DataWalkJSF_2023-12-31

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DATAWALK S.A.. ECA S.A.

INDEPENDENT STATUTORY AUDITOR'S REPORT

ON THE AUDIT OF AN ANNUAL SEPARATE

FINANCIAL STATEMENT

AS AT 31 DECEMBER 2023

(UNAUTHORISED TRANSLATION FROM THE POLISH LANGUAGE)

10/4/2024

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INDEPENDENT STATUTORY

AUDITOR'S REPORT

For the General Meeting and the Supervisory Board of DataWalk S.A.

Report on the audit of an annual separate financial statement

Opinion

We have audited the annual separate financial statement by DataWalk S.A. (the “Company”),

which comprises an annual financial statement as at 31 December 2023, a separate balance

sheet together with a comprehensive income statement, separate statement on equity

changes, separate cash flow statement for the financial year from 1 January to 31 December

2023, and additional information with a description of adopted accounting principles, and

other explanatory notes (“separate financial statement”).

We believe that the attached separate financial statement:

 provides a true and fair view of the Company's property-wise and financial standing

as at 31 December 2023 and of its financial result and cash flows for the financial year

concluded on that day, pursuant to the applicable provisions of the International

Financial Reporting Standards approved by the European Union and adopted

accounting principles (policy);

 is compliant in terms of form and content with the provisions of the law applicable to

the Company and the Company's Articles of Association;

 is based on correctly kept accounting books in accordance with the provisions of

Chapter 2 of the act dated 29 September 1994 on accounting (“Accounting Act” –

cons. text, Dz. U. of 2023, item 120, as amended).

This opinion is coherent with the additional report for the Audit Committee, issued on 10

April 2024.

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Basis for opinion

We conducted our audit in accordance with the National Auditing Standards in the wording of

the International Auditing Standards adopted by Resolution of the National Council of

Statutory Auditors No. 3430/52a/2019 of 21 March 2019 on national auditing standards and

other documents, as amended and the resolution of the Council of the Polish Agency for

Audit Oversight No. 38/I/2022 of 15 November 2022 on national quality control standards,

and the National Auditing Standard 220 (amended) (“NAS”), and also pursuant to the Act of

11 May 2017 on Statutory Auditors, Audit Firms and Public Oversight (“Act on Statutory

Auditors” - cons. text Dz. U. of 2023, item 1015, as amended) and EU Regulation No.

537/2014 of 16 April 2014 on specific requirements regarding statutory audit of public-

interest entities and repealing Commission Decision 2005/909/EC (“ EU Regulation” – OJ EU

L158 of 27 May 2014, p. 77, as amended). Our responsibilities under these standards are

further described in the section of our report Responsibility of the statutory auditor for the

audit of the financial statement.

We are independent of the Company in accordance with the International Code of Ethics for

Professional Accountants (including the International Standards of Independence) of the

International Ethics Standards Board for Accountants (the “IESBA Code”) adopted by

resolution of the National Council of Statutory Auditors No. 3431/52a/2019 of 25 March 2019

on rules on professional ethics for statutory auditors, as amended, and with other ethical

requirements that apply to the audit of financial statement in Poland. We have fulfilled our

other ethical responsibilities in accordance with these requirements and the IESBA Code. In

conducting the audit, the key auditor and the audit firm remained independent of the

Company in accordance with the independence requirements of the Auditors Act and the EU

Regulation.

We believe that the audit evidence that we obtained is sufficient and appropriate to provide a

basis for our opinion.

Explanation with a comment - significant uncertainty regarding going concern

We hereby draw your attention to information included in the separate financial statement

regarding explanatory notes “Basis for the preparation of the financial statements – including

a description of circumstances indicating a threat to the going concern”.

The Management Board identified relevant events and circumstances that may cast serious

doubts in terms of the Company’s ability to continue its activities, including declining sales

revenues, negative cash flow on operations, and unfavourable profitability ratios. The

Management Board took actions aimed at improving the results and liquidity through

introducing a cost reduction scheme, optimizing workforce numbers and structures, and the

number of Company affiliates, increasing deployment team effectiveness, and adapting the

commercial portfolio to customer needs.

