “— Limitation on sale of assets and Subsidiary stock” (including the provisions concerning the application of Net Available Cash) are satisfied with respect to such Sale/Leaseback Transaction, treating all of the consideration received in such Sale/Leaseback Transaction as Net Available Cash for purposes of such covenant.

Limitation on restrictions on distributions from Restricted Subsidiaries The Company will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligations owed to the Company or any Restricted Subsidiary; (2) make any loans or advances to the Company or any Restricted Subsidiary; or (3) transfer any of its property or assets to the Company or any Restricted Subsidiary, provided that (x) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidation distributions being paid on Common Stock and (y) the subordination of (including but not limited to the application of standstill requirements to) loans or advances made to the Company or any Restricted Subsidiary to other Indebtedness Incurred by the Company or any Restricted Subsidiary, shall not be deemed to constitute such an encumbrance or restriction. The preceding provisions will not prohibit: (i) any encumbrance or restriction pursuant to an agreement in effect at the date of the Indenture; (ii) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness or Capital Stock Incurred by a Restricted Subsidiary on or before the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness or Capital Stock Incurred as consideration in, or to provide all or any portion of the funds utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company or in contemplation of the transaction) and outstanding on such date; (iii) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement effecting a refunding, replacement or refinancing of Indebtedness referred to in clause (i) or (ii) of this paragraph or this clause (iii) or contained in any amendment to an agreement relating to any Indebtedness referred to in clause (i) or (ii) of this paragraph or this clause (iii); provided, however, that (x) with respect to any such encumbrances or restrictions relating to Liens created or incurred in respect of Indebtedness Incurred under Credit Facilities, such Liens are created or incurred in accordance with the covenant described under “— Limitation on Liens”

147 and (y) all other encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such agreement (including encumbrances and restrictions relating to Indebtedness Incurred under Credit Facilities not described in (iii)(x) above) are no less favorable to the holders of the Notes than the encumbrances and restrictions contained in such agreements relating to the Indebtedness referred to in clauses (i) or (ii) of this paragraph on the Issue Date or the date such Restricted Subsidiary became a Restricted Subsidiary, whichever is applicable; (iv) any encumbrance or restriction: (a) that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract, or the assignment or transfer of any such lease, license or other contract; (b) contained in mortgages, pledges or other security agreements permitted under the Indenture securing Indebtedness of the Company or a Restricted Subsidiary to the extent such encumbrances or restrictions restrict the transfer of the property subject to such mortgages, pledges or other security agreements; or (c) pursuant to customary provisions restricting dispositions of real property interests set forth in any reciprocal easement agreements of the Company or any Restricted Subsidiary; (v) purchase money obligations for property acquired in the ordinary course of business that impose encumbrances or restrictions of the nature described in clause (3) of the first paragraph of this covenant on the property so acquired; (vi) any restriction with respect to a Restricted Subsidiary (or any of its property or assets) imposed pursuant to an agreement entered into for the direct or indirect sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary (or the property or assets that are subject to such restriction) pending the closing of such sale or disposition; (vii) customary provisions in leases, joint venture agreements and other agreements entered into by the Company or any Restricted Subsidiary in the ordinary course of business; (viii) any encumbrance or restriction pursuant to Hedging Obligations that are not Incurred for speculative purposes; and (ix) encumbrances or restrictions arising or existing by reason of applicable law or any applicable rule, regulation or order.

Limitation on sales of assets and Subsidiary stock The Company will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Disposition unless: (1) the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Disposition at least equal to the fair market value, as determined in good faith by the Management Board (including as to the value of all non-cash consideration), of the shares and assets subject to such Asset Disposition; (2) at least 75% of the consideration from such Asset Disposition received by the Company or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; and (3) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company or such Restricted Subsidiary, as the case may be: (a) to the extent the Company or any Restricted Subsidiary, as the case may be, elects (or is required by the terms of any Indebtedness), to prepay, repay or purchase Indebtedness (other than Disqualified Stock or Subordinated Obligations) or Indebtedness (other than any Disqualified or Preferred Stock or Subordinated Obligations) of a Restricted Subsidiary (in each case other than Indebtedness owed to the Company or an Affiliate

148 of the Company) within 360 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; provided, however, that, in connection with any prepayment, repayment or purchase of Indebtedness pursuant to this clause (a), the Company or such Restricted Subsidiary will retire such Indebtedness and will cause the related commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased; and/or (b) to the extent the Company or such Restricted Subsidiary elects, to invest in Additional Assets within 360 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; provided, however, that any such reinvestment in Additional Assets made pursuant to a definitive agreement or a commitment that is executed within such time will satisfy this requirement, so long as such Investment is consummated within six months of such 360th day, provided that pending final application of any such Net Available Cash in accordance with clause (a) or clause (b) above, the Company and its Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest in such Net Available Cash in any manner not prohibited by the Indenture. Any Net Available Cash from Asset Dispositions that are not applied or invested as provided in the preceding paragraph will be deemed to constitute “Excess Proceeds.” On the 361st day after an Asset Disposition, if the aggregate amount of Excess Proceeds exceeds 320 million, the Company will be required to make an offer (“Asset Disposition Offer”) to all holders of Notes and to the extent required by the terms of other Pari Passu Indebtedness, to all holders of other Pari Passu Indebtedness outstanding with similar provisions requiring the Company to make an offer to purchase such Pari Passu Indebtedness with the proceeds from any Asset Disposition (“Pari Passu Notes”), to purchase the maximum principal amount of Notes and any such Pari Passu Notes to which the Asset Disposition Offer applies that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount of the Notes and Pari Passu Notes plus accrued and unpaid interest and Additional Amounts, if any, to the date of purchase, in accordance with the procedures set forth in the Indenture or the agreements governing the Pari Passu Notes, as applicable, in each case in denominations of 350,000 and any integral multiple of 31,000 in excess thereof. To the extent that the aggregate amount of Notes and Pari Passu Notes so validly tendered and not properly withdrawn pursuant to an Asset Disposition Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes, subject to the other covenants contained in the Indenture. If the aggregate principal amount of Notes surrendered by holders thereof and other Pari Passu Notes surrendered by holders or lenders, collectively, exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and Pari Passu Notes to be purchased on a pro rata basis on the basis of the aggregate principal amount of tendered Notes and Pari Passu Notes. Upon completion of such Asset Disposition Offer, the amount of Excess Proceeds shall be reset at zero. The Asset Disposition Offer will remain open for a period of 20 Business Days following its commencement, except to the extent that a longer period is required by applicable law (the “Asset Disposition Offer Period”). No later than five Business Days after the termination of the Asset Disposition Offer Period (the “Asset Disposition Purchase Date”), the Company will purchase the principal amount of Notes and Pari Passu Notes required to be purchased pursuant to this covenant (the “Asset Disposition Offer Amount”) or, if less than the Asset Disposition Offer Amount has been so validly tendered, all Notes and Pari Passu Notes validly tendered in response to the Asset Disposition Offer. If the Asset Disposition Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to holders of the Notes who tender their Notes pursuant to the Asset Disposition Offer. On or before the Asset Disposition Purchase Date, the Company will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Asset Disposition Offer Amount of Notes and Pari Passu Notes or portions of Notes and Pari Passu Notes so validly tendered and not properly withdrawn pursuant to the Asset Disposition Offer, or if less than the Asset Disposition Offer Amount has been validly tendered and not properly withdrawn, all Notes and Pari Passu Notes so validly tendered and not properly withdrawn, in each case in denominations of 350,000 and any

149 integral multiples of 31,000 in excess thereof. The Company will deliver to the Trustee an Officers’ Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this covenant and, in addition, the Company will deliver all certificates and notes required, if any, by the agreements governing the Pari Passu Notes. The Company or the Paying Agent, as the case may be, will promptly (but in any case not later than five Business Days after termination of the Asset Disposition Offer Period) mail or deliver to each tendering holder of Notes or holder or lender of Pari Passu Notes, as the case may be, an amount equal to the purchase price of the Notes or Pari Passu Notes so validly tendered and not properly withdrawn by such holder or lender, as the case may be, and accepted by the Company for purchase, and the Issuer will promptly issue a new Note, and the Trustee, upon delivery of an Officers’ Certificate from the Company will authenticate and mail or deliver such new Note to such holder, in a principal amount equal to any unpurchased portion of the Note surrendered; provided that each such new Note will be in denominations of 350,000 and any integral multiple of 31,000 in excess thereof. In addition, the Company will take any and all other actions required by the agreements governing the Pari Passu Notes. Any Note not so accepted will be promptly mailed or delivered by the Company to the holder thereof. The Company will publicly announce the results of the Asset Disposition Offer on the Asset Disposition Purchase Date. The Company will not be required to make the Asset Disposition Offer if any of its Subsidiaries makes the Asset Disposition Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to the Asset Disposition Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Asset Disposition Offer. For the purposes of this covenant, the following will be deemed to be cash: (1) the assumption by the transferee of Indebtedness (other than Subordinated Obligations or Disqualified Stock) of the Company or Indebtedness (other than Disqualified or Preferred Stock or Subordinated Obligations) of any Restricted Subsidiary and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition (in which case the Company will, without further action, be deemed to have applied such deemed cash to Indebtedness in accordance with clause (a) above); and (2) securities, notes or other obligations received by the Company or any Restricted Subsidiary from the transferee that are promptly converted by the Company or such Restricted Subsidiary into cash. The Company will not, and will not permit any Restricted Subsidiary to, engage in any Asset Swaps, unless: (1) at the time of entering into such Asset Swap and immediately after giving effect to such Asset Swap, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (2) in the event such Asset Swap involves the transfer by the Company or any Restricted Subsidiary of assets having an aggregate fair market value, as determined by the Management Board in good faith, in excess of 31.0 million, the terms of such Asset Swap have been approved by a majority of the members of the Management Board; and (3) in the event such Asset Swap involves the transfer by the Company or any Restricted Subsidiary of assets having an aggregate fair market value, as determined by the Management Board in good faith, in excess of 35.0 million, the Company has received a written opinion from an independent investment bank, accounting or appraisal firm of internationally recognized standing (as determined by the Company in good faith) that such Asset Swap is fair to the Company or such Restricted Subsidiary, as the case may be, from a financial point of view. The Company will comply, to the extent applicable, with any securities laws or regulations in connection with the repurchase of Notes pursuant to the Indenture. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Indenture by virtue of any conflict.

150 Limitation on Affiliate Transactions The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an “Affiliate Transaction”) unless: (1) the terms of such Affiliate Transaction are no less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable transaction at the time of such transaction in arm’s-length dealings with a Person who is not such an Affiliate; (2) in the event such Affiliate Transaction involves an aggregate amount in excess of 32.5 million, the terms of such transaction have been approved by a majority of the members of the Management Board and by a majority of the members of such board having no personal stake in such transaction, if any (and such majority or majorities, as the case may be, determines that such Affiliate Transaction satisfies the criteria in clause (1) above); and (3) in the event such Affiliate Transaction involves an aggregate amount in excess of 310.0 million, the Company has received a written opinion from an independent investment bank, accounting or appraisal firm of internationally recognized standing (as determined by the Company in good faith) that such Affiliate Transaction is fair, from a financial standpoint, to the Company and its Restricted Subsidiaries or the terms of which are not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arms-length basis from a Person that is not an Affiliate. The preceding paragraph will not apply to: (1) any Restricted Payment (other than a Restricted Investment) permitted to be made pursuant to the covenant described under “—Limitation on Restricted Payments” other than clause (10) of the second paragraph thereof; (2) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans and other reasonable fees, compensation, benefits and indemnities paid or entered into by the Company or its Restricted Subsidiaries in the ordinary course of business to or with members of the Management Board, officers or employees of the Company and its Restricted Subsidiaries approved by the Management Board; (3) loans or advances to employees in the ordinary course of business of the Company or any of its Restricted Subsidiaries and consistent with past practice of the Company or such Restricted Subsidiary; provided that such loans or advances do not exceed 32.0 million in the aggregate outstanding at any one time with respect to all loans or advances made since the Issue Date; (4) any transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries and Guarantees issued by the Company or a Restricted Subsidiary for the benefit of the Issuer or a Restricted Subsidiary as the case may be in accordance with “— Limitations on Indebtedness;” (5) the payment of customary annual management, consulting, monitoring, advisory and guarantee fees and related expenses to, or for the benefit of, ITI or one of its subsidiaries not in excess of 35.0 million; (6) any issuance or sale of any Capital Stock (other than Disqualified Stock) of the Company; (7) the payment of reasonable fees and reimbursement of expenses to, and indemnities provided on behalf of, directors, officers or employees of the Issuer, the Company or any of its Restricted Subsidiaries; (8) any transaction (other than payments referred to in clause (5) above) pursuant to the terms of any agreement reflected in this listing memorandum to which the Company or any of its Restricted Subsidiaries is a party as of the Issue Date, as that agreement may be

151 amended, modified, supplemented, extended or renewed from time to time; provided, however, that any future amendment, modification, supplement, extension or renewal entered into after the Issue Date will be permitted to the extent that its terms are not more disadvantageous to the holders of the Notes than the terms of the agreements in effect on the Issue Date; (9) any transaction between the Company and an officer or director of the Company in the ordinary course of business of the Company but in any event not to exceed 3100,000 with respect to any transaction or series of transactions; (10) transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case in the ordinary course of business of the Company and in accordance with the terms of the Indenture, which are fair to the Company and its Restricted Subsidiaries, in good faith and determination of the Management Board or the senior management of the Company and are on terms no less favorable than those that could reasonably have been obtained at such time from an unaffiliated party; and (11) transactions between the Issuer, the Company or any Restricted Subsidiary and any Affiliate of the Company controlled by the Company that is an Unrestricted Subsidiary or a joint venture or similar entity, in each case only in the ordinary course of business and in accordance with the terms of the Indenture, which are fair to the Company and its Restricted Subsidiaries, in good faith in the determination of the Management Board or the senior management of the Company and are on terms no less favorable than those that could reasonably have been obtained at such time from an unaffiliated party.

Limitation on sale of Capital Stock of Restricted Subsidiaries The Company will not, and will not permit any Restricted Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose of any Voting Stock of any Restricted Subsidiary or to issue any of the Voting Stock of a Restricted Subsidiary (other than, if necessary, shares of its Voting Stock constituting directors’ qualifying shares) to any Person except: (1) to the Company or another Restricted Subsidiary; or (2) in compliance with the covenant described under “— Limitation on sales of assets and Subsidiary stock” and, immediately after giving effect to such issuance or sale, such Restricted Subsidiary would continue to be a Restricted Subsidiary. Notwithstanding the preceding paragraph, the Company may sell all the Voting Stock of a Restricted Subsidiary as long as the Company complies with the terms of the covenant described under “— Limitation on sales of assets and Subsidiary stock.”

Payments for consent The Company will not, and will not permit any of its Subsidiaries or Affiliates to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of the Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid and is paid to all holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Reports The Company will provide to the Trustee and the holders of the Notes and shall make available to potential investors: (1) within 120 days after the end of the Company’s fiscal year, information substantially identical to that which would be required to be included in an Annual Report on Form 20-F (as in effect on the Issue Date) by a foreign private issuer subject to the U.S. Exchange Act, including all annual financial information that would be required by Form 20-F if the Company were required to prepare and file such Form, prepared in accordance with IFRS, including an “Operating and Financial Review and Prospects” section and, in relation to the annual financial statements therein only, a report thereon by the Company’s certified independent accountants; provided that the Company shall not be required to include:

152 (A) the reconciliation of any financial information with U.S. GAAP; (B) any segment data other than net sales by geographic segments; (C) the disclosures required by Items 11 or 3.D of such Form 20-F; (D) the exhibits required by such Form; (E) any guarantor financial information that would be required by Regulation S-X or Form 20-F or any successors thereto or any other Commission requirement; or (F) any management certifications or representations or other information required by Section 302, 906 or 404 of the U.S. Sarbanes-Oxley Act of 2002; (2) within 60 days after the end of each of the first three fiscal quarters in each fiscal year of the Company, all quarterly financial statements that would be required by Form 10-Q as in effect on the Issue Date (prepared in accordance with IFRS) if the Company were required to prepare and file such Form, including a financial review of such periods (including a comparison against the prior year’s comparable period), consisting of a discussion of (A) the financial condition and results of operations of the Company and material changes between the current quarterly period and the quarterly period of the prior year, (B) material developments in the business of the Company, and (C) financial developments and trends in the business in which the Company is engaged; provided, however, that the Company shall not be required to include: (x) any guarantor financial information that would be required by Regulation S-X or Form 20-F or any successors thereto or any other Commission requirements or (y) any management certifications or representations or other information required by Section 302 of the U.S. Sarbanes-Oxley Act; and (3) the following information that would be required to be filed with the Commission in current reports on Form 8-K if the Company were required to file such reports: all of the information set forth in Items 1 through 6 and 8 of Form 8-K; and with respect to Item 7, an unaudited pro forma balance sheet as of a recent date of the Company giving effect to the acquired business and an unaudited pro forma income statement (which income statement shall suffice so long as it permits the calculation of EBITDA derived from accounting data prepared in accordance with IFRS) for the fiscal year recently ended and for the most recent quarter of the Company giving effect to the acquired business, in each case, all such information above to be provided within a period of 15 days, rather than the time periods applicable to each item in Form 8-K and the general instructions thereto (items 9 through 12 of Form 8-K are not required to be included). If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries and any such Unrestricted Subsidiary or group of Unrestricted Subsidiaries constitute Significant Subsidiaries of the Company, then the annual and quarterly information required by the first two clauses of this covenant shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of such Unrestricted Subsidiaries of the Company. In addition, so long as the Notes remain outstanding and during any period during which the Company is not subject to Section 13 or 15(d) of the U.S. Exchange Act nor exempt therefrom pursuant to Rule 12g3-2(b), the Company shall furnish to the holders of the Notes and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the U.S. Securities Act. For so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of that Stock Exchange so require, the above information will also be made available in Luxembourg through the offices of the Paying Agent in Luxembourg.

Merger and consolidation The Company will not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, unless: (1) the resulting, surviving or transferee Person (the “Successor Company”) will be a corporation, partnership, trust or limited liability company organized and existing under the laws of Poland, any member state of the European Union that is a member of the European Union as of the date of the Indenture, or of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company)

153 will expressly assume, by supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Notes, the Note Guarantee of the Company and the Indenture;

(2) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Company or any Subsidiary of the Successor Company as a result of such transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing;

(3) immediately after giving effect to such transaction, the Successor Company would be able to Incur at least an additional 31.00 of Indebtedness pursuant to the first paragraph of the “— Limitation on Indebtedness” covenant; and

(4) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture.

For purposes of this covenant, the sale, lease, conveyance, assignment, transfer, or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

The Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture, but, in the case of a lease of all or substantially all of its assets, the Company will not be released from the obligation to pay the principal of, premium, if any, interest and Additional Amounts on the Notes.

Although there is a limited body of case law interpreting the phrase “substantially all”, there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve “all or substantially all” of the property or assets of a Person.

Notwithstanding the preceding clause (3) (which does not apply to transactions referred to in this paragraph), (x) any Restricted Subsidiary of the Company may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (y) the Company may merge with an Affiliate incorporated or organized for the purpose of changing the legal domicile of the Company reincorporating the Company in another jurisdiction or changing the legal form of the Company, provided that, in the case of a Restricted Subsidiary that merges into the Company, the Company will not be required to comply with the preceding clause (4).

No Subsidiary Guarantor may consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or a series of related transactions to, another Person whether or not affiliated with such Subsidiary Guarantor unless (i) subject to the provisions described under “— General — The Note Guarantees,” the Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of such Subsidiary Guarantor, including the Note Guarantee of such Subsidiary Guarantor, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee under the Notes and the Indenture; and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. The Person formed by or surviving such consolidation or merger (if other than the Subsidiary Guarantor) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made will succeed to, and be substituted for, and may exercise every right and power of, such Subsidiary Guarantor under the Indenture, but in the case of a lease of all or substantially all of its assets, such Subsidiary Guarantor will not be released from its obligation under its Note Guarantee to pay the principal of, premium, if any, interest and Additional Amounts, if any, on the Notes in the event of a default as described above.

154 Limitation on lines of business The Company will not, and will not permit any Restricted Subsidiary to, engage in any business other than a Permitted Business.

Future Note Guarantors After the Issue Date, the Company will cause each Subsidiary (a) to become a Subsidiary Guarantor, (b) to execute a supplemental indenture and (c) to deliver an opinion of counsel satisfactory to Trustee, so that Note Guarantees are provided by such Subsidiaries of the Company whose aggregate unconsolidated EBITDA, net income and assets, taken together with the unconsolidated EBITDA, net income and assets of the Company, comprise at least 90% of Consolidated EBITDA, Consolidated Net Income and consolidated assets of the Company, respectively, determined as of each date on which the Company is required to provide to the Trustee and the holders of the Notes (a) an annual report or (b) a quarterly report in accordance with the provisions set out in the covenant “— Reports.”

The Issuer Notwithstanding anything contained in the Indenture to the contrary, the Company will not permit the Issuer to, and the Issuer will not, engage in any business activity or undertake any other activity, except any activity (a) relating to the offering, sale or issuance of the Notes, the Incurrence of Indebtedness represented by the Notes, lending or otherwise advancing the proceeds thereof to the Company or any Subsidiary Guarantor and any other activities in connection therewith, (b) undertaken with the purpose of fulfilling any other obligations under the Notes or the Indenture or (c) directly related to the establishment and/or maintenance of the Issuer’s corporate existence. The Company will not permit the Issuer to, and the Issuer shall not, (a) Incur any Indebtedness other than the Indebtedness represented by the Notes or (b) issue any Capital Stock other than the issuance of its ordinary shares to the Company. The Company will not permit the Issuer to, and the Issuer shall not, create, incur, assume or suffer to exist any Lien in respect of borrowed money of any kind against or upon any of its property or assets, or any proceeds therefrom, except for Liens to secure the payment or performance of the Notes. The Company shall cause the Issuer to, and the Issuer shall, at all times remain a Restricted Subsidiary of the Company. The Company will not permit the Issuer to, and the Issuer shall not, merge, consolidate, amalgamate or otherwise combine with or into another Person except the Company or another Restricted Subsidiary, or sell, convey, transfer, lease or otherwise dispose of any material property or assets to any Person except to the Company or another Restricted Subsidiary. For so long as any Notes are outstanding, the Company will not commence or take any action to facilitate a winding-up, liquidation or other analogous proceeding in respect of the Issuer.

Events of Default Each of the following is an Event of Default: (1) default in any payment of interest or Additional Amounts, if any, on any Note when due, continued for 30 days; (2) default in the payment of principal of or premium, if any, on any Note when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise; (3) failure by the Issuer, the Company or any of its Subsidiaries to comply with the provisions described under “— Certain covenants — Merger and consolidation; (4) failure by the Company or any of its Subsidiaries to comply for 30 days after notice with any of the provisions described under the covenants described under “— Change of Control and Rating Decline” above or under the covenants described under “— Certain covenants” above (in each case, other than a failure to purchase Notes which will

155 constitute an Event of Default under clause (2) above and other than a failure to comply with “— Certain covenants — Merger and consolidation” which is covered by clause (3)); (5) failure by the Company or any of its Subsidiaries to comply for 60 days after notice with any of the other agreements contained in the Indenture; (6) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Restricted Subsidiaries), other than Indebtedness owed to the Company or a Restricted Subsidiary, whether such Indebtedness or Guarantee now exists, or is created after the date of the Indenture, which default: (a) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness (“payment default”); or (b) results in the acceleration of such Indebtedness prior to its maturity (the “cross acceleration provision”); and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates 325.0 million or more; (7) certain events of bankruptcy, insolvency or reorganization of the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary (the “bankruptcy provisions”); (8) failure by the Company or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final judgments aggregating in excess of 325.0 million (net of any amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged or stayed for a period of 60 days (the “judgment default provision”); (9) except as permitted by the Indenture, any Note Guarantee is held in one or more judicial proceedings to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of such Guarantor, shall deny or disaffirm its obligations under the Indenture or its Note Guarantee (the “guarantee provision”); (10) the declaration or payment by the Company of any dividend or the making by the Company of any distribution on or in respect of its Capital Stock except dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock) if such dividend or distribution would not have been permitted under the covenant described under “— Certain covenants — Limitation on Restricted Payments” if such dividend or distribution constituted a Restricted Payment (the “dividend breach provision”). However, a default under clauses (4) and (5) of this paragraph will not constitute an Event of Default until the Trustee or the holders of 25% in principal amount of the outstanding Notes notify the Issuer or the Company of the default and such default is not cured within the time specified in clauses (4) and (5) hereof after receipt of such notice. If an Event of Default (other than an Event of Default described in clause (7) above) occurs and is continuing, the Trustee by notice to the Issuer or the Company, or the holders of at least 25% in principal amount of the outstanding Notes by notice to the Issuer or the Company and the Trustee, may, and the Trustee at the request of such holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Notes to be due and payable. Upon such a declaration, such principal, premium and accrued and unpaid interest will be due and payable immediately. In the event of a declaration of acceleration of the Notes because an Event of Default described in clause (6) under “Events of Default” has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically annulled if the event of default or payment default

156 triggering such Event of Default pursuant to clause (6) shall be remedied or cured by the Company or a Restricted Subsidiary of the Company or waived by the holders of the relevant Indebtedness within 30 days after the declaration of acceleration with respect thereto and if (x) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction and (y) all existing Events of Default, except nonpayment of principal, premium or interest on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived. If an Event of Default described in clause (7) above occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holders of the Notes. The holders of a majority in principal amount of the outstanding Notes may waive all past defaults (except with respect to nonpayment of principal, premium or interest or Additional Amounts) and rescind any such acceleration with respect to the Notes and its consequences if (x) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (y) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived and the Issuer has paid to the Trustee its reasonable compensation and reimbursed the Trustee for its reasonable expenses, disbursements and advances. Subject to the provisions of the Indenture relating to the duties of the Trustee, if an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the holders of the Notes unless such holders have offered to the Trustee an indemnity or security to its satisfaction against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no holder may pursue any remedy with respect to the Indenture or the Notes unless: (1) such holder has previously given the Trustee notice that an Event of Default is continuing; (2) holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee to pursue the remedy; (3) such holders have offered the Trustee security or indemnity to its satisfaction against any loss, liability or expense; (4) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and (5) the holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request within such 60-day period. Subject to certain restrictions, the holders of a majority in principal amount of the outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Indenture will provide that in the event an Event of Default has occurred and is continuing, the Trustee will be required in the exercise of its powers to use the degree of care that a prudent person would use in the conduct of its own affairs. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other holder of the Notes or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee will be entitled to indemnification and/or security satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. The Indenture provides that if a Default occurs and is continuing and is known to the Trustee, the Trustee must give to each holder of the Notes notice of the Default within 90 days after it occurs. Except in the case of a Default in the payment of principal of, premium, if any, Additional Amounts, if any, or interest on any Note, the Trustee may withhold notice if and so long as a committee of trust officers of the Trustee in good faith determines that withholding notice is in the interests of the holders of the Notes. In addition, the Company is required to deliver to the Trustee, within 90 days after the end of each fiscal year or at any time at the request of the Trustee, an Officers’ Certificate indicating whether the signers thereof know of any Default that occurred during the previous year and, if there are any Defaults, what action is being taken in respect of them. The Company also is

157 required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any events which would constitute certain Defaults, their status and what action the Company is taking or proposes to take in respect thereof.

Amendments and waivers Subject to certain exceptions, the Indenture may be amended with the consent of the holders of a majority in principal amount of the Notes then outstanding (including without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes) and, subject to certain exceptions, any past default or compliance with any provisions may be waived with the consent of the holders of a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes). However, without the consent of holders representing at least 90% of the outstanding aggregate principal amount of Notes affected, no amendment may, among other things: (1) reduce the amount of Notes whose holders must consent to an amendment;

(2) reduce the stated rate of or extend the stated time for payment of interest on any Note; (3) reduce the principal of or extend the Stated Maturity of any Note; (4) reduce the premium payable upon the redemption or repurchase of any Note or change the time at which any Note may be redeemed or repurchased as described above under “— Optional redemption,” “— Change of Control and Rating Decline,” “— Certain covenants — Limitation on sales of assets and Subsidiary stock” or any similar provision, whether through an amendment or waiver of provisions in the covenants, definitions or otherwise;

(5) make any Note payable in money other than that stated in the Note; (6) impair the right of any holder of the Notes to receive payment of principal of or interest, premium, if any, or Additional Amounts, if any, on such holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder’s Notes; (7) modify the Note Guarantee of the Company or any Subsidiary in any manner adverse to the holders of the Notes; or (8) make any change in the amendment provisions which require the consent of each holder of Notes or in the waiver provisions. Without the consent of any holder of the Notes, the Guarantors, the Issuer and the Trustee may amend the Indenture to: (1) cure any ambiguity, omission, defect or inconsistency; (2) provide for the assumption of the Company’s obligations to holders of the Notes under the Note Guarantee of the Company in the case of merger or consolidation or sale of all or substantially all of the Company’s assets;

(3) provide for the assumption by a successor corporation, partnership, trust or limited liability company of the obligations of the Issuer or any Subsidiary Guarantor under the Indenture; (4) provide for uncertificated Notes in addition to or in place of certificated Notes;

(5) add Guarantees with respect to the Notes; (6) secure the Notes or any Guarantee in respect of the Notes; (7) add to the covenants of the Issuer or any Guarantor for the benefit of the holders of the Notes or surrender any right or power conferred upon the Issuer or any Guarantor; or (8) make any change that does not adversely affect the rights of any holder of the Notes.

158 In formulating its opinion on such matters, the Trustee shall be entitled to require and rely upon such evidence as it deems appropriate including, without limitation, an Officers’ Certificate and an Opinion of Counsel. At the request of the Issuer, the Company or any Guarantor, the Trustee is authorized to enter into one or more intercreditor agreements, and one or more amendments, extensions, renewals, restatements, supplements, modifications or replacements to any intercreditor agreement; provided that the terms thereof are not prohibited by any term of the Indenture. Each holder of the Notes agrees to and accepts the terms and conditions of any intercreditor agreement and the entry by the Trustee into any intercreditor agreement and the performance by the Trustee of its obligations and the exercise of its rights thereunder and in connection therewith. The consent of the holders of the Notes is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. After an amendment under the Indenture becomes effective, the Issuer is required to mail to the holders of the Notes a notice briefly describing such amendment. However, the failure to give such notice to all such holders, or any defect in the notice, will not impair or affect the validity of the amendment.

Defeasance The Issuer at any time may terminate all its obligations under the Notes and the Indenture and all obligations of the Company and the Guarantors with respect to the Note Guarantees (“legal defeasance”), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a registrar and paying agent in respect of the Notes. The Issuer at any time may terminate its obligations and those of the Guarantors under covenants described under “— Certain covenants” (other than “— Merger and consolidation”), the operation of the cross-default upon a payment default, cross acceleration provisions, the bankruptcy provisions with respect to Significant Subsidiaries, the judgment default provision and the dividend breach provision described under “— Events of Default” above and the limitations contained in clause (3) and clause (4) under “— Certain covenants — Merger and consolidation” above (“covenant defeasance”). The Issuer may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Issuer exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect to the Notes. If the Issuer exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in clause (4), (5), (6), (7) (with respect only to Significant Subsidiaries), (8), (9) or (10) under “— Events of Default” above or because of the failure of the Company to comply with clause (3) and clause (4) under “— Certain covenants — Merger and consolidation” above. In order to exercise either defeasance option, the Issuer must irrevocably deposit in trust (the “defeasance trust”) with the Trustee euro or euro-denominated Government Obligations for the payment of principal, premium, if any, and interest on the Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the Trustee of: (a) an Opinion of Counsel (subject to customary exceptions and exclusions) to the effect that holders of the Notes will not recognize income, gain or loss for U.S. Federal income tax purposes as a result of such deposit and defeasance and will be subject to U.S. Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred. In the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable U.S. Federal income tax law; and (b) an Opinion of Counsel in Sweden and Poland (subject to customary exceptions and exclusions), each to the effect that holders of the Notes will not recognize income, gain or loss for income tax purposes of Sweden or Poland as a result of such deposit and defeasance and will be subject to income tax in Sweden or Poland on the same

159 amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred.

Satisfaction and Discharge The Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder, when: (a) either: (1) all Notes under the Indenture that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Company, have been delivered to the Trustee for cancellation; or (2) all Notes under the Indenture that have not been delivered to the Trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable by reason of the mailing of a notice of redemption or otherwise within one year and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the holders of such Notes cash in euro, non-callable European Government Obligations or a combination thereof in amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium and Additional Amounts, if any, and accrued interest to the date of maturity or redemption; (b) no Default or Event of Default has occurred and is continuing under the Indenture on the date of the deposit or will occur as a result of the deposit (other than a Default resulting from borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowing) and the deposit will not result in a breach or violation of, or constitute a default under, any other material instrument to which the Company is a party or by which the Company is bound; (c) the Company has paid or caused to be paid all sums payable by it under the Indenture; and (d) the Company has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of the Notes issued thereunder at maturity or the redemption date, as the case may be. In addition, the Company must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Currency indemnity The euro is the sole currency of account and payment for all sums payable by the Issuer, or any Guarantor under the Indenture. Any amount received or recovered in a currency other than euro in respect of the Notes or any Note Guarantee (whether as a result of the enforcement of or obtaining of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Company, any Subsidiary or otherwise) by the holder thereof in respect of any sum expressed to be due to it from the Issuer or any Guarantor will constitute a discharge of the Issuer only to the extent of the euro amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not possible to make that purchase on that date, on the first date on which it is possible to do so). If such euro amount is less than the euro amount expressed to be due to the recipient under any Note or any Note Guarantee, the Issuer, or any Guarantor of the Notes will indemnify the recipient against any loss sustained by it as a result. In any event the Issuer or the Company will indemnify the recipient against the cost of making any such purchase. For the purposes of this indemnity, it will be sufficient for the holder of a Note to certify that it would have suffered a loss had an actual purchase of euro been made with the amount so received in that other currency on the date of receipt or recovery (or, if a purchase of euro on such date had not been practicable, on the first date on which it would have been practicable). These indemnities constitute

160 a separate and independent obligation from the other obligations of the Issuer and Guarantors, will give rise to a separate and independent cause of action, will apply irrespective of any waiver granted by any holder of the Notes and will continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any Note or any Note Guarantee or any other judgment or order.

Listing Application has been made to list the Notes on the Official List of the Luxembourg Stock Exchange and for admission and trading on the Euro MTF market. In addition, so long as the Notes are listed on the Luxembourg Stock Exchange, an agent for making payments on, and transfers of the Notes will be maintained in the Grand Duchy of Luxembourg. The Issuer expects to designate The Bank of New York Mellon (Luxembourg) S.A. as its transfer and paying agent for such purposes.

No personal liability of directors, officers, employees and stockholders No director, officer, employee, incorporator or stockholder, as such, shall have any liability for any obligations of the Issuer or any Guarantor under the Notes and the Note Guarantees, respectively, or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive liabilities under the U.S. federal securities laws and it is the view of the Commission that such a waiver is against public policy. In addition, such waiver and release may not be effective under the laws of Sweden and Poland.

Consent to jurisdiction and service of process The Indenture will provide that each of the Issuer and all Guarantors of the Notes will irrevocably appoint an agent for service of process in any suit, action or proceeding with respect to the Indenture, the Notes, and the Note Guarantees, as the case may be, brought in any federal or state court located in the Borough of Manhattan in the City of New York and that each of the parties submit to the jurisdiction thereof.

Concerning the Trustee The Bank of New York Mellon will be the Trustee under the Indenture and has been appointed by the Issuer as Paying Agent with regard to the Notes.

Governing law The Indenture will provide that it, the Notes and all Note Guarantees will be governed by, and construed in accordance with, the laws of the State of New York.

Notices Notices regarding the Notes will be (a) sent to a leading newspaper having general circulation in New York (which is expected to be The Wall Street Journal) and a leading newspaper having general circulation in London (which is expected to be the Financial Times) (and, if and so long as Notes are listed on the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so require, published in a newspaper having general circulation in the Grand Duchy of Luxembourg (which is expected to be the Luxemburger Wort)), (b) posted on the website of the Luxembourg Stock Exchange (www.bourse.lu) and (c) in the event the Notes are in the form of Definitive Notes, sent, by first-class mail, with a copy to the Trustee, to each holder of the Notes at such holder’s address as it appears on the registration books of the registrar. If and so long as such Notes are listed on any other securities exchange, notices will also be given in accordance with any applicable requirements of such securities exchange. If and so long as any Notes are represented by one or more Global Notes and ownership of Book-Entry Interests therein are shown on the records of Euroclear, Clearstream or any successor clearing agency appointed by the Common Depositary at the request of the Issuer, notices will be delivered to such clearing agency for communication to the owners of such Book- Entry Interests. Notices given by publication will be deemed given on the first date on which

161 publication is made and notices given by first-class mail, postage prepaid, will be deemed given five calendar days after mailing.

Certain definitions “Additional Assets” means: (1) any property or assets (other than Indebtedness and Capital Stock) to be used by the Company or a Restricted Subsidiary in a Permitted Business; (2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or a Restricted Subsidiary of the Company; or (3) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary of the Company, provided, however, that, in the case of clauses (2) and (3), such Restricted Subsidiary is primarily engaged in a Permitted Business. “Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlating to the foregoing; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. “Asset Disposition” means any direct or indirect sale, lease (other than an operating lease entered into in the ordinary course of business), transfer, issuance or other disposition, or a series of related sales, leases, transfers, issuances or dispositions that are part of a common plan, of shares of Capital Stock of a Subsidiary (other than directors’ qualifying shares), property or other assets (each referred to for the purposes of this definition as a “disposition”) by the Company or any of its Restricted Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction. Notwithstanding the preceding, the following items shall not be deemed to be Asset Dispositions: (1) a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary; (2) the sale of Cash Equivalents in the ordinary course of business; (3) a disposition of inventory in the ordinary course of business; (4) a disposition of obsolete or worn out equipment or equipment that is no longer useful in the conduct of the business of the Company and its Restricted Subsidiaries and that is disposed of in each case in the ordinary course of business; (5) transactions permitted under “— Certain covenants — Merger and consolidation”; (6) an issuance of Capital Stock by a Restricted Subsidiary of the Company to the Company or to a Restricted Subsidiary; (7) an Asset Swap effected in compliance with “— Certain covenants — Limitation on sales of assets and Subsidiary stock;” (8) for purposes of “— Certain covenants — Limitation on sales of assets and Subsidiary stock” only, the making of a Permitted Investment or a disposition subject to “— Certain covenants — Limitation on Restricted Payments”; (9) dispositions of assets in a single transaction or series of related transactions with an aggregate fair market value in any calendar year of less than 32.5 million; (10) dispositions in connection with Permitted Liens; (11) dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements;

162 (12) the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property in the ordinary course of business which do not materially interfere with the business of the Company and its Restricted Subsidiaries;

(13) foreclosure, condemnation or similar action on assets; and

(14) dispositions of assets or Capital Stock by the Company or any Restricted Subsidiary in connection with the making of an Investment permitted under clause (11) of the definition of “Permitted Investments.”

“Asset Swap” means concurrent purchase and sale or exchange of Permitted Business Assets between the Company or any of its Restricted Subsidiaries and another Person, provided that any cash received must be applied in accordance with “— Certain covenants — Limitation on sales of assets and Subsidiary stock”.

“Attributable Indebtedness” in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded semi-annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended).

“Average Life” means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (2) the sum of all such payments.

“Business Day” means a day other than a day on which TARGET does not operate or a day other than a Saturday, Sunday or other day on which banking institutions in the state of New York, London or Warsaw or a place of payment are authorized or required by law to close.

“Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.

“Capitalized Lease Obligations” means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with IFRS, and the amount of Indebtedness represented by such obligation will be the capitalized amount of such obligation at the time any determination thereof is to be made as determined in accordance with IFRS, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty.

“Cash Equivalents” means:

(1) securities issued or directly and fully guaranteed or insured by the United States of America Government, Poland, or any member state of the European Union that is a member of the European Union as of the date of the Indenture (each a “Qualified Country”) or any agency or instrumentality thereof (provided that the full faith and credit of the Qualified Country is pledged in support thereof), having maturities of not more than one year from the date of acquisition;

(2) marketable general obligations issued by any political subdivision of any Qualified Country or any public instrumental thereof maturing within one year from the date of acquisition thereof (provided that the full faith and credit of the Qualified Country is pledged in support thereof) and, at the time of acquisition, having a credit rating of “A” or better from either Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc.;

(3) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers’ acceptances having maturities of not more than one year from the date of acquisition thereof issued by any bank the long-term debt of which is rated at the time of acquisition thereof at least “A” or the equivalent thereof by Standard & Poor’s Ratings Services, or “A” or the equivalent thereof by Moody’s Investors Service, Inc., and having combined capital and surplus in excess of 3500.0 million;

163 (4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1), (2) and (3) above entered into with any bank meeting the qualifications specified in clause (3) above; (5) commercial paper rated at the time of acquisition thereof at least “A-2” or the equivalent thereof by Standard & Poor’s Ratings Services or “P-2” or the equivalent thereof by Moody’s Investors Service, Inc., or carrying an equivalent rating by an internationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments, and in any case maturing within one year after the date of acquisition thereof; and (6) interests in any investment company or money market fund which invests solely in instruments of the type specified in clauses (1) through (5) above. “Change of Control” means the occurrence of any of the following events: (1) the consummation of any transaction, whether as a result of the issuance of securities of the Company, any merger or consolidation, purchase or otherwise, the result of which is that any “person” (as such term is used in Section 13(d)(3) of the U.S. Exchange Act), other than one or more Permitted Holders, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the U.S. Exchange Act), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Company and the Permitted Holders beneficially own, directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of the Company than such other person; (2) Approved Directors cease for any reason to constitute a majority of the Supervisory Board; (3) the merger or consolidation of the Company with or into another Person or the merger of another Person with or into the Company, or the sale of all or substantially all the assets of the Company (determined on a consolidated basis) to another Person (other than, in all such cases, a Person that is controlled by the Permitted Holders), other than a transaction following which (A) in the case of a merger or consolidation transaction, holders of securities that represented 100% of the Voting Stock of the Company immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the voting power of the Voting Stock of the surviving Person in such merger or consolidation transaction immediately after such transaction and in substantially the same proportion as before the transaction and (B) in the case of a sale of assets transaction, each transferee becomes an obligor in respect of the Notes and a Subsidiary of the transferor of such assets; (4) the adoption of a plan relating to the liquidation or dissolution of the Company; or (5) the Company or the Company and one or more Restricted Subsidiaries shall cease to directly own 100% of the Capital Stock of the Issuer. For purposes of this definition, (a) “person” has the meaning it has in Sections 13(d) and 14(d) of the U.S. Exchange Act; (b) “beneficial owner” is used as defined in Rules 13(d) and 13d-5 under the Exchange Act, except that a person shall be deemed to have “beneficial ownership” of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time; (c) a person will be deemed to beneficially own any Voting Stock of an entity held by a parent entity, if such person is the beneficial owner, directly or indirectly, of more than 35% of the voting power of the Voting Stock of such parent entity and the Permitted Holders beneficially own, directly or indirectly, in the aggregate a lesser percentage of the voting power of the Voting Stock of such parent entity; and (d) “Approved Director” means a member of the Supervisory Board whose election was approved by either Permitted Holders beneficially owning 35% of the total voting power of the Voting Stock of the Company, or two-thirds of the members of the Supervisory Board who are Approved Directors. “Change of Control Triggering Event” means the occurrence of both (i) a Change of Control and (ii) a Rating Decline. “Clearstream” means Clearstream Banking, société anonyme. “Code” means the U.S. Internal Revenue Code of 1986, as amended.

164 “Commission” means the United States Securities and Exchange Commission, as from time to time constituted, created under the U.S. Exchange Act, or if at any time after the execution of the Indenture such Commission is not existing and performing the duties now assigned to it under the U.S. Securities Act and the U.S. Exchange Act, then the body performing such duties at such time. “Common Stock” means with respect to any Person, any and all shares, interest or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock. “Consolidated EBITDA” for any period means, without duplication, the Consolidated Net Income for such period, (x) plus the following to the extent deducted in calculating such Consolidated Net Income: (1) Consolidated Interest Expense; (2) Consolidated Income Taxes; (3) consolidated depreciation expense; (4) consolidated amortization of intangibles; (5) other non-cash charges reducing Consolidated Net Income (excluding any such non-cash charge to the extent it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period not included in the calculation); and (y), minus non-cash items increasing Consolidated Net Income, other than the accrual of revenue in the ordinary course of business and any other non-cash item to the extent that it represents an accrual to be received in cash in future periods. Notwithstanding the preceding sentence, clauses (2) through (5) relating to amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net Income to compute Consolidated EBITDA of such Person only to the extent (and in the same proportion) that the net income (loss) of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person and, to the extent the amounts set forth in (2) through (5) are in excess of those necessary to offset a net loss of such Restricted Subsidiary or if such Restricted Subsidiary has net income for such period included in Consolidated Net Income, only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders. “Consolidated Income Taxes” means, with respect to any Person for any period, taxes imposed upon such Person or other payments required to be made by such Person by any governmental authority which taxes or other payments are calculated by reference to the income or profits of such Person or such Person and its Restricted Subsidiaries (to the extent such income or profits were included in computing Consolidated Net Income for such period), regardless of whether such taxes or payments are required to be remitted to any governmental authority. “Consolidated Interest Expense” means, for any period, the total interest expense of the Company and its consolidated Restricted Subsidiaries, whether paid or accrued, plus, to the extent not included in such interest expense: (1) interest expense attributable to Capitalized Lease Obligations and the interest portion of rent expense associated with Attributable Indebtedness in respect of the relevant lease giving rise thereto, determined as if such lease were a capitalized lease in accordance with IFRS and the interest component of any deferred payment obligations; (2) amortization of debt discount and debt issuance cost; (3) non-cash interest expense; (4) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing;

165 (5) interest actually paid by the Company or any such Restricted Subsidiary under any Guarantee of Indebtedness or other obligation of any other Person; (6) net costs associated with Hedging Obligations (including amortization of fees); provided that such Hedging Obligations are not Incurred for speculative purposes; (7) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; (8) all dividends paid or payable in cash, Cash Equivalents or Indebtedness or accrued during such period on any series of Disqualified Stock of such Person or on Preferred Stock of its Restricted Subsidiaries payable to a party other than the Company or a Restricted Subsidiary; and (9) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Indebtedness Incurred by such plan or trust, provided, however, that there will be excluded therefrom any such interest expense of any Unrestricted Subsidiary to the extent the related Indebtedness is not Guaranteed or paid by the Company or any Restricted Subsidiary. Notwithstanding the foregoing, any capitalized or other costs incurred by the Company and its Restricted Subsidiaries related to the early extinguishment of Indebtedness shall not be included in the calculation of Consolidated Interest Expense. For purposes of the foregoing, total interest expense will be determined after giving effect to any net payments made or received by the Company and its Subsidiaries with respect to Interest Rate Agreements. “Consolidated Net Income” means, for any period, the net income (loss) of the Company and its consolidated Restricted Subsidiaries determined in accordance with IFRS; provided, however, that there will not be included in such Consolidated Net Income: (1) any net income (loss) of any Person if such Person is not a Restricted Subsidiary, except that: (a) subject to the limitations contained in clauses (4), (5) and (6) below, the Company’s equity in the net income of any such Person for such period will be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (3) below); and (b) the Company’s equity in a net loss of any such Person (other than an Unrestricted Subsidiary) for such period will be included in determining such Consolidated Net Income to the extent such loss has been funded with cash from the Company or a Restricted Subsidiary; (2) any net income (loss) of any Person acquired by the Company or a Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition; (3) any net income (but not loss) of any Restricted Subsidiary if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that: (a) subject to the limitations contained in clauses (4), (5) and (6) below, the Company’s equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation contained in this clause); and (b) the Company’s equity in a net loss of any such Restricted Subsidiary for such period will be included in determining such Consolidated Net Income;

166 (4) any gain (loss) realized upon the sale or other disposition of any property, plant or equipment of the Company or its consolidated Restricted Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which is not sold or otherwise disposed of in the ordinary course of business and any gain (loss) realized upon the sale or other disposition of any Capital Stock of any Person; (5) any extraordinary gain or loss; (6) the cumulative effect of a change in accounting principles; and (7) any capitalized interest on Subordinated Shareholder Loans. “Consolidated Net Tangible Assets” means the total consolidated assets of the Company and its Restricted Subsidiaries determined in accordance with IFRS (less accumulated depreciation and valuation reserves and other reserves and items deductible from gross book value of specific asset accounts under IFRS) after deducting therefrom (1) all current liabilities; (2) any item representing an Investment in an Unrestricted Subsidiary or any other Person (other than the Company or a Restricted Subsidiary); (3) the Investment of any other Person representing Capital Stock in a Restricted Subsidiary to the extent of such Investment; and (4) all goodwill, trade names, trademarks, patents, unamortized debt discount, organization expenses and other like intangibles, all as set forth on the most recent consolidated balance sheet of the Company and the Restricted Subsidiaries and determined in accordance with IFRS. “Credit Facility” means one or more debt facilities in the form of loan agreements, revolving credit facilities, overdraft facilities, working capital facilities, syndicated credit facilities, letters of credit and other facilities provided by commercial banks and other financial institutions as each such facility may be amended, restated, modified, renewed, refunded, replaced, restructured or refinanced in whole or in part from time to time. “Currency Agreement” means, in respect of a Person, any foreign exchange contract, currency swap agreement or other similar agreement as to which such Person is a party or a beneficiary. “Default” means any event which is, or after notice or passage of time or both would be, an Event of Default. “Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event: (1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise; (2) is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible or exchangeable solely at the option of the Company or a Restricted Subsidiary); or (3) is redeemable at the option of the holder of the Capital Stock thereof, in whole or in part, in each case on or prior to the date that is 180 days after the date (a) on which the Notes mature or (b) on which there are no Notes outstanding, provided that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock; provided, further, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or asset sale (each defined in a substantially identical manner to the corresponding definitions described herein) shall not constitute Disqualified Stock if the terms of such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) provide that the Company may not repurchase or redeem any such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) pursuant to such provision prior to compliance by the Company with the provisions of the Indenture described under the captions “— Change of Control and Rating Decline” and “— Certain covenants — Limitation on sales of assets and Subsidiary stock” and such repurchase or redemption complies with “— Certain covenants — Limitation on Restricted Payments.” “Euroclear” means Euroclear Bank S.A./N.V.

167 “European Government Obligation” shall mean direct obligations (or certificates representing an ownership interest in such obligations) of a member state of the European Union, Switzerland, Norway, Iceland or Liechtenstein as of the Issue Date (including any agency or instrumentality thereof) for the payment of which the full faith and credit of such government is pledged. “Future Note Guarantor” means each Subsidiary of the Company that provides a Note Guarantee after the date of the Indenture. “Government Obligations” means direct non-callable and non-redeemable obligations (in each case, with respect to the issuer thereof) of Poland or any member state of the European Union that is a member of the European Union as of the date of the Indenture or of the United States of America (including, in each case, any agency or instrumentality thereof), as the case may be, the payment of which is secured by the full faith and credit of the applicable member state or of the United States of America, as the case may be. “Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person: (1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or (2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term “Guarantee” will not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning. “Guarantors” means the Company and the Subsidiary Guarantors. “Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement. “IFRS” means the accounting standards adopted by the International Accounting Standards Board and its predecessors. “Incur” means issue, create, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) will be deemed to be incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary; and the terms “Incurred” and “Incurrence” have meanings correlative to the foregoing; provided, however, that amortization of debt discount shall not be deemed to be an Incurrence of Indebtedness; provided that in the case of Indebtedness sold at a discount, the amount of such Indebtedness shall at all times be the aggregate principal amount at Stated Maturity. “Indebtedness” means, with respect to any Person on any date of determination (without duplication): (1) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money; (2) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (3) the principal component of all obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments (including reimbursement obligations with respect thereto except to the extent such reimbursement obligation relates to a trade payable and such obligation is satisfied within 30 days of Incurrence); (4) the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property (except trade payables), which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto;

168 (5) Capitalized Lease Obligations and all Attributable Indebtedness of such Person; (6) the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary, any Preferred Stock (but excluding, in each case, any accrued dividends); (7) the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided, however, that the amount of such Indebtedness will be the lesser of (a) the fair market value of such asset at such date of determination and (b) the amount of such Indebtedness of such other Persons; (8) the principal component of Indebtedness of other Persons to the extent Guaranteed by such Person; and (9) to the extent not otherwise included in this definition, net obligations of such Person under Currency Agreements and Interest Rate Agreements (the amount of any such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such obligation that would be payable by such Person at such time). Notwithstanding the foregoing, Indebtedness shall not include any obligation of any Person to make payments pursuant to any programming license agreement or satellite transponder lease in the ordinary course of business. The amount of Indebtedness of any Person at any date will be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. In addition, “Indebtedness” of any Person shall include Indebtedness described in the preceding paragraph that would not appear as a liability on the balance sheet of such Person if: (1) such Indebtedness is the obligation of a partnership or joint venture that is not a Restricted Subsidiary (a “Joint Venture”); (2) such Person or a Restricted Subsidiary of such Person is a general partner of the Joint Venture (a “General Partner”); and (3) there is recourse, by contract or operation of law, with respect to the payment of such Indebtedness to property or assets of such Person or a Restricted Subsidiary of such Person; and then such Indebtedness shall be included in an amount not to exceed: (a) the lesser of (i) the net assets of the General Partner and (ii) the amount of such obligations to the extent that there is recourse, by contract or operation of law, to the property or assets of such Person or a Restricted Subsidiary of such Person; or (b) if less than the amount determined pursuant to clause (a) immediately above, the actual amount of such Indebtedness that is recourse to such Person or a Restricted Subsidiary of such Person, if the Indebtedness is evidenced by a writing and is for a determinable amount and the related interest expense shall be included in Consolidated Interest Expense to the extent actually paid by the Company or its Restricted Subsidiaries. “Interest Rate Agreement” means, with respect to any Person, any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary. “Investment” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of any direct or indirect advance, loan (other than advances to customers in the ordinary course of business) or other extension of credit (including by way of Guarantee or similar arrangement, but excluding any debt or extension of credit represented by a bank deposit other than a time deposit) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others),

169 or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such Person and all other items that are or would be classified as investments on a balance sheet prepared in accordance with IFRS; provided that none of the following will be deemed to be an Investment: (1) Hedging Obligations entered into in the ordinary course of business and in compliance with the Indenture; (2) endorsements of negotiable instruments and documents in the ordinary course of business; and (3) an acquisition of assets, Capital Stock or other securities by the Company or a Subsidiary for consideration to the extent such consideration consists of common equity securities of the Company. For purposes of “— Certain covenants — Limitation on Restricted Payments”: (1) “Investment” will include the portion (proportionate to the Company’s equity interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market value of the net assets of such Restricted Subsidiary of the Company at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company will be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the Company’s “Investment” in such Subsidiary at the time of such redesignation less (b) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets (as conclusively determined by the Management Board in good faith) of such Subsidiary at the time that such Subsidiary is so re-designated a Restricted Subsidiary; and (2) any property transferred to or from an Unrestricted Subsidiary will be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Management Board. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Voting Stock of any Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such entity is no longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value (as conclusively determined by the Management Board in good faith) of the Capital Stock of such Subsidiary not sold or disposed of. “Issue Date” means the date on which the Notes are originally issued. “ITI” means International Trading and Investments Holdings S.A. Luxembourg, a company organized and existing in the Grand Duchy of Luxembourg. “Leverage Ratio” means as of any date of determination, with respect to any Person, the ratio of (x) the sum of the aggregate outstanding Indebtedness (other than Subordinated Shareholder Loans) of the Company and its Restricted Subsidiaries as of the date of calculation on a consolidated basis in accordance with IFRS to (y) Consolidated EBITDA of the Company and its Restricted Subsidiaries for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination provided, however, that: (1) if the Company or any Restricted Subsidiary: (a) has Incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Leverage Ratio is an Incurrence of Indebtedness, Indebtedness, at the end of such period, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period (except that in making such computation, the amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation will be deemed to be (i) the average daily balance of such Indebtedness during such four fiscal quarters or such shorter period for which such facility was outstanding or (ii) if such facility was created after the end of such four fiscal quarters, the average daily

170 balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation) and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period; or (b) has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of the period that is no longer outstanding on such date of determination or if the transaction giving rise to the need to calculate the Leverage Ratio involves a discharge of Indebtedness (in each case other than Indebtedness incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and the related commitment terminated), Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such discharge of such Indebtedness, including with the proceeds of such new Indebtedness, as if such discharge had occurred on the first day of such period; (2) if since the beginning of such period the Company or any Restricted Subsidiary will have made any Asset Disposition or if the transaction giving rise to the need to calculate the Leverage Ratio is an Asset Disposition: (a) Indebtedness for such period will be reduced by an amount equal to Indebtedness discharged, defeased or retired with the Net Available Cash of such Asset Disposition and the assumption of Indebtedness by the Transferee; (b) the Consolidated EBITDA for such period will be reduced by an amount equal to the Consolidated EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period or increased by an amount equal to the Consolidated EBITDA (if negative) directly attributable thereto for such period; and (c) Consolidated Interest Expense for such period will be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale); (3) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) will have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary or is merged with or into the Company) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of an operating unit, division or line of business, Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period; and (4) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) will have made any Asset Disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (2) or (3) above if made by the Company or a Restricted Subsidiary during such period, Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto as if such Asset Disposition or Investment or acquisition of assets occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to any calculation under this definition, the pro forma calculations will be determined in good faith by a responsible financial or accounting officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness will be calculated as if the

171 rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months). “Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). “Management Board” means the management board of the Company or any committee thereof duly authorized to act on behalf of such board. “MBC Krakow Building” means the Company’s planned office building and production studios to be located at Krakow Technology Park in the southern part of Krakow, Poland. “Moody’s” means Moody’s Investors Service, Inc. and any successor to its ratings business. “Neovision Acquisition” means the purchase, acquisition, repurchase or redemption of Capital Stock of Neovision Holdings B.V. by the Company or any Subsidiary Guarantor that is wholly owned, directly or indirectly by the Company, including the purchase or repayment of any Indebtedness of Neovision Holdings B.V. and its Subsidiaires. “Net Available Cash” from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other noncash form) therefrom, in each case net of: (1) all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses incurred, and all federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under IFRS (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Asset Disposition; (2) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law be repaid out of the proceeds from such Asset Disposition; (3) all distributions and other payments required to be made to holders of a minority interest in Subsidiaries or joint ventures as a result of such Asset Disposition; and (4) the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with IFRS, against any liabilities associated with the assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition. “Net Cash Proceeds”, with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of reasonable attorneys’ fees, reasonable accountants’ fees, underwriters’ or placement agents’ fees, listing fees, discounts or commissions and brokerage, consultant and other fees and charges actually incurred and paid in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements). “Non-Recourse Debt” means Indebtedness: (1) as to which neither the Company nor any Restricted Subsidiary (a) provides any Guarantee or credit support of any kind (including any undertaking, guarantee, indemnity, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise); (2) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any Restricted Subsidiary to declare a default under such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and

172 (3) the explicit terms of which provide there is no recourse against any of the assets of the Company or its Restricted Subsidiaries. “Note Guarantee” means a guarantee of the Notes in the form set forth in the Indenture. “Notes” refers to the notes being offered pursuant to this listing memorandum. “Officer” means any member of the Management Board or the Supervisory Board, the Treasurer or the Secretary of the Company. “Officers’ Certificate” means a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. “Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. “Pari Passu Indebtedness” means Indebtedness that ranks equally in right of payment to the Notes. “Permitted Business” means (a) any business of owning or operating a television broadcasting system or service, producing and distributing television programs, conducting a multimedia, merchandising and media related services business (including a transaction television business) and trading in or assembling packages of television programming rights, conducted by the Company and any of its Restricted Subsidiaries on the date of the Indenture, and any reasonable extension of such business, (b) any business of owning or operating, or creating or assembling packages of content for, internet websites, portals or vortals conducted by the Company and any of its Restricted Subsidiaries on the date of the Indenture and any reasonable extension of such business, (c) any business of providing transmissions of programming via electronic or other means conducted by the Company and any of its Restricted Subsidiaries on the date of the Indenture and any reasonable extension of such business and (d) any business reasonably related, ancillary or complementary to those business described at (a), (b) and (c) above; provided that the determination of what shall constitute a Permitted Business hereunder shall be made in good faith by the Management Board. “Permitted Holders” means ITI and its Affiliates. “Permitted Investment” means an Investment by the Company or any Restricted Subsidiary in: (1) a Restricted Subsidiary or a Person which will, upon the making of such Investment, become a Restricted Subsidiary; provided, however, that the primary business of such Restricted Subsidiary is a Permitted Business; (2) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary provided, however, that such Person’s primary business is a Permitted Business; (3) cash and Cash Equivalents; (4) receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances; (5) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (6) loans or advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary; (7) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor;

173 (8) Investments made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with “— Certain covenants — Limitation on sales of assets and Subsidiary stock”; (9) Investments in existence on the Issue Date; (10) Currency Agreements, Interest Rate Agreements and related Hedging Obligations, which transactions or obligations are Incurred in compliance with “— Certain covenants — Limitation on Indebtedness”; (11) Investments by the Company or any of its Restricted Subsidiaries, together with all other Investments pursuant to this clause (11), in an aggregate amount at the time of such Investment not to exceed the greater of (A) 330.0 million and (B) 12.0% of Consolidated Net Tangible Assets outstanding at any one time; (12) Guarantees issued in accordance with “— Certain covenants — Limitations on Indebtedness;” (13) an Investment in the Notes; and (14) Investments by the Company or a Restricted Subsidiary in joint ventures with another Person for the purpose of engaging in a Permitted Business; provided that the Company is able to incur an additional 31.00 of Indebtedness pursuant to the first paragraph under the “Limitation on Indebtedness” covenant after giving effect, on a pro forma basis to such Investment. “Permitted Liens” means, with respect to any Person: (1) Liens securing Indebtedness Incurred under Credit Facilities not in excess of 3100.0 million; (2) pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits or cash or Government Obligations to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business; (3) Liens imposed by law, including carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings if a reserve or other appropriate provisions, if any, as shall be required by IFRS shall have been made in respect thereof; (4) Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings provided appropriate reserves required pursuant to IFRS have been made in respect thereof; (5) Liens in favor of issuers of surety or performance bonds or letters of credit or bankers’ acceptances issued pursuant to the request of and for the account of such Person in the ordinary course of its business; provided, however, that such letters of credit do not constitute Indebtedness; (6) encumbrances, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; (7) Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under the Indenture, secured by a Lien on the same property securing such Hedging Obligation; (8) leases and subleases of real property which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;

174 (9) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

(10) Liens for the purpose of securing the payment of all or a part of the purchase price of, or Capitalized Lease Obligations with respect to, assets or property acquired or constructed in the ordinary course of business, provided that:

(a) the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be Incurred under the Indenture and does not exceed the cost of the assets or property so acquired or constructed; and

(b) such Liens are created within 180 days of construction or acquisition of such assets or property and do not encumber any other assets or property of the Company or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto;

(11) Liens arising solely by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution; provided that such deposit account is not intended by the Company or any Restricted Subsidiary to provide collateral to the depository institution;

(12) Liens arising from United States Uniform Commercial Code financing statement filings (or similar filings in other applicable jurisdictions) regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business;

(13) Liens existing on the Issue Date;

(14) Liens on property or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary; provided, however, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such other Person becoming a Restricted Subsidiary; provided further, however, that any such Lien may not extend to any other property owned by the Company or any Restricted Subsidiary;

(15) Liens on property at the time the Company or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into the Company or any Restricted Subsidiary; provided, however, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such acquisition; provided further, however, that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary;

(16) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or another Restricted Subsidiary;

(17) Liens securing the Notes or any Guarantee in respect of the Notes;

(18) Liens securing Refinancing Indebtedness incurred to refinance Indebtedness that was previously so secured, provided that any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is the security for a Permitted Lien hereunder;

(19) Liens securing money borrowed (or any securities purchased therewith) which is (or are, in the case of securities) set aside at the time of Incurrence of any Indebtedness permitted to be Incurred under the “— Certain covenants — Limitation on Indebtedness” covenant in order to prefund the payment of interest on such Indebtedness;

(20) Leins on the MBC Krakow Building securing Indebtedness Incurred under a debt facility to finance or refinance the purchase of such building not in excess of 350.0 million; and

(21) Liens securing Indebtedness not in excess of 315.0 million.

