Raport

KPMG Audyt spółka z ograniczoną odpowiedzialnością sp.k.

ul. Inflancka 4A, 00-189 Warsaw, Poland

tel. +48 (22) 528 11 00, fax +48 (22) 528 10 09, kpmg@kpmg.pl

partnership and a member firm of the KPMG global organization of ind

ependent

member firms affiliated with KPMG International Limited, a private English company

limited by guarantee.

Company registered at the District Court

for the capital city of Warsaw in Warsaw,

12th Commercial Division of the National

Business Register.

KRS 0000339379

NIP: 527

-261-53-62

REGON: 142078130

This document is a free translation of the Polish original. Terminology current

in Anglo-Saxon countries has been used where practicable for the purposes

of this translation in order to aid understanding. The binding Polish original

should be referred to in matters of interpretation.

Independent Auditor's Report

To the General Shareholders’ Meeting

and Supervisory Board of Toya S.A.

Report on the Audit of the Annual Consolidated Financial Statements

Opinion

We have audited the accompanying annual

consolidated financial statements

of Toya S.A. Group (the “Group”), whose

parent entity is Toya S.A. (the „Parent

Entity”), which comprise:

— the consolidated statement of financial

position as at 31 December 2021;

and, for the period

from 1 January to 31 December 2021:

— the consolidated statement of profit or

loss and other comprehensive income;

— the consolidated statement of changes

in equity;

— the consolidated statement of cash

flows;

and

— accounting policy and other explanatory

notes

(the “consolidated financial statements”).

In our opinion, the accompanying

consolidated financial statements

of the Group:

— give a true and fair view of the

consolidated financial position of the

Group as at 31 December 2021 and

of its consolidated financial

performance and its consolidated cash

flows for the financial year then ended

in accordance with International

Financial Reporting Standards, as

adopted by the European Union (“IFRS

EU”) and the adopted accounting

policy;

— comply, in all material respects,

with regard to form and content, with

applicable laws and the provisions

of the Parent Entity's articles

of association.

Our audit opinion on the consolidated financial statements is consistent with our report to the

Audit Committee dated 21 March 2022.

Basis for Opinion

We conducted our audit in accordance with:

— International Standards on Auditing as

adopted by the National Council of

Statutory Auditors as National Standards

on Auditing (the “NSA”); and

— the act on statutory auditors, audit firms

and public oversight dated 11 May 2017

(the “Act on statutory auditors”); and

— regulation (EU) No 537/2014 of the

European Parliament and of the Council of

16 April 2014 on specific requirements

regarding statutory audit of public-interest

entities and repealing Commission

Decision 2005/909/EC

(the “EU Regulation”); and

— other applicable laws.

Our responsibilities under those regulations

are further described in the Auditor’s

Responsibility for the audit of the consolidated

financial statements section of our report.

We believe that the audit evidence we have

obtained is sufficient and appropriate

to provide a basis for our opinion.

Independence and Ethics

We are independent of the Group in

accordance with International Ethics Standards

Board for Accountants International Code of

Ethics for Professional Accountants (including

International Independence Standards)

(“IESBA Code”) as adopted by the resolution of

the National Council of Statutory Auditors

(„NCSA”), together with the ethical

requirements that are relevant to our audit of

the consolidated financial statements in Poland

and we have fulfilled our other ethical

responsibilities in accordance with these

requirements and the IESBA Code. During our

audit the key statutory auditor and the audit

firm remained independent of the Group in

accordance with requirements of the Act on

statutory auditors and the EU Regulation.

Key Audit Matters

Key audit matters are those matters that, in our

professional judgment, were of most

significance in our audit of the consolidated

financial statements of the current period. They

are the most significant assessed risks of

material misstatements, including those due to

fraud. Key audit matters were addressed in the

context of our audit of the consolidated

financial statements as a whole, and in forming

our opinion thereon we have summarised our

response to those risks. We do not provide

a separate opinion on these matters. We have

determined the following key audit matters:

Revenue recognition

Revenue for the year 2021: PLN 686 737 thousand (for the year 2020: PLN 542 112 thousand)

Refer to disclosures in the consolidated financial statements: Note 3.22 „Revenue recognition”,

Note 23 „Operating segments” and Note 24 „Sales revenue”.

Key audit matter

Our response

In the year ended 31 December 2021, the

Group’s sale of goods accounted for total

revenue in the consolidated financial

statements.

The revenue from sales is one of the key

indicator for the assessment of Group’s

performance, the Management bonus

system as well as is of analysts and

Our audit procedures in the area included,

among other things:

― assessing the Group’s revenue

recognition policy for compliance with

relevant provisions of the financial

reporting standards;

― evaluating design and implementation of

internal control regarding the time of

investors interest, that significantly increase

the risk of fraud through the recognition of

non-existent sale transactions in the

consolidated financial statements.