The Management Board reported that continuing development work associated with the

planned release of further, more technologically advanced Company product versions at the

current stage of Company development depends on third-party funding. The Management

Board accepts that without additional funding, the Company may have limited resources for

further investments, which may lead to delays in product development and continued

expansion of the commercial portfolio.

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The Management Board provides for a possibility to exercise the right to authorize

Company’s share capital increase or finance its investment activities via alternative capital

instruments and/or financial support schemes funded by the European Union or domestically,

which could effectively help in financing the Company’s activities.

We believe that the possibility of implementing the adopted assumptions is uncertain;

although, it cannot be ruled out that due to unforeseen costs or unforeseen reduction in the

rate of acquiring customers and revenues, increasing the demand for funding in each case,

the Company’s financial standing will significantly deviate from the assumptions, which may

adversely impact the Company’s operations, growth prospects, financial standing or results.

Our opinion does not include any modification in this regard.

Key audit matters

Key audit matters are issues that, as per our professional judgement, were of highest

significance in our audit of the separate financial statement for the current reporting period.

These include the most significant of the assessed material misstatement risk, including

assessed risks of material misstatement due to fraud. We have addressed these issues in the

context of our audit of the separate financial statement as a whole and also when formulating

our opinion. We have also summarized our response to such risk types, and in cases where

we deemed it appropriate, we presented our key observations concerning these risk types.

We do not state a separate opinion in relation to these matters.

Key audit matter How does our audit address this matter?

R&D work

The Company conducts work in the field

of IT development related to the

business asset construed as the

DataWalk platform.

In its separate financial statement, the

Company recognizes costs of completed

development work at PLN 15 538 thous.

and costs of development work in

progress at PLN 3 574 thous., which

accounts in total for 46% of the balance

sheet total as at 31 December 2023.

Details on the capitalization of

expenditure on development work and

expenditure incurred in relation to

development work in progress (including

information on the results of the

conducted impairment test) described in

notes 2.1, 2.2, 2.3 and 2.4 of the

separate financial statement, and

related to the accounting policy, have

been described in the explanatory note

to the separate financial statement.

Our procedures to address an identified key

risk included, among others:

 understanding and assessing the

process of identifying, accepting and

classifying development work

expenditure as intangible assets,

 verifying compliance of the

Company’s accounting policy with IAS

38,

 detailed reliability study associated

with the correct allocation of

development work expenditure,

 assessing the developed impairment

tests in terms of mathematical

correctness, rationale behind the key

parameters adopted by the

Company, compliance of financial

projections with the approved

financial plan, and the sensitivity of

the test to a change in the assumed

level of cash flows and discount rate,

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The issue was deemed as key audit

matter due to the scale of conducted

work, their impact on the Company’s

operations and the significance of the

amounts, as well as the fact that the

manner of their recognition in the

separate financial statement requires a

significant judgement of the

management.

 discussing key assumptions in the

impairment test with the Company’s

Management Board and other

authorized persons,

 analysing the disclosures in the

separate financial statement and

related to completed development

work and expenditure on

development work in progress.

Sales revenues

The procedures we implemented at the

stage of unit study and data analysis

made us assign the risk associated with

sales revenue identification and

recognition.

The risk of incorrect revenue recognition

may result, in particular, from fraud

involving the recognition of product and

service sales revenue in the wrong

period.

The disclosures related to detailed

information on revenue items are

presented in notes 24.1, 24.2, 24.3 and

24.4 of the separate financial statement,

and were described in the explanatory

notes to the separate financial

statement if related to the accounting

policy.

The issue was deemed a key audit

matter due to the significance of the

amounts, and the fact that the manner

of revenue identification and

recognition in the separate financial

statement requires significant estimates

and company management judgement.

Our procedures to address an identified key

risk included, among others:

 reviewing the accounting policy

related to revenue recognition and

assessing the compliance of these

principles with IFRS 15,

 understanding the sales process, as

well as the correctness of designing

and implementing an internal control

system in this field,

 analytical procedures involving, in

particular, monthly data and trend

analyses,

 detailed reliability studies in relation

to sales recognized during a year

based on a selected sample,

 verifying a sample of transactions

from December 2023/January 2024

and an independent assessment of

revenue recognition correctness in

the transaction source documents,

 confirming the receivable balance on

a selected sample of counterparties

as at the balance sheet date,

 analysing unusual transactions and

revenue adjustments after the

balance sheet date.