175 “Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, government or any agency or political subdivision hereof or any other entity. “Preferred Stock,” as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation. “Public Equity Offering” means a public offering by the Company or any of its direct or indirect parent companies of its common stock, or options, warrants or rights with respect to its common stock after the Issue Date (A) for net cash proceeds of at least 375.0 million, (B) where such common stock is listed or quoted on a recognized securities exchange or inter-dealer quotation system in Poland, or in any current member state of the European Union or in the United States of America and (C) where proceeds of the offering, if other than by the Company, in an amount at least equal to the redemption price of the Notes being redeemed are contributed to the Company. “Rating Agencies” means Moody’s or S&P, and if Moody’s or S&P shall not make a rating of the notes publicly available, an internationally recognized securities rating agency or agencies, as the case may be, which shall be substituted for Moody’s or S&P or each of them as the case may be. “Rating Date” means the date which is the day prior to the initial public announcement by the Company or the proposed acquirer that (i) the acquirer has entered into one or more binding agreements with the Company and/or shareholders of the Company that would give rise to a Change of Control or (ii) the proposed acquirer has commenced an offer to acquire outstanding Voting Stock of the Company. “Rating Decline” shall be deemed to occur if on the 60th day following the occurrence of a Change of Control the rating of the Notes by either Rating Agency shall have been (i) withdrawn or (ii) downgraded, by one or more degradations, from the ratings in effect on the Rating Date. “Refinancing Indebtedness” means Indebtedness that is Incurred to refund, refinance, replace, exchange, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (collectively, “refinance,” “refinances,” and “refinanced” shall have a correlative meaning) any Indebtedness existing on the date of the Indenture or Incurred in compliance with the Indenture (including Indebtedness of the Company that refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that refinances Indebtedness of another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness, provided, however, that: (1) (a) if the Stated Maturity of the Indebtedness being refinanced is earlier than the Stated Maturity of the Notes, the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced or (b) if the Stated Maturity of the Indebtedness being refinanced is later than the Stated Maturity of the Notes, the Refinancing Indebtedness has a Stated Maturity at least 180 days later than the Stated Maturity of the Notes; (2) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced; (3) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of Indebtedness being refinanced (plus, without duplication, any additional Indebtedness Incurred to pay interest or premiums required by the instruments governing such existing Indebtedness and fees incurred in connection therewith); and (4) if the Indebtedness being refinanced is subordinated in right of payment to the Notes, such Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

176 “Representative” means any trustee, agent or representative (if any) of the holders of Indebtedness Incurred under Credit Facilities. “Restricted Investment” means any Investment other than a Permitted Investment. “Restricted Subsidiary” means any Subsidiary of the Company other than an Unrestricted Subsidiary. “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor to its ratings business. “Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers, by way of sale, such property to a Person (other than the Company or a Restricted Subsidiary) and the Company or a Restricted Subsidiary leases it from such Person. “Significant Subsidiary” means any Restricted Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the Commission as of the date of the Indenture. “Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof. “Subordinated Obligation” means any Indebtedness of the Issuer, the Company or any Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the Notes or any Note Guarantee, as the case may be, pursuant to a written agreement. “Subordinated Shareholder Loans” means Indebtedness of the Company (and any security into which such Indebtedness is convertible or for which it is exchangeable at the option of the holder) issued to and held by any shareholder of the Company that (either pursuant to its terms or pursuant to an agreement with respect thereto): (1) does not mature or require any amortization, redemption or other repayment of principal or any sinking fund payment prior to the first anniversary of the Stated Maturity of the Notes (other than through conversion or exchange of such Indebtedness into Capital Stock (other than Disqualified Stock) of the Company or any Indebtedness meeting the requirements of this definition); (2) does not require, prior to the first anniversary of the Stated Maturity of the Notes, payment of cash interest, cash withholding amounts or other gross-ups, or any similar cash amounts; (3) contains no change of control or similar provisions that are effective, and does not accelerate and has no right to declare a default or event of default or take any enforcement action or otherwise require any payment prior to the first anniversary of the Stated Maturity or the Notes; (4) does not provide for or require any security interest or encumbrance over any asset of the Company or any of its Restricted Subsidiaries; (5) is subordinated in right of payment to the prior payment in full of the Notes in the event of (a) a total or partial liquidation, dissolution or winding up of the Company, (b) a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, (c) an assignment for the benefit of creditors or (d) any marshalling of the Company’s assets and liabilities; (6) under which the Company may not make any payment or distribution of any kind or character with respect to any obligations on, or relating to, such Subordinated Shareholder Loans if (x) a payment Default on the Notes occurs and is continuing or (y) any other Default under the Indenture occurs and is continuing on the Notes that permits the holders of the Notes to accelerate their maturity and the Issuer receives notice of such Default from the requisite holders of the Notes, until in each case the earliest of

177 (a) the date on which such Default is cured or waived or (b) 180 days from the date such Default occurs (and only once such notice may be given during any 360 day period); and (7) under which, if the holder of such Subordinated Shareholder Loans receives a payment or distribution with respect to such Subordinated Shareholder Loan (a) other than in accordance with the Indenture or as a result of a mandatory requirement of applicable law or (b) under circumstances described under clauses (5)(a) through (d) above, such holder will forthwith pay all such amounts to the Trustee to be held in trust for application in accordance with the Indenture. “Subsidiary” of any Person means any corporation, association, partnership, joint venture, limited liability company or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership and joint venture interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Company. “Subsidiary Guarantor” means Neovision Holding B.V., ITI Neovision Sp. z o.o., Grupa Onet Poland Holding B.V. and Grupa Onet.pl S.A. and any Future Note Guarantor. “Supervisory Board” means the supervisory board of the Company or any committee thereof duly authorized to act on behalf of such board. “TARGET” means the Trans-European Automated Real-Time Gross settlement Express Transfer system or, if such clearing system ceases to operate, such other clearing system determined by the Trustee to be a suitable replacement. “Unrestricted Subsidiary” means: (1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Management Board in the manner provided below; and (2) any Subsidiary of an Unrestricted Subsidiary. The Management Board may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger or consolidation or Investment therein) to be an Unrestricted Subsidiary only if: (1) such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of or have any Investment in, or own or hold any Lien on any property of, any other Subsidiary of the Company which is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary; (2) all the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date of designation, and will at all times thereafter, consist of Non-Recourse Debt; (3) such designation and the Investment of the Company in such Subsidiary complies with “— Certain covenants — Limitation on Restricted Payments”; (4) such Subsidiary, either alone or in the aggregate with all other Unrestricted Subsidiaries, does not operate, directly or indirectly, all or substantially all of the business of the Company and its Subsidiaries; (5) such Subsidiary is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation: (a) to subscribe for additional Capital Stock of such Person; or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; (6) on the date such Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary with terms substantially less favorable to the Company than those that might have been obtained from Persons who are not Affiliates of the Company.

178 Any such designation by the Management Board shall be evidenced to the Trustee by filing with the Trustee a resolution of the Management Board giving effect to such designation and an Officers’ Certificate certifying that such designation complies with the foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be Incurred as of such date. The Management Board may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and the Company could incur at least 31.00 of additional Indebtedness under the first paragraph of the “— Certain covenants — Limitation on Indebtedness” covenant on a pro forma basis taking into account such designation. “U.S. Exchange Act” means the United States Securities Exchange Act of 1934, as amended. “U.S. Securities Act” means the United States Securities Act of 1933, as amended. “Voting Stock” of a corporation means all classes of Capital Stock of such corporation then outstanding and normally entitled to vote in the election of members of the board of directors or a management board, directors or persons acting in a similar capacity on similar corporate bodies.

179 Book-entry, settlement and clearance

General

Certain defined terms used but not defined in this section have the meanings assigned to them in the indenture governing the Notes, as described in “Description of the the notes.”

Notes sold to qualified institutional buyers in reliance on Rule 144A under the Securities Act will be represented by one or more global notes in registered form without interest coupons attached (the “144A Global Notes”). Notes sold to non-U.S. persons outside the United States in reliance on Reg S will be represented by one or more global notes in registered form without interest coupons attached (the “Reg S Global Notes” and, together with the 144A Global Notes, the “Global Notes”).

The Global Notes will be deposited with, or on behalf of, a common depositary for the accounts of Euroclear and Clearstream and registered in the name of the nominee of the common depositary. The Global Notes will not be eligible for clearance with The Depository Trust Company.

Ownership of beneficial interests in the 144A Global Notes (“Restricted Book-Entry Interests”) and the Reg S Global Notes (the “Reg S Book-Entry Interests” and, together with the Restricted Book- Entry Interests, the “Book-Entry Interests”) will be limited to persons that have accounts with Euroclear and/or Clearstream or persons that hold interests through such participants or otherwise, and has to be in accordance with applicable transfer restrictions set out in the indenture governing the Notes and in any applicable securities laws of any state of the United States or of any other jurisdiction, as described under “Notice to investors” and under “Transfer restrictions.”

The Book-Entry Interests will not be held in definitive form. Instead, the Book-Entry Interests will be held by Euroclear and Clearstream on behalf of their participants through customers’ securities accounts in their respective names on the books of their respective depositaries. Book-Entry Interests will be shown on, and transfers thereof will be effected only through, records maintained in book- entry form by Euroclear and Clearstream and their participants. Except under the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive definitive notes in registered form (“Definitive Registered Notes”). The laws of some jurisdictions, including certain states of the United States, may require that certain purchasers of Notes take physical possession of such notes in definitive form. The foregoing limitations may impair your ability to own, transfer, pledge or grant any other security interest in Book-Entry Interests.

So long as the Global Notes are in global form, holders of Book-Entry Interests will not be considered the owners or “holders” of Global Notes for any purpose. So long as the Global Notes are held in global form, the common depositary for Euroclear and/or Clearstream, or their respective nominees, as applicable, will be considered the sole holders of Global Notes for all purposes under the indenture governing the Notes. As such, participants must rely on the procedures of Euroclear and/or Clearstream, as the case may be, and indirect participants must rely on the procedures of Euroclear, Clearstream and the participants through which they own Book-Entry Interests, to transfer their interests in or to exercise any rights of holders under the indenture governing the Notes.

The issuer, the trustee, the registrar, the transfer agent, the paying agent and any of their respective agents have not and will not have any responsibility or liability:

(1) for any aspect of the records of Euroclear, Clearstream or any participant or indirect participant relating to Book-Entry Interests, or for maintaining, supervising or reviewing any of the records of Euroclear, Clearstream or any participant or indirect participant relating to Book-Entry Interests; or for payments made by Euroclear, Clearstream or any participant or indirect participant relating to Book-Entry Interests, or

(2) for Euroclear, Clearstream or any participant or indirect participant.

The Notes will be issued in denominations of 350,000 and in integral multiples of 31,000 in excess thereof.

180 Definitive Registered Notes Under the terms of the indenture governing the Notes, owners of Book-Entry Interests will receive Definitive Registered Notes only in the following circumstances: (1) if either Euroclear or Clearstream notifies the issuer that it is unwilling or unable to continue to act as depositary and a successor depositary is not appointed by the issuer within 120 days; (2) in whole, but not in part, at any time if the issuer in its sole discretion determines that the Global Notes should be exchanged for Definitive Registered Notes; (3) if Euroclear or Clearstream so requests following an Event of Default under the indenture governing the Notes; or (4) if the owner of a Book-Entry Interest requests such exchange in writing delivered through either Euroclear or Clearstream following an Event of Default under the indenture governing the Notes. Euroclear has advised the issuer that upon request by an owner of a Book-Entry Interest described in the immediately preceding clause (4), its current procedure is to request that Definitive Registered Notes be issued to all owners of Book-Entry Interests and not only to the owner who made the initial request. In any such events described in clauses (1) to (4), the registrar will issue Definitive Registered Notes, registered in the name or names and issued in any approved denominations, requested by or on behalf of Euroclear and/or Clearstream, as applicable (in accordance with their respective customary procedures and certain certification requirements and based upon directions received from participants reflecting the beneficial ownership of the Book-Entry Interests). The Definitive Registered Notes will bear a restrictive legend with respect to certain transfer restrictions, unless that legend is not required by the indenture governing the Notes or by applicable law. In the case of the issuance of Definitive Registered Notes, the holder of a Definitive Registered Note may transfer such Definitive Registered Note by surrendering it to the registrar. In the event of a partial transfer or a partial redemption of one Definitive Registered Note, a new Definitive Registered Note will be issued to the transferee in respect of the part transferred, and a new Definitive Registered Note will be issued to the transferor or the holder, as applicable, in respect of the balance of the holding not transferred or redeemed, provided that a Definitive Registered Note will only be issued in denominations of 350,000 or in integral multiples of 31,000 in excess thereof. If Definitive Registered Notes are issued and a holder thereof claims that such Definitive Registered Notes have been lost, destroyed or wrongfully taken, or if such Definitive Registered Notes are mutilated and are surrendered to the registrar or at the office of a transfer agent, we will issue and the trustee will authenticate a replacement Definitive Registered Note if the trustee’s and our requirements are met. We or the trustee may require a holder requesting replacement of a Definitive Registered Note to furnish an indemnity bond sufficient in the judgment of both the trustee and us to protect us, the trustee or the paying agent appointed pursuant to the indenture governing the Notes from any loss which any of them may suffer if a Definitive Registered Note is replaced. We may charge for expenses in replacing a Definitive Registered Note. In case any such mutilated, destroyed, lost or stolen Definitive Registered Note has become or is about to become due and payable, or is about to be redeemed or purchased by us pursuant to the provisions of the indenture governing the Notes, we in our discretion may, instead of issuing a new Definitive Registered Note, pay, redeem or purchase such Definitive Registered Note, as the case may be. Definitive Registered Notes may be transferred and exchanged for Book-Entry Interests only in accordance with the indenture governing the Notes and, if required, only after the transferor first delivers to the transfer agent a written certification (in the form provided in the indenture governing the Notes) to the effect that such transfer will comply with the transfer restrictions applicable to such Notes. See “Notice to investors.” To the extent permitted by law, the issuer, the trustee, the paying agent, the transfer agent and the registrar shall be entitled to treat the registered holder of any Global Note as the absolute owner thereof.

181 The issuer will not impose any fees or other charges in respect of the Notes; however, holders of the Book-Entry Interests may incur fees normally payable in respect of the maintenance and operation of accounts in Euroclear and/or Clearstream.

Redemption of Global Notes

In the event any Global Note, or any portion thereof, is redeemed, Euroclear and/or Clearstream, or their respective nominees, as applicable, will distribute the amount received by them in respect of the Global Note so redeemed to the holders of the Book-Entry Interests from the amount received by it in respect of the redemption of such Global Note. The aggregate price payable to the holders of such Book-Entry Interests will be equal to the amount received by Euroclear and/or Clearstream, as applicable, in connection with the redemption of such Global Note, or any portion thereof. The issuer understands that, under existing practices of Euroclear and Clearstream, if fewer than all of the Notes are to be redeemed at any time, Euroclear and Clearstream will credit their respective participants’ accounts on a proportionate basis (with adjustments to prevent fractions) or by lot or on such other basis as they deem fair and appropriate; provided, however, that no Book-Entry Interest of 350,000 may be redeemed in part.

Payments on Global Notes

Payments of any amounts owing in respect of the Global Notes (including principal, premium, interest and additional amounts) will be made by the issuer in euro to the paying agents. The paying agents will, in turn, make such payments to the common depositary or its nominee for Euroclear and/or Clearstream. The common depositary or its nominee will distribute such payments to participants in accordance with its procedures. We will make payments of all such amounts without deduction or withholding for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature except as may be required by law. If any such deduction or withholding is required to be made by any applicable law or regulation, as described under “Description of the the notes — Payment of additional amounts,” then, to the extent described thereunder, such additional amounts will be paid as may be necessary in order that the net amounts received by any holder of the Book-Entry Interest after such deduction or withholding will equal the net amount that such holder or owner would have otherwise received, absent such withholding or deduction.

We expect that payments by participants to owners of Book-Entry Interests held through such participants will be governed by standing customer instructions and customary practices, as is now the case with securities held for the accounts of customers registered in “street name.” Payments by participants to owners of Book-Entry Interests held through participants are the responsibility of such participants, as is now the case with securities held for the accounts of customers registered in “street name.”

In order to tender Book-Entry Interests in a change of control offer or asset sale offer, the holder of the applicable Global Note must, within the time period specified in such offer, give notice of such tender to the paying agents and specify the principal amount of Book-Entry Interests to be tendered.

Action by owners of Book-Entry Interests

Euroclear and Clearstream have advised the issuer that they will take any action permitted to be taken by a holder (including the presentation of Notes for exchange as described above) only at the direction of the participant to whose account the Book-Entry Interests in the Global Notes are credited and only in respect of such portion to the aggregate principal amount of Notes as to which such participant has given such direction. Euroclear and Clearstream will not exercise any discretion in the granting of consents, waivers or the taking of any other action in respect of the Global Notes. However, if there is an Event of Default under the indenture governing the Notes, each of Euroclear and Clearstream reserve the right to exchange the Global Notes for Definitive Registered Notes in certificated form, and to distribute such Definitive Registered Notes to its participants, as described in the subsection “Definitive Registered Notes.”

182 Global clearance, settlement and trading under the book-entry system The following description of the operations and procedures of Euroclear and Clearstream is provided solely as a matter of convenience. These operations and procedures are solely within the control of the relevant settlement systems and are subject to changes by them. We take no responsibility for these operations and procedures and urge investors to contact the systems or their participants directly to discuss these matters.

Initial settlement Book-Entry Interests owned through Euroclear or Clearstream accounts will follow the settlement procedures applicable to conventional eurobonds in registered form. Book-Entry Interests will be credited to the securities custody accounts of Euroclear or Clearstream holders on the business day following the settlement date against payment for value on the settlement date.

Secondary market trading The Book-Entry Interests will trade through participants of Euroclear or Clearstream and will settle in same-day funds. Since the purchase determines the place of delivery, it is important to establish at the time of trading of any Book-Entry Interests where both the purchaser’s and seller’s accounts are located to ensure that settlement can be made on the desired value date.

Transfers Transfers of Book-Entry Interests between participants in Euroclear and Clearstream will be done in accordance with Euroclear’s and Clearstream’s rules and will be settled in immediately available funds. The Global Notes will bear a legend to the effect set forth in “Transfer restrictions.” Book- Entry Interests in the Global Notes will be subject to the restrictions on transfer discussed in “Transfer restrictions.” Through and including the 40th day after the later of the commencement of the offering of the Notes and the closing of the offering (the “40-day period”), beneficial interests in Reg S Global Notes may be transferred to a person who takes delivery in the form of an interest in the Rule 144A Global Notes, only if such transfer is made pursuant to Rule 144A and the transferor first delivers to the trustee a certificate (in the form provided in the indenture) to the effect that such transfer is being made to a person who the transferor reasonably believes is a qualified institutional buyer within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or otherwise in accordance with the transfer restrictions described under “Notice to investors” and “Transfer restrictions” and in accordance with all applicable securities laws of the states of the United States and other jurisdictions. After the expiration of the 40-day period, beneficial interests in Reg S Global Notes may be transferred to a person who takes delivery in the form of a beneficial interest in the Rule 144A Global Notes denominated in the same currency without compliance with these certification requirements. Beneficial interests in a Rule 144A Global Note may be transferred to a person who takes delivery in the form of a beneficial interest in the Reg S Global Note only upon receipt by the trustee of a written certification (in the form provided in the indenture) from the transferor to the effect that such transfer is being made in accordance with Regulation S or Rule 144 under the Securities Act (if available). Subject to the foregoing, Book-Entry Interests may be transferred and exchanged as described under “Transfer restrictions.” Any Book-Entry Interest that is transferred to a person who takes delivery in the form of a Book-Entry Interest in the other Global Note will, upon transfer, cease to be a Book-Entry Interest in the first-mentioned Global Note and become a Book-Entry Interest in the other Global Note, and accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to Book-Entry Interests in such other Global Note for as long as it retains such a Book-Entry Interest.

Pledges Because Euroclear and Clearstream can only act on behalf of participants, who in turn act on behalf of indirect participants and certain banks, the ability of an owner of a Book-Entry Interest to pledge such interest to persons or entities that do not participate in the Euroclear or Clearstream systems, or otherwise take actions in respect of such interest, may be limited by the lack of a definite certificate

183 for that interest. The laws of some jurisdictions require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer beneficial interests to such person may be limited.

Special timing considerations You should be aware that investors will only be able to make and receive deliveries, payments and other communications involving Notes through Euroclear or Clearstream on days when those systems are open for business. In addition, because of time-zone differences, there may be complications with completing transactions involving Euroclear and/or Clearstream on the same business day as in the United States. U.S. investors who wish to transfer their interests in the Notes, or to receive or make a payment or delivery of Notes, on a particular day, may find that the transactions will not be performed until the next business day in Brussels if Euroclear is used, or Luxembourg if Clearstream is used.

Clearing information We expect that the Notes will be accepted for clearance through the facilities of Euroclear and Clearstream. All Book-Entry Interests will be subject to the operations and procedures of Euroclear and Clearstream, as applicable. We provide the summaries of those operations and procedures solely for the convenience of investors. The operations and procedures of each settlement system are controlled by that settlement system and may be changed at any time. Neither we nor the initial purchasers are responsible for those operations or procedures. Euroclear and Clearstream hold securities for participating organizations and facilitate the clearance and settlement of securities transactions between their respective participants through electronic book-entry changes in accounts of such participants. Euroclear and Clearstream provide to their participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream interface with domestic securities markets. Euroclear and Clearstream participants are financial institutions such as underwriters, securities brokers and dealers, banks, trust companies and certain other organizations. Indirect access to Euroclear or Clearstream is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodian relationship with a Euroclear or Clearstream participant, either directly or indirectly.

184 Tax considerations

United States of America taxation INTERNAL REVENUE SERVICE CIRCULAR 230 NOTICE TO ENSURE COMPLIANCE WITH INTERNAL REVENUE SERVICE CIRCULAR 230, PROSPECTIVE INVESTORS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF FEDERALTAX ISSUES CONTAINED OR REFERRED TO IN THIS listing memorandum IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY PROSPECTIVE INVESTORS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THEM UNDER THE INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING BY US AND THE INITIAL PURCHASERS OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) PROSPECTIVE INVESTORS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

General The following summary contains a description of the material U.S. federal income tax consequences of the purchase, ownership and disposition of the Notes acquired for cash pursuant to this offering. This summary is not a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase Notes. In particular, this summary of U.S. federal income tax matters deals only with holders that will hold Notes as capital assets for U.S. federal income tax purposes (generally, assets held for investment), and purchased the Notes at the issue price (i.e., the price at which a substantial amount of the Notes are sold for cash (other than to dealers or underwriters)). It does not address the tax treatment of holders that are subject to special tax rules such as financial institutions or “financial services entities”, securities or currency dealers, brokers, insurance companies, regulated investment companies, real estate investment trusts, tax-exempt organizations, persons holding Notes as part of a hedging, straddle, conversion or larger integrated financial transaction or “U.S. Holders” (as defined below) with a currency other than the dollars as their functional currency. The following summary also assumes that Notes will be issued with no more than a statutorily defined de minimis amount of original issue discount (“OID”). If a partnership holds the Notes, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. This summary is based upon the U.S. Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations issued thereunder, and judicial and administrative interpretations thereof, each as in effect on the date hereof, all of which are subject to change, possibly with retroactive effect. PROSPECTIVE PURCHASERS OF THE NOTES SHOULD CONSULT THEIR OWN TAX ADVISERS AS TO THE U.S. FEDERAL TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES, IN ADDITION TO THE EFFECT OF ANY STATE OR LOCAL TAX LAWS OR THE LAWS OF ANY JURISDICTION OTHER THAN THE UNITED STATES OF AMERICA.

U.S. Holders As used herein, a “U.S. Holder” means a beneficial owner of a note who is for U.S. federal income tax purposes (i) a citizen or resident of the United States of America (including the States and the District of Columbia), its territories, possessions and other areas subject to its jurisdiction, including the Commonwealth of Puerto Rico (the “United States of America”), (ii) a corporation, or any entity treated as a corporation for U.S. federal income tax purposes, created or organized in the United States of America or under the laws of the United States of America or of any political subdivision thereof, (iii) any estate the income of which is subject to U.S. federal income taxation regardless of its source, and (iv) any trust if a court within the United States of America is able to exercise primary supervision over the administration of the trust and one or more U.S. fiduciaries have the authority to control all substantial decisions of the trust.

Interest on the Notes Interest on the Notes will be includable in a U.S. Holder’s income as ordinary income at the time the interest is accrued or received, in accordance with the holder’s method of tax accounting. Interest income will constitute foreign source passive income for foreign tax credit purposes. If any foreign

185 withholding taxes are imposed on the payments, the amount withheld will be included in the holder’s gross income at the time such amount is received or accrued in accordance with such holder’s method of accounting. A U.S. Holder will not be allowed to claim foreign tax credits (but would instead be allowed a deduction) for foreign taxes imposed on income with respect to the Notes unless the U.S. Holder (i) holds such notes for more than 15 days during the 31-day period beginning at the date that is 15 days before the right to receive payment arises (disregarding any period during which the U.S. Holder has a diminished risk of loss with respect to such Notes), and (ii) is not under an obligation to make related payments with respect to positions in substantially similar or related property. Prospective investors should consult their own tax advisors as to the foreign tax credit implications of such interest paid or accrued in respect of a Note. A U.S. Holder of euro-denominated Notes that uses the cash method of accounting for U.S. federal income tax purposes will realize interest income equal to the dollar value of the euro interest payment, based on the exchange rate on the date of receipt, regardless of whether the payment in fact is converted into dollars. No exchange gain or loss will be recognized with respect to the receipt of such payment. However, a U.S. Holder may recognize foreign currency gain or loss when the holder converts the proceeds into dollars. A U.S. Holder of euro-denominated Notes that uses the accrual method of accounting for U.S. federal income tax purposes will determine the amount of interest income allocable to an accrual period in euro, and then will translate that amount into dollars at the average exchange rate in effect during the interest accrual period (or portion thereof within the U.S. Holder’s taxable year). Alternatively, an accrual basis U.S. holder may elect to convert accrued interest into dollars at the spot exchange rate on the last day of the accrued period (or, if an accrued period spans two taxable years, at the exchange rate on the last day of the part of the accrued period within each taxable year), or at the spot rate of exchange on the date of receipt, if such date is within five business days of the last day of the accrued period. A U.S. Holder that makes such an election must apply it consistently to all euro-denominated Notes from year to year and cannot change the election without the consent of the Internal Revenue Service (the “IRS”). A U.S. Holder that does not want to accrue interest income using the average exchange rate may make certain alternative elections. A U.S. Holder that uses the accrual method of accounting for tax purposes will recognize foreign currency gain or loss on the receipt of an interest payment if the exchange rate in effect on the date the payment is received differs from the rate applicable to an accrual of that interest. This foreign currency gain or loss will generally be treated as U.S. source ordinary income or loss.

Sale and redemption of Notes A U.S. Holder generally will recognize capital gain or loss upon the sale, exchange, retirement or other disposition of a Note in an amount equal to the difference between the amount realized upon such sale (other than amounts received in respect of accrued and unpaid interest), exchange, retirement or other disposition and such U.S. Holder’s adjusted tax basis in the note. The U.S. dollar amount realized will be the value of the euro received at the spot exchange rate on the date of disposition (or on the settlement date, if the Notes are traded on an established securities exchange and the holder is either a cash basis U.S. Holder or an electing accrual basis U.S. Holder). Gain or loss will be capital except to the extent attributable to accrued but unpaid interest or foreign exchange gain or loss as discussed below. A U.S. Holder’s adjusted tax basis in a note will generally equal such U.S. Holder’s initial investment in the note. The amount paid for a note with euro will be the U.S. dollar value of the euro used to purchase it at the spot exchange rate on the date of purchase. Capital gain or loss realized by a U.S. Holder on the sale, exchange, retirement or other disposition of a note generally will be long-term capital gain or loss if the note is held for more than one year, and generally will be from U.S. sources for U.S. foreign tax credit purposes. Under the current law, net long-term capital gains of individuals are, under certain circumstances, taxed at lower U.S. federal income tax rates than are items of ordinary income. The deductibility of capital losses by a U.S. Holder, however, is subject to limitations. A U.S. Holder will recognize foreign currency exchange gain or loss equal to the difference between the U.S. dollar value of the principal amount of the note on the date of acquisition and the date of disposition (or on the settlement date, if the Notes are traded on an established securities exchange and the holder is either a cash basis U.S. Holder or an electing accrual basis U.S. Holder). The foreign currency exchange gain or loss cannot exceed overall gain or loss on the note. Foreign currency gain or loss generally will be U.S. source ordinary income or loss.

186 U.S. Holders should note that the Polish tax on civil law transactions, if imposed, will not be treated as creditable foreign tax for United States of America federal income tax purposes, although U.S. Holders may be entitled to deduct such taxes, subject to applicable limitations under the Code. (See discussion below under “— Polish taxation — Tax on civil law transactions on transfer of the Notes “).

Satisfaction and Discharge If we were to obtain a discharge of the Indenture with respect to all of the Notes then outstanding, as described in “Description of the notes — Satisfaction and Discharge”, such discharge would generally be deemed to constitute a taxable exchange of the Notes outstanding for other property. In such case, a U.S. Holder would be required to recognize capital gain or loss in connection with such deemed exchange. In addition, after such deemed exchange, a U.S. Holder might also be required to recognize income from the property deemed to have been received in such exchange over the remaining life of the transaction in a manner or amount that is different than if the discharge had not occurred. U.S. Holders should consult their tax advisors as to the specific consequences arising from a discharge in their particular situations.

Disposition of euro A U.S. Holder will have a tax basis in euro received on the Notes equal to the dollar value to the euro received determined at the spot exchange rate on the date the euro is received. A U.S. Holder will have a tax basis in euro received on the sale, exchange or other disposition of a note equal to the dollar amount realized. Any gain or loss realized by a U.S. Holder on a sale or other disposition of the euro generally will be U.S. source ordinary income or loss.

Information reporting and backup withholding In general, information reporting requirements will apply to certain payments within the United States of America of interest, principal and to proceeds of a sale, redemption or other disposition of Notes. A “backup withholding” tax may apply to such payments or proceeds if the beneficial owner fails to provide a correct taxpayer identification number or certification of exempt status or, in the case of payments of interest, fails to certify that he is not subject to such withholding or fails to report interest and dividend income in full. In general, a U.S. Holder may comply with this requirement by providing the paying agent, broker or other intermediary with a duly completed and executed copy of IRS Form W-9. Any amounts withheld under the backup withholding rules from a payment to a beneficial owner will be allowed as a refund or credit against such beneficial owner’s U.S. federal income tax liability provided the required information is timely furnished to the IRS.

Disclosure requirements Treasury Regulations meant to require the reporting of certain tax shelter transactions (“Reportable Transactions”) could be interpreted to cover transactions generally not regarded as tax shelters, including certain foreign currency transactions. Under the Treasury Regulations, certain transactions may be characterized as Reportable Transactions including, in certain circumstances, a sale exchange, retirement or other taxable disposition of a foreign currency note. U.S. Holders considering the purchase of the Notes should consult with their own tax advisors to determine the tax return obligations, if any, with respect to an investment in the Notes, including any requirement to file IRS Form 8886 (Reportable Transaction Statement).

EU Directive on the taxation of savings income Under Council Directive 2003/48/EC on the taxation of savings income, a member state is required to provide to the tax authorities of another member state details of payments of interest (or similar income) paid by a person within the jurisdiction of the first member state to an individual, or certain other persons, resident in that other member state. However, for a transitional period, Belgium, Luxembourg and Austria are instead required (unless during that period they elect otherwise) to operate a withholding system in relation to such payments (the ending of such transitional period being dependent on the conclusion of certain other agreements relating to information exchange

187 with certain other countries). A number of non-EU countries and territories (including Switzerland) have adopted similar measures (a withholding system in the case of Switzerland).

Swedish taxation The following summary outlines certain Swedish tax consequences relating to holders of Notes that are not considered to be Swedish residents for Swedish tax purposes (if not otherwise stated) and to payments by the Company under the guarantee. The summary is based on the laws of Sweden as currently in effect and is intended to provide general information only. The summary does not address the rules regarding reporting obligations for, among others, payers of interest. Further, the summary does not address credit of foreign taxes. Investors should consult their professional tax advisors regarding the Swedish tax and other tax consequences (including the applicability and effect of tax treaties for the avoidance of double taxation) of acquiring, owning and disposing of Notes in their particular circumstances.

Holders not resident in Sweden Payments of any principal amount or any amount that is considered to be interest for Swedish tax purposes to the holder of any Note should not be subject to Swedish income tax, provided that such a holder is not resident in Sweden for Swedish tax purposes and provided that such a holder does not have a permanent establishment in Sweden to which the Notes are effectively connected. Swedish withholding tax, or Swedish tax deduction, is not imposed on payments of any principal amount or any amount that is considered to be interest for Swedish tax purposes to a holder, except for certain payments of interest to a private individual (or an estate of a deceased individual) with residence in Sweden for Swedish tax purposes.

Holders resident in Sweden Generally, for Swedish corporations and private individuals (and estates of deceased individuals) with residence in Sweden for Swedish tax purposes, all capital income (e.g. income that is considered to be interest for Swedish tax purposes and capital gains on Notes) will be taxable. Specific tax consequences, however, may be applicable to certain categories of corporations, e.g. life insurance companies. Further, specific tax consequences may be applicable if, and to the extent, a holder of Notes realizes a capital loss on the Notes and to any currency exchange gains or losses. If amounts that are considered to be interest for Swedish tax purposes are paid by a legal entity domiciled in Sweden, including a Swedish branch, to a private individual (or an estate of a deceased individual) with residence in Sweden for Swedish tax purposes, Swedish preliminary taxes are normally withheld by the legal entity on such payments.

Payments under the guarantee As for payments by the Company under the guarantee considered to be interest for Swedish tax purposes to holders of Notes not resident in Sweden for Swedish tax purposes, please refer to the section “Holders not resident in Sweden” above. As for payments by the Company under the guarantee considered to be interest for Swedish tax purposes to holders of Notes resident in Sweden for Swedish tax purposes, please refer to the section “Holders resident in Sweden” above.

Polish taxation The following is a summary of the principal Polish tax consequences for investors in the Notes. This summary is not intended to constitute a complete analysis of the tax consequences under Polish law of the acquisition, ownership and disposal of the Notes or the receipt of interest and accrual of discount (including for these purposes any premium payable on redemption) on the Notes or payments by the Company under the guarantee. Potential investors should, therefore, consult their own tax advisers regarding the tax consequences under Polish law including the application of any tax treaty between Poland and their country of residence. All references to a repurchase or redemption of Notes are to a repurchase or redemption of Notes by the issuer of the Notes and shall mean a “repurchase” of the Notes for Polish tax law purposes.

188 Residence

All references to residence for the purposes of this summary are to residence for the purposes of Polish tax law and applicable Double Tax Treaties. References to a “Polish individual” or “Polish legal person” are to an individual or corporation or other legal entity resident in Poland for tax purposes and references to a “foreign individual” or to a “foreign legal person” to an individual or legal person or other legal entity not resident in Poland for tax purposes.

Corporate taxpayers, having their seat or place of management in Poland are subject to Polish corporate income tax on their worldwide income, irrespective of the place in which such income is earned. A corporate taxpayer which has neither its seat nor its place of management in Poland is subject to Polish income tax only on income earned in Poland.

An individual whose place of residence is in Poland is subject to Polish income tax on his or her worldwide income irrespective of the place in which such income is earned. An individual whose place of residence is not located in Poland is subject to Polish income tax only on income earned in Poland.

Taxation of persons resident in Poland

Taxation of interest and discount on the Notes and sale and repurchase of the Notes

Individuals and legal persons having neither their place of residence nor seat nor place of management in Poland will not be liable to taxation in Poland on interest or discount paid or accruing on the Notes nor on income arising from the sale or repurchase of the Notes (save as described below in relation to payments by the Company under the guarantee).

Payments under the guarantee

Payments made by the Company under the guarantee constitute a fulfilment of the liabilities of the issuer towards the investors under the Notes. As such, they should be classified as the same type of income as the Notes i.e. repurchase/redemption of the Notes or a payment of interest under the Notes. However, it cannot be entirely excluded that the Polish tax authorities may attempt to reclassify the payments under the guarantee as constituting for Polish tax purposes an independent type of income e.g. “income from other sources‘.

Any entity resident in Poland (including the Company) which pays interest on the Notes to non- residents (whether individuals or legal persons) is obliged to withhold Polish income tax at the rate of 20% from such payments on the date of payment thereof. However, the rate of withholding tax may be reduced pursuant to an applicable double tax treaty, provided that the foreign resident obtains a certificate confirming its place of residence issued for tax purposes by the appropriate tax administration (a certificate of tax residence).

Should the Polish tax authorities reclassify the streams of payments under guarantee into “income from other sources‘, then non-residents would not be taxable in Poland provided that they are resident in a Treaty country i.e. country with which Poland has concluded a Double Tax Treaty.

Taxation of persons resident in Poland

Interest and discount on the Notes

Interest and discount on the Notes paid by the issuer will, for Polish taxation purposes, be treated as income earned in Sweden. Pursuant to the convention for the avoidance of double taxation entered into between Sweden and the Republic of Poland (the “Convention‘), interest or discount on the Notes earned in the Sweden by Polish legal persons or individuals may be taxed only in the state of residence i.e. Poland (Sweden does not have the right of taxation). The above rules do not apply if the noteholder carries on a trade or business in Sweden through a permanent establishment with which the Notes are effectively connected.

Interest and discount on the Notes earned by Polish tax residents (whether individuals or legal persons) are subject to income tax in Poland at the rate of 19%.

189 Sale, repurchase and redemption of the Notes

Pursuant to the Convention, income from the sale of the Notes or repurchase or redemption of the Notes by the issuer arising to Polish tax residents (whether individuals or legal persons) is subject to taxation only in Poland unless the noteholder carries on business in the Sweden through a permanent establishment with which the Notes are effectively connected. In such cases, tax is payable on the difference between the proceeds of sale, repurchase or redemption and the acquisition cost of the relevant Notes (capital gains).

With respect to individuals, capital gains generated on disposal of the Notes is subject to flat 19% personal income tax rate, assuming the trading of the Notes does not form part of their business activity. No tax advances are payable upon realization of the capital gain during a calendar year - individuals are obliged to file an annual tax return, in which all such capital gains should be declared, and pay the tax accordingly (both due April 30th of the following calendar year).

With respect to legal persons, such capital gains are subject to flat 19% corporate income tax rate. Legal persons are obliged to pay the tax upon realization of the capital gain (relevant tax advance is payable by 20th of the following month, except if the gain is generated during the last month of the tax year, in which case no tax advance is required and tax is settled in an annual corporate tax return).

Payments under the guarantee

Payments made by the Company under the guarantee constitute a fulfilment of the liabilities of the issuer towards the investors under the Notes. As such, they should be classified under the same type of income as the Notes i.e. as repurchase/redemption of the Notes or a payment of interest under the Notes. However, it cannot be entirely excluded that the Polish tax authorities may attempt to reclassify the payments under the guarantee as constituting for Polish tax purposes an independent type of income e.g. “income from other sources‘.

In the case of interest paid by the Company to Polish individuals, such income will be subject to 19% flat rate personal income tax without deduction of any costs. The Company would withhold the tax and remit it to the tax office. Such income is not subject to aggregation with other types of income.

In the case of interest payments made by the Company under the guarantee paid to Polish legal persons, the income would be subject to aggregation with other types of income generated by such legal persons and then subject to flat 19% corporate income tax rate. No withholding tax would apply.

In the case of repurchase or redemption amounts payable by the Company, tax will be payable in Poland by Polish individuals and Polish legal persons on the difference between the proceeds of the repurchase or redemption and the acquisition cost of the Notes (capital gain). The Company would not withhold the tax. In the case of Polish individuals the capital gain would be subject to 19% personal income tax settled on an annual basis (i.e. no interim tax advances are payable). In the case of Polish legal persons, such capital gain is subject to 19% corporate income tax, payable in advance on the 20th day of the month following the month in which the capital gain was realized.

Should the Polish tax authorities reclassify the interest payments under guarantee into “income from other sources‘, then the Polish individuals would be subject to progressive taxation (18% rate up to a ceiling of PLN 85,528 and 32% rate thereafter) and the Company would not be obliged to withhold tax on behalf of the Polish individuals. The tax consequences for the Polish legal persons should not be altered by such potential reclassification.

Tax on civil law transactions on transfer of the Notes

Tax on civil law transactions is payable on sale or exchange of the Notes at a rate of 1% of the value transferred, where the transfer of the Notes is treated as relating to:

• property rights enforceable in the territory of Poland or

• property rights enforceable abroad, if the purchaser of the Notes has its residence or seat in Poland and the transfer is executed in Poland.

190 It is expected that the rights attributable to Notes will not be treated as property rights enforceable in Poland for these purposes. The above description of the Polish tax treatment is made on the assumption that such analysis is accepted by the Polish Tax Authorities. In-kind contribution of the Notes to a company or partnership may be subject to tax on civil law transactions if the company/partnership has its seats in Poland. The applicable tax rate would be 0,5% payable on the value of nominal share capital issued (in the scale of companies) or value of the contributed Notes (in the case of partnerships).

Gift and inheritance tax Liabilities to gift and inheritance tax apply only to individuals and may arise on a gift of the Notes or on an inheritance of the Notes, where: • the heir or the donee is a Polish citizen or has a permanent stay in Poland; or • the rights attributable to the Notes are treated as property rights enforceable in the territory of Poland. It is expected that the rights attributable to Notes will not be treated as property rights enforceable in Poland for these purposes. The above description of the Polish tax treatment is made on the assumption that such analysis is accepted by the Polish Tax Authorities. The amount of such tax (and applicable tax exemptions) depends on the relationship of the donor to donee or of the deceased to the heir.

191 Transfer restrictions The Notes offered hereby are subject to restrictions on transfer as summarized below. By purchasing the Notes, you will be deemed to have made the following acknowledgments, representations to and agreements with us and the initial purchasers: (1) You understand and acknowledge that: • the Notes have not been and will not be registered under the U.S. Securities Act or any other applicable securities laws; • the Notes are being offered for resale in transactions that do not require registration under the U.S. Securities Act or any other securities laws; and • unless so registered, the Notes may not be offered, sold or otherwise transferred except under an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act or any other applicable securities laws, and in each case in compliance with the conditions for transfer set forth in paragraph (4) below. (2) You represent that you are not an “affiliate” (as defined in Rule 144 under the U.S. Securities Act) of ours, that you are not acting on our behalf and that either: • you are a “qualified institutional buyer” (as defined in Rule 144A) and are purchasing Notes for your own account or for the account of another qualified institutional buyer, and you are aware that the initial purchasers are selling the Notes to you in reliance on Rule 144A; or • you are not a “U.S. person” (as defined in Regulation S under the U.S. Securities Act) or purchasing for the account or benefit of a U.S. person, other than a distributor, and you are purchasing Notes in an offshore transaction in accordance with Regulation S. (3) You acknowledge that neither we, the initial purchasers, nor any person representing us or the initial purchasers, has made any representation to you with respect to us or the offering of the Notes, other than the information contained in this listing memorandum. You represent that you are relying only on this listing memorandum in making your investment decision with respect to the Notes. You agree that you have had access to such financial and other information concerning us and the Notes as you have deemed necessary in connection with your decision to purchase the Notes, including an opportunity to ask questions of and request information from us. (4) You represent that you are purchasing the Notes for your own account, or for one or more investor accounts for which you are acting as a fiduciary or agent, in each case not with a view to, or for offer or sale in connection with, any distribution of the Notes in violation of the U.S. Securities Act, subject to any requirement of law that the disposition of your property or the property of that investor account or accounts be at all times within your or their control and subject to your or their ability to resell the Notes pursuant to Rule 144A or any other available exemption from registration under the U.S. Securities Act. If you are a qualified institutional buyer who is purchasing Notes in the United States in reliance on Rule 144A, you agree on your own behalf and on behalf of any investor account for which you are purchasing the Notes, and each subsequent holder of the Notes by its acceptance of the Notes will agree, that until the end of the Resale Restriction Period (as defined below), the Notes may be offered, sold or otherwise transferred only: (a) to us; (b) under a registration statement that has been declared effective under the U.S. Securities Act; (c) for so long as the Notes are eligible for resale under Rule 144A, to a person the seller reasonably believes is a qualified institutional buyer that is purchasing for its own account or for the account of another qualified institutional buyer and to whom notice is given that the transfer is being made in reliance on Rule 144A; (d) through offers and sales that occur outside the United States to a non-U.S. person within the meaning of Regulation S under the U.S. Securities Act;

192 (e) under any other available exemption from the registration requirements of the U.S. Securities Act; subject in each of the above cases to any requirement of law that the disposition of the seller’s property or the property of an investor account or accounts be at all times within the seller or account’s control and in compliance with applicable state and other securities laws.

You also acknowledge that:

• the above restrictions on resale will apply from the closing date until the date that is one year (in the case of Rule 144A Notes) or 40 days (in the case of Regulation S Notes) after the later of the date of delivery of the Notes and the last date on which we or any of our affiliates was the owner of the Notes or any predecessor of the Notes (the “Resale Restriction Period”), and will not apply after the applicable Resale Restriction Period ends;

• we and the registrar reserve the right to require in connection with any offer, sale or other transfer of Notes before the Resale Restriction Period ends under clauses (4)(d) or (e) above the delivery of an opinion of counsel, certifications and/or other information satisfactory to us and the trustee; and

• each note will contain a legend substantially to the following effect:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

THE HOLDER OF THIS SECURITY,BY ITS ACCEPTANCE HEREOF,AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE U.S. SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE U.S. SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE U.S. SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE U.S. SECURITIES ACT, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE U.S. SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT, SUBJECT TO THE ISSUER’S AND THE NEW TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

(5) You acknowledge that we, the initial purchasers and others will rely upon the truth and accuracy of the above acknowledgments, representations and agreements. You agree that if any of the acknowledgments, representations or agreements you are deemed to have made by your purchase of Notes is no longer accurate, you will promptly notify us and the initial purchasers. If you are purchasing any Notes as a fiduciary or agent for one or more investor accounts, you represent that you have sole investment discretion with respect to each of those accounts and that you have full power to make the above acknowledgments, representations and agreements on behalf of each account.

193 Plan of distribution Subject to the terms and conditions in the purchase agreement among the issuer, us, the guarantors and the initial purchasers, we have agreed to sell to the initial purchasers, and the initial purchasers have agreed to purchase from us, the entire principal amount of the Notes. The obligations of the initial purchasers under the purchase agreement, including their agreement to purchase Notes from us, are several and not joint. The purchase agreement provides that the initial purchasers will purchase all the Notes if any of them are purchased. The initial purchasers initially propose to offer the Notes for resale at the issue price that appears on the cover of this listing memorandum. After the initial offering, the initial purchasers may change the offering price and any other selling terms. The initial purchasers may offer and sell Notes through certain of their affiliates. In the purchase agreement, we have agreed that: • we and the issuer will not offer or sell any of our debt securities (other than the Notes) for a period of 180 days after the date of this listing memorandum without the prior consent of each of J.P. Morgan Securities Ltd. and Nomura International plc. • we will indemnify the initial purchasers against certain liabilities, including liabilities under the Securities Act, or contribute to payments that the initial purchasers may be required to make in respect of those liabilities.

United States The Notes have not been and will not be registered under the U.S. Securities Act or the securities laws of any other place. In the purchase agreement, each initial purchaser has agreed that: • the Notes may not be offered or sold within the United States or to U.S. persons except pursuant to an exemption from the registration requirements of the U.S. Securities Act or in transactions not subject to those registration requirements. • during the initial distribution of the Notes, it will offer or sell Notes only to qualified institutional buyers in compliance with Rule 144A and outside the United States to non-U.S. persons in compliance with Regulation S. In addition, until 40 days following the commencement of this offering, an offer or sale of Notes within the United States by a dealer (whether or not participating in the offering) may violate the registration requirements of the U.S. Securities Act unless the dealer makes the offer or sale in compliance with Rule 144A or another exemption from registration under the U.S. Securities Act. During this 40-day period, neither Clearstream nor Euroclear will monitor compliance by dealers with section 4(3) of the U.S. Securities Act.

United Kingdom In the purchase agreement, each initial purchaser has also agreed that: • it has not offered or sold and will not offer or sell any Notes offered hereby to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the Financial Services and Markets Act 2000 (“FSMA”). • it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom. • it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA does not apply to the issuer or the guarantors.

194 European Economic Area In the purchase agreement, each initial purchaser has also agreed that it has not offered or sold and will not offer or sell any Notes offered hereby to persons in any member state of the European Economic Area except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive (including any measure implementing the Prospectus Directive in that Relevant Member State). In the purchase agreement, each initial purchaser has agreed that it: (i) has not, directly or indirectly, offered or sold or issued invitations to subscribe for or bought or sold any Notes or distributed any draft or definitive document in relation to any such offer, invitation or sale in Sweden; and (ii) will not, directly or indirectly, offer for subscription or purchase or issue invitations to subscribe for or buy or sell any Notes or distribute any draft or definitive document in relation to any such offer, invitation or sale in Sweden, except in circumstances that will not result in a requirement to prepare a prospectus pursuant to the provisions of the Swedish Financial Instruments Trading Act (Sw. Lag (1991:980) om handel med finansiella instrument).

General The Notes are a new issue of securities, and there is currently no established trading market for the Notes. In addition, the Notes are subject to certain restrictions on resale and transfer as described under “Transfer restrictions” above. We do not intend to apply for the Notes to be listed on any securities exchange other than the Luxembourg Stock Exchange or to arrange for the Notes to be quoted on any quotation system. The initial purchasers have advised us that they intend to make a market in the Notes, but they are not obligated to do so. The initial purchasers may discontinue any market making in the Notes at any time in their sole discretion. In addition, such market-making activities will be subject to the limits imposed by the U.S. Securities Act and the U.S. Exchange Act. Accordingly, we cannot assure you that a liquid trading market will develop for the Notes, that you will be able to sell your Notes at a particular time or that the prices that you receive when you sell will be favorable. You should be aware that the laws and practices of certain countries require investors to pay stamp taxes and other charges in connection with purchases of securities. In connection with the offering of the Notes, the initial purchasers may engage in overallotment, stabilizing transactions and syndicate covering transactions. Overallotment involves sales in excess of the offering size, which creates a short position for the initial purchasers. Stabilizing transactions involve bids to purchase the Notes in the open market for the purpose of pegging, fixing or maintaining the price of the Notes. Syndicate covering transactions involve purchases of the Notes in the open market after the distribution has been completed in order to cover short positions. Stabilizing transactions and syndicate covering transactions may cause the price of the Notes to be higher than it would otherwise be in the absence of those transactions. If the initial purchasers engage in stabilizing or syndicate covering transactions, they may discontinue them at any time. It is expected that delivery of the Notes will be made against payment therefor on or about the fifth business day following the date of pricing the Notes (such settlement being referred to as “T+5”). Under Rule 15c6-1 under the U.S. Exchange Act, trades in the secondary market generally are required to settle in three business days unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the Notes on the date of pricing or the next three succeeding business days will be required, by virtue of the fact that the Notes will initially settle in T+5, to specify an alternate settlement cycle at the time of such trade to prevent failed settlement. Purchasers of the Notes who wish to trade the Notes on the date of pricing or the next three succeeding business days should consult their own advisers. The initial purchasers and their affiliates have provided and may, from time to time, continue to provide various financial advisory, investment banking, commercial banking and other services to

195 us, for which they have received (and expect to continue to receive) customary fees and reimbursement of expenses. Specifically, J.P. Morgan plc, an affiliate of J.P. Morgan Securities Ltd. has issued opinions as to the fairness, from a financial point of view, of the consideration paid by the Company to ITI Media in connection with the acquisition of the controlling interest in ITI Neovision Sp. z o.o. We expect to engage J.P. Morgan plc to issue a similar opinion as to the fairness, from a financial point of view, of the consideration to be paid by the Company to ITI Media in connection with the remaining interest in ITI Neovision Sp. z o.o. Bayerische Hypo- und Vereinsbank AG, Calyon, Coo¨ peratieve Centrale Raiffeisen-Boerenleenbank B.A. and Nordea Bank Danmark A/S and/or their affiliates are lenders under the SIB Credit Facilities. Delivery of the Notes was made against payment therefor on November 19, 2009, which was the fifth business day following the date of pricing of the Notes (such settlement cycle being herein referred to as “T+5”). Under Rule 15c6-1 under the U.S. Exchange Act, trades in the secondary market generally are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade Notes on the date of pricing or the next succeeding business day will be required, by virtue of the fact that the Notes initially will settle T+5, to specify an alternative settlement cycle at the time of any such trade to prevent a failed settlement. Purchasers of Notes who wish to trade Notes on the date of pricing or the next succeeding business day should consult their advisors.

196 Legal matters Various legal matters will be passed upon for us by Weil, Gotshal & Manges, London, England, as to matters of United States of America federal and New York state law, by Weil, Gotshal & Manges, Warsaw, Poland, as to matters of Polish law, by Advokatfirman Vinge KB, Stockholm, Sweden, as to matters of Swedish Law and by Baker & McKenzie Amsterdam N.V., Amsterdam, The Netherlands, as to matters of Dutch law. Certain legal matters will be passed upon for the initial purchasers by Simpson Thacher & Bartlett LLP, London, England, as to matters of United States of America federal and New York state law, and by White & Case, Warsaw, Poland as to matters of Polish law.

Independent auditors PricewaterhouseCoopers Sp. z o.o., with its registered office in Warsaw (00-638 Warszawa, Al. Armii Ludowej 14), audited the consolidated financial statements of the TVN Group as of and for the year ended December 31, 2008 and the consolidated financial statements of the TVN Group as of and for the year ended December 31, 2007 included in this listing memorandum and issued unqualified auditor’s opinions on the aforementioned financial statements. PricewaterhouseCoopers Sp. z o.o. reviewed the unaudited interim condensed consolidated financial statements of the TVN Group as of and for the three and nine months ended September 30, 2009 included in this listing memorandum and issued a respective unqualified review report. PricewaterhouseCoopers Sp. z o.o. reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their report states that they did not audit and they do not express an opinion on the unaudited interim condensed consolidated financial statements of the TVN Group as of and for the three and nine months ended September 30, 2009. Accordingly, the degree of reliance on their report should be restricted in light of the limited nature of the review procedures applied. Furthermore, PricewaterhouseCoopers Sp. z o.o. audited the consolidated financial statements of the ITI Neovision Group as of and for the year ended December 31, 2008 and issued an unqualified auditor’s opinion on the aforementioned financial statements with the following emphasis of matter: “Without qualifying our opinion, we draw attention to Note 2.2 to the consolidated financial statements which indicates that the Group incurred a net loss of PLN 441,414 thousand during the year ended 31 December 2008 and, as of that date, the Group’s total liabilities exceeded its total assets by PLN 682,879 thousand. These conditions, along with other matters as set forth in Note 2.2, indicate the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern.” PricewaterhouseCoopers Sp. z o.o. is registered in the register of auditors held by the National Chamber of Statutory Auditors under No. 144.

Enforceability of judgments TVN S.A., the parent company of the issuer that is guaranteeing the issuer’s obligations on the Notes, is incorporated under the laws of Poland. Other subsidiaries of the Company located outside Poland may become guarantors of the Notes. The issuer is a company incorporated under the laws of Sweden. All of our directors and executive officers live outside the United States of America. All of the assets of our directors and executive officers and all of our and the issuer’s assets are located outside the United States of America. As a result, although we have appointed CT Corporation as agent for service of process under the indenture governing the Notes, it may be difficult for you to serve process on those persons or us in the United States of America or to enforce judgments obtained in U.S. courts against the issuer or us based on civil liability provisions of the securities laws of the United States of America. We have been advised by our Polish counsel that judgments of foreign courts subject to enforcement, which generally represent judgments for the payment of money or specific performance, are enforceable in Poland if the judgment was issued in a country party to the 156 Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters adopted in Lugano on September 18, 1998 or if a relevant bilateral treaty provides for such enforcement or on the basis of the rules of the Polish Code of Civil Procedure. We have been

197 advised by our Polish counsel that there is no treaty between the United States of America and Poland providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) rendered in civil and commercial matters. Therefore, in such a case, the rule of the Polish Code of Civil Procedure shall apply. Those rules provide for enforcement of foreign judgments concerning matters which may be settled by Polish civil courts if the judgment is enforceable in the country where it has been rendered. In addition the following requirements must be satisfied: • the judgment is final in the jurisdiction in which it was issued; • the case does not belong to the exclusive jurisdiction of the Polish courts; • no summons has been served on the defendant, who was not engaged in the dispute on the matter, in due time for his defense; • the party has not been deprived of the possibility of defending themselves during judicial proceedings; • a case regarding the same claim between the same parties was not pending earlier in the Republic of Poland earlier than before a court of the foreign country; • the judgment is not contrary to an earlier final judgment of a Polish court or an earlier final judgment of a foreign court satisfying the conditions for its recognition in the Republic of Poland, which was rendered in a case regarding the same claim between the same parties; • the judgment is not contrary to the fundamental principles of the legal order of the Republic of Poland. We have been advised by our Swedish counsel that a judgment entered against any Swedish Party in the courts of a state which is not, under the terms of the Brussels Regulation and the 1968 Brussels or 1988 Lugano Conventions on the Recognition of Judgments in Civil and Commercial Matters (the “Conventions”) a Member State (as defined in the Brussels Regulation) or a Contracting State (as defined in the Conventions) (e.g. United States of America), would not be recognized or enforceable in Sweden as a matter of right without retrial on its merits (but will be persuasive authority as a matter of evidence before the courts of law, administrative tribunals or executive or other public authorities of the Kingdom of Sweden). However, there is Swedish case law to indicate that such judgments: (i) that are based on contract which expressly exclude the jurisdiction of the courts of the Kingdom of Sweden; (ii) that were rendered under observance of due process of law; (iii) against which there lies no further right to appeal; and (iv) the recognition of which would not manifestly contravene fundamental principles of the legal order or the public policy of the Kingdom of Sweden, should be acknowledged without retrial on their merits.

198 Listing and general information

Listing Application has been made to admit the Notes to listing on the Official List of the Luxembourg Stock Exchange and to trading on the Euro MTF in accordance with the rules of that exchange. All notices to holders of Notes, including any notice of any additional redemption or change of control will be published in a Luxembourg newspaper of general circulation which is expected to be the Luxemburger Wort or on the website of the Luxembourg Stock Exchange at www.bourse.lu. For so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of that exchange require, copies of the following documents may be inspected and obtained at the specified office of the listing agent in Luxembourg during normal business hours on any weekday: • the organizational documents of the issuer and the guarantors; • our most recent audited consolidated financial statements, and any unaudited interim financial statements published by us; • the most recent unconsolidated financial statements published by the Company (we do not prepare unconsolidated interim financial statements); • the indenture relating to the Notes (which includes the guarantees and the form of the Notes); and • the purchase agreement relating to the Notes among the issuer, the guarantors and the initial purchasers. The issuer will maintain a paying and transfer agent in Luxembourg for as long as any of the Notes are listed on the Luxembourg Stock Exchange. The issuer has appointed The Bank of New York Mellon (Luxembourg) S.A. as its Luxembourg paying and transfer agent. The issuer reserves the right to change this appointment, and the issuer will publish notice of such change of appointment in a newspaper having general circulation in the Grand Duchy of Luxembourg (which is expected to be the Luxemburger Wort) or on the website of the Luxembourg Stock Exchange (www.bourse.lu).

Clearing information The Notes sold pursuant to Regulation S and the Notes sold pursuant to Rule 144A have been accepted for clearance and settlement through the facilities of Euroclear and Clearstream under common codes 046645154 and 046645421, respectively. The international securities identification number for the Notes sold pursuant to Regulation S is XS0466451548 and the international securities identification number for the Notes sold pursuant to Rule 144A is XS0466454211.

Legal information Information on the issuer The issuer is TVN Finance Corporation II AB (whose name was changed from AB Grundstenen 117095 with effect from December 14, 2009), which was incorporated under the laws of Sweden on June 5, 2007 as an off-the-shelf company with no assets or operations that was purchased by the Company for the purpose of issuing the Notes. The issuer became a wholly-owned subsidiary of the Company on November 12, 2009. The issued and paid up share capital of the issuer currently amounts to SEK 500,000 divided into 5,000 ordinary shares with a par value of SEK 100 each. The issuer publishes its financial statements in Swedish. The registered office of the issuer is Stureplan 4 c 4 tr, 114 35 Stockholm, Sweden. The issuer is registered with the Swedish Companies Registration Office under number 556734-5813. The issuer’s director is Carl Henrik Hugo Nordenfelt, whose main occupation is to sit on the board of directors of both holding and active limited liability companies and foundations owned by foreign and Swedish entities; he is also a member of the town council of the city of Stockholm. The issuer’s deputy director is Bernardita Marcelo Modig. The issuer’s auditors are PricewaterhouseCoopers AB with the responsible auditor being Thomas Minell. The issuer is not subject to any legal proceedings or claims.

199 The creation and issuance of the Notes was authorized by a resolution of the issuer’s board of directors, on November 11, 2009. The giving of the guarantees by the Company and certain of its subsidiaries were authorized by a resolution of our board of directors on November 12, 2009.

Information on the guarantors The Notes offered hereby will be fully and unconditionally guaranteed on a senior unsecured basis by TVN S.A., Neovision Holding B.V., ITI Neovision Sp. z o.o., Grupa Onet Poland Holding B.V. and Grupa Onet.pl S.A. Except as disclosed in this listing memorandum: • there has been no material adverse change in our financial position since September 30, 2009; and • we have not been involved in any litigation, administrative proceeding or arbitration relating to claims or amounts which are material in the context of the issuance of the Notes, and, so far as we are aware, no such litigation, administrative proceeding or arbitration is pending or threatened. The issuer and the Company accept responsibility for the information contained in this offering memorandum. To the best of their knowledge, except as otherwise noted, the information contained in this listing memorandum is in accordance with the facts and does not omit anything likely to affect the accuracy of this listing memorandum.

200 Index to financial statements

TVN GROUP Unaudited interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2009 Report on review of financial statements ...... F-2 TVN Information ...... F-3 Interim condensed consolidated income statement...... F-5 Interim condensed consolidated statement of comprehensive income ...... F-6 Interim condensed consolidated balance sheet ...... F-7 Interim condensed consolidated statement of changes in shareholders’ equity ...... F-8 Interim condensed consolidated cash flow statement ...... F-10 Notes to the Interim Condensed Consolidated Financial Statements ...... F-11 Audited consolidated financial statements as of and for the year ended December 31, 2008 Independent auditor’s report ...... F-65 TVN information ...... F-66 Consolidated income statement ...... F-68 Consolidated balance sheet ...... F-69 Consolidated statement of changes in shareholders’ equity ...... F-70 Consolidated cash flow statement ...... F-72 Notes to the consolidated financial statements ...... F-73 Audited consolidated financial statements as of and for the year ended December 31, 2007 Independent auditor’s report ...... F-133 TVN information ...... F-134 Consolidated income statement ...... F-136 Consolidated balance sheet ...... F-138 Consolidated statement of changes in shareholders’ equity ...... F-139 Consolidated cash flow statement ...... F-141 Notes to the consolidated financial statements ...... F-142 ITI NEOVISION GROUP Audited consolidated financial statements as of and for the year ended December 31, 2008 Independent auditor’s report ...... F-196 Group information ...... F-197 Consolidated income statement ...... F-200 Consolidated balance sheet ...... F-201 Consolidated statement of changes in shareholders’ equity ...... F-202 Consolidated cash flow statement ...... F-203 Notes to the consolidated financial statements ...... F-204

F-1

PricewaterhouseCoopers Sp. z o.o. Al. Armii Ludowej 14 00-638 Warszawa Poland Telefon +48 (22) 523 4000 Faks +48 (22) 523 4040 http://www.pwc.com/pl

Report on review of financial statements

To the Shareholders and Supervisory Board of TVN S.A.:

Introduction We have reviewed the accompanying interim condensed consolidated balance sheet of TVN S.A. (the ‘Company’) and its subsidiaries (the ‘TVN Group’) as of 30 September 2009, the related interim condensed consolidated income statements and interim condensed consolidated statements of comprehensive income for the three and nine month periods then ended and the related interim condensed consolidated statement of changes in shareholders’ equity and interim condensed consolidated cash flow statement for the nine month period then ended. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with International Accounting Standard 34, ‘Interim financial reporting’. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review We conducted our review in accordance with International Standard on Review Engagements 2410, ‘Review of interim financial information performed by the independent auditor of the entity’. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, ‘Interim financial reporting’.

PricewaterhouseCoopers Sp. z o.o. Warsaw, Poland October 28, 2009

PricewaterhouseCoopers Sp. z o.o. wpisana jest do Krajowego Rejestru Sa˛ dowego prowadzonego przez Sa˛ d Rejonowy dla m. st. Warszawy, pod numerem KRS 0000044655, NIP 526-021-02-28. Kapitał zakładowy wynosi 10.363.900 złotych. Siedziba˛ Spółki jest Warszawa, Al. Armii Ludowej 14.

F-2 TVN Information

1. Principal activity TVN Group is the leading, integrated Polish media group, active in television broadcasting and production, including operation of a digital satellite television, internet and teleshopping. TVN S.A. (the “Company”) and its subsidiaries (“TVN Group”, the “Group”) operate or jointly operate eleven television channels in Poland: TVN, TVN 7, TVN 24, TVN Meteo, TVN Turbo, ITVN, TVN Style, TVN CNBC Biznes, TVN Warszawa, NTL Radomsko and Telezakupy Mango 24. The Group’s channels broadcast news, information and entertainment shows, serials, movies and teleshopping. The Group also operates a Polish direct-to-home digital satellite television, ’n’, which offers technologically advanced pay television services. The Group also operates Onet.pl the leading internet portal in Poland operating services such as: Zumi.pl, Sympatia.pl, OnetBlog and OnetLajt. 2. Registered Office TVN S.A. ul. Wiertnicza 166 02-952 Warszawa

3. Supervisory Board • Wojciech Kostrzewa, President • Bruno Valsangiacomo, Vice-President • Arnold Bahlmann • Romano Fanconi • Paweł Gricuk • Paweł Kosmala • Wiesław Rozłucki • Andrzej Rybicki • Markus Tellenbach (resigned August 31, 2009) • Aldona Wejchert • Gabriel Wujek

4. Management Board • Markus Tellenbach, President (appointed September 1, 2009) • Piotr Walter, Vice-President (appointed September 1, 2009, resigned as President August 31, 2009) • Jan Łukasz Wejchert, Vice-President • Rafał Wyszomierski (appointed September 1, 2009) • Karen Burgess, Vice-President (resigned August 31, 2009) • Edward Miszczak, Vice-President (resigned August 31, 2009) • Tomasz Berezowski (resigned May 13, 2009) • Olgierd Dobrzyn´ ski (resigned May 13, 2009) • Waldemar Ostrowski (resigned May 13, 2009) • Adam Pieczyn´ ski (resigned May 13, 2009) • Jarosław Potasz (resigned May 13, 2009) • Piotr Tyborowicz (resigned May 13, 2009)

F-3 5. Auditors PricewaterhouseCoopers Sp. z o.o. Al. Armii Ludowej 14 00-638 Warszawa 6. Principal Solicitors Clifford Chance ul. Lwowska 19 00-660 Warszawa 7. Principal Bankers Bank Polska Kasa Opieki S.A. (“Pekao S.A.”) ul. Grzybowska 53/57 00-950 Warszawa 8. Subsidiaries Television Broadcasting and Production • TVN Finance Corporation plc • NTL Radomsko Sp. z o.o. One London Wall ul. 11 Listopada 2 London EC2Y 5EB, UK 97-500 Radomsko • El-Trade Sp. z o.o • Thema Film Sp. z o.o. ul. Wiertnicza 166 ul. Powsin´ ska 4 02-952 Warszawa 02-920 Warszawa • Mango Media Sp. z o.o • Tivien Sp. z o.o. ul. Hutnicza 59 ul. Augustówka 3 81-061 Gdynia 02-981 Warszawa Digital satellite pay television • ITI Neovision Sp. z o.o • Neovision Holding B.V. ul. Kłobucka 23 De Boelelaan 7 02-699 Warszawa NL-1083 Amsterdam The Netherlands • Cyfrowy Dom Sp. z o.o • Neovision UK Ltd. ul. Kłobucka 23 Carmelite 50 Victoria Embankment 02-699 Warszawa London EC4Y 0DX, UK On-line • Grupa Onet.pl S.A. • Media Entertainment Ventures ul. G. Zapolskiej 44 International Limited 30-126 Kraków Palazzo Pietro Stiges 90, Strait Street Valetta VLT 05, Malta • Grupa Onet Poland Holding B.V • SunWeb Sp. z o.o. De Boelelaan 7 ul. G. Zapolskiej 44 NL-1083 Amsterdam 30-126 Kraków The Netherlands • Dream Lab Onet.pl Sp. z o.o. ul. G. Zapolskiej 44 30-126 Kraków 9. Joint ventures • MGM Channel Poland Ltd. • Polski Operator Telewizyjny Sp. z o.o. Carmelite, 50 Victoria Embankment ul. Huculska 6 London EC4Y 0DX, UK 00-730 Warszawa 10. Associate • Polskie Badania Internetu Sp. z o.o. Al. Jerozolimskie 65/79 00-697 Warszawa

F-4 TVN S.A. Interim condensed consolidated income statement (Expressed in PLN, all amounts in thousands, except as otherwise stated)

Nine months Nine months Three months Three months ended ended ended ended September 30, September 30, September 30, September 30, Note 2009 2008 2009 2008 Revenue ...... 6 1,443,006 1,305,011 427,875 353,820 Cost of revenue ...... 7 (931,131) (675,899) (323,646) (204,574) Selling expenses ...... 7 (172,129) (111,673) (67,609) (39,744) General and administration expenses ...... 7 (137,205) (110,151) (41,146) (36,117) Other operating (expense)/ income, net...... 7 (3,912) 2,490 859 756 Gain on step acquisition ...... 29 110,690 - - - Operating profit/ (loss) ...... 309,319 409,778 (3,667) 74,141 Investment income, net ...... 8 39,948 14,873 9,580 1,899 Finance (expense)/ income, net . . . . . 8 (133,599) (64,751) 42,495 (52,829) Share of (loss)/ profit of associate . . . 29 (39,090) (19,057) 128 (18,502) Profit before income tax...... 176,578 340,843 48,536 4,709 Income tax (charge)/ benefit ...... 25 (35,299) (64,801) 1,316 299 Profit for the period ...... 141,279 276,042 49,852 5,008 Profit/ (loss) attributable to: Owners of the parent ...... 178,160 276,042 58,238 5,008 Non-controlling interests ...... (36,881) - (8,386) - 141,279 276,042 49,852 5,008 Earnings per share for profit attributable to the owners of TVN S.A. (not in thousands) -basic...... 9 0.52 0.79 0.17 0.01 -diluted...... 9 0.52 0.78 0.17 0.01 Supplementary disclosure of impact of embedded option valuation: Profit attributable to the owners of TVN S.A...... 178,160 276,042 58,238 5,008 Impact on profit, net of tax, of fair value (gain)/ loss on embedded option...... - (4,601) - 12,483 Adjusted profit attributable to the owners of TVN S.A...... 178,160 271,441 58,238 17,491

The Group presents adjusted profit to reflect the impact of non-cash fair value gains/ losses arising on prepayment options embedded in its Senior Notes. The accounting for prepayment options is technical, judgmental and driven by accounting interpretations. The Group believes that presentation of net profit adjusted for this item enables a reader to better understand the Group’s operating and financial performance.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-5 TVN S.A. Interim condensed consolidated statement of comprehensive income (Expressed in PLN, all amounts in thousands, except as otherwise stated)

Nine months Nine months Three months Three months ended ended ended ended September 30, September 30, September 30, September 30, Note 2009 2008 2009 2008 Profit for the period ...... 141,279 276,042 49,852 5,008 Other comprehensive income: Available-for-sale assets ...... 15 (668) - - - Income tax relating to components of other comprehensive income . . . . . 25 127 - - - Other comprehensive income for the period, net of tax . . . (541) - - - Total comprehensive income for the period ...... 140,738 276,042 49,852 5,008 Total comprehensive income attributable to: Owners of the parent ...... 177,619 276,042 58,238 5,008 Non-controlling interests ...... (36,881) - (8,386) - 140,738 276,042 49,852 5,008

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-6 TVN S.A. Interim condensed consolidated balance sheet (Expressed in PLN, all amounts in thousands, except as otherwise stated)

As at As at September 30, December 31, Note 2009 2008 ASSETS Non-current assets Property, plant and equipment ...... 10 728,931 347,400 Goodwill ...... 11 1,695,529 952,657 Brand...... 12 791,579 693,688 Other intangible assets ...... 72,057 56,796 Non-current programming rights ...... 13 175,152 154,741 Investments in associates ...... 29 1,284 120,076 Loan to associate ...... 29 - 179,138 Available-for-sale financial assets ...... 15 7,588 7,588 Deferred tax asset ...... 25 44,620 34,515 Other non current assets ...... 18 5,338 5,181 3,522,078 2,551,780 Current assets Current programming rights...... 13 234,209 192,676 Trade receivables...... 16 288,443 305,834 Available-for-sale financial assets ...... 15 - 315,616 Derivative financial assets...... 17 3,657 149,865 Prepayments and other assets...... 18 100,571 51,286 Corporate income tax receivable...... - 1,250 Cash and cash equivalents ...... 19 81,040 184,867 707,920 1,201,394 TOTAL ASSETS ...... 4,229,998 3,753,174 EQUITY Shareholders’ equity Share capital ...... 20 68,076 69,903 Share premium ...... 606,129 605,805 Treasury shares ...... 21 - (37,428) 8% obligatory reserve ...... 23,301 23,152 Other reserves...... 125,248 109,048 Accumulated profit ...... 762,292 876,474 1,585,046 1,646,954 Non-controlling interest...... (327,665) - 1,257,381 1,646,954

LIABILITIES Non-current liabilities 9.5% Senior Notes due 2013...... 22 871,023 855,432 PLN Bonds due 2013 ...... 22 498,610 498,593 Loans from related parties ...... 22,31 525,550 - Loan facility ...... 22 109,927 109,875 Deferred tax liability ...... 25 175,512 165,679 Non-current trade payables ...... 26 41,735 6,951 Contingent consideration...... 29 228,766 - Other non-current liabilities ...... 2,475 1,342 2,453,598 1,637,872 Current liabilities Current trade payables ...... 26 196,237 141,905 Corporate income tax payable ...... 6,560 40,559 Accrued interest on borrowings ...... 22 39,202 7,658 Derivative financial liabilities ...... 17 693 - Overdraft facility ...... 22 - 48,733 Other liabilities and accruals...... 23 276,327 229,493 519,019 468,348 Total liabilities ...... 2,972,617 2,106,220 TOTAL EQUITY AND LIABILITIES ...... 4,229,998 3,753,174

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-7 TVN S.A. Interim condensed consolidated statement of changes in shareholders’ equity (Expressed in PLN, all amounts in thousands, except as otherwise stated)

Total Number of Employee attributable shares 8% share to owners Non- (not in Share Share obligatory option plan Accumulated of the controlling Total thousands) capital premium reserve reserve profit Company interests equity Balance at January 1, 2008 ..... 347,272,975 69,455 566,327 22,901 86,833 684,245 1,429,761 - 1,429,761 Total comprehensive income for the period ...... - - - - - 276,042 276,042 - 276,042 Issue of shares ...... 2,223,678 444 39,315 - (18,252) - 21,507 - 21,507 Share issue cost ...... - - (95) - - - (95) - (95) Dividend declared and paid . . . . - - - - - (171,180) (171,180) - (171,180) Dividend cost ...... - - - - - (16) (16) - (16) Share option plan charge for the period(1) ...... - - - - 30,628 - 30,628 - 30,628 Appropriation of 2007 profit —transfer to 8% obligatory reserve ...... - - - 251 - (251) - - - Balance at September 30, 2008 .. 349,496,653 69,899 605,547 23,152 99,209 788,840 1,586,647 - 1,586,647

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-8 TVN S.A. Interim condensed consolidated statement of changes in shareholders’ equity (Expressed in PLN, all amounts in thousands, except as otherwise stated) Number of Total shares 8% Other attributable Non- (not in Share Share Treasury obligatory reserves Accumulated to owners of controlling Total thousands) capital premium shares reserve (*) profit the Company interests equity Balance at January 1, 2009 ... 349,515,414 69,903 605,805 (37,428) 23,152 109,048 876,474 1,646,954 - 1,646,954 Total comprehensive income for the period ...... - - - - - (541) 178,160 177,619 (36,881) 140,738 Issue of shares(2) ...... 23,850 5 429 - - (179) - 255 - 255 Purchase of treasury shares(3) ...... - - - (62,572) - - - (62,572) - (62,572) Redemption of treasury shares(3) ...... (9,157,107) (1,832) - 100,000 - - (98,168) - - - Dividend declared and paid(4) ...... ------(194,005) (194,005) - (194,005) Dividend cost ...... ------(20) (20) - (20) Cost of share option plan . . . . - - (105) - - - - (105) - (105) Share option plan charge for the period(1) ...... - - - - - 16,920 - 16,920 - 16,920 Acquisition of subsidiary (see Note 29) ...... ------(290,784) (290,784) Appropriation of 2008 profit - transfer to 8% obligatory reserve ...... - - - - 149 - (149) - - - Balance at September 30, 2009 ...... 340,382,157 68,076 606,129 - 23,301 125,248 762,292 1,585,046 (327,665) 1,257,381

(1) On December 27, 2005 TVN S.A. introduced the TVN Incentive Scheme I based on C series of shares. On June 8, 2006 the Annual Shareholders’ Meeting approved a conditional share capital increase of up to 1,974 required for execution of the TVN Incentive Scheme I. On July 31, 2006, as part of the acquisition of Grupa Onet.pl, TVN S.A. introduced the TVN Incentive Scheme II based on E series of shares. On September 26, 2006 the Extraordinary Shareholders’ Meeting approved a conditional share capital increase of up to 1,756 required for execution of the TVN Incentive Scheme II. (2) During the nine months ended September 30, 2009 23,850 (not in thousands) of C1 and C2 series shares were issued and fully paid as a result of the exercise of share options granted under the TVN incentive schemes. (3) During the nine months ended September 30, 2009, 6,200,937 (not in thousands) shares were purchased by the Company for redemption. The redemption of 9,157,107 (not in thousands) treasury shares was registered by the Court on July 3, 2009 (see Note 21). (4) The dividend declared and paid in 2009 amounted to 0.57 per share (not in thousands). Included in accumulated profit as of September 30, 2009 is an amount of 371,750 designated for a share buyback (see Note 21) and an amount of 381,412 being the accumulated profit of TVN S.A. on a stand-alone basis which is distributable. The Senior Notes (see Note 22) impose certain restrictions on payment of dividends. * Other reserves Employee share Fair value option plan reserve reserve Total Balance at January 1, 2009...... 108,507 541 109,048 Issue of shares ...... (179) - (179) Charge for the period ...... 16,920 (668) 16,252 Deferred tax on charge for the period ...... - 127 127 Balance at September 30, 2009...... 125,248 - 125,248

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-9 TVN S.A. Interim condensed consolidated cash flow statement (Expressed in PLN, all amounts in thousands, except as otherwise stated)

Nine months ended Nine months ended September 30, September 30, Note 2009 2008 Operating activities Cash generated from operations ...... 24 315,501 543,812 Tax paid...... (92,892) (88,704) Net cash generated by operating activities ...... 222,609 455,108 Investing activities Acquisition of subsidiary, net of cash acquired ...... 29 (97,683) - Acquisition of associate ...... - (323,817) Loans granted to associate ...... 29 (75,344) (15,180) Payments to acquire property, plant and equipment . . (248,705) (96,237) Proceeds from sale of property, plant and equipment ...... 554 447 Payments to acquire intangible assets ...... (22,568) (12,441) Bank deposit with maturity over 3 months ...... - (18,360) Purchase of available for sale financial assets ...... 15 (27,025) (87,529) Sale of available-for-sale financial assets ...... 15 347,270 - Payments to acquire options ...... - (6,987) Settlement of foreign exchange options ...... 9,864 - Interest received ...... 5,354 10,225 Net cash used in investing activities ...... (108,283) (549,879) Financing activities Issue of shares, net of issue cost...... 150 21,412 Dividend paid ...... (194,025) (171,196) Share buyback, including related expenses ...... 21 (62,572) - Proceeds from related party borrowings ...... 69,509 - Issue of PLN Bonds due 2013 ...... - 498,670 Repurchase of Senior Notes due 2013 ...... - (36,587) Payments to acquire options ...... - (10,370) Early settlement of options ...... 8,17 101,014 (16,642) Overdraft facility...... 22 (48,733) - Interest paid ...... (78,834) (41,165) Net cash (used in)/ generated by financing activities .. (213,491) 244,122 (Decrease)/ increase in cash and cash equivalents .... (99,165) 149,351 Cash and cash equivalents at the start of the period . . 184,867 110,372 Effects of exchange rate changes...... (4,662) 332 Cash and cash equivalents at the end of the period .. 81,040 260,055

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-10 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated)

1. TVN These interim condensed consolidated financial statements were authorized for issuance by the Management Board of TVN S.A. on October 28, 2009 and by the Supervisory Board of TVN S.A. on , 2009.

TVN S.A. (until July 29, 2004 TVN Sp. z o. o.) was incorporated in May 1995 and is a public media and entertainment company established under the laws of Poland and listed on the Warsaw Stock Exchange.

The Company is part of a group of companies controlled by International Trading and Investments Holdings S.A. Luxembourg (“ITI Holdings”) and its subsidiaries (the “ITI Group”). ITI Group has been active in Poland since 1984 and is the largest media and entertainment group in Poland.

The structure of TVN Group is described in Note 30.

On June 25, 2008, the Group became the direct owner of shares of Neovision Holding B.V. (“Neovision Holding”) and, through its ownership interest in Neovision Holding, the indirect owner of shares of ITI Neovision Sp. z o.o. (“ITI Neovision”) representing 25% plus one share of each of those companies. The Group at the same time also acquired interests in certain shareholder loans made by ITI Media Group N.V. (“ITI Media Group”) and other ITI Holdings subsidiaries to ITI Neovision (“Shareholder Loans”) representing 25% of the principal of those Shareholder Loans plus 25% of all interest on those Shareholder Loans from May 1, 2008. ITI Neovision and its subsidiaries distribute pay-TV and video-on-demand content in Poland via digital satellite broadcasting, cable operators and IPTV and ADSL operators. Neovision Holding’s only activity is to hold the shares of ITI Neovision.

On March 11, 2009, the Group and ITI Media Group entered into a preliminary agreement where the parties agreed that the Group would increase its direct ownership interest in Neovision Holding and its indirect ownership interest in ITI Neovision to, in aggregate, 51% of each company’s shares. Up to March 11, 2009 the Group had classified its investment in Neovision Holding as an investment in an associate and recognized only the respective share of net results of the associate. From March 11, 2009 the Group has fully consolidated the operations of Neovision Holding Group.

As a result of the acquisition, the financial results for the three and nine months ended September 30, 2009 are not directly comparable to the results for the three and nine months ended September 30, 2008.

On May 22, 2009 ITI Neovision purchased from Union des Associations Europeennes de Football (“UEFA”) headquartered in Switzerland, license rights to broadcast in Poland Champions League matches during the 2009/2010, 2010/2011 and 2011/2012 seasons.

The majority of the Group’s operations and assets are based in Poland. Assets and revenues from outside Poland constitute less than 10% of the total assets of all segments. Therefore, no geographic information has been included.

Advertising sales in Poland tend to be lowest during the third quarter of each calendar year, which includes the summer holiday period, and highest during the fourth quarter of each calendar year.

Revenue from pay-TV services tends to be seasonal. The highest number of new subscribers are typically acquired in the fourth quarter. Seasonal increases in the subscriber base also occur prior to

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-11 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) major sport events that are not covered by free-to-air channels. These increases are usually followed by higher subscription revenue.

2. Summary of significant accounting policies

2.1. Basis of preparation

These interim condensed consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the EU, issued and effective at the date when these financial statements were published and IAS 34 “Interim Financial Reporting”. The accounting policies used in the preparation of the interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2009 are consistent with those used in the annual consolidated financial statements for the year ended December 31, 2008 except for new accounting policies described below and standards and interpretations which became effective January 1, 2009 or were early adopted by the Group. The Group presents in these interim condensed consolidated financial statements only the accounting policies which have changed as compared to the annual consolidated financial statements for the year ended December 31, 2008 due to adoption or early adoption of new standards, amendments to standards and interpretations in 2009 as well as new policies for the new transactions, operations and events in the Group resulting from the acquisition of Neovision Holding.

In 2009 the Group adopted:

(i) IFRS 8 — Operating Segments

The standard specifies how an entity should report information about its operating segments and requires reporting selected information in interim financial reports. It also sets out requirements for disclosures about products and services, geographical areas and major customers.

As a result of application of IFRS 8 the Group presents EBITDA as a measure of segment profit or loss. The Group introduced also new segment—’All other’, which includes mainly teleshopping services and content and technical services.

(ii) Amendments to IAS 23 — Borrowing Costs

The standard requires capitalization of borrowing costs attributable to qualifying assets. Qualifying assets are assets that take substantial time to get ready for their intended use or sale. It applies only to assets measured at historical cost.

The amended standard is applied by the Group from January 1, 2009. As the Group’s borrowings are usually raised for general purposes, the borrowing costs for capitalization are determined through the application of a capitalization rate to costs incurred in getting ready qualifying asset during the reporting period. The capitalization rate is determined as a relation of the applicable borrowing costs to the weighted average balance of borrowings outstanding during the period. Currently, the only qualifying assets identified by the Group in relation to which borrowing costs are capitalized are office investments in the special economic zone in Krakow.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-12 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

(iii) Amendments to IAS 1 — Presentation of financial statements

The amendments introduce a statement of comprehensive income which replaces the income statement and also includes all non-owner changes in equity, such as the revaluation of available-for-sale financial assets. The Group has chosen to present two statements: a consolidated income statement and a consolidated statement of comprehensive income. The revised IAS 1 also introduced a requirement to present a statement of financial position (balance sheet) at the beginning of the earliest comparative period whenever the Group restates comparatives due to reclassifications, changes in accounting policies or corrections of errors. The revised IAS 1 affects the presentation of the Group’s consolidated financial statements but has no impact on the recognition or measurement of specific transactions and balances.

(iv) Revision to IFRS 3 Business Combinations and amendment to IAS 27 Consolidated and Separate Financial Statements — applicable on or after July 1, 2009

Changes incorporate the revised guidance on acquisitions and business combinations. The Group decided to early adopt the revised standard as of January 1, 2009.

(v) Amendment to IFRS 2, Share-based Payments

The amendment clarifies that vesting conditions are service conditions and performance conditions only and that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment. This amendment did not impact the Group’s financial statements.

(vi) Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements — Puttable Financial Instruments and Obligations Arising on Liquidation

The amendments require entities to classify as equity puttable financial instruments and instruments or components of instruments, that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation. Additional disclosures are required about the instruments affected by the amendments. These amendments did not impact the Group’s financial statements.

(vii) IFRIC 11 — Group and Treasury Share Transactions

The interpretation addresses the issue of share-based payment arrangements involving an entity’s own equity instruments and equity instruments of the parent. This interpretation did not impact the Group’s consolidated financial statements.

(viii) IFRIC 13 — Customer Loyalty Programmes

The interpretation addresses revenue accounting by entities that grant loyalty award credits to their customers for buying goods or services. The Group’s accounting policy is aligned with the Interpretation and therefore it did not affect the Group’s consolidated financial statements. The Group allocates some of the consideration receivable from sales to the credits awarded and defers the recognition of revenue.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-13 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

(ix) IFRIC 14, The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

The interpretation clarifies the issue when the refunds or reductions in future contributions should be regarded as available, particularly when a minimum funding requirement exists. The interpretation did not affect the Group’s consolidated financial statements.

(x) IFRIC 15 — Agreements for the Construction of Real Estate

The interpretation applies to the accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors. The Interpretation provides guidance on how to determine whether an agreement for the construction of real estate is within the scope of IAS 11 Construction Contracts or IAS 18 Revenue and when revenue from the construction should be recognized. This interpretation was early adopted and did not impact the Group’s financial statements.

(xi) IFRS Improvements 2008

The International Accounting Standards Board has issued “IFRS Improvements”, which amend 20 standards. The amendments include changes in presentation, recognition and valuation and include terminology and editorial changes. The majority of the amendments is effective from annual periods starting on January 1, 2009. The Group adopted the changes in accordance with the transition provisions, the changes did not have significant impact on Group’s consolidated financial statements.

(xii) IFRIC 12 — Service Concession Arrangements

The interpretation gives guidance on the accounting by operators for public-to-private service concession arrangements. This interpretation was early adopted and did not impact the Group’s financial statements.

(xiii) IFRIC 16 — Hedges of a Net Investment in a Foreign Operation

The interpretation applies to an entity that hedges the foreign currency risk arising from its net investments in foreign operations and wishes to qualify for hedge accounting in accordance with IAS 39. This interpretation was early adopted and did not impact the Group’s financial statements.

(xiv) Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements — Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

The amendments to IFRS 1 allow first-time adopters, in their separate financial statements, to use a deemed cost option for determining the cost of an investment in a subsidiary, jointly controlled entity or associate. Additionally, when an entity reorganises the structure of its group by establishing a new entity as its parent (subject to specific criteria), the amendments require the new parent to measure cost as the carrying amount of its share of the equity items shown in the separate financial statements of the original parent at the date of the reorganisation. These amendments did not impact the Group’s financial statements.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-14 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

These interim condensed consolidated financial statements are prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and available for sale financial assets.

These interim condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements for the year ended December 31, 2008.

The Group’s consolidated financial statements for the year ended December 31, 2008 prepared in accordance with IFRS as adopted by the EU are available on http://investor.tvn.pl.

2.2. Standards early adopted

Revision to IFRS 3 “Business combinations” was early adopted by the Group on January 1, 2009. The revised standard continues to apply the acquisition method to business combinations, with some significant changes. In particular, all payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as liabilities and subsequently remeasured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs are expensed. In step acquisition transactions accounted for under IFRS 3 (Revised) any previously held equity interest in an acquiree or subsidiary is remeasured at fair value and the resulting gain or loss is recognized in the income statement.

Following the Group’s policy to account for business combinations with entities under common control using acquisition method, the standard was applied to the acquisition of the controlling interest in Neovision Holding on March 11, 2009 (see Note 29). Contingent consideration has been recognized at its fair value at March 11, 2009. Acquisition related costs have been recognized in the income statement, which previously would have been included in the consideration for the business combination. The Group has chosen to recognize the non-controlling interest at the proportionate share (49%) of the net assets of Neovision Holding. See Note 29 for further details of the business combination which was entered into in the period ended September 30, 2009.

As the Group has early adopted IFRS 3 (Revised), it is required to early adopt IAS 27 (Revised), “Consolidated and separate financial statements” at the same time. IAS 27 (Revised) requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will not result in goodwill or gains and losses. The standard also specifies the accounting treatment when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognized in profit or loss. There has been no impact of the revised IAS 27 on the reported period as there have been no transactions whereby an interest in an entity is retained after the loss of control of that entity and there have been no transactions with non-controlling interests.

IFRS 3 (Revised) and IAS 27 (Revised) apply prospectively.

2.3. Consolidation

Subsidiary undertakings, which are those companies in which the Group, directly or indirectly, has an interest of more than half of the voting rights or otherwise has power to exercise control over the operations, have been consolidated. Subsidiaries are consolidated from the date on which effective

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-15 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) control is transferred to the Group, and are no longer consolidated from the date the Group ceases to have control. The Group applies the acquisition method of accounting to account for business combinations, including business combinations with entities under common control. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in the acquiree at the non-controlling interest’s proportionate share of the acquiree’s net assets. The excess of the sum of consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previously held equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the income statement. All inter company transactions, balances and unrealized surpluses and deficits on transactions between Group companies have been eliminated. Unrealized deficits on transactions between Group companies are eliminated to the extent they are not indicative of an impairment. The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases of shares from non-controlling interests, the difference between any consideration and the relevant share acquired of the carrying value of the net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

2.4. Property, plant and equipment Property, plant and equipment are stated at historical cost less depreciation. Where the carrying amount of an asset is greater than its estimated recoverable amount (the higher of fair value less costs to sell and its value in use), it is written down immediately to its recoverable amount. Subsequent expenditure relating to an item of property, plant and equipment is added to the carrying amount of the asset when it is probable that future economic benefits associated with the item will flow to the enterprise and the cost of the item can be measured reliably. All other repair and maintenance expenses are charged to the income statement during the financial period in which they are incurred.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-16 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Depreciation is charged so as to write off the cost of property, plant and equipment less their estimated residual values on a straight-line basis over their expected useful economic lives as follows:

Term

TV, broadcasting and other technical equipment ...... 2-10 years Vehicles ...... 3-4 years Studio vehicles ...... 7 years Decoders ...... 4-5 years Satellite dishes ...... up to 5 years Leasehold improvements ...... up to 10 years Furniture and fixtures...... 4-5 years

Decoders provided to subscribers in order to allow them to receive the television signal broadcast by the Group remain the Group’s property and are recognized as non-current assets. Before their activation, decoders are regarded as non-commissioned fixed assets and are not depreciated. Depreciation begins after the activation of services by the subscriber and lasts for the expected economic useful life of a decoder. Depreciation is not discontinued for periods in which a decoder is not used, e.g. due to small repairs or being delivered to another subscriber. Leasehold improvements are amortized over the shorter of their useful life or the related lease term. Land is not depreciated. Depreciation of other assets is calculated using the straight-line method to allocate their cost less their residual values over their estimated useful lives. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are included in operating profit. Assets’ residual values and useful lives are reviewed and adjusted if appropriate at least at each financial year end.

2.5. Inventory Inventory is stated at the lower of cost and net realisable value. In general, cost is determined on a first-in-first-out basis and includes transport and handling costs. In the case of manufactured products, costs include all direct expenditure and production overheads based on the normal level of activity to bring the inventory to its present location and condition. Net realisable value is the estimated selling price less estimated costs of completion and sale. Where necessary, provision is made for obsolete, slow moving and defective inventory.

2.6. Trade receivables Trade receivables are carried initially at fair value and subsequently measured at amortised cost using the effective interest rate method less provision made for impairment of these receivables. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of settlement. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or failure in payments (more than 60 days overdue) are considered as indicators that a trade receivable is impaired. The amount of the provision is the

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-17 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) difference between the asset’s carrying amount and the recoverable amount, calculated as the present value of expected future cash flows, discounted at the effective interest rate. The future cash flows related to subscription fees from digital platform customers are estimated by the Group based on available historical data on late payment of receivables. Provision for impaired receivables from digital platform customers is calculated based on uncollected subscription fees related to historical billing cycles (with the exception of the two most recent billings). The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the income statement within selling expenses. When a trade receivable is uncollectible, it is written off against the trade receivable allowance account. Amounts charged to the allowance account are generally written off when the Group does not expect to recover additional cash after attempting all relevant formal recovery procedures. Subsequent recoveries of amounts previously written off are credited against selling expenses in the income statement.

2.7. Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of services and goods in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group. The Group recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

(i) Sales of services — television and on-line Revenue primarily results from the sale of television and on-line advertising and is recognized in the period in which the advertising is broadcast. Other revenues primarily result from cable and satellite television subscription fees, internet users’ fees and call television and are recognized generally upon the performance of service.

(ii) Sales of services — digital platform Revenue primarily results from subscription and activation fees paid by digital platform customers. For multiple-element arrangements, revenue recognition for each of the elements identified is determined separately. Therefore, arrangements involving the delivery of bundled services are separated into individual units of accounting (activation services and subscriptions), each with its own separate earning process. Total arrangement consideration relating to the bundled services is allocated among the different units based on their relative fair values (i.e., the relative fair value of each of the accounting units to the aggregated fair value of the bundled deliverables). The fair value allocated to the subscription revenue is recognized in the periods to which they relate on a pro rata basis. Activation revenue is recognized in the income statement at fair value allocated to the service provided in the month in which the customer contract was signed. Any activation revenue in excess of the allocated fair value to the service provided is recognized in the balance sheet as deferred income and subsequently charged to the income statement starting from the month

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-18 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) following the month of signing the customer contract over the expected customer relationship period.

Discounts granted are deducted from revenue. If a discount on both the activation fee and the subscription fee is offered, the discount is deducted from the individual revenue categories in proportion to their amounts before discount. Discounts applicable to subscription fees granted in a given period, but related to the entire customer contract, are recognized proportionately over the contract term.

Revenue from sale of subscriptions in the pre-paid system is recognized starting from the moment the service is activated by the end customer, over the period when the service is rendered.

Revenue from penalty fees assessed against subscribers, for example those related to early contract termination or failure to return decoders after contract termination, are recognized in the period when the penalties are assessed, but only to the extent the Group expects the penalty fees to be paid.

(iii) Sales of goods

The Group operates a teleshopping business selling goods to individual customers. Sales of goods are recognized when the goods are sent to the customer. It is the Group’s policy to sell the goods to the individual customers with a right to return within 10 days. Accumulated experience is used to estimate and provide for such returns at the time of sale.

2.8. Comparative financial information

Where necessary, comparative figures or figures presented in previously issued financial statements have been adjusted to conform to changes in presentation in the current period. No amendments have resulted in changes to previously presented net results or shareholders’ equity.

2.9. New Accounting Standards and IFRIC pronouncements

Certain new accounting standards and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations have been published by IASB since the publication of the annual consolidated financial statements that are mandatory for accounting periods beginning on or after January 1, 2010. The Group’s assessment of the impact of these new standards and interpretations is set out below.

(i) Amendment to IFRS 7 Improving Disclosures about financial instruments

The amendment was published on March 5, 2009. It requires enhanced disclosures about fair value measurements and liquidity risk. The amendments are applicable retrospectively for annual periods beginning on or after 1 January 2009. Entities are not required to provide comparative disclosures in the first year of adoption.

(ii) Amendments to IFRIC 9 and IAS 39 Embedded Derivatives

The amendments were published on March 12, 2009. They clarify the accounting treatment for embedded derivatives when reclassifying financial instruments. The amendments apply

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-19 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) retrospectively and are required to be applied for annual periods ending on or after June 30, 2009. These amendments will not affect the Group’s financial statements.

(iii) IFRS Improvements 2009 On April 16, 2009 the International Accounting Standards Board issued “IFRS Improvements”, which amend 12 standards. The amendments include changes in scope, presentation, recognition and valuation and include terminology and editorial changes. The majority of the amendments is effective from annual periods starting on January 1, 2010, but some changes are effective for annual periods beginning on or after July 1, 2009. The Group is currently assessing the impact of the changes on Group’s financial statements.

(iv) Amendments to IFRS 2 Group Cash-settled Share-based Payment Transactions The amendments were published on June 18, 2009. They clarify the accounting treatment for group cash-settled share-based payment transactions in the separate or individual financial statements of the entity receiving the goods or services when that entity has no obligation to settle the share- based payment transaction. The amendments are effective from annual periods starting on or after January 1, 2010. The amendments will not affect the Group’s financial statements. Additionally, the following standards and IFRIC Interpretations are applicable in future and were discussed in the Group’s annual financial statements for the year ended December 31, 2008: • Amendments to IAS 39: Financial Instruments: Recognition and Measurement: Eligible Hedged Items — applicable for annual periods beginning on or after July 1, 2009 • IFRIC 17 — Distributions of Non-cash Assets to Owners — applicable for annual periods beginning on or after July 1, 2009 • IFRIC 18 — Transfers of Assets from Customers — applicable on July 1, 2009 At the date of preparation of these financial statements the following standards and IFRIC interpretations were not adopted by the EU: • IFRS Improvements 2009 • IFRIC 17 — Distributions of Non-cash Assets to Owners • IFRIC 18 — Transfers of Assets from Customers • Amendment to IFRS 7 Improving Disclosures about financial instruments • Amendments to IFRIC 9 and IAS 39 Embedded Derivatives • Amendments to IFRS 2 Group Cash-settled Share-based Payment Transactions

3. Financial risk management 3.1. Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group’s overall risk management process focuses on the unpredictability of financial markets and aims to minimize potential adverse effects on the Group’s financial performance. The Group

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-20 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) uses derivative financial instruments to hedge certain risk exposures when hedging instruments are assessed to be cost effective.

Financial risk management is carried out by the Group under policies approved by the Management Board and Supervisory Board. The Group Treasury Policy lays down the rules to manage financial risk and liquidity, through determination of the financial risk factors to which the Group is exposed to and their sources. Details of the duties, activities and methodologies used to identify, measure, monitor and report risks as well as forecast cash flows, finance maturity gaps and invest free cash resources are contained in approved supplementary written instructions.

The following organizational units within the Group’s financial department participate in the risk management process: risk committee, liquidity management team, risk management team, financial planning and analyzing team and accounting and reporting team. The risk committee is composed of the Board Member responsible for the Group’s financial reporting and heads of the teams within the Group’s financial department. The risk committee meets monthly and based on an analysis of financial risks recommends financial risk management strategy, which is approved by the Management Board. The Supervisory Board approves risk exposure limits and is consulted prior to the execution of hedging transactions. The financial planning and analyzing team measures and identifies financial risk exposure based on information reported by operating units generating exposure. The liquidity management team performs analysis of the Group’s risk factors, forecasts the Group’s cash flows and market and macroeconomic conditions and proposes cost-effective hedging strategies. The accounting and reporting team monitors accounting implications of hedging strategies and verifies settlement of the transactions.

(i) Market risk

Market risk related to the Senior Notes

The price of the Senior Notes depends on the Group’s creditworthiness and on the relative strength of the bond market as a whole. The Group recognizes as an asset the value of early redemption options embedded in the Senior Notes (see Note 22) and this valuation largely depends on the market price of the Senior Notes. The Group is therefore exposed to decreases in the market price of the Senior Notes.

The Senior Notes are listed on the Luxembourg Stock Exchange and the fair value of embedded options recognized by the Group at the reporting date reflects the Senior Notes market price on the last value date available from Reuters prior to the reporting date. The impact of the Senior Notes market price change on the Group’s assets and income statement is discussed in Note 4(i).

Foreign currency risk

The Group’s revenue is primarily denominated in Polish złoty. Foreign exchange risk arises mainly from the Group’s liabilities in respect of the Senior Notes, loans from related parties, contingent consideration and the Group’s assets in respect of embedded prepayment options and cash and cash equivalents all denominated in EUR and liabilities to suppliers of foreign programming rights, satellite costs and rental costs denominated in USD or EUR. Liabilities related to the purchase of decoders are denominated in PLN but are linked to USD through a price setting mechanism based on USD. Other costs are predominantly denominated in PLN.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-21 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

The Group’s policy in respect of management of foreign currency risks is to cover known risks in a cost efficient manner and that no trading in financial instruments is undertaken. Following evaluation of its exposures the Group enters into derivative financial instruments to manage these exposures. Call options, swaps and forward exchange agreements may be entered into to manage currency exposures. Regular and frequent reporting to management is required for all transactions and exposures.

The estimated net profit (post-tax) impact on balances as of September 30, 2009 and September 30, 2008 of a reasonably possible EUR appreciation of 5% against the złoty, with all other variables held constant and without taking into account derivative financial instruments entered into for hedging purposes on EUR denominated items in the balance sheet is presented below:

Nine months ended Nine months ended September 30, September 30, 2009 2008 Assumed EUR appreciation against PLN: ...... 5% 5% Liabilities: 9.5% Senior Notes due 2013 including accrued interest ...... (37,787) (31,919) Loans from related parties ...... (23,558) - Contingent consideration...... (9,265) - Trade payables ...... (1,739) (194) Other ...... (238) (71) Assets: Trade receivables ...... 149 83 Loans to associate...... - 5,227 Embedded prepayment options ...... - 1,058 Cash and cash equivalents ...... 50 1,378

The estimated net profit (post-tax) impact on balances as of September 30, 2009 and September 30, 2008 of a reasonably possible USD appreciation of 5% against the złoty, with all other variables held constant and without taking into account derivative financial instruments entered into to mitigate USD fluctuations, on the major USD denominated items in the balance sheet is:

Nine months ended Nine months ended September 30, September 30, 2009 2008 Assumed USD appreciation against PLN: ...... 5% 5% Liabilities Trade payables ...... (3,405) (2,177) Assets: Cash and cash equivalents ...... 666 10 Trade receivables ...... 871 154

The net profit impact of possible foreign currency fluctuations is limited by derivative instruments entered into by the Group. Details of USD options which the Group had on September 30, 2009 are discussed in Note 17.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-22 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Cash flow and fair value interest rate risk The Group’s exposure to interest rate risk arises on interest bearing assets and liabilities. The main interest bearing items are the Senior Notes, PLN Bonds (see Note 22), loans from related parties and contingent consideration. As the Senior Notes are at a fixed interest rate, the Group is exposed to fair value interest rate risk in this respect. Since the Senior Notes are carried at amortised cost, the changes in fair values of these instruments do not have direct impact on valuation of the Senior Notes in the balance sheet. PLN Bonds with a nominal value of 500,000 were issued by the Group on June 23, 2008 and are at a variable interest rate linked to WIBOR and therefore expose the Group to interest rate risk. At September 30, 2009, if WIBOR interest rates had been 50 b.p. higher/lower with all other variables held constant, post-tax profit for the period would have been 599 lower/higher. As the loans from related parties are at a fixed annual interest rate the Group is exposed to fair value interest rate risk in this respect. Since the loans from related parties are carried at amortized cost, the changes in fair values of these instruments do not have direct impact on valuation of the instruments in the balance sheet. The carrying value of contingent consideration reflects its present value at the reporting date and is estimated based on assumed cost of debt (see Note 4(iv)). As the cost of debt used to determine net present value is linked to 12-month EURIBOR interest rate the Group is exposed to interest rate risk. At September 30, 2009 if EURIBOR interest rates had been 50 b.p. higher/lower with all other variables held constant, post-tax profit for the period would have been 1,303 higher/lower due to change in estimation of the contingent payment. Management does not consider it cost effective to use financial instruments to hedge or otherwise seek to reduce interest rate risk.

Television broadcasting, production and on-line advertising customers The Group performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral from its customers. Clients with poor or no history of payments with the Group, with low value committed spending or assessed by the Group as not credit worthy are required to pay before the service is rendered. Credit is granted to customers with a good history of payments and significant spending who are assessed credit worthy based on internal or external ratings. The Group performs ongoing evaluations of the market segments focusing on their liquidity and creditworthiness and the Group’s credit policy is appropriately adjusted to reflect current and expected economic conditions.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-23 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

The majority of the Group’s sales are made through advertising agencies (57% of the total trade receivables as of September 30, 2009) who manage advertising campaigns for advertisers and pay the Group once payment has been received from the customer. The Group’s top ten advertisers account for 17% and the single largest advertiser accounted for 3% of sales for the nine months ended September 30, 2009. Generally advertising agencies in Poland are limited liability companies with little recoverable net assets in case of insolvency. The major players amongst the advertising agencies in Poland with whom the Group co-operates are subsidiaries and branches of large international companies of good reputation. To the extent that it is cost-efficient the Group mitigates credit exposure by use of a trade receivable insurance facility from a leading insurance company.

Digital satellite pay television customers The primary source of credit risk related to digital platform operations is the sale of services to subscribers to the pay TV service, who comprise a large group of individuals and companies with a relatively low individual value in their purchases from the Group. Credit risk is therefore dispersed and is additionally limited by the Group’s policy of monitoring the collection of receivables and deactivating the service to customers who do not pay their subscription fees. The Group monitors the statistics related to late or non-payment of subscription fees and creates bad debt provisions based on the available statistics. The Group performs ongoing credit evaluations of the financial condition of its distributors and in many cases requires certain collateral in the form of deposits, bills of exchange or bank guarantees. Collateral is provided in order to secure the Group’s receivables arising from activation fees collected by distributors from subscribers on behalf of the Group, receivables from the sale of decoders and prepaid decoding cards to distributors, as well from the value of decoders and other devices provided to distributors for further distribution to the Group’s subscribers. The table below analyses the Group’s trade receivables by category of customers: September 30, December 31, Trade receivables (net) 2009 2008 Receivables from advertising agencies ...... 57% 70% Receivables from individual customers ...... 35% 22% Receivables from related parties ...... 8% 8% 100% 100%

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-24 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Credit concentration of the five largest counterparties measured as a percentage of the Group’s total trade receivables:

September 30, December 31, Trade receivables (net) 2009 2008* Agency A ...... 9% 8% Agency B ...... 8% 7% Agency C ...... 6% 5% Agency D ...... 6% 4% Agency E ...... 5% 7% Sub-total ...... 34% 31% Total other counterparties ...... 66% 69% 100% 100%

* 2008 figures represent comparative data for each Agency

September 30, December 31, Trade receivables from advertising agencies (net) 2009 2008* Agency Group F ...... 18% 14% Agency Group G ...... 14% 14% Agency Group H ...... 10% 16% Agency Group I ...... 6% 14% Agency Group J ...... 3% 2% Sub-total ...... 51% 60% Total other counterparties ...... 49% 40% 100% 100% * 2008 figures represent comparative data for each Agency Group.

Management does not expect any significant losses with respect to amounts included in the trade receivables from non-performance by the Group’s customers as at September 30, 2009. The Group does not expect any losses with respect to derivative financial assets attributable to credit risk.

(iii) Liquidity risk The Group maintains sufficient cash to meet its obligations as they become due and has available to it additional funding through a credit facility (see Note 22). Management monitors regularly expected cash flows. The Group expects that its principal future cash needs will be capital expenditures relating to dividends, acquisitions, share buyback, capital investment in television and broadcasting facilities and equipment, debt service on the Senior Notes and PLN Bonds and the launch of new thematic channels and internet services. The Group believes that its cash balances, cash generated from operations and existing credit facility will be sufficient to fund these needs. However, if following the current liquidity crisis in the banking sector external financing is unavailable at reasonable conditions for a longer period of time or the operating cash flows of

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-25 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) the Group are negatively affected by an economic slow-down or clients’ financial difficulties the Group will review its cash needs to ensure that its existing obligations can be met for the foreseeable future. As at September 30, 2009 the Group had cash and cash equivalents and committed unutilized credit facilities totaling 135,799 at its disposal (531,957 at December 31, 2008). The table below analyses the Group’s financial liabilities that will be settled into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The balances in the table are the contractual undiscounted cash flows including interest and excluding the impact of early prepayment options. Balances due within 12 months equal their carrying balances.

Within Between Above At September 30, 2009 1 year 1-2 years 2 years 9.5% Senior Notes due 2013 ...... 86,247 86,247 1,123,476 PLN Bonds due 2013...... 37,500 37,500 575,103 Loans from related parties ...... - - 906,224 Loan facility ...... 5,786 117,086 - Trade payables ...... 196,237 32,753 9,701 Contingent consideration...... - 253,356 - Other liabilities and accruals ...... 163,854 932 188 At December 31, 2008 9.5% Senior Notes due 2013 ...... 85,221 85,221 1,152,730 PLN Bonds due 2013...... 46,315 46,315 615,843 Loan facility ...... 8,557 8,557 116,206 Overdraft facility ...... 48,733 - - Trade payables ...... 141,905 6,951 - Other liabilities and accruals ...... 133,032 1,342 -

3.2. Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares, draw borrowings or sell assets to reduce debt. The Group monitors capital on the basis of the net debt to EBITDA ratio. Net debt represents the nominal value of borrowings (see Note 22) payable at the reporting date including accrued interest and guarantees issued on Group’s behalf less cash and cash equivalents and liquid available for sale financial instruments. EBITDA is calculated for the last twelve months. The Group defines EBITDA as net profit/ (loss), as determined in accordance with IFRS, before depreciation and amortization (other than for programming rights), impairment charges and reversals on property, plant and equipment and intangible assets, finance expenses or investment income, net (including interest income and expense and foreign exchange gains and losses), income taxes and share of net results of associates. The reconciling item between EBITDA and reported operating profit is depreciation and amortization expense and impairment charges and reversals on property, plant and equipment. EBITDA is not an IFRS measure and should not be considered as an alternative to IFRS measures of

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-26 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) net profit/(loss), as an indicator of operating performance, as a measure of cash flow from operations under IFRS, or as an indicator of liquidity. EBITDA is not a uniform or standardized measure and the calculation of EBITDA, accordingly, may vary significantly from company to company, and by itself the Group’s presentation and calculation of EBITDA may not be comparable to that of other companies.

September 30, December 31, 2009 2008 Net debt ...... 2,092,975 1,072,778 EBITDA ...... 683,712 711,378 Net debt/ EBITDA ratio ...... 3.1 1.5

The Group’s strategy is to maintain its net debt/EBITDA ratio at a level not exceeding 3.5.

3.3. Fair value estimation

The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. The fair value of available for sale financial assets is determined using industry multiples and the most recent available financial information about the investment. The fair value of options and forwards is determined based on valuations performed by the Group’s bank.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to the short-term nature of trade receivables and payables.

3.4. Consideration of the current economic environment

The uncertainties in the global financial markets have also led to bank failures and bank rescues in the United States of America, Western Europe, Russia and elsewhere. Indeed the full extent of the impact of the ongoing financial crisis is proving to be impossible to anticipate or completely guard against.

Management is unable to reliably estimate the effects on the Group’s financial position of any further deterioration in the liquidity of the financial markets and the increased volatility in the currency and equity markets. Management believes it is taking all the necessary measures to support the sustainability and growth of the Group’s business in the current circumstances.

Debtors of the Group may be affected by the lower liquidity situation which could in turn impact their ability to repay the amounts owed. Deteriorating operating conditions for customers may also have an impact on management’s cash flow forecasts and assessment of the impairment of financial and non-financial assets. To the extent that information is available, management have properly reflected revised estimates of expected future cash flows in their impairment assessments.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-27 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

4. Critical accounting estimates and judgements

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(i) Fair valuation of the embedded prepayment options

The Group calculates at each reporting date the fair value of the prepayment options embedded in the Senior Notes using the Brace-Ga˛ tarek-Musiela model. Significant inputs into the valuation model are the Senior Notes market price, benchmark bond yields and interest rate cap volatilities. The inputs are based on information provided by Reuters on the valuation date. The Senior Notes market price is quoted by Reuters based on the last value date. In the fair valuation as of September 30, 2009 the Group input into the valuation model a market price of 93.05 based on the last available value date on September 29, 2009. This resulted in a carrying amount value of the embedded options of nil. The last available Senior Notes market price provided by Reuters at the date when these financial statements were prepared was 94.60 (based on a value date on October 22, 2009). Should this price be input into the valuation model the carrying value of the embedded prepayment options would be 5.

(ii) Fair valuation of “n” brand as of March 11, 2009

Following the takeover of control over Neovision Holding on March 11, 2009 the Group initiated the purchase price allocation process and identified and provisionally valued the “n” brand at the date of business combination at 103,630.

In the absence of applicable market benchmarks, the Group fair valued the “n” brand using the ‘relief from royalty’ income method. The ‘relief from royalty’ method assumes that the value of the brand is reflected in the present value of hypothetical future royalty payments, which the owner of the brand would have to incur, should the brand be licensed from another entity. This valuation requires the use of estimates related to sales projections for the activity run under the brand, estimation of the representative royalty rate applied on projected revenues, estimation of the discount rate and estimation of the useful life of the brand. The following assumptions were used in the valuation as of March 11, 2009 : a royalty rate of 2%, the revenue projections were based on management’s business plan which covered the period 2009-2018 and the discount rate used in the valuation was 13.61%. The Group assumed the useful life of the “n” brand to be 10 years.

Fair value is sensitive to changes in the revenue growth and other parameters of the valuation model. A decrease of the revenue growth by 100 b.p. gives a fair value of 100 million. A royalty rate of 3% would give a fair value of 155 million. A discount rate of 12% would give a fair value of 113 million.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-28 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

(iii) Estimated impairment of goodwill and brand allocated to on-line cash-generating unit

The Group classifies the Onet.pl brand acquired as an intangible asset with indefinite useful life and allocates brand and goodwill to the on-line cash-generating unit. The Group tests annually whether the on-line cash-generating unit, including goodwill and brand, have suffered any impairment. The recoverable amount of the cash-generating unit is determined based on fair value less cost to sell. The Group tests the total carrying amount of the cash-generating unit and in case of impairment write-offs are made with respect to goodwill first. If goodwill is fully impaired the Group continues impairment testing of the brand with potential write-offs against the carrying value of brand and other assets allocated to the on-line cash-generating unit. In the annual impairment test performed by the Group as at December 31, 2008 the calculation of fair value less cost to sell, in the absence of an active market for similar cash-generating units, was based on discounted free cash flows and involved the use of estimates related to cash flow projections based on financial business plans approved by management covering the period until 2013. Cost to sell was assumed at 1% of the present value of the cash-generating unit. The key assumptions included in the business plans and cash-flow projections beyond 2013 were: Annual growth rate of the Polish advertising market in 2009-2013 . . from 0% to 12% Increase in the on-line advertising market as a percentage of the total Polish advertising market in 2009-2013...... from 17% to 34.1% Share of Onet in the on-line advertising market in 2009-2013 ...... stable Growth of free cash flows in 2014-2021 ...... from 18% declining to 6% Terminal growth ...... 4% Discount rate ...... 12.2%

As at December 31, 2008 fair value less cost to sell of the on-line cash-generating unit exceeded the carrying amount by 144 million. In view of the ongoing global liquidity crisis and its potential impact on customers and advertisers the Group reviewed and amended the key assumptions included in the business plans of the on-line cash generating unit as of March 31, 2009: Annual growth rate of the Polish advertising market in 2009-2013 . . from -10% in 2009 to 12% in 2013 Increase in the on-line advertising market as a percentage of the total Polish advertising market in 2009-2013...... from 15% to 27.8% Share of Onet in the on-line advertising market in 2009-2013 ...... stable Growth of free cash flows in 2014-2022 ...... from 20% declining to 6% Terminal growth ...... 4% Discount rate ...... 12.4%

The Group also reviewed and amended other significant business plan assumptions relating to future operating and capital expenditures. Since reviewing the key assumptions included in the business plans as at March 31, 2009 the Group has not observed any indications for further amendments of the business plan. The revised business plan of the on-line cash generating unit returns a fair value less cost to sell which approximates to the carrying value of the cash-generating unit as of September 30, 2009. The Group will continue to monitor and amend when appropriate its business plan for the on-line cash-generating unit on a quarterly basis.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-29 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

(iv) Estimated present value of contingent consideration

Following the transaction agreement with ITI Media Group N.V. (see Note 29) the Group recognized as at March 11, 2009 a contingent supplemental payment at fair value of 236,448. The contractual amount of the supplemental payment is between EUR 0 and EUR 60,000 and is payable at the beginning of 2011 if and to the extent that ITI Neovision achieves specified operational targets during 2010 such as EBITDA, number of subscribers, average revenue per subscriber and subscription revenue. In the fair valuation of the contingent consideration the Group assumed a discount rate of 7.93% and a 100% probability of paying the maximum amount. The Group provisionally recognized a gain on step acquisition of 110,690 and goodwill of 742,872 (see Note 29), which are impacted by the inclusion in the purchase consideration of the fair value of the contingent element.

The fair value of the consideration payable, goodwill recognized on the investment and the gain on step acquisition are sensitive to changes in the assumptions used in the valuation. Had the probability of achieving all payment conditions been assessed at 75%, the Group would have recognized a gain on step acquisition of 53,851 and goodwill of 626,965.

As of September 30, 2009 the Group assumed 100% probability of paying the maximum amount of the contingent consideration. Had the maximum amount of contingent consideration payable been assessed at 75%, the Group would have recognized a gain on fair value re-assessment of 57,191.

(v) Estimated fair value of loans from related parties

Following the business combination with Neovision Holding (see Note 29), as part of the purchase price allocation the Group estimated provisionally as at March 11, 2009 fair value of loans from related parties recorded by Neovision Holding. The fair value of 913,560 was estimated assuming a discount rate of 9.5% and repayment of loans in full at their maturity. The Group believes that the assumed discount rate approximates the cost of external financing that ITI Neovision would be able to rise on the market.

The fair value of loans from related parties, goodwill recognized on investment, gain on step acquisition and loss on loan to associate recognized on consolidation are sensitive to changes in the assumptions used in the valuation. Had the discount rate been estimated at 10.0%, the Group would have fair valued loans from related parties at 860,896 and recorded a goodwill of 742,872, gain on step acquisition of 117,513 and loss on loan to associate on consolidation of 40,183.

(vi) Estimated impairment of digital satellite pay television cash-generating unit

Beginning from the acquisition date, the Group tests annually whether the digital satellite pay television cash-generating unit, including goodwill, has suffered any impairment. During the year the Group monitors cash-generating units against impairment indicators through the review of actual financial and operating results. As of September 30, 2009 the Group assessed that the operating and financial results of digital satellite pay television cash-generating unit do not indicate impairment of the cash-generating unit.

5. Segment reporting The Group’s principal activities are television broadcasting and production, digital satellite pay television and on-line.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-30 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

An operating segment is a distinguishable component of an enterprise that is engaged in business activities from which it may earn revenues and incur expenses and whose operating results are regularly reviewed by the Group operating decision maker to make decisions about resources to be allocated and assess its performance.

The chief operating decision-maker has been identified as the steering committee, which is composed of the Board Member responsible for the Group’s financial reporting and heads of the teams within the Group’s financial department. The committee reviews regularly the Group’s internal reporting. Management has determined the operating segments based on these reports. The committee considers the business from product and service perspective. The committee assesses the performance of TV channels aggregated into single television broadcasting and production segment, digital satellite pay television and on-line operations. All other include mainly teleshopping services and content and technical services.

The steering committee assesses the performance of the operating segments based on a revenue and earnings before interest, tax, depreciation and amortization (EBITDA). Other information provided to the steering committee is measured in a manner consistent with that in the financial statements.

Operating segments are aggregated into a single operating segment if the segments have similar economic characteristics and have in particular a similar nature of products and services, type of customers, distribution methods and regulatory environment.

The television broadcasting and production segment is mainly involved in the production, purchase and broadcasting of news, information and entertainment shows, series and movies and comprises television channels operated in Poland. The television broadcasting and production segment generates revenue mainly from advertising spot sales, sponsoring and cable and direct-to-home operators. The digital satellite pay television segment is mainly engaged in direct-to-home distribution of technologically advanced pay television services and generates revenue mainly from program subscription. The on-line segment primarily comprises Onet.pl, Poland’s leading portal, revenue is generated mainly form internet advertising spot sales and user generated transactions.

Reconciliation of EBITDA to total profit before income tax:

Nine months ended Nine months ended September 30, September 30, 2009 2008 EBITDA ...... 440,807 468,473 Depreciation of property, plant and equipment ...... (103,787) (44,273) Amortization of intangible assets ...... (27,701) (16,307) Impairment of fixed assets ...... - 1,885 Segment result ...... 309,319 409,778 Investment income, net (see Note 8) ...... 39,948 14,873 Financial expenses, net (see Note 8)...... (133,599) (64,751) Share of loss of associate (see Note 29) ...... (39,090) (19,057) Profit before income tax ...... 176,578 340,843

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-31 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Television Digital Other Nine months ended broadcasting satellite pay reconciling September 30, 2009 and production television On-line All other items Total Revenue from external customers ...... 1,014,543 231,918 130,732 55,942 - 1,433,135 Inter-segment revenue ...... 31,018 1,598 11,253 25,165 (59,163) 9,871 Total revenue...... 1,045,561 233,516 141,985 81,107 (59,163) 1,443,006 EBITDA ...... 405,688 (67,127) 26,092 12,427 63,727 440,807 Segment result ...... 357,976 (126,936) 5,543 9,009 63,727 309,319 Investment income/(expenses), net (see Note 8)...... 40,874 9,689 3,920 479 (15,014) 39,948 Financial income/ (expenses), net (see Note 8) ...... (159,969) 38,276 (5,603) (309) (5,994) (133,599) Share of income/ (loss) of associate (see Note 29) ...... - (39,197) 107 - - (39,090) Profit/ (loss) before income tax .. 238,881 (118,168) 3,967 9,179 42,719 176,578 Income tax charge (see Note 25) ...... - - - - (35,299) (35,299) Profit/ (loss) for the period ..... 238,881 (118,168) 3,967 9,179 7,420 141,279 Additions to non-current assets (other than financial instruments and deferred tax assets) ...... 20,491 88,518 68,683 200 - 177,892 Depreciation of property, plant and equipment ...... 39,921 51,234 9,717 2,915 - 103,787 Amortization of intangible assets ...... 7,791 8,575 10,832 503 - 27,701 Significant non-cash expenses . . . 11,143 - 1,536 482 3,759 16,920 Share option plan ...... 11,143 - 1,536 482 3,759 16,920 As at September 30, 2009 Segment assets including: ...... 1,097,975 1,330,820 1,696,401 86,550 18,252 4,229,998 Investment in associates . . . . . - 1,079 205 - - 1,284

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-32 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Television Other broadcasting reconciling Nine months ended September 30, 2008 and production On-line All Other items Total Revenue from external customers ...... 1,109,323 135,579 60,109 - 1,305,011 Inter-segment revenue ...... 4,842 6,754 8,473 (20,069) - Total revenue ...... 1,114,165 142,333 68,582 (20,069) 1,305,011 EBITDA ...... 446,458 34,120 16,038 (28,143) 468,473 Segment result ...... 404,019 19,082 12,935 (26,258) 409,778 Investment income/ (expenses), net (see Note 8) ...... 19,380 4,558 62 (9,127) 14,873 Financial income/ (expenses), net (see Note 8) ...... (64,197) (801) (301) 548 (64,751) Share of loss of associate...... - - - (19,057) (19,057) Profit/ (loss) before income tax ...... 359,202 22,839 12,696 (53,894) 340,843 Income tax charge (see Note 25) ...... - - - (64,801) (64,801) Profit/ (loss) for the period ...... 359,202 22,839 12,696 (118,695) 276,042 Impairment of fixed assets...... - - - (1,885) (1,885) Additions to non-current assets (other than financial instruments and deferred tax assets)...... 71,849 29,152 515 - 101,516 Depreciation of property, plant and equipment ...... 34,368 7,461 2,444 - 44,273 Amortization of intangible assets ...... 8,071 7,577 659 - 16,307 Significant non-cash expenses ...... 19,117 6,401 672 4,438 30,628 Share option plan ...... 19,117 6,401 672 4,438 30,628 As at December 31, 2008 Segment assets including: ...... 1,213,768 1,659,423 82,084 797,899 3,753,174 Investment in associates ...... - 98 - 119,978 120,076

6. Revenue

Nine months Nine months Three months Three months ended ended ended ended September 30, September 30, September 30, September 30, 2009 2008 2009 2008 Revenue from advertising spot sales ...... 883,979 1,008,553 232,535 267,221 Subscription fees ...... 364,218 108,694 140,359 36,451 Revenue from sponsoring ...... 85,284 89,949 19,463 20,758 Revenue from sales of goods ...... 38,241 30,570 13,957 10,005 Other revenue ...... 71,284 67,245 21,561 19,385 1,443,006 1,305,011 427,875 353,820

Subscription fees include subscriptions receivable by TVN from DTH and cable operators, subscription receivable by ‘n’ platform from consumers and internet transaction based fees. Other revenue includes mainly sales of licenses. Included in revenues for the nine months ended

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-33 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

September 30, 2009 are revenues from related parties in the amount of 20,601 (nine months ended September 30, 2008: 36,263) and for the three months ended September 30, 2009 of 2,160 (three months ended September 30, 2008: 12,188) (see Note 31).

7. Operating expenses

Nine months Nine months Three months Three months ended ended ended ended September 30, September 30, September 30, September 30, 2009 2008 2009 2008 Amortization of locally produced content ...... 354,635 349,995 108,263 106,339 Amortization of acquired programming rights and co- production ...... 217,698 87,799 89,690 26,116 Staff expenses ...... 146,508 119,922 48,086 41,297 Share options granted to board members and employees . . . . . 16,920 30,628 4,824 9,486 Depreciation, amortization and impairment charges ...... 131,488 58,695 52,518 20,618 Marketing and research...... 62,484 51,653 26,974 16,304 Royalties...... 51,348 45,937 15,474 11,772 Broadcasting expenses ...... 70,813 37,283 25,452 12,096 Cost of services and goods sold . . 23,115 21,887 7,664 7,768 Rental...... 33,896 20,059 11,564 6,538 Impaired accounts receivable . . . 6,001 85 3,953 538 Other ...... 129,471 71,290 37,080 20,807 1,244,377 895,233 431,542 279,679

Included in the amortization of acquired programming rights and co-production for the nine months ended September 30, 2009 are fees for broadcasting television channels and content incurred by digital satellite pay television in the total amount of 101,803 (nine months ended September 30, 2008: nil) and for the three months ended September 30, 2009 of 51,947 (three months ended September 30, 2008: nil).

Included in the above operating expenses are operating lease expenses for the nine months ended September 30, 2009 of 114,116 (nine months ended September 30, 2008: 73,837) and for the three months ended September 30, 2009 of 28,381 (three months ended September 30, 2008: 23,614).

Amortization of locally produced content for the nine months ended September 30, 2009 has been reduced by grants received in the total amount of 1,238 (nine months ended September 30, 2008: 1,317) and for the three months ended September 30, 2009 of 655 (three months ended September 30, 2008: 90).

Included in depreciation, amortization and impairment charges is an amount of impairment reversal of 1,885 for the nine months ended September 30, 2008 (three months ended September 30, 2008: nil).

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-34 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Included in the above operating expenses is an aggregate amount of research and development expenditure of 788 recognized as an expense in the nine months ended September 30, 2009 (nine months ended September 30, 2008: 1,131) and for the three months ended September 30, 2009 of 185 (three months ended September 30, 2008: 448). Included in other operating expenses are transaction costs of 16,608 related to the investment in the ‘n’ DTH platform (see Note 29).

8. Investment income and finance expense

Nine months Nine months Three months Three months ended ended ended ended September 30, September 30, September 30, September 30, Investment income, net 2009 2008 2009 2008 Foreign exchange gains/ (losses), net ...... 48,382 4,134 13,933 (3,677) Fair value gains/ (losses) on financial instruments: - foreign exchange options— settlement of instrument (see Note 17) ...... 24,069 - 2,655 - - foreign exchange options not designated as hedging instruments (see Note 17) .... (20,089) (2,121) (7,680) (2,121) 3,980 (2,121) (5,025) (2,121) Interest income from available for sale financial assets (see Note 15) ...... 5,297 - - - Accrued interest income on loan to associate (see Note 29) . . . . 4,181 2,550 - 2,414 Loss on elimination of loans granted to associate recognized on consolidation * (See Note 29) ...... (26,486) - - - Other interest income ...... 4,594 10,310 672 5,283 39,948 14,873 9,580 1,899 * established provisionally

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-35 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Nine Nine Three Three months months months months ended ended ended ended September 30, September 30, September 30, September 30, Finance expense, net 2009 2008 2009 2008 Foreign exchange losses/ (gains) on Senior Notes ...... 10,683 (40,239) (53,000) 12,346 Foreign exchange gains on loans from related parties ...... (41,605) - (27,571) - Foreign exchange gains on contingent consideration ...... (20,036) - (13,084) - Fair value losses/ (gains) on financial instruments: - embedded option (see Note 17, 22). . . . - (5,680) - 15,411 - foreign exchange options—fair value hedges (see Note 17) ...... 126,121 --(34,263) - foreign exchange options—settlement of instrument (see Note 17) ...... (101,014) 16,642 - 16,642 - foreign exchange options—portion not designated as hedging instrument (see Note 17) ...... - 11,673 - 8,685 25,107 28,315 - (8,936) Interest expense on 9.5% Senior Notes (see Note 22) ...... 76,285 62,760 24,190 20,009 Interest expense on PLN Bonds due 2013 (see Note 22) ...... 32,393 12,870 9,294 11,960 Interest expenses on loans from related parties (see Note 22) ...... 23,266 - 8,993 - Interest expense on loan facility and overdraft (see Note 22) ...... 5,656 - 1,726 - Guarantee fees to related party (see Note 31(vii)) ...... 3,381 1,819 1,190 606 Bank and other charges ...... 6,117 1,996 669 1,433 Unwinding of interest on contingent consideration (see Note 29)...... 12,352 - 5,098 - Cost of repurchase of Senior Notes (including pre-issuance costs written off)* ...... - 2,910 - - 133,599 64,751 (42,495) 52,829 * The cost reflects the premium paid on repurchase and the derecognized amount of the remaining unamortized debt issuance costs relating to the repurchased Senior Notes (see Note 22).

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-36 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

9. Basic and diluted earnings per share (not in thousands) (i) Earnings per share for profit attributable to the owners of TVN S.A.

Basic

Basic earnings per share are calculated by dividing the net profit attributable to the owners of TVN S.A. by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Company.

Nine Nine Three Three months ended months ended months ended months ended September 30, September 30, September 30, September 30, 2009 2008 2009 2008 Profit attributable to the owners of TVN S.A. (in thousands)...... 178,160 276,042 58,238 5,008 Weighted average number of ordinary shares in issue ...... 341,541,891 348,531,422 340,364,963 349,443,751 Basic earnings per share ...... 0.52 0.79 0.17 0.01

Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has only one category of potential ordinary shares: share options. For the share options a calculation was done to determine the number of shares that could have been acquired at fair value (determined as average market price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above was compared with the number of shares that would have been issued assuming the exercise of the share options.

Nine Nine Three Three months ended months ended months ended months ended September 30, September 30, September 30, September 30, 2009 2008 2009 2008 Profit attributable to the owners of TVN S.A. (in thousands)...... 178,160 276,042 58,238 5,008 Weighted average number of ordinary shares in issue ...... 341,541,891 348,531,422 340,364,963 349,443,751 Adjustment for share options . . . . . 770,337 4,854,435 1,965,911 3,434,721 Weighted average number of potential ordinary shares for diluted earnings per share ...... 342,312,228 353,385,857 342,330,874 352,878,472 Diluted earnings per share...... 0.52 0.78 0.17 0.01

(ii) Earnings per share for adjusted profit attributable to the owners of TVN S.A.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-37 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) presentation of net profit adjusted for this item enables a reader to better understand the Group’s operating and financial performance.

Basic

Nine Nine Three Three months ended months ended months ended months ended September 30, September 30, September 30, September 30, 2009 2008 2009 2008 Profit attributable to the owners of TVN S.A. (in thousands) . . . . 178,160 276,042 58,238 5,008 Impact on profit, net of tax of fair value (gain)/ loss on embedded option (in thousands) ...... - (4,601) - 12,483 Adjusted profit attributable to the owners of TVN S.A. (in thousands) ...... 178,160 271,441 58,238 17,491 Weighted average number of ordinary shares in issue ...... 341,541,891 348,531,422 340,364,963 349,443,751 Adjusted basic earnings per share...... 0.52 0.78 0.17 0.05

Diluted

Nine Nine Three Three months ended months ended months ended months ended September 30, September 30, September 30, September 30, 2009 2008 2009 2008 Profit attributable to the owners of TVN S.A. (in thousands) . . . . 178,160 276,042 58,238 5,008 Impact on profit, net of tax of fair value (gain)/ loss on embedded option (in thousands) ...... - (4,601) - 12,483 Adjusted profit attributable to the owners of TVN S.A. (in thousands) ...... 178,160 271,441 58,238 17,491 Weighted average number of ordinary shares in issue ...... 341,541,891 348,531,422 340,364,963 349,443,751 Adjustment for share options . . . 770,337 4,854,435 1,965,911 3,434,721 Weighted average number of potential ordinary shares for diluted earnings per share. . . . 342,312,228 353,385,857 342,330,874 352,878,472 Adjusted diluted earnings per share...... 0.52 0.77 0.17 0.05

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-38 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

10. Property, plant and equipment

September 30, December 31, Property, plant and equipment 2009 2008 Freehold land ...... 35,286 34,784 Buildings ...... 27,036 163 Leasehold improvements...... 38,526 37,806 Television, broadcasting and other technical equipment ...... 210,095 183,792 Set top decoders and satellite dishes ...... 316,152 - Vehicles ...... 28,227 29,724 Furniture and fixtures ...... 10,863 8,544 Assets under construction ...... 62,746 52,587

728,931 347,400

The balance of the property, plant and equipment as of September 30, 2009 includes the following items of property, plant and equipment acquired in a business combination on March 11, 2009 * (see Note 29): Leasehold improvements ...... 1,256 Television, broadcasting and other technical equipment...... 15,823 Set top decoders and satellite dishes ...... 295,591 Vehicles ...... 3,195 Furniture and fixtures ...... 2,316 Assets under construction ...... 12,894 331,075

* established provisionally

11. Goodwill January 1, 2008...... 952,657 September 30, 2008 ...... 952,657 January 1, 2009...... 952,657 Business combination with Neovision Holding (see Note 29) ...... 742,872* September 30, 2009 ...... 1,695,529

The carrying amount of goodwill is allocated to cash generating units identified by the Group: On-line ...... 802,205 Digital satellite pay television (see Note 29) ...... 742,872* Thematic television channels ...... 131,704 Television production unit ...... 12,423 Teleshopping unit...... 6,325 1,695,529

* established provisionally

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-39 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

12. Brand

January 1, 2008 ...... 693,688 September 30, 2008 ...... 693,688 January 1, 2009 ...... 693,688 Business combination with Neovision Holding (see Note 29) ...... 103,630* Amortization of “n” brand ...... (5,739) September 30, 2009 ...... 791,579

The carrying amount of brands as of September 30, 2009 is allocated to the following brands identified by the Group:

Onet.pl (on-line cash generating unit) ...... 643,428 ‘n’ (digital satellite pay television cash generating unit) ...... 97,891* Mango (teleshopping cash generating unit) ...... 50,260 791,579

* established provisionally

13. Programming rights

September 30, December 31, 2009 2008 Acquired programming rights: - television broadcasting and production ...... 196,669 172,707 - digital satellite pay television ...... 27,644 - 224,313 172,707 News archive ...... 12,114 12,453 Co-productions ...... 11,061 14,306 Productions ...... 161,873 147,951 409,361 347,417 Less current portion of programming rights ...... (234,209) (192,676) Non-current portion of programming rights ...... 175,152 154,741

Changes in acquired programming rights

Nine months ended Nine months ended September 30, September 30, 2009 2008 Net book value as at January 1 ...... 172,707 187,263 Additions ...... 162,554 71,605 Amortization...... (110,948) (86,809) Net book value as at September 30...... 224,313 172,059

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-40 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

14. Financial instruments by category

Financial assets at Loans and fair value through Financial assets September 30, 2009 receivables profit or loss available-for-sale Total Assets as per balance sheet Available-for-sale financial assets . . - - 7,588 7,588 Derivative financial instruments . . . - 3,657 - 3,657 Trade and other receivables...... 288,443 - - 288,443 Cash and cash equivalents ...... 81,040 - - 81,040 369,483 3,657 7,588 380,728

Derivatives used Other financial September 30, 2009 for hedging liabilities Total Liabilities as per balance sheet 9.5% Senior Notes due 2013 ...... - 871,023 871,023 PLN Bonds due 2013 ...... - 498,610 498,610 Loans from related parties...... - 525,550 525,550 Loan facility ...... - 109,927 109,927 Accrued interest on borrowings ...... - 39,202 39,202 Non-current trade payables ...... - 41,735 41,735 Current trade payables ...... - 196,237 196,237 Contingent consideration ...... - 228,766 228,766 Derivative financial liabilities...... 693 - 693 Other liabilities and accruals* ...... - 165,076 165,076 693 2,676,126 2,676,819

* This amount excludes the following items which are not financial liabilities: VAT and other taxes payable, employee benefits, deferred income.