Furthermore, part of the Group’s revenue

from sales require complex analysis in

identifying the time when performance

obligation is satisfied, therefore the

appropriate time of revenue recognition.

In the wake of the above factors,

we have considered revenue recognition to

be associated with a significant risk of

material misstatement in the consolidated

financial statements. Therefore, the area

required our increased attention in the audit

and as such was determined to be a key

audit matter.

revenue recognition and segregation of

duties implemented in the revenue

recognition process in order to mitigate

the risk of fraud in the consolidated

financial statements;

― analysis of significant credit notes

issued after the balance sheet date in

terms of revenue recognition

correctness in audited financial year;

― based on selected sample confirmation

of sale transactions to a source

documentation such as: invoices and

transport documents or confirmation of

payment;

― assessing for reasonableness the

amount of remaining sales throughout

comparison of revenue recognized in

2021 with the amount of sales expected

by us, based on the cashflow analysis

adjusted among others by change in the

balance of receivables;

― analysis of selected sample Group’s

sale transactions on the turn-of-the-year

in terms of revenue recognition in

appropriate time throughout verification

of source documentation such as sale

invoices and transportation evidence

confirming delivery of goods;

― examining appropriateness and

completeness of revenue recognition-

related disclosures in the consolidated

financial statements regarding to

relevant information required by the

applicable financial reporting standards.

Responsibility of the Management Board and Supervisory Board of the Parent Entity for the

Consolidated Financial Statements

The Management Board of the Parent Entity is

responsible for the preparation of consolidated

financial statements that give a true and fair

view in accordance with International Financial

Reporting Standards, as adopted by the

European Union, the adopted accounting

policy, the applicable laws and the provisions

of the Parent Entity's articles of association

and for such internal control as the

Management Board of the Parent Entity

determines is necessary to enable the

preparation of consolidated financial

statements that are free from material

misstatement, whether due to fraud or error.

In preparing the consolidated financial

statements, the Management Board of the

Parent Entity 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

Board of the Parent Entity either intends to

liquidate the Group or to cease operations, or

has no realistic alternative but to do so.

According to the accounting act dated

29 September 1994 (the “Accounting Act”), the

Management Board and members of the

Supervisory Board of the Parent Entity are

required to ensure that the consolidated

financial statements are in compliance with the

requirements set forth in the Accounting Act.

Members of the Supervisory Board of the

Parent Entity are responsible for overseeing

the Group’s financial reporting process.

Auditor’s Responsibility for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable

assurance about whether the consolidated

financial statements as a whole are free from

material misstatement, whether due to fraud or

error, and to issue an auditors’ 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

consolidated financial statements.

The scope of audit does not include assurance

on the future viability of the Group or on the

efficiency or effectiveness with which the

Management Board of the Parent Entity 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 scepticism throughout

the audit. We also:

— identify and assess the risks of material

misstatement of the 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 Board of the Parent Entity;

— conclude on the appropriateness of the

Management Board of the Parent Entity’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 auditors’

report on the audit of the consolidated

financial statements to the related

disclosures in the 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

auditors’ report on the audit of the

consolidated financial statements.

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 consolidated financial

statements, including the disclosures, and

whether the 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

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 Audit Committee of

the Parent Entity 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 provide the Audit Committee of the Parent

Entity with a statement that we have complied

with relevant ethical requirements regarding

independence, and communicate with them all

relationships and other matters that may

reasonably be thought to bear on our

independence, and where applicable, actions

taken to eliminate threats or safeguards

applied.

From the matters communicated with the Audit

Committee of the Parent Entity, we determine

those matters that were of most significance in

the audit of the consolidated financial

statements of the current reporting period and

are therefore the key audit matters. We

describe these matters in our auditors’ report

on the audit of the consolidated financial

statements unless law or regulation precludes

public disclosure about the matter or when, in

extremely rare circumstances, we determine

that a matter should not be communicated in

our report because the adverse consequences

of doing so would reasonably be expected to

outweigh the public interest benefits of such

communication.

Other Information

The other information comprise:

— the letter of the President of the

Management Board to the Shareholders;

— the selected financial data;

— the Directors’ Report on the operations of

TOYA S.A. Capital Group for the year

ended 31 December 2021 (the “Report on

activities”), including the corporate

governance statement, which is a separate

part of the Report on activities;

— the statement of the Management Board

regarding the preparation of the

consolidated financial statements and

Report on activities;

— the Management Board’s information

regarding the appointment of the audit

firm;

— the statement of the Supervisory Board

regarding the Audit Committee; and

— the Supervisory Board’s assessment of the

consolidated financial statements and the

Report on activities

(together the “Other information”).