The conducted reliability tests, combined

with assessing the internal control

environment, provided us with sufficient and

appropriate audit evidence, required to

address the revenue recognition risk in

question.

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Responsibility of the Management Board and the Supervisory Board in relation to the separate

financial statement

The Management Board of the Company is responsible for the preparation, on the basis of

properly maintained accounting records, of the separate financial statement that provide a

true and fair view of the financial position and performance of the Company pursuant to the

International Financial Reporting Standards approved by the European Union, the accounting

principles (policies) adopted, and the legislation and Articles of Association applicable to the

Company; and for such internal control as management determines to be necessary to enable

the preparation of the separate financial statement that is free from material misstatement,

whether due to fraud or error.

In drawing up the separate financial statement, the Company’s Management Board is liable

for assessing the Company's ability to continue as a going concern, disclosing, where

applicable, matters related to going concern and adopting the going concern basis of

accounting, except where the Management Board either intend to liquidate the Company or

to cease operations, or have no realistic alternative but to liquidate or cease operations.

The Management Board of the Company and the Members of the Supervisory Board are

obliged to ensure that the separate financial statement satisfies the requirements provided

for in the Accounting Act. The Members of the Supervisory Board are responsible for

overseeing the Company's financial reporting process.

Liability of a Statutory Auditor in relation to auditing the separate financial statement

Our objectives are to obtain reasonable assurance as to whether the separate financial

statement as a whole is free from material misstatement, whether due to fraud or error, and

to issue an audit report containing our opinion. Reasonable assurance is a high level of

assurance, but it does not guarantee that audit conducted in accordance with the NAS will

always detect an existing material misstatement. Misstatements can arise due to fraud or

error and are considered material if they could reasonably be expected to influence, either

individually or in aggregate, the economic decisions of users taken based on such a separate

financial statement.

The scope of the audit does not include assurance as to the future viability of the Company or

the efficiency or effectiveness of the Management in the conduct of its affairs now or in the

future.

We employ professional judgement and maintain professional scepticism when investigating

in line with the NAS and:

 we identify and assess the risks of material misstatement in the separate financial

statement due to fraud or error, design and conduct audit procedures corresponding

to those risks and obtain audit evidence that is sufficient and appropriate to provide a

basis for our opinion. The risk of a material misstatement resulting from fraud going

undetected is greater than in the case of that resulting from error, as fraud may

involve collusion, forgery, deliberate omissions, misrepresentation or circumvention

of internal controls;

 we obtain an understanding of the internal control relevant to the audit for the

purpose of designing audit procedures that are appropriate under the circumstances,

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but not for the purpose of expressing an opinion on the effectiveness of the

Company's internal control;

 we assess the appropriateness of the accounting principles (policy) applied and the

rationale behind the accounting estimates and related disclosures made by the

Company's Management Board;

 we draw a conclusion on the appropriateness of the Company's Management Board

employing the going concern principle as a basis of accounting and, based on the

audit evidence obtained, whether there is any material uncertainty related to events

or conditions that may cast significant doubt on the Company's ability to continue as

a going concern. If we conclude that a material uncertainty exists, we are required to

draw attention in our statutory auditor's report to the related disclosures in the

separate financial statement or, if such disclosures are inapplicable, we modify our

opinion. Our conclusions are based on audit evidence obtained up to the date of our

statutory auditor's report; however, future events or conditions may cause the

Company to cease to operate as a going concern;

 we assess the overall presentation, structure and content of the separate financial

statement, including disclosures, and whether the separate financial statement

presents the underlying transactions and events in a manner that ensures a fair

presentation.

We provide the Supervisory Board with information on, among other things, the planned

scope and timing of the audit and the significant findings of the audit, including any significant

internal control weaknesses that we identify during the audit.

We submit a statement to the Supervisory Board that we complied with the relevant ethical

requirements for independence and that we will notify the Board of all affiliations and other

matters that could reasonably be considered as posing a threat to our independence and,

where applicable, report on the safeguards applied.