Financial assets at Loans and Derivatives used fair value through Financial assets December 31, 2008 receivables for hedging profit or loss available-for-sale Total Assets as per balance sheet Available-for-sale financial assets . . - - - 323,204 323,204 Derivative financial instruments . . . . . - 120,515 29,350 - 149,865 Trade and other receivables ...... 305,834 - - - 305,834 Loans to associate. . 179,138 - - - 179,138 Cash and cash equivalents . . . . . 184,867 - - - 184,867 669,839 120,515 29,350 323,204 1,142,908

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-41 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Other financial December 31, 2008 liabilities Total Liabilities as per balance sheet 9.5% Senior Notes due 2013 ...... 855,432 855,432 PLN Bonds due 2013 ...... 498,593 498,593 Loan facility ...... 109,875 109,875 Accrued interest on borrowings ...... 7,658 7,658 Overdraft facility ...... 48,733 48,733 Non-current trade payables ...... 6,951 6,951 Current trade payables ...... 141,905 141,905 Other liabilities and accruals* ...... 133,032 133,032 1,802,179 1,802,179

* This amount excludes the following items which are not financial liabilities: VAT and other taxes payable, employee benefits, deferred income.

15. Available for sale financial assets

Nine months ended Nine months ended September 30, September 30, 2009 2008 Beginning of the period ...... 323,204 7,588 Additions ...... 27,025 87,529 Sales ...... (347,270) - Fair value change through equity ...... (668) - Interest credited to profit or loss (see Note 8) ...... 5,297 - End of the period ...... 7,588 95,117 Less: non-current portion ...... (7,588) (7,588) Current portion...... - 87,529

Available for sale financial assets include:

September 30, December 31, 2009 2008 Securities quoted on active markets: - Treasury bills PLN...... - 315,616 Securities not quoted on active markets: - Polskie Media S.A...... 7,588 7,588 7,588 323,204

The Group does not have any significant influence over the financial and operating policies of Polskie Media S.A. (“Polskie Media”). The Group estimated the fair value of its investment in Polskie Media as at June 30, 2009 based on financial information available from the annual financial statements of Polskie Media for the year ended December 31, 2008 and industry sales multiples. The

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-42 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Group assessed that there is no impairment of the carrying value as of September 30, 2009. During the year the Group monitors audience share of Polskie Media for impairment indicators. The Group’s share in Polskie Media is 5.59% of the current voting interest and 6.95% of the share capital.

16. Trade receivables September 30, December 31, 2009 2008 Trade receivables ...... 262,066 290,487 Less: provision for impairment of receivables...... (14,418) (9,993)

Trade receivables — net...... 247,648 280,494 Accrued revenue — discounts to ‘n’ customers...... 18,703 - Receivables from related parties (Note 31 (iii))...... 22,092 25,340

288,443 305,834

The fair values of trade receivables, because of their short-term nature, are estimated to approximate their carrying values. The carrying amounts of the Group’s trade receivables are denominated in the following currencies: September 30, December 31, 2009 2008 PLN...... 262,832 292,549 USD ...... 21,497 11,008 EUR ...... 3,685 1,763 GBP...... 338 503 CAD...... 77 - AUD...... 14 11

288,443 305,834

Provision for impairment of receivables was created individually for non-related trade receivables that were overdue more than 60 days or in relation to individual customers who are in unexpectedly difficult financial situations.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-43 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Movements on the provision for impairment of trade receivables are as follows:

Nine months ended Nine months ended September 30, September 30, 2009 2008 Beginning of the period ...... 9,993 8,238 Provision for receivables impaired, net change ...... 5,992 (63) Receivables written off as uncollectible ...... (1,567) (231)

End of the period ...... 14,418 7,944

The creation and release of provisions for impaired receivables have been included in selling expenses in the income statement.

As of September 30, 2009, trade receivables of 84,320 were past due but not impaired. The balance relates to a number of customers with no recent history of default. The ageing analysis of these trade receivables is as follows:

September 30, December 31, 2009 2008 Up to 30 days...... 47,615 114,989 31-60 days ...... 9,086 14,915 Over 60 days ...... 27,619 12,417

84,320 142,321

The Group defines credit exposure as total outstanding receivables. Maximum exposure to credit risk is the total balance of trade receivables. Maximum exposure to credit risk as of September 30, 2009 was 288,443 (December 31, 2008: 305,834).

17. Derivative financial instruments

September 30, December 31, 2009 2008 Derivative financial assets Foreign exchange options EUR ...... - 126,120 Foreign exchange options USD ...... 3,657 23,745

3,657 149,865

Derivative financial liabilities Foreign exchange forwards ...... 693 -

693 -

The fair value of the prepayment options embedded in the Senior Notes as of September 30, 2009 was nil (December 31, 2008: nil). The valuation of embedded prepayment options is described in Note 4(i).

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-44 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

In 2008 the Group entered into EUR put and call currency options to limit the impact on the Group’s net results of PLN/EUR exchange rate movements in relation to the Senior Notes balance. The hedging strategy based on EUR put and call options had in total a notional value of EUR 225,000, a maturity date of January 15, 2009 and a PLN/EUR corridor between 3.30 and 3.60. Following the repurchase of Senior Notes by the Group on February 8 and October 24, 2008 (see Note 22), the Group has de-designated the existing hedging relationship and re-designated a new one. All the parameters of the hedging relationship remained unchanged, except for the nominal value of the Senior Notes hedged which was decreased to EUR 215,000 and the fact that only the fraction of the options corresponding to 215/225 was designated as hedging item. Between January 9 and January 13, 2009 the Group closed the foreign exchange options in EUR in the total nominal amount of EUR 210,000 and received a total premium of 91,630. The remaining balance of EUR 15,000 matured on January 15, 2009 resulting in a gain of 9,384. The Group did not have any open EUR options as of September 30, 2009. The Group entered into USD put and call currency options to limit the impact on the Group’s net results of PLN/USD exchange rate movements in relation to payments for programming rights. The hedging strategy based on USD put and call options had in total a notional value of USD 7,896, maturity date on December 22, 2009 and PLN/USD corridor between 2.10 and 2.45. The Group has not designated the options for hedge accounting. The fair value of foreign exchange options in USD as at September 30, 2009 was based on valuations performed by the Group’s banks. A currency option with the notional value of USD 13,081 matured on March 23, 2009 resulting in a gain of 11,550 being recognized by the Group. A currency option with the notional value of USD 12,354 matured on June 22, 2009 resulting in a gain of 9,864 being recognized by the Group. A currency option with the notional value of USD 7,149 matured on September 22, 2009 resulting in a gain of 2,655 being recognized by the Group. The change in fair value of the options including gains/ losses on settlement was recognized in the income statement (see Note 8). The Group entered into USD foreign exchange forwards in order to limit the impact of exchange rate movements on the fair value of Group’s firm commitments to purchase set top decoders. The hedging strategy based on USD foreign exchange forwards had in total a notional value of USD 34,005, maturity dates between September 24, 2009 and December 23, 2009 and PLN/USD foreign exchange forward rates between 2.91 and 2.93. The Group has designated the foreign exchange forwards for hedge accounting, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognized as an asset or liability with a corresponding gain or loss recognized in the income statement. The changes in the fair value of the foreign exchange forwards are also recognized in the income statement. The fair value of the foreign exchange forwards as at September 30, 2009 was based on valuations performed by the Group’s bank. A foreign exchange forward with the notional value of USD 3,192 matured on September 24, 2009 resulting in a loss of 240 being recognized by the Group in the income statement as the foreign exchange forward was not effective.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-45 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Foreign exchange options and foreign exchange forwards were contracted with banks rated as follows (by Moody’s):

September 30, December 31, 2009 2008 Derivative financial assets Bank rated Aa1 ...... 3,657 23,745 Banks rated A2 ...... - 126,120 3,657 149,865 Derivative financial liabilities Bank rated Aa1 ...... 693 - 693 -

The Group defines maximum exposure to credit risk with respect to derivative financial assets as the carrying amount of those assets at the reporting date. The maximum exposure as at September 30, 2009 amounted to 3,657 (December 31, 2008: 149,865).

18. Prepayments and other assets

September 30, December 31, 2009 2008 Inventory, net of impairment provision ...... 22,563 11,758 Prepayments for programming ...... 18,452 17,580 VAT and other non-CIT taxes receivables ...... 8,096 3,133 Technical support ...... 4,165 3,576 Employee settlements ...... 3,330 3,543 Other ...... 49,303 16,877

105,909 56,467

Less: current portion of other assets ...... (100,571) (51,286)

Non-current portion of other assets ...... 5,338 5,181

19. Cash and cash equivalents

September 30, December 31, 2009 2008 Cash at bank and in hand ...... 81,040 131,316 Short-term treasury bills ...... - 53,551

81,040 184,867

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-46 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Cash at bank (credit rating— Standard and Poor’s):

September 30, December 31, 2009 2008 Banks rated A- ...... 40,956 46,896 Bank rated AAA...... 40,084 84,420

81,040 131,316

20. Share capital (not in thousands)

The total authorized number of ordinary shares is 413,499,585 with a par value of 0.20 per share. The total number of ordinary shares in issue as at September 30, 2009 was 340,382,157 with a par value of 0.20 per share. All issued shares are fully paid and include shares issued on exercise of share options granted under incentive schemes (C and E series of shares) as soon as cash consideration is received. The shareholders structure as at September 30, 2009:

Number % of share Number of Shareholder of shares capital votes % of votes Strateurop International B.V.(1) ...... 180,355,430 52.99% 180,355,430 52.99% N-Vision B.V.(1) ...... 15,218,400 4.47% 15,218,400 4.47% Cadizin Trading&Investment(1)...... 8,031,477 2.36% 8,031,477 2.36% ITI Impressario(1) ...... 1,400 0.00% 1,400 0.00% Other shareholders ...... 136,775,450 40.18% 136,775,450 40.18%

Total ...... 340,382,157 100.00% 340,382,157 100.00%

(1) Entities controlled by ITI Group.

Included in the total number of shares in issue as at September 30, 2009 held by other shareholders is 23,850 shares of C1 and C2 series not registered by the Court.

During the nine months ended September 30, 2009 23,850 shares of C1 and C2 series were issued under the stock option plan for an amount of 255 (in thousands).

21. Share buyback and redemption

On October 30, 2008 the Company’s shareholders approved a share buyback program to acquire and voluntarily redeem the Company’s shares. The share buyback program allows the Group to purchase up to 35 million shares but not more than 10% of the Company’s share capital as calculated on the last day of the program and to spend not more than 500,000. The program expires on December 31, 2009 and the Company’s shareholders approved the designation of accumulated profits in a maximum amount of 471,750 to finance the share buyback program.

The first tranche of the share buyback program commenced on November 17, 2008 and ended on January 21, 2009. The second tranche of the share buyback program commenced on February 5, 2009 and ended on March 24, 2009.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-47 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Since the beginning of the share buyback program, the Group has purchased in total 9,157,107 (not in thousands) shares for a total amount of 100,000 (6,200,937 (not in thousands) shares for a total amount of 62,572 in the nine months ended September 30, 2009).

On May 15, 2009 Annual General Shareholders’ Meeting adopted resolutions on redemption of 9,157,107 (not in thousands) treasury shares and decrease of share capital. On July 3, 2009 these resolutions were registered by the Court.

22. Borrowings

December 31, September 30, 2009 2008 9.5 Senior Notes due 2013...... 871,023 855,432 Interest accrued on Senior Notes due 2013 ...... 25,155 3,551 PLN Bonds ...... 498,610 498,593 Interest accrued on PLN Bonds ...... 11,096 2,156 Loan facility ...... 109,927 109,875 Interest accrued on loan facility ...... 2,951 1,951 Loans from related parties (see Note 29,31(iv))* ...... 525,550 - Overdraft facility ...... - 48,733 2,044,312 1,520,291

Less: current portion of borrowings ...... (39,202) (56,391)

Non-current portion of borrowings ...... 2,005,110 1,463,900

* Including accrued interest

Senior Notes

On February 8, 2008 the Group repurchased Senior Notes with a nominal value of EUR 10,000 for an amount of EUR 10,200 (PLN 36,587). On October 24, 2008 the Group repurchased Senior Notes with a nominal value of EUR 10,000 for an amount of EUR 9,400 (PLN 34,141). The Group has accounted for the repurchases as a de-recognition of the corresponding part of the Senior Notes liability. As a result, the difference between the consideration paid and the carrying amount corresponding to the Notes repurchased was recognized in the income statement within finance expense. The nominal value of the remaining Senior Notes is EUR 215,000.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-48 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

The fair value of the Senior Notes, excluding accrued interest, as at September 30, 2009 is estimated to be PLN 844,765 or EUR 200,058 (PLN 753,535 or EUR 180,600 as at December 31, 2008). Fair value of the Senior Notes reflects their market price quoted by Reuters based on the last value date on September 30, 2009.

The Group may redeem all or part of the Senior Notes on or after December 15, 2008 at a redemption price ranging from 104.75% to 100% of nominal value.

The Group recognized an embedded financial instrument with respect to these options (see Note 4(i).

i) A person other than Permitted Holders become the beneficial owner of more than 35% of the voting power of the voting stock of the Company, and the Permitted Holders own a lesser% than such other person,

ii) Approved directors cease to constitute a majority of the Supervisory Board,

iii) The Company sells substantially all of its assets,

iv) A plan is adopted relating to the liquidation or dissolution of the Company,

v) The Company ceases to own 100% of the shares of TVN Finance Corporation plc.

PLN Bonds

On May 26, 2008 the Group entered into an agreement with Bank Pekao S.A., Bank Handlowy w Warszawie S.A. and BRE Bank S.A. to conduct a Bond Issue Program (“Program”). The Program enables the Group to issue bearer, unsubordinated and unsecured bonds (“PLN Bonds”) with a maximum total nominal value of PLN 1 billion at any time. The Program can be extended up to a nominal value of PLN 2 billion.

On June 23, 2008 the Group completed the first issue of PLN Bonds with a total nominal value of 500,000 and with a variable interest rate of 6 month WIBOR plus 2.75% per annum. The interest is payable semi-annually starting December 14, 2008. The PLN Bonds are due for repayment on June 14, 2013. The PLN Bonds are unsecured obligations and are governed by a number of covenants including restrictions on disposal or inadequate use of assets. The total transaction costs of the issue amounted to 1,686 and mainly related to dealers commission and legal services. The PLN Bonds are carried at amortized cost using an effective interest rate of 7.83%.

The Group has an option to redeem all or 50% of the PLN Bonds on June 14, 2011 or on June 14, 2012 at a redemption price of 102% or 101% of the nominal value respectively. The Group assessed that the early prepayment options are closely related to the economic characteristics of the host contract (PLN Bonds) as the option exercise price is close on each exercise date to the amortized cost of the PLN Bonds. Consequently, the Group did not separate the embedded derivative.

The fair value of the PLN Bonds, including accrued interest, as at September 30, 2009 was estimated to be PLN 511,146 (December 31, 2008: 503,371). The PLN Bonds are non-public and their fair value

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-49 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) was estimated using an internal valuation model with the key inputs being market interest rate, payment dates and credit spread.

Loan facility On June 30, 2008 the Group entered into a PLN 200,000 multicurrency loan facility with Bank Pekao SA. The facility is available for a three year period. The facility bears interest at six-month WIBOR, EURIBOR or LIBOR (depending on loan currency) plus a margin which depends on the ratio of consolidated net debt to consolidated EBITDA of the Group and at September 30, 2009 was 1.4%. The effective interest rate is approximated by WIBOR and applicable margin and fair value as at September 30, 2009 is approximated by the carrying amount. The facility is secured over trade receivables of TVN S.A. up to the equivalent of EUR 25 million. The loan facility is guaranteed by Grupa Onet.pl S.A., Mango Media Sp. z o.o. and ITI Neovision Sp. z o.o., subsidiaries of TVN S.A. As of September 30, 2009 145,241 of the facility had been used (December 31, 2008: 168,526).

23. Other liabilities and accruals September 30, December 31, 2009 2008 Employee benefits ...... 34,711 45,175 VAT and other taxes payable...... 43,917 29,639 Deferred income ...... 33,845 21,647 Accrued production costs ...... 22,146 14,908 Sales and marketing related costs...... 7,159 2,050 Satellites ...... 3,218 6,236 Other liabilities and accrued costs ...... 131,331 109,838

276,327 229,493

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-50 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

24. Note to the consolidated cash flow statement Reconciliation of net profit to cash generated from operations

Nine months ended Nine months ended September 30, September 30, Note 2009 2008 Net profit ...... 141,279 276,042 Tax charge ...... 35,299 64,801 Share options granted to board members and employees...... 7 16,920 30,628 Depreciation, amortization and impairment charges ...... 7 131,488 58,695 Amortization of acquired programming rights and co-production ...... 7 113,740 87,799 Impaired accounts receivable ...... 7 6,001 85 Loss on sale of property, plant and equipment . . 287 76 Investment income and finance expense, net . . . 8 93,651 49,878 Share of loss of associate ...... 39,090 19,057 Gain on step acquisition...... 29 (110,690) — Transaction costs related to acquisition of associate, expensed ...... 7,29 3,273 — Loss on sale of joint venture ...... 30 1,924 — Guarantee fee...... 8 (3,488) (2,426) Payments to acquire programming rights ...... (175,102) (81,594) Change in local production balance ...... (13,922) (53,011) Changes in working capital excluding digital platform: Trade receivables ...... 49,546 31,586 Prepayments and other assets ...... (6,520) (9,375) Trade payables ...... 48,143 7,259 Other short term liabilities and accruals . . . . . 3,053 64,312 94,222 93,782 Changes in working capital—digital platform. . . (58,471) — Total changes in working capital ...... 35,751 93,782 Cash generated from operations ...... 315,501 543,812 Non-cash transactions Barter (costs)/ revenue, net ...... (5,823) 6,879 Share options granted to board members and employees...... 7 16,920 30,628

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-51 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

25. Taxation Nine Nine Three Three months months months months ended ended ended ended September 30, September 30, September 30, September 30, 2009 2008 2009 2008 Current tax charge ...... (61,419) (76,380) (6,188) (14,558) Deferred tax benefit ...... 26,120 11,579 7,504 14,857 (35,299) (64,801) 1,316 299 Profit before income tax ...... 176,578 340,843 51,204 4,709 Income tax charge at the enacted statutory rate of 19% ...... (33,550) (64,760) (9,729) (895) Tax impact of employee share option plan costs not deductible for tax purposes (see Note 7) . . . (3,215) (5,819) (917) (1,802) Impact of tax deduction claimed and deferred in relation to operations in special economic zone...... 28,548 11,782 12,033 7,598 Reversal of deferred tax assets recognized on investment in associate due to obtaining the control ...... (25,475) - - - Impact of non-taxable gain recognized on step acquisition . . 21,031 - - - Losses carry forward on which deferred tax asset was not recognised ...... (13,310) - (2,162) - Impact of non-taxable loss on elimination of loans granted to associate recognized on consolidation* ...... (5,032) - - - Net tax impact of other expenses and losses not deductible for tax purposes and revenue not taxable...... (4,296) (6,004) 2,091 (4,602) Tax for the period ...... (35,299) (64,801) 1,316 299

* established provisionally

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-52 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Nine months ended Nine months ended September 30, September 30, Movements in deferred tax asset 2009 2008 Balance at beginning of period ...... 34,515 12,637 Debit for the period* ...... 10,105 5,554 Balance at end of period ...... 44,620 18,191

Nine months ended Nine months ended September 30, September 30, Movements in deferred tax liability 2009 2008 Balance at beginning of period ...... (165,679) (166,578) Acquisition of subsidiary ** ...... (25,975) - Deferred tax credited to equity, net ...... 127 - Debit for the period ...... 16,015 6,025 Balance at end of period ...... (175,512) (160,553)

* includes reversal of deferred tax asset of 25,475 recognized on investment in associate due to obtaining the control ** represents the deferred tax liability established provisionally on ‘n’ brand and fair value adjustments

26. Trade payables September 30, 2009 December 31, 2008 Acquired programming rights payables ...... 90,974 65,375 Property, plant, equipment and intangible assets payables ...... 58,064 33,885 Other trade payables ...... 68,927 44,510 Related party payables (see Note 31(iii)) ...... 20,007 5,086 237,972 148,856 Less: current portion of trade payables...... (196,237) (141,905) Non-current portion of acquired programming rights payables ...... 41,735 6,951

27. Contingencies The Group has a remaining contingent asset in respect of a VATclaim of 3,594 and interest due from the tax authorities of 13,492. A court ruling in favour of the Group was announced on April 13, 2006. On June 12, 2006 the tax authorities appealed to the Supreme Administrative Court. On October 9, 2007 the Supreme Administrative Court decided to return the case to the Administrative Court in Krakow for further review. On July 23, 2008 the Administrative Court overrode penalties imposed by the tax authorities (in the amount of 1,078 plus interest) but overruled the Group’s claim with respect to the base VAT amount. The Group recognized receivable penalty of 1,078 plus interest in 2008 financial statements and received the amount in January 2009. On October 10, 2008 the Group appealed to the Supreme Administrative Court with respect to the base VAT claim. On March 25, 2009 the tax authorities appealed to the Supreme Administrative Court against the Group’s base VAT claim.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-53 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

28. Commitments The Group has entered into a number of operating lease and other agreements. The commitments derived from these agreements are presented below.

(i) Commitments to acquire programming The Group has outstanding contractual payment commitments in relation to programming as of September 30, 2009. These commitments are scheduled to be paid as follows: Due in 2009 ...... 54,039 Due in 2010 ...... 246,521 Due in 2011 ...... 292,775 Due in 2012 ...... 276,335 Due in 2013 ...... 185,533 Due in 2014 and thereafter ...... 39,408 1,094,611

(ii) Total future minimum payments relating to operating lease agreements signed as at September 30, 2009: Non-related Related parties parties Total Due in 2009 ...... 7,320 8,083 15,403 Due in 2010 ...... 26,552 20,249 46,801 Due in 2011 ...... 25,894 16,283 42,177 Due in 2012 ...... 25,894 14,346 40,240 Due in 2013 ...... 25,894 9,657 35,551 Due in 2014 and thereafter...... 59,176 12,253 71,429 170,730 80,871 251,601

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-54 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Due in 2009 ...... 16,017 Due in 2010 ...... 82,857 Due in 2011 ...... 78,177 Due in 2012 ...... 47,280 Due in 2013 ...... 32,083 Due in 2014 and thereafter ...... 90,918 347,332

Additionally, the Group leases transmission sites and related services for an annual amount of 6,600.

(iii) Barter commitments

The Group has an outstanding commitment of service to broadcast advertising of 3,155 to settle sundry amounts payable recorded as of September 30, 2009 (3,466 at December 31, 2008). The service to broadcast advertising will be rendered under commercial terms and conditions and at market prices.

(iv) Other commitments

As at September 30, 2009, the Group assumed contractual commitments of 94,107 to acquire property, plant and equipment and intangible assets (1,304 at December 31, 2008).

Additionally the Group has undertaken to invest 215,782 in the special economic zone in Kraków by December 31, 2017. As at September 30, 2009 the remaining commitment amounted to 100,578.

29. Investment in polish digital satellite pay television “n”

On June 25, 2008 the Group completed the acquisition of 25% of the share capital plus 1 share of Neovision Holding B.V. (“Neovision Holding”) a company registered in Amsterdam, the Netherlands from ITI Media Group N.V. (“ITI Media Group”), an entity under common control. Neovision Holding is the sole shareholder of ITI Neovision Sp. z o.o. (“ITI Neovision”) which owns and operates the ‘n’ digital satellite television in Poland. For a total cash consideration of EUR 95 million (PLN 319,628) the Group purchased 25% of the share capital plus one share in Neovision Holding and a corresponding pro-rata interest in the shareholder’s loans granted to ITI Neovision with a nominal value of EUR 35.3 million.

Before March 11, 2009 the Group had significant influence on, but not control over ITI Neovision operations. Accordingly, the investment was classified as an investment in an associate and accounted for using the equity method with the recognition of a 25% share of the associate’s net results. In the consolidated financial statements the total investment was split between investment in an associate and loans receivable from an associate.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-55 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Nine months ended Year ended September 30, December 31, Investment in associate 2009 2008 Beginning of the period ...... 120,076 83 Investment in Neovision Holding ...... - 211,819 Other direct costs...... - 2,614 Share of loss of Neovision Holding* ...... (39,588) (94,455) Direct costs written down ...... (2,614) - Business combination elimination ** ...... (77,789) - Acquisition of associate ...... 902 - Share of gain of other associates ...... 297 15 End of the period ...... 1,284 120,076

* Including amortization of ‘n’ brand Nine months ended Year ended September 30, December 31, Loans receivable from associate 2009 2008 Beginning of the period ...... 179,138 - Acquisition of loans in Neovision Holding ...... - 107,809 Other direct costs...... - 1,575 Interest accrued ...... 4,181 5,767 Loans extended during the period ...... 75,344 28,180 Foreign exchange gains...... 20,363 35,807 Business combination elimination ** ...... (279,026) - End of the period ...... - 179,138

** Elimination results from the acquisition of a subsidiary On March 11, 2009, the Group and ITI Media Group entered into a preliminary agreement where the parties agreed that the Group would increase its direct ownership interest in Neovision Holding and its indirect ownership interest in ITI Neovision to, in aggregate, 51% of company’s shares and a corresponding pro-rata interest in the shareholder’s loans granted to Neovision Holding Group for the price of EUR 46.2 million. The Group agreed to immediately provide ITI Neovision with funding of EUR 25.1 million in the form of a shareholder loan simultaneously receiving a contractual right to exercise voting rights in Neovision Holding equivalent to an additional 26% minus one share, thereby increasing voting control to 51%. As a result, the Group obtained control over Neovision Holding Group on March 11, 2009. The transaction agreement provides that the Group will pay ITI Media Group a supplemental payment if and to the extent that ITI Neovision’s subscriber revenues for the 2010 calendar year exceed PLN 555,618,071 (not in thousands). The amount of the supplemental payment will be computed as EUR 0.3214 (not in thousands) for each PLN 1.00 (not in thousands) in excess of the foregoing threshold amount. ITI Media Group’s right to receive this supplemental payment is contingent upon ITI Neovision achieving certain specified conditions during the 2010 calendar year as regards EBITDA, numbers of subscribers and average revenue per subscriber. The amount of the supplemental payment is subject to a EUR 60.0 million limit. The limit amount will be reduced if and to the extent that, prior to the end of 2010 calendar year, ITI Media Group sells all or a part of its

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-56 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) remaining ownership interest in Neovision Holding or ITI Neovision to a third party where the purchase price paid by the third party reflects ITI Neovision having an equity value which is less than the amount specified in the transaction agreement (which amount reflects the Group’s investment in, and the resulting equity value of, ITI Neovision). The Group has the option to pay up to one-half of the contingent consideration in the form of its shares valued at the weighted average trading price over the last 30 trading days prior to the payment, with the balance being paid in cash.

The investment of the Group in ‘n’ DTH platform, which offers technologically advanced pay television services in Poland, has strengthed the competitive position of the Group on the attractive Polish DTH and cable market which is likely to consolidate in the future and will provide the Group with revenue diversification.

The following summarizes the consideration for the acquisition *:

Amounts transferred (equivalent of EUR 46.2 million)**...... 216,316 Contingent consideration (fair value of EUR 60.0 million)...... 236,448 Total Consideration per transaction of March 11, 2009, including: ...... 452,764 Consideration paid for loans (fair value of loans granted) ...... 225,847 Consideration paid for equity instrument ...... 226,917 Total Consideration per transaction of March 11, 2009 ...... 452,764 Consideration paid for equity instruments...... 226,917 Fair value of the previously held equity instruments ...... 213,302 Total Consideration for 51% stake in equity of Neovision Holding ...... 440,219

* established provisionally ** includes amounts transferred to ITI Media Group (as repayment of loans) in the amount of 130,551 and amounts transferred to Neovision Holding Group as new loans granted

Note to the investing activities in the consolidated cash flow statement:

Loans repaid by the Group to ITI Media Group and granted to Neovision Holding Group on acquisition date ...... (212,112) Less: cash acquired in the subsidiary as at March 11, 2009 ...... 114,429 Acquisition of subsidiary, net of cash acquired ...... (97,683)

The potential undiscounted amount of all future payments that the Group could be required to make under this arrangement is between EUR 0 and EUR 60,000. The fair value of the contingent consideration arrangement of 236,448 was estimated based on a discount rate of 7.93% and assumed the full probability of maximum payment (see Note 4(iv)).

The Group has accounted for the acquisition of Neovision Holding using the purchase accounting method under early adopted IFRS 3 (revised) (please see accounting policies in Notes 2.2 and 2.3). The goodwill of 742,872 arising from the acquisition is attributable to the acquired customer base and future operating cash-flows from the digital platform.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-57 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

None of the goodwill recognized is expected to be deductible for income tax purposes. The following table summarizes the provisionally established amounts of the assets acquired and liabilities assumed recognized at the date on which effective control was transferred to the Group (March 11, 2009), as well as the non-controlling interest’s share in the net identifiable liabilities of Neovision Holding Group:

Brand (see Note 12) ...... 103,630 Other intangible assets ...... 13,821 Property, plant and equipment (see Note 10) ...... 331,075 Programming inventory ...... - Corporate income tax receivable ...... 1,276 Trade and other receivables...... 48,101 Inventory ...... 5,613 Prepayments and other assets ...... 66,554 Cash and cash equivalents ...... 114,429 Trade and other liabilities ...... (263,180) Deferred tax liability on brand and fair value adjustments(see Note 25)...... (25,975) Loans from related parties...... (913,560) Provisions and accruals ...... (75,221) Total identifiable net liabilities established provisionally ...... (593,437) Less: Non-controlling interest ...... 290,784 Total net liabilities attributable to the Group...... (302,653) Goodwill (see Note 11) * ...... 742,872 Consideration relating to equity investment ...... 440,219

* established provisionally Included in trade and other receivables is the balance of trade receivables at fair value of 43,694 with the gross contractual amount of 48,696 and estimated expected uncollectible amount of 5,002. In the provisional purchase price allocation process the Group identified and valued marketing related intangible assets such as the “n” brand. The fair value of the brand was estimated using the relief from royalty method and is discussed in detail in Note 4 (ii). The adjustment recognized during the three months ended September 30, 2009 amounts to 15,430. In the provisional purchase price allocation process the Group valued set top decoders using a depreciated replacement cost approach (see Note 10). The fair value adjustment recognized during the three months ended September 30, 2009 amounts to 33,078. In the provisional purchase price allocation process the Group derecognized programming inventory in the amount of 46,160 and corresponding programming rights payables in the amount of 46,160 as a consequence of application of the Group’s accounting policy on programming rights. The Group will recognize any adjustments to the provisional values assigned to the subsidiary’s identifiable assets and liabilities as a result of completing the initial purchase price allocation within twelve months of the acquisition date. The subsidiary will not be able to pay dividends to the Group until its cumulative losses are covered.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-58 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

The Group recognized a gain on step acquisition of 110,690 as a result of measuring at fair value its 25% equity investment in Neovision Holding held before the business combination. The fair value of the equity investment held before the business combination was measured at 213,302 The gain on step acquisition is disclosed separately in the Group’s consolidated income statement for the nine months ended September 30, 2009. The Group recognized on consolidation with Neovision Holding Group a fair value loss of 26,486 resulting from elimination of loans granted by the Group to Neovision Holding and ITI Neovision. The loss represents a difference between the fair value of loans acquired by the Group and their respective carrying value in the accounts of the Group. The loss is recognized in investment expense (see Note 8). The direct costs relating to the acquisition amounted to 16,608 and included mainly legal, valuation and professional consulting fees and were expensed in the income statement in general and administration expenses. In the period between March 11, 2009 and September 30, 2009 the Group recognized post- acquisition revenue of 231,739 and a net loss of 71,569 in respect to ITI Neovision Group. If the acquisition had occurred on January 1, 2009 the Group, would have recognized consolidated revenue of 1,517,372 and a consolidated net profit of 17,419 for the nine months ended September 30, 2009.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-59 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

30. Group companies These consolidated financial statements as at September 30, 2009 comprise the parent company and the following subsidiaries (the Group), joint ventures and associates: September 30, December 31, 2009 2008 Country of Ownership Ownership incorporation % % Grupa Onet.pl S.A...... Poland 100 100 Dream Lab Onet Sp. z o.o...... Poland 100 100 Tivien Sp. z o.o...... Poland 100 100 El-Trade Sp. z o.o...... Poland 100 100 NTL Radomsko Sp. z o.o...... Poland 100 100 Mango Media Sp. z o.o...... Poland 100 100 SunWeb Sp. z o.o...... Poland 100 100 Thema Film Sp. z o.o...... Poland 96 96 TVN Finance Corporation plc...... UK 100 100 Grupa Onet Poland Holding B.V...... The Netherlands 100 100 Media Entertainment Ventures Int Ltd ...... Malta 100 100 Neovision Holding B.V.* ...... The Netherlands 51 25 ITI Neovision Sp. z o.o.*...... Poland 51 - Cyfrowy Dom Sp. z o.o.* ...... Poland 51 - Neovision UK Ltd* ...... UK 51 - Polski Operator Telewizyjny Sp. z o.o...... Poland 50 50 Discovery TVN Ltd ...... UK - 50 MGM Chanel Poland Ltd (joint venture)* . . . . . UK 23 11 Polskie Badania Internetu Sp. z o.o...... Poland 20 20

* Neovision Holding B.V. wholly owns ITI Neovision Sp. z o.o. (Poland), Neovision UK Ltd (UK), has 99% of Cyfrowy Dom Sp. z o.o. and has 45% joint venture in MGM Channel Poland Ltd (UK). The share capital percentage owned by the Group equals the percentage of voting rights in each of the above entities. On May 29, 2009 the Group sold to Discovery Communications Europe Limited its share in the share capital of Discovery TVN Limited for the consideration of GBP 1 (not in thousands). The Group recognized loss on this transaction in the amount of 2,451.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-60 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

31. Related party transactions

(i) Revenue:

Nine months Nine months Three months Three months ended ended ended ended September 30, September 30, September 30, September 30, 2009 2008 2009 2008 ITI Neovision*...... 8,065 30,889 - 10,543 ITI Group ...... 9,140 5,354 810 1,639 MGM Channel Poland ...... 3,379 - 1,344 - Poland Media Properties ...... 17 20 6 6 20,601 36,263 2,160 12,188

* ITI Neovision was an associate of the Group from June 25, 2008 to March 10, 2009. From March 11, 2009 ITI Neovision is consolidated with TVN Group (see Note 29).

Revenue from the ITI Group and ITI Neovision includes mainly revenue from the exploitation of film rights, license fees, production and technical services rendered and services of broadcasting advertising, net of commissions. Poland Media Properties is controlled by certain shareholders and executive directors of the ITI Group.

Additionally the Group recognised revenue of 4,595 for the nine months ended September 30, 2009 (nine months ended September 30, 2008: 4,606) and for the three months ended September 30, 2009 1,867 (three months ended September 30, 2008: 2,702) from advertising services rendered for ITI Neovision through advertising agencies.

(ii) Operating expenses:

Nine months Nine months Three months Three months ended ended ended ended September 30, September 30, September 30, September 30, 2009 2008 2009 2008 ITI Group ...... 22,583 20,515 3,283 6,109 ITI Neovision*...... 1,493 4,077 - 1,228 Poland Media Properties ...... 2,861 396 1,365 127 MGM Channel Poland ...... 6,645 - 6,645 -

33,582 24,988 11,293 7,464

* ITI Neovision was an associate of the Group from June 25, 2008 to March 10, 2009. From March 11, 2009 ITI Neovision is consolidated with TVN Group (see Note 29).

Operating expenses from ITI Group comprise rent of office premises and the provision of certain management, sales, financial advisory and other services.

Operating expenses from Poland Media Properties comprise rent of office premises.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-61 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

(iii) Outstanding balances arising from sale/purchase of goods and services:

September 30, 2009 December 31, 2008 Receivables: ITI Group ...... 6,065 4,532 ITI Neovision ...... - 20,808 MGM Channel Poland ...... 16,027 - 22,092 25,340

September 30, 2009 December 31, 2008 Payables: ITI Group ...... 3,623 4,978 MGM Channel Poland ...... 16,384 - Poland Media Properties ...... - 63 ITI Neovision ...... - 45 20,007 5,086

(iv) Non-current loans from related parties

September 30, 2009 December 31, 2008 Loan from Strateurop* ...... 285,037 - Loan from N-Vision* ...... 240,490 - ITI Media Group* ...... 23 - 525,550 -

* Including accrued interest. Loans from related parties were initially recognized at fair value as of March 11, 2009 and are subsequently measured at amortized cost. The loan from Strateurop is for a principal amount of EUR 64,657, bears interest of 9.50% per annum and is due for repayment on December 31, 2015. The loans from N-Vision are for a total principal amount of EUR 54,240, bear interest of 9.50% per annum and are due for repayment on December 31, 2015 and December 31, 2018.

(v) Other non current assets Other non current assets include a rental deposit paid to ITI Group by TVN in the amount of 2,418.

(vi) Lease commitments with related parties See Note 28 for further details.

(vii) Other ITI Holdings has provided guarantees in the amount of US$25,000 to Warner Bros. International Television Distribution, US$8,000 to DreamWorks, EUR 4,750 to UEFA (expired June 30, 2009),

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-62 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

US$3,812 to MGM, US$3,024 to Universal in respect of programming rights purchased and broadcast by the Group. and EUR 1,900 to Eutelsat (expired September 14, 2009) and 1,229 to IBM (expired September 25, 2009) in respect of rental of satellite capacity and other services. During the nine months ended September 30, 2009, the Group recorded finance costs relating to ITI Holdings guarantees of 3,381 (during the nine months ended September 30, 2008: 1,819) and during the three months ended September, 2009 1,190 (during the three months ended September 30, 2008: 606). On March 31, 2009 the Group completed the acquisition of additional 26% of the share capital of Neovision Holding from ITI Media Group (see Note 29). Non current liabilities include an amount of 228,766 being the net present value of contingent consideration of 60,000 EUR related to the acquisition of Neovision holding Group (see Note 29).

32. Share-based payments Share options are granted to certain Management Board members, employees and co-workers who are of key importance to the Group. Share options are granted under two share option schemes: (i) TVN Incentive Scheme I introduced on December 27, 2005, based on C series of shares (ii) TVN Incentive Scheme II introduced on July 31, 2006 as part of the acquisition of Grupa Onet.pl, based on E series of shares. The Group has no legal or constructive obligation to repurchase or settle the options in cash. Movements in the number of share options outstanding and their related weighted average exercise prices are as follows (not in thousands) Nine months ended Nine months ended September 30, 2009 September 30, 2008 Average Average exercise price Outstanding options exercise price Outstanding options At 1 January...... PLN 10.79 12,644,716 PLN 10.62 14,887,155 Exercised...... PLN 9.56 (23,850) PLN 9.67 (2,223,678)

At 30 September . . . . . PLN 10.80 12,620,866 PLN 10.79 12,663,477

The total fair value of the options granted was estimated using a trinomial tree model and amounted to 74,124 with respect to C series and 110,101 with respect to E series. The model assumes that dividends would be paid in the future in accordance with the Group’s dividend policy. Fair valuation of options granted before January 1, 2007 assumed that no dividends would be paid in the future. The stock option plan is service related.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-63 TVN S.A. Notes to interim condensed consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

The remaining options are exercisable at the prices indicated below and vest after the specified period (not in thousands):

Number of Service vesting Series options Exercise price period C1 ...... 383,560 PLN 8.66 Vested C2 ...... 1,645,980 PLN 9.58 Vested C3 ...... 3,479,210 PLN 10.58 Vested 5,508,750

Number of Service vesting Series options Exercise price period E1 ...... 217,730 PLN 8.66 Vested E2 ...... 282,135 PLN 9.58 Vested E3 ...... 1,337,516 PLN 10.58 Vested E4 ...... 2,441,065 PLN 11.68 Vested E4 ...... 2,833,670 PLN 11.68 until January 1, 2010 7,112,116

On May 15, 2009 the shareholders’ meeting approved an extension of the TVN Incentive Schemes exercise period to December 31, 2014. Between October 1, 2009 and the date when these financial statements were prepared, 49,710 of C1 and C2 series options were exercised and as a result 49,710 new ordinary shares were issued.

33. Exchange rates and inflation

PLN Exchange Rate PLN Exchange Rate to U.S. dollar to euro September 30, 2009 ...... 2.8852 4.2226 December 31, 2008 ...... 2.9618 4.1724 September 30, 2008 ...... 2.3708 3.4083

The movement in the consumer price index for the nine months ended September 30, 2009 amounted to 3.1% (2.8% for the nine months ended September 30, 2008).

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

F-64

PricewaterhouseCoopers Sp. z o.o. Al. Armii Ludowej 14 00-638 Warszawa Poland Telefon +48 (22) 523 4000 Faks +48 (22) 523 4040 http://www.pwc.com/pl Independent auditor’s report To the Shareholders and Supervisory Board of TVN S.A. We have audited the accompanying consolidated financial statements of TVN S.A. and its subsidiaries (the ‘TVN Group’) which comprise the consolidated balance sheet as of 31 December 2008 and the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the TVN Group as of 31 December 2008, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

PricewaterhouseCoopers Sp. z o.o. Warsaw, Poland 19 February 2009

PricewaterhouseCoopers Sp.z o.o. wpisana jest do Krajowego Rejestru Sa˛ dowego prowadzonego przez Sa˛ d Rejonowy dla m. st. Warszawy, pod numerem KRS 0000044655, NIP 526-021-02-28. Kapitał zakładowy wynosi 10.363.900 złotych. Siedziba˛ Spółki jest Warszawa, Al. Armii Ludowej 14.

F-65 TVN Information

1. Principal activity

TVN S.A. (the “Company”) and its subsidiaries (“TVN Group”, the “Group”) operate or jointly operate thirteen television channels in Poland: TVN, TVN 7, TVN 24, TVN Meteo, TVN Turbo, ITVN, TVN Style, TVN Lingua, TVN CNBC Biznes, TVN Warszawa, Discovery Historia, NTL Radomsko and Telezakupy Mango 24. The Group’s channels broadcast news, information and entertainment shows, serials, movies and teleshopping. The Group also operates Onet.pl the leading internet portal in Poland operating services such as: Zumi.pl, Sympatia.pl, OnetBlog and OnetLajt.

2. Registered Office TVN S.A. ul. Wiertnicza 166 02-952 Warszawa

3. Supervisory Board

• Wojciech Kostrzewa, President

• Bruno Valsangiacomo, Vice-President

• Arnold Bahlmann

• Romano Fanconi

• Paweł Gricuk

• Paweł Kosmala (appointed May 9, 2008)

• Sandra Nowak (resigned January 7, 2008)

• Wiesław Rozłucki

• Andrzej Rybicki

• Markus Tellenbach (appointed May 9, 2008)

• Aldona Wejchert

• Gabriel Wujek (appointed February 15, 2008)

4. Management Board

• Piotr Walter, President

• Karen Burgess, Vice-President

• Edward Miszczak, Vice-President

• Jan Łukasz Wejchert, Vice-President

• Tomasz Berezowski

• Olgierd Dobrzyn´ ski

• Waldemar Ostrowski

• Adam Pieczyn´ ski

• Jarosław Potasz

• Piotr Tyborowicz

F-66 5. Auditors PricewaterhouseCoopers Sp. z o.o. Al. Armii Ludowej 14 00-638 Warszawa 6. Principal Solicitors Clifford Chance ul. Lwowska 19 00-660 Warszawa

7. Principal Bankers Bank Polska Kasa Opieki S.A. (“Pekao SA”) ul. Grzybowska 53/57 00-950 Warszawa

8. Subsidiaries

Television Broadcasting and Production • TVN Finance Corporation plc • El-Trade Sp. z o.o. One London Wall ul. Wiertnicza 166 London EC2Y 5EB 02-952 Warszawa UK • Tivien Sp. z o.o. • NTL Radomsko Sp. z o.o. ul. Augustówka 3 ul. 11 Listopada 2 02-981 Warszawa 97-500 Radomsko

• Mango Media Sp. z o.o. • Thema Film Sp. z o.o. ul. Kos´ciuszki 61 ul. Powsin´ ska 4 81-703 Sopot 02-920 Warszawa

On-line • Grupa Onet.pl S.A. • Dream Lab Onet.pl Sp. z o.o. ul. G. Zapolskiej 44 ul. G. Zapolskiej 44 30-126 Kraków 30-126 Kraków • Grupa Onet Poland Holding B.V. • Media Entertainment Ventures De Boelelaan 7 International Limited NL-1083 Amsterdam Palazzo Pietro Stiges 90, Strait Street The Netherlands Valetta VLT 05 Malta • SunWeb Sp. z o.o. ul. G. Zapolskiej 44 30-126 Kraków

9. Joint ventures • Polski Operator Telewizyjny Sp. z o.o. • Discovery TVN Ltd ul. Huculska 6 566 Chiswick High Road 00-730 Warszawa London W4 5YB UK

10. Associates • Polskie Badania Internetu Sp. z o.o. • Neovision Holding B.V. Al. Jerozolimskie 44 De Boelelaan 7 00-950 Warszawa NL-1083 Amsterdam The Netherlands

F-67 TVN S.A. Consolidated Income Statement (Expressed in PLN, all amounts in thousands, except as otherwise stated)

Year ended Year ended December 31, December 31, Note 2008 2007 Revenue ...... 6 1,897,309 1,554,729 Cost of revenue ...... 7 (967,153) (818,423) Selling expenses ...... 7 (151,772) (126,452) General and administration expenses ...... 7 (148,801) (126,008) Other operating income/(expense), net ...... 7 2,292 (1,834) Operating profit ...... 631,875 482,012 Investment income, net ...... 8 81,090 19,344 Finance expense, net ...... 8 (170,973) (204,124) Share of loss of associate ...... 15 (94,440) - Profit before income tax ...... 447,552 297,232 Income tax charge ...... 27 (83,876) (53,924) Profit attributable to the equity holders of TVN S.A...... 363,676 243,308 Earnings per share for profit attributable to the equity holders of TVN S.A. (not in thousands) - basic ...... 9 1.04 0.70 - diluted ...... 9 1.03 0.69 Supplementary disclosure of impact of embedded option valuation: Profit attributable to the equity holders of TVN S.A...... 363,676 243,308 Impact on profit, net of tax, of fair value loss on embedded option ...... 8,27 16,562 87,170 Adjusted profit attributable to the equity holders of TVN S.A...... 380,238 330,478

The Group presents adjusted profit to reflect the impact of non-cash fair value losses/gains arising on prepayment options embedded in its Senior Notes. The accounting for prepayment options is technical, judgmental and driven by accounting interpretations. The Group believes that presentation of net profit adjusted for this item enables a reader to better understand the Group’s operating and financial performance.

The accompanying notes are an integral part of these consolidated financial statements.

F-68 TVN S.A. Consolidated Balance Sheet (Expressed in PLN, all amounts in thousands, except as otherwise stated)

As at As at December 31, December 31, Note 2008 2007 ASSETS Non-current assets Property, plant and equipment ...... 10 347,400 250,168 Goodwill ...... 11 952,657 952,657 Brand...... 12 693,688 693,688 Other intangible assets ...... 13 56,796 50,969 Non-current programming rights ...... 14 154,741 127,433 Investments in associates ...... 15 120,076 83 Loan to associate ...... 15 179,138 - Available-for-sale financial assets ...... 17 7,588 7,588 Deferredtaxasset...... 27 34,515 12,637 Othernoncurrentassets...... 20 5,181 4,256 2,551,780 2,099,479 Current assets Current programming rights ...... 14 192,676 179,523 Trade receivables ...... 18 305,834 299,590 Available-for-sale financial assets ...... 17 315,616 - Derivative financial assets...... 19 149,865 24,267 Prepayments and other assets ...... 20 51,286 31,600 Corporateincometaxreceivable...... 1,250 94 Cash and cash equivalents ...... 21 184,867 110,372 1,201,394 645,446 TOTAL ASSETS ...... 3,753,174 2,744,925 EQUITY Shareholders’ equity Sharecapital...... 22 69,903 69,455 Share premium ...... 605,805 566,327 Treasuryshares...... 23 (37,428) - 8%obligatoryreserve...... 23,152 22,901 Other reserves ...... 109,048 86,833 Accumulated profit ...... 876,474 684,245 1,646,954 1,429,761

LIABILITIES Non-current liabilities 9.5% Senior Notes due 2013 ...... 24 855,432 790,388 PLN Bonds due 2013 ...... 24 498,593 - Loan facility ...... 24 109,875 - Deferred tax liability ...... 27 165,679 166,578 Non-current trade payables ...... 25 6,951 8,724 Other non-current liabilities ...... 1,342 1,374 1,637,872 967,064 Current liabilities Current trade payables...... 25 141,905 111,107 Corporateincometaxpayable...... 40,559 43,223 Accruedinterestonborrowings...... 24 7,658 3,332 Overdraft facility ...... 24 48,733 - Other liabilities and accruals ...... 26 229,493 190,438 468,348 348,100 Total liabilities ...... 2,106,220 1,315,164 TOTAL EQUITY AND LIABILITIES ...... 3,753,174 2,744,925

The accompanying notes are an integral part of these consolidated financial statements.

F-69 TVN S.A. Consolidated statement of changes in shareholders’ equity (Expressed in PLN, all amounts in thousands, except as otherwise stated)

Number of Employee share shares Share Share 8% obligatory option plan Accumulated Shareholders’ (not in thousands) capital Premium reserve reserve profit equity Balance at January 1, 2007 .... 343,508,455 68,702 499,238 21,323 77,087 570,815 1,237,165 Profit for the year ...... - - - - - 243,308 243,308

Total recognized income for the year ...... - - - - - 243,308 243,308 Issue of shares ...... 3,764,520 753 67,571 - (35,086) - 33,238 Share issue cost ...... - - (482) - - - (482) Charge for the year(1) ...... - - - - 44,832 - 44,832 Dividend declared and paid . . . - - - - - (128,300) (128,300) Appropriation of 2006 profit — transfer to 8% obligatory reserve...... - - - 1,578 - (1,578) -

Balance at December 31, 2007 .. 347,272,975 69,455 566,327 22,901 86,833 684,245 1,429,761

The accompanying notes are an integral part of these consolidated financial statements.

F-70 TVN S.A. Consolidated statement of changes in shareholders’ equity (Expressed in PLN, all amounts in thousands, except as otherwise stated)

Number of shares Share Share Treasury 8% obligatory Other Accumulated Shareholders’ (not in thousands) capital Premium shares reserve reserves (*) profit equity Balance at January 1, 2008 .. 347,272,975 69,455 566,327 - 22,901 86,833 684,245 1,429,761 Fair value gain on available- for-sale assets...... - - - - - 668 - 668 Deferred tax on fair value gain on available-for- sale assets ...... - - - - - (127) - (127)

Net income recognized directly in equity ...... - - - - - 541 - 541 Profit for the year ...... ------363,676 363,676

Total recognized income for the year ...... - - - - - 541 363,676 364,217 Issue of shares(2) ...... 2,242,439 448 39,623 - - (18,396) - 21,675 Share issue cost ...... - - (145) - - - - (145) Dividend declared and paid(4). . ------(171,180) (171,180) Dividend cost ...... ------(16) (16) Purchase of treasury shares(3) . . - - - (37,428) - - - (37,428) Share option plan charge for the year(1) ...... - - - - - 40,070 - 40,070 Appropriation of 2007 profit — transfer to 8% obligatory reserve ...... - - - - 251 - (251) -

Balance at December 31, 2008...... 349,515,414 69,903 605,805 (37,428) 23,152 109,048 876,474 1,646,954

(1) On December 27, 2005 TVN S.A. introduced the TVN Incentive Scheme I based on C series of shares. On June 8, 2006 the Annual Shareholders’ Meeting approved a conditional share capital increase of up to 1,974 required for execution of the TVN Incentive Scheme I. On July 31, 2006, as part of the acquisition of Grupa Onet.pl, TVN S.A. introduced the TVN Incentive Scheme II based on E series of shares. On September 26, 2006 the Extraordinary Shareholders’ Meeting approved a conditional share capital increase of up to 1,756 required for execution of the TVN Incentive Scheme II . (2) During the year ended December 31, 2008, 2,242,439 (not in thousands) of C1, C2, E1, E2 and E3 series shares were issued and fully paid as a result of the exercise of share options granted to the participants of TVN incentive schemes. (3) During the year ended December 31, 2008, 2,956,170 (not in thousands) shares were purchased by the Company for redemption (see Note 23). These shares are included in the total number of shares in issue as of December 31, 2008 until the Shareholders’ Meeting resolves to redeem and cancel the shares. (4) The dividend paid in 2008 amounted to 0.49 per share (not in thousands). Included in accumulated profit is an amount of 471,750 designated for a share buyback (see Note 23) and an amount of 405,032 being the accumulated profit of TVN S.A. on a stand-alone basis which is distributable. The Senior Notes (see Note 24) impose certain restrictions on payment of dividends.

* Other reserves Employee share option plan Fair value reserve reserve Total Balance at January 1, 2008 ...... 86,833 - 86,833 Issue of shares ...... (18,396) - (18,396) Charge for the period ...... 40,070 668 40,738 Deferred tax on charge for the period ...... - (127) (127) Balance at December 31, 2008 ...... 108,507 541 109,048

The accompanying notes are an integral part of these consolidated financial statements.

F-71 TVN S.A. Consolidated cash flow statement (Expressed in PLN, all amounts in thousands, except as otherwise stated)

Year ended Year ended December 31, December 31, Note 2008 2007 Operating activities Cash generated from operations ...... 28 725,951 507,669 Tax paid...... (110,597) (87,710)

Net cash generated from operating activities ...... 615,354 419,959 Investing activities Acquisition of subsidiaries net of cash acquired ...... - (49,561) Acquisition of associate ...... 15 (323,817) - Payments to acquire property, plant and equipment . . . . . (135,761) (111,164) Proceeds from sale of property, plant and equipment . . . . 622 779 Payments to acquire intangible assets ...... (21,107) (17,685) Purchase of available for sale financial assets ...... 17 (349,729) (2,745) Sale of available-for-sale financial assets ...... 17 39,773 - Loans granted to associate ...... 15 (28,180) - Payments to acquire options ...... 19 (6,987) - Interest received ...... 11,798 5,625

Net cash used in investing activities ...... (813,388) (174,751) Financing activities Issue of shares, net of issue cost ...... 22,33 21,530 32,756 Share buyback, including related expenses ...... 23 (37,428) - Dividend paid ...... (171,196) (128,300) Repurchase of Senior Notes due 2013 ...... 24 (70,728) - Payments to acquire options ...... 19 (27,105) (17,545) Early settlement of options ...... 19 5,362 (40,725) Loan facility...... 24 110,000 (500) Overdraft facility...... 24 48,608 - Issue of PLN Bonds due 2013 ...... 24 498,458 - Interest paid ...... (105,988) (85,598)

Net cash generated by/ (used in) financing activities ..... 271,513 (239,912)

Increase in cash and cash equivalents ...... 73,479 5,296 Cash and cash equivalents at the start of the year ...... 21 110,372 104,611 Effects of exchange rate changes ...... 1,016 465

Cash and cash equivalents at the end of the year ...... 21 184,867 110,372

The accompanying notes are an integral part of these consolidated financial statements.

F-72 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated)

1. TVN

These consolidated financial statements were authorized for issuance by the Management Board and Supervisory Board of TVN S.A. on February 19, 2009.

The structure of TVN Group is described in Note 31.

On June 25, 2008 the Group completed the acquisition from ITI Media Group N.V. of 25% of the share capital plus 1 share of Neovision Holding B.V. a company registered in Amsterdam, the sole shareholder of ITI Neovision Sp. z o.o. which owns and operates the ‘n’ direct-to-home (‘DTH’) platform in Poland. For a total cash consideration of EUR 95 million the Group purchased 25% of the share capital plus one share in Neovision Holding B.V. and a corresponding pro-rata interest in shareholder loans granted to ITI Neovision Sp. z o.o. (see Note 15).

On June 23, 2008 the Group completed a Bond Issue with a nominal value of 500,000 with Bank Pekao S.A., Bank Handlowy w Warszawie S.A. and BRE Bank S.A. (see Note 24).

On June 30, 2008 the Group entered into a 200,000 multicurrency loan facility agreement with Bank Pekao S.A. (see Note 24).

On October 15, 2008 the Group set up SunWeb Sp. z o.o., a wholly owned subsidiary of Grupa Onet.pl S.A., a developer of software for internet merchandising.

On October 30, 2008 the Shareholders’ Meeting approved a share buyback program to acquire and redeem up to 35 million shares for a maximum amount of 500,000. The program commenced on November 17, 2008 and expires on December 31, 2009. As a result of the program, the Group had acquired 2,956,170 shares (not in thousands) by the end of 2008 (see Note 23).

On December 15, 2008 the Group launched TVN Warszawa, a free to air cable and satellite channel broadcasting local news and information for Warsaw.

2. Accounting policies

2.1. Basis of preparation

These consolidated financial statements are prepared on a going concern basis and in accordance with the International Financial Reporting Standards (“IFRS”) as adopted by the EU, issued and effective as at the balance sheet date. The accounting policies used in the preparation of the consolidated financial statements as of and for the year ended December 31, 2008 are consistent with those used in the annual consolidated financial statements for the year ended December 31, 2007 except for new accounting policies described below and interpretations which became effective January 1, 2008.

The accompanying notes are an integral part of these consolidated financial statements.

F-73 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

In 2008 the Group adopted:

(i) IFRIC 11- Group and Treasury Share Transactions, an interpretation which addresses the issue of share-based payment arrangements involving an entity’s own equity instruments and equity instruments of the parent. This interpretation did not impact the Group’s financial statements.

(ii) Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures, the amendments which introduce the possibility of certain reclassifications of financial instruments for companies applying International Financial Reporting Standards, which were already permitted under US generally accepted accounting principles (GAAP). These amendments did not impact the Group’s financial statements.

These consolidated financial statements are prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and available for sale financial assets.

The Group’s consolidated financial statements for the year ended December 31, 2007 prepared in accordance with IFRS as adopted by the EU are available on http://investor.tvn.pl.

2.2. Segment reporting

A business segment is a group of assets and operations that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different to those of other business segments.

Operating costs, including central administration costs are allocated to segments to which they relate.

The majority of the Group’s operations and assets are based in Poland. Assets outside Poland constitute less than 10% of the total assets of all segments. Therefore, no geographic information has been included.

2.3. Consolidation

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of acquisition is measured as the fair value of the assets given and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. The Company uses the purchase accounting method to account for transactions with entities under common control.

The accompanying notes are an integral part of these consolidated financial statements.

F-74 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

All inter company transactions, balances and unrealized surpluses and deficits on transactions between Group companies have been eliminated. Unrealized deficits on transactions between Group companies are eliminated to the extent they are not indicative of an impairment.

2.4. Joint ventures The Group’s interests in jointly controlled entities are accounted for by proportionate consolidation. The Group combines its share of the joint ventures’ individual income and expenses, assets and liabilities and cash flow on a line-by-line basis with similar items in the Group’s financial statements. The Group recognizes the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other ventures. The Group does not recognize its share of profits or losses from joint ventures that result from the Group’s purchase of assets from a joint venture until it resells the assets to an independent party. However, a loss on a transaction is recognized immediately if the loss provides evidence of a reduction in the net realizable value of current assets, or an impairment loss.

2.5. Associates Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for under the equity method and are initially recognized at cost. The group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss. The Group’s share of post-acquisition profits or losses is recognized in the income statement, and its share of post-acquisition movements in reserves is recognized in reserves. The cumulative post- acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it is obliged to cover losses or make payments on behalf of the associate. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the assets transferred. Contracts between an acquirer and a vendor in a business combination to buy or sell an acquiree at a future date, including options to increase the Group’s shareholding in associates that would result in business combinations, are not recognized by the Group as financial instruments.

2.6 Foreign currency The accompanying financial statements are presented in Polish złoty (PLN), which is the presentation and functional currency of the Company. Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates. Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange applicable at the balance sheet date. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Gains and

The accompanying notes are an integral part of these consolidated financial statements.

F-75 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) losses arising from the settlement of such transactions and from translation of monetary assets and liabilities at year-end exchange rates are recognized in the income statement, except when deferred in equity as qualifying cash flow hedges.

Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in equity.

For available-for-sale financial assets that are non — monetary assets, the gain or loss that is recognized directly in equity includes any related foreign exchange translation component.

2.7. Exchange rates and inflation:

PLN exchange rate PLN exchange rate to U.S. dollar to euro December 31, 2008 2.9618 4.1724 December 31, 2007 2.4350 3.5820

The movement in the consumer price index for the year ended December 31, 2008 amounted to 3.3% (4.0% for the year ended December 31, 2007).

2.8. Property, plant and equipment

Property, plant and equipment are stated at historical cost less depreciation. Where the carrying amount of an asset is greater than its estimated recoverable amount (the higher of fair value less costs to sell and its value in use), it is written down immediately to its recoverable amount.

Subsequent expenditure relating to an item of property, plant and equipment is added to the carrying amount of the asset when it is probable that future economic benefits associated with the item will flow to the enterprise and the cost of the item can be measured reliably. All other repair and maintenance expenses are charged to the income statement during the financial period in which they are incurred.

Term TV, broadcasting and other technical equipment 2-10 years Vehicles 3-4 years Studio vehicles 7 years Leasehold improvements up to 10 years Furniture and fixtures 4-5 years

Leasehold improvements are amortized over the shorter of their useful life or the related lease term. Land is not depreciated. Depreciation of other assets is calculated using the straight-line method to allocate their cost less their residual values over their estimated useful lives.

The accompanying notes are an integral part of these consolidated financial statements.

F-76 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are included in operating profit.

Assets’ residual values and useful lives are reviewed and adjusted if appropriate at least at each financial year end. As a result of the review as of December 31, 2007, the expected remaining useful lives and residual values of some items of TV & broadcasting equipment and vehicles were adjusted. The changes in estimates were effective January 1, 2008 and resulted in a reduction of depreciation during the year ended December 31, 2008 of 1,713. No material adjustments to remaining useful lives and residual values were required as a result of the review as at December 31, 2008.

2.9. Goodwill

Goodwill represents the excess of the cost of an acquisition over the Group’s share of fair value of net identifiable assets of the acquired subsidiary at the date of acquisition and is carried at cost less accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if there are indicators of possible impairment. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

2.10. Brands

Brands acquired through business combinations, unless an indefinite useful life can be justified, are amortized on a straight-line basis over their useful lives. Brands with indefinite useful life are tested annually for impairment or whenever there is an indicator for impairment.

2.11. Other intangible assets

Customer related intangibles

Customer related intangibles acquired through business combinations are amortised on a straight line basis over their estimated useful life. The expected useful economic life of customer related assets recognized on acquisition of Onet is four years.

Capitalized development costs

Research expenditure is recognized as an expense as incurred. Costs incurred on development that can be measured reliably and that are directly associated with the production of identifiable, unique and technically feasible technology projects and know-how controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year and where management has the intention and ability to use or sell the projects and adequate resources to complete the project exist, are recognized as intangible assets. Other development expenditures that do not meet these criteria are recognized as expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period. Direct costs recognized as intangible assets include employee costs and an appropriate portion of relevant overheads. Development costs recognized as intangible assets are amortized on a straight line basis over their estimated useful lives. Currently the majority of capitalized development costs are amortized over three years. Development assets are tested for impairment annually, in accordance with IAS 36.

The accompanying notes are an integral part of these consolidated financial statements.

F-77 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Other intangible assets Expenditures on acquired programming formats and broadcasting licenses are capitalised and amortized using the straight line method over their expected useful economic lives:

Term Programming formats 5 years Broadcasting licenses life of the license

Other intangible assets include acquired computer software. Acquired computer software is capitalized and amortized using the straight-line method over two to three years.

2.12. Programming rights Programming rights include acquired program rights, co-production and production costs. Programming rights are reviewed for impairment every year or whenever events or changes indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The individual accounting policies adopted for each of these categories are summarized below:

Acquired program rights Program rights acquired by the Group under license agreements and the related obligations are recorded as assets and liabilities at their present value when the program is available and the license period begins. Contractual costs are allocated to individual programs within a particular contract based on the relative value of each to the Group. The capitalised costs of program rights are recorded in the balance sheet at the lower of unamortized cost or estimated recoverable amount (the higher of its fair value less cost to sell and its value in use). A write down is recorded if unamortized costs exceed the recoverable amount.

The accompanying notes are an integral part of these consolidated financial statements.

