technology to accelerate joint growth. The two companies’ advantages will thus be leveraged to the full, helping build a truly international business flywheel, based on the know-how from the joint teams. As Allegro plans to strengthen Mall Group’s 3P business, currently operating mainly in 1P model, the Group also expects to see growth in Mall Group profitability through significant increase in offer selection and transaction frequency.

The Group's management expects the Transaction to strengthen the companies’ joint status as a leading regional marketplace, improving the everyday lives of millions of customers. Buyers will benefit from the improved selection, price, and convenience, while international merchants will be able to “list once, sell everywhere.” The tie-up should improve the shopping experience and provide the best prices, broadest offer selection and maximum convenience for an 18m-strong existing combined customer base across the region. Mall Group and WE|DO extend the Group’s footprint to cover also the Czech Republic, Slovakia, Slovenia, Hungary, and Croatia.

Although the transaction will bring many opportunities to all the Group members, most of the synergies are expected to occur in Mall segment.

The revenue and net loss of the Group for the period ended 31 December 2022 would have been PLN 9,658,509,788 and PLN 2,018,111,640 respectively if the acquisition of Mall Group and WE|DO had been as of the beginning of the financial year. Since the date of the acquisition the acquired entities generated revenue in the amount of PLN 2,365,766,676 and net loss amounting to PLN 359,620,796.

Upon the closing Allegro.eu initially acquired 47 shares in Mall Group a.s. representing 47% of its share capital and the remaining shares in Mall Group a.s (53 shares representing 53% of the share capital) and all the shares in WE|DO CZ s.r.o. were acquired by Allegro.

The price for all the shares in WE|DO CZ s.r.o. and 53 shares in Mall Group were acquired by Allegro in exchange for cash that amounted to EUR 14,000,000 (equivalent of PLN 65,109,800) and EUR 459,510,138 (equivalent of PLN 2,137,043,798) respectively.

The price for the 47 shares in Mall Group a.s. acquired by Allegro.eu was settled via the issuance of 33,649,039 new ordinary shares (the “New Shares”) each having a nominal value of PLN 0.01. The issued shares provide the Former Shareholder with 3% of the interest in Allegro.eu and the same voting power. The fair value of the new shares on Closing (measured at the quoted price as of the Closing day) amounted to PLN 1,181,081,269. 

Immediately following the closing, Allegro.eu made an in-kind contribution of the 47 shares in Mall Group a.s. to Allegro Treasury S.à r.l. (previously Adinan Midco S.à r.l.), which in turn immediately made an in-kind contribution of the 47 shares in Mall Group a.s. to Allegro. After the transaction Allegro became the only owner of 100% shares in Mall Group and 100% shares in WE|DO. Those were transferred within the Allegro.eu Group thus had no impact on the consolidated financial statements of the Allegro.eu Group.

The cash payment for Mall Group and WE|DO was settled in full at the date of the Transaction. The Transaction was partly financed from the Group’s own funds at PLN 1,221,258,800 and from Additional Term Facility at PLN 1,000,000,000. The transaction price was expressed and settled in EUR. In order to mitigate risk of foreign exchange volatility and secure Group’s cash flows, the Group entered into Foreign Exchange Deal Contingent Forward, which was executed on 31 March 2022 via transferring 2,221,258,800 PLN in exchange for EUR 474,000,000. The Group applied the hedge accounting to hedge the foreign currency risk resulting from this Transaction. Foreign Exchange Deal Contingent Forward contract was used as hedging instrument and the loss on the settlement of the hedging derivative in the amount of PLN 16,827,000 was recognised directly in equity and adjusted goodwill recognised on this Transaction.

The purchase price consideration was further reduced to reflect the recognition of the indemnification asset amounting to PLN 15,134,672. In accordance with the Share Purchase Agreement the Group is entitled to receive, from the previous Shareholders, the compensation equal to any amount of cost or liabilities incurred by the Group, in relation to the contractually defined CIT and other tax claims that might arise subsequent to the commencement of the acquisition transaction. The indemnification asset was recognised in the amount equal to the amount of the VAT provision recognised in net assets acquired.