Among the matters reported to the Supervisory Board, we identified those that were most

significant during the audit of the separate financial statement for the current reporting

period and, therefore, considered them to be key audit matters. We describe these matters

in our statutory auditor's report unless legislation or regulation prohibits public disclosure or

if, in exceptional circumstances, we determine that the matter should not be disclosed in our

report because it could reasonably be expected for the adverse consequences to outweigh

the benefits of such information to the public interest.

Other information, including a report on the operations

Other information comprises the report on the Company's operations for the financial year

concluded on 31 December 2023 (“Report on operations”) along with the corporate

governance statement, and the Annual Report for the financial year concluded on 31

December 2023 (“Annual Report”) (collectively “Other Information”).

Responsibility of the Management Board and the Supervisory Board

The Company’s Management Board is responsible for the preparation of Other Information in

accordance with the law.

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The Company’s Management Board and the Members of the Supervisory Board are obliged

to ensure that the Report on the Company's operations, together with the separate parts,

satisfies the requirements provided for in the Accounting Act.

Statutory Auditor's liability

Our opinion on the audit of the separate financial statement does not cover Other

Information. In respect of the audit of the separate financial statement, it is our responsibility

to read the Other Information and, in doing so, to consider whether other information is

materially inconsistent with the separate financial statement or our knowledge obtained in

the course of the audit, or otherwise appears to be materially misstated. If, based on the

work performed, we identify a material misstatement in the Other Information, we are

required to report this in our audit report. Our responsibility pursuant to the requirements of

the Auditors Act is also to express an opinion as to whether the Report on the operations was

developed in accordance with the regulations and is consistent with the information

contained in the separate financial statement. Furthermore, we are required to express an

opinion whether the Company has included the required information in its corporate

governance statement.

We obtained the report on Company’s operations prior to the date of this audit report, and

the Annual Report after this date. Should we identify a material misstatement in the Annual

Report, we are obliged to notify the Supervisory Board of this fact.

Opinion on the Report on operations

Based on the work performed during the audit, in our view, the Report on the Company's

operations:

 was drawn up pursuant to Art. 49 of the Accounting Act and par. 70 of the Regulation

of the Minister of Finance dated 29 March 2018 on current and periodic information

provided by issuers of securities and conditions for recognising as equivalent the

information required by the law of a non-member state (“Regulation on current

information” – Dz. U. of 2018, item 757, as amended);

 is consistent with the information contained in the separate financial statement.

Moreover, in the light of the knowledge about the Company and its environment obtained in

the course of our audit, we declare that we did not identify any material misstatement in the

Report on operations.

Opinion on the corporate governance statement

It is our opinion, that in its corporate governance statement, the Company included

information referred to in Art. 70(6) cl. 5 of the Regulation on current information.

Furthermore, we believe that the information indicated in Art. 70(6) cl. 5 let. c-f, h and i of

this Regulation and contained in the corporate governance statement are consistent with the

applicable legislation and the information contained in the separate financial statement.

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Report on other legal and regulatory requirements

Declaration on non-audit services provided

To the best of our knowledge and belief, we declare that non-audit services we provided to

the Company and its affiliates are compliant with the legislation and regulations applicable in

Poland, and that we did not provide non-audit services prohibited under Art. 5(1) of the EU

Regulation and Art. 136 of the Auditors Act. Non-audit services that we provided to the

Company and its affiliates within the audited period are listed under “Provision of permitted

non-audit services by the Auditor” Reports on the operations of the Capital Group.

Audit firm selection

We were commissioned with a separate audit of the Company’s financial statement by way of

the Company’s Supervisory Board resolution dated 10 March 2022. We are auditing the

Company’s separate financial statement for the night time.

The key statutory auditor responsible for the audit resulting in this independent statutory

auditor's report is Marta Jankowska.

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Registry number 13498

acting on behalf of UHY ECA Audyt Spółka z ograniczoną odpowiedzialnością with its

registered office in Warsaw, entered on the list of audit firms under number 3886 on behalf

of which the key statutory auditor audited the separate financial statement.

This document is a foreign language version of the original Independent Auditor’s Report

issued in Polish version and only the original version is binding. This document has been

prepared for information purposes and could be used only for Group’s internal purposes. In

case of any discrepancies between the Polish and English version, the Polish version shall

prevail.

Wroclaw, 10 April 2024