F-78 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

The program rights purchased by the Group are amortized as follows:

Percentage of Program Categories Number of runs amortization per run 1st 2nd 3rd ACQUIRED PROGRAMMING 1 Movies, incl. Feature Films, ...... 1 100 Made for Television or Cable, 2 60 40 whether first run, library or rerun. 3 or more 50 35 15 2 Weekly Fiction Series, ...... 1 100 including dramas, comedies or 2 60 40 serials, first run or library, live 3 or more 60 25 15 action and animation. 3 Weekly Non-Fiction Series, ...... 1 100 including documentary series, 2 90 10 docu-soaps, reality and nature. 3 or more 90 10 0 4 Entertainment Documentaries ...... 1 100 One off documentaries of less than timely topics. 2 or more 80 20 0 5 Clips Shows of Comedy material ...... 1 100 26040 3 or more 55 35 10

Programming rights are allocated between current and non-current assets based on estimated date of broadcast. Amortization of program rights is included in cost of revenue.

Capitalised production costs Capitalised production costs comprise capitalised internal and external production costs in respect of programs specifically produced by or for the Group under own licences or under licences from third parties. Capitalised production costs are stated at the lower of cost or recoverable amount on a program by program basis. Capitalised production costs are amortized based on the ratio of net revenues for the

The accompanying notes are an integral part of these consolidated financial statements.

F-79 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) period to total estimated revenues, and the amortization pattern is determined individually for each program. The majority of programs are amortized as set out below:

Percentage of amortization per run Programs with second runs in prime time 60% on first showing, 40% on second showing, or 75% on first showing, 25% on second showing Programs with second runs outside prime time 90% on first showing, 10% on second showing Programs expected to be broadcast once 100% on first showing Fiction series 50% on first showing, 30% on second showing, 20% on third and next showings in total or 66% on first showing, 20% on second showing, 14% on third and next showings in total

Capitalised production costs are allocated between current and non-current assets based on estimated date of broadcast. Amortization of capitalised production costs is included in cost of revenue.

Co-production Programs co-produced by the Group for cinematic release are stated at the lower of cost or estimated recoverable amount. Program costs are amortized using the individual-film-forecast-computation method, which amortizes film costs in the same ratio that current gross revenues bears to anticipated total gross revenues.

News archive News archives were recognized on business combination and are amortised based on their average usage in minutes per year.

2.13. Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Goodwill and brand are allocated to groups of cash-generating units as identified by the Group. Non — financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

The accompanying notes are an integral part of these consolidated financial statements.

F-80 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) financial assets. The classification depends on the purpose for which the financial assets are acquired. Management of the Group determines the classification of its financial assets at initial recognition and re-evaluates the designation at every reporting date.

(i) Financial assets at fair value through profit or loss Financial assets that are acquired principally for the purpose of selling in the short-term or if so designated by management are classified as financial assets at fair value through profit or loss. This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the balance sheet date.

(ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Receivables are classified as trade receivables in the balance sheet (see Note 2.16).

(iii) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. These are included in non-current available-for-sale investments unless management has the express intention of holding the investment for less than twelve months from the balance sheet date or unless they will be sold to raise operating capital, in which case they are included in current assets as current available-for-sale investments.

(iv) Held-to-maturity financial assets Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. During the period the Group did not hold any financial assets in this category. Purchases and sales of investments are recognised on trade-date — the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value and transaction costs are expensed in the income statement. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortized cost using the effective interest rate method. Realised and unrealized gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category, including interest and dividend income, are included in the income statement in the period in which they arise. Changes in the fair value of monetary securities denominated in a foreign currency and classified as available for sale are analysed between translation differences resulting from changes in amortised

The accompanying notes are an integral part of these consolidated financial statements.

F-81 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) cost of the security and other changes in the carrying amount of the security. The translation differences on monetary securities are recognized in profit or loss; translation differences on non- monetary securities are recognized in equity. Changes in the fair value of monetary and non- monetary securities are classified as available for sale are recognized in equity. When securities classified as available for sale are sold or impaired the accumulated fair value adjustments recognized in equity are included in the income statement as “gains and losses from investment securities”. Interest on available-for-sale securities calculated using the effective interest method is recognized in the income statement as part of investment income, net. Dividends on available-for-sale equity instruments are recognized in the income statement as part of other income when the Group’s right to receive payments is established. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the Group’s specific circumstances. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss — measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss — is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. Impairment testing of trade receivables is described in Note 2.16.

2.15. Derivative financial instruments and hedging activities Derivative financial instruments are carried in the balance sheet at fair value. The method of recognizing the resulting gain or loss is dependent on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either (1) a hedge of the fair value of a recognized asset or liability (fair value hedge), or (2) a hedge of a highly probable forecast transaction (cash flow hedge), or (3) a hedge of a net investment in a foreign operation, on the date a derivative contract is entered into. Changes in the fair value of derivatives that are designated and qualify as fair value hedges, are recorded in the income statement, along with any changes in the fair value of the hedged asset or liability that is attributable to the hedged risk. The Group applies fair value hedge accounting for hedging foreign exchange risk on borrowings. The gain or loss relating to the effective and ineffective portion of derivatives is recognized in the income statement within finance expense. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in equity. The gain or loss relating to the ineffective portion is recognized immediately in the income statement within finance expense. Where the forecast transaction results in the recognition of a non-financial asset or of a liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of

The accompanying notes are an integral part of these consolidated financial statements.

F-82 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) the cost of the asset or liability. Otherwise, amounts deferred in equity are transferred to the income statement and classified as revenue or expense in the same periods during which the hedged forecast transaction affects the income statement (for example, when the forecast sale takes place).

Certain derivative transactions, while providing effective economic hedges under the Group’s risk management policies, do not qualify for hedge accounting under the specific rules in IAS 39. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting under IAS 39 are recognized immediately in the income statement.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting under IAS 39, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction ultimately is recognized in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as hedges to specific assets and liabilities or to specific firm commitments or forecast transactions. The Group also documents its assessment, both at the hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The Group separates embedded derivatives from the host contracts and accounts for these as derivatives if the economic characteristics and risks of the embedded derivative and host contract are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative and the combined instrument is not measured at fair value with changes in fair value recognized in profit or loss.

2.16. Trade receivables

Trade receivables are carried initially at fair value and subsequently measured at amortised cost using the effective interest rate method less provision made for impairment of these receivables. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of settlement. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or failure in payments (more than 60 days overdue) are considered as indicators that a trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the recoverable amount, calculated as the present value of expected future cash flows, discounted at the effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the income statement within selling expenses. When a trade receivable is uncollectible, it is written off against the trade receivable allowance account. Amounts charged to the allowance account are generally written off when the Group does not expect to recover additional cash after attempting all relevant formal recovery procedures. Subsequent recoveries of amounts previously written off are credited against selling expenses in the income statement.

The accompanying notes are an integral part of these consolidated financial statements.

F-83 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

2.17. Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, call deposits with banks, and highly liquid non- equity investments with a maturity of less than three months from the date of acquisition. Bank overdrafts are shown in current liabilities on the balance sheet.

2.18. Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares that otherwise would have been avoided are shown in equity as a deduction (net of any related income tax benefit) from the proceeds. Equity transaction costs include legal and financial services and printing costs.

Shares issued on the exercise of share options granted to the participants of TVN incentive schemes are recognized in share capital at the date when cash consideration is received by the Group.

2.19. Share premium

Share premium represents the fair value of amounts paid to the Company by shareholders over and above the nominal value of shares issued to them.

Share premium includes the difference between the fair value of share options exercised established at the grant date, recognized through their vesting period in other reserves, and the nominal value of shares issued.

2.20. Treasury shares

Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid is deducted from shareholders equity until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in shareholders equity.

2.21. 8% obligatory reserve

In accordance with the Polish Commercial Companies Code, a joint-stock company is required to transfer at least 8% of its annual net profit to a non distributable reserve until this reserve reaches one third of its share capital. The 8% obligatory reserve is not available for distribution to shareholders but may be proportionally reduced to the extent that share capital is reduced. The 8% obligatory reserve can be used to cover net losses incurred.

2.22. Borrowings

The Group recognizes its borrowings initially at fair value net of transaction costs incurred. In subsequent periods, borrowings are stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

The accompanying notes are an integral part of these consolidated financial statements.

F-84 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

2.23. Deferred income tax

Deferred income tax is provided in full using the liability method for all temporary differences arising between the tax base of assets and liabilities and their carrying values for financial reporting purposes. Deferred income tax is determined using tax rates (and laws) that have been enacted by the balance sheet date and are expected to apply when the related income tax asset is realized or liability settled.

Deferred income tax liability is recognised for all taxable temporary differences arising on investments in subsidiaries, joint ventures and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax asset is recognised for all deductible temporary differences arising on investments in subsidiaries, joint ventures and associates to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

In the Group’s consolidated financial statements tax assets (both current and deferred) and tax liabilities (both current and deferred) are not offset unless the Group has a legally enforceable right to offset tax assets against tax liabilities.

2.24. Tax credit

The Group recognizes deferred tax assets related to tax credits arising from operations in the special economic zone. Tax credits are subject to meeting certain conditions related to minimum levels of capital expenditures and employment. Generally, tax credits are recognized when it is highly probable that these conditions will be met, in particular when expenditure is made and if it is probable that the tax credit will be used in the future.

2.25. Employee benefits

Retirement benefit costs

The Group contributes to state managed defined contribution plans. Contributions to defined contribution pension plans are charged to the income statement in the period to which they relate.

Share-based plans

The Group’s management board and certain key employees and co-workers are granted share options based on the rules of an incentive scheme introduced by the Group. The options are subject to service vesting conditions, and their fair value is recognized as an employee benefits expense with a corresponding increase in other reserves in equity over the vesting period. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

The accompanying notes are an integral part of these consolidated financial statements.

F-85 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Bonus plan

The Group recognizes a liability and an expense for bonuses. The Group recognizes a provision where contractually obliged or where there is past practice that has created a constructive obligation.

2.26. Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. Provisions are measured at present value of the expenditures expected to be required to settle the obligation.

2.27. Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of services and goods in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

(i) Sales of services

Revenue primarily results from the sale of television and internet advertising and is recognised in the period in which the advertising is broadcast. Other revenues from sales of services primarily result from cable and satellite television subscription fees, internet users’ fees and call television and are recognised generally upon the performance of service.

(ii) Sales of goods

2.28. Government grants

Government grants related to income are recognised in the income statement so as to match them with the expenditure towards which they are intended to contribute in the period they become receivable. Government grants reduce the related expense if the expense would not have been incurred if the grant had not been available.

The accompanying notes are an integral part of these consolidated financial statements.

F-86 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

2.29. Barter transactions

Revenue from barter transactions (advertising time provided in exchange for goods and services) is recognised when commercials are broadcast. Programming, merchandise or services received as part of barter transactions are expensed or capitalised as appropriate when received or utilised. The Group records barter transactions at the estimated fair value of the programming, merchandise or services received. If merchandise or services are received prior to the broadcast of a commercial, a liability is recorded. Likewise, if a commercial is broadcast first, a receivable is recorded.

When the Group provides advertising services in exchange for advertising services, revenue is recognized only if the services exchanged are dissimilar and the amount of revenue can be measured reliably. Barter revenue is measured at the fair value of the consideration received or receivable. When the fair value of the services received cannot be measured reliably, the revenue is measured at the fair value of the services provided, adjusted by the amount of any cash equivalents transferred.

2.30. Advertising costs

The Group expenses advertising costs at the time of the first broadcast or publication.

2.31. Leases

Leases of assets under which substantially all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.

Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. The lease payments are apportioned between a reduction of the outstanding capital liability and interest in such a way as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The interest element of the finance charge is charged to the income statement over the lease period. Property, plant and equipment held under finance leasing contracts are depreciated over the shorter of the lease term or the useful life of the asset.

2.32. Dividend distribution

Dividend distribution to the Company’s shareholders is recognized as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s shareholders. Incremental costs directly attributable to dividend distributions that otherwise would have been avoided are accounted for as a deduction from equity. They comprise mainly financial services.

2.33. Comparative financial information

The accompanying notes are an integral part of these consolidated financial statements.

F-87 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

2.34. New Accounting Standards and IFRIC pronouncements Certain new accounting standards and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations have been published by IASB since the publication of the annual consolidated financial statements that are mandatory for accounting periods beginning on or after January 1, 2009. The Group’s assessment of the impact of these new standards and interpretations is set out below.

(i) Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements — Puttable Financial Instruments and Obligations Arising on Liquidation The amendments were published on February 14, 2008 and are effective for annual periods beginning on January 1, 2009 with earlier application permitted. The amendments require entities to classify as equity puttable financial instruments and instruments or components of instruments, that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation. Additional disclosures are required about the instruments affected by the amendments. The amendments will not affect the Group’s financial statements.

(ii) Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements — Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate. The amendments were published on May 22, 2008. The amendments to IFRS 1 allow first-time adopters, in their separate financial statements, to use a deemed cost option for determining the cost of an investment in a subsidiary, jointly controlled entity or associate. Additionally, when an entity reorganises the structure of its group by establishing a new entity as its parent (subject to specific criteria), the amendments require the new parent to measure cost as the carrying amount of its share of the equity items shown in the separate financial statements of the original parent at the date of the reorganisation. The new requirements will apply for annual periods beginning on January 1, 2009, with earlier application permitted. The Group will not be affected by the amendments.

(iii) IFRIC 15 — Agreements for the Construction of Real Estate The interpretation was issued on July 3, 2008. It applies to the accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors. The Interpretation provides guidance on how to determine whether an agreement for the construction of real estate is within the scope of IAS 11 Construction Contracts or IAS 18 Revenue and when revenue from the construction should be recognised. The interpretation is effective for annual periods beginning on January 1, 2009 and is to be applied retrospectively. The Group will not be affected by the interpretation.

(iv) IFRIC 16 — Hedges of a Net Investment in a Foreign Operation The interpretation was issued on July 3, 2008. IFRIC 16 applies to an entity that hedges the foreign currency risk arising from its net investments in foreign operations and wishes to qualify for hedge accounting in accordance with IAS 39. IFRIC 16 provides guidance on (1) identifying the foreign currency risks that qualify as a hedged risk in the hedge of a net investment in a foreign operation; (2) where, within a group, hedging instruments that are hedges of a net investment in a foreign

The accompanying notes are an integral part of these consolidated financial statements.

F-88 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) operation can be held to qualify for hedge accounting; and (3) how an entity should determine the amounts to be reclassified from equity to profit or loss for both the hedging instrument and the hedged item. IFRIC 16 is effective for annual periods commencing on or after October 1, 2008. The interpretation will not affect the Group financial statements.

(v) IFRS Improvements

The International Accounting Standards Board has issued “IFRS Improvements”, which amend 20 standards. The amendments include changes in presentation, recognition and valuation and include terminology and editorial changes. The majority of the amendments will be effective from annual periods starting on January 1, 2009. The Group will adopt the changes in accordance with transition provisions. The Group is currently analyzing the impact of the amended standards on the Group’s financial statements.

(vi) Amendments to IAS 39: Financial Instruments: Recognition and Measurement: Eligible Hedged Items

The amendment was published on July 31, 2008. It provides additional guidance on what can be designated as a hedged item. Entities are required to apply the amendment retrospectively for annual periods beginning on or after July 1, 2009 with earlier application permitted. The Group will apply the amendments but they will not affect the Group’s financial statements.

(vii) IFRIC 17 — Distributions of Non-cash Assets to Owners

The interpretation was issued on November 27, 2008. IFRIC 17 standardizes practice in the accounting treatment of distribution of non-cash assets to owners. The interpretation clarifies that: (1) a dividend payable should be recognized when the dividend is appropriately authorized and is no longer at the discretion of the entity, (2) an entity should measure the dividend payable at the fair value of the net assets to be distributed, (3) an entity should recognize the difference between the dividend paid and the carrying amount of the net assets distributed in profit or loss. IFRIC 17 is to be applied prospectively for annual periods beginning on or after July 1, 2009. Earlier application is permitted. The interpretation will not affect the Group’s financial statements.

(viii) IFRIC 18 — Transfers of Assets from Customers

The Interpretation was issued on January 29, 2009. IFRIC 18 is particularly relevant to the utility sector. It clarifies the requirements of IFRSs for agreements in which an entity receives from a customer an item of property, plant and equipment that the entity must then use either to connect the customer to a network or to provide the customer with ongoing supply of goods or services. The interpretation should be applied prospectively to transfers of assets from customers received on or after July 1, 2009. The interpretation will not affect the Group’s financial statements.

Additionally, the following standards and IFRIC Interpretations are applicable in future and were discussed in the Group’s annual financial statements for the year ended December 31, 2007:

• IFRS 8 — Operating Segments — applicable on or after January 1, 2009

• Amendments to IAS 23 — Borrowing Costs — applicable on January 1, 2009

The accompanying notes are an integral part of these consolidated financial statements.

F-89 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

• Amendments to IAS 1 — Presentation of financial statements — applicable on January 1, 2009 • Revision to IFRS 3 Business Combinations and amendment to IAS 27 Consolidated and Separate Financial Statements - applicable on or after July 1, 2009 • Amendment to IFRS 2, Share-based Payments- applicable on January 1, 2009 • IFRIC 13 — Customer Loyalty Programmes • IFRIC 14 — The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction At the date of preparation of these financial statements the following standards and IFRIC interpretations were not adopted by the EU: • Revision to IFRS 3 Business Combinations and amendment to IAS 27 Consolidated and Separate Financial Statements • IFRIC 12 — Service Concession Arrangements — the interpretation will not affect the Group’s financial statements. • Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements — Puttable Financial Instruments and Obligations Arising on Liquidation • Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate • IFRIC 15 — Agreements for the Construction of Real Estate • IFRIC 16 — Hedges of a Net Investment in a Foreign Operation • IFRS Improvements • Amendment to IAS 39 Financial Instruments: Recognition and Measurement: Eligible Hedged Items • IFRIC 17 — Distributions of Non-cash Assets to Owners • IFRIC 18 — Transfers of Assets from Customers

The accompanying notes are an integral part of these consolidated financial statements.

F-90 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) and their sources. Details of the duties, activities and methodologies used to identify, measure, monitor and report risks as well as forecast cash flows, finance maturity gaps and invest free cash resources are contained in approved supplementary written instructions. The following organizational units within the Group’s financial department participate in the risk management process: risk committee, liquidity management team, risk management team, financial planning and analyzing team and accounting and reporting team. The risk committee is composed of the vice-president of the Management Board and heads of the teams within the Group’s financial department. The risk committee meets monthly and based on an analysis of financial risks recommends financial risk management strategy, which is approved by the Management Board. The Supervisory Board approves risk exposure limits and is consulted prior to the execution of hedging transactions. Financial planning and analyzing team measure and identify financial risk exposure based on information reported by operating units generating exposure. The liquidity management team performs analysis of the Group’s risk factors, forecasts the Group’s cash flows and market and macroeconomic conditions and proposes cost-effective hedging strategies. The accounting and reporting team monitors accounting implications of hedging strategies and verifies settlements of the transactions.

(i) Market risk Market risk related to the Senior Notes The price of the Senior Notes depends on the Company’s creditworthiness and on the relative strength of the bond market as a whole. The Group recognizes as an asset the value of early redemption options embedded in the Senior Notes (see Note 24) and this valuation largely depends on the market price of the Senior Notes. The Group is therefore exposed to decreases in the market price of the Senior Notes. The Senior Notes are listed on the Luxembourg Stock Exchange and the fair value of embedded options recognized by the Group at the balance sheet date reflects the Senior Notes market price on the last value date available from Reuters prior to the balance sheet date. The impact of the Senior Notes market price change on the Group’s assets and income statement is discussed in Note 4(vi).

Foreign currency risk The Group’s revenue is primarily denominated in Polish złoty. Foreign exchange risk arises mainly from the Group’s liabilities in respect of the Senior Notes and related embedded prepayment options, loans to associate all denominated in EUR and liabilities to suppliers of foreign programming rights, satellite costs and rental costs denominated in USD or EUR. Other costs are predominantly denominated in PLN. The Group’s policy in respect of management of foreign currency risks is to cover known risks in a cost efficient manner and that no trading in financial instruments is undertaken. Following evaluation of its exposures the Group enters into derivative financial instruments to manage these exposures. Call options, swaps and forward exchange agreements may be entered into to manage currency exposures. Regular and frequent reporting to management is required for all transactions and exposures. The estimated net profit (post-tax) impact on 2008 balances of a reasonably possible EUR appreciation of 15% against the złoty (2007: 5%), with all other variables held constant and

The accompanying notes are an integral part of these consolidated financial statements.

F-91 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) without taking into account derivative financial instruments entered into for hedging purposes on EUR denominated balance sheet items is presented below:

Year ended Year ended December 31, 2008 December 31, 2007 Liabilities: 9.5% Senior Notes due 2013 including accrued interest ...... (109,465) (34,227) Trade payables ...... (841) (124) Other ...... (107) (187) Assets: Loans to associate ...... 23,135 - Embedded prepayment options ...... - 828

The estimated net profit (post-tax) impact on 2008 balances of a reasonably possible USD appreciation of 15% against the złoty (2007: 5%), with all other variables held constant and without taking into account derivative financial instruments entered into to mitigate USD fluctuations, on the major USD denominated balance sheet items is:

Year ended Year ended December 31, 2008 December 31, 2007 Trade payables ...... (5,424) (2,450)

The net profit/(loss) impact of possible foreign currency fluctuations is mitigated by derivative instruments entered into by the Group. Details of EUR and USD options which the Group had on December 31, 2008 are discussed in Note 19.

Cash flow and fair value interest rate risk

The Group’s exposure to interest rate risk arises on interest bearing assets and liabilities. The main interest bearing items are the Senior Notes and PLN Bonds (see Note 24) and loans to associate. As the Senior Notes are at a fixed interest rate, the Group is exposed to fair value interest rate risk in this respect. Since the Senior Notes are carried at amortised cost, the changes in fair values of these instruments do not have direct impact on valuation of the Senior Notes in the balance sheet.

PLN Bonds with a nominal value of 500,000 were issued by the Group on June 23, 2008 and are at a variable interest rate linked to WIBOR and therefore expose the Group to interest rate risk. At December 31, 2008, if WIBOR interest rates had been 75 b.p. higher/lower with all other variables held constant, post-tax profit for the year would have been 141 lower/higher.

Loans to associate are at a variable interest rate linked to EURIBOR and therefore expose the Group to interest rate risk. At December 31, 2008 if EURIBOR interest rates had been 100 b.p. higher/lower with all other variables held constant, post tax profit for the year would have been 876 higher/lower.

As of December 31, 2008 the Group had PLN treasury bills at carrying value of 315,616 which are exposed to fair value interest rate risk. The carrying value of each instrument is based on a price provided by Reuters. If WIBOR interest rate had been 75 b.p. higher/lower, as at December 31, 2008,

The accompanying notes are an integral part of these consolidated financial statements.

F-92 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) fair value reserve in equity would have been 474 lower/higher.. Details of PLN treasury bills held by the Group are disclosed in Note 17.

Management does not consider it cost effective to use financial instruments to hedge or otherwise seek to reduce interest rate risk.

(ii) Credit risk

Financial assets, which potentially expose the Group to concentration of credit risk consist principally of trade receivables, loans to associate (see Note 15) and related party receivables. The Group places its cash and cash equivalents, bank deposits, current available for sale financial assets and foreign currency options with financial institutions that the Group believes are credit worthy based on current credit ratings (see Note 17, 19 and 21). The Group does not consider its current concentration of credit risk as significant.

The Group performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral from its customers. Clients with poor or no history of payments with the Group, with low value committed spending or assessed by the Group as not credit worthy are required to pay before the service is rendered. Credit is granted to customers with a good history of payments and significant spending who are assessed credit worthy based on internal or external ratings. The Group performs ongoing evaluations of the market segments focusing on their liquidity and creditworthiness and the Group’s credit policy is appropriately adjusted to reflect current and expected economic conditions.

The Group defines credit exposure as total outstanding receivables (including overdue balances) and monitors the exposure regularly on an individual basis by paying counterparty. The majority of the Group’s sales are made through advertising agencies (70% of the total trade receivables as of December 31, 2008) who manage advertising campaigns for advertisers and pay the Group once payment has been received from the customer.

The Group’s top ten advertisers account for 16% and the single largest advertiser accounted for 2% of sales for the year ended December 31, 2008. Generally advertising agencies in Poland are limited liability companies with little recoverable net assets in case of insolvency.

The major players amongst the advertising agencies in Poland with whom the Group co-operates are subsidiaries and branches of large international companies of good reputation. To the extent that it is cost-efficient the Group mitigates credit exposure by use of a trade receivable insurance facility from a leading insurance company.

The table below analyses the Group’s trade receivables by category of customers:

Trade receivables (net) December 31, 2008 December 31, 2007 Receivables from advertising agencies ...... 70% 73% Receivables from individual customers ...... 22% 24% Receivables from related parties...... 8% 3% 100% 100%

The accompanying notes are an integral part of these consolidated financial statements.

F-93 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Credit concentration of the five largest counterparties measured as a percentage of the Group’s total trade receivables:

Trade receivables (net) December 31, 2008 December 31, 2007* Agency A ...... 10% 11% Agency B ...... 8% 6% Agency C ...... 8% 5% Agency D ...... 7% 10% Agency E ...... 7% 3% Sub-total ...... 40% 35% Total other counterparties ...... 60% 65% 100% 100%

* 2007 figures represent comparative data for each Agency

Trade receivables from advertising agencies (net) December 31, 2008 December 31, 2007* Agency Group F...... 16% 12% Agency Group G ...... 14% 20% Agency Group H ...... 14% 16% Agency Group I ...... 14% 13% Agency Group J ...... 2% 2% Total other counterparties ...... 40% 37% 100% 100%

* 2007 figures represent comparative data for each Agency Group.

Management does not expect any significant losses with respect to amounts included in the trade receivables at the balance sheet date from non-performance by the Group’s customers as at December 31, 2008. The Group does not expect any losses with respect to derivative financial assets attributable to credit risk. The Group does not consider credit risk associated with loans to associate as significant.

The accompanying notes are an integral part of these consolidated financial statements.

F-94 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) operations and existing credit facility will be sufficient to fund these needs. However, if following the current liquidity crisis in the banking sector external financing is unavailable at reasonable conditions for a longer period of time or the operating cash flows of the Group are negatively affected by an economic slow-down or clients’ financial difficulties the Group will review its cash needs to ensure that its existing obligations can be met for the foreseeable future. As at December 31, 2008 the Group had cash and cash equivalents, liquid available for sale financial instruments and committed unutilized credit facilities totaling 531,957 at its disposal (282,652 at December 31, 2007). The table below analyses the Group’s financial liabilities that will be settled into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The balances in the table are the contractual undiscounted cash flows, excluding the impact of early prepayment options. Balances due within 12 months equal their carrying balances, as the impact of discounting is not significant.

Within Between Above 1 year 1-2 years 2 years At December 31, 2008 9.5% Senior Notes due 2013 ...... 85,221 85,221 1,152,730 PLN Bonds due 2013...... 46,315 46,315 615,843 Loan facility ...... 8,557 8,557 116,206 Overdraft facility ...... 48,733 - - Trade payables ...... 141,905 6,951 - Other liabilities and accruals ...... 133,032 1,342 - At December 31, 2007 9.5% Senior Notes due 2013 ...... 79,968 79,968 1,081,674 Trade payables ...... 111,107 8,724 - Other liabilities and accruals ...... 94,334 1,374 -

3.2 Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares, draw borrowings or sell assets to reduce debt. The Group monitors capital on the basis of the net debt to EBITDA ratio. Net debt represents the nominal value of borrowings (see Note 24) payable at the balance sheet date including accrued interest less cash and cash equivalents and liquid available for sale financial instruments. EBITDA is calculated for the last twelve months and is defined as net profit/(loss), before depreciation and amortization (other than programming rights), impairment charges on property plant and equipment and intangible assets, finance expense, investment income, share of loss of associate and income tax charge.

The accompanying notes are an integral part of these consolidated financial statements.

F-95 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

December 31, 2008 December 31, 2007 Net debt ...... 1,062,974 734,730 EBITDA ...... 711,378 554,102 Net debt/EBITDA ratio ...... 1.5 1.3

The Group’s strategy is to maintain its net debt/EBITDA ratio at a level not exceeding 3.5.

3.3 Fair value estimation The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. The fair value of available for sale financial assets is determined using industry multiples and the most recent available financial information about the investment. The fair value of options is determined based on the valuations performed by the Group’s bank. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to the short-term nature of trade receivables and payables.

4. Critical accounting estimates and judgements Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

(i) Estimated useful life of Onet.pl brand In accordance with IAS 38.90 the Group reviewed factors that need to be considered when assessing the useful life of the Onet.pl brand such as: • the expected usage of the brand and whether the brand could be managed efficiently, • technical, technological, commercial or other types of obsolescence, • the stability of the industry in which the brand operates and changes in the market demand for media services, • expected actions by competitors or potential competitions in the media via internet industry, • the level of maintenance expenditure required to obtain the expected future economic benefits from the brand, • whether the useful life of the brand is dependent on the useful life of other assets.

The accompanying notes are an integral part of these consolidated financial statements.

F-96 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Having considered the above factors, the Group concluded that there is no foreseeable limit to the period over which the Onet.pl brand is expected to generate net cash flows for the Group, therefore the useful life of the Onet.pl brand was assessed as indefinite. Each reporting period the Group reviews whether events and circumstances continue to support an indefinite useful life assessment of the Onet.pl brand. If the reviews result in a change in the useful life assessment from indefinite to finite, this change is accounted for as a change in an accounting estimate.

(ii) Estimated impairment of goodwill and brand allocated to on-line cash-generating unit The Group classifies the Onet.pl brand acquired as an intangible asset with indefinite useful life and allocates brand and goodwill to the on-line cash-generating unit. The Group tests annually whether the on-line cash-generating unit, including goodwill and brand, have suffered any impairment, in accordance with the accounting policy stated in Note 2.13. The recoverable amount of the cash- generating unit is determined based on fair value less cost to sell. The Group tests the total carrying amount of the cash-generating unit and in case of impairment write-offs are made with respect to goodwill first. If goodwill is fully impaired the Group continues impairment testing of the brand with potential write-offs against the carrying value of brand and other assets allocated to the online cash-generating unit. In the annual impairment test performed by the Group as at December 31, 2008 the calculation of fair value less cost to sell, in the absence of an active market for similar cash-generating units, was based on discounted free cash flows. Cost to sell was assumed at 1% of the present value of the cash- generating unit. The calculation of fair value involved the use of estimates related to cash flow projections based on financial business plans approved by management covering the period until 2013. The key assumptions included in the business plans were the annual growth rates of the total advertising market in Poland, which increase from 0% in 2009 to 12.0% in 2013, an increase in the on-line advertising market as a percentage of the total advertising market in Poland from 17% in 2009 to 34.1% in 2013, a stable share of Onet in the on-line advertising market and a discount rate of 12.2% in 2009 and further years. In the annual impairment test performed by the Group as at December 31, 2008 cash flows beyond the period covered by the financial business plan were extrapolated using an estimated growth rate of 18% in 2014 declining to 6% in 2021 and to 4% in further years. The Group believes that the key assumptions made in testing for impairment of the on-line cash-generating unit as at December 31, 2008 are reasonable and prudent. However, if any of the key assumptions used for testing impairment were to change unfavorably, the Group might have recognized an impairment. The

The accompanying notes are an integral part of these consolidated financial statements.

F-97 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Group would recognize an impairment if the key assumptions made in testing for impairment were to change as follows:

Unfavorable change by* Annual growth rate of the Polish advertising market in 2009-2013 . . . . . 40 b.p. Increase in the on-line advertising market as a percentage of the total Polish advertising market in 2009-2013 ...... 70 b.p. Share of Onet in the on-line advertising market in 2009-2013 ...... 30 b.p. Discount rate ...... 60 b.p. Terminal growth ...... 160 b.p.

* with all other variables held constant

As at December 31, 2008 fair value less cost to sell of the on-line cash-generating unit exceeded the carrying amount by 144 million.

(iii) Estimated impairment of goodwill allocated to thematic television channels

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.13. The recoverable amounts of cash-generating units are determined based on value-in-use calculations. These calculations require the use of estimates related to cash flow projections based on financial business plans approved by management covering a five year period. In the annual impairment test performed by the Group as at December 31, 2008 cash flows beyond the five year period were extrapolated as regards TVN 24 using an estimated growth rate of 3%. Other key assumptions used for the TVN 24 value-in-use calculations were the discount rate of 10.98% and assumptions regarding development of the business and advertising and cable market growth rate. If the revised estimated growth rate beyond the five year period was 0%, there would be still no impairment against goodwill. If the revised estimated discount rate applied to the discounted cash flows was doubled compared with management’s estimates the Group would still not recognize an impairment against goodwill.

(iv) Estimated useful life of Mango brand

In accordance with IAS 38.90 the Group reviewed factors that need to be considered when assessing the useful life of the Mango brand such as:

• the expected usage of the brand and whether the brand could be managed efficiently,

• technical, technological, commercial or other types of obsolescence,

• the stability of the industry in which the brand operates and changes in the market demand for teleshopping services,

• expected actions by competitors or potential competitors in teleshopping via the media industry,

• the level of maintenance expenditure required to obtain the expected future economic benefits from the brand,

• whether the useful life of the brand is dependent on the useful life of other assets.

The accompanying notes are an integral part of these consolidated financial statements.

F-98 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Having considered the above factors, the Group concluded that there is no foreseeable limit to the period over which the Mango brand is expected to generate net cash flows for the Group, therefore the useful life of the Mango brand was assessed as indefinite. At each reporting period the Group reviews whether events and circumstances continue to support an indefinite useful life assessment of the Mango brand. If the reviews result in a change in the useful life assessment from indefinite to finite, this change is accounted for as a change in an accounting estimate.

(v) Estimated impairment of goodwill and brand allocated to teleshopping unit The Group classifies the Mango Media brand acquired as an intangible asset with indefinite useful life and allocates brand and goodwill to the teleshopping cash-generating unit. The Group tests annually whether the teleshopping cash-generating unit, including goodwill and brand, have suffered any impairment, in accordance with the accounting policy stated in Note 2.13. The recoverable amount of the cash-generating unit is determined based on value-in-use calculations. The Group tests the total carrying amount of the cash-generating unit and in case of impairment; write-offs are made with respect to goodwill first. If goodwill is fully impaired the Group continues impairment testing of the brand with potential write-offs against the carrying value of brand and other assets allocated to the teleshopping cash-generating unit. These calculations require the use of estimates related to cash flow projections based on financial business plans approved by management covering a five year period. In the annual impairment test performed by the Group as at December 31, 2008 cash flows beyond the five year period were extrapolated as regards Mango Media using an estimated growth rate of 1%. The other key assumptions used for the Mango Media value-in-use calculations was the discount rate of 13,3%. If the revised estimated growth rate beyond the five year period was 0%, there would still be no impairment against goodwill. If the revised estimated discount rate applied to the discounted cash flows was doubled compared with management’s estimates the Group would still not recognize impairment against goodwill.

(vi) Fair valuation of the embedded prepayment options The Group calculates at each reporting date the fair value of the prepayment options embedded in the Senior Notes using the Brace-Ga˛ tarek-Musiela model. Significant inputs into the valuation model are the Senior Notes market price, benchmark bond yields and interest rate cap volatilities. The inputs are based on information provided by Reuters on the valuation date. The Senior Notes market price is quoted by Reuters based on the last value date. In the fair valuation as of December 31, 2008 the Group input into the valuation model a market price of 84.00, based on the last available value date on December 31, 2008. This resulted in a carrying amount value of the embedded options of nil. The last available Senior Notes market price provided by Reuters at the date when these financial statements were prepared was 88,01(based on a value date on February 12, 2009). Should this price be input into the valuation model the carrying value of the embedded prepayment options would still be nil.

(vii) Fair valuation of “n” brand as of June 30, 2008 The Group valued the “n” brand at the date of acquisition of Neovision Holding BV at 88,200. In the absence of applicable market benchmarks, the Group fair valued the “n” brand using the ‘relief

The accompanying notes are an integral part of these consolidated financial statements.

F-99 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) from royalty’ income method. The ‘relief from royalty’ method assumes that the value of the brand is reflected in the present value of hypothetical future royalty payments, which the owner of the brand would have to incur, should the brand be licensed from another entity. This valuation requires the use of estimates related to sales projections for the activity run under the brand, estimation of the representative royalty rate applied on projected revenues, estimation of the discount rate and estimation of the useful life of the brand. The royalty rate used in the valuation was assumed at 2%. The revenue projections were based on management’s business plan which covered the period 2008-2017. The Group assumed the useful life of the “n” brand to be 10 years. The discount rate used in the valuation was 12.05%. Fair value is sensitive to changes in the revenue growth and other parameters of the valuation model. A decrease of the revenue growth by 100 b.p. gives a fair value of 84,720. A royalty rate at 3% would give a fair value of 132 million. A discount rate of 11% would give a fair value of 93 million.

(viii) Estimated impairment of investment in associate The Group tests annually whether investment in associate has suffered any impairment. The Group tests the total aggregate carrying amount of investment in Neovision Holding BV (see Note 15). The recoverable amounts of investment has been determined based on value-in-use calculations and exceeded the carrying amount as at December 31, 2008. These calculations require the use of estimates related to cash flow projections based on financial business plans approved by management covering a five year period. In the annual impairment test performed by the Group as at December 31, 2008 cash flows beyond the five year period were extrapolated as regards Neovision Holding BV. using an estimated growth rate of 2%. Other key assumptions used for the Neovision Holding BV value-in-use calculations were the discount rate of 13.3% and assumptions regarding development of the business and Polish DTH market growth rate. If the revised estimated growth rate beyond the five year period was 0%, there would be still no impairment of investment in associate. The Group would recognize an impairment of investment in associate if the revised estimated discount rate applied to the discounted cash flows was 26%.

(ix) Consideration of the current economic environment The ongoing global liquidity crisis which commenced in the middle of 2007 has resulted in, among other things a lower level of capital market funding, lower liquidity levels across the banking sector, and , at times, higher inter-bank lending rates and very high volatility in stock markets. The uncertainties in the global financial markets have also led to bank failures and bank rescues in the United States of America, Western Europe, Russia and elsewhere. Indeed the full extent of the impact of the ongoing financial crisis is proving to be impossible to anticipate or completely guard against. Management is unable to reliably estimate the effects on the Group’s financial position of any further deterioration in the liquidity of the financial markets and the increased volatility in the currency and equity markets. Management believes it is taking all the necessary measures to support the sustainability and growth of the Group’s business in the current circumstances. Debtors of the Group may be affected by the lower liquidity situation which could in turn impact their ability to repay the amounts owed. Deteriorating operating conditions for customers may also

The accompanying notes are an integral part of these consolidated financial statements.

F-100 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) have an impact on management’s cash flow forecasts and assessment of the impairment of financial and non-financial assets. To the extent that information is available, management have properly reflected revised estimates of expected future cash flows in their impairment assessments.

5. Segment reporting The Group’s principal activities are television broadcasting and production, and on-line. A business segment is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments. The television broadcasting and production segment is mainly involved in the broadcasting of news, information and entertainment shows, series and movies and comprises television channels operated in Poland. The on-line segment primarily comprises mainly Onet.pl, Poland’s leading portal.

Television Broadcasting & Production On-line Unallocated Total Year ended Year ended Year ended Year ended Year ended Year ended Year ended Year ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2008 2007 2008 2007 2008 2007 2008 2007 Revenue from external customers ..... 1,700,923 1,399,351 196,386 155,378 - - 1,897,309 1,554,729 Inter-segment revenue...... 6,567 8,110 9,869 7,108 (16,436) (15,218) - - Total revenue ...... 1,707,490 1,407,461 206,255 162,486 (16,436) (15,218) 1,897,309 1,554,729 Segment result ...... 635,630 498,544 34,866 19,345 (38,621) (35,877) 631,875 482,012 Investment income, net (Note 8) ...... 81,090 19,344 Financial expenses, net (Note 8) ...... (170,973) (204,124) Share of loss of associate ...... (94,440) - Profit before income tax ...... 447,552 297,232 Income tax charge ...... (83,876) (53,924) Profit for the year...... 363,676 243,308 Impairment of fixed assets ...... - 306 - (23) (1,885) - (1,885) 283 Capital expenditures ...... 121,905 85,451 61,728 40,602 - - 183,633 126,053 Depreciation of property, plant and equipment ...... 49,984 43,298 10,133 8,914 - - 60,117 52,212 Amortization of intangible assets ..... 10,749 12,523 10,522 7,072 - - 21,271 19,595 Significant non-cash expenses Share option plan ...... 26,629 21,384 7,770 16,463 5,671 6,985 40,070 44,832

December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2008 2007 2008 2007 2008 2007 2008 2007 Segment assets including: ...... 1,293,559 1,084,326 1,660,049 1,621,396 799,566 39,203 3,753,174 2,744,925 Investment in associates ...... - - 98 83 119,978 - 120,076 83 Segment liabilities ...... 325,708 282,305 61,182 38,527 1,719,330 994,332 2,106,220 1,315,164

6. Revenue

Year ended Year ended December 31, 2008 December 31, 2007 Revenue from advertising spot sales ...... 1,475,252 1,209,599 Subscription fees ...... 150,396 123,748

The accompanying notes are an integral part of these consolidated financial statements.

F-101 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Year ended Year ended December 31, 2008 December 31, 2007 Revenue from sponsoring ...... 136,576 102,849 Revenue from sales of goods ...... 41,678 15,060 Other revenue ...... 93,407 103,473 1,897,309 1,554,729

Subscription revenue includes revenue from cable operators and internet transaction based fees. Other revenue includes mainly audiotele revenues and sales of licenses. Included in revenues are revenues from related parties in the amount of 49,446 (year ended December 31, 2007: 43,431) (see note 32).

7. Operating expenses

Year ended Year ended December 31, 2008 December 31, 2007 Amortization of locally produced content ...... 506,655 421,634 Amortization of acquired programming rights and co-production ...... 122,860 123,712 Staff expenses ...... 168,614 121,714 Share options granted to board members and employees ...... 40,070 44,832 Depreciation, amortization and impairment charges . . . . 79,503 72,090 Marketing and research ...... 70,138 59,657 Royalties ...... 67,174 58,887 Broadcasting expenses ...... 51,635 49,339 Cost of services and goods sold ...... 30,899 14,082 Rental ...... 27,439 19,521 Impaired accounts receivable ...... 2,261 4,979 Other ...... 98,186 82,270 1,265,434 1,072,717 Average number of persons employed ...... 2,308 1,622

Included in the above operating expenses are operating lease expenses for the year ended December 31, 2008 of 103,242 (year ended December 31, 2007: 81,622). Amortization of locally produced content for the year ended December 31, 2008 has been reduced by grants received in the total amount of 1,365 (year ended December 31, 2007: 211). Included in the above operating expenses is an aggregate amount of research and development expenditure of 1,333 recognized as an expense in the year ended December 31, 2008 (year ended December 31, 2007: 1,298).

The accompanying notes are an integral part of these consolidated financial statements.

F-102 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Included in depreciation, amortization and impairment charges is the amount of impairment reversal of 1,885 for the year ended December 31, 2008 (charge of 283 for the year ended December 31, 2007).

8. Investment income and finance expense

Year ended Year ended Investment income, net December 31, 2008 December 31, 2007 Foreign exchange gains, net...... 33,404 13,973 Fair value gain on foreign exchange options not designated as hedging instruments ...... 16,759 - Interest income ...... 14,255 5,371 Fair value gain on settlement of foreign exchange options ...... 5,913 - Accrued interest income on loan to associate ...... 5,767 - Interest income from available for sale financial assets. . . 4,992 - 81,090 19,344 Finance expense, net Foreign exchange losses/(gains) on Senior Notes ...... 130,605 (58,562) Interest expense on 9.5% Senior Notes (see Note 24) . . . . 85,816 94,763 Interest expense on PLN Bonds (see Note 24) ...... 24,776 - Fair value (gains)/losses on financial instruments: - foreign exchange options — fair value hedges (Note 19) ...... (123,066) - - foreign exchange options — portion not designated as hedging instrument (see Note 19) ...... 27,870 13,725 - foreign exchange options — early settlement of instrument ...... (5,362) 40,725 - embedded option (see Note 19,24) ...... 20,447 107,617 Cost of repurchase of Senior Notes (including pre- issuance costs written off)* ...... 2,724 - Bank charges ...... 2,561 2,895 Guarantee fees to related party (see 32(vi)) ...... 2,426 2,961 Interest expense on bank loan and overdraft ...... 2,176 - 170,973 204,124

* The cost reflects the premium paid on repurchase and the derecognized amount of the remaining unamortized debt issuance costs relating to the repurchased Senior Notes (see Note 24).

The accompanying notes are an integral part of these consolidated financial statements.

F-103 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

9. Basic and diluted earnings per share (not in thousands)

(i) Earnings per share for profit attributable to the equity holders of TVN S.A.

Basic

Basic earnings per share are calculated by dividing the net profit attributable to equity holders of TVN S.A. by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Company.

Diluted

Year ended Year ended December 31, 2008 December 31, 2007 Profit attributable to equity holders of TVN S.A. (in thousands) ...... 363,676 243,308 Weighted average number of ordinary shares in issue . . . 348,585,264 345,979,725 Adjustment for share options ...... 4,480,914 6,514,819 Weighted average number of potential ordinary shares for diluted earnings per share ...... 353,066,178 352,494,544 Diluted earnings per share ...... 1.03 0.69

(ii) Earnings per share for adjusted profit attributable to the equity holders of TVN S.A.

The accompanying notes are an integral part of these consolidated financial statements.

F-104 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Basic

Year ended Year ended December 31, 2008 December 31, 2007 Profit attributable to equity holders of TVN S.A. (in thousands) ...... 363,676 243,308 Impact on profit, net of tax of fair value loss on embedded option (in thousands) ...... 16,562 87,170 Adjusted profit attributable to equity holders of TVN S.A. (in thousands)...... 380,238 330,478 Weighted average number of ordinary shares in issue . . . 348,585,264 345,979,725 Adjusted basic earnings per share ...... 1.09 0.96

Diluted

10. Property, plant and equipment

Property, plant and equipment December 31, 2008 December 31, 2007 Freehold land ...... 34,784 24,796 Buildings ...... 163 172 Leasehold improvements ...... 37,806 27,184 Television ,broadcasting and other technical equipment ...... 183,792 159,986 Vehicles ...... 29,724 24,009 Furniture and fixtures ...... 8,544 8,311 Assets under construction ...... 52,587 5,710 347,400 250,168

The accompanying notes are an integral part of these consolidated financial statements.

F-105 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Changes in property, plant and equipment

Television, broadcasting and other Leasehold technical Furniture Assets under Freehold land Buildings Improvements equipment Vehicles and fixtures construction Total Gross value January 1, 2007 ...... 14,539 194 64,325 283,300 31,334 16,446 1,766 411,904 Acquisition of subsidiary ...... - - 139 - 81 13 - 233 Additions ...... 12,142 - 6,311 69,646 12,464 2,691 3,973 107,227 Disposals ...... - - (1,091) (1,687) (1,870) (164) (29) (4,841) December 31, 2007 ...... 26,681 194 69,684 351,259 42,009 18,986 5,710 514,523 Accumulated depreciation and impairment January 1, 2007 ...... 1,885 13 37,083 155,365 13,485 8,085 - 215,916 Charge for the period ...... - 9 6,228 37,235 6,063 2,677 - 52,212 Disposals ...... - - (1,094) (1,327) (1,548) (87) - (4,056) Impairment ...... - - 283 - - - - 283 December 31, 2007 ...... 1,885 22 42,500 191,273 18,000 10,675 - 264,355 Net book value at January 1, 2007 ...... 12,654 181 27,242 127,935 17,849 8,361 1,766 195,988 Net book value at December 31, 2007...... 24,796 172 27,184 159,986 24,009 8,311 5,710 250,168

Changes in property, plant and equipment

Television, broadcasting and other Leasehold technical Furniture Assets under Freehold land Buildings improvements equipment Vehicles and fixtures construction Total Gross value January 1, 2008 ...... 26,681 194 69,684 351,259 42,009 18,986 5,710 514,523 Additions ...... 8,103 - 17,678 67,745 12,730 3,165 47,107 156,528 Disposals ...... - - (104) (3,812) (5,803) (144) (230) (10,093) December 31, 2008 ...... 34,784 194 87,258 415,192 48,936 22,007 52,587 660,958 Accumulated depreciation and impairment January 1, 2008 ...... 1,885 22 42,500 191,273 18,000 10,675 - 264,355 Charge for the period ...... - 9 7,046 43,595 6,540 2,927 - 60,117 Disposals ...... - - (94) (3,468) (5,328) (139) - (9,029) Impairment ...... (1,885) ------(1,885) December 31, 2008 ...... - 31 49,452 231,400 19,212 13,463 - 313,558 Net book value at January 1, 2008 ... 24,796 172 27,184 159,986 24,009 8,311 5,710 250,168 Net book value at December 31, 2008 ...... 34,784 163 37,806 183,792 29,724 8,544 52,587 347,400

Depreciation expense of 48,799 has been charged in cost of revenue (year ended December 31, 2007: 41,841), 1,642 in selling expenses (year ended December 31, 2007: 1,374) and 9,676 in general and administration expenses (year ended December 31, 2007: 8,997).

Impairment reversal in the amount of 1,885 has been credited to other operating income/(expense), net (year ended December 31, 2007: charge of 306 in other operating income/(expense), net and reversal of 23 in general and administration expenses).

The accompanying notes are an integral part of these consolidated financial statements.

F-106 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

11. Goodwill

January 1, 2007 ...... 946,332 Acquisition of Mango Media ...... 6,325 December 31, 2007 ...... 952,657 January 1, 2008 ...... 952,657 December 31, 2008 ...... 952,657

The carrying amount of goodwill is allocated to cash generating units identified by the Group:

Thematic television channels ...... 131,704 Television production unit ...... 12,423 On-line...... 802,205 Teleshopping unit ...... 6,325 952,657

12. Brand

January 1, 2007 ...... 643,428 Acquisition of Mango Media ...... 50,260 December 31, 2007 ...... 693,688 January 1, 2008 ...... 693,688 December 31, 2008 ...... 693,688

The carrying amount of brands is allocated to the following brands identified by the Group:

Onet.pl (on-line cash generating unit) ...... 643,428 Mango (teleshopping cash generating unit) ...... 50,260 693,688

13. Other intangible assets

December 31, 2008 December 31, 2007 Broadcasting licenses ...... 7,644 8,653 Customer related intangibles ...... 5,855 9,553 Internally generated software ...... 6,984 5,217 Software and other...... 36,313 27,546

The accompanying notes are an integral part of these consolidated financial statements.

F-107 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

December 31, 2008 December 31, 2007 56,796 50,969

Changes in other intangible assets

Customer Internally Broadcasting related generated Software licenses intangibles software and other Total Gross value January 1, 2007 ...... 12,728 14,792 3,486 48,632 79,638 Acquisition of subsidiary...... - - - 20 20 Additions ...... 12 - 3,868 14,946 18,826 Disposals ...... - - (333) (802) (1,135) December 31, 2007 ...... 12,740 14,792 7,021 62,796 97,349 Accumulated amortization and impairment January 1, 2007 ...... 2,245 1,541 507 22,953 27,246 Charge for the period ...... 1,842 3,698 1,630 12,425 19,595 Disposals ...... - - (333) (128) (461) December 31, 2007 ...... 4,087 5,239 1,804 35,250 46,380 Net book value at January 1, 2007...... 10,483 13,251 2,979 25,679 52,392 Net book value at December 31, 2007 ...... 8,653 9,553 5,217 27,546 50,969

Customer Internally Broadcasting related generated Software licenses intangibles software and other Total Gross value January 1, 2008 ...... 12,740 14,792 7,021 62,796 97,349 Additions ...... 142 - 5,975 20,988 27,105 Disposals ...... - - - (20) (20) December 31, 2008 ...... 12,882 14,792 12,996 83,764 124,434 Accumulated amortization and impairment January 1, 2008 ...... 4,087 5,239 1,804 35,250 46,380 Charge for the period ...... 1,151 3,698 4,208 12,214 21,271 Disposals ...... - - - (13) (13) December 31, 2008 ...... 5,238 8,937 6,012 47,451 67,638 Net book value at January 1, 2008 ...... 8,653 9,553 5,217 27,546 50,969 Net book value at December 31, 2008 ..... 7,644 5,855 6,984 36,313 56,796

The accompanying notes are an integral part of these consolidated financial statements.

F-108 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Amortization of 12,434 has been charged in cost of revenue (year ended December 31, 2007: 11,543), 5,075 in selling expenses (year ended December 31, 2007: 4,852) and 3,762 in general and administration expenses (year ended December 31, 2007: 3,200).

14. Programming rights

December 31, 2008 December 31, 2007 Acquired programming rights ...... 172,707 187,263 News archive ...... 12,453 12,907 Co-productions ...... 14,306 2,273 Productions ...... 147,951 104,513 347,417 306,956 Less current portion of programming rights ...... (192,676) (179,523) Non-current portion of programming rights ...... 154,741 127,433

Changes in acquired programming rights

Year ended Year ended December 31, 2008 December 31, 2007 Net book value as at January 1 ...... 187,263 199,247 Additions ...... 106,218 107,186 Amortization ...... (120,774) (119,170) Net book value as at December 31 ...... 172,707 187,263

15. Investment in Polish DTH “N” platform On June 25, 2008 the Group completed the acquisition of 25% of the share capital plus 1 share of Neovision Holding B.V. (“Neovision Holding”) a company registered in Amsterdam, the Netherlands from ITI Media Group N.V. (“ITI Media Group”), an entity under common control. Neovision Holding is the sole shareholder of ITI Neovision Sp. z o.o. (“ITI Neovision”) which owns and operates the ‘n’ DTH platform in Poland. For a total cash consideration of EUR 95 million (PLN 319,628) the Group purchased 25% of the share capital plus one share in Neovision Holding and a corresponding pro- rata interest in the loans granted to ITI Neovision with a nominal value of EUR 35.3 million. As part of the transaction, the Group has also acquired options to acquire an additional 25% of shares in Neovision Holding. In accordance with the policy adopted by the Group these options are not recognized as financial instruments. The Group has significant influence on, but not control over, ITI Neovision’s operations. Accordingly, the investment is classified as an investment in an associate and accounted for using the equity method. In these consolidated financial statements the total investment is split between investment in an associate and loans receivable from an associate. The value attributed initially to the investment in associate reflects the purchase price paid to ITI Media Group less the fair value of loans acquired. The fair value of loans receivable was estimated based on a valuation model with the key inputs being credit spread and market interest rates.

The accompanying notes are an integral part of these consolidated financial statements.

F-109 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Year ended Year ended Investment in associate December 31, 2008 December 31, 2007 Beginning of the year ...... 83 83 Investment in Neovision Holding ...... 211,819 - Other direct costs ...... 2,614 - Share of loss of Neovision Holding*...... (94,455) - Share of gain of Polskie Badania Internetu ...... 15 - End of the year ...... 120,076 83

* Including amortization of ‘n’ brand amounting to 1,103

Year ended Year ended Loans receivable from associate December 31, 2008 December 31, 2007 Beginning of the year ...... - - Acquisition of loans in Neovision Holding ...... 107,809 - Other direct costs ...... 1,575 - Interest accrued...... 5,767 - Loans extended after acquisition ...... 28,180 - Foreign exchange gains ...... 35,807 - End of the year ...... 179,138 -

On December 31, 2008 the following loans were receivable from associate:

Nominal value Effective (EUR) interest rate Maturity dates Carrying value Fair value 25,073 8.58% December 31, 2015 99,208 99,107 4,532 7.56% April 5, 2011 24,969 25,004 5,666 7.56% July 19, 2011 19,975 20,003 8,180 6.68% June 30, 2015 34,986 32,057 179,138 176,171

Loans receivable from associate are not past due. The Group defines maximum exposure to the credit risk with respect to the loans receivable from associate as the total nominal value receivable plus interest accrued. The maximum exposure as of December 31, 2008 with respect to loans receivable from associate was 179,138. Fair value of the loans was determined based on an internal valuation model with key inputs being credit spread and market interest rates. The Group’s share of the results of Neovision Holding and its aggregated assets and liabilities at book values as at December 31, 2008 are as follows:

% Country of interest Name incorporation Assets Liabilities Revenues Net result held Neovision Holding B.V ...... Netherlands 472,712 (1,155,603) 260,850 (373,412)* 25

* since the date of investment (June 25, 2008)

The accompanying notes are an integral part of these consolidated financial statements.

F-110 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

The fair value of aggregated assets and aggregated liabilities arising from the acquisition, determined based on a valuation as of June 30, 2008, are as follows:

Acquiree’s carrying Fair value amount Brand ...... 88,200 - Deferred tax liability on brand ...... (16,758) - Other assets ...... 431,860 431,860 Other liabilities ...... (746,654) (746,654) Value of net liabilities assumed ...... (243,352) (314,794) The Group’s share ...... 25% Value of the Group’s share of net liabilities assumed ...... (60,838)

In the purchase price allocation process the Group identified and valued marketing related intangible assets such as the “n” brand. The fair value of the brand was estimated using the relief from royalty method. In the valuation process the Group assumed a royalty rate of 2%, weighted average cost of capital of 12.05%, brand beta of 1.06 and an estimated useful life of 10 years. The Group did not identify other intangible assets with respect to its investment in DTH “n” platform with a potential impact on net liability value. The associate will not be able to pay dividends to the Group until its cumulative losses are covered.

16. Financial instruments by category Financial Derivatives assets at fair Loans and used for value through Available- December 31, 2008 receivables hedging profit or loss for-sale Total Assets as per balance sheet Available-for-sale financial assets...... - - - 323,204 323,204 Derivative financial instruments ...... - 120,515 29,350 - 149,865 Trade and other receivables. . . 305,834 - - - 305,834 Loans to associate ...... 179,138 - - - 179,138 Cash and cash equivalents . . . . 184,867 - - - 184,867

669,839 120,515 29,350 323,204 1,142,908

The accompanying notes are an integral part of these consolidated financial statements.

F-111 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

1,802,179 1,802,179

* This amount excludes following items which are not financial liabilities: “VAT and other taxes payable”, “employee benefits”, “deferred income”.

Financial Derivatives assets at fair Loans and used for value through Available- December 31, 2007 receivables hedging profit or loss for-sale Total Assets as per balance sheet Available-for-sale financial assets ...... - - - 7,588 7,588 Derivative financial instruments ...... - 3,820 20,447 - 24,267 Trade and other receivables . . . . 299,590 - - - 299,590 Cash and cash equivalents . . . . . 110,372 - - - 110,372

409,962 3,820 20,447 7,588 441,817

Other financial December 31, 2007 liabilities Total Liabilities as per balance sheet 9.5% Senior Notes due 2013 ...... 790,388 790,388 Accrued interest on borrowings ...... 3,332 3,332 Non-current trade payables ...... 8,724 8,724 Current trade payables ...... 111,107 111,107 Other liabilities and accruals* ...... 94,334 94,334

1,007,885 1,007,885

* This amount excludes following items which are not financial liabilities: “VAT and other taxes payable”, “employee benefits”, “deferred income”.

The accompanying notes are an integral part of these consolidated financial statements.

F-112 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

17. Available for sale financial assets

December 31, 2008 December 31, 2007 Beginning of the year ...... 7,588 4,650 Additions ...... 349,729 - Sales ...... (39,773) - Fair value change through equity ...... 668 - Interest credited to profit or loss ...... 4,992 - Consolidation of subsidiary ...... - 193 Paid-in share capital ...... - 2,745

End of the year ...... 323,204 7,588 Less: non-current portion ...... (7,588) (7,588)

Current portion ...... 315,616 -

Available for sale financial assets include:

December 31, 2008 December 31, 2007 Securities quoted on active markets: - Treasury bills PLN ...... 315,616 - Securities not quoted on active markets: - Polskie Media S.A...... 7,588 7,588

323,204 7,588

On December 31, 2008 the Group held the following securities quoted on active markets:

Effective Credit interest rating* rate Maturity dates Nominal value Purchase value Polish T-bills ...... A-/A2 6.15% February 11, 2009 107,000 104,685 Polish T-bills ...... A-/A2 6.20% February 18, 2009 25,000 24,411 Polish T-bills ...... A-/A2 6.30% April 15, 2009 63,000 61,021 Polish T-bills ...... A-/A2 6.05% May 27, 2009 100,000 96,299 Polish T-bills ...... A-/A2 6.10% May 27, 2009 25,000 24,117

320,000 310,533

* Credit rating provided by Standard and Poor’s and Moody’s

The Group defines maximum exposure to credit risk with respect to Polish treasury bills as the total carrying amount of those instruments at the balance sheet date.

The Group does not have any significant influence over the financial and operating policies of Polskie Media S.A. (“Polskie Media”). The Group estimated the fair value of its investment in Polskie Media as at June 30, 2008 based on financial information available from the annual financial

The accompanying notes are an integral part of these consolidated financial statements.

F-113 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) statements of Polskie Media for the year ended December 31, 2007 and industry sales multiples. The Group assessed that there is no impairment of the carrying value as of December 31, 2008. During the year the Group monitors audience share of Polskie Media for impairment indicators. The Group’s share in Polskie Media is 5.59% of the current voting interest and 6.95% of the share capital.

None of the available-for-sale financial assets is past due or impaired.

18. Trade receivables

December 31, 2008 December 31, 2007 Trade receivables...... 290,487 297,865 Less: provision for impairment of receivables ...... (9,993) (8,238)

Trade receivables — net ...... 280,494 289,627 Receivables from related parties (Note 32 (iii)) ...... 25,340 9,963

305,834 299,590

The fair values of trade receivables, because of their short-term nature, are estimated to approximate their carrying values.

The carrying amounts of the Group’s trade receivables are denominated in the following currencies:

December 31, 2008 December 31, 2007 PLN ...... 292,549 285,539 USD ...... 11,008 7,471 EUR ...... 1,763 6,343 GBP...... 503 198 AUD...... 11 39

305,834 299,590

Movements on the provision for impairment of trade receivables are as follows:

Year ended Year ended December 31, 2008 December 31, 2007 Beginning of the year ...... 8,238 7,765 Provision for receivables impaired, net change ...... 2,293 4,979 Receivables written off as uncollectible ...... (538) (4,506)

End of the year ...... 9,993 8,238

The creation and release of provisions for impaired receivables have been included in selling expenses in the income statement.

The accompanying notes are an integral part of these consolidated financial statements.

F-114 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

As of December 31, 2008, trade receivables of 142,321 were past due but not impaired. The balance relates to a number of customers with no recent history of default. The ageing analysis of these trade receivables is as follows: December 31, 2008 December 31, 2007 Up to 30 days ...... 114,989 102,850 31-60 days ...... 14,915 20,412 Over 60 days ...... 12,417 3,293

142,321 126,555

The Group defines credit exposure as total outstanding receivables. Maximum exposure to credit risk is the total balance of trade receivables. Maximum exposure to credit risk as of December 31, 2008 was 305,834 (December 31, 2007: 299,590).

19. Derivative financial assets December 31, 2008 December 31, 2007 Embedded prepayment options (see Note 24) ...... - 20,447 Foreign exchange options EUR ...... 126,120 3,820 Foreign exchange options USD...... 23,745 -

149,865 24,267

Following the repurchase by the Group of the Senior Notes in 2008 (see Note 24) the valuation of the embedded prepayment options as at December 31, 2008 reflects only the remaining Senior Notes with a nominal amount of EUR 215,000. The change in carrying amounts of the prepayment options between December 31, 2008 and December 31, 2007 was recognized in the income statement (see Note 8). The valuation of embedded prepayment options as of December 31, 2008 is discussed in Note 4 (vi). The Group entered into EUR put and call options to limit the impact on the Group’s net results of PLN/EUR exchange rate movements in relation to the Senior Notes balance. The hedging strategy based on EUR put and call options had in total a notional value of EUR 225,000, a maturity date of January 15, 2009 and a PLN/EUR corridor between 3.30 and 3.60. As long as the PLN/EUR spot rate is within the corridor the fair value of the options consists of their time value only, which reflects the possibility that the options will create further gains in the future. The intrinsic value of options exists when the spot rate is outside the corridor. It basically reflects the value of the option if exercised today and is measured based on the difference between the spot rate and the respective corridor rate. The intrinsic value of the options was designated as a fair value hedge. The fair value of foreign exchange options in EUR as at December 31, 2008 was based on valuations performed by the Group’s banks. Following the repurchase of Senior Notes by the Group (see note 24), the Group has de-designated the existing hedging relationship and re-designated a new one. All the parameters of the hedging relationship remain unchanged, except for the nominal value of the Senior Notes hedged which was 215 decreased to EUR 215,000 and the fact that only a fraction of the options corresponding to ⁄225 was designated as hedging item.

The accompanying notes are an integral part of these consolidated financial statements.

F-115 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

As of December 31, 2008 the PLN/EUR options had an intrinsic value of 128,790. The change in fair value of the options was recognized in the income statement (see Note 8). After the balance sheet date, between January 9 and January 13, 2009 the Group closed the foreign exchange options in EUR in the total nominal amount of EUR 210,000 and received a total premium of 91,630. The remaining balance of EUR 15,000 matured on January 15, 2009 resulting in a received premium of 9,384. The Group entered into USD put and call options to limit the impact on the Group’s net results of PLN/USD exchange rate movements in relation to payments for programming rights. The hedging strategy based on USD put and call options had in total a notional value of USD 40,479 maturity dates between March 23, 2009 and December 22, 2009 and PLN/USD corridor between 2.10 and 2.45. The Group has not designated the options for hedge accounting. The fair value of foreign exchange options in USD as at December 31, 2008 was based on valuations performed by the Group’s banks. The change in fair value of the options including premiums paid and received was recognized in the income statement (see Note 8). Foreign exchange options were contracted with banks rated as follows (by Moody’s): December 31, 2008 December 31, 2007 Bank rated Aa1 ...... 23,745 - Banks rated A2 ...... 126,120 3,820

149,865 3,820

The Group defines maximum exposure to credit risk with respect to derivative financial assets as the carrying amount of those assets at the balance sheet date. The maximum exposure as at December 31, 2008 amounted to 149,865 (December 31, 2007: 3,820).

20. Prepayments and other assets December 31, 2008 December 31, 2007 Prepayments for programming...... 17,580 8,559 Inventory, less provided for ...... 11,758 7,266 Employee settlements ...... 3,543 3,326 Technical support ...... 3,576 2,097 Other ...... 20,010 14,608

56,467 35,856

Less: current portion of other assets ...... (51,286) (31,600)

Non-current portion of other assets ...... 5,181 4,256

The accompanying notes are an integral part of these consolidated financial statements.

F-116 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

21. Cash and cash equivalents

December 31, 2008 December 31, 2007 Cash at bank and in hand...... 131,316 110,372 Short-term treasury bills ...... 53,551 -

184,867 110,372

(i) Cash at bank (credit rating — Standard and Poor’s):

December 31, 2008 December 31, 2007 Bank rated AAA ...... 84,420 - Bank rated A ...... 46,896 110,288

131,316 110,288

(ii) Short term treasury bills:

Effective Credit interest rating* rate Maturity dates Nominal value Purchase value Polish T-bills ...... A-/A2 6.30% February 18, 2009 39,000 38,428 Polish T-bills ...... A-/A2 5.95% February 18, 2009 15,000 14,807

53,235

* Credit rating provided by Standard and Poor’s and Moody’s

The Group defines maximum exposure to credit risk with respect to polish treasury bills as the total carrying amount of those instruments at the balance sheet date.

