Komputronik S A : 2020 – Annual financial report

Independent

Auditor's Report on

Annual Consolidated

Financial Statements

For the Shareholders of Komputronik Spółka Akcyjna w restrukturyzacji

Report on the Annual Consolidated Financial Statements

Opinion

Grant Thornton Polska

Sp. z o.o. sp. k.

ul. Abpa Antoniego Baraniaka 88 E 61-131 Poznań

Polska

T [phone]

F [phone]

www.GrantThornton.pl

We have audited the annual consolidated financial statements of the Group (the Group), in which the parent entity is Komputronik S.A. w restrukturyzacji (the Parent) with its registered office in Poznań, 37 Wołczyńska Street, which comprise the consolidated balance sheet as of March 31, 2021, and the income statement, consolidated statement of profit and loss and statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows for the financial year then ended, and notes, comprising a summary of significant accounting policies and other explanatory notes.

In our opinion, the accompanying annual consolidated financial statements:

• give a true and fair view of the financial position of the Group as of March 31, 2021 and of its financial performance and of its cash flows for the financial year then ended in accordance with the International Accounting Standards, International Financial Reporting Standards and related interpretations published in the form of European Commission regulations and adopted accounting principles (policy),
• comply with the laws affecting the content and form of the annual consolidated financial statements and the provisions of the Parent's articles of association.

The audit opinion is consistent with the additional report to the Audit Committee submitted on the same day as this audit report.

Audit - Tax - Accounting - Advisory

Member of Grant Thornton International Ltd

Grant Thornton Polska Spółka z ograniczoną odpowiedzialnością sp. k. Audit Firm No. 4055.

General partner: Grant Thornton Polska Sp. z o.o. General Partner's Management Board: Tomasz Wróblewski - President of the Board,

Dariusz Bednarski - Vice-President of the Board, Jan Letkiewicz - Vice-President of the Board. Registered office address: ul. Abpa Antoniego Baraniaka 88 E, 61-131 Poznań,

Poland. Tax identification number NIP: 782-25-45-999. REGON: 302021882. Bank account: 31 1090 1476 0000 0001 3554 7340.

District Court Poznań - Nowe Miasto i Wilda in Poznań, 8th Commercial Division of the National Court Register, KRS No. 0000407558.

Basis for Opinion

We conducted our audit in accordance with

• the Act of May 11, 2017 on statutory auditors, audit firms, and public supervision (uniform text: Journal of Laws of 2020, item 1415) (the Act on Statutory Auditors),
• International Standards on Auditing adopted as National Standards on Auditing (NSA) by the National Council of Statutory Auditors' resolution No. 3430/52a/2019 of March 21, 2019, as amended and
• Regulation (EU) No. 537/2014 of the European Parliament and of the Council of April,16 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC (OJ L 158, 27.5.2014, p. 77 and OJ L 170, 11.6.2014, p. 66) (the Regulation 537/2014).

Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Annual Consolidated Financial Statements section of our report.

We are independent of the entities comprising the Group in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) adopted by the National Council of Statutory Auditors' resolution No. 3431/52a/2019 of March 25, 2019 together with the ethical requirements that are relevant to our audit of the financial statements in Poland. In particular, in conducting the audit the Key Audit Partner and the Audit Firm remained independent of the entities comprising the Group in accordance with the provisions of the Act on Statutory Auditors and the Regulation 537/2014. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

In note 6.2 of the additional notes to the consolidated financial statements prepared as at 31 March 2021, the Parent Company's Management presented the circumstances that led to the assumption of going concern, including: the legal situation concerning the recovery proceedings opened by the District Court, the current financial situation of the Parent Company as well as risks and uncertainty that may affect the fulfilment of the assumptions set out in the request for initiation of the recovery proceedings. Due to the court's decision to open the recovery proceedings and to the actions taken by the Administrator to bring the Parent Company to recovery and thus enter into an arrangement with creditors, allowing for further operation of the Company, the financial statements were prepared on the assumption of going concern. The Restructuring Plan prepared under the recovery proceedings contains a financial model and forecasts of the Parent Company's results assuming positive financial flows, which will enable the entity to continue its activity without interruptions and partially satisfy claims under the arrangement with creditors. The implementation of the Plan depends primarily on entering into the arrangement the absence of which involves a significant risk of bankruptcy.

The circumstances described by the Parent Company's Management indicate that there is material uncertainty which may cast significant doubt on the Parent Company's and the Group's ability to continue as a going concern. However, in the opinion of the Parent Company's Manager, the arrangement is feasible and so is the implementation of the remaining restructuring measures, which gives feasible opportunity to free the Parent Company from debt and gradually improve the financial results; however, there is no certainty that the actions taken and planned by the Management will succeed, as they pertain to future events. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the annual consolidated financial statements of the current period. They include the most significant assessed

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risks of material misstatement, including assessed risk of material misstatement due to fraud. These matters were addressed in the context of the audit of the annual consolidated financial statements as a whole, and in forming the auditor's opinion thereon. In addition to the matter described in the Basis for Qualified Opinion / Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Below, we provided a summary of our response to those risks and where relevant, key observations arising with those risks. We do not provide a separate opinion on these matters.

