A member firm of Ernst & Young Global Limited
Independent auditor’s report
To the Shareholders of
Zabka Group S.A.
2, rue Jean Monnet
L-2180 Luxembourg
Report on the audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of Zabka Group S.A. and its subsidiaries (the
“Group”), which comprise the consolidated statement of financial position as at 31 December 2024, and the
consolidated statement of profit and loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and the notes to the
consolidated financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the
consolidated financial position of the Company as at 31 December 2024, and of its consolidated financial
performance and consolidated cash flows for the year then ended in accordance with International Financial
Reporting Standards (“IFRS”) as adopted by the European Union.
Basis for opinion
We conducted our audit in accordance with EU Regulation N° 537/2014, the Law of 23 July 2016 on the
audit profession (“Law of 23 July 2016”) and with International Standards on Auditing (“ISAs”) as adopted for
Luxembourg by the “Commission de Surveillance du Secteur Financier” (“CSSF”). Our responsibilities under
the EU Regulation Nº 537/2014, the Law of 23 July 2016 and ISAs as adopted for Luxembourg by the CSSF
are further described in the “Responsibilities of the “réviseur d’entreprises agréé” for the audit of the
consolidated financial statements” section of our report. We are also independent of the Group in
accordance with the International Code of Ethics for Professional Accountants, including International
Independence Standards, issued by the International Ethics Standards Board for Accountants (“IESBA
Code”) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to
our audit of the consolidated financial statements, and have fulfilled our other ethical responsibilities under
those ethical requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
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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. These matters were addressed in the context
of the audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit
Matter:
Accounting for bonuses and discounts granted to franchisees
Description
of Key
Audit
Matter:
In the consolidated financial statements, the Group presents revenues from franchisees
for the year ended 31 December 2024 amounting to PLN 22 554 631 thousand.
The main source of the Group's revenues are contracts concluded with franchisees
under which the Group, among other things, sells goods, rents out stores with
equipment and provides the know-how. The Group identifies one performance
obligation under contracts with franchisees.
Revenue is recorded as goods are delivered. Revenue from services that accompany
sale of physical goods to franchisees is, in principle, dependent on the turnover from
physical goods and is not separate from that revenue stream. Their value is part of the
variable remuneration per performance obligation under the franchise agreement.
Under the franchise agreement, the Group grants to franchisees price discounts and
volume bonuses the amount of which depends on the turnover made by franchisees.
The accrual for bonuses and discounts granted to franchisees is accounted for against
revenue and presented on a net basis in the consolidated statement of profit or loss.
At the end of each reporting period, the Group estimates the amount of remuneration to
which it will be entitled in exchange for the transfer of the goods or services to
franchisees, taking into account the expected discounts and bonuses, as well as
potential returns of goods. The expected discounts and bonuses and expected returns
of goods represent a variable component in the remuneration of the transaction price.
This variable remuneration is recognized only to the extent that there is a high
probability that the amount previously recognized as revenue will not be reversed. The
amount of the variable remuneration is determined based on an estimation calculated
by the Management.
Due to the inherent subjectivity and complexity involved in estimating this variable
remuneration with franchisees the matter was considered as a Key Audit Matter. The
estimates made by management could materially affect the revenue recognition as well
as the accrual for refund liabilities.
The accounting policies adopted by the Group in this respect are presented in note 5.1
”Revenue” to the consolidated financial statements.
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Our
Response:
We assessed the appropriateness of the Group's accounting principles relating to the
recognition of accruals for bonuses and discounts granted to franchisees in accordance
with IFRS.
We obtained an understanding of the Group’s internal processes for entering into
contracts with franchisees as well as the internal controls implemented to ensure
appropriate settlement of the bonuses and discounts granted to franchisees.
As part of our audit, we have also performed procedures, which included among
others:
▪ inspecting a sample of the franchise agreements and identifying the terms that
give rise to variable consideration (bonus and discounts);
▪ recalculation of the bonus amount based on contractual terms included in the
agreements signed by franchisees;
▪ verification of accruals for bonuses and discounts recognized at year end to
actual settlement after the reporting date;
▪ analysis of historical data on bonuses and discounts provided to franchisees to
assess the accuracy and reliability of management's estimates;
▪ reconciliation of the key inputs embedded into the model to the underlying
supporting documentation;
▪ analytical procedures on franchisees’ financial results and rationalization of
bonuses and discounts to which franchisees are entitled;
▪ assessment of the adequacy and accuracy of disclosures in the consolidated
financial statements.
Key Audit
Matter:
Recognition of rebates related to contracts with suppliers
Description
of Key
Audit
Matter:
In the consolidated financial statements, the Group presents cost of sales for the year
ended 31 December 2024 amounting to PLN 19 406 266 thousand.
The Group receives various types of supplier rebates, which are included in cost of sales.