On January 21, 2009 the Group acquired 49,481 of Polish treasury bills maturing on April 15, 2009:

Effective Credit interest rating* rate Maturity dates Nominal value Purchase value Polish T-bills ...... A-/A2 4.55% April 15, 2009 50,000 49,481

49,481

* Credit rating provided by Standard and Poor’s and Moody’s

22. Share capital (not in thousands)

The total authorized number of ordinary shares is 413,499,585 with a par value of 0.20 per share. The total number of ordinary shares in issue as at December 31, 2008 was 349,515,414 with a par value of 0.2 per share. All issued shares are fully paid and include also shares issued on exercise of share

The accompanying notes are an integral part of these consolidated financial statements.

F-117 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) options granted under incentive schemes (C and E series of shares) as soon as cash consideration is received. The shareholders structure as at December 31, 2008:

Number of % of share Number of % of votes Shareholder shares capital votes Strateurop International B.V.(1) . . 180,355,430(2) 51.60%(2) 180,355,430(2) 51.60%(2) 52.04%(3) N-Vision B.V.(1)...... 23,048,635 6.59% 23,048,635 6.59% 6.65% Cadizin Trading&Investment(1). . 10,001,400 2.86% 10,001,400 2.86% 2.89% ITI Impresario(1) ...... 1,400 0.00% 1,400 0.00% 0.00% Other shareholders ...... 136,108,549 38.95% 136,108,549 38.95% 38.42%

Total ...... 349,515,414 100.00% 349,515,414 100.00% 100.00%

(1) Entities controlled by ITI Group. (2) Including treasury shares. (3) Excluding treasury shares.

As at December 31, 2008 all shares were registered by the Court.

The total number of shares as of December 31, 2008 includes 2,956,170 treasury shares (see Note 23).

During the year ended December 31, 2008, 2,242,439 shares of C and E series were issued for an amount of PLN 21,675 (in thousands).

According to the Polish Commercial Companies Code the Company cannot exercise voting rights deriving from TVN own shares.

23. Share buyback and redemption

The first tranche of 50,000 of the share buyback program commenced on November 17, 2008. By December 31, 2008 the Company had purchased 2,956,170 (not in thousands) shares for a total amount of 37,428.

Between January 1, 2009 and the date when these financial statements were prepared the Group purchased 947,018 (not in thousands) shares for a total amount of 12,572.

The second tranche of 50,000 of the share buyback program commenced on February 5, 2009. Between the date of the commencement and the date when these financial statements were prepared the Group purchased 728,134 shares (not in thousands) for a total amount of 7,691.

The accompanying notes are an integral part of these consolidated financial statements.

F-118 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

24. Borrowings

December 31, 2008 December 31, 2007 9.5 Senior Notes due 2013 ...... 855,432 790,388 Interest accrued on Senior Notes due 2013 ...... 3,551 3,332 PLN Bonds ...... 498,593 - Interest accrued on PLN Bonds ...... 2,156 - Loan facility...... 109,875 - Interest accrued on loan facility ...... 1,951 - Overdraft facility ...... 48,733 -

1,520,291 793,720

Less: current portion of borrowings ...... (56,391) (3,332)

Non-current portion of borrowings ...... 1,463,900 790,388

Senior Notes

On February 8, 2008 the Group repurchased Senior Notes with a nominal value of EUR 10,000 for an amount of EUR 10,200 (PLN 36,587). On October 24, 2008 the Group repurchased Senior Notes with a nominal value of EUR 10,000 for an amount of EUR 9,400 (PLN 34,141). The Group has accounted for the repurchases as a de-recognition of the corresponding part of the Senior Notes liability. As a result, the difference between the consideration paid and the carrying amount corresponding to the Notes repurchased was recognized in the income statement within finance expense (see Note 8). The nominal value of the remaining Senior Notes is EUR 215,000.

The fair value of the Senior Notes, excluding accrued interest, as at December 31, 2008 is estimated to be PLN 753,535 or EUR 180,600 (PLN 879,650 or EUR 245,575 as at December 31, 2007). Fair value of the Senior Notes reflect its market price quoted by Reuters based on the last value date on December 31, 2008.

The Group may redeem all or part of the Senior Notes on or after December 15, 2008 at a redemption price ranging from 104.75% to 100% of nominal value.

The Group recognized an embedded financial instrument with respect to these options (see Note 4(vi) and 19).

The accompanying notes are an integral part of these consolidated financial statements.

F-119 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

The Senior Notes also have a put option, which may be exercised by the holders of the Senior Notes at a purchase price of 101% of the nominal value if a change of control takes place. Change of control means: i) a person other than Permitted Holders become the beneficial owner of more than 35% of the voting power of the voting stock of the Company, and the Permitted Holders own a lesser% than such other person ii) Approved directors cease to constitute a majority of the Supervisory Board, iii) The Company sells substantially all of its assets, iv) A plan is adopted relating to the liquidation or dissolution of the Company, v) The Company ceases to own 100% of the shares of TVN Finance Corporation plc.

PLN Bonds On May 26, 2008 the Group entered into an agreement with Bank Pekao S.A., Bank Handlowy w Warszawie S.A. and BRE Bank S.A. to conduct a Bond Issue Program (“Program”). The Program enables the Group to issue bearer, unsubordinated and unsecured bonds (“PLN Bonds”) with a maximum total nominal value of PLN 1 billion at any time. The Program can be extended up to a nominal value of PLN 2 billion. On June 23, 2008 the Group completed the first issue of PLN Bonds with a total nominal value of 500,000 and with a variable interest rate of 6 month WIBOR plus 2.75% per annum. The interest is payable semi-annually starting December 14, 2008. The PLN Bonds are due for repayment on June 14, 2013. The PLN Bonds are unsecured obligations and are governed by a number of covenants including restrictions on disposal or inadequate use of assets. The total transaction costs of the issue amounted to 1,542 and mainly related to dealers commission and legal services. The PLN Bonds are carried at amortized cost using an effective interest rate of 9.69%. The Group has an option to redeem all or 50% of the PLN Bonds on June 14, 2011 or on June 14, 2012 at a redemption price of 102% or 101% of the nominal value respectively. The Group assessed that the early prepayment options are closely related to the economic characteristics of the host contract (PLN Bonds) as the option exercise price is close on each exercise date to the amortized cost of the PLN Bonds. Consequently, the Group did not separate the embedded derivative. The fair value of the PLN Bonds, excluding accrued interest, as at December 31, 2008 was estimated to be PLN 503,371. The PLN Bonds are non-public and their fair value was estimated using an internal valuation model with the key inputs being market interest rate, payment dates and credit spread.

Loan facility Until June 30, 2008 the Group had a EUR 50,000 loan facility with Bank Pekao S.A. The facility was secured over trade receivables, other intangible assets, television and broadcasting equipment and programming rights. On June 30, 2008 the Group entered into a PLN 200,000 multicurrency loan facility with Bank Pekao SA. The facility is available for a three year period. The facility bears interest at six-month WIBOR, EURIBOR or LIBOR (depending on loan currency) plus a margin which depends on the ratio of consolidated net debt to consolidated EBITDA of the Group and at the date of the agreement was

The accompanying notes are an integral part of these consolidated financial statements.

F-120 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

1%. The effective interest rate is approximated by WIBOR and applicable margin and fair value as at December 31, 2008 is approximated by the carrying amount. The facility is secured over trade receivables of TVN S.A. up to the equivalent of EUR 25 million. The loan facility is guaranteed by Grupa Onet.pl S.A. and Mango Media Sp. z o.o., wholly owned subsidiaries of TVN S.A. As of December 31, 2008 168,526 the facility had been used.

25. Trade payables

December 31, 2008 December 31, 2007 Acquired programming rights payables ...... 65,375 68,803 Property, plant, equipment and intangible assets payables ...... 33,885 9,034 Other trade payables ...... 44,510 36,808 Related party payables (see note 32(iii)) ...... 5,086 5,186

148,856 119,831

Less: current portion of trade payables ...... (141,905) (111,107)

Non-current portion of acquired programming rights payables ...... 6,951 8,724

26. Other liabilities and accruals

December 31, 2008 December 31, 2007 VAT and other taxes payable ...... 29,639 32,675 Employee benefits...... 45,175 35,520 Deferred income ...... 21,647 27,909 Accrued production costs ...... 14,908 11,741 Satellites ...... 6,236 6,761 Other liabilities and accrued costs ...... 111,888 75,832

229,493 190,438

27. Taxation

Year ended Year ended December 31, 2008 December 31, 2007 Current tax charge ...... (106,780) (78,186) Deferred tax credit ...... 22,904 24,262

(83,876) (53,924)

The accompanying notes are an integral part of these consolidated financial statements.

F-121 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Year ended Year ended December 31, December 31, Reconciliation of accounting profit to tax charge 2008 2007 Profit before income tax ...... 447,552 297,232 Income tax charge at the enacted statutory rate of 19% ...... (85,035) (56,474) Tax impact of employee share option plan costs not deductible for tax purposes (see Note 7) ...... (7,613) (8,518) Impact of tax deduction claimed and deferred in relation to operations in special economic zone ...... 14,574 14,442 Net tax impact of other expenses not deductible for tax purposes and revenue not taxable...... (5,802) (3,374)

Tax for the year ...... (83,876) (53,924)

The tax authorities may at any time inspect the books and records within 5 years from the end of the year when a tax declaration was submitted, and may impose additional tax assessments with penalty interest and penalties. The Company’s management is not aware of any circumstances, which may give rise to a potential material liability in this respect.

The Group operates partially in special economic zone in Kraków and was granted a tax credit equal to 40% and 50% of investments undertaken and certain categories of staff expenses incurred in the zone. The tax credits are available until December 31, 2017 and are subject to minimum investment commitments and the creation and maintenance of a certain number of jobs. As at December 31, 2008 the remaining committed investment amounted to 167,080. In the year ended December 31, 2008 the Group claimed tax reductions in the amount of 10,775 with respect to its costs incurred in the special economic zone. The balance of 11,936 with respect to this tax credit is deferred for future tax reduction.

Management believes that it is probable that taxable profit will be available in the future against which the deductible temporary differences can be utilized, and consequently has recognized deferred tax assets in the amount that reflects the assumed utilization of tax losses and tax credits. The deferred tax amounts were calculated using the enacted tax rate of 19% as at December 31, 2008.

The deferred tax assets and liabilities are expected to be recovered:

December 31, 2008 December 31, 2007 Deferred tax liabilities, net - Deferred tax liability, net to be realized after more than 12 months ...... (143,178) (144,559) - Deferred tax (liability)/asset, net to be recovered within 12 months ...... 12,014 (9,382)

(131,164) (153,941)

The accompanying notes are an integral part of these consolidated financial statements.

F-122 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Year ended Year ended Movements in deferred tax asset December 31, 2008 December 31, 2007 Balance at beginning of period ...... 12,637 6,235 Acquisition of subsidiary...... - 49 Credit for the period...... 21,878 6,353

Balance at end of period ...... 34,515 12,637

Year ended Year ended Movements in deferred tax liability December 31, 2008 December 31, 2007 Balance at beginning of period ...... (166,578) (174,637) Acquisition of subsidiary* ...... - (9,850) Deferred tax debited to equity, net ...... (127) - Credit for the period...... 1,026 17,909

Balance at end of period ...... (165,679) (166,578)

* Represents the deferred tax liability recognized mainly on Mango Media brand Differences in depreciation and Brand and amortization rates Non- Unrealised Unpaid customer for tax and deductible Debt foreign Derivative interest Available for related Tax losses accounting provisions issuance exchange financial Investment in accrued, sale assets carry policies and accruals costs differences assets/(liabilities) associate net investments acquired Tax credit forward Total Deferred tax asset/(liability) at January 1, 2007 . . . . . 2,693 17,570 (11,054) (34,828) (22,740) - (493) 1,198 (124,768) 352 3,668 (168,402) Acquisition of subsidiary . . . - (471) ------(9,330) - - (9,801) (Charged)/ credited to net profit ...... (1,326) 10,882 1,142 (12,108) 20,805 - (91) - 659 7,785 (3,486) 24,262

Deferred tax asset/(liability) at December 31, 2007 . . . 1,367 27,981 (9,912) (46,936) (1,935) - (584) 1,198 (133,439) 8,137 182 (153,941)

Deferred tax asset/(liability) at January 1, 2008 . . . . . 1,367 27,981 (9,912) (46,936) (1,935) - (584) 1,198 (133,439) 8,137 182 (153,941) (Charged)/ credited to net profit ...... (3,764) 10,680 1,732 16,151 (22,032) 17,943 (2,054) - 631 3,799 (182) 22,904 (Charged)/ credited to equity ...... ------(127) - - - (127)

Deferred tax asset/(liability) at December 31, 2008 . . . (2,397) 38,661 (8,180) (30,785) (23,967) 17,943 (2,638) 1,071 (132,808) 11,936 - (131,164)

The accompanying notes are an integral part of these consolidated financial statements.

F-123 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

28. Note to the consolidated cash flow statement

Reconciliation of net profit to cash generated from operations

Year Ended Year Ended Note December 31, 2008 December 31, 2007 Net profit ...... 363,676 243,308 Tax charge ...... 83,876 53,924 Share options granted to board members and employees ...... 7 40,070 44,832 Depreciation, amortization and impairment charges ...... 7 79,503 72,090 Amortization of acquired programming rights and co-production ...... 7 122,860 123,712 Impaired accounts receivable ...... 7 2,261 4,981 Loss/(gain) on sale of property, plant and equipment ...... 107 (92) Investment income and finance expense, net . . . . 8 89,883 184,780 Share of loss of associate ...... 94,440 - Guarantee fee ...... 8 (2,426) (2,961) Payments to acquire programming rights ...... (139,771) (128,070) Change in local production balance...... (43,438) (27,344) Changes in working capital: Trade receivables ...... (8,505) (118,096) Prepayments and other assets ...... (11,590) (4,172) Trade payables ...... 16,164 (9,286) Other short term liabilities and accruals ...... 38,841 70,063

34,910 (61,491)

Cash generated from operations ...... 725,951 507,669

Acquisition of subsidiaries net of cash acquired and acquisition of associates

Note Neovision Holding B.V...... 15 323,817 - Mango Media ...... - 49,561

323,817 49,561

Non-cash transactions Barter revenue, net ...... (1,564) (1,353) Share options granted to board members and employees ...... 7 40,070 44,832

The accompanying notes are an integral part of these consolidated financial statements.

F-124 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

29. Contingencies The Group has a remaining contingent asset in respect of VAT claim of 3,594 and interest due from the tax authorities of 12,834. A court ruling in favour of the Group was announced on April 13, 2006. On June 12, 2006 the tax authorities appealed to the Supreme Administrative Court. On October 9, 2007 the Supreme Administrative Court decided to return the case to the Administrative Court in Krakow for further review. On July 23, 2008 the Administrative Court overrode penalties imposed by the tax authorities (in the amount of 1,078 plus interest) but overruled the Group’s claim with respect to the base VAT amount. The Group has already applied to the tax authorities for the return of the penalty of 1,078 plus interest which as at December 31, 2008 amounted to 1,071. The total amount of 2,149 was recognized as a receivable at December 31, 2008 with a corresponding credit to the income statement. On October 10, 2008 the Group appealed to the Supreme Administrative Court with respect to the base VAT claim.

30. Commitments The Group has entered into a number of operating lease and other agreements. The commitments derived from these agreements are presented below.

(i) Commitments to acquire programming The Group has outstanding contractual payment commitments in relation to programming as of December 31, 2008. These commitments are scheduled to be paid as follows:

Due in 2009 ...... 118,293 Due in 2010 ...... 175,180 Due in 2011 ...... 173,667 Due in 2012 ...... 196,812 Due in 2013 ...... 178,833 Due in 2014 and thereafter ...... 51,737

894,522

(ii) Total future minimum payments relating to operating lease agreements signed as at December 31, 2008: Related Non-related parties parties Total Due in 2009 ...... 20,790 24,220 45,010 Due in 2010 ...... 20,778 17,567 38,345 Due in 2011 ...... 20,120 15,817 35,937 Due in 2012 ...... 20,120 13,638 33,758 Due in 2013 ...... 20,120 8,999 29,119 Due in 2014 and thereafter ...... 52,410 10,959 63,369

154,338 91,200 245,538

The accompanying notes are an integral part of these consolidated financial statements.

F-125 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Contracts signed with related parties relate to lease of office space and television studios from Poland Media Properties S.A. (“Poland Media Properties”, previously ITI Poland S.A.) and Diverti Sp. z o.o. (“Diverti”). Diverti is a subsidiary of ITI Group. Commitments in foreign currencies were calculated using exchange rates as at December 31, 2008. Contracts signed with non-related parties relate to lease of office space and television studios. In addition to the lease agreements disclosed above, the Group has agreements with third parties for the provision of satellite capacity. Under these agreements the Group is obliged to pay annual fees. These commitments are scheduled to be paid as follows:

Due in 2009 ...... 29,083 Due in 2010 ...... 34,315 Due in 2011 ...... 34,315 Due in 2012 ...... 15,016

112,729

Additionally, the Group leases transmission sites and related services for an annual amount of 6,600.

(iii) Barter commitments The Group has an outstanding commitment of service to broadcast advertising of 3,466 to settle sundry amounts payable recorded as of December 31, 2008 (4,598 at December 31, 2007). The service to broadcast advertising will be rendered under commercial terms and conditions and at market prices.

(iv) Other commitments As at December 31, 2008, the Group assumed contractual commitments of 1,304 to acquire property, plant and equipment and intangible assets (5,334 at December 31, 2007). Additionally the Group has undertaken to invest 215,782 in the special economic zone in Kraków by December 31, 2017. As at December 31, 2008 the remaining commitment amounted to 167,080.

The accompanying notes are an integral part of these consolidated financial statements.

F-126 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

31. Group companies

These consolidated financial statements as at December 31, 2008 comprise the parent company and the following subsidiaries (“the Group’), joint ventures and associates:

December 31, 2008 December 31, 2007 Country of Ownership Ownership incorporation % % Grupa Onet.pl S.A...... Poland 100 100 Dream Lab Onet Sp. z o.o...... Poland 100 100 Tivien Sp. z o.o...... Poland 100 100 El-Trade Sp. z o.o...... Poland 100 100 NTL Radomsko Sp. z o.o...... Poland 100 100 Mango Media Sp. z o.o...... Poland 100 100 SunWeb Sp. z o.o...... Poland 100 - Thema Film Sp. z o.o ...... Poland 96 96 TVN Finance Corporation plc ...... UK 100 100 Grupa Onet Poland Holding B.V. . . . . The Netherlands 100 100 Media Entertainment Ventures Int Ltd ...... Malta 100 100 Polski Operator Telewizyjny Sp. z o.o...... Poland 50 50 Discovery TVN Ltd ...... UK 50 50 Neovision Holding B.V.* ...... The Netherlands 25 - Polskie Badania Internetu Sp. z o.o. . . . Poland 20 20

* Neovision Holding B.V. wholly owns ITI Neovision Sp. z o.o. (Poland), Neovision UK Ltd. (UK), has 99% of Cyfrowy Dom Sp. z o.o. and has 45% joint venture in MGM Channel Poland Ltd.

The share capital percentage owned by the Group equals the percentage of voting rights in each of the above entities.

32. Related party transactions

(i) Revenue:

Year ended Year ended December 31, 2008 December 31, 2007 ITI Group ...... 6,622 8,613 ITI Neovision* ...... 42,799 34,779 Poland Media Properties...... 25 39

49,446 43,431

* ITI Neovision is an associate of the Group (see Note 31). The amounts disclosed in this note in relation to ITI Neovision cover also the periods when ITI Neovision was not an associate of the Group.

The accompanying notes are an integral part of these consolidated financial statements.

F-127 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Additionally the Group recognised revenue of 16,756 (10,401 in 2007) from advertising services rendered for ITI Neovision through advertising agencies.

(ii) Operating expenses: Year ended Year ended December 31, 2008 December 31, 2007 ITI Group ...... 26,549 22,750 ITI Neovision ...... 5,275 6,233 Poland Media Properties...... 535 584

32,359 29,567

Operating expenses from ITI Group comprise rent of office premises and the provision of certain management, sales, financial advisory and other services.

Operating expenses from Poland Media Properties comprise rent of office premises.

(iii) Outstanding balances arising from sale/purchase of goods and services: December 31, 2008 December 31, 2007 Receivables: ITI Group ...... 4,532 1,518 ITI Neovision ...... 20,808 8,445

25,340 9,963

December 31, 2008 December 31, 2007 Payables: ITI Group ...... 4,978 5,038 ITI Neovision ...... 45 15 Poland Media Properties...... 63 133

5,086 5,186

(iv) Other non current assets

Other non current assets include a rental deposit paid to ITI Group by TVN in the amount of 1,981.

(v) Lease commitments with related parties

See Note 30 for further details.

The accompanying notes are an integral part of these consolidated financial statements.

F-128 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

(vi) Other

ITI Holdings has provided guarantees in the amount of US$25,000 to Warner Bros. International Television Distribution and US$8,000 to DreamWorks in respect of programming rights purchased and broadcast by the Group. During the year ended December 31, 2008, the Group recorded finance costs of 2,426 relating to these guarantees (during the year ended December 31, 2007: 2,961).

On June 25, 2008 the Group completed the acquisition of 25% of the share capital plus 1 share of Neovision Holding from ITI Media Group (see Note 15).

(vii) Management Board compensation

Short-term employee benefits

Management Board cash compensation for the year ended December 31, 2008 amounted to 10,485 (9,863 for the year ended December 31, 2007).

Year ended Year ended December 31, 2008 December 31, 2007 Base salary Bonuses* Base salary Bonuses** Piotr Walter ...... 1,245 800 1,239 593 Karen Burgess ...... 1,120 540 1,119 353 Edward Miszczak ...... 843 390 842 288 Jan Łukasz Wejchert ...... 846 492 818 177 Tomasz Berezowski ...... 527 175 539 122 Olgierd Dobrzyn´ ski...... 605 142 604 197 Waldemar Ostrowski ...... 518 175 517 129 Adam Pieczyn´ ski...... 638 191 639 267 Jarosław Potasz ...... 540 175 539 124 Piotr Tyborowicz ...... 523 - 506 251

7,405 3,080 7,362 2,501

* Bonuses paid for 2007 ** Bonuses paid for 2006

Share based payments

Members of the Management Board of the Company participate in share incentive schemes introduced by the Group (see note 33) with the following total number of granted share options divided into four series and estimated fair value thereof recognized either as an expense or incremental cost of business combination with Grupa Onet.pl. The fair value of options granted on December 27, 2005 was estimated with reference to a share price of PLN 15.76 (not in thousands) at that date (after taking into account the effect of subsequent share split). Fair values of options granted on July 31, 2006 and December 18, 2007 were estimated with reference to share prices of (not in thousands) PLN 21.30 and PLN 24.75 respectively. For details of the share incentive scheme please refer to Note 33.

The accompanying notes are an integral part of these consolidated financial statements.

F-129 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Total number Cumulative fair Cumulative fair of share options granted value recognized up to value recognized up to (not in thousands) December 31, 2008* December 31, 2007* Piotr Walter ...... 622,600 7,387 5,950 Karen Burgess ...... 526,290 6,275 5,095 Edward Miszczak...... 526,290 6,275 5,095 Jan Łukasz Wejchert . . . 577,065 6,784 5,887 Tomasz Berezowski . . . . 336,030 4,007 3,253 Olgierd Dobrzyn´ ski . . . . 314,115 3,484 2,470 Waldemar Ostrowski . . . 336,030 4,007 3,253 Adam Pieczyn´ ski ...... 314,115 3,484 2,470 Jarosław Potasz ...... 336,030 4,007 3,253 Piotr Tyborowicz ...... 336,030 4,007 3,253

* Calculated as proportion of the fair value of service already rendered to the total fair value of the scheme.

(viii) Supervisory Board compensation

Supervisory Board cash compensation for the year ended December 31, 2008 amounted to 1,126 (1,097 for the year ended December 31, 2007).

Year Ended Year Ended December 31, 2008* December 31, 2007 Wojciech Kostrzewa ...... 192 165 Jan Wejchert ...... - 10 Bruno Valsangiacomo ...... 156 137 Arnold Bahlmann ...... 108 90 Romano Fanconi ...... 72 68 Paweł Gricuk ...... 144 121 Paweł Kosmala ...... 47 - Sandra Nowak ...... 21 263 Wiesław Rozłucki...... 132 92 Andrzej Rybicki ...... 72 66 Marcus Tellenbach ...... 47 - Mariusz Walter ...... - 10 Aldona Wejchert ...... 72 56 Gabriel Wujek ...... 63 - Jan Adam Zielin´ ski...... - 19

1,126 1,097

* Including total amount of 237 accrued for in 2008 but paid out in 2009.

The accompanying notes are an integral part of these consolidated financial statements.

F-130 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

33. Share-based payments Share options are granted to certain Management Board members, employees and co-workers who are of key importance to the Group. Share options are granted under two share option schemes: (i) TVN Incentive Scheme I introduced on December 27, 2005, based on C series of shares (ii) TVN Incentive Scheme II introduced on July 31, 2006 as part of the acquisition of Grupa Onet.pl, based on E series of shares. The Group has no legal or constructive obligation to repurchase or settle the options in cash. Movements in the number of share options outstanding and their related weighted average exercise prices are as follows (not in thousands) Year ended December 31, 2008 Year ended December 31, 2007 Average Average exercise price Outstanding options exercise price Outstanding options At 1 January...... PLN 10.62 14,887,155 PLN 10.01 15,818,005 Granted ...... - - PLN 11.68 2,833,670 Exercised...... PLN 9.67 (2,242,439) PLN 8.83 (3,764,520) At 31 December ...... PLN 10.79 12,644,716 PLN 10.62 14,887,155

Weighted average market share price during the year ended December 31, 2008 was 20.95. The total fair value of the options granted was estimated using a trinomial tree model and amounted to 74,124 with respect to C series and 110,101 with respect to E series. The model assumes that dividends would be paid in the future in accordance with the Group’s dividend policy. Fair valuation of options granted before January 1, 2007 assumed that no dividends would be paid in the future. The stock option plan is service related. The remaining options are exercisable at the prices indicated below and vest after the specified period (not in thousands): Series Number of options Exercise price Service vesting period C1 ...... 384,060 PLN 8.66 Vested C2 ...... 1,669,330 PLN 9.58 Vested C3 ...... 3,479,210 PLN 10.58 until January 1, 2009

5,532,600

The accompanying notes are an integral part of these consolidated financial statements.

F-131 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Series Number of options Exercise price Service vesting period E1 ...... 217,730 PLN 8.66 Vested E2 ...... 282,135 PLN 9.58 Vested E3 ...... 1,337,516 PLN 10.58 Vested E4 ...... 2,441,065 PLN 11.68 until April 1, 2009 E4 ...... 2,833,670 PLN 11.68 until January 1, 2010

7,112,116

All options can be exercised no later than December 31, 2011. Between January 1, 2009 and the date when these financial statements were prepared, no options were exercised.

The accompanying notes are an integral part of these consolidated financial statements.

F-132

PricewaterhouseCoopers Sp. z o.o. Al. Armii Ludowej 14 00-638 Warszawa Poland Telefon +48 (22) 523 4000 Faks +48 (22) 523 4040 http://www.pwc.com/pl Independent auditor’s report To the Shareholders and Supervisory Board of TVN S.A. We have audited the accompanying consolidated financial statements of TVN S.A. and its subsidiaries (the ‘TVN Group’) which comprise the consolidated balance sheet as of 31 December 2007 and the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the TVN Group as of 31 December 2007, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

PricewaterhouseCoopers Sp. z o.o. Warsaw, Poland 15 February 2008 PricewaterhouseCoopers Sp. z o.o. wpisana jest do Krajowego Rejestru Sa˛ dowego prowadzonego przez Sa˛ d Rejonowy dla m. st. Warszawy, pod numerem KRS 0000044655, NIP 526-021-02-28. kapitał zakładowy wynosi 10.363.900 złotych. Siedziba˛ Spółki jest Warszawa, Al. Armii Ludowej 14. Członkami Zarza˛dusa˛ : George Johnstone, Antoni F. Reczek, Adam Celiñski, Andrzej Konopacki, Grzegorz Skrzeszewski, Antoni Tymin´ ski, Piotr Walin´ ski, Artur Ziobro, Halina Koniecka - Maliszewska, Ewa Sowin´ ska, Wojciech Maj, Waldemar Lachowski, Tomasz Reinfuss, Reginald Webb, Michał Mastalerz, Zuzanna Mrugała, Tomasz Konieczny, Karol Dziekan´ ski, Tomasz Zielke.

F-133 TVN Information

1. Principal activity TVN S.A. (the “Company”) and its subsidiaries (“TVN Group”, the “Group”) operate or jointly operate fourteen television channels in Poland: TVN, TVN 7, TVN 24, TVN Meteo, TVN Turbo, ITVN, TVN Style, TVN Gra, TVN Med, TVN Lingua, TVN CNBC Biznes, Discovery Historia, NTL Radomsko and Telezakupy Mango 24. The Group’s channels broadcast news, information and entertainment shows, serials, movies and teleshopping. The Group also operates Onet.pl the leading and the most popular internet portal in Poland operating services such as: Zumi.pl, Sympatia.pl, OnetBlog and OnetLajt .

2. Registered Office TVN S.A. ul. Wiertnicza 166 02-952 Warszawa

3. Supervisory Board • Wojciech Kostrzewa, President • Jan Wejchert, President (until February 26, 2007) • Bruno Valsangiacomo, Vice-President • Arnold Bahlmann • Romano Fanconi • Paweł Gricuk • Sandra Nowak (appointed March 6, 2007 and resigned January 7, 2008) • Wiesław Rozłucki (appointed March 23, 2007) • Andrzej Rybicki • Mariusz Walter (until February 26, 2007) • Aldona Wejchert (appointed March 6, 2007) • Gabriel Wujek (appointed February 15, 2008) • Jan Zielin´ ski (until March 22, 2007)

4. Management Board • Piotr Walter, President • Karen Burgess, Vice-President • Edward Miszczak, Vice-President • Jan Łukasz Wejchert, Vice-President • Tomasz Berezowski • Olgierd Dobrzyn´ ski • Waldemar Ostrowski • Adam Pieczyn´ ski • Jarosław Potasz • Piotr Tyborowicz

F-134 5. Auditors PricewaterhouseCoopers Sp. z o.o. Al. Armii Ludowej 14 00-638 Warszawa

6. Principal Solicitors CMS Cameron McKenna ul. Emilii Plater 53 00-113 Warszawa

7. Principal Bankers Bank Polska Kasa Opieki S.A. (“Pekao SA”) ul. Grzybowska 53/57 00-950 Warszawa until November 30, 2007: Bank BPH S.A. (“BPH”) Al. Pokoju 1 31-548 Kraków

8. Subsidiaries

Television Broadcasting and Production

• TVN Finance Corporation plc • El-Trade Sp. z o.o. One London Wall ul. Wiertnicza 166 London EC2Y 5EB 02-952 Warszawa UK • Tivien Sp. z o.o. • NTL Radomsko Sp. z o.o. ul. Augustówka 3 ul. 11 Listopada 2 02-981 Warszawa 97-500 Radomsko (previously Newsroom Sp. z o.o.) • Mango Media Sp. z o.o. • Thema Film Sp. z o.o. ul. Kos´ciuszki 61 ul. Powsin´ ska 4 81-703 Sopot 02-920 Warszawa New Media • Grupa Onet.pl S.A. • Dream Lab Onet.pl Sp. z o.o. ul. G. Zapolskiej 44 ul. G. Zapolskiej 44 30-126 Kraków 30-126 Kraków • Grupa Onet Poland Holding B.V. • Media Entertainment Ventures De Boelelaan 7 International Limited NL-1083 Amsterdam Palazzo Pietro Stiges 90, Strait Street The Netherlands Valetta VLT 05 Malta

9. Joint ventures

• Polski Operator Telewizyjny Sp. z o.o. • Discovery TVN Ltd ul. Huculska 6 566 Chiswick High Road 00-730 Warszawa London W4 5YB UK

10. Associates

• Polskie Badania Internetu Sp. z o.o. Al. Jerozolimskie 44 00-950 Warszawa

F-135 TVN S.A. Consolidated income statement (Expressed in PLN, all amounts in thousands, except as otherwise stated) Year ended Year ended December 31, December 31, Note 2007 2006 Revenue ...... 6 1,554,729 1,165,027 Cost of revenue...... 7 (817,907) (632,385) Selling expenses ...... 7 (126,968) (78,862) General and administration expenses ...... 7 (126,008) (104,676) Other operating expense, net ...... 7 (1,834) (589)

Operating profit ...... 482,012 348,515 Investment income, net ...... 8 19,344 54,059 Finance expense, net ...... 8 (204,124) (68,277)

Profit before income tax...... 297,232 334,297 Income tax charge ...... 23 (53,924) (75,472)

Profit attributable to the equity holders of TVN S.A...... 243,308 258,825

Earnings per share for profit attributable to the equity holders of TVN S.A. (not in thousands) - basic ...... 9 0.70 0.78

- diluted ...... 9 0.69 0.77

Supplementary disclosure of impact of embedded option valuation Profit attributable to the equity holders of TVN S.A...... 243,308 258,825 Impact on profit, net of tax of fair value loss/(gain) on embedded option ...... 17,23 87,170 (26,455)

Adjusted profit attributable to the equity holders of TVN S.A...... 330,478 232,370

The accompanying notes are an integral part of these consolidated financial statements.

F-136 The Group presents adjusted profit to reflect the impact of non-cash fair value losses/gains arising on prepayment options embedded in its Senior Notes. The accounting for prepayment options is technical, judgmental and driven by accounting interpretations. The Group believes that presentation of net profit adjusted for this item enables a reader to better understand the Group’s operating and financial performance.

Piotr Walter Karen Burgess Edward Miszczak President of the Board Vice-President of the Board Vice-President of the Board

Jan Łukasz Wejchert Tomasz Berezowski Olgierd Dobrzyn´ ski Vice-President of the Board Board Member Board Member

Waldemar Ostrowski Adam Pieczyn´ ski Jarosław Potasz Board Member Board Member Board Member

Piotr Tyborowicz Warsaw, February 15, 2008 Board Member

The accompanying notes are an integral part of these consolidated financial statements.

F-137 TVN S.A. Consolidated balance sheet (Expressed in PLN, all amounts in thousands, except as otherwise stated)

As at As at December 31, 2007 December 31, 2006 Note ASSETS Non-current assets Property, plant and equipment ...... 10 250,168 195,988 Goodwill ...... 11 952,657 946,332 Brand...... 12 693,688 643,428 Other intangible assets...... 13 50,969 52,392 Non-current programming rights ...... 14 127,433 133,125 Investments in associates ...... 83 83 Available-for-sale financial assets ...... 15 7,588 4,650 Deferredtaxasset...... 23 12,637 6,235 Othernoncurrentassets...... 18 4,256 4,325 2,099,479 1,986,558 Current assets Current programming rights ...... 14 179,523 158,537 Tradereceivables...... 16 299,590 185,269 Derivative financial assets...... 17 24,267 128,064 Prepayments and other assets ...... 18 31,600 15,619 Corporate income tax receivable ...... 94 - Cash and cash equivalents ...... 110,372 104,611 645,446 592,100 TOTAL ASSETS ...... 2,744,925 2,578,658 EQUITY Shareholders’ equity Sharecapital...... 19 69,455 68,702 Share premium ...... 566,327 499,238 8%obligatoryreserve...... 22,901 21,323 Otherreserves...... 86,833 77,087 Accumulated profit ...... 684,245 570,815 1,429,761 1,237,165

LIABILITIES Non-current liabilities 9.5% Senior Notes due 2013...... 20 790,388 841,856 Deferred tax liability ...... 23 166,578 174,637 Non-current trade payables ...... 21 8,724 9,007 Other non-current liabilities ...... 406 1,096 966,096 1,026,596 Current liabilities Currenttradepayables...... 21 111,107 143,126 Corporate income tax payable ...... 43,223 52,681 Accrued interest on 9.5% Senior Notes due 2013 ...... 20 3,332 3,564 Other liabilities and accruals ...... 22 191,406 115,526 349,068 314,897 Total liabilities ...... 1,315,164 1,341,493 TOTAL EQUITY AND LIABILITIES ...... 2,744,925 2,578,658

The accompanying notes are an integral part of these consolidated financial statements.

F-138 TVN S.A.

Consolidated statement of changes in shareholders’ equity (Expressed in PLN, all amounts in thousands, except as otherwise stated)

Number of Employee shares(1) share (not in Share Share 8% obligatory Other option plan Accumulated Shareholders’ thousands) capital Premium reserve reserves reserve profit equity Balance at January 1, 2006 ...... 319,847,910 63,970 - 13,708 (1,205) 597 319,605 396,675 Impairment of available for sale financial assets ...... - - - - 1,760 - - 1,760 Deferred tax on impairment of available for sale financial assets ...... - - - - (334) - - (334) Fair value gains on cash flow hedges, net ...... - - - - (273) - - (273) Deferred tax on fair value gains on cash flow hedges . . - - - - 52 - - 52 Net income recognized directly in equity ...... - - - - 1,205 --1,205 F-139 Profit for the year ...... ------258,825 258,825 Total recognized income for the period...... - - - - 1,205 - 258,825 260,030 Issue of shares ...... 23,660,545 4,732 499,238 - - - - 503,970 Charge for the period(2) ...... - - - - - 76,490 - 76,490 Appropriation of 2005 profit—transfer to 8% obligatory reserve...... - - - 7,615 - - (7,615) - Balance at December 31, 2006 ...... 343,508,455 68,702 499,238 21,323 - 77,087 570,815 1,237,165

(1) On November 29, 2006 the Extraordinary Shareholders’ Meeting resolved to decrease the nominal value of shares from PLN 1 to PLN 0.2 (not in thousands). Consequently, the number of ordinary shares in issue presented in this table was multiplied by 5. This share split was registered by the court on December 12, 2006 and is reflected in this table.

The accompanying notes are an integral part of these consolidated financial statements. TVN S.A.

Consolidated statement of changes in shareholders’ equity (Expressed in PLN, all amounts in thousands, except as otherwise stated)

Number of shares (not in 8% obligatory Employee share Accumulated thousands) Share capital Share Premium reserve option plan reserve profit Shareholders’ equity Balance at January 1, 2007 ...... 343,508,455 68,702 499,238 21,323 77,087 570,815 1,237,165 Profit for the year ...... - - - - - 243,308 243,308 Total recognized income for the period...... - - - - - 243,308 243,308 Issue of shares(3) ...... 3,764,520 753 67,571 - (35,086) - 33,238 Share issue cost ...... - - (482) - - - (482) Charge for the period(2) ...... - - - - 44,832 - 44,832 Dividend declared and paid(4) ...... - - - - - (128,300) (128,300)

F-140 Appropriation of 2006 profit —transfer to 8% obligatory reserve ...... - - - 1,578 - (1,578) - Balance at December 31, 2007...... 347,272,975 69,455 566,327 22,901 86,833 684,245 1,429,761

(2) On December 27, 2005 TVN S.A. introduced the TVN Incentive Scheme I based on C series of shares. On June 8, 2006 the Annual Shareholders’ Meeting approved a conditional share capital increase of up to 1,974 required for the execution of the TVN Incentive Scheme I. On July 31, 2006, as part of the acquisition of Grupa Onet.pl, TVN S.A. introduced the TVN Incentive Scheme II based on E series of shares. On September 26, 2006 the Extraordinary Shareholders’ Meeting approved a conditional share capital increase of up to 1,756 required for the execution of the TVN Incentive Scheme II (see note 30). (3) During the year ended December 31, 2007 3,764,520 (not in thousands) of C1, E1 and E2 series shares were issued and fully paid as a result of exercising share options granted to the participants of TVN incentive schemes. Of this number, 79,778 shares were pending registration by the Court as at December 31, 2007. (4) The dividend paid in 2007 amounted to 0.37 per share (not in thousands). Included in accumulated profit is an amount of 642,930 being the accumulated profit of TVN S.A. on a stand-alone basis which is distributable. The Senior Notes (see note 20) impose certain restrictions on payment of dividends. The accompanying notes are an integral part of these consolidated financial statements. TVN S.A.

Consolidated cash flow statement (Expressed in PLN, all amounts in thousands, except as otherwise stated)

Year ended Year ended December 31, December 31, Note 2007 2006 Operating activities Cash generated from operations ...... 24 507,669 452,391 Tax paid ...... (87,710) (15,060)

Net cash generated from operating activities ...... 419,959 437,331 Investing activities Acquisition of subsidiaries net of cash acquired...... 24 (49,561) (1,280,036) Increase in share capital of available-for-sale investment ...... (2,745) - Payments to acquire property, plant and equipment . . . . . (111,164) (81,723) Proceeds from sale of property, plant and equipment . . . . 779 1,933 Payments to acquire intangible assets ...... (17,685) (16,161) Interest received ...... 5,625 6,600 Proceeds from repayment of bond from related party . . . - 607,060

Net cash used in investing activities ...... (174,751) (762,327) Financing activities Issue of shares ...... 19, 30 33,238 439,897 Share issue cost ...... (482) - Bank loan repaid ...... (500) - Dividend paid ...... (128,300) - Payments to acquire options ...... (17,545) (3,455) Early settlement of options ...... (40,725) - Interest paid ...... (85,598) (87,610)

Net cash (used in)/generated by financing activities ..... (239,912) 348,832

Increase in cash and cash equivalents ...... 5,296 23,836 Cash and cash equivalents at the start of the period . . . . . 104,611 80,764 Effects of exchange rate changes ...... 465 11

Cash and cash equivalents at the end of the period ..... 110,372 104,611

Cash at bank and in hand ...... 110,372 104,611

The accompanying notes are an integral part of these consolidated financial statements.

F-141 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated)

1. TVN

These consolidated financial statements were authorized for issuance by the Management Board and Supervisory Board of TVN S.A. on February 15, 2008.

TVN S.A. (until July 29, 2004 TVN Sp. z o.o.) was incorporated in May 1995 and is a public media and entertainment company established under the laws of Poland and listed on the Warsaw Stock Exchange.

The structure of TVN Group is described in Note 28. The main changes in the Group’s structure during 2007 are described below:

On January 24, 2007 Discovery TVN Limited, a joint venture of the Group and Discovery Communications Europe Limited, was registered in the Registrar of Companies at Companies House in the United Kingdom. Discovery TVN Limited operates Discovery Historia, an encoded satellite history channel, which was launched in November 2006.

On May 23, 2007 the Group acquired 100% of the share capital of Mango Media Sp. z o.o. (“Mango Media”), a broadcaster of the satellite channel “Telezakupy Mango 24” for consideration of EUR 13,000. The Group has accounted for the acquisition of Mango Media using the purchase accounting method (see note 27).

On August 31, 2007, Newsroom Sp. z o.o. a wholly owned subsidiary of the Company changed its name to Tivien Sp. z o.o. and its seat from Krakow to Warsaw.

On September 3, 2007 the Group launched TVN CNBC Biznes, a free to air cable and satellite channel broadcasting business news.

On December 28, 2007 TVN S.A. merged with its wholly owned subsidiary TVN Turbo Sp. z o.o.

On July 31, 2006 the Group completed the acquisition of Grupa Onet Poland Holding B.V. (“GOPH BV”) from ITI Group. GOPH BV is the owner of 6,622,449 (not in thousands) shares constituting 82.30% of the share capital of Grupa Onet.pl S.A. (“Onet”). As a result of a public tender offer for the remaining shares of Onet and completing a squeeze-out procedure, by December 31, 2006 the Group acquired 100% of shares in Onet. The Group has accounted for the acquisition of Onet using the purchase accounting method applied as if the business combination was achieved in one stage with the acquisition date being July 31, 2006.

As a result of the acquisition, the financial results for the year ended December 31, 2007 are not directly comparable to the results for the year ended December 31, 2006. If the acquisition had occurred on January 1, 2006 the Group, including Onet, would have recognized revenue of 1,229,898 and a net profit of 226,555 for the year ended December 31, 2006.

Advertising sales in Poland tend to be lowest during the third quarter of each calendar year, which includes the summer holiday period, and highest during the fourth quarter of each calendar year.

The accompanying notes are an integral part of these consolidated financial statements.

F-142 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

2. Accounting policies 2.1. Basis of preparation These consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (“IFRS”) as adopted by the EU, issued and effective as at the balance sheet date. The accounting policies used in the preparation of the consolidated financial statements as of and for the year ended December 31, 2007 are consistent with those used in the annual consolidated financial statements for the year ended December 31, 2006 except for new accounting policies described below and interpretations which became effective January 1, 2007. The following standards and interpretations were adopted by the Group in 2007: i. IFRS 7, Financial Instruments: Disclosures, and an amendment to IAS 1 — Presentation of Financial Statements Capital Disclosures IFRS 7 introduces new disclosure requirements related to financial instruments. This standard does not have any impact on the classification and valuation of financial instruments in the Group’s financial statements. ii. IFRIC 10, Interim Financial Reporting and Impairment The interpretation addresses the interaction between the requirements of IAS 34 Interim Financial Reporting and those in other standards on the recognition and reversal in financial statements of impairment losses on goodwill and certain financial assets. These consolidated financial statements are prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and available for sale financial assets. The Group’s consolidated financial statements for the year ended December 31, 2006 prepared in accordance with IFRS as adopted by the EU are available on http://investor.tvn.pl.

2.2. Segment reporting A business segment is a group of assets and operations that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different to those of other business segments. Operating costs, including central administration costs are allocated to segments to which they relate. The majority of the Group’s operations and assets are based in Poland. Assets outside Poland constitute less than 10% of the total assets of all segments. Therefore, no geographic information has been included.

2.3. Consolidation Subsidiary undertakings, which are those companies in which the Group, directly or indirectly, has an interest of more than half of the voting rights or otherwise has power to exercise control over the operations, have been consolidated. Subsidiaries are consolidated from the date on which effective

The accompanying notes are an integral part of these consolidated financial statements.

F-143 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) control is transferred to the Group, and are no longer consolidated from the date the Group ceases to have control.

The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. The Company uses the purchase accounting method to account for transactions with entities under common control.

2.4. Joint ventures

The Group’s interests in jointly controlled entities are accounted for by proportionate consolidation. The Group combines its share of the joint ventures’ individual income and expenses, assets and liabilities and cash flow on a line-by-line basis with similar items in the Group’s financial statements. The Group recognizes the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other ventures. The Group does not recognize its share of profits or losses from joint ventures that result from the Group’s purchase of assets from a joint venture until it resells the assets to an independent party. However, a loss on a transaction is recognized immediately if the loss provides evidence of a reduction in the net realizable value of current assets, or an impairment loss.

2.5. Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted under the equity method and are initially recognized at cost.

The Group’s share of post-acquisition profits or losses is recognized in the income statement, and its share of post-acquisition movements in reserves is recognized in reserves. The cumulative post- acquisition movements are adjusted against the carrying amount of the investment.

When the Group’s share of losses in an associate equals or exceeds its interest the Group does not recognize further losses, unless it is obliged to cover losses or make payments on behalf of the associate. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the assets transferred.

2.6. Foreign currency

The accompanying financial statements are presented in Polish złoty (PLN), which is the presentation and functional currency of the Company.

The accompanying notes are an integral part of these consolidated financial statements.

F-144 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates.

Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange applicable at the balance sheet date. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Gains and losses arising from the settlement of such transactions and from translation of monetary assets and liabilities at year-end exchange rates are recognized in the income statement, except when deferred in equity as qualifying cash flow hedges.

For available-for-sale financial assets that are non — monetary assets, the gain or loss that is recognized directly in equity includes any related foreign exchange translation component.

2.7. Exchange rates and inflation:

PLN exchange rate PLN exchange rate to U.S. dollar to euro

December 31, 2007 ...... 2.4350 3.5820 December 31, 2006 ...... 2.9105 3.8312

The movement in the consumer price index for the year ended December 31, 2007 amounted to 4.0% (1.4% for the year ended December 31, 2006).

2.8. Property, plant and equipment

Buildings ...... up to 40 years Leasehold improvements ...... up to 10 years TV and broadcasting equipment ...... 2-10 years Vehicles...... 3-4 years Studio vehicles ...... 7 years Furniture and fixtures ...... 4-5 years

The accompanying notes are an integral part of these consolidated financial statements.

F-145 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are included in operating profit.

Assets’ residual values and useful lives are reviewed and adjusted if appropriate at least at each financial year end. The Group reviewed the expected useful lives and residual values of property, plant and equipment as at December 31, 2007. No adjustments were required.

2.9. Goodwill

Goodwill represents the excess of the cost of an acquisition over the Group’s share of fair value of net identifiable assets of the acquired subsidiary at the date of acquisition and carried at cost less accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if there are indicators of possible impairment. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The Group allocates goodwill to business segments in which it operates.

2.10. Brands

2.11. Other intangible assets

Customer related intangibles

Capitalized development costs

Research expenditure is recognized as an expense as incurred. Costs incurred on development that can be measured reliably and that are directly associated with the production of identifiable, unique and technically feasible technology projects and know-how controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year and where management has the intention and ability to use or sell the projects and adequate resources to complete the project exist, are recognized as intangible assets. Other development expenditures that do not meet these criteria are recognized as expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period. Direct costs recognized as intangible assets include employee costs and an appropriate portion of relevant overheads. Development costs recognized as intangibles assets are amortized on a straight line basis over their estimated useful lives. Currently the majority of capitalized development costs are

The accompanying notes are an integral part of these consolidated financial statements.

F-146 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) amortized over three years. Development assets are tested for impairment annually, in accordance with IAS 36.

Other intangible assets Expenditures on acquired programming formats and broadcasting licenses are capitalised and amortized using the straight line method over their expected useful economic lives:

Term

Programming formats ...... 5 years Broadcasting licenses...... life of the license

Other intangible assets include acquired computer software. Acquired computer software is capitalized and amortized using the straight-line method over two to three years.

The accompanying notes are an integral part of these consolidated financial statements.

F-147 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

The program rights purchased by the Group are amortized as follows:

Percentage of amortization per run

Number Program Categories of runs 1st 2nd 3rd

Acquired Programming 1 Movies, incl. Feature Films, ...... 1 100 Made for Television or Cable, 2 60 40 whether first run, library or rerun 3 or more 50 35 15 2 Weekly Fiction Series, ...... 1 100 including dramas, comedies or 2 60 40 serials, first run or library, live action and animation 3 or more 60 25 15 3 Weekly Non-Fiction Series, ...... 1 100 including documentary series, 2 90 10 docu-soaps, reality and nature 3 or more 90 10 0 4 Entertainment Documentaries ...... 1 100 One off documentaries of less than timely topics 2 or more 80 20 0 5 Clips Shows of Comedy material ...... 1 100 26040 3 or more 55 35 10

Programming rights are allocated between current and non-current assets based on estimated date of broadcast. Amortization of program rights is included in cost of revenue.

Capitalised production costs Capitalised production costs comprise capitalised internal and external production costs in respect of programs specifically produced by or for the Group own licences or under licences from third parties. Capitalised production costs are stated at the lower of cost or recoverable amount on a program by program basis. Capitalised production costs are amortized based upon the ratio of net revenues for

The accompanying notes are an integral part of these consolidated financial statements.

F-148 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) the period to total estimated revenues, and the amortization pattern is determined individually for each program. The majority of programs are amortized as set out below:

Percentage of amortization per run

Programs with second runs in prime time 60% on first showing, 40% on second showing, or 75% on first showing, 25% on second showing Programs with second runs outside prime time 90% on first showing, 10% on second showing Programs expected to be broadcast once 100% on first showing Fiction series 50% on first showing, 30% on second showing, 20% on third and next showings in total or 66% on first showing, 20% on second showing, 14% on third and next showings in total

Capitalised production costs are allocated between current and non-current assets based on estimated date of broadcast. Amortization of capitalised production costs is included in cost of revenue.

Co-production

Programs co-produced by the Group for cinematic release are stated at the lower of cost or estimated recoverable amount. Program costs are amortized using the individual-film-forecast- computation method, which amortizes film costs in the same ratio that current gross revenues bears to anticipated total gross revenues.

News archive

News archives were recognized on business combination and are amortised based on their average usage in minutes per year.

2.13. Impairment of non — financial assets

Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Goodwill and brand are allocated to groups of cash-generating units as identified by the Group.

Non — financial assets other than goodwill or brand that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

The accompanying notes are an integral part of these consolidated financial statements.

F-149 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

2.14. Financial assets The Group classifies its financial assets into the following categories: financial assets at fair value through profit or loss, loans and receivables, available-for-sale financial assets and held-to-maturity financial assets. The classification depends on the purpose for which the financial assets are acquired. Management of the Group determines the classification of its financial assets at initial recognition and re-evaluates the designation at every reporting date.

(ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Receivables are classified as trade receivables in the balance sheet (see note 2.16).

The accompanying notes are an integral part of these consolidated financial statements.

F-150 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortized cost using the effective interest method. Realised and unrealized gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category, including interest and dividend income, are included in the income statement in the period in which they arise. Unrealized gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognised in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from investment securities.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the Group’s specific circumstances.

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss — measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss — is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. Impairment testing of trade receivables is described in note 2.16.

2.15. Derivative financial instruments and hedging activities

Derivative financial instruments are carried in the balance sheet at fair value. The method of recognizing the resulting gain or loss is dependent on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either (1) a hedge of the fair value of a recognized asset or liability (fair value hedge), or (2) a hedge of a highly probable forecast transaction (cash flow hedge), or (3) a hedge of a net investment in a foreign operation, on the date a derivative contract is entered into.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges, are recorded in the income statement, along with any changes in the fair value of the hedged asset or liability that is attributable to the hedged risk. The Group applies fair value hedge accounting for hedging foreign exchange risk on borrowings. The gain or loss relating to the effective and ineffective portion of derivatives is recognized in the income statement within finance expense.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in equity. The gain or loss relating to the ineffective portion is recognized immediately in the income statement within finance expense. Where the forecast transaction results in the recognition of a non-financial asset or of a liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability. Otherwise, amounts deferred in equity are transferred to the income

The accompanying notes are an integral part of these consolidated financial statements.

F-151 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) statement and classified as revenue or expense in the same periods during which the hedged forecast transaction affects the income statement (for example, when the forecast sale takes place).

The Group separates embedded derivatives from the host contracts and accounts for these as derivatives under IAS 39 (revised) if the economic characteristics and risks of the embedded derivative and host contract are not closely related and a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative.

2.16. Trade receivables

The accompanying notes are an integral part of these consolidated financial statements.

F-152 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

2.17. Cash and cash equivalents Cash and cash equivalents comprise cash in hand, call deposits with banks, and investments with maturity of less than three months from the date of acquisition. Bank overdrafts are shown within borrowings in current liabilities on balance sheet.

2.18. Restricted cash Restricted cash primarily represents amounts held by financial institutions as collateral on guarantees given by these financial institutions on behalf of the Group, or cash that is kept on the Group’s bank accounts, which for contractual reasons may only be spent by the Group for specific purposes. Restricted cash is allocated between current and non-current assets based on contractual terms of releasing the collateral and is classified in the cash flow statement depending upon the purpose for which it had been restricted.

2.19. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares that otherwise would have been avoided are shown in equity as a deduction (net of any related income tax benefit) from the proceeds. Equity transaction costs include legal and financial services and printing costs. Shares issued on the exercise of share options granted to the participants of TVN incentive schemes are recognized in share capital at the date when cash consideration is received by the Group.

2.20. Share premium Share premium represents the fair value of amounts paid to the Company by shareholders over and above the nominal value of shares issued to them. Share premium includes the difference between the fair value of share options exercised established at the grant date, recognized through their vesting period in other reserves, and the nominal value of shares issued.

2.21. Treasury shares Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid is deducted from shareholders equity until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in shareholders equity.

2.22. 8% obligatory reserve In accordance with the Polish Commercial Companies Code, a joint-stock company is required to transfer at least 8% of its annual net profit to a non distributable reserve until this reserve reaches one third of its share capital. The 8% obligatory reserve is not available for distribution to shareholders but may be proportionally reduced to the extent that share capital is reduced. The 8% obligatory reserve can be used to cover net losses incurred.

The accompanying notes are an integral part of these consolidated financial statements.

F-153 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

2.23. Borrowings

The Group recognizes its borrowings initially at fair value net of transaction costs incurred. In subsequent periods, borrowings are stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of liability for at least 12 months after the balance sheet date.

2.24. Deferred income tax Deferred income tax is provided in full using the liability method for all temporary differences arising between the tax base of assets and liabilities and their carrying values for financial reporting purposes. Deferred income tax is determined using tax rates (and laws) that have been enacted by the balance sheet date and are expected to apply when related income tax asset is realized or liability settled. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, joint ventures and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

2.25. Investment tax credit The Group recognizes tax credit on investments undertaken in the special economic zone when expenditure is made and if it is probable that the investment will be used in the future.

2.26. Employee benefits Retirement benefit costs

The Group contributes to state managed defined contribution plans. Contributions to defined contribution pension plans are charged to the income statement in the period to which they relate.

Share-based plans The Group’s management board and certain key employees and co-workers are granted share options based on the rules of an incentive scheme introduced by the Group. The options are subject to service vesting conditions, and their fair value is recognized as an employee benefits expense with a corresponding increase in other reserves in equity over the vesting period. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

The accompanying notes are an integral part of these consolidated financial statements.

F-154 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Bonus plan

The Group recognizes a liability and an expense for bonuses. The Group recognizes a provision where contractually obliged or where there is past practice that has created a constructive obligation.

2.27. Provisions

2.28. Revenue recognition

(i) Sales of services

(ii) Sales of goods

The Group operates a teleshopping business selling goods to individual customers. Sales of goods are recognized when both the goods are received by the customer and payment received by the Group. It is the Group’s policy to sell the goods to the individual customers with a right to return within 10 days. Accumulated experience is used to estimate and provide for such returns at the time of sale.

2.29. Government grants

Government grants related to income are recognised in the income statement so as to match them with the expenditure towards which they are intended to contribute in the period they become receivable. Government grants are deducted in reporting the related expense if the expense might not have been incurred if the grant had not been available.

The accompanying notes are an integral part of these consolidated financial statements.

F-155 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

2.30. Barter transactions

2.31. Advertising costs

The Group expenses advertising costs at the time of the first broadcast or publication.

2.32. Leases

2.33. Dividend distribution

2.34. Comparative financial information

Where necessary, comparative figures or figures presented in previously issued financial statements have been adjusted to conform to changes in presentation in the current year. No amendments have resulted in changes to previously presented net results or shareholders’ equity.

2.35. New Accounting Standards and IFRIC pronouncements

Certain new accounting standards and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations have been published by IASB since the publication of the annual consolidated financial statements that are mandatory for accounting periods beginning on or after January 1, 2008. The Group’s assessment of the impact of these new standards and interpretations is set out below.

The accompanying notes are an integral part of these consolidated financial statements.

F-156 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

(i) Amendments to IAS 23 — Borrowing Costs

The amendment should be applied for annual periods beginning on or after January 1, 2009, It requires capitalization of borrowing costs attributable to qualifying assets. Qualifying assets are assets that take substantial time to get ready for their intended use or sale. It applies only to assets measured at cost. Early adoption is allowed and the Group will adopt the amendment when it draws external financing for new investments.

(ii) IFRIC 13 — Customer Loyalty Programmes

IFRIC 13 is applicable to annual periods beginning on or after January 1, 2008, earlier application is permitted. The interpretation addresses revenue accounting by entities that grant loyalty award credits to their customers for buying goods or services. The Group’s accounting policy is aligned with the Interpretation and therefore it will not affect the Group’s financial statements. The Group allocates some of the consideration receivable from sales to the credits awarded and defers the recognition of revenue.

(iii) IFRIC 14, The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

IFRIC 14 was issued on July 5, 2007 to clarify the issue when the refunds or reductions in future contributions should be regarded as available, particularly when a minimum funding requirement exists. The interpretation is effective for annual periods beginning on or after January 1, 2008 with early application permitted. The interpretation will not affect the Group’s financial statements.

(iv) Amendments to IAS 1 — Presentation of financial statements

An amendment to IAS 1 was issued on September 6, 2007 and is effective for annual periods beginning on or after January 1, 2009 with early application permitted. Changes require information in financial statements to be aggregated on the basis of shared characteristics and to introduce a statement of comprehensive income.

(v) Revision to IFRS 3 Business Combinations and amendment to IAS 27 Consolidated and Separate Financial Statements

A revision to IFRS 3 and amendment to IAS 27 were issued on January 10, 2008 and are effective for annual periods beginning on or after January 1, 2009 with early application permitted. Changes incorporate the revised guidance on acquisitions and business combinations. The changes will not affect these financial statements. The Group will follow amendments when applicable for future transactions.

(vi) Amendment to IFRS 2, Share-based Payments

The amendment was published on January 17, 2008 and is effective for annual periods beginning on or after January 1, 2009. It clarifies that vesting conditions are service conditions and performance conditions only and that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The Group will follow the amendment which will not affect the Group’s financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

F-157 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Additionally, the following standards and IFRIC Interpretations are applicable in future and were discussed in the Group’s annual financial statements for the year ended December 31, 2006.: • IFRS 8 — Operating Segments — applicable on or after January 1, 2009 • IFRIC 12 — Service Concession Arrangements — applicable on or after January 1, 2008 At the date of preparation of these financial statements the following standards and IFRIC interpretations were not adopted by the EU: • IFRIC 12 — Service Concession Arrangements • IFRIC 13 — Customer Loyalty Programmes • IFRIC 14 — The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction • Amendments to IAS 23 — Borrowing Costs • Amendments to IAS 1 — Presentation of financial statements • Revision to IFRS 3 Business Combinations and amendment to IAS 27 Consolidated and Separate Financial Statements • Amendment to IFRS 2, Share-based Payments

3. Financial risk management 3.1 Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group’s overall risk management process focuses on the unpredictability of financial markets and aims to minimize potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures when hedging instruments are assessed to be cost effective. Financial risk management is carried out by the Group under policies approved by the Management Board and Supervisory Board. The TVN Treasury Policy lays down the rules to manage financial risk and liquidity, through determination of the financial risk factors to which the Group is exposed to and their sources. Details of the duties, activities and methodologies used to identify, measure, monitor and report risks as well as forecast cash flows, finance maturity gaps and invest free cash resources are contained in approved supplementary written instructions. The following organizational units within the Group’s financial department participate in the risk management process: risk committee, liquidity management team, risk management team, financial planning and analyzing team and accounting and reporting team. The risk committee is composed of the vice-president of the Management Board and heads of the teams within the Group’s financial department. The risk committee meets monthly and based on an analysis of financial risks recommends financial risk management strategy, which is approved by the Management Board. The Supervisory Board approves risk exposure limits and is consulted prior to the execution of hedging transactions. Financial planning and analyzing team measure and identify financial risk exposure based on information reported by operating units generating exposure. The liquidity management team performs analysis of the Group’s risk factors, forecasts

The accompanying notes are an integral part of these consolidated financial statements.

F-158 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) the Group’s cash flows and market and macroeconomic conditions and proposes on cost-effective hedging strategies. The accounting and reporting team monitors accounting implications of hedging strategies and verifies settlements of the transactions.

(i) Market risk

Market risk related to our bonds

The price of the Senior Notes depends on the Company’s creditworthiness and on the relative strength of the bond market as a whole. The Group recognizes as an asset the value of early redemption options embedded in the Senior Notes (see note 20) and this valuation largely depends on the market price of the Senior Notes. The Group is therefore exposed to decreases in the market price of the Senior Notes.

The Senior Notes are listed on the Luxembourg Stock Exchange and the fair value of embedded options recognized by the Group at the balance sheet date reflects the Senior Notes market price on the last value date available from Reuters prior to the balance sheet date as provided by Reuters. The impact of the Senior Notes market price change on the Group’s assets and income statement is discussed in note 4(ix).

Foreign currency risk

The Group’s revenue is primarily denominated in Polish złoty. Foreign exchange risk arises mainly from the Group’s liabilities in respect of the Senior Notes and related embedded prepayment options both denominated in EUR and liabilities to suppliers of foreign programming rights, satellite costs and rental costs denominated in USD or EUR. Other costs are predominantly denominated in PLN.

The estimated net profit (post-tax) impact of a reasonably possible EUR appreciation of 5% against the złoty, with all other variables held constant and without taking into account derivative financial instruments entered into for hedging purposes, on the major EUR denominated balance sheet items is:

December 31, December 31, Year ended 2007 2006 Liabilities: 9.5% Senior Notes due 2013 including accrued interest . . . (34,227) (36,608) Assets: embedded prepayment options ...... 828 5,187

* appreciation of denomination currency results in increase of liabilities and assets and an additional net charge to income statement

The accompanying notes are an integral part of these consolidated financial statements.

F-159 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

The estimated net profit (post-tax) impact of a reasonably possible USD appreciation of 5% against the złoty, with all other variables held constant, on the major USD denominated balance sheet items is: December 31, December 31, Year ended 2007 2006 Trade payables ...... (2,450) (4,077)

* appreciation of denomination currency results in increase of liabilities and additional charge to income statement

Interest rate risk The Group’s exposure to interest rate risk arises on interest bearing assets and liabilities. As the main interest bearing item (the Senior Notes) is at a fixed interest rate, the Group is exposed to fair value interest rate risk. Management does not consider it cost effective to use financial instruments to hedge or otherwise seek to reduce interest rate risk.

(ii) Credit risk Financial assets, which potentially expose the Group to concentration of credit risk consist principally of trade receivables and related party receivables. The Group places its cash and cash equivalents and restricted cash with financial institutions that the Group believes are credit worthy. The Group does not consider the concentration of credit risk as significant. The Group performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral from its customers. Clients with poor or no history of payments with the Group, with low value committed spending or assessed by the Group as not credit worthy are required to prepay before the service is rendered. Credit is granted to customers with a good history of payments and significant spending who are assessed credit worthy based on internal or external ratings. The Group defines credit exposure as total outstanding receivables (including overdue balances) and monitors the exposure regularly on an individual basis by paying counterparty. The majority of the Group’s sales are made through advertising agencies (73% of the total trade receivables as of December 31, 2007) who manage advertising campaigns for advertisers and pay the Group once payment has been received from the customer. The Group’s top ten advertisers account for 15% and the single largest advertiser accounted for 2% of sales for the year ended December 31, 2007. Generally advertising agencies in Poland are limited liability companies with little recoverable net assets in case of insolvency. The major players amongst the advertising agencies in Poland with whom the Group co-operates are subsidiaries and branches of large international companies of good reputation. To the extent it is required and cost-efficient the Group mitigates credit exposure by use of a trade receivable insurance facility from a leading insurance company.

The accompanying notes are an integral part of these consolidated financial statements.