Goodwill impairment	Auditor's response

In the consolidated financial statements, the Parent Company recognised goodwill in the

amount of PLN 19,290k. The Parent Company's

Management carried out a goodwill impairment test. During the test, assumptions of a subjective nature are made.

In particular, the consolidated financial statements include goodwill from the acquisition of Komputronik Biznes Sp. z o.o. w restrukturyzacji in the amount of PLN 13,007 k. The impairment test for its carrying amount did not show any impairment, however, the basis for the impairment test are expected cash flows depending on future events, the occurrence of which is not certain.

Goodwill and the assumptions of the goodwill impairment test are described in note 6.7 of the additional notes to the consolidated financial statements.

As part of our audit procedures, we:

• verified the appropriateness of the methodology adopted for the impairment tests,
• checked the correctness of calculations,
• assessed the assumptions adopted by the Parent
  Company's Management, including their feasibility and correctness of estimates made as part of the valuation,
• assessed the judgements reached on this basis by the Parent Company's Management.

Recognition of revenues from satisfaction of

performance obligations over timeAuditor's response (hereinafter: long-term contracts)

As at 31 March 2021, in the consolidated financial statements, the Group recognized assets due to surplus of determined revenues over invoiced revenues in the amount of PLN 24,293k.

The Group recognized revenues from the implementation of contracts according to the principles of IFRS 15: "Revenue from Contracts with Customers".

The value of revenues recognized in a given year depends to a significant extent on the actual costs incurred, the determination of the appropriate margin and the assessment of the stage of completion of the contracts, as well as on the accuracy and completeness of budgets for long-term contracts.

In our opinion, the core judgements pertain to the accuracy and completeness of budgets for

Our audit procedures for the assessment of correctness of settlement of long-term contracts included:

• the analysis of the correctness of the settlement model for long-term contracts, including the verification of the mathematical correctness of the settlement of the contract and recognition of the valuation in the books,
• the analysis of the portfolio of contracts aimed at identifying material and risk-sensitive contracts which were included in the sample selected for further detailed procedures. The procedures included:
• • discussing the implementation status of contracts with the Parent Company's
    Management and Contract Directors,
  • analyzing changes in contract budgets in the audited period together with reconciliation of changes in the forecast revenues and costs for the source documents,

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long-term contracts and the impact that these budgets have on the recognition of revenues in the context of the requirements of the International Financial Reporting Standards 15:

"Revenue from Contracts with Customers". The

risk of incorrect identification of all risks in the budget of contracts remains a key factor for the

Group's operations and has a significant impact

on the correctness of settlement of long-term contracts. Moreover, the correctness of settlement of long-term contracts depends to a significant extent on the valuation of changes in the specification and changes in the scope of works. Due to the scale of projects implemented, their complexity, uncertainty as to the costs of their completion, results of talks with the contracting entities, changes in the specification and changes in the scope of works, they require material subjective assessments.

Assets and liabilities under contracts with customers are described in note 6.23 of the additional notes to the consolidated financial statements.

• • analyzing budgets in terms of completeness of cost recognition,
  • when material subjective assessments were identified in the budgets, we obtained additional assurance by comparing the position of the
    Parent Company's Management and the opinions of third parties, including specialists in long-term contracts and lawyers, and/or by checking the documented history of changes in the specification and claims,
  • analyzing letters from lawyers for recognition of potential claims,
• assessing the completeness of revenue disclosures in the consolidated financial statements.

Emphasis of Matter

We draw attention to note 6.20 of the additional notes to the consolidated financial statements, where the

Parent Company's Management described the provisions for tax risk established by the Company, and to note

6.37, where the tax risk resulting from ongoing tax proceedings was described. Our opinion is not modified in respect of this matter.

Responsibilities of Management and Supervisory Board of the Parent for the Annual Consolidated Financial Statements

The Management of the Parent is responsible for the preparation of these annual consolidated financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Group in accordance with the International Accounting Standards, International Financial Reporting Standards and related interpretations published in the form of European Commission regulations, adopted accounting principles (policy), legal regulations, and the Parent's articles of association. The Management of the Parent is also responsible for such internal control as the Management determines is necessary to enable the preparation of annual consolidated financial statements that are free from material misstatements, whether due to fraud or error.

In preparing the annual consolidated financial statements, the Management of the Parent is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management of the Parent either intends to liquidate the Group or to cease the operations, or has no realistic alternative but to do so.

In accordance with the Accounting Act of September 29, 1994 (uniform text: Journal of Laws of 2021, item 217, as amended) (the Accounting Act), the Management and the Supervisory Board of the Parent are obliged to assure compliance of the annual consolidated financial statements with the requirements of the Accounting Act. The Supervisory Board of the Parent is responsible for overseeing the Group's financial reporting process.

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Auditor's Responsibilities for the Audit of the Annual Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the annual consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with NSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual consolidated financial statements.

The scope of the audit does not include assurance on the future viability of the Group or on the efficiency or effectiveness with which the Management of the Parent has conducted or will conduct the affairs of the Group.

As part of an audit in accordance with NSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the annual consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit 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 Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management of the Parent.
• Conclude on the appropriateness of the Management of the Parent's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the annual consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the
  Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the annual consolidated financial statements, including the disclosures, and whether the annual consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the annual consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Supervisory Board of the Parent regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Supervisory Board of the Parent with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From matters communicated with the Supervisory Board of the Parent, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore

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