Current report No. 3/2024

Date: 1 March 2024

Legal basis: Article 17 of MAR - inside information

The Board of Directors of Allegro.eu (the "Board" and the “Company”, accordingly) hereby informs that the Company has completed an impairment test of the cash-generating units (“CGUs”) made up of the MALL legal entities operating in Czechia, Slovakia and Hungary. The Board accepted the revised financial projections used to estimate the recoverable amount of each CGU. The Board then accepted the result of the impairment test for inclusion in the Group's Annual Consolidated Financial Statements for the year ended 31 December 2023.

In performing its annual impairment testing of goodwill, the Company has noted that the estimated total fair value, less costs to sell, of all the cash-generating units that comprise Allegro's International Operations (consisting of the MALL Segment and the new Allegro International Segment) has increased in comparison to the equivalent test performed for 2022. However, this increase in valuation is mainly attributable to the Allegro.cz marketplace cash-generating unit launched in May 2023 (Allegro International Segment). In contrast, the MALL North (Czech Republic, Slovakia, and Hungary) and CZC cash-generating units (parts of the Mall Segment) are underperforming previous projections and Management has concluded that the remaining goodwill allocated to MALL Segment and substantially all intangible assets allocated to these two cash-generating units should be written down.

The impairment test was performed in accordance with International Accounting Standards and compared a financial projection estimating the fair value of each CGU, less costs to sell, as of 31 December 2023 and resulted in the Group recognizing a non-cash impairment charge of PLN 629.3 million netted off with the impact of deferred tax in the amount of PLN 123.7 million. This impairment loss will be allocated pro rata to intangible assets (mainly customer relationships, trademark, domains and software) and will be presented in the Consolidated Statement of Comprehensive Income for the year ended  31 December 2023 in the cost line ‘Impairment losses of non-current non-financial assets’ and ‘Income Tax’ accordingly.

The impairment will reduce the net income of the Group in the fourth quarter of 2023. In contrast, it will not affect earnings before interest, tax, depreciation, amortization and impairment losses of non-current non-financial assets ("EBITDA"). Neither does it affect the Group cash flow generation. This accounting event does not have any impact on the stability of Allegro’s business, nor Group’s business priorities -  including the operations of Allegro’s 3P marketplace in Czechia and upcoming launches in other MALL markets.

The presented amounts are estimates and are subject to change. The final value of the impairment loss will be presented in the consolidated financial statements of the Company for 2023, which will be audited by a certified auditor and published on 14 March 2024.

Allegro.eu is a Luxembourg public limited liability company (société anonyme), registered office: 1, rue Hildegard von Bingen, L – 1282 Luxembourg, Grand Duchy of Luxembourg, R.C.S. Luxembourg: B214830.