F-160 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

The table below analyses the Group’s trade receivables by category of customers: December 31, December 31, Trade receivables (net) 2007 2006 Receivables from advertising agencies ...... 73% 64% Receivables from individual customers...... 24% 33% Receivables from related parties ...... 3% 3% 100% 100%

Credit concentration of the five largest counterparties measured as a percentage of the Group’s total trade receivables: Trade receivables (net) December 31, 2007 December 31, 2006 Agency A...... 11% 5% Agency B ...... 10% 9% Agency C ...... 7% 10% Agency D...... 7% 8% Agency E ...... 6% 7% Sub-total ...... 41% 39% Total other counterparties ...... 59% 61% 100% 100%

Certain advertising agencies operating in Poland as separate entities are part of international financial groups controlled by the same ultimate shareholders. Credit concentration of the Group aggregated by international agency groups, measured as a percentage of the Group’s total trade receivables is presented below: Trade receivables from advertising agencies (net) December 31, 2007 December 31, 2006 Agency Group F ...... 20% 20% Agency Group G ...... 16% 17% Agency Group H ...... 13% 13% Agency Group I ...... 12% 9% Agency Group J...... 2% 2% Total other counterparties ...... 37% 39% 100% 100%

Management does not expect any losses with respect to amounts included in the trade receivables at the balance sheet date from non-performance by the respective Group’s customers as at December 31, 2007.

(iii) Liquidity risk

The Group maintains sufficient cash to meet its obligations as they become due and has available to it additional funding through a committed credit facility (see note 20). Management monitors expected cash flows. The Group expects that its principal future cash needs will be capital expenditures relating to television and broadcasting facilities and equipment, acquisitions, the

The accompanying notes are an integral part of these consolidated financial statements.

F-161 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) debt service on the Senior Notes, dividends and the launch of new thematic channels. The Group believes that its cash balances, cash generated from operations and existing overdraft facility will be sufficient to fund these needs. As at December 31, 2007 the Group had cash and cash equivalents and committed unutilized credit facilities totaling 282,652 at its disposal (283,298 at December 31, 2006).

The table below analyses the Group’s financial liabilities that will be settled into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The balances in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances, as the impact of discounting is not significant. Within Between Above At December 31, 2007 1 year 1-2 years 2 years 9.5% Senior Notes due 2013 ...... 79,968 79,968 1,081,674 Trade payables ...... 111,107 8,724 - Other liabilities and accruals ...... 191,406 - -

Within Between Above At December 31, 2006 1 year 1-2 years 2 years 9.5% Senior Notes due 2013 ...... 85,532 85,532 1,242,458 Trade payables ...... 143,126 9,007 - Other liabilities and accruals ...... 115,526 - -

The Group can early repay the Senior Notes as described in the note 20. The Group has announced that it intends to exercise its early repayment option in 2008. Since the details of refinancing are not known, the tables above assume the continuance of existing conditions of external financing.

3.2 Capital risk management

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares, draw borrowings or sell assets to reduce debt.

The Group monitors capital on the basis of the net debt to EBITDA ratio. Net debt represents the nominal value of borrowings (see note 20) payable at the balance sheet date including accrued interest less cash and cash equivalents. EBITDA is defined as net profit/(loss), before depreciation and amortization (other than programming rights), impairment charges on property plant and equipment and intangible assets, finance expense, investment income and income tax charge. December 31, 2007 December 31, 2006 Net debt ...... 734,730 799,285 EBITDA ...... 554,102 399,956 Debt/EBITDA ratio...... 1.3 2.0

The Group’s strategy is to maintain debt/EBITDA ratio at a level not exceeding 3.5.

The accompanying notes are an integral part of these consolidated financial statements.

F-162 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

3.3 Fair value estimation

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. The fair value of available for sale financial assets is determined using industry multiples and the most recent available financial information about the investment. The fair value of forward foreign exchange contracts and option collars is determined based on the valuations performed by the Group’s bank.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to the short-term nature of trade receivables and payables.

Critical accounting estimates and assumptions

(i) Estimated useful life of Onet.pl brand

In accordance with IAS 38.90 the Group reviewed factors that need to be considered when assessing the useful life of the Onet.pl brand such as:

• the expected usage of the brand and whether the brand could be managed efficiently,

• technical, technological, commercial or other types of obsolescence,

• the stability of the industry in which the brand operates and changes in the market demand for media services,

• expected actions by competitors or potential competitions in the media via internet industry,

• the level of maintenance expenditure required to obtain the expected future economic benefits from the brand,

• whether the useful life of the brand is dependent on the useful life of other assets.

Each reporting period the Group reviews whether events and circumstances continue to support an indefinite useful life assessment of the Onet.pl brand. If the reviews result in a change in the useful

The accompanying notes are an integral part of these consolidated financial statements.

F-163 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) life assessment from indefinite to finite, this change is accounted for as a change in an accounting estimate.

(ii) Fair valuation of Onet.pl brand as of July 31, 2006 The Group valued the Onet.pl brand at the date of acquisition of Grupa Onet.pl SA and the carrying amount of the brand as at December 31, 2007 was 643,428. In the absence of applicable market benchmarks and due to the unique character of the brand, the Group fair valued the Onet.pl brand using the ‘relief from royalty’ income method. The ‘relief from royalty’ method assumes that the value of the brand is reflected in the present value of hypothetical future royalty payments, which the owner of the brand would have to incur, should the brand be licensed from another entity. This valuation requires the use of estimates related to sales projections for the activity run under the brand, estimation of representative royalty rate, estimation of the discount rate taking into account, the brand related risk factor and estimation of the useful life of the brand. The royalty rate used in the valuation was assumed at 5.25% and represented the median of selected comparable brand license agreements. The revenue projections were based on management’s business plan which covered the period 2006-2015. The main assumptions included in the revenue projections were: compound annual growth rate of the total advertising market in Poland from 2005 to 2015 of 8.3%, the share of the on-line advertising market in the total advertising market in Poland increasing from 3% in 2005 to 20% in 2015, Onet.pl’s share in the on-line advertising market of 37.8% in 2006, declining to 30% in 2015. After the projection period the growth rate of revenues was assumed to decline from 14% in 2015 to 4% in 2020. The Group assumes the useful life of the Onet.pl brand to be indefinite and the fair valuation of the brand therefore assumes indefinite growth of revenues at a level of 4%. The discount rates used in the valuation varied from 7.6% in 2006 to 9.2% in 2009 and further years. Due to the indefinite useful life of the brand, its fair value is sensitive to changes in the indefinite growth parameter. Indefinite growth at 4% gives a fair value of 643 million. Indefinite growth at 2% would give a fair value of 532 million and indefinite growth at 6%, a value of 897 million.

(iii) Fair valuation of customer related intangibles as of July 31, 2006 The Group estimated the fair value of customer related intangibles identified at the acquisition of Onet based on the average length of contractual relationships with 17 key advertising customers considered by the Group as regular and the net operating profit after tax. In calculation of the net operating profit 50% operating margin on the core customers was assumed and further decreased by the notional royalty rate of 5.25% as a charge for usage of the brand. Based on the indicated track record of the commercial relationship with the customers the Group estimated average duration of the relationship to be four years. Fair value of customer related intangibles is the sum of net operating profit after tax in the period 2006 -2009 discounted at 10.9%-12.5%.

(iv) Estimated impairment of goodwill and brand allocated to new media The Group classifies the Onet.pl brand acquired as an intangible asset with indefinite useful life and allocates brand and goodwill to the new media cash-generating unit. The Group tests annually whether the new media cash-generating unit, including goodwill and brand, have suffered any impairment, in accordance with the accounting policy stated in Note 2.13. The recoverable amount

The accompanying notes are an integral part of these consolidated financial statements.

F-164 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) of the cash-generating unit is determined based on fair value less cost to sell. The Group tests the total carrying amount of the cash-generating unit and in case of impairment write-offs are made with respect to goodwill first. If goodwill is fully impaired the Group continues impairment testing of brand with potential write-offs against the carrying value of brand and other assets allocated to the new media cash-generating unit.

In the annual impairment test performed by the Group as at December 31, 2007 the calculation of fair value less cost to sell, in the absence of an active market for similar cash-generating units, was based on discounted free cash flows. Cost to sell was assumed at 1% of the present value of the cash- generating unit. The calculation of fair value requires the use of estimates related to cash flow projections based on financial business plans approved by management covering the period until 2012. Comparing to the market assumptions used in impairment test as at December 31, 2006 the Group revised its assumptions regarding development of the advertising market in Poland and the structure of on-line advertising. The key assumptions included in the business plans were the annual growth rates of the total advertising market in Poland, which decrease from 10.7% in 2008 to 9.0% in 2012, an increase in on-line advertising market as a percentage of the total advertising market in Poland from 11.1% in 2008 to 28.3% in 2012 and the discount rate of 12.9% in 2008 and further years.

In the annual impairment test performed by the Group as at December 31, 2007 cash flows beyond the period covered by the financial business plan were extrapolated using an estimated growth rate of 20% in 2013 declining to 10% in 2018-2021 and to 4% in further years. The Group believes that the key assumptions made in testing for impairment of the new media cash-generating unit as at December 31, 2007 are reasonable and prudent. However, if any of the key assumptions used for testing impairment were to change unfavorably, the Group might have recognized an impairment. If the annual growth rate of the total advertising market in Poland was reduced by 1 p.p. in the years 2008 - 2012 the Group would recognize an impairment against the cash-generating unit of 70 million. If the increase in on-line advertising market as a percentage of the total advertising market in Poland was reduced by 1 p.p. in the years 2008 — 2012 there would an impairment against the cash-generating unit of 21 million. If the revised estimated discount rate applied to the discounted cash flows was increased by 1 p.p., compared with management’s estimates, the Group would recognize an impairment against the cash-generating unit of 58 million. As at December 31, 2007 fair value less cost to sell of the new media cash-generating unit exceeded its carrying amount by 160 million.

(v) Estimated impairment of goodwill allocated to thematic television channels The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.13. The recoverable amounts of cash-generating units are determined based on value-in-use calculations. These calculations require the use of estimates related to cash flow projections based on financial business plans approved by management covering a five year period. In the annual impairment test performed by the Group as at December 31, 2007 cash flows beyond the five year period were extrapolated as regards TVN 24 using an estimated growth rate of 3%. Other key assumptions used for the TVN 24 value-in-use calculations were the discount rate of 10% and assumptions regarding development of the business and advertising and cable market growth rate. If the revised estimated growth rate beyond the five year period was 0%, there would be still no impairment against goodwill. If the revised estimated

The accompanying notes are an integral part of these consolidated financial statements.

F-165 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) discount rate applied to the discounted cash flows was doubled compared with management’s estimates the Group would still not recognize an impairment against goodwill. During the year the Group monitors cash-generating units against impairment indicators through the review of the actual financial results.

(vi) Estimated useful life of Mango brand In accordance with IAS 38.90 the Group reviewed factors that need to be considered when assessing the useful life of the Mango brand such as: • the expected usage of the brand and whether the brand could be managed efficiently, • technical, technological, commercial or other types of obsolescence, • the stability of the industry in which the brand operates and changes in the market demand for teleshopping services, • expected actions by competitors or potential competitions in the media via teleshopping industry, • the level of maintenance expenditure required to obtain the expected future economic benefits from the brand, • whether the useful life of the brand is dependent on the useful life of other assets. Having considered the above factors, the Group concluded that there is no foreseeable limit to the period over which the Mango brand is expected to generate net cash flows for the Group, therefore the useful life of the Mango brand was assessed as indefinite. At each reporting period the Group reviews whether events and circumstances continue to support an indefinite useful life assessment of the Mango brand. If the reviews result in a change in the useful life assessment from indefinite to finite, this change is accounted for as a change in an accounting estimate.

(vii) Fair valuation of Mango brand for the purchase price allocation as of May 23, 2007 The Group valued the Mango brand at the date of acquisition of Mango Media at 50,260. In the absence of applicable market benchmarks and due to the unique character of the brand, the Group fair valued the Mango brand using the “relief from royalty’ income method. The “relief from royalty’ method assumes that the value of the brand is reflected in the present value of hypothetical future royalty payments, which the owner of the brand would have to incur, should the brand be licensed from another entity. This valuation requires the use of estimates related to sales projections for the activity run under the brand, estimation of the representative royalty rate, estimation of the discount rate and estimation of the useful life of the brand. The royalty rate used in the valuation was assumed at 3% and represents the median of selected comparable brand license agreements. The revenue projections were based on management’s business plan which covers the period 2007-2012. The main assumptions included in the revenue projections were: annual growth rates of revenues from 113% in 2008 to 27% in 2012. The Group assumes the useful life of the Mango brand to be indefinite and the fair valuation of the brand therefore assumes indefinite growth of revenues

The accompanying notes are an integral part of these consolidated financial statements.

F-166 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued) at a level of 1%. The discount rate used in the valuation was 10%. Due to the indefinite useful life of the brand, its fair value is sensitive to changes in the indefinite growth parameter. Indefinite growth at 1% gives a fair value of 50 million. Indefinite growth at 0.5% would give a fair value of 48 million and indefinite growth at 2%, a value of 55 million.

(viii) Estimated impairment of goodwill and brand allocated to teleshopping unit The Group classifies the Mango Media brand acquired as an intangible asset with indefinite useful life and allocates brand and goodwill to the teleshopping cash-generating unit. The Group tests annually whether the teleshopping cash-generating unit, including goodwill and brand, have suffered any impairment, in accordance with the accounting policy stated in Note 2.13. The recoverable amount of the cash-generating unit is determined based on value-in-use calculations. The Group tests the total carrying amount of the cash-generating unit and in case of impairment; write-offs are made with respect to goodwill first. If goodwill is fully impaired the Group continues impairment testing of the brand with potential write-offs against the carrying value of brand and other assets allocated to the teleshopping cash-generating unit. These calculations require the use of estimates related to cash flow projections based on financial business plans approved by management covering a five year period. In the annual impairment test performed by the Group as at December 31, 2007 cash flows beyond the five year period were extrapolated as regards Mango Media using an estimated growth rate of 1%. Other key assumptions used for the Mango Media value-in-use calculations were the discount rate of 10%. If the revised estimated growth rate beyond the five year period was 0%, there would still be no impairment against goodwill. If the revised estimated discount rate applied to the discounted cash flows was doubled compared with management’s estimates the Group would still not recognize impairment against goodwill million. During the year the Group monitors cash-generating units against impairment indicators through the review of the actual financial results.

(ix) Fair valuation of the embedded prepayment options The Group calculates at each reporting date the fair value of the prepayment options embedded in the Senior Notes using the Brace-Ga˛ tarek-Musiela model. Significant inputs into the valuation model are the Senior Notes market price, benchmark bond yields and interest rate cap volatilities. The inputs are based on information provided by Reuters on the valuation date. The Senior Notes market price is quoted by Reuters based on the last value date. In the fair valuation as of December 31, 2007 the Group input into the model a market price of 104.50, based on the last available value on December 19, 2007. Should the Senior Notes price have decreased to 100, the price as at January 29, 2008, from 104,50 the price as at December 31, 2007, the Group estimates that the balance sheet value of the embedded prepayment option as at December 31, 2007 would have decreased by 14,947 with an additional net charge to the consolidated income statement of 12,107.

5. Segment reporting The Group’s principal activities are television broadcasting and production, and new media. A business segment is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments.

The accompanying notes are an integral part of these consolidated financial statements.

F-167 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

The television broadcasting and production segment is mainly involved in the broadcasting of news, information and entertainment shows, series and movies and comprises television channels operated in Poland: TVN, TVN7, TVN24, TVN Meteo, TVN Turbo, ITVN, TVN Style, TVN Gra, TVN Med, TVN Lingua, TVN CNBC Biznes, Discovery Historia and Telezakupy Mango 24. The new media segment primarily comprises mainly Onet.pl, Poland’s leading portal.

Television broadcasting & Production New Media Unallocated Total

Year ended Year ended Year ended Year ended Year ended Year ended Year ended Year ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2007 2006 2007 2006 2007 2006 2007 2006 Revenue from external customers ...... 1,399,351 1,107,469 155,378 57,558 - - 1,554,729 1,165,027 Inter-segment revenue ...... 8,110 3,268 7,108 2,243 (15,218) (5,511) - - Total revenue ...... 1,407,461 1,110,737 162,486 59,801 (15,218) (5,511) 1,554,729 1,165,027 Segment result ...... 492,410 372,757 19,214 10,433 (29,612) (34,675) 482,012 348,515 Investment income, net (Note 8) . . 19,344 54,059 Financial expenses, net (Note 8) . . (204,124) (68,277) Profit before income tax ...... 297,232 334,297 Income tax charge ...... (53,924) (75,472) Profit for the year ...... 243,308 258,825 Impairment of fixed assets . . . . . 306 - (23) 514 - - 283 514

Capital expenditures ...... 85,451 87,551 40,602 15,406 - - 126,053 102,957 Depreciation of property, plant and equipment ...... 43,298 37,304 8,914 2,603 - - 52,212 39,907 Amortization of intangible assets...... 12,523 8,681 7,072 2,339 - - 19,595 11,020 Significant non-cash expenses Share option plan ...... 21,384 35,381 16,463 10,573 6,985 10,976 44,832 56,930 December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2007 2006 2007 2006 2007 2006 2007 2006 Segment assets including: ..... 1,084,326 891,546 1,621,396 1,559,514 39,203 127,598 2,744,925 2,578,658 Investment in associates...... - - 83 83 - - 83 83 Segment liabilities ...... 282,305 248,496 38,527 23,358 994,332 1,069,639 1,315,164 1,341,493

6. Revenue

Year ended Year ended December 31, December 31, 2007 2006 Revenue from advertising spot sales ...... 1,209,599 941,585 Revenue for sales of goods ...... 15,060 - Other revenue ...... 330,070 223,442

1,554,729 1,165,027

Other revenue relates mainly to amounts earned under agreements with advertisers for sponsoring certain programs, audiotele revenues, sales of licenses and subscription revenue from cable operators and internet transaction based fees.

Included in revenues are revenues from related parties in the amount of 43,431 (year ended December 31, 2006: 13,712) (see note 29 (i)).

The accompanying notes are an integral part of these consolidated financial statements.

F-168 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

7. Operating expenses

Year ended Year ended December 31, December 31, 2007 2006 Amortization of locally produced content ...... 421,634 308,490 Amortization of acquired programming rights and co- production ...... 123,712 112,312 Staff expenses...... 127,944 74,260 Share options granted to board members and employees ...... 44,832 56,930 Depreciation, amortization and impairment charges ...... 72,090 51,441 Royalties ...... 58,887 47,517 Marketing and research ...... 53,573 36,914 Broadcasting expenses ...... 49,798 43,805 Rental ...... 20,490 23,780 Impaired accounts receivable ...... 4,979 177 Other ...... 94,778 60,886

1,072,717 816,512

Average number of persons employed ...... 1,622 960

Included in the above operating expenses are operating lease expenses for the year ended December 31, 2007 of 81,622 (year ended December 31, 2006: 72,833). Amortization of locally produced content for the year ended December 31, 2007 has been reduced by grants received in the total amount of 211 (year ended December 31, 2006: 3,329). Included in the above operating expenses is an aggregate amount of research and development expenditure of 1,298 recognized as an expense in the year ended December 31, 2007 (the year ended December 31, 2006: 307).

The accompanying notes are an integral part of these consolidated financial statements.

F-169 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

8. Investment income and finance expense

Year ended Year ended December 31, December 31, Investment income, net 2007 2006 Foreign exchange gains, net ...... 13,973 19,378 Other interest income ...... 5,371 6,424 Interest income on related party bond (see note 29(iii))...... - 34,074 Fair value gain on related party bond recognized in income statement (see note 29(iii)) ...... - 491 Impairment of available-for-sale financial assets (see note 15). . . . . - (6,308)

19,344 54,059

Finance expense, net Interest expense on 9.5% Senior Notes due 2013 (see note 20) . . . . (94,763) (92,423) Guarantee fees to related party (see note 29(vii))...... (2,961) (6,999) Fair value (losses)/gains on financial instruments: - embedded option (see note 17,20) ...... (107,617) 32,660 - foreign exchange option collars — time value of instrument (see note 17)...... (13,725) (5,302) - foreign exchange option collars — early settlement of instrument (see note 17) ...... (40,725) - - foreign exchange forward — cash flow hedges, transfer from equity ...... - 86 Bank charges ...... (2,895) (2,668) Foreign exchange gains on Senior Notes...... 58,562 6,369

(204,124) (68,277)

9. Basic and diluted earnings per share (not in thousands) (i) Earnings per share for profit attributable to the equity holders of TVN S.A. Basic Basic earnings per share are calculated by dividing the net profit attributable to equity holders of TVN S.A. by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Company. The weighted average number of ordinary shares for both periods presented was adjusted for a share split which took place in 2006.

The accompanying notes are an integral part of these consolidated financial statements.

F-170 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Diluted Diluted earnings per share is calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has only one category of potential ordinary shares: share options. For the share options a calculation was done to determine the number of shares that could have been acquired at fair value (determined as average market price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above was compared with the number of shares that would have been issued assuming the exercise of the share options.

Year ended Year ended December 31, December 31, 2007 2006 Profit attributable to equity holders of TVN S.A. (in thousands) . . . 243,308 258,825 Weighted average number of ordinary shares in issue ...... 345,979,725 329,830,715 Adjustment for share options ...... 6,514,819 5,105,916 Weighted average number of potential ordinary shares for diluted earnings per share ...... 352,494,544 334,936,631 Diluted earnings per share ...... 0.69 0.77

(ii) Earnings per share for adjusted profit attributable to the equity holders of TVN S.A. The Group presents adjusted profit to reflect the impact of non-cash fair value losses/gains arising on prepayment options embedded in its Senior Notes. The accounting for prepayment options is technical, judgmental and driven by accounting interpretations. The Group believes that presentation of net profit adjusted for this item enables a reader to better understand the Group’s operating and financial performance.

The accompanying notes are an integral part of these consolidated financial statements.

F-171 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Basic

Year ended Year ended December 31, December 31, 2007 2006 Profit attributable to equity holders of TVN S.A. (in thousands) . . . 243,308 258,825 Impact on profit, net of tax of fair value loss/(gain) on embedded option ...... 87,170 (26,455) Adjusted profit attributable to equity holders of TVN S.A. (in thousands)...... 330,478 232,370 Weighted average number of ordinary shares in issue ...... 345,979,725 329,830,715 Adjusted basic earnings per share ...... 0.96 0.70

Diluted

The accompanying notes are an integral part of these consolidated financial statements.

F-172 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

10. Property, plant and equipment

December 31, December 31, Property, plant and equipment 2007 2006 Freehold land ...... 24,796 12,654 Buildings ...... 172 181 Leasehold improvements ...... 27,184 27,242 Television ,broadcasting and other technical equipment ...... 159,986 127,935 Vehicles...... 24,009 17,849 Furniture and fixtures ...... 8,311 8,361 Assets under construction ...... 5,710 1,766

250,168 195,988

The Pekao SA loan facility (see note 20) is secured over television and broadcasting equipment vehicles and furniture and fixtures with a net book value of 157,812 (as at December 31, 2006: 76,819).

Changes in property, plant and equipment

Television, broadcasting and other Leasehold technical Furniture Assets under Freehold land Buildings improvements equipment Vehicles and fixtures construction Total Gross value January 1, 2006 ...... 12,696 243 56,822 218,769 21,409 13,440 - 323,379 Acquisition of subsidiary . . . . - - 2,249 11,615 957 39 1,108 15,968 Additions ...... 2,544 13 7,260 58,210 10,353 3,710 658 82,748 Disposals ...... (701) (62) (2,006) (5,294) (1,385) (743) - (10,191)

December 31, 2006 ...... 14,539 194 64,325 283,300 31,334 16,446 1,766 411,904

Accumulated depreciation and impairment January 1, 2006 ...... 2,000 4 32,805 132,991 9,903 5,930 - 183,633 Charge for the period ...... - 9 5,300 27,318 4,864 2,416 - 39,907 Disposals ...... (115) - (1,500) (4,980) (1,282) (261) - (8,138) Impairment ...... - - 478 36 - - - 514

December 31, 2006 ...... 1,885 13 37,083 155,365 13,485 8,085 - 215,916

Net book value at January 1, 2006 ...... 10,696 239 24,017 85,778 11,506 7,510 - 139,746

Net book value at December 31, 2006...... 12,654 181 27,242 127,935 17,849 8,361 1,766 195,988

The accompanying notes are an integral part of these consolidated financial statements.

F-173 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Changes in property, plant and equipment

Television, broadcasting and other Leasehold technical Furniture Assets under Freehold land Buildings improvements equipment Vehicles and fixtures construction Total Gross value January 1, 2007 ...... 14,539 194 64,325 283,300 31,334 16,446 1,766 411,904 Acquisition of subsidiary (see note 27) ...... - - 139 - 81 13 - 233 Additions ...... 12,142 - 6,311 69,646 12,464 2,691 3,973 107,227 Disposals ...... - - (1,091) (1,687) (1,870) (164) (29) (4,841)

December 31, 2007 ...... 26,681 194 69,684 351,259 42,009 18,986 5,710 514,523

Accumulated depreciation and impairment January 1, 2007 ...... 1,885 13 37,083 155,365 13,485 8,085 - 215,916 Charge for the period ...... - 9 6,228 37,235 6,063 2,677 - 52,212 Disposals ...... - - (1,094) (1,327) (1,548) (87) - (4,056) Impairment ...... - - 283 - - - - 283

December 31, 2007 ...... 1,885 22 42,500 191,273 18,000 10,675 - 264,355

Net book value at January 1, 2007 ...... 12,654 181 27,242 127,935 17,849 8,361 1,766 195,988

Net book value at December 31, 2007...... 24,796 172 27,184 159,986 24,009 8,311 5,710 250,168

Depreciation expense of 41,841 has been charged in cost of revenue (year ended December 31, 2006: 31,762), 1,374 in selling expenses (year ended December 31, 2006: 1,030) and 8,997 in general and administration expenses (year ended December 31, 2006: 7,115).

11. Goodwill

January 1, 2006 ...... 144,127 Acquisition of Onet ...... 802,205

December 31, 2006 ...... 946,332 January 1, 2007 ...... 946,332 Acquisition of Mango Media (see note 27) ...... 6,325

December 31, 2007 ...... 952,657

The carrying amount of goodwill is allocated to cash generating units identified by the Group:

Thematic television channels ...... 131,704 Television production unit ...... 12,423 New media ...... 802,205 Teleshopping unit ...... 6,325

952,657

The accompanying notes are an integral part of these consolidated financial statements.

F-174 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

12. Brand

January 1, 2006 ...... - Acquisition of Onet ...... 643,428

December 31, 2006 ...... 643,428

January 1, 2007 ...... 643,428 Acquisition of Mango Media (see note 27) ...... 50,260

December 31, 2007 ...... 693,688

The carrying amount of brands is allocated to the following brands identified by the Group:

Onet.pl ...... 643,428 Mango (see note 27)...... 50,260

693,688

13. Other intangible assets

December 31, 2007 December 31, 2006 Broadcasting licenses ...... 8,653 10,483 Customer related intangibles ...... 9,553 13,251 Internally generated software ...... 5,217 2,979 Software and other...... 27,546 25,679

50,969 52,392

The Pekao SA loan facility (see note 20) is secured over intangible assets with a net book value of 12,957 at December 31, 2007 (December 31, 2006: 10,972).

The accompanying notes are an integral part of these consolidated financial statements.

F-175 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Changes in other intangible assets

Customer Internally Broadcasting related generated Software licenses intangibles software and other Total Gross value January 1, 2006 ...... 11,834 - - 28,143 39,977 Acquisition of subsidiary ...... - 14,792 1,649 3,453 19,894 Additions...... 894 - 1,837 17,478 20,209 Disposals ...... - - - (442) (442)

December 31, 2006 ...... 12,728 14,792 3,486 48,632 79,638

Accumulated amortization and impairment January 1, 2006 ...... 1,502 - - 14,912 16,414 Charge for the period...... 743 1,541 507 8,229 11,020 Disposals ...... - - - (188) (188)

December 31, 2006 ...... 2,245 1,541 507 22,953 27,246

Net book value at January 1, 2006 ...... 10,332 --13,231 23,563

Net book value at December 31, 2006 .... 10,483 13,251 2,979 25,679 52,392

The accompanying notes are an integral part of these consolidated financial statements.

F-176 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Customer Internally Software Broadcasting related generated and licenses intangibles software other Total Gross value January 1, 2007 ...... 12,728 14,792 3,486 48,632 79,638 Acquisition of subsidiary (see note 27) . . . . - - - 20 20 Additions ...... 12 - 3,868 14,946 18,826 Disposals...... - - (333) (802) (1,135)

December 31, 2007 ...... 12,740 14,792 7,021 62,796 97,349

Accumulated amortization and impairment January 1, 2007 ...... 2,245 1,541 507 22,953 27,246 Charge for the period ...... 1,842 3,698 1,630 12,425 19,595 Disposals...... - - (333) (128) (461)

December 31, 2007 ...... 4,087 5,239 1,804 35,250 46,380

Net book value at January 1, 2007 ...... 10,483 13,251 2,979 25,679 52,392

Net book value at December 31, 2007 .... 8,653 9,553 5,217 27,546 50,969

Amortization of 11,543 has been charged in cost of revenue (year ended December 31, 2006: 6,198), 4,852 in selling expenses (year ended December 31, 2006: 2,537) and 3,200 in general and administration expenses (year ended December 31, 2006: 2,285).

14. Programming rights December 31, 2007 December 31, 2006 Acquired programming rights ...... 187,263 199,247 News archive ...... 12,907 13,360 Co-productions ...... 2,273 1,886 Productions ...... 104,513 77,169

306,956 291,662 Less current portion of programming rights ...... (179,523) (158,537)

Non-current portion of programming rights ...... 127,433 133,125

The accompanying notes are an integral part of these consolidated financial statements.

F-177 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Changes in acquired programming rights Year ended Year ended December 31, December 31, 2007 2006 Net book value as at January 1 ...... 199,247 133,912 Additions ...... 107,186 175,061 Amortization ...... (119,170) (109,726)

Net book value as at December 31 ...... 187,263 199,247

15. Available for sale financial assets Year ended Year ended December 31, December 31, 2007 2006 January 1 ...... 4,650 9,198 Impairment loss ...... - (4,548) Consolidation of subsidiary ...... 193 - Paid-in share capital ...... 2,745 -

December 31 ...... 7,588 4,650

The Group does not have any significant influence over the financial and operating policies of Polskie Media S.A. (“Polskie Media”). Following the assessment of the regulatory environment and the financial situation of Polskie Media as disclosed in its audited financial statements for the year ended December 31, 2005 the Group recognized in profit and loss for the year ended December 31, 2006 an impairment loss of 6,308. Of this amount 1,760 was reversed from equity and 4,548 decreased the value of the investment. The Group estimated the fair value of its investment in Polskie Media as at June 30, 2007 based on financial information available from the annual financial statements of Polskie Media for the year ended December 31, 2006 and industry sales multiples. During the year the Group monitors the audience share of Polskie Media for impairment indicators. In the absence of detailed current financial data, the Group assessed that there are no impairment indicators as at December 31, 2007. In August 2007 the Group subscribed for 274,450 (not in thousands) new shares at issue price and par value of PLN 10 each (not in thousands) in Polskie Media for a total amount of 2,745. The Group’s share in Polskie Media is 5.59% of the current voting interest and 6.95% of the share capital.

The accompanying notes are an integral part of these consolidated financial statements.

F-178 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

16. Trade receivables

December 31, 2007 December 31, 2006 Trade receivables ...... 297,865 187,636 Less: provision for impairment of receivables ...... (8,238) (7,765)

Trade receivables — net ...... 289,627 179,871 Receivables from related parties (note 29 (iv)) ...... 9,963 5,398

299,590 185,269

The fair values of trade receivables, because of their short-term nature, are estimated to approximate their carrying values. Concentration of trade receivables is discussed in note 3.1. ii. The carrying amounts of the Group’s trade receivables are denominated in the following currencies:

December 31, 2007 December 31, 2006 PLN ...... 285,539 181,201 EUR ...... 6,343 2,466 USD ...... 7,471 1,573 GBP...... 198 10 AUD...... 39 19

299,590 185,269

Provision for impairment of receivables was created individually for trade receivables that were overdue more than 60 days or in relation to individual customers who are in unexpectedly difficult financial situations. Movements on the provision for impairment of trade receivables are as follows: Year ended Year ended December 31, December 31, 2007 2006 Beginning of the period ...... 7,765 7,899 Provision for receivables impaired, net change ...... 4,979 904 Receivables written off as uncollectible...... (4,506) (1,038)

End of the period ...... 8,238 7,765

The creation and release of provision for impaired receivables have been included in selling expenses in the income statement (note 7).

The accompanying notes are an integral part of these consolidated financial statements.

F-179 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

As of December 31, 2007, trade receivables of 126,555 were past due but not impaired. The balance relates to a number of customers with no recent history of default. The ageing analysis of these trade receivables is as follows:

December 31, 2007 December 31, 2006 Up to 30 days ...... 102,850 47,395 31-60 days ...... 20,412 5,689 Over 60 days ...... 3,293 675

126,555 53,759

The Group defines credit exposure as total outstanding receivables. Maximum exposure to credit risk is the total balance of trade receivables less related party receivables. Maximum exposure to credit risk as of December 31, 2007 was 289,627 (December 31, 2006: 179,871).

17. Derivative financial assets

December 31, 2007 December 31, 2006 Embedded prepayment options (see note 20) ...... 20,447 128,064 Foreign exchange option collars ...... 3,820 -

24,267 128,064

The fair value of the prepayment options as at December 31, 2007 was calculated using the Brace- Ga˛ tarek-Musiela model. The change in fair value between December 31, 2007 and December 31, 2006 was recognized in the income statement (see note 8).

The fair value of the foreign exchange option collars as at December 31, 2007 was based on valuations performed by the Group’s banks. The collars had in total a notional value of EUR 235,000, a maturity date of December 15, 2008, a PLN/EUR corridor between 3.50 and 3.70 and were entered into to limit the impact on the Group’s net results of PLN/EUR exchange rate movements in relation to the Senior Notes balance. As long as the PLN/EUR spot rate is within the corridor the fair value of the option collars consists of their time value only, which reflects the possibility that the collars will create further gains in the future. The intrinsic value of collars exists when the spot rate is outside the corridor. It basically reflects the value of option if exercised today and is measured based on the difference between the spot rate and the respective corridor rate. The intrinsic value of the collars was designated as a fair value hedge. As of December 31, 2007 the collars did not have any intrinsic value. The change in fair value of the collars less the premium paid on the purchase of the collars was recognized in the income statement (see note 8).

During the year ended December 31, 2007 the Company recognized fair value losses on hedging instruments in the amount of PLN 44,195 which reflected the premium paid of 3,470 and cost of restructuring the hedging strategy from a PLN/EUR corridor between 3.80 and 4.00 to the existing one of 40,725, which was offset by fair value gains on the Senior Notes attributable to the hedged risk in the same amount.

The accompanying notes are an integral part of these consolidated financial statements.

F-180 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

18. Other assets

December 31, 2007 December 31, 2006 Prepayments for programming ...... 8,559 1,691 Inventory, less provided for ...... 7,266 1,301 Employee settlements...... 3,326 2,012 Technical support ...... 2,097 1,469 Other...... 14,608 13,471

35,856 19,944

Less: current portion of other assets ...... (31,600) (15,619)

Non-current portion of other assets...... 4,256 4,325

19. Share capital (not in thousands)

The total authorized number of ordinary shares is 413,499,585 with a par value of 0.20 per share. The total number of ordinary shares in issue as at December 31, 2007 was 347,272,975 with a par value of 0.2 per share. All issued shares are fully paid and include also shares issued on exercise of share options granted under incentive schemes (C and E series of shares) as soon as cash consideration is received. The shareholders structure as at December 31, 2007:

Number of % of share Number of Shareholder shares capital votes % of votes Strateurop International B.V.(1) ...... 178,597,985 51.43% 178,597,985 51.43% N-Vision B.V.(1) ...... 37,261,960 10.73% 37,261,960 10.73% Shares held by other shareholders ...... 131,413,030 37.84% 131,413,030 37.84%

Total ...... 347,272,975 100.00% 347,272,975 100.00%

(1) Entities controlled by ITI Group.

Included in the total number of shares in issue as at December 31, 2007 held by other shareholders is 79,778 shares of C1, E1 and E2 series not registered by the Court.

Shares issued on exercise of share options (C and E series) included in the share capital at the balance sheet date were registered by the National Depository of Securities (Krajowy Depozyt Papierów Wartos´ciowych) and are tradable on the Warsaw Stock Exchange and qualify for dividends.

During the year ended December 31, 2007 3,764,520 shares of C and E series were issued for an amount of PLN 33,238 (in thousands).

On January 16, 2008 the Court registered 79,788 shares of C1, E1 and E2 series which were not registered at the balance sheet date.

The accompanying notes are an integral part of these consolidated financial statements.

F-181 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

20. Borrowings

December 31, December 31, 2007 2006 9.5% Senior Notes due 2013 ...... 790,388 841,856 Interest accrued on Senior Notes due 2013 ...... 3,332 3,564

793,720 845,420

On December 2, 2003 the Group via its subsidiary, TVN Finance Corporation plc, issued EUR 235,000 Senior Notes with an interest rate of 9.5%. The Notes are quoted on the Luxembourg Stock Exchange. Interest is paid semi-annually starting June 15, 2004. The Senior Notes mature on December 15, 2013. The Senior Notes are senior unsecured obligations and are governed by a number of covenants including, but not limited to, restrictions on the level of additional indebtedness, payment of dividends, sale of assets and transactions with affiliated companies. The Senior Notes are fully and unconditionally guaranteed by the Company and its principal subsidiary Grupa Onet.pl S.A. The Senior Notes are carried at amortized cost using an effective interest rate of 10.88%. The fair value of the Senior Notes, excluding accrued interest, as at December 31, 2007 is estimated to be PLN 879,650 or EUR 245,575 (PLN 1,017,375 or EUR 265,550 as at December 31, 2006). This is based on the last available price quoted by Reuters on that date. The Group may redeem all or part of the Senior Notes on or after December 15, 2008 at a redemption price ranging from 104.75% to 100% of nominal value. The Group recognized an embedded financial instrument with respect to these options (see note 17). The fair value of these options as at December 31, 2007 was PLN 20,447 (EUR 5,708). The fair value was calculated using the Brace-Ga˛ tarek-Musiela model. The Senior Notes also have a put option, which may be exercised by the holders of the Senior Notes at a purchase price of 101% of the nominal value if a change of control takes place. Change of control means: i) a person other than Permitted Holders become the beneficial owner of more than 35% of the voting power of the voting stock of the Company, and the Permitted Holders own a lesser% than such other person ii) Approved directors cease to constitute a majority of the Supervisory Board, iii) The Company sells substantially all of its assets, iv) A plan is adopted relating to the liquidation or dissolution of the Company, v) The Company ceases to own 100% of the shares of TVN Finance Corporation plc. On June 30, 2005 the Group entered into a USD 17,000 loan facility with Pekao SA (previously Bank BPH S.A.). On July 26, 2006 the Group extended the loan facility to EUR 50,000. The extended facility bears interest at WIBOR, EURIBOR or LIBOR plus 1.15%. The facility is secured over trade receivables, other intangible assets, television and broadcasting equipment and programming rights with a total net book value of 431,087 as of December 31, 2007. The facility includes a number of restrictive covenants, including restrictions on additional indebtedness and the ability to extend loans. As of

The accompanying notes are an integral part of these consolidated financial statements.

F-182 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

December 31, 2007 the facility was used in the amount of EUR 1,904 (PLN 6,820) to cover two guarantees issued by Pekao SA on the Group’s behalf.

21. Trade payables

December 31, December 31, 2007 2006 Acquired programming rights payables ...... 68,803 100,527 Other trade payables ...... 45,842 45,464 Related party payables (see note 29(iv)) ...... 5,186 6,142

119,831 152,133

Less: current portion of trade payables ...... (111,107) (143,126)

Non-current portion of acquired programming rights payables. . . . 8,724 9,007

22. Other liabilities and accruals

December 31, December 31, 2007 2006 VAT and other taxes payable ...... 32,675 21,591 Employee benefits ...... 36,488 19,019 Deferred income...... 27,909 12,776 Satellites ...... 6,761 3,863 Other liabilities and accrued costs ...... 87,573 58,277 191,406 115,526

23. Taxation

Year ended Year ended December 31, December 31, 2007 2006 Current tax charge ...... (78,186) (63,665) Deferred tax credit/(charge), net ...... 24,262 (11,807)

(53,924) (75,472)

The accompanying notes are an integral part of these consolidated financial statements.

F-183 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Year ended Year ended December 31, December 31, Reconciliation of accounting profit to tax charge 2007 2006 Profit before income tax ...... 297,232 334,297 Income tax charge at the enacted statutory rate of 19% ...... (56,474) (63,516) Tax impact of employee share option plan costs not deductible for tax purposes ...... (8,518) (10,817) Impact of tax deduction claimed and deferred in relation to investments in special economic zone ...... 14,442 - Impact of write down of deferred tax asset on tax losses that will not be utilised...... - (1,213) Net tax impact of other expenses not deductible for tax purposes and revenue not taxable ...... (3,374) 74

Tax for the period ...... (53,924) (75,472)

The Group is entitled to 40% and 50% tax reliefs on investments undertaken and certain categories of staff expenses incurred in the special economic zone in Kraków. The tax reliefs are available until December 31, 2017. In the year ended December 31, 2007 the Group claimed tax reductions in the amount of 6,637 with respect to its costs incurred in the special economic zone. The balance of 8,137 with respect to this tax relief is deferred for future tax reduction.

Management believes that it is probable that taxable profit will be available in the future against which the deductible temporary differences can be utilized, and consequently has recognized deferred tax assets in the amount that reflects the assumed utilization of tax losses and investment tax credits. The deferred tax amounts were calculated using the enacted tax rate of 19% as at December 31, 2007.

The deferred tax assets and liabilities are expected to be recovered:

December 31, December 31, 2007 2006 Deferred tax liabilities, net - Deferred tax liability, net to be realized after more than 12 months ...... (144,559) (194,997) - Deferred tax (liability)/asset, net to be recovered within 12 months ...... (9,382) 26,595

(153,941) (168,402)

The accompanying notes are an integral part of these consolidated financial statements.

F-184 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Year ended Year ended December 31, December 31, Movements in deferred tax asset 2007 2006 Balance at beginning of period ...... 6,235 9,196 Acquisition of subsidiary (see note 27) ...... 49 4,736 Credit/(charge) for the period ...... 6,353 (6,484) Deferred tax asset write down...... - (1,213)

Balance at end of period ...... 12,637 6,235

Year ended Year ended December 31, December 31, Movements in deferred tax liability 2007 2006 Balance at beginning of period ...... (174,637) (45,338) Acquisition of subsidiary* (see note 27) ...... (9,850) (124,907) Deferred tax debited to equity, net...... - (282) Credit/(charge) for the period ...... 17,909 (4,110)

Balance at end of period ...... (166,578) (174,637)

* Represents the deferred tax liability recognized mainly on acquired brands

The accompanying notes are an integral part of these consolidated financial statements.

F-185 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

Differences in depreciation and amortization rates Non- Unrealised Brand and for tax and deductible Debt foreign Derivative Interest accrued Available for customer Tax losses accounting provisions and issuance exchange financial on ITI Media Unpaid interest sale related assets Tax relief on carry policies accruals costs differences assets/(liabilities) notes accrued, net investments acquired investment forward Total Deferred tax asset/(liability) at January 1, 2006 ...... 7,304 13,954 (12,084) (13,351) (17,575) (22,827) 634 334 - - 7,469 (36,142) Acquisition of subsidiary ...... 154 414 ------(125,061) - 4,322 (120,171) (Charged)/credited to net profit ...... (4,765) 3,202 1,030 (21,477) (5,217) 22,827 (1,127) 1,198 293 352 (8,123) (11,807) Credited / (charged) to equity ...... - - - - 52 - - (334) - - - (282)

Deferred tax asset/(liability) at December 31, 2006 ...... 2,693 17,570 (11,054) (34,828) (22,740) - (493) 1,198 (124,768) 352 3,668 (168,402)

Deferred tax asset/(liability) at January 1, 2007 ...... 2,693 17,570 (11,054) (34,828) (22,740) - (493) 1,198 (124,768) 352 3,668 (168,402) Acquisition of subsidiary ...... - (471) ------(9,330) - - (9,801) F-186 (Charged)/ credited to net profit ...... (1,326) 10,882 1,142 (12,108) 20,805 - (91) - 659 7,785 (3,486) 24,262

Deferred tax asset/(liability) at December 31, 2007 ...... 1,367 27,981 (9,912) (46,936) (1,935) - (584) 1,198 (133,439) 8,137 182 (153,941)

The accompanying notes are an integral part of these consolidated financial statements. TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

24. Note to the consolidated cash flow statement

Reconciliation of net profit to cash generated from operations Year ended Year ended Note December 31, 2007 December 31, 2006 Net profit...... 243,308 258,825 Tax charge ...... 53,924 75,472 Share options granted to board members and employees ...... 7 44,832 56,930 Depreciation, amortization and impairment charges. . 7 72,090 51,441 Amortization of acquired programming rights and co-production...... 7 123,712 112,312 Impaired accounts receivable ...... 7 4,981 177 Gain on sale of property, plant and equipment ...... (92) (123) Investment income and finance expense, net ...... 8 184,780 14,218 Guarantee fee ...... 8 (2,961) (6,999) Payments to acquire programming rights ...... (128,070) (74,907) Change in local production balance ...... (27,344) (21,062) Changes in working capital: Trade receivables ...... (118,096) (31,109) Prepayments and other assets...... (4,172) 183 Trade payables...... (9,286) (1,429) Other short term liabilities and accruals...... 70,063 18,462 (61,491) (13,893) Cash generated from operations ...... 507,669 452,391

Acquisition of subsidiaries net of cash acquired

Mango Media ...... 27 49,561 - Grupa Onet ...... - 1,278,804 NTL Radomsko ...... - 1,232 49,561 1,280,036

Non-cash transactions Barter revenue, net ...... (1,353) (2,978) Content rights acquired under barter agreements. . . . - 329 Share options granted to board members and employees ...... 44,832 56,930 Share options granted to board members and employees on acquisition of subsidiary ...... - 19,560

The accompanying notes are an integral part of these consolidated financial statements.

F-187 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

25. Contingencies The Group has a contingent asset of 17,224 in a respect of VAT, penalties and interest due from the tax authorities. A court ruling in favour of the Group was announced on April 13, 2006. On June 12, 2006 the tax authorities appealed to the Supreme Administrative Court. On October 9, 2007 the Supreme Administrative Court decided to return the case to the Administrative Court in Krakow for further review. The Group expects that it is probable that this amount will be received in future but the date cannot be reliably estimated by the Group.

26. Commitments The Group has entered into a number of operating lease and other agreements. The commitments derived from these agreements are presented below.

(iii) Commitments to acquire programming

The Group has outstanding contractual payment commitments in relation to programming as of December 31, 2007. These commitments are scheduled to be paid as follows:

Due in 2008...... 75,453 Due in 2009...... 60,735 Due in 2010...... 16,842 Due in 2011...... 8,071 Due in 2012...... 2,889 163,990

(iv) Total future minimum payments relating to operating lease agreements signed as at December 31, 2007:

Non-related Related parties parties Total Due in 2008 ...... 15,298 12,228 27,526 Due in 2009 ...... 15,300 10,074 25,374 Due in 2010 ...... 15,303 6,854 22,157 Due in 2011 ...... 15,306 6,360 21,666 Due in 2012 ...... 15,309 5,209 20,518 Due in 2013 and thereafter ...... 55,081 13,004 68,085 131,597 53,729 185,326

Contracts signed with related parties relate to lease of office space and TV studios from ITI Poland S.A. (“ITI Poland”) and Diverti Sp. z o.o. (“Diverti”). On June 19, 2007 Diverti took over office space management from Multikino Sp. z o.o. (“Multikino”). Multikino and Diverti are subsidiaries of ITI Group. Commitments in foreign currencies were calculated using exchange rates as at December 31, 2007.

Contracts signed with non-related parties relate to lease of office space and TV studios.

The accompanying notes are an integral part of these consolidated financial statements.

F-188 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

In addition to the lease agreements disclosed above, the Group has agreements with third parties for the provision of satellite capacity. Under these agreements the Group is obliged to pay annual fees. These commitments are scheduled to be paid as follows: Due in 2008...... 23,856 Due in 2009...... 27,223 Due in 2010...... 27,223 Due in 2011...... 27,223 Due in 2012...... 12,780 118,305

Additionally, the Group leases transmission sites and related services for an annual amount of 6,600.

(v) Barter commitments The Group has an outstanding commitment of service to broadcast advertising of 4,598 to settle sundry amounts payable recorded as of December 31, 2007 (3,007 at December 31, 2006). The service to broadcast advertising will be rendered under commercial terms and conditions and at market prices.

(vi) Other commitments At December 31, 2007, the Group assumed contractual commitments of 5,334 to acquire property, plant and equipment and intangible assets (398 at December 31, 2006). Additionally the Group has undertaken to invest 215,782 in the special economic zone in Kraków by December 31, 2017. On December 31, 2007 the remaining commitment amounted to 190,682.

27. Acquisition of Mango Media Sp. z o.o. On May 23, 2007 the Group acquired Mango Media Sp. z o.o. (“Mango Media”) for a contractual consideration of 13,000 EUR. Mango Media operates a teleshopping channel “Telezakupy Mango 24”. The Group has accounted for the acquisition of Mango Media using the purchase accounting method. Details of the value of net assets acquired and goodwill are as follows: Purchase consideration:

Cash paid ...... 49,353 Other direct costs ...... 509

Total purchase consideration ...... 49,862 Fair value of net assets acquired (see below) ...... (43,537)

Goodwill ...... 6,325

The above goodwill is attributable to the high profitability and future free operating cash flows of Mango Media.

The accompanying notes are an integral part of these consolidated financial statements.

F-189 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

The fair value of assets and liabilities arising from the acquisition, determined as at May 23, 2007, are as follows:

Acquiree’s carrying Fair value amount Brand (see note 4 (vii))...... 50,260 - Other intangible assets ...... 20 1,171 Property, plant and equipment ...... 233 233 Deferred tax asset ...... 49 49 Trade and other receivables...... 1,206 1,206 Inventory ...... 3,794 1,060 Prepayments and other assets ...... 970 970 Cash and cash equivalents ...... 301 301 Trade and other liabilities ...... (855) (855) Corporate income tax payable...... (66) (66) Short term bank loans ...... (500) (500) Provisions and accruals...... (2,025) (2,025) Deferred tax liability on fair value adjustments ...... (9,850) - Value of net assets acquired ...... 43,537 1,544

In the period between May 23, 2007 and December 31, 2007 the Group recognized post-acquisition revenue of 18,406 and a net profit of 5,075 in respect to Mango Media. If the acquisition had occurred on January 1, 2007 the Group, would have recognized consolidated revenue of 1,562,346 and a consolidated net profit of 244,433 for the twelve ended December 31, 2007.

The accompanying notes are an integral part of these consolidated financial statements.

F-190 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

28. Group companies The consolidated financial statements of the Group at December 31, 2007 comprise the parent company and the following subsidiaries, joint ventures and associates: December 31, December 31, 2007 2006 Country of Ownership Ownership incorporation % % Grupa Onet.pl S.A...... Poland 100 100 Dream Lab Onet Sp. z o.o...... Poland 100 100 Tivien Sp. z o.o. (formerly Newsroom sp. z o.o.) . . Poland 100 100 El-Trade Sp. z o.o...... Poland 100 100 NTL Radomsko Sp. z o.o...... Poland 100 100 Mango Media Sp. z o.o...... Poland 100 - TVN Turbo Sp. z o.o...... Poland -* 100 TVN Finance Corporation plc ...... UK 100 100 Grupa Onet Poland Holding B.V...... The Netherlands 100 100 Polish Television Finance Corporation BV...... The Netherlands -** 100 Media Entertainment Ventures Int Ltd ...... Malta 100 100 Thema Film Sp. z o.o ...... Poland 96 47 Polski Operator Telewizyjny Sp. z o.o...... Poland 50 50 Discovery TVN Ltd ...... UK 50 - Polskie Badania Internetu Sp. z o.o...... Poland 20 20

* On December 28, 2007 the Company merged with TVN Turbo Sp. z o.o ** Polish Television Finance Corporation was liquidated on November 5, 2007 The share capital percentage owned by the Group equals the percentage of voting rights in each of the above entities.

29. Related party transactions (i) Revenue:

Year ended Year ended December 31, December 31, 2007 2006 ITI Group...... 43,392 13,674 ITI Poland S.A. (“ITI Poland”) ...... 39 38 43,431 13,712

Revenue from the ITI Group includes mainly revenue from the exploitation of film rights, license fees, production and technical services rendered and services of broadcasting advertising, net of commissions.

The accompanying notes are an integral part of these consolidated financial statements.

F-191 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

(ii) Operating expenses:

Year ended Year ended December 31, December 31, 2007 2006 ITI Group...... 28,983 29,942 ITI Poland ...... 584 4,109 29,567 34,051

Operating expenses from ITI Group comprise rent of office premises and the provision of certain management, sales, financial advisory and other services. Operating expenses from ITI Poland comprise rent of office premises. ITI Poland is controlled by certain shareholders and executive directors of the ITI Group.

(iii) Bond receivable from related party The income from the bond represents interest accrued on a bond issued by ITI Media Group N.V. (“ITI Media Group”) and acquired by the Group on December 2, 2003. On July 31, 2006, following the acquisition of Grupa Onet.pl from ITI Media Group the bond was prepaid by ITI Media Group in full. The effective interest rate on the bond in the year ended December 31, 2006 was 10.02%.

(iv) Outstanding balances arising from sale/purchase of goods and services:

December 31, December 31, 2007 2006 Receivables: ITI Group...... 9,963 5,398 Payables: ITI Group...... 5,053 6,052 ITI Poland ...... 133 90 5,186 6,142

(v) Other non current assets Other non current assets include a rental deposit paid to ITI Group by TVN in the amount of 1,981.

(vi) Lease commitments with related parties See note 26 for further details.

(vii) Other ITI Holdings has provided guarantees in the amount of US$25,000 to Warner Bros. International Television Distribution and US$8,000 to DreamWorks in respect of programming rights purchased and broadcast by the Group. During the year ended December 31, 2007, the Group recorded finance costs of 2,961 relating to these guarantees (during the year ended December 31, 2006: 6,999).

The accompanying notes are an integral part of these consolidated financial statements.

F-192 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

(viii) Management Board compensation Short-term employee benefits Management Board cash compensation for the year ended December 31, 2007 amounted to 9,863 (7,843 for the year ended December 31, 2006).

Year ended Year ended December 31, 2007 December 31, 2006 Base salary Bonuses* Base salary Bonuses** Piotr Walter ...... 1,239 593 1,043 436 Karen Burgess ...... 1,119 353 1,084 216 Edward Miszczak ...... 842 288 697 212 Jan Łukasz Wejchert ...... 818 177 272 - Tomasz Berezowski ...... 539 122 457 82 Olgierd Dobrzyn´ ski...... 604 197 410 197 Waldemar Ostrowski ...... 517 129 518 101 Adam Pieczyn´ ski...... 639 267 581 176 Jarosław Potasz ...... 539 124 481 88 Piotr Tyborowicz ...... 506 251 549 243 7,362 2,501 6,092 1,751

* Bonuses paid for 2006 ** Bonuses paid for 2005

Share based payments Members of the Management Board of the Company participate in share incentive schemes introduced by the Group (see note 30) with the following total number of granted share options divided into four series and estimated fair value thereof recognized either as an expense or incremental cost of business combination with Grupa Onet.pl.

Cumulative fair Cumulative fair Total number value recognized up value recognized up of share options granted to December 31, to December 31, (not in thousands) 2007* 2006* Piotr Walter...... 622,600 5,950 3,414 Karen Burgess ...... 526,290 5,095 3,027 Edward Miszczak...... 526,290 5,095 3,027 Jan Łukasz Wejchert ...... 577,065 5,887 3,604 Tomasz Berezowski ...... 336,030 3,253 1,933 Olgierd Dobrzyn´ ski ...... 314,115 2,470 1,694 Waldemar Ostrowski...... 336,030 3,253 1,933 Adam Pieczyn´ ski ...... 314,115 2,470 1,694 Jarosław Potasz ...... 336,030 3,253 1,933 Piotr Tyborowicz ...... 336,030 3,253 1,933

* Calculated as proportion of the fair value of service already rendered to the total fair value of the scheme.

The accompanying notes are an integral part of these consolidated financial statements.

F-193 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

(ix) Supervisory Board compensation Supervisory Board cash compensation for the year ended December 31, 2007 amounted to 1,097 (605 for the year ended December 31, 2006).

Year ended Year ended December 31, 2007 December 31, 2006 Wojciech Kostrzewa ...... 165 80 Jan Wejchert ...... 10 66 Bruno Valsangiacomo ...... 137 80 Arnold Bahlmann ...... 90 63 Romano Fanconi ...... 68 64 Paweł Gricuk ...... 121 69 Sandra Nowak...... 263 - Wiesław Rozłucki ...... 92 - Andrzej Rybicki ...... 66 30 Mariusz Walter ...... 10 56 Aldona Wejchert...... 56 - Jan Adam Zielin´ ski...... 19 67 Maciej Z˙ ak...... - 30 1,097 605

30. Share-based payments Share options are granted to certain Management Board members, employees and co-workers who are of key importance to the Group. Share options are granted under two share option schemes: (i) TVN Incentive Scheme I introduced on December 27, 2005, based on C series of shares (ii) TVN Incentive Scheme II introduced on July 31, 2006 as part of the acquisition of Grupa Onet.pl, based on E series of shares. The Group has no legal or constructive obligation to repurchase or settle the options in cash. Movements in the number of share options outstanding and their related weighted average exercise prices are as follows (not in thousands):

Year ended Year ended December 31, 2007 December 31, 2006 Average Outstanding Average Outstanding exercise price options exercise price options At 1 January...... PLN 10.01 15,818,005 PLN 9.66 9,870,000 Granted ...... PLN 11.68 2,833,670 PLN 10.58 5,948,055 Exercised ...... PLN 8.83 (3,764,520) - - At 31 December ...... PLN 10.62 14,887,155 PLN 10.01 15,818,055

Weighted average market share price during the year ended December 31, 2007 was 25.01.

The accompanying notes are an integral part of these consolidated financial statements.

F-194 TVN S.A. Notes to consolidated financial statements (Expressed in PLN, all amounts in thousands, except as otherwise stated) — (Continued)

The total fair value of the options granted was estimated using a trinomial tree model and amounted to 74,124 with respect to C series and 110,101 with respect to E series. The total fair value of options granted to acquire C series of shares will be accounted for in the period starting from December 27, 2005 and finishing December 31, 2008. Of the total fair value of options granted with respect to E series, the value of 70,775 less the part attributable to vested options granted under the original share option scheme existing in Grupa Onet.pl modified at acquisition and included in the cost of acquisition will be accounted for in the period starting from July 31, 2006 and finishing March 31, 2009. The balance of 39,326 relating to E options granted on December 18, 2007 will be accounted for in the period starting from December 18, 2007 and finishing December 31, 2009.

Significant inputs into the option valuation model for the options granted on December 18, 2007 were share price of PLN 24.75 (not in thousands), money market interest rates and interest rate swap rates provided by Reuters, the exercise price of 11.68 (not in thousands), the number of options, maximum option life (until December 31, 2011), expected option termination ratio of 0%, expected intrinsic value of an option when exercised of PLN 4 (not in thousands) per option and price volatility of 36.50%. Volatility was calculated based on an annualized logarithmic rate of return based on daily prices since the shares were first listed on December 7, 2004. The model assumes that dividends would be paid in the future in accordance with the Group’s dividend policy. Fair valuation of options granted before January 1, 2007 assumed that no dividends would be paid in the future. The stock option plan is service related.

The remaining options are exercisable at the prices indicated below and vest after the specified period:

Series Number of options Exercise price Service vesting period C1 ...... 463,300 PLN 8.66 vested C2 ...... 3,479,210 PLN 9.58 until January 1, 2008 C3 ...... 3,479,210 PLN 10.58 until January 1, 2009 7,421,720

Series Number of options Exercise price Service vesting period E1 ...... 233,140 PLN 8.66 vested E2 ...... 340,055 PLN 9.58 vested E3 ...... 1,617,505 PLN 10.58 until April 1, 2008 E4 ...... 2,441,065 PLN 11.68 until April 1, 2009 E4 ...... 2,833,670 PLN 11.68 until January 1, 2010 7,465,435

All options can be exercised no later than December 31, 2011.

Between January 1, 2008 and the date when these financial statements were prepared, 19,410 of E1 and E2 series options were exercised and as a result 19,410 new ordinary shares were issued. These shares were registered by the court at the date of the preparation of these financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

F-195

PricewaterhouseCoopers Sp. z o.o. Al. Armii Ludowej 14 00-638 Warszawa Poland Telefon +48 (22) 523 4000 Faks +48 (22) 523 4040 http://www.pwc.com/pl Independent auditor’s report To the Shareholders and Supervisory Board of ITI Neovision Sp. z o.o. We have audited the accompanying consolidated financial statements of ITI Neovision Sp. z o.o. (the ‘Company’) and its subsidiaries (the ‘Group’) which comprise the consolidated balance sheet as of 31 December 2008 and the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as of 31 December 2008, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union. Emphasis of matter Without qualifying our opinion, we draw attention to Note 2.2 to the consolidated financial statements which indicates that the Group incurred a net loss of PLN 441,414 thousand during the year ended 31 December 2008 and, as of that date, the Group’s total liabilities exceeded its total assets by PLN 682,879 thousand. These conditions, along with other matters as set forth in Note 2.2, indicate the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern.

PricewaterhouseCoopers Sp. z o.o. Warsaw, Poland 28 October 2009

F-196 Group Information 1. Principal activity

ITI Neovision Sp. z o.o. (“ITI Neovision” or the “Company”) is the parent company of ITI Neovision Group (the “Group”). The Company is a provider of pay television services. The Company operates a digital television platform under the trade name “n”, offering subscribers packages which include both the proprietary television channels and channels broadcast based on licences obtained from other broadcasters. The Company offers its subscribers video-on-demand services, on a subscription basis or paid by transaction, for which it acquires content from Polish and international film and TV series producers. ITI Neovision is also a producer of television programmes that are distributed to both related entities and third parties. The Company owns a 100% interest in Neovision UK Ltd (“Neovision UK”), and a 45% interest in MGM Channel Poland Ltd (“MGM Poland”) a joint venture with MGM Networks Inc. Both companies are broadcasters of television channels. The Company acquired 99% of the shares in Cyfrowy Dom Sp. z o.o. (“Cyfrowy Dom”), a company incorporated in May 2008. Cyfrowy Dom is a distributor of prepaid pay television services.

2. Registered office

ITI Neovision Sp. z o.o. ul. Powsin´ ska 4 00-920 Warsaw

After the balance sheet date the registered office of the Company was transferred to the following address: ul.Kłobucka 23 02-699 Warsaw

3. Parent Company

Neovision Holding B.V. De Boelelaan 7 1083 – HJ Amsterdam The Netherlands

4. Ultimate Parent Company

International Trading and Investments Holdings S.A. Luxembourg 5, rue Guillaume Kroll L-1882 Luxembourg

5. Supervisory Board

• Wojciech Kostrzewa – Chairman

• Bruno Valsangiacomo

• Piotr Walter – appointed June 25, 2008

• Karen Burgess – appointed June 25, 2008, resigned August 31, 2009

• Jan Łukasz Wejchert – appointed June 25, 2008

• Piotr Jastrze¸ bski – resigned March 31, 2009

• Romano Fanconi – resigned March 31, 2009

• Jan Bohdan Wejhert – appointed May 12, 2009

• Arnold Bahlmann – appointed May 12, 2009

F-197 • Mariusz Walter – appointed May 12, 2009

• Edward Miszczak – appointed May 12, 2009

6. Management Board

• Maciej Sojka – Chairman – resigned September 30, 2009

• Artur Przybysz – Deputy Chairman

• Olga Korolec – Deputy Chairman, appointed April 7, 2008

• Karol Depczyn´ ski – appointed April 1, 2008

• Tomasz Berezowski – Deputy Chairman, appointed May 29, 2009

• Piotr Zygo – Deputy Chairman, to February 25, 2008

7. Auditors

PricewaterhouseCoopers Sp. z o.o. Al. Armii Ludowej 14 00-638 Warsaw

8. Solicitors

Wardyn´ ski i Wspólnicy Aleje Ujazdowskie 10 00-478 Warsaw

Taylor Wessing LLP Carmelite, 50 Victoria Embankment Blackfriars London EC4Y 0DX United Kingdom

9. Bankers

Bank Pekao S.A. ul. Grzybowska 53/57 00-950 Warszawa

ING Bank S´la¸ ski S.A. ul. Sokolska 34 40-086 Katowice

10. Subsidiaries

Neovision UK Carmelite, 50 Victoria Embankment, EC4Y 0DX London United Kingdom 1 share (not in thousands) constituting 100% of the share capital with a value of GBP 1 (not in thousands)

Cyfrowy Dom Sp. z o.o. ul. Powsin´ ska 4 00-920 Warszawa 99 shares (not in thousands) constituting 99% of the share capital with a value of PLN 500 each (not in thousands)

F-198 After the balance sheet date the registered office of Cyfrowy Dom Sp. z o.o. was transferred to the following address: ul. Kłobucka 23 02-699 Warsaw

11. Joint ventures MGM Channel Poland Ltd Carmelite, 50 Victoria Embankment, EC4Y 0DX London United Kingdom 45 shares (not in thousands) with a value of GBP 1 each (not in thousands) constituting 45% of the share capital

F-199 ITI NEOVISION Sp. z o.o. Consolidated income statement (Expressed in PLN, all amounts in thousands, unless otherwise stated)

Year ended Year ended December 31, December 31, Note 2008 2007 Revenue ...... 4 260,850 105,965 Cost of revenue ...... 5 (402,343) (218,967)

Gross loss on sales ...... (141,493) (113,002) Selling expenses ...... 5 (106,665) (68,276) General and administrative expenses...... 5 (19,992) (18,338) Other income ...... 465 100 Other expenses ...... (246) (592)

Operating loss ...... (267,931) (200,108) Financial income ...... 6 488 23,713 Financial costs ...... 6 (173,495) (32,103) Share of (loss)/income of joint venture ...... 10 (476) 1,126

Loss before income tax ...... (441,414) (207,372) Income tax ...... 23 - -

Loss for the year ...... (441,414) (207,372)

Artur Przybysz Tomasz Berezowski Deputy Chairman of the Deputy Chairman of the Board Board

Karol Depczyn´ ski Olga Korolec Member of the Board Deputy Chairman of the Board

Warsaw, October 28, 2009

The accompanying notes are an integral part of these financial statements.

F-200 ITI NEOVISION Sp. z o.o. Consolidated balance sheet (Expressed in PLN, all amounts in thousands, unless otherwise stated) As at As at December 31, December 31, Note 2008 2007 Assets Non-current assets Property, plant and equipment ...... 7,9 301,533 241,870 Intangible assets ...... 8 14,376 12,762 Non-current programming rights ...... - 6,099 Investment in joint venture ...... 10 598 990 Financial assets -loans granted ...... 190 190 Othernon-currentassets...... - 70 316,697 261,981 Current assets Tradereceivables...... 11 36,287 9,143 Inventories ...... 12 7,825 4,274 Prepayments...... 13 10,242 4,802 VAT receivables...... 14 15,829 27,196 Corporate income tax receivables ...... 1,187 931 Cashandcashequivalents...... 15 9,882 6,589 Othercurrentassets...... 16 18,981 7,872 100,233 60,807 Total Assets ...... 416,930 322,788 Equity Sharecapital...... 17 40,000 40,000 Otherreserves...... 10 (52) (136) Accumulated losses...... (722,827) (281,413) (682,879) (241,549)

Liabilities Non-current liabilities Long term borrowings ...... 25.3 803,540 381,476 Lease liabilities ...... 18 2,338 3,563 Other non-current liabilities ...... 19 25,819 37,355 831,697 422,394 Current liabilities Trade payables ...... 20 185,503 107,674 Taxation customs duty and social security payables ...... 2,072 1,363 Lease liabilities ...... 18 2,076 1,996 Other liabilities and accruals ...... 21 72,265 26,262 Deferredincome...... 22 6,196 4,648 268,112 141,943 Total liabilities ...... 1,099,809 564,337 Total Equity and Liabilities ...... 416,930 322,788

The accompanying notes are an integral part of these financial statements.

F-201 ITI NEOVISION Sp. z o.o. Consolidated statement of changes in shareholders’ equity (Expressed in PLN, all amounts in thousands, unless otherwise stated) Number of shares Share Other Accumulated Shareholders’ (not in thousands) capital reserves losses equity As at January 1, 2007 ...... 75,000 37,500 - (74,041) (36,541) Net loss for the year ...... - - - (207,372) (207,372) FX adjustment on equity method consolidation (Note 10) ...... - - (136) - (136) New share issue ...... 5,000 2,500 - - 2,500

As at December 31, 2007...... 80,000 40,000 (136) (281,413) (241,549)

As at January 1, 2008 ...... 80,000 40,000 (136) (281,413) (241,549) Net loss for the year ...... - - - (441,414) (441,414) FX adjustment on equity method consolidation (Note 10) ...... - - 84 - 84

As at December 31, 2008...... 80,000 40,000 (52) (722,827) (682,879)

The accompanying notes are an integral part of these financial statements.

F-202 ITI NEOVISION Sp. z o.o. Consolidated cash flow statement (Expressed in PLN, all amounts in thousands, unless otherwise stated)

Year ended Year ended Note December 31, 2008 December 31, 2007 Operating activities Cash used in operations ...... 26 (117,675) (172,266)

Net cash used in operating activities ...... (117,675) (172,266) Investing activities Repayment of loans granted ...... - 190 Payments to acquire property, plant and equipment and intangible assets ...... (132,918) (137,655) Interest received ...... 488 471

Net cash used in investing activities ...... (132,430) (136,994) Financing activities Proceeds from capital increase ...... - 2,500 Loans received from related parties ...... 259,272 311,913 Interest paid ...... (3,680) (5,149) Finance lease payment ...... (2,194) (1,512)

Net cash generated from financing activities .... 253,398 307,752

Increase/(decrease) in cash and cash equivalents ...... 3,293 (1,508)

Cash and cash equivalents at the beginning of the year ...... 6,589 8,097 Cash and cash equivalents at the end of the year ...... 9,882 6,589

F-203 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated)

1. Introduction to the financial statements

These consolidated financial statements were authorized for issuance by the Management Board of ITI Neovision Sp. z o.o. on October 28, 2009.

The Company was formed in 1992 and registered in Poland. Since 2006, the Company has been engaged in broadcasting and distribution of television programmes. In previous years the Company’s business activities consisted of the organization of events for customers, production and post-production services related to advertising films. The Company also conducted financial transactions related to shares owned in other companies.

The Company is part of a group of companies controlled by International Trading and Investments Holdings S.A. Luxembourg (“ITI Holdings”) and its subsidiaries (the “ITI Group”). The ITI Group has been active in Poland since 1984 and is one of the largest media and entertainment groups in Poland.

On June 25, 2008, TVN S.A., the leading privately-owned media group in Poland, acquired 25 percent plus one share in our parent company, Neovision Holding B.V., and became the Company’s indirect shareholder. Moreover, in March, 2009 TVN S.A. acquired control over an additional 26% of the shares in Neovision Holding B.V.

The Company began operating in October 2006 as the operator of a digital platform under the trade name “n”, based on a Resolution of the National Broadcasting Council dated September 13, 2006, granting the Company a licence for the wireless broadcast of television programmes. The Company did not carry out such activities before 2006. During 2008 the Company expanded its operations, attracted new subscribers and introduced new television channels in its offer.

The Company broadcasts its own television channels and acquires licences for broadcasting third party channels, which are provided via satellite to the Company’s subscribers who are equipped with the devices needed to receive a coded television signal, such as decoders with decoding cards and satellite dishes. Customers sign contracts with the Company that have a minimum duration of 12 to 24 months. The Company’s programming offer consists of television channels, either proprietary or licensed from other broadcasters, grouped in six thematic packages. Customers select the program packages they are interested in and pay an appropriate monthly fee for each of the packages. Additionally, the Company offers premium film services which customers may subscribe to. Customers who use a decoder equipped with a hard-disk drive may use video-on-demand (VOD) services by accessing programming content transmitted over the satellite and stored on a hard disk. Video-on-demand is offered on a monthly subscription basis or paid per rental of a film.

Neovision UK was incorporated in September 2006 and commenced trading on November 30, 2006. Neovision UK is a broadcaster of television channels.

MGM Poland was incorporated in February, 2007 as a joint venture between the Company and MGM Networks Inc. MGM Poland produces the MGM HD television channel.

Cyfrowy Dom, incorporated in May 2008, commenced trading in October 2008, as a distributor of prepaid pay television services. The company distributes decoders and decoding cards, which give access to a package of television programmes for an initial period of three months. After the initial period expires, customers may make prepayments extending access to the full programming offer or may continue to watch only a limited number of free programmes. Customers are not bound by any contract and can choose periods in which they want to pay for the service.

F-204 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

2. Summary of significant accounting policies

2.1. Basis of preparation of the consolidated financial statements for the year ended December 31, 2008

These consolidated financial statements of the Group have been prepared on a going concern basis and in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”), issued and effective as at the balance sheet date.

The consolidated financial statements of the Group for the year ended December 31, 2008 prepared in Polish were approved by the Management Board of ITI Neovision Sp. z o.o on March 30, 2009. The approved consolidated financial statements have been prepared to satisfy the requirements of the Polish Accounting Act. These consolidated financial statements have been prepared for the purpose of a planned transaction by the TVN Group (TVN S.A. and its subsidiaries), on the basis of previously issued consolidated financial statements in Polish. In these financial statements certain presentation and disclosure amendments have been made compared to the consolidated financial statements approved on March 30, 2009. These amendments did not result in the need to make changes to the previously presented net results or shareholders’ equity.

The accounting policies used in the preparation of the consolidated financial statements as of and for the year ended December 31, 2008 are consistent with those used in the annual consolidated financial statements for the year ended December 31, 2007 except for the new accounting policies described below and interpretations which became effective as of January 1, 2008.

The following standards and interpretations were adopted by the Group in 2008: i. IFRIC 13, Customer Loyalty Programmes

IFRIC 13, ‘Customer loyalty programmes’ clarifies that where goods or services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the arrangement is a multiple-element arrangement and the consideration receivable from the customer is allocated between the components of the arrangement using fair values.

As at December 31, 2008 the Group does not provide loyalty programme incentives. This interpretation does not have an impact on the Group’s financial statements. ii. Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures, the amendments which introduce the possibility of certain reclassifications of financial instruments for companies applying International Financial Reporting Standards, which were already permitted under US generally accepted accounting principles (GAAP). These amendments did not impact the Group’s financial statements.

2.2. Going concern

These consolidated financial statements have been prepared on the assumption that the Group will continue in operation as a going concern, without changing the scope or type of its operations and assuming the recoverability of its assets and satisfaction of its liabilities and commitments in the normal course of business. The Group has a limited operating history and has incurred losses from operations since the inception of pay television services. The Management’s plans in this respect include continued development, marketing and provision of pay television services as well as seeking additional financing arrangements. The going concern assumption is based on the accessibility of sources of financing and the letters of support dated October 28, 2009, in which

F-205 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued) the Company’s shareholders expressed their ability and willingness to provide the Company with financial support for at least twelve months from the date of the letter.

Although Management continues to pursue the above-mentioned plans, the currently estimated financing needs, which are based on the Group’s business plan, may not accurately reflect actual future results. Additionally, the recent macroeconomic circumstances and global liquidity issues discussed below, indicate the potential uncertainties that are likely to exist with respect to the availability of funds committed to the Group. These consolidated financial statements do not include any adjustments that could result from the outcome of these uncertainties.

As at December 31, 2008, the Company’s liabilities were higher than its assets. In such event, Art. 21 of the Bankruptcy and Recovery Act requires that the Management Board file a petition for bankruptcy with a bankruptcy court. However, the Management Board draws attention to the fact that the Company is in a phase of fast growth and its investments in the development of its operations are being financed by long-term liabilities. Therefore, the Management Board believes that there are no grounds for filing a petition for bankruptcy.

2.3. Segment reporting

The Management of the Company believes that all the Group’s material operations are part of the pay television broadcast service segment, which currently reports as a single business segment. Additionally, substantially all the Group’s operations and assets, including all customers, are based in Poland, except for the broadcasting licences and organisational structures of Neovision UK and MGM Channel Poland, which are used for providing services and programme licences to ITI Neovision. Therefore, no other geographic information has been included.

2.4. Functional and presentation currency

The accompanying consolidated financial statements are presented in Polish złoty (PLN), which is the presentation and functional currency of the Group, except for MGM Channel Poland Ltd, whose functional currency is the US dollar (USD).

Items included in the financial statements are measured in Polish złoty, which is the currency of the primary economic environment in which the Group mainly operates.

Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates applicable as at the balance sheet date. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing as at the dates of the transactions. Gains and losses arising from the settlement of such transactions and from the translation of monetary assets and liabilities at year-end exchange rates are recognized in the income statement.

2.5. Exchange rates and inflation:

Exchange rate USD Exchange rate EUR December 31, 2007 ...... 2.4350 3.5820

December 31, 2008 ...... 2.9618 4.1724

The movement in the consumer price index for the year ended December 31, 2008 amounted to 3.3% (4.0% for the year ended December 31, 2007).

F-206 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

2.6. Property, plant and equipment

Property, plant and equipment are stated at historical cost less depreciation and impairment (if any). Where the carrying amount of an asset is greater than its estimated recoverable amount (the higher of fair value less costs to sell and its value in use), it is written down to its recoverable amount.

Subsequent expenditure relating to an item of property, plant and equipment is added to the carrying amount of the asset when it is probable that future economic benefits associated with the item will flow to the enterprise and the cost of the item can be measured reliably. All other expenses, including repair and maintenance expenses, are charged to the income statement during the financial period in which they are incurred.

Depreciation is charged to write off the cost of property, plant and equipment less their estimated residual values on a straight-line basis over their expected useful economic lives as follows:

Term TV & broadcasting equipment, including decoders ...... 4-5 years Satellite dishes ...... up to 5 years Vehicles ...... 4-5 years Furniture and fixtures...... 4-10 years

Decoders provided to subscribers to allow them to receive the television signal broadcast by the Company remain the Company’s property and are recognized as non-current assets. Before their activation, decoders are regarded as non-commissioned fixed assets and are not depreciated. Depreciation begins after the activation of services by the subscriber and lasts for the expected economic useful life of a decoder. Depreciation is not discontinued for periods in which a decoder is not used, e.g. due to minor repairs or being delivered to another subscriber.

Leasehold improvements are depreciated over the shorter of their useful life or the related lease term. Land is not depreciated.

Residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are included in operating profit.

2.7. Intangible assets

Intangible assets include acquired computer software, trademarks, licences and other rights which could be used for economic purposes, including acquired goodwill. Expenditures on acquired intangible assets are capitalized and amortized using the straight-line method over their expected useful economic lives:

Term Computer software ...... 2-5 years Trademarks ...... 2-5 years Purchased rights to an Internet domain ...... 5 years Broadcasting licenses...... 10 years

F-207 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

Useful economic lives of acquired intangible assets are determined by contract as the term of the license or are unspecified (unlimited) in which case the Group assesses the useful economic life of such assets.

Goodwill represents the excess of the cost of an acquisition over the Group’s share of fair value of net identifiable assets of the acquired subsidiary as at the date of acquisition and carried at cost less accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if there are indicators of possible impairment. Goodwill is not amortized.

2.8. Impairment of non-financial assets

Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non—financial assets, other than goodwill, that were subject to impairment are reviewed for possible reversal of the impairment at each reporting date.

2.9. Consolidation

Subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated and are considered to be an impairment indicator of the asset transferred. The accounting policies of subsidiaries have been changed where necessary to ensure their consistency with the policies adopted by the Group.

Joint ventures

Joint venture undertakings, which are those entities in which the Group, directly or indirectly, has an interest or statutory rights giving it the right to exercise control over the operation jointly with other shareholders, have been accounted for under the equity method and are initially recognized at cost.

F-208 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

The Group’s share in post-acquisition profits or losses is recognized in the income statement, and its share in post-acquisition movements in reserves is recognized in reserves.

2.10. Financial assets

The Group classifies its financial assets into the following categories: financial assets at fair value through profit or loss, loans and receivables, available-for-sale financial assets and held-to-maturity financial assets. The classification depends on the purpose for which the financial assets are acquired. The Management of the Company determines the classification of its financial assets at initial recognition. Currently, the only financial asset category identified by the management are loans and receivables.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Loans and receivables are initially recognized at fair value plus transaction costs (if any) and are carried at amortized cost using the effective interest rate method.

2.11. Programming rights

Programming rights include rights to broadcast television channels, rights to broadcast specific programmes, sports and other events and rights to cyclical broadcasts during the term of the licence. Programming rights acquired by the Group and the related obligations are recorded as assets and liabilities at the present value of future payments when the licence period begins.

Programming rights are amortized for the term of the related licence agreement. Amortization methods reflect the way the economic benefits related to the use of the acquired programming rights flow to the Group, in particular:

• Rights to broadcast television channels — amortization is charged on a straight-line basis over the licence term;

• Rights to broadcast individual programs or events — amortization is charged at the moment of broadcast;

• Rights to broadcast cyclical events (e.g. seasonal sports events) — amortization is charged on a straight-line basis over the licence term;

• Rights to broadcast movies — amortization is charged on a straight-line basis over the licence term, unless the number of showings is limited in the licence. If the number of showings is limited, amortization is charged on a one-off basis upon the first showing or allocated to individual showings, provided that it is possible to estimate the inflow of economic benefits associated with each showing.

Not later than at each balance sheet date, acquired programming rights are reviewed for impairment by comparing their net present value with the recoverable amount determined using the same method as for other non-current assets and intangible assets. Impairment should also be

F-209 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued) assessed whenever changes in the legal environment or on the market indicate that the carrying amount may not be recoverable.

Programming rights are allocated between current and non-current assets based on the estimated amortization period. Amortization of programming licences is included in operating expenses as amortization of programming licences and purchase costs of the rights to broadcast television channels.

2.12. Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method.

2.13. Leases

Leases of assets, under which a significant part of the risks and benefits of ownership is effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.

Leases of property, plant and equipment where the Group assumes a significant part of the benefits and risks of ownership are classified as finance leases. Finance leases are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. The lease payments are apportioned between a reduction in the outstanding capital liability and interest so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The interest element of the finance charge is charged to the income statement over the lease period. The value of property, plant and equipment held under finance lease contracts less its estimated residual value is depreciated over the shorter of the lease term and the useful life of the asset.

2.14. Trade receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortised cost using the effective interest method, less provisions for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of settlement. Significant financial difficulties of the debtor, the probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivables are impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The Group estimates the future cash flows related to subscription fees from its customers based on available historical data on late payment of receivables. Provision for doubtful receivables is calculated on a monthly basis according to the following methodology: the Company assumes that all uncollected subscription fees related to historical billing cycles (with the exception of two recent billings) are a subject of potential loss—as a result, a provision for 100% of the amount due has been recorded. To properly reflect a reasonable delay in payments and collection, two recent billing cycles have been excluded from this calculation, however the potential loss from them is assessed at a level of 1.5% (based on historical data) of the total subscription amount billed to customers. The amount of the impairment provision is recognized in the income statement in ‘selling and marketing costs’. When a trade receivable is uncollectible after the available vindication activities have been exhausted, it is written off against the provision for trade receivables. Subsequent recoveries of

F-210 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued) amounts previously written off are credited against ‘selling and marketing costs’ in the income statement.

2.15. Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at bank, call deposits with banks, and investments with a maturity of less than three months from the date of acquisition.

2.16. Restricted cash

Restricted cash represents deposits paid in by distributors to secure the Group’s receivables. They are presented as part of cash and cash equivalents and are treated by the Group as current liabilities to suppliers.

2.17. Share capital

Shares are classified as equity.

2.18. Borrowings

Borrowings are recognised initially at fair value, net of the transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowing using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

2.19. Deferred income tax

Deferred income tax is provided in full using the liability method for all temporary differences arising between the tax base of assets and liabilities and their carrying values for financial reporting purposes. However, deferred income tax is not accounted for if it arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither the accounting nor taxable profit or loss. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

2.20. Advertising costs

Advertising costs are recognized in the period in which the advertisements are broadcasted or exhibited.

2.21. Employee benefits

Retirement benefit costs

The Group contributes to State managed defined contribution plans. Contributions to defined contribution pension plans are charged to the income statement in the period to which they relate.

F-211 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

2.22. Provisions Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. Provisions are stated at the present value of the expenditure which is expected to be incurred to settle the obligation. 2.23. Revenue recognition Revenue contains all revenues from ordinary business activities and primarily results from subscription and activation fees paid by customers. For multiple-element arrangements, revenue recognition for each of the elements identified is determined separately. Therefore, arrangements involving the delivery of bundled services are separated into individual accounting units (activation services and subscriptions), each with its own separate earning process. The total arrangement consideration relating to the bundled services is allocated among the different units based on their relative fair values (i.e., the relative fair value of each of the accounting units to the aggregated fair value of the bundled deliverables). The fair value allocated to the subscription revenue is recognized in the periods to which they relate on a pro rata basis. Activation revenue is recognized in the income statement at fair value allocated to the service provided in the month in which the customer contract was signed. Any activation revenue in excess of the allocated fair value to the service provided is recognized in the balance sheet as deferred income and subsequently charged to the income statement starting from the month following the month of signing the customer contract over the expected customer relationship period. Discounts granted are deducted from revenue. If a discount on both the activation fee and the subscription fee is offered, the discount is deducted from the fair value of the individual revenue categories in proportion to their amounts before discount. Discounts applicable to subscription fees granted in a given period, but related to the entire customer contract, are recognized proportionately over the contract term. Revenue from the sale of subscriptions in the pre-paid system is recognized starting from the moment the service is activated by the end customer, over the period in which the service is rendered. Revenue from broadcasting commercials is recognized in the period in which the commercial is broadcast.

F-212 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

2.24. Critical accounting estimates and judgments Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. a. Estimated amounts of doubtful receivables Due to the fact that the Group sells its services to a large number of individual customers, there is a risk of the failure to collect all trade receivables. In order to reflect the risk of potential losses, a provision for doubtful receivables is recorded based on the available subscribers’ payment history. b. Estimated useful life of decoders The Group provides services to individual customers with the use of decoders recognized as non- current assets which are subject to depreciation. On the basis of the expected wear and tear, the Group has assumed that the economic useful life of decoders is five years. Due to the fact that the Group is in the early stages of operation and no statistical data is available, it is difficult to estimate the actual economic useful life of decoders. c. Estimated amount of royalties The Group is in the process of negotiating agreements with organizations representing authors, whose copyrights are included in the programmes broadcast by the Group. Accruals for the cost of the royalties have been estimated using available knowledge of the rates used in similar agreements in the market. d. Revenue from multiple-element arrangements The Group accounts for multiple-element arrangements involving the delivery of bundled services by separation of individual accounting units (activation services and subscriptions), each with its own separate earnings process. The total arrangement consideration relating to the bundled services is allocated among the different units based on their relative fair values. The fair value of activation services is estimated by the Company’s management based on the market value of similar services. The fair value of subscriptions is assumed at the level of minimum obligatory subscription fees payable by the subscriber over the contract term. These estimations could change

F-213 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued) as a result of competitor actions and client preferences, leading to a changed approach of the Group towards its pricing policy. Any revision made to the estimates of these relative fair values and to the activation revenue recognition method could significantly affect the future operating results. Management will adjust the fair value of activation services where circumstances indicate that the fair value allocated to the activation services differ from those previously estimated. Alternatively, the entire amount invoiced at the inception of the contract with the customer could be deferred in the balance sheet as deferred income and recognized as revenue over the expected customer relationship period had the Company’s management decided that multiple-element arrangements should not be separated. e. Assessment of indicators of asset impairment

The Management reviewed whether there was any indication of asset impairment as at December 31, 2008 and determined that the current macroeconomic crisis could potentially impact, among others the payment discipline of individual clients and growth prospects, therefore being an indicator that the carrying amount of property plant and equipment may not be recoverable. Nevertheless the Management believes that the likelihood that the current economic slowdown could materially impact the Company’s operations is low. To support such assessments, Management draws attention to the impairment test that was performed as at December 31, 2008.

The impairment test was based on value-in-use calculations. These calculations required the use of estimates related to cash flow projections based on financial business plans approved by the Management of the Company covering a five year period. In the annual impairment test as at December 31, 2008 cash flows beyond the five year period were extrapolated using an estimated growth rate of 2%. Other key assumptions used for value-in-use calculations were the discount rate of 13.3% and assumptions regarding the development of the business and the Polish DTH market growth rate. If the revised estimated growth rate beyond the five year period was 0%, there would still be no impairment recognized.

The results of the test performed as of December 31, 2008 indicate, that the value of ITI Neovision Group’s assets is not impaired.

2.25. New Accounting Standards and IFRIC pronouncements

Certain new accounting standards and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations have been published by IASB that are mandatory for accounting periods beginning on or after January 1, 2009. The Group’s assessment of the impact of these new standards and interpretations is set out below.

(i) Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements — Puttable Financial Instruments and Obligations Arising on Liquidation

The amendments were published on February 14, 2008 and are effective for annual periods beginning on January 1, 2009 with earlier application permitted. The amendments require entities to classify as equity puttable financial instruments and instruments or components of instruments that impose an obligation on the entity to deliver to another party a pro rata share of the net assets of the entity only on liquidation. Additional disclosures are required about the instruments affected by the amendments. The amendments will not affect the Group’s financial statements.

F-214 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

(ii) Amendments to IFRS 1 First-Time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements — Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate. The amendments were published on May 22, 2008. The amendments to IFRS 1 allow first-time adopters, in their separate financial statements, to use a deemed cost option for determining the cost of an investment in a subsidiary, jointly controlled entity or associate. Additionally, when an entity re-organizes the structure of its group by establishing a new entity as its parent (subject to specific criteria), the amendments require the new parent to measure cost as the carrying amount of its share of the equity items shown in the separate financial statements of the original parent at the date of reorganization. The new requirements will apply for annual periods beginning on January 1, 2009, with earlier application permitted. The Group will not be affected by the amendments.

(iii) IFRIC 11 — Group and Treasury Share Transactions IFRIC 11 is applicable to annual periods beginning on or after March 31, 2008. The interpretation addresses the issue of share-based payment arrangements involving an entity’s own equity instruments and the equity instruments of the parent. This interpretation will not impact the Group’s financial statements.

(iv) IFRIC 12 — Service Concession Arrangements The interpretation was published on November 30, 2006 and gives guidance on the accounting by operators for public-to-private service concession arrangements. This interpretation will not impact the Group’s consolidated financial statements.

(v) IFRIC 14 — The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their interaction IFRIC 14 was issued on July 5, 2007 to clarify the issue when the refunds or reductions in future contributions should be regarded as available, particularly when a minimum funding requirement exists. The interpretation is applicable to annual periods beginning on or after January 1, 2009. The interpretation will not affect the Group’s consolidated financial statements.

(vi) IFRIC 15 — Agreements for the Construction of Real Estate The interpretation was published on July 3, 2008. It applies to the accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors. The Interpretation provides guidance on how to determine whether an agreement for the construction of real estate is within the scope of IAS 11 Construction Contracts or IAS 18 Revenue and when revenue from the construction should be recognized. The interpretation is effective for annual periods beginning on January 1, 2009 and is to be applied retrospectively. The Company will not be affected by the interpretation.

(vii) IFRIC 16 — Hedges of a Net Investment in a Foreign Operation The interpretation was published on July 3, 2008. IFRIC 16 applies to an entity that hedges the foreign currency risk arising from its net investments in foreign operations and wishes to qualify for hedge accounting in accordance with IAS 39. IFRIC 16 provides guidance on (1) identifying the foreign currency risks that qualify as a hedged risk in the hedge of a net investment in a foreign operation; (2) where, within a group, hedging instruments that are hedges of a net investment in a

F-215 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued) foreign operation can be held to qualify for hedge accounting; and (3) how an entity should determine the amounts to be reclassified from equity to profit or loss for both the hedging instrument and the hedged item. IFRIC 16 is effective for annual periods commencing on or after July 1, 2009. The interpretation will not affect the Group’s financial statements.

(viii) IFRIC 17 — Distributions of Non-cash Assets to Owners The interpretation was issued on November 27, 2008. IFRIC 17 standardizes practice in the accounting treatment of distribution of non-cash assets to owners. The interpretation clarifies that: (1) a dividend payable should be recognized when the dividend is appropriately authorized and is no longer at the discretion of the entity, (2) an entity should measure the dividend payable at the fair value of the net assets to be distributed, (3) an entity should recognize the difference between the dividend paid and the carrying amount of the net assets distributed in profit or loss. IFRIC 17 is to be applied prospectively for annual periods beginning on or after July 1, 2009. Earlier application is permitted. The interpretation will not affect the Group’s financial statements.

(ix) IFRIC 18 — Transfers of Assets from Customers The Interpretation was published on January 29, 2009. IFRIC 18 is particularly relevant to the utility sector. It clarifies the requirements of IFRS for agreements in which an entity receives an item of property, plant and equipment from a customer that the entity must then use either to connect the customer to a network or to provide the customer with ongoing supply of goods or services. The interpretation should be applied prospectively to transfers of assets from customers received on or after July 1, 2009. The interpretation will not affect the Group’s financial statements.

(x) IFRS 8 — Operating Segments The standard was published on November 30, 2006 and is applicable for annual periods beginning on or after January 1, 2009. The standard specifies how an entity should report information about its operating segments and requires reporting selected information in interim financial reports. It also sets out requirements for disclosures about products and services, geographical areas and major customers. The Group is exempted from the scope of IFRS 8, since neither its debt nor equity instruments are traded in a public market and the Group is not in the process of filing the consolidated financial statements with a securities commission for the purpose of issuing any class of instruments in a public market.

(xi) Amendments to IAS 23 — Borrowing Costs Amendments to IAS 23 were published on March 29, 2007 and are applicable to annual periods beginning on or after January 1, 2009. The amended standard requires capitalization of borrowing costs attributable to qualifying assets. Qualifying assets are assets that take substantial time to get ready for their intended use or sale. It applies only to assets measured at historical cost. Since the Group has not identified any material qualifying assets, the standard is not expected to impact the Group’s consolidated financial statements.

(xii) Amendments to IAS 1 — Presentation of Financial Statements Amendments to IAS 1 were published on September 6, 2007 and are applicable to annual periods beginning on or after January 1, 2009. The amendments introduce changes that require information in financial statements to be aggregated on the basis of shared characteristics and to introduce a

F-216 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued) statement of comprehensive income. The amendments are not expected to have a significant impact on the Group’s financial statements.

(xiii) Revision to IFRS 3 Business Combinations and Amendment to IAS 27 Consolidated and Separate Financial Statements A revision to IFRS 3 and an amendment to IAS 27 were issued on January 10, 2008 and are effective for annual periods beginning on or after January 1, 2009, with early application permitted. Changes incorporate the revised guidance on acquisitions and business combinations. The changes will not impact the Group’s financial statements. The Group will apply IFRS 3 revised and amended IAS 27 to future transactions.

(xiv) Amendment to IFRS 2, Group and Treasury Share Transactions The amendment to IFRS 2 was published on January 17, 2008 and is applicable to annual periods beginning on or after January 1, 2009. The amendment clarifies that vesting conditions are service conditions and performance conditions only and that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment. This amendment will not impact the Group’s financial statements.

(xv) IFRS Improvements 2008 The International Accounting Standards Board has published “IFRS Improvements”, which amend 20 standards. The amendments include changes in presentation, recognition and valuation and include terminology and editorial changes. The majority of the amendments will be effective for annual periods starting on January 1, 2009. The Group will adopt the changes in accordance with transition provisions. The Group is currently analyzing the impact of the amended standards on the Group’s financial statements.

(xvi) Amendments to IAS 39: Financial Instruments: Recognition and Measurement: Eligible Hedged Items The amendment was published on July 31, 2008. It provides additional guidance on what can be designated as a hedged item. Entities are required to apply the amendment retrospectively for annual periods beginning on or after July 1, 2009 with earlier application permitted. The amendments will not affect the Group’s financial statements.

(xvii) Amendment to IFRS 7 Improving Disclosures about Financial Instruments The amendment was published on March 5, 2009. It requires enhanced disclosures about fair value measurements and liquidity risk. The amendments are applicable retrospectively for annual periods beginning on or after 1 January 2009. Entities are not required to provide comparative disclosures in the first year of adoption.

(xviii) Amendments to IFRIC 9 and IAS 39 Embedded Derivatives The amendments were published on March 12, 2009. They clarify the accounting treatment for embedded derivatives when reclassifying financial instruments. The amendments apply retrospectively and are required to be applied for annual periods ending on or after June 30, 2009. These amendments will not affect the Group’s financial statements.

F-217 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

(xix) IFRS Improvements 2009 On April 16, 2009 the International Accounting Standards Board issued “IFRS Improvements”, which amend 12 standards. The amendments include changes in scope, presentation, recognition and valuation and include terminology and editorial changes. The majority of the amendments are effective for annual periods starting on January 1, 2010, but some changes are effective for annual periods beginning on or after July 1, 2009. The Group is currently assessing the impact of the changes on the Group’s financial statements.

(xx) Amendments to IFRS 2 Group Cash-Settled Share-Based Payment Transactions The amendments were published on June 18, 2009. They clarify the accounting treatment for group cash-settled share-based payment transactions in the separate or individual financial statements of the entity receiving the goods or services when that entity has no obligation to settle the share- based payment transaction. The amendments are effective for annual periods starting on or after January 1, 2010. The amendments will not affect the Group’s financial statements. At the date of preparation of these financial statements the following standards and IFRIC interpretations had not been adopted by the EU: • IFRS Improvements 2009 • IFRIC 17 — Distributions of Non-cash Assets to Owners • IFRIC 18 — Transfers of Assets from Customers • Amendment to IFRS 7 Improving Disclosures about financial instruments • Amendments to IFRIC 9 and IAS 39 Embedded Derivatives • Amendments to IFRS 2 Group Cash-settled Share-based Payment Transactions

3. Financial risk management 3.1 Financial risk factors The Group is exposed to a variety of financial risks, such as foreign currency and interest rate risk, liquidity risk and credit risk. Management observes the situation in the financial markets and acts to minimize the risk wherever possible. Risk management activities are undertaken in accordance with the Company’s shareholder who provides financing for the Group’s operations. The Management of the Company has not adopted a formal financial risk management policy. The finance department of the Company identifies and monitors risk factors affecting the Group and prepares monthly forecasts of financial liquidity to identify the expected cash surpluses or deficits. The finance director of the Company accepts credit limits for distributors of the Group’s services. a. Foreign currency risk The Group’s revenue is primarily denominated in Polish złoty. Certain liabilities, primarily those related to purchases of foreign programming rights and satellite transponder costs, are denominated in US dollars or euro. Liabilities related to purchases of decoders are denominated in Polish złoty but are linked to the US dollar through a price setting mechanism based on the US dollar. Other costs are predominantly denominated in Polish złoty. The Group is primarily financed in the form of loans from related parties, denominated in euro. Therefore, the exposure

F-218 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued) arising from foreign currency denominated purchases is to a significant degree matched by the inflow of foreign currency financing. As a result, Management views the euro denominated loans from related parties as the most significant source of foreign currency risk exposure. The euro denominated loans have maturity dates between the years 2011 and 2018.

To date, the Group has not used financial instruments to hedge against foreign currency risk based on the expectation of a long-term appreciation of the Polish złoty, and in accordance with the policy of the Company’s shareholder.

At December 31, 2008, had the PLN weakened/strengthened by 10% against the, euro with all other variables held constant, the net loss for the year ended December 31, 2008 would have been 80,354 higher/lower, as a result of foreign exchange losses/gains on the translation of related party loans. Such a weakening of the PLN would result in an aggregate increase in future estimated undiscounted payments resulting from outstanding loan liabilities equal to 128,872.

Moreover, at December 31, 2008, had the PLN weakened/strengthened by 10% against the euro and US dollar, with all other variables held constant, the net loss for the year ended December 31, 2008 would have been 3 785 higher/lower, as a result of foreign exchange losses/gains on the translation of trade payables expressed in these currencies. b. Interest rate risk

The Group’s exposure to interest rate risk arises on interest bearing liabilities, primarily the loans from related parties where interest is linked to EURIBOR at the beginning of the interest period. At December 31, 2008, had the variable interest rate increased/decreased by 1 p.p., with all other variables held constant, the net loss for the year ended December 31, 2008 would have been 5,424 higher/lower, as a result of increased/decreased interest rate expense on related party loans.

An increase in interest rates by 1 percentage point, starting from the next interest period, which is the year 2009, would result in an aggregate increase in future payments related to the loans by 1,164 in respect of loan due in 2011, by 41,959 for loans due in 2015, and by 7,931 for loans due in 2018.

Moreover, a portion of liabilities related to purchases of decoders carry interest at a variable rate of 12-month WIBOR plus 2.2%. An aggregate increase in the interest rate of 1 percentage point, starting from the next interest period, which is the year 2009, would result in an aggregate increase in future payments related to the purchases of decoders by 1,023. To date, the Group has not used financial instruments to hedge against interest rate risk arising on EURIBOR and WIBOR. c. Liquidity risk

The Group maintains sufficient cash to meet its obligations as they become due and has additional funding available through committed loan facilities. Management monitors and forecasts the expected cash flows regularly. The Group business plan provides for future financing primarily in the form of loans from related parties. The table below analyses the Group’s financial liabilities that will be settled into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The balances in the table are the contractual undiscounted cash flows including interest. Balances due within 12 months equal their carrying balances.

F-219 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

Within Between Above 1 year 1-2 years 2 years At December 31, 2008 Loans from related parties...... - - 1,288,722 Financial lease liabilities ...... 2,218 1,578 860 Payables to decoders supplier ...... 78,313 14,690 13,555 Other trade payables ...... 107,190 - - Other liabilities and accruals ...... 72,265 - - 259,986 16,268 1,303,137

Within Between Above 1 year 1-2 years 2 years At December 31, 2007 Loans from related parties ...... - - 638,627 Financial lease liabilities ...... 1,996 1,884 1,679 Payables to decoders supplier ...... 69,816 14,240 27,380 Other trade payables ...... 37,858 - - Other liabilities and accruals ...... 26,262 - - 135,932 16,124 667,686 d. Credit risk Financial assets which potentially expose the Group to concentration of credit risk consist principally of trade receivables. The primary source of trade receivables is the sale of services to subscribers to the pay TV service, which consists of a large group of individuals and companies with a relatively low individual value of their purchases from the Group. Credit risk is therefore very dispersed and is additionally limited by the Group’s policy of monitoring the collection of receivables and deactivating the service for customers who do not pay their subscription fees. The Group monitors the statistics related to late or non-payment of subscription fees and creates bad debt provisions based on the available statistics. The Group performs ongoing credit evaluations of the financial condition of its distributors and in many cases requires certain collateral in the form of deposits, bills of exchange or bank guarantees. Collateral is provided in order to secure the Group’s receivables arising from activation fees collected by distributors from subscribers on behalf of the Group, receivables from the sale of decoders and prepaid decoding cards to distributors, as well as from the value of decoders and other devices provided to distributors for further distribution to the Group’s subscribers. The Group places its cash and cash equivalents and restricted cash with financial institutions that the Group believes are credit worthy. e. Risk related to growth prospects in an uncertain economic environment The Group began marketing its services in October 2006. During more than two years of operation it has acquired a significant subscriber base and established itself as a strong player in the pay TV market in Poland. The Group continues to generate operating losses as it invests in further growth. As at the balance sheet date it has not reached a sufficient number of customers to guarantee the profitability of its core operations. The competitive nature of the pay TV market in Poland, as well as

F-220 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued) a deteriorating macroeconomic environment, pose a risk of slowdown in demand for the Group’s services, which may extend the period in which the Group generates losses and is dependent on shareholder financing.

The ongoing global liquidity crisis which commenced in the middle of 2007 has resulted in, among other things, a lower level of capital market funding, lower liquidity levels across the banking sector, and, at times, higher inter-bank lending rates and very high volatility in stock markets. The uncertainties in the global financial markets have also led to bank failures and bank rescues in the United States of America, Western Europe, Russia and elsewhere. Indeed the full extent of the impact of the ongoing financial crisis is proving to be impossible to anticipate or completely guard against.

3.2 Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. In the early phase of its operation the Group, is relying on financing from its shareholder and related entities in order to cover investment requirements and operating losses. Financing is provided in the form of issues of new shares or loans. In accordance with the shareholder’s policy and in line with expectations of future profitability and positive cash-flows, financing in 2008 was provided primarily in the form of loans.

3.3 Fair value estimation

The face values less any estimated credit adjustments for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values.

4. Revenue Year ended Year ended December 31, December 31, 2008 2007 Net revenue from activation...... 30,709 24,653 Net revenue from subscription and VOD ...... 201,626 73,218 Net revenue from pre-paid subscription...... 1,086 - Net revenue from sales of goods for resale ...... 6,635 417 Other sales revenues ...... 20,794 7,677 Total ...... 260,850 105,965

F-221 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

Other revenue relates mainly to amounts earned from sales of programming rights and programmes produced by the Group and from provision of technical and other services. In the year ended December 31, 2008 revenues from related parties amounted to 15,641 (for the year ended December 31, 2007: 6,194) — see also note 25.1.

5. Operating expenses Year ended Year ended December 31, December 31, 2008 2007 Fees for broadcasting television channels ...... 168,617 90,175 Costs of production of channels and programs ...... 87,954 58,874 Marketing services ...... 67,011 46,862 Amortization, depreciation and impairment ...... 59,951 29,870 Distribution costs ...... 41,506 23,782 Other external services ...... 32,179 16,845 Wages and salaries ...... 30,224 20,424 Social security ...... 4,157 2,847 Costs of sales of goods for resale ...... 9,066 - Materials and energy ...... 9,024 9,052 Taxes and fees ...... 1,001 532 Other ...... 18,310 6,318 Total ...... 529,000 305,581

Costs of production of channels and programs consist primarily of transmission costs, satellite transponders rental, rental of production facilities and costs of external production staff. Marketing costs consist primarily of advertisement production costs, purchased advertising media, public relations and market research costs. Distribution costs consist primarily of commissions paid to agents distributing the Group’s services. External services consist primarily of consulting services, tax and legal advice and IT support and maintenance services. Costs of goods for resale relate to costs of decoding cards, decoders and satellite dishes, which the Group sells to its distributors, related companies and other entities. During the year ended December 31, 2008 the Group incurred costs related to obligatory pension fund contributions in the amount of 3,303 (in 2007: 2,229). During the year ended December 31, 2008, the costs related to operating leases amounted to 46,798 (in 2007: 33,775).

F-222 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

6. Finance income and cost

Year ended Year ended December 31, December 31, Financial income 2008 2007 Other interest income ...... 488 471 Net foreign exchange gains on loans (note 25.3) ...... - 23,242 Total ...... 488 23,713

Year ended Year ended December 31, December 31, Financial cost 2008 2007 Interest cost on loans from related parties (see Note 25.2) ...... (44,745) (15,779) Guarantee fees to related party (see Note 25.2) ...... (655) (368) Unwinding of interest on programming rights liabilities ...... (5,257) (7,588) Interest paid and accrued on payables to decoders supplier ...... (3,717) (6,378) Net exchange losses on loans (note 25.3)...... (118,047) - Net exchange losses on cash in bank ...... (666) (1,772) Other financial costs ...... (408) (218) Total ...... (173,495) (32,103)

The exchange differences (charged)/credited to the income statement are included as follows:

Year ended Year ended December 31, December 31, Exchange differences 2008 2007 Net foreign exchange (losses)/gains relating to operating expenses . . . (14,732) 10,002 Net foreign exchange losses on cash in bank...... (666) (1,772) Net foreign exchange (losses)/gains on loans...... (118,047) 23,242 Total ...... (133,445) 31,472

7. Property, plant and equipment

December 31, December 31, 2008 2007 Decoders and satellite dishes ...... 258,727 146,945 Other technical equipment ...... 9,705 10,089 Servers...... 875 1,917 Vehicles ...... 3,388 3,667 Furniture and fixtures...... 2,469 2,150 Leasehold improvements ...... 1,310 588 Property, plant and equipment before commissioning (see also note 9) ...... 25,059 76,514

Total ...... 301,533 241,870

F-223 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

On August 21, 2007 the Group entered into an agreement for an ordinary pledge over movable assets and receivables in favour of ADB Services S.A., Switzerland. The Group established an ordinary pledge over all decoders purchased by the Group from ADB Services S.A. until August 1, 2007. See also Note 11 for information about ordinary pledge over receivables. The pledges have been established to secure ADB Services’ outstanding trade receivables from the Group related to purchases of decoders made prior to August 1, 2007. The Group has no other property, plant and equipment which are used as collateral for repayment of liabilities or borrowings. During the year ended December 31, 2008 the Group assessed the impairment loss related to the value of decoders provided to customers which are not expected to be returned after termination of the subscription contracts. The impairment charge amounted to 4,191.

F-224 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

Changes in property, plant and equipment in 2008

Technical Property, plant Total equipment held Vehicles held and equipment property, under finance under finance Leasehold Decoders and Other Furniture before plant and lease lease improvements satellite dishes equipment and fixtures commissioning equipment Gross value January 1, 2008 ...... 2,773 4,719 673 168,455 13,180 3,538 77,419 270,757 Transfers ...... - - - 159,519 - - (159,519) - Additions...... — 822 886 — 3,094 1,119 109,069 114,990

F-225 Sale and liquidation ...... - (203) - - (6) - - (209) December 31, 2008 ...... 2,773 5,338 1,559 327,974 16,268 4,657 26,969 385,538

Accumulated depreciation and impairment January 1, 2008 ...... (856) (1,052) (85) (21,510) (3,091) (1,388) (905) (28,887) Depreciation charge for the period ...... (1,042) (935) (164) (43,546) (3,477) (800) — (49,964) Impairment ...... - - - (4,191) - - (1,005) (5,196) Sale and liquidation ...... - 37 - - 5 - - 42 December 31, 2008 ...... (1,898) (1,950) (249) (69,247) (6,563) (2,188) (1,910) (84,005)

Net book value at January 1, 2008...... 1,917 3,667 588 146,945 10,089 2,150 76,514 241,870

Net book value at December 31, 2008 ...... 875 3,388 1,310 258,727 9,705 2,469 25,059 301,533 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

Changes in property, plant and equipment in 2007

Property, Technical Vehicles Decoders plant and Total equipment held held under and equipment property, under finance finance Leasehold satellite Other Furniture before plant and lease lease improvements dishes equipment and fixtures commissioning equipment Gross value January 1, 2007 ...... 1,544 3,380 492 40,529 9,715 2,536 60,814 119,010 Transfers ...... - - - 127,926 - - (127,926) - Additions ...... 1,229 1,339 181 — 3,465 1,002 144,531 151,747 F-226 December 31, 2007...... 2,773 4,719 673 168,455 13,180 3,538 77,419 270,757

Accumulated depreciation and impairment January 1, 2007 ...... (129) (315) (21) (1,486) (387) (355) (1,006) (3,699) Depreciation charge for the period ...... (727) (737) (64) (20,024) (2,704) (1,033) - (25,289) Provision for the settlement of physical count ...... - - - - - — 101 101

December 31, 2007...... (856) (1,052) (85) (21,510) (3,091) (1,388) (905) (28,887)

Net book value at January 1, 2007 ...... 1,415 3,065 471 39,043 9,328 2,181 59,808 115,311

Net book value at December 31, 2007 ...... 1,917 3,667 588 146,945 10,089 2,150 76,514 241,870 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

8. Intangible assets December 31, December 31, 2008 2007 Goodwill ...... - - Trademarks ...... 707 785 Computer software and other intangible assets ...... 13,273 11,654 Intangibles before commissioning for use ...... 396 323

Total ...... 14,376 12,762

The Group has no intangible assets which are used as collateral for repayment of liabilities or borrowings. During the year ended December 31, 2007 the Group decided to replace some of its computer software systems. Due to partial discontinuation of use of the previously used software, it was reviewed for impairment and an impairment charge in the amount of 589 was recognised.

Changes in intangible assets in 2008 Computer Intangibles Total software and before property, other intangible commissioning plant and Trademarks Goodwill assets for use equipment Gross value January 1, 2008 ...... 1,047 954 15,404 323 17,728 Additions ...... 202 - 6,130 73 6,405 December 31, 2008...... 1,249 954 21,534 396 24,133

Accumulated amortization and impairment January 1, 2008 ...... (262) (954) (3,750) - (4,966) Amortization charge for the period...... (280) - (4,511) - (4,791)

December 31, 2008...... (542) (954) (8,261) - (9,757)

Net book value at January 1, 2008 ...... 785 - 11,654 323 12,762

Net book value at December 31, 2008 ...... 707 - 13,273 396 14,376

F-227 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

Changes in intangible assets in 2007

Computer Intangibles Total software and before property, other intangible commissioning plant and Trademarks Goodwill assets for use equipment Gross value January 1, 2007 ...... 813 954 10,022 - 11,789 Additions ...... 234 - 5,382 323 5,939 December 31, 2007...... 1,047 954 15,404 323 17,728

Accumulated amortization and impairment January 1, 2007 ...... (42) - (343) - (385) Amortization charge for the period...... (220) - (2,818) — (3,038) Write-off and impairment . . . — (954) (589) - (1,543)

December 31, 2007...... (262) (954) (3,750) — (4,966)

Net book value at January 1, 2007 ...... 771 954 9,679 - 11,404

Net book value at December 31, 2007 ...... 785 - 11,654 323 12,762

9. Property, plant and equipment and intangible assets before commissioning

December 31, December 31, 2008 2007 Decoders before commissioning ...... 20,829 74,751 Satellite dishes before commissioning ...... 5,691 2,320 Other ...... 449 348 Intangible assets before commissioning ...... 396 323 Other impairment and provision ...... (1,910) (905)

Total ...... 25,455 76,837

Decoders and satellite dishes are not depreciated before activation and include devices which have already been delivered to the distribution network and devices stored in the distribution warehouse, and which are not yet in a location and condition necessary for them to generate income for the Company.

As a result of the physical count of decoders and satellite dishes performed in the Group’s warehouse and in the distribution network as at December 31, 2008 and December 31, 2007, the Group established a provision for missing devices in the amount of 905.

F-228 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

The Group assessed the impairment loss related to the purchases of equipment which was not commissioned and which had lost its economic value. The impairment charge recognized in 2008 amounted to 1,005 (2007: reversal of impairment charge in the amount of 101).

10. Investment in joint venture December 31, December 31, 2008 2007 Beginning of the year ...... 990 — Share of (loss)/profit ...... (476) 1,126 Exchange differences ...... 84 (136)

End of year...... 598 990

The Group’s share of the results in the joint venture and its aggregated assets (including goodwill) and liabilities is as follows: % Country of interest Name incorporation Assets Liabilities Revenues Loss held MGM Channel Poland Limited ...... United Kingdom 5,945 5,347 4,887 (476) 45

The joint venture was incorporated on February 1, 2007.

11. Trade receivables December 31, December 31, 2008 2007 Receivables from subscribers at amount due...... 16,016 7,371 Impairment provision for receivables from subscribers ...... (3,653) (2,729) Receivables from distributors ...... 4,145 1,523 Receivables from related parties with respect to sales of goods and services (Note 25.4) ...... 18,426 2,527 Receivables from other buyers with respect to sales of goods and services ...... 1,353 451

Total ...... 36,287 9,143

Changes in impairment provision for receivables from subscribers:

2008 2007 At the beginning of the year ...... 2,729 67 Additional provision net ...... 924 2,662

At the end of the period ...... 3,653 2,729

The amount of the impairment provision for receivables is calculated based on available historical data concerning late payment of receivables. Other receivables are monitored and management

F-229 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued) assesses the risk of their collectability based on available information about the financial standing of the debtors.

Receivables from distributors include activation fees and receivables for goods and services sold.

On August 21, 2007 the Group entered into an agreement for the ordinary pledge over movable assets and receivables in favour of ADB Services S.A., Switzerland. The Group established an ordinary pledge over its receivables from bank accounts which serve the purpose of collecting subscription payments made by its customers. See also Note 7 for information about an ordinary pledge over decoders. The pledges have been established to secure ADB Services outstanding trade receivables from the Group related to purchases of decoders made prior to August 1, 2007.

The ageing analysis of trade receivables is as follows:

December 31, December 31, 2008 2007 Not due ...... 9,600 1,252 Up to 30 days ...... 8,968 6,167 31-90 days...... 3,244 2,281 91-180 days...... 2,136 679 181-360 days ...... 13,063 1,027 over 360 days ...... 2,929 466

Total ...... 39,940 11,872

44% of trade receivables come from subscribers. The Company estimates that 77% of them will be fully collected, the rest was impaired. 51% of trade receivables are from related parties and 5% from distributors and other buyers. The Company expects they all will be fully paid.

12. Inventories

December 31, December 31, 2008 2007 Decoders for sale ...... 2,845 — Cables and accessories ...... 345 674 Satellite dishes for sale...... 224 129 Sets of decoder and pre-paid cards ...... 510 — Coding cards for decoders ...... 3,901 3,471

Total ...... 7,825 4,274

Decoders held in inventory are primarily the set-top boxes purchased by Cyfrowy Dom for sale to its customers of the prepaid pay television service.

Coding cards are purchased by the Group and held in inventory before they are provided to subscribers together with decoders.

Accessories and satellite dishes are sold to distributors of the Company’s services or are used by the Company for replacement of lost or damaged items, such as cables and remote controls.

F-230 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

13. Prepayments December 31, December 31, 2008 2007 Settlement of service fees for IT systems ...... 1,953 2,305 Settlement of programming rights ...... 5,006 1,959 Deferred costs of pre-paid cards ...... 2,039 — Other deferred costs ...... 1,244 538

Total ...... 10,242 4,802

14. VAT receivables December 31, December 31, 2008 2007 Recoverable VAT...... 12,233 18,019 VAT to be settled in subsequent months ...... 3,596 9,177

Total ...... 15,829 27,196

15. cash and cash equivalents December 31, December 31, 2008 2007 Cash in hand...... 27 14 Cash on bank accounts...... 9,455 6,032 Restricted cash ...... 400 543

Total ...... 9,882 6,589

Cash on bank accounts — Fitch credit ratings of banks used: December 31, December 31, 2008 2007 A rated bank ...... 9,829 6,504 AA- rated bank...... 19 59 A+ rated bank ...... 7 12

Total...... 9,855 6,575

F-231 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

16. Other Current assets

December 31, December 31, 2008 2007 Allocation of promotional discounts ...... 18,631 7,561 Other current assets from related parties ...... 75 75 Other current assets ...... 275 236

Total ...... 18,981 7,872

17. Share capital (not in thousands) The total number of shares as at December 31, 2008 is 80,000 (not in thousand). The par value of one share is PLN 500.

As at December 31, 2008, the Company’s sole shareholder is Neovision Holding B.V., an ITI Group company.

18. Current and non-current lease liabilities

Lease liabilities payable between Lease liabilities 01.01.2010 and payable in 2009 31.12.2013 Computer hardware ...... 1,026 - Vehicles ...... 1,050 2,338

Total ...... 2,076 2,338

No conditional lease payments were expensed in the year ended December 31, 2008 and no sublicense agreements were applicable.

Computer hardware Vehicles Lease liabilities presented in balance sheet ...... 1,026 3,388 Future finance charges on finance lease liabilities ...... 35 207

Future minimum lease payment...... 1,061 3,595

Future minimum lease Future payment minimum lease between payment 01.01.2010 and in 2009 31.12.2013 Computer hardware ...... 1,061 - Vehicles ...... 1,157 2,438

Total ...... 2,218 2,438

F-232 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

For the carrying value of leased computer hardware and leased vehicles as at December 31, 2008 see note 7. Leasing interest paid in 2008 amounted to 304 (2007: 190). Details of the lease conditions are specified in the table below: Description Computer hardware Vehicles Lease period...... 36 months 48 months Initial payment...... 0% 0% Residual value ...... market value 30% Purchase obligation / option at the end of lease period ...... Purchase option at Purchase obligation market value at residual value

19. Other non-current liabilities Other non-current liabilities include accrued liabilities to supplier of decoders. December 31, December 31, 2008 2007 Non-current trade payables for decoders ...... 25,819 37,355

Total ...... 25,819 37,355

20. Trade payables December 31, December 31, 2008 2007 Current payables to decoder supplier ...... 67,709 69,816 Other payables to foreign suppliers (excluding decoder supplier) . . 37,854 9,013 Payables to related entities (Note 25.4) ...... 34,683 9,209 Payables to distributors ...... 18,468 4,242 Other payables to domestic suppliers ...... 26,789 15,394

Total ...... 185,503 107,674

F-233 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

21. Other liabilities and accruals December 31, December 31, 2008 2007 Accrual for commissions and other liabilities to distributors ...... 20,821 7,330 Accrual for liabilities to external programming content providers. . 14,513 4,069 Accrual for liabilities to related parties (Note 25.4) ...... 10,762 989 Accrual for royalty payments ...... 9,217 2,489 Accrual for marketing campaign fund...... 4,821 2,311 Accrual for satellite broadcasting costs ...... 4,474 7,021 Accrual for refurbishment of decoders ...... 1,056 245 Other liabilities and accruals ...... 6,601 1,808

Total ...... 72,265 26,262

22. Deferred income December 31, December 31, 2008 2007 Activation fees ...... 848 3,966 Prepayments received...... 1,557 678 Prepaid subscription ...... 3,791 - Other...... - 4

Total ...... 6,196 4,648

23. Taxation December 31, December 31, 2008 2007 Current tax charge ...... - - Deferred tax charge ...... - -

December 31, December 31, Reconciliation of accounting profit to tax charge 2008 2007 Loss before tax ...... (441,414) (207,372) Income tax benefit at the statutory rate of 19% ...... 83,869 39,401 Net tax impact of expenses not deductible for tax purpose and non taxable revenue ...... (137) (82) Impact of tax losses and deductible temporary differences for which no deferred income tax asset was recognized ...... (83,732) (39,319)

Tax for the year ...... - -

F-234 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

The tax authorities may at any time inspect the books and records within 5 years from the end of the year in which the tax declaration was submitted, and may impose additional tax assessments with penalty interest and penalties. The Company’s management is not aware of any circumstances which could give rise to a potential material liability arising in this respect. Management has decided not to recognize a deferred tax asset since the Group is in the phase of developing its operations, is still incurring losses and material uncertainty exists as to the moment of generating taxable income which would allow the Group to utilize deductible temporary differences. The Group did not recognize deferred income tax assets of 98,147 (2007: 52,531) in respect of tax losses. Tax losses can be used to offset taxable profits achieved during the next five fiscal years. Losses amounting to 71,362, 205,119 and 240,085 expire in 2011, 2012 and 2013 respectively.

24. Commitments The Group has entered into agreements which result in commitments to make payments in the future. The commitments derived from these agreements are presented below.

(i) Commitments related to lease of satellite transponders As at December 31, 2008, the Group had commitments to make payments in the future in connection with the rental of satellite transponders. These commitments are scheduled to be paid as follows, (in EUR thousands): Non-related parties Total (EUR thousands) (EUR thousands) Due in 2009 ...... 7,600 7,600 Due in 2010 ...... 7,600 7,600 Due in 2011 ...... 6,492 6,492 Due in 2012 ...... 3,800 3,800 Due in 2013 ...... 3,800 3,800 Due in 2014-2018...... 17,733 17,733

47,025 47,025

F-235 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

(ii) Commitments related to rental of office space As at December 31, 2008, the Group had commitments to make payments in the future in connection with the rental of office space in Warsaw (rental agreement with Poland Media Properties S.A.) and in Cracow (rental agreement with a non-related company). These commitments are scheduled to be paid as follows, (in PLN thousands): Related parties Non-related parties Total (PLN thousands) (PLN thousands (PLN thousands Due in 2009 ...... 951 591 1,542 Due in 2010 ...... 951 - 951 Due in 2011 ...... 79 - 79

1,981 591 2,572

(iii) Commitments related to purchase of decoders The Group has commitments to purchase decoders for which orders have already been placed. As at December 31, 2008, the estimated value of decoders ordered and not yet delivered was 56,022.

(iv) Commitments related to programming rights As at December 31, 2008, the Company had commitments to make future minimum guaranteed payments to providers of programming licenses. These commitments are scheduled to be paid as follows: Total (PLN thousands) Due in 2009 ...... 74,878 Due in 2010 ...... 41,573 Due in 2011 ...... 40,250 Due in 2012 ...... 23,714

Total ...... 180,415

F-236 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

25. Related Party transactions 25.1 Revenue: Year ended Year ended December 31, December 31, 2008 2007 Grupa Onet S.A...... 217 30 TVN S.A...... 4,969 6,075 Mango Media Sp. z o.o...... 293 71 Klub Piłkarski Legia Warszawa S.A...... 793 8 MGM Channel Poland ...... 9,229 - Other ITI Group companies ...... 140 10

Total ...... 15,641 6,194

Revenues from TVN comprise primarily sale of television programs, distribution and rental of decoders and technical services. Revenues from MGM Channel Poland comprise programming production and technical services. Revenues from the other companies listed above include primarily sale of advertising. All the companies listed above (except for MGM Channel Poland) belong to the ITI Group. MGM Channel Poland is a joint venture between the Company and MGM Networks Inc.

25.2 Expenses: Year ended Year ended December 31, December 31, 2008 2007 Strateurop B.V. — interest on loan ...... 19,899 9,288 N-Vision B.V. — interest on loan ...... 13,066 196 Neovision Holding B.V. — interest on loan ...... 5,545 6,295 TVN S.A. — interest on loan ...... 6,235 - TVN S.A...... 35,331 26,245 Grupa Onet S.A...... 1,554 1,111 Klub Piłkarski Legia Warszawa S.A...... 2,143 4 MGM Channel Poland ...... 10,920 5,268 Other ITI Group companies ...... 4,295 3,694

Total ...... 98,988 52,101

Expenses relating to TVN S.A. consist primarily of purchase of programming rights, advertising services, programming production services, satellite broadcasting and other technical services, rental of space and other services. Expenses relating to Grupa Onet S.A. consist primarily of advertising services, software development services and commissions for distribution of Company’s services.

F-237 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

Expenses relating to Klub Piłkarski Legia Warszawa consist of advertising services.

Expenses relating to MGM Channel Poland consist of the purchase of programming rights.

All the companies listed above (except for MGM Channel Poland) belong to the ITI Group. MGM Channel Poland is a joint venture between the Company and MGM Networks Inc.

25.3 Loans from related party

December 31, December 31, 2008 2007 Loans from N-Vision B.V...... 223,909 54,554 Interest N-Vision B.V...... 14,143 196 Loans from Strateurop B.V...... 269,775 231,602 Interest accrued Strateurop B.V...... 33,945 8,965 Loans from Neovision Holding B.V...... 57,033 79,152 Interest accrued Neovision Holding B.V...... 14,321 7,007 Loans from TVN ...... 181,295 - Interest accrued TVN ...... 9,119 -

Total ...... 803,540 381,476

The loans bear interest at a floating annual rate of 12-month EURIBOR plus a margin of 3.5 p.p. (in the case of loans from Neovision Holding B.V.) or 2.375 p.p. (in the case of loans from Strateurop B.V., N-Vision B.V. and TVN). In 2008, the interest rate was 8.25% p.a. The loans are contractually due to be repaid in 2011 (Neovision Holding B.V.) or in 2015 (Strateurop B.V. and N-Vision B.V.) or in 2018 (N-Vision B.V.). The loans are denominated in euro. As of December 31, 2008 the total outstanding amount of the loans (including accrued interest) was euro 192,584 (2007: euro 106,498).

According to the terms of the loan agreements concluded, at the Company’s discretion the payment of interest may be deferred until maturity of each loan. As a result, interest accrued on the loans is presented within non-current liabilities.

The Group can prepay the loans at any time at an amount equal to the principal amount and accrued interest, without any penalty or premium. In accordance with the agreements, a lender may request immediate repayment of a loan in the event of default, which include among others: non payment of any tranche of the loan, the imposition of legal restrictions on the Company which would prevent it from complying with its obligations under the loan agreement, the Company suspending or threatening to suspend all or a substantial part of its operations, a petition against the Company being entered for bankruptcy, reorganization, receivership, liquidation, dissolution or a decree or court order adjudging the Company bankrupt or insolvent. As of December 31, 2008 and until the date these consolidated financial statements are approved by the Management Board, no event of default has occurred.

During 2008 the Company recognized unrealized exchange losses on all loans in the amount of 118,047 (in 2007: gains 23,242), see also note 6.

F-238 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

25.4 Outstanding balances arising from sale/purchase of goods and services December 31, December 31, 2008 2007 Receivables: TVN S.A...... 6,193 2,471 Klub Piłkarski Legia ...... 189 - Grupa Onet S.A...... 201 - MGM Channel Poland ...... 11,545 - Other ITI Group companies ...... 298 56

Total ...... 18,426 2,527

December 31, December 31, 2008 2007 Payables and accruals(*): TVN S.A...... 24,685 8,516 Grupa Onet S.A...... 1,237 257 Klub Piłkarski Legia ...... 1,549 - Discovery TVN Ltd...... 5,060 - Accrual for MGM Channel Poland ...... 10,757 989 Other ITI Group companies ...... 2,157 436

Total ...... 45,445 10,198

(*) accrual reported in Note 21, all other liabilities reported in Note 20

F-239 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued)

26. Reconciliation of net income and cash flows from operating activities

Year ended Year ended December 31, 2008 December 31, 2007 Loss for the year ...... (441,414) (207,372) Adjustments for: Share of profit/loss of associates ...... 476 (1,126) Depreciation, amortization and impairment (see note 7 and 8) ...... 59,951 29,870 Financial income and costs, net (see note 6) ...... 172,341 (1,559) Changes in working capital: Trade, tax and VAT receivables (see notes 11 and 14) . . . . (16,033) (5,730) Inventories (see note 12) ...... (3,551) 2,143 Other assets (see note 16) ...... (11,039) - Prepayments including reclassification from programming rights (see note 13) ...... (4,238) (3,244) Trade, taxation, custom duty and social security payables, other non-current liabilities (see notes 19 and 20) ...... 78,281 2,904 Accruals and deferred income (see notes 21 and 22) . . . . 47,551 11,848 Net cash flows from operating activities...... (117,675) (172,266)

27. Other information Management Board compensation Management Board compensation for the year ended December 31, 2008 consisted solely of short term remuneration and amounted to 1,623 (in the year ended December 31, 2007: 1,385).

Supervisory Board compensation In the years ended December 31, 2008 and December 31, 2007 members of the Company’s Supervisory Board did not receive any compensation.

28. Post balance sheet events

28.1 Change in Shareholders’ structure On 11 March, 2009 the TVN Group reached agreement with the ITI Group to raise its stake in “n” DTH platform from 25% to 51% by acquiring an additional 26% of shares in Neovision Holding B.V., the sole shareholder of ITI Neovision Sp. z o.o.

28.2 Guarantees issued On July 31,2009, on adhesion to the Fourth Supplemental Indenture relating to EUR 235,000 Senior Notes issued by TVN Finance Corporation plc (subsidiary of TVN S.A.), the Company unconditionally

F-240 ITI NEOVISION Sp. z o.o. Notes to the consolidated financial statements (Expressed in PLN, all amounts in thousands, unless otherwise stated) — (Continued) guaranteed any liabilities to bondholders arising from the Senior Notes held. The Senior Notes mature on December 15, 2013, bear interest at the rate of 9.5% and may be redeemed in whole or in part at any time on or after December 15, 2008. The Senior Notes are jointly guaranteed by the Company, TVN S.A. and Grupa Onet.pl S.A. (subsidiary of TVN S.A.) Moreover, in 2009 the Company guaranteed the PLN 200,000 multicurrency loan facility concluded between TVN S.A. and Bank Pekao SA, up to the maximum amount of PLN 270,000. The facility is available until June 30, 2011. The facility bears interest at six-month WIBOR, EURIBOR or LIBOR (depending on the loan currency) plus a margin which at the date of the agreement being June 20, 2008 was 1%. The facility is secured on the trade receivables of TVN S.A. up to the equivalent of EUR 25 million. The loan facility is jointly guaranteed by the Company, Grupa Onet.pl S.A. and Mango Media Sp. z o.o. (subsidiaries of TVN S.A.).

28.3 Significant commitments On March 10, 2009 the Company entered into a sublicense agreement with TVN to exploit pay tv and video-on-demand rights from a major movie production studio. Moreover, on May 22, 2009 the Company purchased from Union des Associations Europeennes de Football (“UEFA”) headquartered in Switzerland, license rights to broadcast in Poland Champions League matches during the 2009/2010, 2010/2011 and 2011/2012 seasons, for a total amount of EUR 48,000.

F-241 THE ISSUER THE COMPANY TVN Finance Corporation II AB TVN S.A. Stureplan 4 c 4 tr ul. Wiertnicza 166 114 35 Stockholm 02-952 Warsaw Sweden Poland

LEGAL ADVISORS TO THE ISSUER AND THE COMPANY as to matters of as to matters of as to matters of as to matters of U.S. law Polish law Swedish law Dutch law Weil, Gotshal & Weil Gotshal & Advokatfirman Vinge Baker & McKenzie Manges Manges- Pawel KB Amsterdam N.V. One South Place Rymarz Sp.k. Sma˚ landsgatan 20 Claude Debussylaan 54 London EC2M 2WG ul. Emilii Plater 53 Box 1703 1082 MD Amsterdam United Kingdom 00-113 Warsaw 111 87 Stockholm The Netherlands Poland Sweden

LEGAL ADVISORS TO THE INITIAL PURCHASERS as to matters of as to matters of U.S. law Polish law Simpson Thacher & Bartlett LLP White & Case Citypoint W. Danilovicz, W. Surcewicz, Wspólnicy One Ropemaker Street ul. Marszalkowska 142 London EC2Y 9HU 00-061 Warsaw United Kingdom Poland

INDEPENDENT AUDITORS PricewaterhouseCoopers Sp. z o.o. Al. Armii Ludowej 14 00-638 Warsaw Poland

REGISTRAR, LUXEMBOURG LISTING, TRANSFER TRUSTEE AND PRINCIPAL PAYING AGENT AGENT AND PAYING AGENT The Bank of New York Mellon The Bank of New York Mellon London Branch (Luxembourg) S.A. One Canada Square Aerogolf Center London E14 5AL 1A Hoehenhof United Kingdom L-1736 Senningerberg Luxembourg O U07793