Darktrace Regulatory News (DARK)

Darktrace plc

18 July 2023

Conclusion of Ernst & Young LLP Review

Darktrace plc ("Darktrace") (DARK.L), a global leader in cyber security AI, announces that Ernst & Young LLP ("EY") has concluded its independent third-party review.

EY has delivered its written report and presented its findings to Darktrace's Audit and Risk Committee ("ARC"), all other Board members and Darktrace's independent auditors, Grant Thornton (UK) LLP ("Grant Thornton"). Further, copies of EY's report are being provided voluntarily to the Financial Conduct Authority and the Financial Reporting Council ("FRC") to ensure they also have full visibility of EY's review.

Neither Management, nor the Board consider EY's report to have any impact on Darktrace's previously filed public company financial statements nor to change their belief that those financial statements fairly represent Darktrace's financial position and results. In addition, Grant Thornton's audit opinions for prior years remain unchanged and the audit for FY23 is in progress.

Furthermore, since Darktrace's February statements, the Audit Quality Review ("AQR") team of the FRC, in accordance with its usual cycle of UK audit inspections, has undertaken an inspection of Grant Thornton's audit of Darktrace for the year ended 30 June 2022. There were no key findings arising from this inspection.

Darktrace gave EY unrestricted access to all information, employees, partners and customers necessary to allow it to conduct a thorough review of the policies, processes and controls related to the areas of scope referenced in its 20 February statement. The areas covered included Darktrace's treatment of partner channel contracts and marketing spend, contract opt-outs and appliance deployments, as well as the process for calculation of non-current deferred revenue. Darktrace also expanded EY's work to include a review of the process for calculating Annual Recurring Revenue and the status of certain third-party relationships.

In its review, EY reported a number of areas already known to Darktrace where systems, processes or controls could be improved. For example, as part of its work around channel processes and controls, EY reviewed a risk weighted sample of new channel contracts which identified a small number of errors and inconsistencies. Neither Management nor the Board consider these to be material to the financial statements and controls enhancements in this area are already underway.

Cathy Graham, Darktrace's CFO said, "We have a culture of continuous improvement at Darktrace. As you would expect and as we said in our FY22 Annual Report, we have an ongoing program to advance our systems, processes and controls. We have developments already underway, on our roadmap or under consideration across relevant areas of the business, including those covered in EY's review. EY provided some valuable recommendations for how we could implement these planned improvements as we move through this journey."

Gordon Hurst Chair of the Board, added, "We are pleased that EY has concluded its review and with the cooperation and transparency EY received from Darktrace employees at all levels. This has further reinforced the Board's confidence that Management has set a tone and culture consistent with good governance. Separately, the AQR team's review of Grant Thornton's audit for 30 June 2022, which identified no key findings, reinforces the confidence we have always had in the robustness of the audit process and the resulting independently audited public company financial statements. We trust that all stakeholders are reassured by these outcomes." 

Contact:

Luk Janssens - Head of Investor Relations, Darktrace

+44 7811 027918

luk.janssens@darktrace.com

Powerscourt (Public Relations adviser to Darktrace)

Peter Ogden/Victoria Palmer-Moore/Elly Williamson

+44 (0) 20 7250 1446

darktrace@powerscourt-group.com