Responsibility of the Management Board and Supervisory Board

The Management Board of the Parent Entity is

responsible for the Other information in

accordance with applicable laws.

The Management Board and members of the

Supervisory Board of the Parent Entity are

required to ensure that the Report on activities,

including separate parts of the Report on

activities, is in compliance with the

requirements set forth in the Accounting Act.

Auditor’s Responsibility

Our opinion on the consolidated financial

statements does not cover the Other

information.

In connection with our audit of the consolidated

financial statements, our responsibility was to

read the Other information and, in doing so,

consider whether the Other information is

materially inconsistent with the consolidated

financial statements or our knowledge obtained

in the audit, or otherwise appears to be

materially misstated. If, based on the work we

have performed, we conclude that there is

a material misstatement in the Other

information, we are required to report that fact.

In accordance with the Act on statutory

auditors our responsibility was to report if the

Report on activities was prepared in

accordance with applicable laws and the

information given in the Report on activities is

consistent with the consolidated financial

statements.

Moreover, in accordance with the requirements

of the Act on statutory auditors our

responsibility was to report whether the Group

included in the statement on corporate

governance information required by the

applicable laws and regulations, and in relation

to specific information indicated in these laws

or regulations, to determine whether it

complies with the applicable laws and whether

it is consistent with the consolidated financial

statements.

Opinion on the Report on Activities

Based on the work undertaken in the course of

our audit of the consolidated financial

statements, in our opinion, the accompanying

Report on activities, in all material respects:

— has been prepared in accordance with

applicable laws, and

— is consistent with the consolidated financial

statements.

Opinion on the Statement on Corporate Governance

In our opinion, the corporate governance

statement, which is a separate part of the

Report on activities, includes the information

required by paragraph 70 subparagraph 6

point 5 of the Decree of the Ministry of Finance

dated 29 March 2018 on current and periodic

information provided by issuers of securities

and the conditions for recognition as equivalent

of information required by the laws of a non-

member state (the “decree”).

Furthermore, in our opinion, the information

identified in paragraph 70 subparagraph 6

point 5 letter c-f, h and letter i of the decree,

included in the corporate governance

statement, in all material respects:

— has been prepared in accordance with

applicable laws; and

— is consistent with the consolidated financial

statements.

Statement on Other Information

Furthermore, based on our knowledge about

the Group and its environment obtained in the

audit of the consolidated financial statements,

we have not identified material misstatements

in the Report on activities and the Other

information.

Report on Other Legal and Regulatory Requirements

Statement on Services Other than Audit of the Financial Statements

To the best of our knowledge and belief, we

did not provide prohibited non-audit services

referred to in Art. 5 paragraph 1 second

subparagraph of the EU Regulation and Art.

136 of the act on statutory auditors.

Appointment of the Audit Firm

We have been appointed for the first time to

audit the annual consolidated financial

statements of the Group by resolution of the

Supervisory Board dated 10 December 2019.

Our period of total uninterrupted engagement

is 2 years, covering the periods ended

31 December 2020 to 31 December 2021.

Opinion on compliance of the consolidated financial statements prepared in the single

electronic reporting format with the requirements of the regulatory technical standards on the

specification of a single electronic reporting format

As part of our audit of the consolidated

financial statements we were engaged to

perform a reasonable assurance engagement

in order to express an opinion on whether the

consolidated financial statements of the Group

as at 31 December 2021 and for the year then

ended prepared in the single electronic

reporting format included in the reporting

package named „toa-2021-12-31_pl.zip”

(the “consolidated financial statements in the

ESEF format”) were tagged in accordance with

the requirements specified in the Commission

Delegated Regulation (EU) of 17 December

2018 supplementing Directive 2004/109/EC of

the European Parliament and of the Council

with regard to regulatory technical standards

on the specification of a single electronic

reporting format (the “ESEF Regulation”).

Defining the Criteria and Description of the Subject Matter of the Service

The consolidated financial statements in the

ESEF format have been prepared by the

Management Board of the Parent Entity to

meet the tagging requirements and technical

requirements for the specification of a single

electronic reporting format, which are defined

in the ESEF Regulation. The subject of our

assurance service is the compliance of the

tagging of the consolidated financial

statements in the ESEF format with the

requirements of the ESEF Regulation, and the

requirements set out in these regulations are,

in our opinion, appropriate criteria for our

opinion.

Responsibility of the Management Board and Supervisory Board of the Parent Entity

The Management Board of the Parent Entity is

responsible for the preparation of consolidated

financial statements in the ESEF format in

accordance with the tagging requirements and

technical conditions of a single electronic

reporting format, which are specified in the

ESEF Regulation. Such responsibility includes

the selection and application of appropriate

XBRL tags using the taxonomy specified in the

this regulation.

This responsibility of the Management Board of

the Parent Entity includes designing,

implementing and maintaining internal control

relevant to the preparation of the consolidated

financial statements in the ESEF format that is

free from material non-compliance with

requirements specified in the ESEF

Regulation, whether due to fraud or error.

The members of the Parent Entity’s

Supervisory Board are responsible for

overseeing the financial reporting process,

including the preparation of financial

statements in the format required by applicable

law.

Auditor’s Responsibility

Our objective is to issue an opinion about

whether the consolidated financial statements

in the ESEF format were tagged in accordance

with the requirements specified in the ESEF

Regulation.

We conducted our engagement in accordance

with the National Standard on Assurance

Services Other than Audit or Review 3001PL

“Audit of financial statements prepared in

a single electronic reporting format” as adopted

by the NCSA (“NSAE 3001PL”) and where

applicable, in accordance with the International

Standard on Assurance Engagements 3000

(Revised) “Assurance Engagements Other

than Audits or Reviews of Historical Financial

Information” as adopted by the NCSA as the

National Standard on Assurance Engagement

3000 (Revised) (“NSAE 3000 (R)”). These

standards requires that the auditor plans and

performs procedures to obtain reasonable

assurance about whether the consolidated

financial statements in the ESEF format were

prepared in accordance with specified criteria.

Reasonable assurance is a high level of

assurance, but it is not guaranteed that the

assurance engagement conducted in

accordance with NSAE 3001PL and where

applicable, in accordance with NSAE 3000 (R)

will always detect material misstatement.

The procedures selected depend on the

auditor’s judgment, including the assessment

of the risks of material misstatements, whether

due to fraud or error. In making those risk

assessments, the auditor has considered

internal controls relevant to the preparation of

the consolidated financial statements in the

ESEF format in accordance with the specified

criteria in order to design procedures that are

appropriate, which provide the auditor with

sufficient and appropriate evidence under the

circumstances. The assessment of internal

controls was not performed for the purpose of

expressing an opinion thereon.

Summary of the Work Performed

Our procedures planned and performed

included, among others:

— obtaining an understanding of the process

of preparing the consolidated financial

statements in the ESEF format, including

selection and application of XBRL tags by

the Parent Entity and ensuring compliance

with the ESEF Regulation, including an

understanding of the mechanisms of

internal control relevant to this process,

— reconciling the tagged information included

in the consolidated financial statements in

the ESEF format to the audited

consolidated financial statements,

— assessing, by using a specialized IT tool,

compliance with the regulatory technical

standards regarding the specification of

a single electronic reporting format,

— assessing the completeness of tagging of

information in the consolidated financial

statements in the ESEF format with XBRL

tags,

— assessing whether the XBRL tags from the

taxonomy specified in the ESEF

Regulation were properly applied and

whether the taxonomy extensions were

used where the relevant elements were

not identified in the core taxonomy

specified in the ESEF Regulation,

— assessing the correctness of anchoring of

the applied taxonomy extensions in the

core taxonomy specified in the ESEF

Regulation.

Requirements of the Quality Control and Ethical Requirements, including Independence

The firm applies International Standard on

Quality Control 1 “Quality Management for

Firms that Perform Audits or Reviews of

Financial Statements, or Other Assurance or

Related Services Engagements” as adopted by

the NCSA as national standard on quality

control, which requires us to implement and

maintain a comprehensive system of quality

control including documented policies and

procedures regarding compliance with ethical

requirements, professional standards and

applicable legal and regulatory requirements.

We have complied with the independence and

other ethical requirements of the IESBA Code

as adopted by the resolution of the NCSA,

which is founded on fundamental principles of

integrity, objectivity, professional competence

and due care, confidentiality and professional

behavior as well as other independence and

ethical requirements, applicable to this

assurance engagement in Poland.

Opinion on Compliance with the Requirements of ESEF Regulation

Our opinion has been formed on the basis of,

and is subject to, the matters outlined above.

We believe that the evidence we have

obtained is sufficient and appropriate to

provide a basis for our opinion on compliance

with the requirements of the ESEF Regulation.

In our opinion, the consolidated financial

statements in the ESEF format as at

31 December 2021 and for the year then

ended was tagged, in all material respects,

in accordance with the requirements

of the ESEF Regulation.

On behalf of audit firm

KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp.k.

Registration No. 3546

Signed on the Polish original

Wojciech Drzymała

Key Statutory Auditor

Registration No. 90095

Proxy

Wrocław, 24 March 2022