These rebates are associated with supply contracts with vendors and take various forms
such as credits and discounts. Such rebates obtained from contracts are considered as
a component of the cost of the inventory and are recognized in the income statement
when the products are sold (according to IAS 2 “Inventories”).
Given the large number of contracts with suppliers and diversity of terms and conditions,
as well as the complexity of the calculation model, we considered this area as a Key
Audit Matter.
The accounting policies adopted by the Group in respect to the recognition and
presentation of rebates related to contracts with suppliers are presented in note 6.6
“Inventory”, 6.12. “Trade payables and other financial liabilities”, in the consolidated
financial statements.
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Our
Response:
We assessed the appropriateness of the Group's accounting principles relating to the
recognition of rebates related to contracts with suppliers in accordance with IFRS.
During our audit we also obtained an understanding of the Group’s internal processes
for entering into contracts with suppliers as well as the internal controls implemented to
ensure appropriate settlement of the rebates with suppliers.
We have also performed procedures, which included among others:
▪ for a selected sample of suppliers, we assessed whether the methodology
applied in calculating the rebates was in line with contractual terms and
arrangements with suppliers;
▪ for a selected sample of suppliers, we tested arithmetical accuracy of the
calculations;
▪ for a selected sample of suppliers, we obtained audit evidence in respect to the
value of purchases;
▪ reconciliation of the key inputs embedded into the model to the underlying
supporting documentation;
▪ performing retrospective review of prior year management’s calculation by
testing subsequent collections of supplier rebate balances as well as by testing
subsequent transactions after the financial position date.
Other information
The Board of Directors is responsible for the other information. The other information comprises the
information included in the management report: strategy and business model, financial overview, corporate
governance and leadership team and remuneration report, but does not include the consolidated financial
statements and our report of “réviseur d’entreprises agréé” thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is 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 of this other information, we are required to report this fact. We have nothing to report in this
regard.
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Responsibilities of the Board of Directors for the consolidated financial statements
The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS as adopted by the European Union, and for such internal control as the
Board of Directors determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
The Board of Directors is also responsible for presenting and marking up the consolidated financial
statements in compliance with the requirements set out in the Delegated Regulation 2019/815 on European
Single Electronic Format, as amended (“ESEF Regulation”).
In preparing the consolidated financial statements, the Board of Directors 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 Board of Directors either intends to liquidate the
Group or to cease operations, or has no realistic alternative but to do so.
Responsibilities of the “réviseur d’entreprises agréé” for the audit of the consolidated financial
statements
The objectives of our audit 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 a
report of the “réviseur d’entreprises agréé” that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in accordance with EU Regulation N°
537/2014, the Law of 23 July 2016 and with the ISAs as adopted for Luxembourg by the CSSF 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.
As part of an audit in accordance with EU Regulation N° 537/2014, the Law of 23 July 2016 and with ISAs
as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional
skepticism 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 Board of Directors.
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• Conclude on the appropriateness of Board of Directors’ 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 report of the “réviseur
d’entreprises agréé” 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 report of the “réviseur d’entreprises agréé”. 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.
• Assess whether the consolidated financial statements have been prepared, in all material respects, in
compliance with the requirements laid down in the ESEF Regulation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities and
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 those charged with governance 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 those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate to them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were
of most significance in the audit of the consolidated financial statements of the current period and are
therefore the key audit matters. We describe these matters in our report unless law or regulation precludes
public disclosure about the matter.
Report on other legal and regulatory requirements
We have been appointed as “réviseur d’entreprises agréé” by the General Meeting of the Shareholders on
26 April 2024 and the duration of our uninterrupted engagement, including previous renewals and
reappointments, is four years.
The management report is consistent with the consolidated financial statements and has been prepared in
accordance with applicable legal requirements.
The corporate governance statement, included in the consolidated management report, is the responsibility
of the Board of Directors. The information required by article 68ter paragraph (1) letters c) and d) of the law
of 19 December 2002 on the commercial and companies register and on the accounting records and annual
accounts of undertakings, as amended, is consistent with the consolidated financial statements and has
been prepared in accordance with applicable legal requirements.
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We have checked the compliance of the consolidated financial statements of the Group as at
31 December 2024 with relevant statutory requirements set out in the ESEF Regulation that are applicable
to the financial statements. For the Group, it relates to:
• Financial statements prepared in valid xHTML format;
• The XBRL markup of the consolidated financial statements using the core taxonomy and the common
rules on markups specified in the ESEF Regulation.
In our opinion, the consolidated financial statements of the Group as at 31 December 2024, identified as
zabkagroup-2024-12-31-0-en/reports/zabkagroup-2024-12-31-0-en, have been prepared, in all material
respects, in compliance with the requirements laid down in the ESEF Regulation.
We confirm that the prohibited non-audit services referred to in EU Regulation No 537/2014 were not
provided and that we remained independent of the Group in conducting the audit.
Ernst & Young
Société anonyme
Cabinet de révision agréé
Alban Aubrée
Luxembourg, 24 March 2025