At the date of the Transaction the Group settled the outstanding indebtedness of Acquired Entities towards the previous shareholders in the amount of CZK 1,089,054,731 (equivalent of PLN 207,573,832) being accounted for as the part of the purchase price consideration. Further details have been presented in the section below. 

The identifiable assets and liabilities of Acquired Entities are measured at the Closing date at fair value.

Based on the purchase price allocation the Goodwill recognised on the acquisition transaction amounted to PLN 2,286,138. This amount is attributable to the items that do not meet the recognition criteria and reflects the synergies that are expected to occur in Mall segment. Those synergies are expected to result mostly from the growth in the number of merchants and increased variety of products offered on the marketplace that should in turn drive a significant increase in the Group active buyers’ base.   

Due to the fact that Mall Group and WE|DO were acquired by Allegro Group from the same ultimate selling party, the acquisitions were negotiated as one deal and the Targets were acquired on the same closing day and, therefore the Transaction is accounted for as one business combination transaction. Consequently the disclosure is provided for the acquisition of Targets accounted for as one business combination.

Moreover the Group determined that impairment testing should be performed on the level of the Mall operating segment as a whole as this is the lowest level at which management monitors goodwill for internal management purposes. That also represents the aggregation level on which the operating segment was identified, “Mall”, reflecting the level on which the Chief Operating Decision Maker is analysing the operating results of acquired entities. The goodwill is expressed in the local currencies of acquired entities (functional currency), being subject to translation into the presentation currency of the consolidated financial statements of Allegro.eu Group.

Acquisition of X-press Couriers sp. z o.o. (‘XPC’) and SkyNet Customs Brokers sp. z o.o. (‘SCB’)

On 8 October 2021 Allegro.pl sp. z o.o. purchased 100% of shares in X-press Couriers Sp. z o.o. and 100% of shares in SkyNet Customs Brokers Sp. z o.o. for cash consideration of PLN 26,865 and PLN 1,925respectively.

The payment for XPC was divided into two tranches – PLN 25,865 was settled at the date of the transaction, with the remaining PLN 1,000 payable in October 2022. The payment for SCB was settled in full at the date of the transaction. Both transactions were financed from the Group’s own funds.

X-press Couriers Sp. z o.o. is a leading provider of intra-city SameDay and inter-city NextDay delivery services. XPC concentrates on rapidly expanding SameDay delivery and international segments with e-commerce shipments. SCB is a customs agency that provides services to XPC and other clients.

On the acquisition of XPC, the Group recognised PLN 29,253 of goodwill and PLN 530 of intangible assets. The excess of the consideration paid over the fair value of the net identifiable assets of SCB of PLN 1,067 was fully allocated to goodwill.

Goodwill on both acquisitions is attributable to scale effects expected as a result of the combination of the Group’s operations with those of the acquired entities.

The underlying idea of the transaction was to acquire the existing network of couriers to complement the further roll-out of the Groups logistics operations, including the fulfillment center initiative and expanding network of Automated Parcel Lockers. In Accordance with IFRS 3 the assembled workforce fails to meet the identifiability criteria, hence any value attributed to it is subsumed into goodwill.

The revenue and net loss of XPC and SCB since the acquisition date included in the consolidated statement of comprehensive income for the 2021 financial year amounted to PLN 8,856 and PLN 388 respectively. The revenue and net profit of the Group for the 2021 financial year would have been PLN 5,372,431 and PLN 1,085,135, respectively if the acquisition of XPC and SCB had been as of the beginning of the financial year.

Costs related to the purchase transaction in the amount of PLN 819, were recognised in the consolidated statement of profit or loss and other comprehensive income as transaction costs.

The effect of accounting for the acquisitions is presented below: