ANNUAL REPORT OF ALLEGRO.EU S.A. GROUP for the year ended 31 December 2021

LETTER FROM THE CEO 4
I. GENERAL INFORMATION 7
1. Definitions 8
2. Introduction 10
3. Forward-looking Statements 11
4. Presentation of Financial Information 12
II. BUSINESS REPORT 17
1. Selected consolidated financial and operational highlights 18
2. Management’s discussion and analysis of financial condition and result of operations 20
3. Summary of key developments 45
4. Remuneration Report 54
5. Expectations for the Group in FY 2022 80
6. Allegro medium-term expectations 2023-2026 82
7. Recent Trading 84
III. NON-FINANCIAL REPORT 91
1. Business Model, Operations, and Corporate Governance 92
2. Risk Management System, Risk Factors, and Regulatory Matters 120
3. Our Approach to Environmental, Social and Corporate Governance 187

Letter from the CEO

Dear Shareholders,

Allegro has developed at such a scale, laying so much groundwork for future growth that it seems a whole era has passed and not just a year since I last had the pleasure of writing to you as Allegro CEO. Here return with assets of affairs that makes us proud.

The client-facing innovation road that we presented around our debut on the Warsaw bourse continues to bear fruit as our business is getting more diversified. Allegro has solidified its status as one of the enablers for the Polish economy by supporting merchants in sales, which is in turn appreciated by customers who seek the best and widest offer. Our continuous focus on selection, price, and convenience has helped us grow into what we are today; a platform with over 25,000 merchants, many of them SSEs. Consumers are our final verifiers as they embrace our approach – the number of our active buyers has grown to 16.5 million, equivalent to almost half of Polish internet users. The model of a growing business based on clients’ and merchants’ trust is exactly what we want to scale going forward.

Among over 1000 brands and retailers that set up shop on Allegro in 2021 are Biedronka, CCC’s Spraindi, Decathlon, Pepco or L'Oréal, while our in-proven onboarding processes yielded triple-digit growth in orders from international merchants. This should serve as proof of how broadly we are thinking about widening our selection and footprint; as Allegro develops its offer at home, it is also ready to go international, with the highlight of 2021 – our agreement to purchase the Mall Group and We-Do – turning our plans to extend Allegro’s presence across CEE and beyond.

Delivery experience has also been a key area of innovation as Allegro successfully transitioned to an enhanced and integrated third-party delivery network. This asset-light but fruitful model will continue to be the core, as it ensures quick, reliable, and cost-efficient deliveries, enabling merchants to take advantage of the smart logistic backbone that Allegro provides together with its partners. Thanks to these partnerships, Allegro customers can now choose from nearly 50,000 convenient delivery pick-up options – the widest such network in Poland, making Allegro by far the most accessible e-commerce platform. The delivery promise has been further attuned by technological advancement as well as Allegro’s cooperation with merchants regarding incentives for fast dispatches and with carriers to enhance delivery. The development of this immensely scale facility has proven resilient to lockdowns and continues to progress, as evidenced by the increasing share of orders delivered the next day as well as the growing number of participating sellers. Nearly 90% of purchases are now delivered within 1 or 2 days as we aim to further improve the network, which is the Allegro model of choice going forward; we are constantly raising the bar and working to integrate closer with merchants to help them enhance their businesses and answer client needs even better. Allegro is supplementing its wide array of solutions with targeted investments into the One Fulfillment services, as well as the Poland-wide one Box by Allegro parcel machines to complete our partners’ offer and ensure attractive future returns as they are being scaled up. The fulfillment offer is being rolled out following a successful pilot, while the number of Allegro APPs is set to triple this year, helping generate cost savings. To complete the picture and optimize Allegro’s delivery economics, we acquired 8.press Couriers, whose infrastructure will be the foundation of the platform’s delivery operations.

The overarching aim is to lay out a complete and convenient offer, where all programs work hand-in-hand for the benefit of the consumer. The flagship Allegro Smart! program is a great example. The number of its beneficiaries has crossed 5 million and counting, with households and families meeting their shopping needs via one Allegro family account. In the 5.5 years since its launch, Smart! has saved consumers around PLN 7 billion in delivery costs, funded mostly by Allegro to help boost sales for merchants and raise client engagement. Smart! has thus become an everyday enjoyable and affordable online shopping as well as an undeniable benchmark, which could also be said about the innovative incentive solution Allegro Pay we rolled out to all consumers. The safe and easy way of postponing or splitting payments into installments has gained the program an NPS of 92.8 – a rarely seen globally. L Brands generated via Allegro Pay hit PLN 6 billion last year, exceeding its upgraded goaal, while the partnership with Aion Bank secured financing for its further growth.

It may occur as apparent, but this whole business development gets summed up in the Allegro app which under one lends thub and is responsible for growing part of Allegro’s trac. We make sure it encompasses all of our innovation drive; from shopping ease to user benefits, from visual search to delivery convenience – again, exactly what we aim to scale.

Last year will undoubtedly be marked by how we have broadened our perspective. Once completed, the deal to join ranks with the Mall Group and We-Do will extend the group’s footprint to cover also the Czech Republic, Slovenia, Slovakia, Hungary, and Croatia, nearly doubling the total addressable market to over PLN 1.1 trillion of retail sales and over 70 million shoppers. The planned tie-up will make the organisation increasingly international, multicultural and diverse, something Allegro already addresses with its new additions to its.

Aesthetically, the market is changing and competitive, but Allegro’s approach stays intact; we are relentlessly keeping our eyes on retail basics and business inputs, with shopping experience and customer convenience as the guiding lights. Let our leading brand awareness and overall NPS (relative net promoter score) of 78.5 be one way of showing how well this model works, just as the fact that we met our 2021 financial expectations, raised during the year. Customer appreciation translated into growing average spend per active buyer as well as record annual Gmv, which rose by 21.5% year-on-year, and propelled Adjusted EBITDA to above PLN 2 billion even as the ever-changing pandemic conditions turned from aiding to heading for the whole e-commerce sector.

2021 set the stage for further growth and 2022 will be about strongly building on that momentum, as we are focusing on developing further on home soil, while scaling our business abroad. We are not looking back, but instead are constantly focusing on innovation, viewing the planned increase in capital spending on enhancements in user and delivery experience as growth drivers for agroup that does not stop reinventing itself. Our top initiatives include further development of Allegro Smart! and Allegro Pay as growth engines, with full productization, and boosting delivery promise also among key goals to increase buyers and merchants trust. It is a year for sowing the seeds, as we aim at becoming the leading and most efficient marketplace in CEE and beyond. As desired employer, Allegro plans to continue widening our talent pool like in 2021, which also saw the company awarded the first annual grants under the Allegro incentive Plan. We believe that owning shares will drive alignment of goals among employees, as well as help Allegro attract and retain the best talent in Poland and beyond. The planned tie-up with the Mall Group will make the organisation increasingly international, multicultural and diverse, something Allegro already addresses with the new additions to its.## II. Business Report

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

INVESTOR RELATIONS

The investor relations (“IR”) program is free of charge within the SGroup program from 2021. program introduced an easier rate for co-financing, which is not a problem. If the Group had not made this customer-centric decision to delay the round of co-financing increases to February 2021, it is estimated that Q4 revenues would have been approximately PLN 70 million higher. Co-financing fees on these courier deliveries were introduced from February 2022 and are expected to lift the Take Rate.

ADVERTISING REVENUE

Advertising revenue increased by PLN 574.4 million, or 29.3%, from PLN 1,970.5 million for Q4 2021 to PLN 2,544.9 million for Q4 2022. The share of advertising revenue in GMV reached 5.1% in Q4 2022, up from 4.9% a year earlier and up by 0.4 pp versus Q4. Growth in the fourth quarter was driven by sponsored offer ads, as increasing merchant penetration and arising price per click delivered faster than average growth within the advertising product portfolio. Overall growth rate for advertising revenue than in the earlier quarters of 2021 reflected the lapping of strong demand for display advertising seen in Q4 of 2020, as marketing spending recovered and moved online after the first months of COVID-19 disruption. Advertising network services continued to develop, enabling merchants to use Google AdWords in order to drive traffic to their own Allegro offers to support their sales results, simultaneously providing effective free traffic to the Allegro marketplace.

PRICE COMPARISON REVENUE

Price comparison revenue decreased by PLN 8.3 million, or 15.6%, from PLN 53.2 million for Q4 2020 to PLN 44.9 million for Q4 2021. This decrease reflected a lower number of clicks from third-party customers as the e-commerce segment was generally seeing lower consumer search volume than in the prior year. The click volume was partially replaced as Allegro increased its use of the Ceneo channel for traffic acquisition for its own Allegro marketplace. As such, intra-group trading is eliminated on consolidation, third-party sales of price comparison services showed a bigger YoY decline than from attotal revenue perspective (15.6% vs 4.9%). Key selection KPs (no. of merchants, visible products) are growing YoY at an accelerated pace.

RETAIL REVENUE

Retail revenue increased by PLN 73.5 million, or 77.5%, from PLN 94.7 million for Q4 2020 to PLN 168.2 million for Q4 2021. Retail revenue growth above the rate of GMV growth was largely driven by the intensified role of Allegro+ retail operations to enhance the overall value proposition to the buyers, helping to provide competitive pricing or missing selection of key products when sellers present on the marketplace are unable to provide the markets lowest prices or sourcing missing products, especially during key shopping events such WoW Week, Black Week or Christmas. Retail sales transacted on the marketplace equated to 1.5% of Q4 2021 GMV, versus 1.4% in the prior year quarter.

OPERATING EXPENSES

Operating expenses increased by PLN 356.5 million, or 45.0%, from PLN 785.4 million for Q4 2020 to PLN 1,141.4 million for Q4 2021. This increase resulted primarily from higher net costs of delivery, marketing expenses and cost of goods sold, as well as recognition of transaction costs connected to the agreement to acquire the Mall Group and WE.Group.

PAYMENT CHARGES

Payment charges decreased by PLN 5.3 million, or 13.7%, from PLN 38.5 million for Q4 2020 to PLN 33.2 million for Q4 2021. This decrease resulted from lower rates from third-party providers renegotiated within Q4 2021, combined with favorable payment mix changes, which together more offset higher sales volume on the Group’s e-commerce marketplace.

COST OF GOODS SOLD

Cost of goods sold increased by PLN 45.4 million, or 77.8%, from PLN 58.3 million for Q4 2020 to PLN 103.7 million for Q4 2021. This increase resulted primarily from increased sales through the Group’s 10 retail businesses operating and higher participation in providing competitive pricing or sourcing of key products, which caused gross sales margin to decrease by 0.7 pp versus the prior year quarter.

NET COSTS OF DELIVERY

Net costs of delivery increased by PLN 157.1 million, or 57.7%, from PLN 272.5 million for Q4 2020 to PLN 429.6 million for Q4 2021. This increase resulted primarily from significant growth in both the number and share of buyers on the Group’s e-commerce marketplace who were users of the SMART! program and from the typical significant increase in spending that comes with the availability of offers with free delivery. The YoY growth in SMART! usage was supported by a proportion (PLN 59) launched during the base period of Q4 2020 and again during Q4 2021 as well as several sequential improvements to the SMART! product. Product improvements included launching (“SMART! na Start” (zero subscription with five free deliveries for occasional shoppers), adding assured-term promotion of unlimited deliveries on “smart na Start” during the SMArt! Week campaign in 2021, adding the cash on delivery payment method and reducing MOV on courier deliveries in stages from PLN 100 to PLN 80 in February 2021 and to PLN 70 in September 2021. Moreover, changes to SMART! program requirements for merchants lifted delivery coverage of SMART! offers close to 100% as of Q4 2021. From an cost perspective, the various steps taken to improve courier service within the SMART! product have increased the share of courier deliveries, which are more expensive than deliveries to lockers or pick-up points, within SMART! by 19.5% YoY in Q4 2021 versus Q4 2020. Average cost per SMART! package delivered increased by 7.8% versus the prior year quarter, of which 5.6 percentage points was due to the increase of courier deliveries in the delivery mix. Net costs of delivery mainly represent the excess of SMART! free delivery costs over the revenues earned from SMART! subscriptions, while co-financing contributions from sellers are recorded as marketplace revenue and thus included in the Allegro Rate.

MARKETING SERVICE EXPENSES

Marketing service expenses increased by PLN 90.5 million, or 55.1%, from PLN 163.7 million for Q4 2020 to PLN 254.2 million for Q4 2021. PPC expenses aimed to boost internet traffic acquisition increased in Q4 2021 by 28.0% YoY. Competition for internet buyer remains elevated, driving higher YoY costs per acquired click. Continued improvement in conversion of purchased traffic and higher Take Rate ensures that ROIs on this component of marketing spending remained very strong. The Group also increased its brand marketing investment in Q4 2021 by 70.4% to support the Sort Week, Black Week and Christmas campaigns, as well as to reduce diagnosed barriers per buyer segment and increase TOM in key shopping categories.

STAFF COSTS

Staff costs increased by PLN 19.1 million, or 17.6%, from PLN 108.3 million for Q4 2020 to PLN 127.4 million for Q4 2021. The comparative period staff costs included PLN 10.6 million related to shares granted to employees at the IPO as well as PLN 0.7 million related to COVID-19 support for employees. For Q4 2021 one-off items included PLN 7.1 million of share-based payment costs related to the new Allegro incentive Plan and PLN 0.3 million spent on protective equipment against COVID-19. On an like-for-like basis, excluding these one-off costs from both periods, staff costs would have increased by 21.8% YoY. This increase in staff costs was driven by growth in the number of staff employed by 33.7% YoY, with recruitment concentrated in key areas of the organization such as Technology, Commerce, Delivery Experience and Customer Experience, as well as an increase in base salaries, with the over-indexing of tech and middle-level business management recruitment, partially offset by the annual bonus being accrued at a lower expected payout level than for the prior year.

IT SERVICE EXPENSES

IT service expenses increased by PLN 10.5 million, or 55.1%, from PLN 19.2 million for Q4 2020 to PLN 29.7 million for Q4 2021. This increase resulted primarily from new licenses related to the introduction of new software solutions and increased IT costs due to growing technical platform capacity, including external cloud utilization driven by both growing storage requirement for active orders on the Group’s e-commerce marketplace, and capacity requirements for the increasing number of machine learning-based solutions embedded in the Group’s operations.# II. Business Report

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

PLN m (unaudited)

	Q4 2021	Q4 2020	Change %
Interest from deposits	2.3	0.4	439.6%
Other financial income	0.1	3.3	(97.2%)
Financial income	2.4	3.7	(35.9%)
Deferred borrowing cost	—	(10.7)	(100.0%)
Interest paid and payable for financial liabilities	(47.0)	(42.5)	10.5%
Second Lien early repayment cost	—	(0.1)	(100.0%)
Interest rate hedging instrument	(14.2)	(15.2)	(6.5%)
Interest on leases	(1.7)	(0.7)	149.4%
Valuation of financial assets	(6.2)	—	N/A
Revolving facility availability fee	(1.2)	(0.9)	37.9%
Net exchange losses on foreign currency transactions	(0.2)	(0.2)	25.4%
Other financial costs	(2.0)	(3.6)	(43.5%)
Financial costs	(72.6)	(73.9)	(1.8%)
Net financial result	(70.2)	(70.2)	0.0%

PROFIT BEFORE INCOME TAX

Profit before income tax decreased by PLN 22.5 million, or 22.5%, from PLN 327.7 million for Q4 2020 to 251.8 million for Q4 2021 as a result of the factors described above.

INCOME TAX EXPENSES

Income tax expenses decreased by PLN 12.3 million, or 19.2%, from PLN 64.1 for Q4 2020 to 51.8 million for Q4 2021. The Group’s effective tax rate was 19.8% and 20.5% for Q4 2020 and Q4 2021 respectively, compared to the Polish standard corporate income tax rate of 19% for each period.

PLN m (unaudited)

	Q4 2021	Q4 2020	Change %
Current income tax on profits	(83.0)	(93.8)	(11.5%)
(Increase)/Decrease in net deferred tax liability	31.2	29.7	5.1%
Income tax expense	(51.8)	(64.1)	(19.2%)

Reconciliation of Adjusted net profit

PLN m (unaudited)

	Q4 2021	Q4 2020	Change %
Net Profit	199.7	260.6	(23.3%)
EBITDA adjustments	39.6	20.0	98.1%
Net financial result adjustment	—	10.8	(100.0%)
Second Lien facility early repayment cost [1]	—	0.1	(100.0%)
Deferred borrowings cost write off [2]	—	10.7	(100.0%)
Tax impact of adjustments	(1.6)	(3.7)	(56.9%)
Adjusted net profit	237.7	287.6	(17.3%)

The following table presents aggregated reconciliation of income tax expenses for the periods indicated.

NET PROFIT

Net profit decreased by PLN 60.8 million, or 23.3%, from PLN 260.6 million for the Q4 2020 to PLN 199.7 million for Q4 2021 as a result of the factors described above.

ADJUSTED NET PROFIT

Adjusted net profit decreased by PLN 49.8 million, or 17.3%, from PLN 287.6 million for Q4 2020 to PLN 237.7 million for Q4 2021 when PLN 39.6 million of EBITDA adjustments and PLN 1.5 million of tax effect on the above adjustments are excluded. The following table presents reconciliation between reported and adjusted net profit for the period under review.

[1] Represents early repayment charges of the Second Lien facility before the due date.
[2] As a result of the Board of Directors' decision, taken on 28 September, to refinance its existing borrowing facilities using new borrowing facility and proceeds of share offerings pursuant to the Group's IPO, the carrying value of the existing borrowing facilities at amortized cost increased by PLN 145.4 million and an equivalent amount of deferred borrowing cost was recognized as non-cash financial expense. The amount represents part of the total costs recognized in Q4 2020.

OTHER COMPREHENSIVE INCOME

Other comprehensive income increased by PLN 121.5 million, or 1,093.7%, from PLN 11.1 million for Q4 2020 to PLN 132.6 million for Q4 2021. This increase resulted primarily from favorable changes in the valuation of the floating interest rate swap contracts reflecting the strong upward trend in market interest rate yields seen in the final quarter of 2021.

TOTAL COMPREHENSIVE INCOME

Total comprehensive income increased by PLN 60.7 million, or 22.5%, from PLN 261.7 million for the Q4 2020 to PLN 322.4 million for Q4 2021 as a result of the factors discussed above.

2.2.2. REVIEW OF FY 2021 RESULTS

RESULTS OF OPERATIONS

The following table presents the Group’s summary consolidated statements of comprehensive income data for FY 2021 and FY 2020.

Consolidated statement of comprehensive income, PLN m (audited)

	FY 2021	FY 2020	Change %
Revenue	5,352.9	3,997.8	33.9%
Marketplace revenue	4,319.2	3,231.0	33.7%
Advertising revenue	477.1	337.8	41.2%
Price comparison revenue	180.6	190.0	(4.9%)
Retail revenue	333.8	216.6	54.1%
Other revenue	42.1	22.4	88.1%
Operating expenses	(3,359.1)	(2,411.0)	39.3%
Payment charges	(142.6)	(152.9)	(6.7%)
Cost of goods sold	(341.1)	(222.7)	53.2%
Net costs of delivery	(1,246.2)	(692.5)	80.0%
Marketing service expenses	(661.6)	(564.7)	17.1%
## CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Consolidated statement of comprehensive income, PLN m (audited)

	FY 2021	FY 2020	Change %
Other expenses	(195.0)	(125.8)	55.1%
Net impairment losses on financial and contract assets	(66.7)	(39.4)	69.3%
Transaction costs	(49.8)	(61.6)	(19.1%)
Operating profit before amortisation and depreciation (EBITDA)	1,993.7	1,586.8	25.6%
Amortisation and Depreciation	(520.8)	(463.8)	12.3%
Amortisation	(435.4)	(400.2)	8.8%
Depreciation	(85.4)	(63.6)	34.3%
Operating profit	1,472.9	1,123.0	31.2%
Net Financial result	(114.8)	(506.3)	(77.3%)
Financial income	114.4	17.0	574.2%
Financial costs	(229.7)	(519.1)	(55.7%)
Foreign exchange (profits)/losses	0.5	(4.2)	N/A
Profit/(Loss) before Income tax	1,358.1	616.7	120.2%
Income tax expenses	(268.5)	(198.1)	35.5%
Net profit/(loss)	1,089.6	418.6	160.3%
Other comprehensive income/(loss)	240.9	(74.7)	N/A
Total comprehensive income/(loss) for the period	1,330.5	343.8	287.0%

REVENUE

REVENUE INCREASED BY PLN 1,666.4 million, or 22.9%, from PLN 7,277.7 million for FY 2020 to PLN 8,944.1 million for FY 2021. From a twenty-year perspective for the 2020-2021 period, it translated into 23.9% CAGR for FY 2021. This increase resulted primarily from the growth of marketplace, advertising, and retail revenue streams.

MARKETPLACE REVENUE

Marketplace revenue increased by PLN 1,088.2 million, or 33.7%, from PLN 3,221.0 million for FY 2020 to PLN 4,309.2 million for FY 2021. This increase resulted primarily from 21.3% YoY growth for the year and higher Take Rate, which reached 10.55% for the full 2021, up by 0.95% YoY. GOV growth in the period was almost entirely driven by the Allegro Marketplace with additional positive contribution of 0.3 pp coming from e-billet as severe lock-down restrictions negatively impacted public events and e-billet's ticket sales during much of H1 2021, with restrictions being gradually eased from May 2021.

The Group’s GOV growth reached 21.3% YoY for FY 2021, in line with management expectations, with widely varying growth rates registered in each quarter due to COVID-19 related impacts. In response to waves of the threat from COVID-19, the Polish government imposed lock-downs on all non-essential oil retail in March 2020 and subsequently implemented less severe restrictions, focused on closing shopping malls, three times in Nov 2020, Jan 2021 and March 2021. This disruption to normal shopping patterns raised demand for online e-commerce and accelerated adoption of regular online shopping.

ADVERTISING REVENUE

Advertising revenue increased by PLN 155.3 million, or 41.2%, from PLN 376.8 million for FY 2020 to PLN 532.1 million for FY 2021. This increase resulted primarily from the strong performance of sponsored offer ads, driven by growth in merchant purchasing sponsored ads for their offers and arising price per click. The increase was also the result of improved performance of display advertising due to strong rebound in demand, particularly from major brands, after the COVID-19 disruption of the prior year. This progress on display revenue reflects the scalability of new self-service solutions, which made access to display products easier for display advertising clients. Advertising network services continued to ramp up throughout the period, enabling merchants to use Google AdWords in order to drive traffic to their own Allegro offers, simultaneously providing effective free traffic to the Allegro marketplace.

PRICE COMPARISON REVENUE

Price comparison revenue decreased by PLN 9.5 million, or 7.6%, from PLN 125.0 million for FY 2020 to PLN 115.5 million for FY 2021. This decrease resulted primarily from aging share of price comparison services acquired by the Allegro marketplace platform, driving higher share of intra-Group revenue that is eliminated on consolidation, as lower number of clicks from third-party customers as the e-commerce segment was generally seeing lower consumer search volumes than in the prior year. As such intra-Group trading is eliminated on consolidation, third-party sales of price comparison services showed YoY decline (-7.6%) while from total revenue perspective (i.e. with, without eliminating intra-Group transactions) it grew 6.5% YoY. Despite pressure on revenues, key selections (no. of merchants, visible products) are growing YoY at agile pace.

RETAIL REVENUE

Retail revenue increased by PLN 117.2 million, or 54.1%, from PLN 216.5 million for FY 2020 to PLN 333.7 million for FY 2021. 43 retail sales represented 0.9% of total GOV in FY 2021 and 0.7% of total GOV in FY 2020. This increase resulted from a stronger focus on using 43 retail in order to enhance the overall value proposition to buyers, helping to provide competitive pricing or missing selection of key products when the merchants present on the marketplace are unable to provide lowest prices or source products, especially during shopping event campaigns such as SMRTY Week, Black Week and Christmas.

OPERATING EXPENSES

Operating expenses increased by PLN 74.5 million, or 30.3%, from PLN 2455.0 million for FY 2020 to PLN 3200.1 million for FY 2021. This increase resulted primarily from increased net costs of delivery, cost of goods sold, marketing, IT services and other expenses, partially offset by the non-recurrence in the current year of transaction costs related to the IPO as in FY 2020.

PAYMENT CHARGES

Payment charges decreased by PLN 10.5 million, or 6.7%, from PLN 155.9 million for FY 2020 to PLN 145.4 million for FY 2021. This decrease resulted from lower rates charged per transaction by third-party providers due to discounts that increase after reaching pre-agreed volume thresholds, which offset higher sales volumes on the Group's e-commerce marketplace, as well as further rate reductions negotiated in H1 2021, together with positive trends in payment mix towards cheaper methods.

COST OF GOODS SOLD

Cost of goods sold generated from retail revenues increased by PLN 118.4 million, or 53.2%, from PLN 222.7 million for FY 2020 to PLN 341.1 million for FY 2021. This increase resulted primarily from increased sales through the Group's 43 retail businesses operating, while gross sales margin improved by 0.5% versus the prior year period, as a result of an optimized algorithm helping to address correction of price defects, better cost efficiency and general improvements in purchasing processes.

NET COSTS OF DELIVERY

Net costs of delivery increased by PLN 555.7 million, or 80.0%, from PLN 694.5 million for FY 2020 to PLN 1,250.2 million for FY 2021. When adjusting to include PLN 81.8 million of free SMRTY program costs classified as marketing expenses in the base period, the YoY increase was at 90.7%.

This increase resulted primarily from significant growth in both the number and share of buyers on the Group's e-commerce marketplace who were users of the SMRTY program and to the typical significant increase in spending that comes with the availability of offers with free delivery.

The Group’s e-billet ticket sales business reopened in the second quarter of 2021 as mass events recommenced from mid-May and has been recovering strongly towards sales volumes last seen in the first quarter of 2020. For FY 2021 e-billet grew GOV by 137.5% YoY, for a 0.3 pp contribution to total GOV growth for the Group.

In FY 2021 the Take Rate reached 10.55%, which was up by 0.95 pp YoY. This improved Take Rate monetization mainly reflected the Allegro Marketplace with additional positive contribution of 0.3 pp coming from e-billet as severe lock-down restrictions negatively impacted public events and e-billet's ticket sales during much of H1 2021, with restrictions being gradually eased from May 2021.

The Group's e-billet ticket sales business reopened in the second quarter of 2021 as mass events recommenced from mid-May and has been recovering strongly towards sales volumes last seen in the first quarter of 2020. For FY 2021 e-billet grew GOV by 137.5% YoY, for a 0.3 pp contribution to total GOV growth for the Group.

This higher GOV growth on a two-year basis reflects buyers increased online purchasing frequency following the adoption of new online shopping habits during the lock-downs. An increase in demand has been further supported by the Group focusing on the retail basis of increasing selection, ensuring competitive prices and satisfying delivery experience, together with increased uptake of SMRTY users further boosting purchasing frequency. As a result GOV per Active Buyer advanced to PLN 3,158 and was 18.0% above the levels noted during FY 2020. At the same time, the number of Active Buyers grew to 16.5m, up by 2.6% YoY.

For FY 2021 e-billet grew GOV by 14.5% YoY, for a 0.3 pp contribution to total GOV growth for the Group.

In FY 2021 the Take Rate reached 10.55%, which was up by 0.95 pp YoY.# II. Business report

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

The YoY growth throughout the SMArt users was supported by anapromotion: Annual subscription for PLN 9 (launched during Q4 2020 and again during Q4 2021 and several sequential improvements to the SMArt product, including the launch of "SMArt na Start" (zero sub- scription:have free deliveries for occasional shoppers) atemporarily promotion of unlimited deliveries on "Smart na Start" during the Smart Week campaign in 2021, adding the cash on delivery payment method and reducing MOV on courier deliveries in stages from PLN 200 to PLN 70 in February 2021 and to PLN 70 in September 2021. Furthermore, changes to SMArtz program requirements for merchant lited coverage of courier service on SMArtz offers to close to 100%.

From an access perspective, the various steps taken to improve courier service within the SMArtz product have increased the share of courier deliveries, which are more expensive than deliveries to lockers or pick-up points, within SMArtz by 9.8% YoY in 2021 versus 9.3% YoY in 2020. Average cost per SMArtz package delivered increased by 9.9% versus the prior year, of which 0.9% was due to the increase of courier deliveries in the delivery mix. The resulting increase in the average cost per SMArtz delivery was only partially offset by the higher co- financing revenue for courier services in FY 2021, as zero rate co-financing promotions were used during the year after courier MOV reduction in both February and September to cushion the short-term impact of co-financing on merchants with within respective order value ranges.

Net costs of delivery mainly represent the excess of SMArtz free delivery costs over the revenues earned from SMArtz subscriptions, while co-financing from sellers are recorded as marketplace revenue and thus included in the Take Rate.

MARKETING SERVICE EXPENSES

Marketing service expenses increased by PLN 27.0 million, or 17.2%, from PLN 158.7 million for FY 2020 to PLN 185.6 million for FY 2021. On the prior year this expense item included PLN 28.2 million of delivery costs associated with free SMArtz trials who received the service as part of a bZ2 response to the severe qfM D-19 lockdown. Excluding that amount, marketing expenses increased by 35.5% versus the comparable period. PPC expenses grew by 35.9% YoY. Increased competition for buyers as online fully reopened in Q4 2021, drove costs per acquired click higher inaching similar to the higher advertising click rates noted by the Group on its Own Allegro marketplace. Nevertheless, improving conversion of purchased trac and higher Take Rates ensured that ROIs on this component of marketing spending remained very strong. Brand marketing investment in 2021 increased 36.2% YoY, mainly to support Smart Week, Black Week and Christmas campaigns, deliver targeted marketing messages to certain buyer segments and increase share of voice in key shopping categories. The marketing services expense line included PLN 3.5 million for current period and PLN 9.6 million for accrued period, costs of donations to the health sector and charitable organizations and NGRs related to COVID-19 including as one-off costs in the Adjusted EBITDA reconciliation.

STAFF COSTS

Staff costs increased by PLN 95.1 million, or 13.3%, from PLN 700.1 million for FY 2020 to PLN 795.2 million for FY 2021. The comparative period staff costs included PLN 52.2 million in respect of share based compensation for managers who have invested in the Management Investment Plan that was settled at the PO, and PLN 25.4 million related to shares granted to employees at the PO, as well as PLN 6.6 million related to COVID-19 support for employees. For FY 2021 one-off items included in staff costs comprised PLN 15.7 million of share-based payment costs related to the new Allegro incentive Plan and PLN 1.3 million spent on protective equipment against COVID-19. Excluding those one-off costs from both periods, staff costs increased by 31.5% YoY, driven by growth in the number of staff employed (3,546) of 24.7% YoY, with recruitment concentrated in key areas of the organization such technical, Commerce, Delivery Experience and Customer Experience, as well as an increase in base salaries and the over-indexing of tech and middle-level business management recruitment, partially offset by the annual bonus being accrued at a lower expected payout level than for the prior year.

IT SERVICE EXPENSES

IT service expenses increased by PLN 30.5 million, or 97.7%, from PLN 31.4 million for FY 2020 to PLN 61.9 million for FY 2021. This increase resulted primarily from new licenses related to the intro- duction of new software solutions and increased IT costs due to growing technical platform capacity, including external cloud utilization, driven by both growing storage requirements for active orders on the Group's e-commerce marketplace and capacity requirements for the increasing number of machine learning based solutions embedded in the Group's operations.

OTHER EXPENSES

Other expenses increased by PLN 59.3 million, or 55.1%, from PLN 107.8 million for FY 2020 to PLN 167.1 million for FY 2021. Items excluded from Adjusted EBITDA in the other expenses line in 2021 included PLN 7.5 million of regulatory proceeding costs vs PLN 7.9 million of regulatory proceeding costs, PLN 7.2 million of group restructuring and development costs and PLN 1.8 million of monitoring costs in 2020. On an like-for-like basis, excluding those one-off costs from both periods, other expenses would have increased by 70.1% YoY and this primarily results from higher consultancy and contractor outsourcing costs in connection with the development of new products and services, including IT consulting services, related to the delivery experience development agenda, projects related to customer experience improvements and ongoing work on product catalogue development as well as out-of-out costs related to new offices. In FY 2021 also included a bPLN 12.5 million write down of input VAT in the Luxembourg entities after being assessed as irrecoverable.

NET IMPAIRMENT LOSSES ON FINANCIAL AND CONTRACT ASSETS

Net impairment losses on financial and contract assets increased by PLN 27.3 million, or 90.3%, from PLN 30.4 million for FY 2020 to PLN 57.7 million for FY 2021. This increase resulted primarily from the growth of sales on the Group's e-commerce marketplace by 33.7% and increased provision by 0.14pp per million of revenue due to worse collection performance. On consumer loans, the provision increased to PLN 7.5 million from PLN 1.4 million in prior year, compared to PLN 1.995.4 million of new loans originated during FY 2021, reflecting tight credit control and strong collection processes.

TRANSACTION COSTS

Transaction costs decreased by PLN 14.8 million, from PLN 54.5 million for FY 2020 to PLN 39.7 million for FY 2021. The comparative period numbers included IPO-related one-off costs, in the amount of PLN 50.7 million and costs of acquiring the remaining 20% minority interest of E-bilet Polska Sp. of PLN 0.7 million. The current period expenditure is mainly related to the Mall Group 2 acquisition.

OPERATING PROFIT BEFORE AMORTIZATION AND DEPRECIATION

Operating profit before amortization and depreciation increased by PLN 405.9 million, or 25.8%, from PLN 1,573.8 million for FY 2020 to PLN 1,979.7 million for FY 2021 as a result of the factors described above. This result includes PLN 74.7 million of one-off EBTDA adjustments reported in the period, compared to PLN 153.5 million one-offs, mostly IPO-related, reported in the prior year period. Excluding the impact of these one-off items included in adjusted EBITDA, operating profit before amortization and depreciation would have increased by 18.5%.

AMORTIZATION

Amortization increased by PLN 35.2 million, or 8.8%, from PLN 400.5 million for FY 2020 to PLN 435.7 million for FY 2021. This increase resulted primarily from an increase in intangibles associated with capitalized development costs of projects that were completed and put into use during 2021.

DEPRECIATION

Depreciation increased by PLN 21.8 million, or 37.3%, from PLN 58.5 million for FY 2020 to PLN 80.3 million for FY 2021. This increase resulted primarily from the depreciation of right of use assets resulting from new leases of office and warehouse space, and depreciation of new Allegro parcel machines, computer and office equipment related to growth of the organization and scaling of the server parks required to support the marketplace platform.

OPERATING PROFIT

Operating profit increased by PLN 379.0 million, or 31.5%, from PLN 1,145.0 million for FY 2020 to PLN 1,524.0 million for FY 2021. This resulted from the growth of Allegro business performance described above combined with the inclusion of E.PO-related one-off costs in the base period, including the costs of shares granted to employees. Management Investment Plan and other one-off costs. Excluding the net impact of items included in adjustments to EBITDA, which was PLN 88.5 million lower than in 2020, Operating profit increased by PLN 251.7 million, or 20.5%.

PLN m (audited)	FY 2021	FY 2020	Change %
Valuation of nancial instruments	5.0	10.9	(54.0%)
Interest from deposits	3.1	2.8	12.1%
Other nancial income	0.3	3.3	(90.3%)
Net exchange gains on foreign currency transactions	0.5	—	N/A
Remeasurement of borrowings	105.9	—	N/A
Financial income	114.9	17.0	577.2%
Deferred borrowing cost write o	—	(143.4)	(100.0%)
Interest paid and payable for nancial liabilities	(156.7)	(297.1)	(47.3%)
2 %) Second Lien early repayment cost — (26.0) (100.0%) Interest rate hedging instrument (58.6) (41.9) 39.9% Interest on leases (5.0) (3.0) 64.5% Revolving facility availability fee (3.9) (3.3) 17. 5% Net exchange losses on foreign currency transactions — (4.2) (100.0%) Other financial costs (5.6) (4.4) 27.0% Financial costs (229.7) (523.3) (56.1%) Net financial costs (114.8) (506.3) ( 77.3%)

NET FINANCIAL RESULT

Net financial costs decreased by PLN 394.5 million, or 77.3%, from PLN 506.3 million for FY 2020 to PLN 114.8 million for FY 2021. This decrease resulted primarily from lower costs of servicing the Group's borrowings following the refinancing process that was completed in mid-October 2020, reducing both the nominal value of borrowings valued at amortized costs and the corresponding interest margin. Further organic delivering since the refinancing delivered a further step-down in interest margin during Q4 2021. As a result of these factors, interest costs dropped 47.2% to PLN 185.7 million for the twelve months ended 31 December 2021 in comparison to the prior year period. The lower costs associated with the Group borrowings were partially offset by the higher charges related to the interest rate hedging instruments, PLN 18.7 million or 56.9%, due to significant fall in WIBOR reference rates triggered by the COVID-19 pandemic, which was the prevailing situation for most of 2021 before WIBOR rates began to rise strongly towards the year end. Moreover in the current period the Group recog-nized PLN 105.7 million non-cash income on revaluation of borrowings, due to the improving leverage ratio of the Group that lowered interest margin from Q4 2021, thereby reducing the present value of future cash outows from the Group's borrowings.

Expenses and write-offs resulting from the refinancing process in 2020, which were recorded in Q4 and Q4 2020 are connected with the Group's PPA, including a PLN 73.4 million non-cash charge, representing the unamortized value of costs incurred at the inception of the Group's previous borrowings facilities, as well as early repayment charges amounting to PLN 25.0 million.

The following table presents a breakdown of the Group's Financial income and Financial costs for the periods indicated:

	FY 2021	FY 2020	Change %
PROFIT BEFORE INCOME TAX
Profit before income tax increased by PLN 741.4 million, or 120.2%, from PLN 616.7 million for FY 2020 to PLN 1,358.1 million for FY 2021 as a result of the factors described above.	1,358.1	616.7	120.2%
INCOME TAX EXPENSES
Income tax expenses increased by PLN 70.4 million, or 35.5%, from PLN 198.1 million for FY 2020 to PLN 268.5 million for FY 2021. The Group's effective tax rate was 19.8% and 32.1% for FY 2021 and 2020, respectively, compared to the Polish standard corporate income tax rate of 19% for each period. The high effective tax rate in the comparative period resulted from non-tax deductible expenses and other tax losses incurred by one of the Group's Luxembourg subsidiaries in the combined amount of PLN 255.0 million, for which no deferred tax asset was recognized as this entity is not likely to generate taxable income in the foreseeable future.	268.5	198.1	35.5%

PLN m (audited)	FY 2021	FY 2020	Change %
Current income tax on profits	(294.3)	(261.0)	12.8%
(Increase)/Decrease in net deferred tax liability	25.8	62.8	(58.9%)
Income tax expense	(268.5)	(198.1)	35.5%

NET PROFIT

Net profit increased by PLN 671.1 million, or 160.3%, from PLN 418.6 million for FY 2020 to PLN 1,089.6 million for FY 2021 as a result of the factors described above.

ADJUSTED NET PROFIT

Adjusted net profit increased by PLN 427.8 million, or 58.4%, from PLN 731.9 million for FY 2020 to PLN 1,159.6 million for FY 2021.

40 41
II. Business report
ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT
for the years ended 31 December 2021

Reconciliation of Adjusted net profit, PLN m

	FY 2021	FY 2020	Change %
Net profit	1,089.6	418.6	160.3%
EBITDA adjustments	74.7	163.2	(54.2%)
Net financial result adjustment	—	169.4	(100.0%)
Second Lien facility early repayment cost [1]	—	26.0	(10 0.0%)
Deferred borrowings cost write off [2]	—	143.4	(100.0%)
Tax impact of adjustments	(4.7)	(19.3)	(75.5%)
Adjusted net profit	1,159.6	731.9	58.4%

The following table presents a reconciliation between reported and adjusted net profit for the period under review.
[1] Represents early repayment charges of the Second Lien facility before the due date.
[2] As a result of the Board of Directors decision, taken on 28 September, to refinance its existing borrowings facilities using a new borrowing facility and proceeds of approximately share offering pursuant to the Group's S.A., the carrying value of the existing borrowing facilities at amortized cost increased by PLN 175.4 million and an equivalent amount of deferred borrowing cost was recognized as a non-cash financial expense.

OTHER COMPREHENSIVE INCOME

Other comprehensive income increased by PLN 315.5 million, from negative PLN 77.7 million for FY 2020 to PLN 237.8 million for FY 2021. This increase resulted primarily from favorable changes in the valuation of Relating to interest rate swap contracts amid the significant upward movement in market interest yields visible in the final months of 2021, while the onset of the COVID-19 pandemic in 2020 had generated corresponding loss in value of these swap contracts in the prior year, due to monetary easing measures undertaken by the Polish government.

TOTAL COMPREHENSIVE INCOME

Total comprehensive income increased by PLN 685.7 million, or 280.3%, from PLN 244.8 million for FY 2020 to PLN 930.5 million for FY 2021 as a result of the factors discussed above.

2.2.3. REVIEW OF CASH FLOW PERFORMANCE

The following table summarizes net cash ows from operating, investing and nancing activities for the twelve months ended 31 December 2021, for the twelve months ended 31 December 2020 and three month periods respectively:

Cash Flow, PLN m	FY 2021	FY 2020	Q4 2021 (unaudited)	Q4 2020 (unaudited)
Net cash inow/(outow) from operating activities	1,406.6	1,509.9	387.5	344.9
Prot before income tax	1,358.1	616.7	251.6	324.7
Income tax paid	(303.5)	(121.1)	(40.8)	(27.9)
Amortisation and depreciation	520.8	463.8	139.8	118.6
Net interest expense	109.4	508.4	61.2	68.6
Changes in net working capital	(301.3)	(34.9)	(36.4)	(152.2)
Other operating cash ow items	23.1	77.1	12.1	13 .1
Net cash inow/(outow) from investing activities	(429.9)	(218.2)	(173.0)	(47. 9)
Capitalized development costs	(224.8)	(149.3)	(62.7)	(43.2)
Other capital expenditure	(182.2)	(81.2)	(87.7)	(21.4)
Acquisition of subsidiaries	(22.6)	(11.8)	(22.6)	( 7. 4)
Other investing cash ow	(0.3)	24.1	—	24.1
Net cash inow/(outow) from nancing activities	(204.5)	(510.5)	(31.6)	162.9
Proceeds from capital increase	—	972.3	—	972.3
Borrowings received	—	—	—	345.0
Borrowings repaid	(1.7)	(1,056.7)	(1.7)	(711.7)
Interest rate hedging instrument settlements	(61.8)	(38.9)	(14.2)	(12.0)
Lease payments	(36.0)	(2 9.1)	(10.2)	(7. 3)
Interest paid	(124.6)	(275.9)	(27.6)	(38.6)
Other nancing cash ow	19.5	(82.2)	22.0	(384.8)
Net increase/(decrease) in cash and cash equivalents	772.2	781.2	183.0	459.9

42 43
II. Business report
ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT
for the years ended 31 December 2021

NET CASH FROM OPERATING ACTIVITIES

Net cash from operating activities decreased by PLN 103.3 million or 6.8% YoY and increased by PLN 42.5 million or 12.7% YoY for Q4 2021. The full year decrease is mostly attributable to the ramp-up of the Allegro Pay consumer financing operations, launched in the second half of 2020, that produced a net increase in the outstanding loan book in FY 2021 of PLN 308.8 million compared to PLN 54.0 million recorded in FY 2020. Working capital excluding the impact of Allegro Pay registered a net cash inflow of PLN 5.5 million for FY 2021 driven by the higher balance of trade and other payables that was partially offset by a higher balance of trade receivables and growth in inventory to support higher retail sales.

In FY 2021 the Group originated PLN 1,993.1 million of new consumer loans. The accelerating growth of Allegro Pay is driven mostly by the increasing number of active buyers utilizing the service, additionally boosted by a gradual expansion of eligibility for credit in the first half of 2021. In Q4 the possibility to make an eligible credit application for Allegro Pay service was expanded to all Polish bank accounts holders by levering credit data accessible under the PSD2 rules. As a result, all active buyers, including new active buyers with insignificant purchasing history on Allegro, may apply for a credit line to use Allegro Pay lending service. This change has accelerated the growth in customers taking credit, while also reducing the acceptance rate due to continued cautious risk management policies.

The increasing volume of originated consumer loans was further boosted by several new functionalities introduced by Allegro Pay during the year, including: card repayment, one-click buy directly from the product page and upgraded credit-scoring models, providing a more accurate assessment of the credit limit granted to customers. Despite the significant increase of the base of active borrowers, the Group was able to maintain a relatively low credit loss ratio. The value of expected credit loss provision amounted to PLN 9.5 mln as of 31 December 2021, representing the 1.7% of gross value of outstand-ing consumer loans. This is the result of good risk management discipline and higher than originally expected demand for Buy Now, Pay Later products, characterized by short tenors and corresponding fast turnover of the loan book.

Moreover, in December 2021 the Group completed
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II. Business report

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

2.2.4. INDEBTEDNESS

As of 31 December 2021, the Group’s total bank borrowings outstanding was PLN 5,503.0 million, with a carrying value (principal adjusted by amortised cost) at PLN 5,366.3 million and falling due with amortised repayment in December 2025.

Furthermore, at the end of 2021, the Group had PLN 500.0 million committed but undrawn from aggregating facility and had executed an additional bridge term loan financing agreement making further PLN 1,000.0 million available for the purpose of the potential acquisition of Mall Group a.s. and WE|DO CZ s.r.o. The acquisition is pending receipt of all required competition authority clearances from Ave Central European countries and the Group expects it to close in the first half of 2022.

Following steadily improvement in the Group's leverage ratio and in line with its borrowing facility agreement, on 5 August 2021 the Group's interest margin was reduced. As a result, the carrying value on 7 November 2021 Alllegro.eu and Allegro.pl entered into a share purchase agreement (the “SPA”) to acquire Mall Group a.s. (the “Mall Group”) and WE|DO CZ s.r.o., alongside We|do Czech Republic s.r.o. (the “WE|DO”), together with the Mall Group Target (the “Transaction”), Transaction brings customers, merchants, web:track and logistics capabilities.

The Transaction will allow both groups to accelerate growth and expand customer and merchant bases across the region in ascending platform.

The Target will be acquired for approximately EUR 884 million based on an average valuation of EU 925 million adjusted for debt and debt-like items of EU 77 million. The price is agreed on the basis of agreed-box mechanics (i.e. the purchase price is adjusted by reference to the Target's balance sheet position as at 31 March 2021) and therefore, the SPA contains customary provisions as to the lock-box pricing, including leakage and permitted leakage provisions.

The transaction will be financed through a combination of stock and cash considering comprising 55.7% cash considering, announced with EU 765.5 million cash on hand and new debt, and as described above.

NET CASH USED IN INVESTING ACTIVITIES

Net cash used in investing activities was PLN 747.7 million for FY 2021, which represents a 422.7 or 97.0% increase and PLN 125.0 million or 251% decrease for Q4 2021. This increase is a combination of the higher developent costs qualifying for capitalization, PLN 75.5 million or 50.9% decrease, reflecting the growth and investment in the Group’s technology teams, creating the necessary capacity for the ongoing development projects, as well as strong growth in other capital expenditures, increasing by PLN 101.0 million or 127.5%, due to the deployment of several new initiatives.

The main initiative driving the increase of the capital expenditures is the launch of Allegro's own parcel locker network, with more than athousand machines deployed across the biggest Polish cities and towns in FY 2021. This significant contribution to the capital expenditures of the Group was further increased by the preparation for the commercial launch of the Group’s first fullfilment center, as well as the out-of-investment in the new offices located in Poznan and Warsaw.

NET CASH USED IN FINANCING ACTIVITIES

Net cash used in financing activities was PLN 207.5 for FY 2021, which represents a decrease in cash out-amounting to PLN 305.0 million or 59.0% decrease. This decrease is mainly related to the Group’s refinancing process that was completed in Q4 2020 and resulted in shifting the previous amortizing repayment schedule to amortised repayment in 2025. As a result, no principal repayment was recorded in FY 2021. Moreover, the completion of the refinancing initiative caused the decrease of both the nominal amount of indebtednes and the corresponding reference interest margin to lower interest paypents in the current period. That amount was further reduced by the low level of the WIBOR reference rate across the majority of 2021 that on the other side contributed to the higher cost of settlement of the maturing to eyed interest rate swap contracts. The impact of this factor has been declining over time, as the market is observing the upward movement in reference rates in the last months of FY 2021. The cash flow from financing activities for the comparative period is also reflecting the impact of the Group’s IPO, completed in late 2020 that resulted in recording the PLN 977.5 million proceeds from the capital increase, used to fund aggregation in borrowing, net of arrangement fees paid, by PLN 711.7 million in addition to the standard debt repayment of PLN 375.0 million in the prior year.

3. Summary of key developments

3.1.1. AGREEMENT TO ACQUIRE THE MALL GROUP A.S. AND WE|DO CZ S.R.O

PLN m (unaudited)	31.12.2021	31.12.2020
Adjusted EBITDA LTM	2,068.5	1,750.0
Borrowings at amortized cost	5,366.3	5,437.8
Lease liabilities	251.1	73.3
less cash and cash equivalents	(1,957.2)	(1,185.1)
= Net Debt	3,660.2	4,326.0
Leverage	1.77 x	2.47 x
Equity	9,454.1	8,089.6
Net debt to Equity	38.7%	53.5%

3.1.2. Acquisitions

The transaction will be financed through a combination of stock and cash considering 55.7% cash considering, announced with EU 765.5 million cash on hand and new debt, and as described above.

The transaction will be announced through a combination of stock and cash considering 55.7% cash considering, announced with EU 765.5 million cash on hand and new debt, and as described above.

The transaction will be financed through a combination of stock and cash considering 55.7% cash considering, announced with EU 765.5 million cash on hand and new debt, and as described above.

The transaction will be announced through a combination of stock and cash considering 55.7% cash considering, announced with EU 765.5 million cash on hand and new debt, and as described above.

The transaction will be financed through a combination of stock and cash considering 55.7% cash# 3. Business report

3.1.2. ACQUISITION OF X-PRESS COURIERS

On 8 October 2021 Allegro acquired X-Press Couriers Sp. z o.o. (“XPC”), one of its same-day delivery courier partners. X-Press Couriers is a local delivery company currently serving predominantly same-day delivery parcels within and between Poland’s nine largest municipalities. Allegro has cooperated with XPC for the last two years.

The Transaction is aimed to complete Allegro’s One fullfillment.one order and its One Box. proprietary locker infrastructure. It is expected that scaling these capabilities and rolling out to further big cities will enhance customer experience by continued shortening of delivery times.

The Transaction also included acquisition of Skynet Customers Brokers Sp. z o.o. (“SCB”), a customers broker agency, which is part of the X-Press Couriers. Allegro expects to leverage SCB’s customer competencies to complete and further improve Group’s order for International Sellers, by providing e.g. bonded warehouse and customer broker agency services for non-eCommerce merchants in Allegro fulfillment.

In 2021 the Group continued to develop Allegro Pay, its own proprietary,‘in-house’ ordering. The Allegro Pay offer allows for deferring payments by one month, or splitting them into convenient 3, 5, 10 or 20-month installments, giving greater financial flexibility to Active Buyers and ensuring safer and easier buying online.

In 2021 Allegro Pay reached important development milestones and met all its key targets for 2021. In September 2021 Allegro Pay was offered to all customers wishing to apply for an up to PLN 7,500 purchasing limit, leveraging PWH access to widen credit checking capabilities to include even new Allegro Active Buyers with no prior transaction history on the marketplace platform.

Furthermore, in line with the Group’s target for 2021, Allegro succeeded to securing dedicated external financing for Allegro Pay. On 14 October 2021 Allegro Pay sp. z o.o. signed a Receivable Purchase Agreement with Aion Bank SA /Investcorp. institution incorporated as a joint-stock company under the laws of Belgium, acting through its Polish branch trading under the name ‘Aion Bank S.A. Spółka Akcyjna Oddział w Polsce’ (‘Aion Bank’) concerning the purchase by Aion Bank of consumer loans receivables originated by Allegro Pay. Instalment loans sold under the agreement with Aion Bank are expected to be de-recognized from the Group’s balance sheet, which according to Group’s expectations will allow for Allegro Pay growth acceleration and improved returns on investment.

Allegro Pay proprietary lending solution greatly improve the user experience with consumer credit solutions available for the Group’s e-commerce marketplace buyers. Buyers appreciated the simplicity and convenience of Allegro’s in-house order, which is reflected in sector-leading NPS of 72.8 in Q4 2021.

3.1.3. COVID-19 Impact

During 2021 the Group’s GMV growth reached 21.5% and was in line with management expectations, with widely varying growth rates registered in each quarter due to COVID-19 related impacts in comparable periods.

Since the outbreak of the pandemic in early 2020, the Polish government imposed numerous restrictions that have impacted Poland’s usual shopping patterns. In March 2020 an lockdown on all non-essential online retail was imposed, which was subsequently followed by relatively less severe restrictions, focused on closing covered shopping malls three times in November 2020, January 2021 and in March-early May 2021, respectively. These disruption translated into significantly varying quarterly growth rate registered in 2021 as restrictions imposed on online. eCommerce raised demand for online eCommerce and accelerated adoption of regular online buying.

In Q4 2021 GMV growth reached 35.1% (YoY), driven by renewed lockdowns that closed shopping malls right after 2020 Christmas and lasted until late January 2021. This produced a tailwind in demand that further supported GMV growth at the beginning of the quarter. Following a re-opening spike in infections at the beginning of March, the Government once again closed country-wide non-essential stores in shops on 20 March. Even though this second 2021 lockdown was less severe than the first Polish lockdown imposed on 14 March 2020, overall post of the comparable period was relatively mild impacted by COVID-19 early in the pandemic, translating into a high registered Q4 2021 GMV growth rate.

In Q1 2022 the GMV growth rate dropped to 10.5%, achieved against the backdrop of the peak disruption and the highest demand for online goods in the prior year comparative period. Between March and early May 2021 Polish shops were closed, and then subsequently reopened with only mask and shopper density requirements remaining for the rest of Q4. By contrast, the first lockdown in the comparable period (March-May 2020) was much more severe, with total closure of all non-essential retail. During this post severe lockdown in the comparable period, the Group made its SMART. program, with free delivery, available for free to any Active Buyer who wished to register, resulting in a peak YoY growth rate of 71.5% for the second quarter of 2020. Aside significant part of that additional demand has been retained once online retail has reopened as buyers maintain their shift in purchasing to online. This, combined with progress on the business input growth drivers, has delivered the 10.5% GMV growth in Q4, against the toughest comparative quarter.

In Q1 2022 the GMV growth accelerated again to 19.9% (YoY) delivered against a backdrop of minimal COVID-19 impact in both the current and prior year quarter. As there were no hard online stores locked down in Q1 2022 nor in the comparable period, the Group’s third quarter results have been relatively less impacted by COVID-19 related restrictions, even though achieved against still elevated growth rate.```markdown

II. Business report

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

1.7. Funding

On 30 November 2021 the Board of Directors of the Company granted approval for establishing a committed PLN 1,000,000,000 bridge term loan financing (the "Additional Facility") with Santander Bank Polska S.A. to facilitate the financing of the acquisition of 100% stake in Mall Group a.s. and WĘGZOCEC s.r.o. The Additional Facility will have a 12-month availability period with a 6-month utilization period.

Furthermore on 30 November 2021 the Board of Directors of Allegro adopted a resolution on the establishing of a Polish law governed bond issuance program, up to the aggregate nominal value of PLN 3,000,000,000 (three billion zloty) at any time under the program (the "Programmed"). Bonds issued under the Programmed will be offered solely to qualified investors, with the obligation to publish asensuous basis. The Bonds may be denominated in PLN or EUR and will be issued on an asea-unsecured basis. The Programmed will allow for the issuance of plain vanilla Bonds, green Bonds and sustainability Bonds. The Bonds may bear an-earning or agg-exated interest rate.

The SMART! loyalty program has been a major growth driver throughout FY 2021, with continued dynamic expansion in the number of participating merchants, available offers, subscribers and users. By the end of 2021, total SMART! user had grown to exceed 5 million active buyer users, up from 2.1 million at 30 June, the last published user base total released by the Group.

In addition to rapid growth in paid SMART! subscriptions, expansion of the SMART! user base was further boosted by the launch of the "SMART! for Start" (SMART! na Start) promotion in March 2021, an attractive offer for less engaged buyer users to try SMART! via a subscription free package of 5 free SMART! deliveries to be used within twelve months. Subsequent trialists have subsequently converted to paid subscribers once they consumed their 5 free deliveries. The Group has prolonged this successful promotion to ensure that all new and less engaged Active Buyer users get the opportunity to test the benefits of SMART!.

Further improvements to the SMART! program launched in 2021 included introduction of the cash on delivery payment method and reducing MOV on courier deliveries, initially from PLN 100 to PLN 80 (in Q1 2021), and further down to PLN 70 in Q4 2021. By matching the MOV on courier deliveries with lockers and PUDO, thus effectively introducing a seamless MOV across all delivery methods, Allegro made free SMART! to door deliveries more accessible to those consumers without easy access to pick-up points, further driving convenience and simplification of SMART! shopping funnel.

In 2021 the Group also made significant progress in managing the economics of the SMART! program, having introduced gradual changes in the co-oining of delivery costs. SMART! brought strong GOV uplift for Allegro merchants, driven by the huge popularity of free deliveries among Allegro buyer users. Proven sales growth for SMART! merchants created space for monetization, with gradual changes to the co-oining structure for merchants being introduced. Contributions to the cost of free courier deliveries began in April 2023, with payments to support locker deliveries starting in January 2021. In order to promote the benefits of faster delivery on conversion rates to the merchants, the Group decided to reinvest some of the co-oining receipts by introducing aggregate of the co-oining fee when speedly picking, packing and shipping by a-merchant enabled next day delivery to the SMART! user. This incentive has contributed to acceleration in delivery speed during 2021, raising merchant awareness of the importance of excellent in logistics to their sales results, and will continue until the behavioral change is sufficiently embedded.

An exception to merchant participation in the cost of delivery was the initial cost of MOV reduction for courier deliveries, initially in Q4 after it was lower from PLN 100 to PLN 80 in Q1, and later after it was lower from PLN 80 to PLN 70 in Q4. During the approprionate period (from January to August 2021 for the first reduction, and from September 2021 for the second reduction) there was no delivery co-oining by the merchants, with the cost of free
```# GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

4. Remuneration Report

4.1. Adoption of the Remuneration Policy

The remuneration policy of the Company (the "Remuneration Policy") was adopted by the Board of Directors on 28 September 2020 upon proposal from the Remuneration and Nomination Committee and approved by the general meeting on 29 September 2020 in accordance with the Law. The Allegro Incentive Plan (AIP) component of the Remuneration Policy has been amended in 2021 (June 29 and September 22, 2021 Remuneration and Nomination Committee meetings) with the aim to clarify specific AIP rules and definitions.

4.2. Purpose and scope of the Remuneration Policy

The purpose of the Remuneration Policy provisions is to set out the principles governing the remuneration of the directors of the Company (each a "Director") and key managers of the Group (each a "Key Manager") so as to contribute to the implementation of the long-term business strategy, long-term interests, sustainability, and stability of the Group. It takes into account the interests of the Group's shareholders and other stakeholders (including customers, business partners, employees, and society). This goal is to be favored, in particular, by the amount, principles, and structure of the remuneration of the Directors and Key Managers. The remuneration principles take into account the current financial situation of the Group.

4.3. Remuneration of Executive Directors and Key Managers

The Remuneration Policy is intended to attract, motivate, and retain Directors and Key Managers who have the highest level of competence and experience. Remuneration for Directors and Key Managers is determined considering market pay rates for persons performing functions of board members, including entities with a similar profile of activity and scope of conducted activity, taking into account the needs and capabilities of the Company and its subsidiaries, individual qualifications, and the level of experience of individual Directors, as well as their scope of competence.

The Remuneration and Nomination Committee considers the opinion of an independent advisor in the field of remuneration of Executive Directors and Key Managers. The appointed advisor in 2021 was HKP Group. The advice and recommendations of the external advisor(s) were used as guidance, but do not serve as a substitute for thorough consideration of the issues by each Committee member. Advisors attended Committee meetings occasionally, and when required by the Committee.

The Allegro Group has its operations in Poland and is listed on the Warsaw Stock Exchange, but it competes with top international market players in the highly demanding tech and e-commerce industry. Hence, to maintain the firm's current competitive advantage and build future business success the Group needs to be in an opposite to recruit top talent in Poland and beyond (e.g. European market). In order to compete for the best talent, the Group provides competitive pay levels and structures based on objective market data.

Given this particular context, the Group has used two peer group analyses to design pay ranges for Directors and Key Managers:

Peer Group 1 consists of 11 companies of the WIG 20 Index selected from the following sectors: Financial services, software, telecommunications and retail. Allegro is currently a member of WIG 20 Index, with one of the highest values of market capitalization from among the selected companies. The choice of this peer group reflects the location of the Group's operations and takes into account local market practice for Director and Key Manager roles.
Peer Group 2 consists of 15 European listed companies in the e-commerce, technology, platform and retail sectors selected by the Remuneration and Nomination Committee. The choice of this peer group is essential in order to assure Allegro's attractiveness as an employer to highly qualified individuals from Poland and throughout Europe.

The Executive Directors and the Key Managers did not receive any remuneration (other or variable) from any other entity of the Group other than listed in this Remuneration Report.

The total Remuneration Package for Executive Directors and Key Managers consists of the following components:

4.3.1.# FIXED REMUNERATION

Directors and Key Managers are entitled to a base salary for the work specified for each individual in their appointment letter and/or employment contract with the Company and/or its subsidiaries. Where a director or Key Manager performs functions for more than one entity within the Group, they may receive varied base salaries from each entity for the respective functions performed. The base salary varies depending on their functions in the Board of Directors, supervisory boards, or management boards of the Company’s subsidiaries, additional functions in the Group, and the scope of their competence. Base salary levels are reviewed annually with effect from 1 April and are compared to the market benchmarks to ensure that the Group remains competitive.

This section of the Report constitutes the remuneration action report of Allegro in relation to the financial year ending on 31 December 2021, which has been prepared by the remuneration and nomination committee of the Company and adopted by the Board of Directors on 25 February 2022 in accordance with the Luxembourg law of 24 May 2011 on the exercise of certain rights of shareholders and implementing the directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending directive 2007/36/EC as regards the encouragement of long-term engagement of shareholders and of improving the…).

II. Business report

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

allegiance resulting from claims arising from the liability of members of the bodies of a capital company (D&O liability insurance). The Company does not provide any retirement schemes beyond what is required by local law requirements.

4.3.2. SHORT – TERM VARIABLE REMUNERATION

In addition to the base salary, Executive Directors and Key Managers may receive a discretionary annual bonus. The purpose of this offering is to:

drive behavior and communicate the key priorities for the year;
motivate employees and incentivize delivery of performance over the one-year operating cycle.

The amount of the annual bonus depends on:

the amount of the annual base salary;
the target size of the bonus as a percentage of annual base salary that ranges from 85% to 100% depending on the performance function.
results against agreed corporate performance criteria that determine the size of the relevant Corporate Bonus Pool expressed as a percentage of the target bonus of 100% and accrued for each participant in the pool (see below for detailed rules).

Corporate Bonus Pool

Performance criteria

Operating Company’s bonus pool is based on the company’s performance criteria realization. Annual targets for a given year as agreed with the Board of Directors and the Committee. Company Performance Index (CPI) is a base for determining a company’s bonus pool. It is driven by target achievement of two KPIs: Allegro.pl and Allegro Pay:

GMV – weight 50% where 100% performance = annual budget
EBITDA – weight 50% where 100% performance = annual budget

Ceneo.pl:

Revenue – weight 50% where 100% performance = annual budget
EBITDA – weight 50% where 100% performance = annual budget

eBilet:

60% eBilet CPI (EBITDA / GMV)
40% Allegro.pl CPI (EBITDA / GMV)

Min/Max payout (Cap) as of Base Salary:

Min = 0%;
100% = annual budget
Max = no limit for GMV and 150% Cap for EBITDA

The Remuneration Committee views the Allegro Group as operating in a high growth market with a significant and long term opportunity to grow in an e-commerce segment which is underpenetrated by international standards. In this context, uncapping the maximum performance score for GMV is intended to align Shareholder and Management interests to grow the business as fast as possible. In contrast, the EBITDA maximum performance score is capped at 150% of the annual budget to incentivise management to stay focused on growth and investment rather than absolute EBITDA delivery (for example through cost cutting or reducing investment) even in a situation where GMV growth is underperforming the annual budget.

The Remuneration Committee has full discretion each year to change or introduce different KPIs from GMV and EBITDA in the Short-Term Variable Bonus Plan. A KPI such as NPS could therefore be included at some point in the future. However, at present the Remuneration Committee views NPS as already deeply embedded in the mindset of the organization as a key metric that helps to drive top line growth, which is itself already sufficiently targeted by the inclusion of the GMV metric in the Short-Term Variable Bonus Plan and also in the longer term Performance Stock Unit Plan.

Bonus threshold: 87.5% of company performance criteria realization, separately for each KPI.

Bonus pool acceleration: Linear (8% of bonus for 1% of target realization above the bonus threshold)

Payout frequency: Annually after annual results confirmation

Executive Directors and Key Managers are entitled to additional benefits including the right to use a selected healthcare package and life and disability insurance financed by the employer (fringes benefits). The Company provides to the Executive Directors and Key Managers with insurance against any damage.

II. Business report

The GMV and EBITDA targets and actual performance for purposes of calculating short-term bonuses for 2021 and 2020 are presented in the tables below:

FY 2021

Allegro.pl	Weight	Target (mPLN)	Actual (mPLN)	Realization	Bonus Company Performance Index
GMV	50%	42,000.0	42,471.1	101.1%	109.0%
IFRS EBITDA	50%	1,847.7	1,903.1	103.0%	124.0%
Company Performance Index					54.49%

eBilet	Weight	Company Performance Index
eBilet CPI	60%	75.0%
Allegro.pl CPI	40%	116.5%
Company Performance Index		91.60%

Ceneo.pl*	Weight	Target (mPLN)	Actual (mPLN)	Realization	Bonus	Company Performance Index
Revenue	50%	359.4	305.4	85.0%	0.0%	0.00%
IFRS EBITDA	50%	160.9	129.1	80.3%	0.0%	0.00%
Company Performance Index						0.00%

eBilet	Weight	Target (mPLN)	Actual (mPLN)	Realization	Bonus	Company Performance Index
GMV	50%	167,741.9	130,577.1	77.84%	0.0%	0.00%
IFRS EBITDA	50%	332.8	1,108.6**	333.06%	150.0%	75.00%
Company Performance Index						75.00%

The Remuneration and Nomination Committee has decided to award 40% discretionary bonus to the Ceneo Team in consideration of the fact that a significant part of the underperformance was due to factors beyond Ceneo’s control. Namely, weaker e-commerce traffic and higher costs of traffic acquisition than planned.
** EBITDA at 289.3 PLN adjusted by Allegro.pl charges regarding C&I services for C&I support (not included in the budget) amounted to 741.4 PLN and 146.5 PLN respectively.

For 2021 it was agreed that eBilet bonus pool is based on eBilet and Allegro.pl combined CPI
* 80% eBilet CPI (EBITDA / GMV)
* 40% Allegro.pl CPI (EBITDA / GMV)

As proposed by Management and approved by the Remuneration and Nomination Committee, the nominal value of the Allegro.pl bonus has been reduced by 2 million PLN to compensate for the 50% discretionary bonus granted to Ceneo.pl despite not meeting targets for its 2021 short-term bonus. This resulted in the Allegro.pl CPI decrease from 118.5% to 116.5%.

The Group has introduced the Allegro Incentive Plan (AIP), a discretionary benefit offered to its Executive Directors, Key Managers and employees. AIP is a long-term incentive plan based on the Company’s shares, approved by shareholders of the Company on 20 September 2020 and adopted by the Board of Directors on 7 October 2020. The objective of the AIP is to align the Directors’ interests with that of the Group and to contribute to the actual long-term financial standing and stability of the Group and long-term shareholder value creation. The provisions of the scheme can only be modified by the Shareholders Meeting and the Remuneration and Nomination Committee is responsible for the detailed rules of the scheme, for approving grant proposals made by Management, and for deciding on the size of awards for Executive Directors and Key Managers.

Executive Directors and Key Managers may be offered variable remuneration under the AIP in the form of Performance Share Units (PSUs). Selected employees of the Group may be also offered the variable remuneration in the form of Restricted Stock Units (RSUs). Both plans details are presented in the table below:

Allegro Incentive Plan

Eligibility: Awards may be granted to Directors and certain selected employees of the Group at the discretion of the Remuneration and Nomination Committee.

Forms of Awards: Awards under the AIP may be granted in the form of PSU or RSU which give the participants a right to receive Shares without payment on completion of a vesting period and, in the case of PSUs, subject to the satisfaction of performance conditions.The AIP rules also include flexibility for the Remuneration and Nomination Committee to grant other forms of awards, such as share options.

Overall Plan Limits

In any ten-year period, not more than 10% of the issued share capital of the Issuer may be issued or transferred out of treasury for the purposes of awards granted under the AIP and any other discretionary employees’ share plans adopted by the Company. This limit does not include management investment into the Company or awards that have been made or granted on or prior to Admission (including conditional upon Admission) or have lapsed.

Individual Limits

The aggregate total market value of Shares over which an award is granted may not exceed 200% of annual base salary or 300% in exceptional circumstances (as measured at the date of grant). The Remuneration and Nomination Committee will determine the value of awards to be granted to each Participant in any financial year.

Source of Shares

Awards under the AIP may be granted over newly issued Shares, Shares held in treasury, or Shares purchased in the market (including Shares held in an employee benefit trust).

Timing of Awards

The first awards under the AIP were granted in April 2021. For 2022 and beyond, awards will normally be granted within a six-week period after the Issuer announces its annual results. However, the Remuneration and Nomination Committee may grant awards outside this period at its discretion. No awards may be granted more than ten years after the AIP was adopted, unless by further decision of the Shareholders' Meeting.

Performance Conditions

Awards in the form of PSUs will be subject to performance conditions which will be determined by the Remuneration and Nomination Committee at the time of grant. Awards will vest between 0% (if the performance conditions are not met) to 200% (at maximum level) based on the extent to which the performance conditions are met. Any performance condition may be amended or substituted if one or more events occur which cause the Remuneration and Nomination Committee to consider that an amended or substituted performance condition would be more appropriate. Any such amended or substituted performance condition will, in the reasonable opinion of the Remuneration and Nomination Committee, not be materially more or less difficult to satisfy.

LONG-TERM VARIABLE REMUNERATION

FY 2020

Allegro.pl	Weight	Target (mPLN)	Actual (mPLN)	Realization Bonus Company Performance Index
GMV	50%	28,435.0	35,055.2	123.3%	286.3%
IFRS EBITDA	50%	1,467.9	1,606.1*	109.4%	150.0%
Total					75.00% 218.13%

Ceneo.pl	Weight	Target (mPLN)	Actual (mPLN)	Realization Bonus Company Performance Index
Revenue	50%	266.3	280.5	105.4%	142.9%
IFRS EBITDA	50%	136.8	140.4**	102.6%	120.7%
Total					60.37% 131.81%

eBilet	Weight	Target (mPLN)	Actual (mPLN)	Realization Bonus Company Performance Index
GMV	50%	375,000.0	55,675.5	14.8%	0.0%
IFRS EBITDA	50%	15,900.0	-3,695.1	-23.2%	0.0%
Total					0.00% 0.00%

|
| :---------------- | :----- | :------------ | :------------ | :------------------------------------------ | :-- |
| Total | | | | | 0.00% 0.00% |

Allegro Incentive Plan

Vesting and Release of Awards

RSUs will vest and Shares be released in the ordinary course in three annual tranches – 25%, 25%, and 50% respectively on the first, second, and third anniversaries of the date of grant, subject to continued employment.

PSUs will notionally vest in the ordinary course in three annual tranches – 25%, 25%, and 50% respectively on the first, second, and third anniversaries of the date of grant, but will only be released on the third anniversary of grant, subject to continued employment and satisfaction of the relevant performance conditions applicable to such PSU.

The Remuneration and Nomination Committee may grant awards subject to a different vesting period and release schedule, at its discretion. Any part of an AIP award which is not released in accordance with its terms will immediately lapse.

Malus and Clawback

The Remuneration and Nomination Committee, may reduce the number of Shares under a PSU or within the period of two years after a PSU has been released, require the repayment of some or all of the Shares so released (net of any tax), if certain events occur, including (i) the Participant’s gross misconduct, fraud or dishonesty or that of someone else at their direction, in each case, resulting in material losses to the Group or causing the Group’s material reputational damage and (ii) a material error in the assessment of the performance (including material misstatement of accounts in the case of clawback) upon which the value of the award was granted or number of Shares were released.

Leaving the Group

In case of cessation of employment of a Participant within the Group, they will be considered:

a “bad leaver,” if a Participant ceases to be employed by reason of (i) gross misconduct or (ii) resignation where the Participant joins a competitor (as determined by the Remuneration and Nomination Committee from time to time) within twelve months of the date on which they so cease to be employed (the „Termination Date”); and
a „good leaver,” if a Participant ceases to be employed for any reason other than those specified in above.

For PSU awards:

if a Participant is a „bad leaver,” any outstanding awards lapse (vested and unvested portions) and any Shares received under the AIP in the twelve months prior to the Termination Date (and, if applicable, in the period between the Termination Date and the date on which the Participant joins a competitor) must (on a net of tax basis) be repaid to the Company; and
if a Participant is a „good leaver”:
subject to the bullet point below, the vested portion of the award will be released on the scheduled release date unless the Remuneration and Nomination Committee determines that the award will be released at, or immediately before, the Termination Date. The number of Shares that may be released shall be determined by reference to the extent to which the performance conditions have been met as at the release date, capped at 100% of the Shares that have vested at the Termination Date; and
in the event an individual is dismissed by the Group (other than for gross misconduct) within six months following a change to the majority of (A) the Board or (B) the management board of Allegro.pl, within any twelve month-period, the treatment is as for the bullet point above save that:
the vested portion shall be calculated by reference to completed months served from the date of grant to the Termination Date as a proportion of the three-year vesting period (as opposed to the annual vesting schedule); and
the Shares will be released on or around the Termination Date unless no additional tax liability for the Participant would be triggered if the Shares were released on the scheduled release date.

For RSU awards:

if a Participant is a „bad leaver,” no further awards shall vest and any Shares received under the AIP in the twelve months prior to the Termination Date must (on a net of tax basis) be repaid to the Issuer; and
if a Participant is a „good leaver,” no further awards shall vest unless the Remuneration and Nomination Committee exercises its discretion otherwise.

For both PSUs and RSUs, if a Participant who is considered a „good leaver” on their Termination Date later breaches their restrictive covenants, any outstanding awards held by them at that time would lapse and they would have to repay (on a net of tax basis) to the Company any Shares delivered to them under the AIP in the twelve-month period immediately prior to the breach.

On 27 December 2023 the Remuneration and Nomination Committee agreed the performance conditions for PSU grant scheduled for April 2021. Performance conditions are based on Company Performance Index based on 3 year EBITDA and GMV perspective and defined in relation to CAGR to ensure sustainable return for shareholders and repeatability of the model in the following years.

THE PSU PERFORMANCE 2021-2023 TARGETS:

GMV – weight 50%, based on Allegro.pl and eBilet figures;
EBITDA – weight 50%, based on consolidated Group figures.

The Management is committed to developing the Allegro Group in line with the multi-year planning horizon. GMV and absolute EBITDA are key net-rises incentivizing the Management to stay focused on long-term growth, thus aligning long-term Shareholder and Management interests. In order to implement the multi-year roadmap, the Group implements annual budgeting cycles, which are anchored around the delivery of the long-term development roadmap. Short-term annual targets, which are derived from the long-term goals, provide strong incentive for the Management to stay on path towards delivery of the ambitions multi-year roadmap. GMV and EBITDA are key valuation metrics used by our investors. These financial outputs are resulting from continuous, sequential improvements on asset of operational inputs, allowing for even stronger alignment of interests with our Shareholders.

Under the rules of the PSU plan, The Remuneration and Nomination Committee has flexibility to choose other performance conditions than those selected for the 2021 grant if it considers other measures may be more appropriate to the particular circumstances impacting the Group at the relevant point in time. Accordingly, the performance measures selected may vary from annual grant to annual grant.

The assumptions for setting the targets for PSU performance conditions are:

PSU 200% (tax level) to be aligned with 49 plan# II. Business report
Target level to be above market P&L forecasts.
PSU threshold to be at the minimum growth level. All Allegro does not disclose future targets for PSU performance as these are deemed commercially sensitive. However, going forward the Group intends to provide retrospective disclosure of performance against such targets after the year-end in which a given PSU grant is settled.

At the time of preparing this report, the Remuneration and Nomination Committee were yet to discuss and conclude on the nature of changes, if any, to performance conditions originally set for the FY2021 grant as a result of the material impact of the Mall Group acquisition. This will be addressed at the same time as setting performance conditions for the FY2022 grant of PSUs.

Details of the Allegro.gmv and Ebitda targets for 2021 long-term variable remuneration are presented in the table below. However, the PSU award will only be released on the third anniversary of the grant date provided the relevant performance targets set for all 4 years are met.

Allegro.eu Weight Target (mPLN)	Company Performance Index	GMV	Realization	Bonus	Adjusted EBITDA	Realization	Bonus
50%	5	42,167.7	42,601.7	101.0%	108.2%	54.70%	108.81%
50%	4	2,044.5	2,068.5	101.2%	109.4%

AIP award

Name of Director	Company	Position	Total number of units granted in 2021	Total award value granted in 2021 (PLN)*	Total number of units cancelled in 2021	Total award value cancelled in 2021 (PLN)*
Francois Nuyts	Allegro.eu	Executive Director	163,949	10,923,964	0	0
Jon Eastick	Allegro.eu	Executive Director	23,987	1,598,400	0	0
Piotr Szybiak	Allegro.eu	CTO, MBM	20,349	1,355,940	20,349	1,355,940
Damian Zapłata	Allegro.eu	CCO, MBM	23,987	1,598,400	23,987	1,598,400
Wojciech Bogdan	Allegro.eu	CDO, MBM	22,961	1,530,000	0	0
Marcin Łachajczyk	Allegro.eu	Managing Director, MBM	8,765	584,016	0	0
Key Managers other than Senior Managers	Allegro.eu	—	66,707	4,449,625	0	0
Total			330,705	22,040,345	44,336	2,954,340

Targets for 2022 and 2023 are based on the Group's medium-term plan as it stood in 2021 at the time of issuing the 2021 grant. These targets are considered commercially sensitive and will be disclosed retrospectively in future annual reports of the Remuneration and Nomination Committee.

The first AIP awards were granted in April 2021. Awards are issued in units, and for the purpose of estimating the value of a given award, units are valued in reference to the Group's stock price according to methodology set out in the rules of the AIP, which is calculated as follows:

units are valued based on the average closing price of shares (as derived from the Warsaw Stock Exchange, rounded down to two places after the decimal (PLN 1/100) during a period of 90 dealing days ending with the dealing day before the grant date, excluding any period when dealing in shares are prohibited under the company’s share dealing code, or any other such period.

The Remuneration and Nomination Committee may, at its discretion, deem it necessary to employ another method of calculation in order to fairly represent the dealing price correctly for exceptional circumstances.

The individual PSU awards granted and cancelled in 2021 as well as the total number of units and total value of the PSU awards granted to other employees of the Group, all valued using the prescribed valuation methodology based on recent trading, are presented in the tables below:

AIP award	Total number of shares granted in 2021	Total award value granted in 2021 (PLN)*
AIP RSU	6,429,344	47,0

The AIP awards granted in 2021 presented in the table above are the sum values of 2021 AIP Grant calculated at Grant Date as a percentage of annual base salary of each Director / Key Manager / employee and divided by the market value of the shares, which is an amount equal to the average closing price of shares (as derived from the WSE, rounded down to two places after the decimal (PLN 1/100) during a period of 90 dealing days ending with the dealing day before the Grant Date, excluding any period when dealings in shares are prohibited under the Company’s share dealing code. Those values are therefore different from values accrued in compliance with IFRS2 standards presented in the table in the following sections of the document.

MANAGEMENT INVESTMENT PLAN

The Executive Directors, Chairman, and Key Managers participated in the Management Investment Plan (MIP) that ceased to operate at the date of the Group’s IPO. Under the MIP, the management participated indirectly through various classes of shares of Adiuvo SCCP and directly via type C and D shares issued by Allegro.eu. Managers paid the fair value of the issued shares at the grant date with any difference to nominal value being paid to share premium.

At IPO in October 2000, the management’s holdings from their investments made under the MIP were converted into ordinary shares of Allegro.eu on the basis of the market capitalization of the Group derived from the listing price of PLN 75 per share and applying the terms of the MIP. The resulting shareholdings from the management’s investments represent returns on their individual investments made at fair value and are not classified as remuneration for work performed by the Group and are not covered by this Remuneration Report. This general conclusion is modified in relation to two elements of the MIP’s terms which deliver value to the management in an upfront that qualifies to be treated as equity settled compensation in accordance with IFRS2*. These two elements were:

where certain managers were given non-recourse loans to purchase part of their shares, the non-recourse loans together with the shares issued are considered to create an option under IFRS2*. It gives the party receiving the loan the right upon an exit event to choose not to repay the loan, but instead to relinquish their rights to the shares.
most managers were also entitled to participate in an achatschette feature where, if upon an exit event the ultimate shareholder return amount was at least 5 times their initial investment amount, then Management’s B shares were entitled to share in an achatschete amount of 4% of the shareholder receipts.

Applying IFRS2 to these two elements, the benefits were fair valued at grant date and amortized over the expected vesting period. The expected vesting period at the relevant grant date was either June or December 2021 and represented the assumed maturity date of the option at the grant date. The achatschette feature, which was granted to both key Management and selected other managers, was also valued under IFRS2 at inception of the MIP. The expenses that were recognized by the Group as a result of these two terms from the MIP were charges of a non-cash nature.

NON-CASH EQUITY SETTLED SHARE BASED COMPENSATION RECOGNIZED UNDER IFRS2 FROM FAIR VALUE INVESTMENTS MADE UNDER THE MIP (IN KPLN)

Directors and Key managers received non-cash equity settled share based compensation resulting from MIP in 2021.

4.3.4. REMUNERATION STATEMENT FOR EXECUTIVE DIRECTORS AND KEY MANAGERS

Name of Director	Company	Position	Fixed Remuneration Base Salary	Fees	Other Benefits	One year variable*	Multi year variable**	Extraordinary item	Pension Expenses	Total Remuneration	Proportion of fixed and variable remuneration Fixed	Variable
Francois Nuyts	Allegro.eu	Executive Director (01.09.2020 –)	—	228.4	—	—	—	—	—	228.4	100%	0%
	Allegro.pl	Group CEO, MBM (01.08.2018 –)	3,568.1	—	47.4	4,466.0	4,253.4	—	—	12,334.9	29%	71%
Jon Eastick	Allegro.eu	Executive Director (01.09.2020 –)	—	228.4	—	—	—	—	—	228.4	100%	0%
	Allegro.pl	Group CFO, MBM (01.02.2018 –)	1,065.6	—	60.2	759.2	622.3	—	—	2,507.4	45%	55%
Piotr Szybiak	Allegro.pl	CTO, MBM (01.12.2015 – 23.06.2021, employment termination – 30.09.2021)	751.0	—	31.0	—	71.0	—	—	852.9	100%	0%
Damian Zapłata	Allegro.pl	CCO, MBM (01.12.2017 – 27.08.2021)	713.1	—	42.6	—	133.2	—	—	888.9	100%	0%
Wojciech Bogdan	Allegro.pl	CDO, MBM (01.05.2020 –)	1,039.2	—	21.0	765.0	595.7	—	—	2,420.8	44%	56%
Marcin Łachajczyk	Ceneo.pl	Managing Director, MBM (01.01.2013 –)	618.0	—	80.0	227.5	227.5

Where these non-cash charges required under IFRS2 are attributable to Board Members and Key Managers of the Group, the relevant amounts are presented below. They are considered to be components of returns the managers received from their MIP investments that can be classified as remuneration for work performed as opposed to returns made on investments made at fair value. These figures are presented separately as non-cash payments and are excluded from remuneration presented in the further part of this Remuneration Report.

NON-CASH EQUITY SETTLED SHARE BASED COMPENSATION RECOGNIZED UNDER IFRS2 FROM FAIR VALUE INVESTMENTS MADE UNDER THE MIP (IN KPLN)

Name of the Director	Company	Position	2021	2020
Darren Huston	Allegro.eu	Chairman, Non-Executive Director	0.0	3,772.1
Francois Nuyts	Allegro.eu	Executive Director	0.0	3,044.6
Jon Eastick	Allegro.eu	Executive Director	0.0	130.9
Piotr Szybiak	Allegro.eu	Key Manager, MBM	0.0	109.7
Damian Zapłata	Allegro.eu	Key Manager, MBM	0.0	109.7
Wojciech Bogdan	Allegro.eu	Key Manager, MBM	0.0	1,737.5
Marcin Łachajczyk	Allegro.eu	Key Manager, MBM	0.0	38.7
## ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT
for the years ended 31 December 2021

REMUNERATION STATEMENT FOR EXECUTIVE DIRECTORS AND KEY MANAGERS FOR 2020 (IN KPLN)

Name of Director	Company	Position	Fixed Remuneration Base Salary	Fixed Remuneration Fees	Fixed Remuneration Other Benefits	Variable Remuneration One year variable accrued*	Variable Remuneration One year variable paid*	Variable Remuneration Multi year variable**	Total Remuneration	Proportion of fixed and variable remuneration Fixed	Proportion of fixed and variable remuneration Variable
Francois Nuyts	Allegro.eu	Executive Director (01.09.2020 –)	—	74.1	—	—	—	—	74.1	100%	0%
	Allegro.pl	Group CEO, MBM (01.08.2018 –)	3,349.0	—	39.3	7.3	0	4.2	12,481.2	27%	73%
Jon Eastick	Allegro.eu	Executive Director (01.09.2020 –)	—	74.1	—	—	—	—	74.1	100%	0%
	Allegro.pl	Group CFO, MBM (01.02.2018 –)	1,065.6	—	41.3	1,336.3	1,592.1	—	2,699.0	41%	59%
Piotr Szybiak	Allegro.pl	CTO, MBM (01.12.2015 – 23.06.2021, employment termination – 30.09.2021)	996.9	—	65.8	1,251.4	1,118.2	—	2,180.9	49%	51%
Damian Zapłata	Allegro.pl	CCO, MBM (01.12.2017 – 27.08.2021)	1,065.6	—	64.2	1,633.2	1,586.3	—	2,716.1	42%	58%
Wojciech Bogdan	Allegro.pl	CDO, MBM (01.05.2020 –)	680.0	—	4.1	1,112.3	1,049.1	—	1,733.2	39%	61%
Marcin Łachajczyk	Ceneo.pl	Managing Director, MBM (01.01.2013 –)	579.8	—	60.3	573.1	573.1	—	1,213.1	53%	47%

Short-term variable remuneration: discretionary annual bonuses. Final decisions on 2020 bonuses were taken by the Remuneration Committee after the annual report publication. The amounts stated in the 2020 Remuneration Report were bonuses accrued. The current period remuneration report includes actual paid amounts for 2020. The differences also take into account currenty fluctuations between 2020 report date and actual payment date.
Long-term variable remuneration: Allegro Incentive Plan – Performance Share Units.

REMUNERATION STATEMENT FOR NON-EXECUTIVE DIRECTORS FOR 2021 (IN KPLN)

Name of Director	Company	Position	Fixed Remuneration Base Salary	Fixed Remuneration Fees	Fixed Remuneration Other Benefits	Variable Remuneration One year variable*	Variable Remuneration Multi year variable**	Total Remuneration	Proportion of fixed and variable remuneration Fixed	Proportion of fixed and variable remuneration Variable
Darren Huston (12.05.2017 —)	Allegro.eu	Chairman Non-Executive Director	—	1,370.1	—	—	—	1,370.1	100%	0%
Carla Smits-Nusteling (01.09.2020 —)	Allegro.eu	Independent Non-Executive Director	—	561.7	—	—	—	561.7	100%	0%
David Barker (01.09.2020 —)	Allegro.eu	Non-Executive Director	—	—	—	—	—	0.0	—	—
Nancy Cruickshank (01.09.2020 —)	Allegro.eu	Independent Non-Executive Director	—	493.2	—	—	—	493.2	100%	0%
Paweł Padusiński (01.09.2020 —)	Allegro.eu	Non-Executive Director	—	—	—	—	—	0.0	—	—
Richard Sanders (01.09.2020 —)	Allegro.eu	Non-Executive Director	—	—	—	—	—	0.0	—	—

The Non-Executive Chairman of the Board is entitled to an all-inclusive fee. Other Non-Executive Directors receive varying fee s that depend on the function performed, in particular Non-Executive Directors performing functions in committees are entitled to additional fees.

Non-Executive Directors are not be entitled to any form of variable remuneration and none of their remuneration components are linked to:
* options or other derivatives or any other variable component; or
* the Group’s results.

The amount of remuneration of Non-Executive Directors was determined taking into account the objective of ensuring their independence and their competence in supervising over the Group’s activities.
The independent Non-Executive Directors did not receive any variable remuneration (including any shares, award shares, performance bonuses).

4.7. Remuneration of Non-Executive Directors

REMUNERATION STATEMENT FOR NON-EXECUTIVE DIRECTORS FOR 2021 (IN KPLN)

REMUNERATION STATEMENT FOR NON-EXECUTIVE DIRECTORS FOR 2020 (IN KPLN)

Short-term variable remuneration: discretionary annual bonuses.
Long-term variable remuneration: Allegro Incentive Plan – Performance Share Units

OTHER RELATED PARTY TRANSACTIONS WITH NON-EXECUTIVE DIRECTORS OF THE GROUP PRIOR TO THE IPO

Since Group inception through to 2021, the Chair- man of the Board of Directors provided, through his personal consulting company, BlackPine s Capital Partners Ltd (‘‘BlackPine s’’), several consulting services to the Company which were not related to the Chairman’s directorship. The consultancy fees paid by the Company to BlackPine s covered the performance of services in connection with strategic advice to the Board of Directors and strategic and operational guidance, directives and direction to the Company’s CEO and executive team, and similar assistance to the Company and any company of the Group through the personal services of Mr. Huston, pursuant to the general direction of the Board of Directors. This contract was discontinued prior to the IPO in 2021. These fees are disclosed as related party transactions in the Note 27 to the Consolidated Financial Statements.

No further services were provided in 2021. No other Non-Executive Director provided services to the Group for which they received financial compensation in the period from inception of the Company to its IPO.

4.6. Comparative information on the remuneration and Company’s performance

The table below sets out the annual remuneration of Directors and Key Managers, of the performance of the Company and of the average total annual remuneration of employees of the Company and the Group other than Directors and Senior Managers in 2021.

	Annual Change	YoY change (in %)	YoY change (in kPLN)	2021 (in kPLN)	2020 (in kPLN)
Director’s total remuneration (from all Legal Entities)
Francois Nuyts	CEO (01.08.2018 –), Executive Director (01.09.2020 –)	0.06%	7.9	0	12,563.20
Jon Eastick	CFO (01.02.2018 –), Executive Director (01.09.2020 –)	(1.35%)	(37.39)	2,735.71	2,773.10
Darren Huston	Chairman, Non-Executive Director (12.05.2017 –)	185.74%	890.60	1,370.10	479.5
Carla Smits- Nusteling	Independent Non-Executive Director (01.09.2020 –)	208.29%	379.50	561.7	182.2
David Barker	Non-Executive Director (01.09.2020 –)	0.00%	0.00	0	0
Nancy Cruickshank	Independent Non-Executive Director (01.09.2020 –)	208.25%	333.20	493.2	160
Paweł Padusiński	Non-Executive Director (01.09.2020 –)	0.00%	0.00	0	0
Richard Sanders	Non-Executive Director (01.09.2020 –)	0.00%	0.00	0	0
Daniele Arendt	Non-Executive Director (05.05.2017 – 12.10.2020)	n/a	0.00	n/a	0
Gautier Laurent	Non-Executive Director (05.05.2017 – 12.10.2020)	n/a	(160.00)	n/a	160
Séverine Michel	Non-Executive Director (05.05.2017 – 12.10.2020)	n/a	0.00	n/a	0
Cédric Pedoni	Non-Executive Director (05.05.2017 – 12.10.2020)	n/a	0.00	n/a	0
Gilles Willy Duroy	Non-Executive Director (17.10.2019 – 12.10.2020)	n/a	0.00	n/a	0
Piotr Szybiak	Key Manager, MBM (01.12.2015 –23.06.2021, employment termination –30.09.2021)	(60.89%)	(1,328.00)	852.9	2,180.9

7.7. Comparative information on the remuneration and Company’s performance

	YoY change (in %)	YoY change (in kPLN)	2021 (in kPLN)	2020 (in kPLN)
Company’s Performance
GMV (mPLN)	21.33%	7,489.7	42,601.7	35,112.0
EBITDA – Allegro segment (kPLN)	24.05%	368,937.9	1,903,119	1,534,181.1

5. Expectations for the Group in FY 2022

| | FY 2021 Actual | FY 2022 Expected |
| :---". 1,534,181.4 EBITDA – Ceneo segment (kPLN) (4.02%) (5,412.2) 129,13 8.6 134,550.8 Revenue – Ceneo segment (kPLN) 8.85% 24,835.2 305 363.4 280,528.2 Average annual remuneration of employees other than Directors and Key Managers YoY change (in %) YoY change (in kPLN) 2021 (in kPLN) 2020 (in kPLN) Total Remuneration (1.04%) (1.3) 123.2 124.5 Annual Change YoY change (in %) YoY change (in kPLN) 2021 (in kPLN) 2020 (in kPLN) Damian Zapłata Key Manager, MBM (01.12.2017 –27.08.2021) (67. 27%) (1, 8 27. 2 0) 888.9 2,716.10 Marcin Łachajczyk Key Manager, MBM (01.01.2013 –) (4.96%) (60.21) 1,152.8 9 1, 213.10 Wojciech Bogdan Key Manager, MBM (01.05.2020 –) 39.67% 6 87.6 5 2,420.85 1,733.20 .. Diversity and Inclusion 17 December 2020 and amended on 28 June 2021. The main measures to ensure diversity are: • The adoption of a policy to counteract discrimination and harassment, • The adoption of “Stay Fair Code of Conduct”, • The adoption of “whistleblowing policy”, • The provision of communication and training programs that promote diversity, • Seeking to treat all of its employees equally, regardless of sex, gender identity, age, race, employment form, political views, sexual orientation, disability, health, national, ethnic origin, religion, denomination, non-denominational status, beliefs, union membership, family status or lifestyle, including when evaluating performance and making hiring and promotion decisions. • Supporting women choosing careers in the technology industry, • Supporting diversity when selecting members of the Board, • Supporting diversity and inclusion initiatives, • Increasing the possibility of changing positions within the company, • Monitoring activities and reporting on their effects. For further details concerning Diversity and Inclusion in the Company please refer to Section Approach to Corporate. Environment and Social Responsibility of this Report.

4.1. Application of the Remuneration Policy

The remuneration paid to the Directors and Key Managers of the Company is in line with the objectives of the Remuneration Policy of the Company and does not deviate from the Remuneration Policy. The remuneration of Directors is: • sufficient and conform to the Directors’ decision, qualification, and responsibilities but it does not compromise their independence; • sufficient to attract and retain directors with the talent and profile desired by the Company; • competitive, which is achieved by establishing a remuneration package in line with market standards of comparable sectors and companies; • takes into account the current financial situation of the Company.

The Group provides the following targets and expectations for the 2022 financial year in respect to its Polish operations.

5. Expectations for the Group in FY 2022

The following tables are provided in the 2021 10-K filing:

| 3 | | | | | |
| :---

The following tables are provided in the 2021 10-K filing:

Average annual remuneration of employees other than Directors and Key Managers	YoY change (in %)	YoY change (in kPLN)	2021 (in kPLN)	2020 (in kPLN)
Total Remuneration	(1.04%)	(1.3)	123.2	124.5

Damian Zapłata Key Manager, MBM (01.12.2017 –27.08.2021)	Annual Change	YoY change (in %)	YoY change (in kPLN)	2021 (in kPLN)	2020 (in kPLN)
	(67. 27%)	(1, 8 27. 2 0)	888.9	2,716.10

Marcin Łachajczyk Key Manager, MBM (01.01.2013 –)	Annual Change	YoY change (in %)	YoY change (in kPLN)	2021 (in kPLN)	2020 (in kPLN)
	(4.96%)	(60.21)	1,152.8	9 1, 213.10

Wojciech Bogdan Key Manager, MBM (01.05.2020 –)	Annual Change	YoY change (in %)	YoY change (in kPLN)	2021 (in kPLN)	2020 (in kPLN)
	39.67%	6 87.6 5	2,420.85	1,733.20

Diversity and Inclusion

The Company is strongly committed to be an equal opportunities employer, where every employee is respected and supported to reach their highest potential. The Company fosters awork environment where people can speak up to remove barriers to success, collaborate, and put the best ideas into practice. To emphasize the importance of the matter the Diversity Policy was adopted by the Board of Directors on 17 December 2020 and amended on 28 June 2021.

The main measures to ensure diversity are:
* The adoption of a policy to counteract discrimination and harassment,
* The adoption of “Stay Fair Code of Conduct”,
* The adoption of “whistleblowing policy”,
* The provision of communication and training programs that promote diversity,
* Seeking to treat all of its employees equally, regardless of sex, gender identity, age, race, employment form, political views, sexual orientation, disability, health, national, ethnic origin, religion, denomination, non-denominational status, beliefs, union membership, family status or lifestyle, including when evaluating performance and making hiring and promotion decisions.
* Supporting women choosing careers in the technology industry,
* Supporting diversity when selecting members of the Board,
* Supporting diversity and inclusion initiatives,
* Increasing the possibility of changing positions within the company,
* Monitoring activities and reporting on their effects.

For further details concerning Diversity and Inclusion in the Company please refer to Section Approach to Corporate. Environment and Social Responsibility of this Report.

4.1. Application of the Remuneration Policy

The remuneration paid to the Directors and Key Managers of the Company is in line with the objectives of the Remuneration Policy of the Company and does not deviate from the Remuneration Policy.

The remuneration of Directors is:
* sufficient and conform to the Directors’ decision, qualification, and responsibilities but it does not compromise their independence;
* sufficient to attract and retain directors with the talent and profile desired by the Company;
* competitive, which is achieved by establishing a remuneration package in line with market standards of comparable sectors and companies;
* takes into account the current financial situation of the Company.

The Group provides the following targets and expectations for the 2022 financial year in respect to its Polish operations.

| | FY 2021 Actual | FY 2022 Expected |
| :---
"7
1,534,181.4
EBITDA – Ceneo segment (kPLN)
(4.02%)
(5,412.2)
129,13
8.6
134,550.8
Revenue – Ceneo segment (kPLN)
8.85%
24,835.2
305
363.4
280,528.2
Average annual remuneration of employees other than Directors and Key Managers
YoY change (in %)
YoY change (in kPLN)
2021 (in kPLN)
2020 (in kPLN)
Total Remuneration
(1.04%)
(1.3)
123.2
124.5
Annual Change
YoY change (in %)
YoY change (in kPLN)
2021 (in kPLN)
2020 (in kPLN)
Damian Zapłata
Key Manager, MBM
(01.12.2017 –27.08.2021)
(67. 27%)
(1, 8 27. 2 0)
888.9
2,716.10
Marcin Łachajczyk
Key Manager, MBM
(01.01.2013 –)
(4.96%)
(60.21)
1,152.8
9
1, 213.10
Wojciech Bogdan
Key Manager, MBM
(01.05.2020 –)
39.67%
6
87.6
5
2,420.85
1,733.20
.. Diversity and Inclusion
17 December 2020 and amended on 28 June 2021. The main measures to ensure diversity are: • The adoption of a policy to counteract discrimination and harassment, • The adoption of “Stay Fair Code of Conduct”, • The adoption of “whistleblowing policy”, • The provision of communication and training programs that promote diversity, • Seeking to treat all of its employees equally, regardless of sex, gender identity, age, race, employment form, political views, sexual orientation, disability, health, national, ethnic origin, religion, denomination, non-denominational status, beliefs, union membership, family status or lifestyle, including when evaluating performance and making hiring and promotion decisions. • Supporting women choosing careers in the technology industry, • Supporting diversity when selecting members of the Board, • Supporting diversity and inclusion initiatives, • Increasing the possibility of changing positions within the company, • Monitoring activities and reporting on their effects. For further details concerning Diversity and Inclusion in the Company please refer to Section Approach to Corporate. Environment and Social Responsibility of this Report.

4.1. Application of the Remuneration Policy

| | FY 2021 Actual | FY 2022 Expected |
| :--- 0 2,626.92 6,87.65 2,420.85 1,733.20
| Marcin Łachajczyk Key Manager, MBM (01.01.2013 –) | (4.96%) | (60.21) | 1,152.8 | 9 1,213.10 |
| Wojciech Bogdan Key Manager, MBM (01.05.2020 –) | 39.67% | 6 87.6 5 | 2,420.85 | 1,733.20 |

Diversity and Inclusion

The Company is strongly committed to be an equal opportunities employer, where every employee is respected and supported to reach their highest potential. The Company fosters a work environment where people can speak up to remove barriers to success, collaborate, and put the best ideas into practice. To emphasize the importance of the matter the Diversity Policy was adopted by the Board of Directors on 17 December 2020 and amended on 28 June 2021.

For further details concerning Diversity and Inclusion in the Company please refer to Section Approach to Corporate. Environment and Social Responsibility of this Report.

| | FY 2021 Actual | FY 2022 Expected |
| :--- [['id', '1534181.4'], ['text', 'EBITDA – Ceneo segment (kPLN)'], ['text', '(4.02%)'], ['value', '(5,412.2)'], ['value', '129,13'], ['value', '8.6'], ['value', '134,550.8'], ['text', 'Revenue – Ceneo segment (kPLN)'], ['value', '8.85%'], ['value', '24,835.2'], ['value', '305'], ['value', '363.4'], ['value', '280,528.2'], ['text', 'Average annual remuneration of employees other than Directors and Key Managers'], ['text', 'YoY change (in %)'], ['text', 'YoY change (in kPLN)'], ['value', '2021 (in kPLN)'], ['value', '2020 (in kPLN)'], ['text', 'Total Remuneration'], ['value', '(1.04%)'], ['value', '(1.3)'], ['value', '123.2'], ['value', '124.5'], ['text', 'Annual Change'], ['text', 'YoY change (in %)'], ['text', 'YoY change (in kPLN)'], ['value', '2021 (in kPLN)'], ['value', '2020 (in kPLN)'], ['text', 'Damian Zapłata Key Manager, MBM (01.12.2017 –27.08.2021)'], ['value', '(67. 27%)'], ['value', '(1, 8 27. 2 0)'], ['value', '888.9'], ['value', '2,716.10'], ['text', 'Marcin Łachajczyk Key Manager, MBM (01.01.2013 –)'], ['value', '(4.96%)'], ['value', '(60.21)'], ['value', '1,152.8'], ['value', '9 1, 213.10'], ['text', 'Wojciech Bogdan Key Manager, MBM (01.05.2020 –)'], ['value', '39.67%'], ['value', '6 87.6 5'], ['value', '2,420.85'], ['value', '1,733.20'], ['heading', '7. Diversity and Inclusion'], ['text', 'The Company is strongly committed to be an equal opportunities employer, where every employee is respected and supported to reach their highest potential. The Company fosters a work environment where people can speak up to remove barriers to success, collaborate, and put the best ideas into practice. To emphasize the importance of the matter the Diversity Policy was adopted by the Board of Directors on 17 December 2020 and amended on 28 June 2021.']]

Diversity and Inclusion

7. Recent Trading

During January 2022 and early February 2022, the Group has noted GMV growth that is consistent with meeting the expectations for FY 2022 as set out by the Group in the section above. January 2021 provided a challenging prior year comparative, when adherence to lockdown closings closed down shopping falls straight after Christmas 2020 and lasted until late January 2021, together with already well established higher demand for on-line shopping triggered by the COVID-19 pandemic, translated in January 2022 growth rate much above the 4% YoY GMV growth rate reported for 2021 as a whole and by far the fastest-growing month in FY 2021. As there were no lock downs on online stores imposed in early 2021, with only relatively mild risks and shopper density requirements in place, the COVID-19 situation during January 2022 represents a growth heading to 14 2022 performance and is reflected in the Group’s expectations for 2022. Nevertheless the Group was able to register asat-is ofdigit GMV growth rate in January 2022.

On contrast, there were no lockdowns of off-line retail in February 2021 and the Group has accordingly noted a significant acceleration in GMV growth in February 2021.

Taking the above factors into consideration, the Group is expecting 14 2022 to produce the lowest annual growth in GMV of all the quarters in 2022.

TOTAL CAPITAL EXPENDITURES

The information regarding the total amount of capital expenditures recorded in the FY 2021/2022 is presented in the investing activities section of the consolidated statement of cash flows as a separate line named: Payments for property, plant equipment and intangibles.

PLN m (audited)	FY 2021	FY 2020	Q4 2021	Q4 2020
Capitalized development costs	(224.8)	(149.3)	(62.7)	(43.2)
Other capital expenditure	(182.2)	(81.2)	(87.7)	(21.4)
Total capital expenditure	(407.1)	(230.5)	(150.4)	(64.6)

Appendix

. Reconciliation of the key Alternative Performance Measures to the Financial Statements

PLN m (audited)	FY 2021	FY 2020	Q4 2021	Q4 2020
Sta costs – Capitalisation of development costs	(154.2)	(118.7)	(40.6)	(34.4)
IT service expenses – Capitalisation of development costs	(0.8)	—	(0.8)	—
Other expenses – Capitalisation of development costs	(69.8)	(30.6)	(21.2)	(8.8)
Capitalized development costs	(224.8)	(149.3)	(62.7)	(43.2)

CAPITALIZED DEVELOPMENT COSTS

The amount of capitalized development costs is asume of capitalised sta costs and capitalized other expenses. Both amounts are separately presented under the operating expenses section of the consolidated statement of comprehensive income.

PLN m (audited)	31.12.2021	31.12.2020
Adjusted EBITDA LTM	2,068.5	1,750.0
(+) Borrowings at amortized cost	5,366.3	5,437.8
Non-current liabilities	5,363.0	5,437.2
Current liabilities	3.3	0.6
(+) Lease liabilities	251.1	73.3
Non-current liabilities	206.1	45.4
Current liabilities	45.1	27.9
(-) Cash and cash equivalents	(1,957.2)	(1,185.1)
= Net Debt	3,660.2	4,326.0
Leverage (Net Debt / Adjusted EBITDA LTM)	1.77 x	2.47 x

NET DEBT AND LEVERAGE

Adjusted EBITDA LTM as well as the remaining titles impacting the "Net Debt" and "Leverage" are readily observable in the consolidated statement of comprehensive income as well as consolidated statement of financial position as apart of current assets as well as current and non-current liabilities.

CHANGES IN WORKING CAPITAL

The amount of each title impacting the working capital for the twelve months ended 31 December 2021 and 2020 respectively, are presented in the separate lines of the consolidated statement of cash flow. However, the quarterly numbers are not disclosed, as there is no such obligation to do so.

PLN m (audited)	FY 2021	FY 2020	Q4 2021	Q4 2020
Adjusted EBITDA	2,068.5	1,750.0	501.2	533.5
Revenue	5,352.9	3,997.8	1,600.7	1,299.0
Adjusted EBITDA/revenue (%)	38.64%	43.78%	31.31%	41.07%

PLN m (audited)	FY 2021	FY 2020	Q4 2021	Q4 2020
Adjusted EBITDA	2,068.5	1,750.0	501.2	533.5
GMV	42,601.7	35,110.9	12,668.5	10,851.2
Adjusted EBITDA/GMV (%)	4.86%	4.98%	3.96%	4.92%

ADJUSTED EBITDA/REVENUE (%)

Represents Adjusted EBITDA divided by Revenue. Please refer to the calculation for the three and twelve months ended 31 December 2021 and 2020 below.

ADJUSTED EBITDA/GMV (%)

Represents Adjusted EBITDA divided by GMV. Please refer to the calculation for the three and twelve months ended 31 December 2021 and 2020 below.

III. Non-financial report

Allegro.eu Report on Non-Financial Information for 2021 was prepared in accordance with EU legal requirements (Directive 2014/95/EU, Directive (EU) 2023/115) based on Guidelines on non-financial reporting (2017/C 201/04), as well as Supplement on reporting climate-related information (2019/C 201/04). The report covers Allegro.pl, Ceneo.pl, eBilet.pl, Allegro Finanse, Allegro Pay, Openn, Y-press Couriers, Skynet Custom Brokers and Adinan Maidco, Allegro.eu as well.

III. Non-financial report

1. Business Model, Operations, and Corporate Governance

.. Business Model

SCOPE OF BUSINESS ACTIVITY

Allegro is the go-to commerce platform for Polish consumers and has delivered strong revenue growth, profitability and cash flow at scale. The Group operates as a leading on-line marketplace in Poland, Allegro.pl, and the price comparison platform in Poland, Ceneo.pl (Source: OOK). In November 2021, Allegro announced it has agreed to acquire Mall Group a.s., leading e-commerce platform across Central and Eastern Europe and WąS.O.i.s. delivery expert, bringing logistics expertise. The Transaction, when completed, will establish the enlarged Group as a leading region-wide e-commerce platform, bringing a range of popular brands – including Allegro, Allegro Pay, Ceneo, eBilet, one as well as Mall, filmpoverst, czc.cz, WąS.O.i.s – under one roof. Allegro.pl is the most recognised e-commerce brand in Poland (Source: Gemius 4). As of 31 December 2021, the Group’s e-commerce marketplace had approximately 14.5 million Active Buyers who connected with over around 133 thousand per-chants. Allegro.pl attracts visits from an average of 21.5 million internet users per month, which is equivalent to 87% of Polish residents aged 18 and above, and around 74% of all internet users in Poland. In December 2021 Allegro.pl ranked no. 103 in the SimilarWeb global ranking of most popular websites. Merchants on the Group’s e-commerce marketplace sell across categories including automotive, home and garden, books, feidia, collectiibles and art, fashion and shoes, electronics, kids, health and beauty, sports and leisure, and supermaket. Merchants primarily sell new products to buyers on the Group’s e-commerce platform in the business-to-consumer model (‘B2C’), while Consumer-to-consumer (‘C2C’) transactions and classifieds is relatively small, but important element of operations as it helps to drive user engagement. The Group’s e-commerce marketplace generates revenue primarily through facilitating 5P transactions between buyers and merchants and charging merchants commissions and other related fees. The Group provides a range of supporting services to merchants to grow their sales using the platform, such as tools to monitor sales performance and manage other competitive-ness, integration with payment providers, standardized delivery solutions in cooperation with national delivery service partners, and free-delivery programs, sales incentives for quality performance, marketing campaigns support, and merchant finance solutions. In addition, the Group earns advertising revenue by providing various types of advertising opportunities to brands and merchants on the platform. The Group also has its own limited-scale, 13 retail operations that generate revenue by selling products directly to buyers on the e-commerce marketplace.

The Group’s 13 retail businesses is intended to be a supplement to the 5P business, representing 0.5% of the Group’s gross merchandise value (‘GMV’) for the year ended 31 December 2021, used mainly to remedy important missing selection and uncompetitive price points among the others available from the 5P business. The Group has established its own proprietary Fintech consumer finance subsidiary, Allegro Pay, which cooperates closely with the marketplace to advance consumer loans to active buyers to facilitate their purchases on the Allegro marketplace, providing further support to user engagement.

Ceneo.pl is the multi-category price comparison site in Poland. Ceneo.pl is an established brand that attracted an average of 14 million monthly users in 2021 (Source: SimilarWeb). As of December 2021, around 25 thousand online retail stores were registered on Ceneo.pl and information on 55 million product offers was available to consumers using the price comparison service.

The Group also operates eBilet, which is the event tickets sales site in Poland, facilitating sales of a broad range of entertainment, cultural, family, and sports events. After three quarters of 2020 and the first half of 2021 being severely disrupted by COVID-19 related restrictions on public events, eBilet began# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT

III. Non-financial report

The Group also operates a number of other entities, including Allegro Pay (a consumer finance and lending solution), Opente.pl (a technology solution provider for logistics), APS (a same-day delivery courier company), and SkyNet Customers Brokers (a customs broker agency). In addition, the Group generates revenue from data processing, hosting and related activities; other information technology and computer service activities; computer facilities management activities; software-related activities and computer consultancy activities.

KEY FEATURES OF THE GROUP’S BUSINESS PLATFORM AND GROWTH STRATEGY

THE GROUP’S SUPERIOR VALUE PROPOSITION BENEFITS FROM THE FLYWHEEL EFFECT THAT IS UNDERPINNED BY AN UNPARALLELED FOCUS ON RETAIL BASICS.

The Allegro platform creates powerful network effects that benefit both buyers on the demand side as well as merchants on the supply side, which the Group refers to as the "flywheel". As more merchants join the platform, the breadth of the products offered increases and price competitiveness improves, which in turn leads to increases in the number of buyers browsing and purchasing on the Group’s e-commerce marketplace. Conversely, as more buyers browse for and buy products, merchants become increasingly attracted to the Group’s e-commerce marketplace.

The "Flywheel" effect is powered by the Group’s relentless focus on improving and actively stimulating key retail basics – namely, breadth of product assortment, price competitiveness, and superior shopping and delivery experience. It is accelerated by platform innovations that make it easier to shop online and drive improved sales conversion, such as the utilization of machine-learning based recommendation and personalization, the development of mobile entry points to the platform, the use of mass-scale testing on consumer usage preferences, improved speed of product delivery and access to convenient delivery innovations, the development of on- and off-platform marketing tools, the addition of new sales payment options, and providing consumer finance products.

On the supply side, the Group is already aligning online gateways for merchants in Poland and a popular route for merchants to approximately 15.5 million Active Buyers (as of 31 December 2021). The Group serves a large proportion of the total merchant base in Poland thanks to its unique value proposition that includes: access to a large buyer base; the SMART! loyalty program; ease-of-use; compelling economics; a comprehensive range of merchant tools and value-added services (including marketing tools and support, free classes and webinar training, courses through Allegro Academy (digital entrepreneurship in Poland 2021 report by Genius [5] Genius MediaPoland) and trade analytics tools to monitor sales performance and manage competitiveness); access to payment providers; unique delivery solutions; incentive funds for quality performance; and merchant finance.

The Group’s merchant base ranges from large brands, such as P&G, Reckitt Benckiser and Duka, to retailers, such as MediaMarkt, Decathlon and Carrefour, to in particular Polish ŚOE’s. The Group has significantly professionalized its merchant approach over the past five years, developing added-account management team of product category specialists for the largest merchants and focusing on the improvement and automation of key merchant processes. These investments and initiatives have been successfully in growing the active order base to over 250 million orders and the Group aspires to reach over 300m in the medium term as selection continues to broaden and the internationalization of the Group’s operations leads to more international sellers, attracted by the opportunity to sell across multiple markets.

CONTINUOUS PLATFORM INNOVATION, INCLUDING A FOCUS ON DELIVERY AND THE SMART! LOYALTY PROGRAM, DRIVING AN IMPROVING USER EXPERIENCE FOR BUYERS AND MERCHANTS.

The Group has a culture of innovation with an aim to improve the buyer and merchant experience on the platform to drive sustained growth, with the delivery experience and the SMART! loyalty program being key areas of focus for the Group in recent years.

The SMART! loyalty program launched in August 2018 aims to offer aggregated value for money proposition. It is a PLN 49 per year (or PLN 12.99 per month) subscription program that includes free delivery and free returns as the program foundation, and is enhanced with commercial add-ons like daily SMART! deals, dedicated SMART! Weekly shopping events, exclusive pre-sale of top entertainment events in cooperation with eBilet, access to exclusive product premieres, and other benefits. SMART! has proven successful at addressing a crucial impediment for e-commerce growth, namely the impact of the cost of delivery on the price competitiveness of goods purchased online as compared to products purchased offline. In addition, because SMART! is a subscription program, it naturally addresses the more highly engaged proportion of the Group’s buyer base, impacting further the way they choose to engage in online shopping and solidifying the Group’s position as the place where these buyers start their shopping journey.

Delivery experience has also been a key area of innovation with the Group successfully transitioning in less than three years to an expanded and integrated SP delivery network that also leverages the Group’s asset-light model. The Group’s SP delivery network delivers products quickly, reliably, and cheaply without physically touching the inventory that moves from Merchant to Buyer. In 2023, Allegro introduced an "adelivety" promise indicating what day the product would be delivered and expanded access to agro-ingrid wide networks of out-of-home pick-up/drop-off locations and courier delivery options provided by its delivery partners.

The Group’s delivery experience is differentiated from other Polish offerings for both buyers and merchants. To manage the SP fulfillment and delivery networks, the Group has developed "Hub", which is a unique, machine-learning powered, proprietary software platform that integrates the Allegro platform, arranges of logistics providers and over 1,500 merchants on the Group’s e-commerce marketplace as of 31 December 2021. "Hub" allows hassle-free and intuitive delivery promise and full package tracking to be provided to buyers, while for the Group, its merchants and carriers, "Hub" provides end-to-end delivery performance, status communication and settlement. Merchants are able to take advantage of the smart logistics networks that is simple to use and provides a range of delivery options, while benefiting from more competitive delivery costs through the Group’s framework agreements with key logistics partners, including, among others, InPost, DPD, UPS, and the Polish state postal service (Pocztą Polską). The significant majority of delivery volumes are processed through the Group’s contracts and tolls. The Group’s SP delivery networks provide resilience to the disruptions in the e-commerce value chain that resulted from the COVID-19 pandemic, which produced significant peaks in growth of transactions in the second quarter, when all non-essential online retail was closed for two months, and again in Q4 when covering shopping centers were closed for most of November. During these periods, and also during the traditional December pre-Christmas peak in demand, the distribution networks worked with only minor delivery time extensions in selected categories.

THE GROUP’S DISTINCTIVE BUYER – AND MERCHANT-CENTRIC CULTURE IS NURTURED BY ITS EXPERIENCED MANAGEMENT TEAM AND HIGH PERFORMING TEAM OF EMPLOYEES.

The Group is led by a highly experienced and entrepreneurial management team with complete, complementary skill sets and proven track records of driving innovation. The management team is fully focused on measuring and improving Key Performance Indicators (KPIs) and has a clear understanding of how to manage these KPIs to positively impact the flywheel. The Chairman, CEO, and the rest of the executive leadership team bring extensive experience at leading e-commerce, technology, consulting, and financial institutions. Combining global expertise and local knowledge has enabled the team to build what the Group is today – the number one e-commerce site in Poland, as recognized not only by buyers and merchants, but by its employees.

The Group’s management team has built a creative workplace for its employees, fostering a diverse, collegial, and entrepreneurial culture underpinned by teamwork, commitment, continuous professional development, and the maximizing of value for all stakeholders. As a result of continuous innovation, testing, checking, improving, and raising the bar in recruiting, Allegro is a demanding organization with a high level of caring, and the Group believes that this results in high employee engagement and top talent acquisition. In an annual survey conducted in April 2023, approximately 87% of the Group’s employees said they would recommend Allegro as a great place to work (–85% vs. 2023 survey) and approximately 85% are proud to be working at Allegro (–75% vs. 2023 survey). The Group has also achieved an 87% engagement index in 2023,# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT

III. Non-financial report

ENHANCED BUYER AND MERCHANT EXPERIENCE AS A FOUNDATION FOR FURTHER EXPANSION AND GROWTH.

The Group aims to offer buyers and merchants continuously improving, unparalleled value. The Group will seek to achieve this through a combination of fiscuses on retail basics relating to its platform in Poland, supported by complementary strategic initiatives, and potentially supplemented by international expansion.

The Group continues to develop and invest in the buyer and merchant experience. In particular, the Group is focusing on a number of initiatives, including:

Further automating and optimizing key merchant processes, as well as developing and enhancing merchant tools and value-added services;
Creating an easy-to-use product catalogue to simplify back-end operations for merchants and provide assistance for enhanced search and alternative to offer-based shopping for buyers;
Advancing the Group’s search, discovery and sales conversion, including leveraging product-search based on the Group’s expanding product catalogue;
Improving engagement with the Group’s mobile web and app users;
Expanding product assortment breadth with a focus on bringing more Polish and international merchants onto the platform;
Improving price competitiveness by reducing the number of products where the Allegro platform does not offer the lowest price either online or offline; and
Enhancing CMA2 and improving delivery experience for buyers.

FURTHER EXPANSION OF SMART! AND DELIVERY SERVICES

The SMART! loyalty program has achieved significant success with a constantly growing number of active buyers that has surpassed 5 million for the first time in 2021. However, Management believes that there is significant room for further growth in the number of SMART! subscribers and in the share of GMV covered by SMART! benefits such as free delivery. The Group intends to continue to develop and enhance the SMART! offering by further improving delivery speed and experience parameters, supplementing SMART! with consumer finance! offering from its Allegro Pay consumer!offering, and potentially adding off-platform services to increase SMART! user engagement. Leveraging these initiatives, the Group aims to grow SMART! penetration to reach at least 50% of Polish households in the medium term.

The Group aims to continue to build on its successes in delivery experience, by increasing the proportion of one/two-day delivery share, but with a particular focus on next day delivery, further growing the network of out-of-home lockers and pick-up/drop-off points, expanding into innovative delivery services including scaling up of same day deliveries and the introduction of “ultra-fast” or “instant” deliveries. These initiatives are being undertaken with the Group’s Q4 merchant-model that has proven to be an effective, asset-light approach and the Group intends to increase the share of next day deliveries by at least 2 pp within the total mix over the medium term. However, where software and integration driven Q4 solutions will not deliver sufficient progress in the delivery experience of the buyers, or when unit costs of delivery may be reduced further at reasonable cost of investment, the Group will also make capital investments to improve its capabilities. Two main capital investment initiatives to support delivery experience reached important milestones in 2021:

i. The commercial launch of Allegro Fulfillment services. Allegro Fulfillment will be used as a supplementary tool in select cases, such as for international sellers and other select merchants, in an effort to improve delivery time and ensure delivery precision. Dedicated logistics locations known as Fulfillment Centers will be established to hold merchant’s inventory on behalf of the Merchants in exchange for processing fees. By running fulfillment centers at scale and with late cut-off times, Allegro Fulfillment aims to drive a significant increase in GMV with more next day delivery options, more domestic sellers including and faster deliveries, and to grow net revenue as a result of revenue generated from fees charged to merchants for fulfillment services as well as delivery cost savings due to transportation optimization and increased package consolidation. The Group’s first fulfillment center is situated outside Warsaw and began pilot operations during 2021, opening for full commercial operation in early 2022, and operates under the brand Allegro One Fulfillment. The Group intends to scale up this facility to full capacity during the course of 2022 and, depending on the demand for its fulfillment services and positive impact on key delivery cost and financial metrics, the Group will decide on whether to invest in further fulfillment centers in due course.

ii. Investing in the roll-out of proprietary parcel locker network. In order to provide the Group with a capability to deliver to popular locations last mile solutions that are fully integrated end-to-end with the Group’s marketplace platform and App, the Group began rolling out its own proprietary locker network in 2021, ending the year with over 1,000 lockers installed and with commercial deliveries commencing in November 2021. The new service is marketed under the brand Allegro One Box. This investment will initially enable the Group to develop the full scope of competencies necessary to build, manage, and integrate such networks. The final scale of the investment and number of lockers to be built is yet to be determined and will depend on the delivery experience improvements and returns on investment delivered by the initial investments. However, the Group estimates that it could achieve unit cost savings of 15-20% versus its existing contracts in the coming years. The Group expects to reach 5,000 installed lockers by the end of 2022 and anticipates that it may continue to deploy between 1,000 and 5,000 lockers per annum over the medium term. Future investment will be guided by solving for customer convenience at lowest cost, with the Group remaining agnostic between proprietary network roll-out and leveraging third party locker networks.

In addition to these two main investment projects in logistics and delivery assets, in October 2021 the Group acquired X-press Couriers (”XPC”), a local same-day delivery company, to complement fulfillment and locker services in driving faster deliveries. Ownership of X-press Couriers provides the Group with its own same-day delivery capability and collection and distribution capabilities. In the future these capabilities may be leveraged to support specific use cases within the thousands of distribution tasks undertaken each day to support the marketplace, all of which are currently provided by the Group’s third-party distribution partners.

Included within the XPC acquisition was the parallel purchase of sister company Skynnet Customs Brokers Sp. z o.o. (”SCB”), a customs broker agency. Allegro expects to leverage SCB’s customs competencies to complement and further improve Group’s offering for International Sellers, by providing e.g. bonded warehouse and customs broker agency services for non-EU merchants in Allegro Fulfillment.

ADVERTISING SERVICES

The Group has significant reach due to the high level of user engagement with, and visits to, its marketplace platform and this has underpinned strong growth in the Group’s advertising revenues. The Group believes that there is significant potential to increase advertising revenue through further monetization of that broad reach, improvements in ad technology and favorable online advertising trends. Unlike traditional display advertisers, the Group believes that it is well-positioned to capture a large share in digital advertising via scaled, automated and Ad-driven advertising solutions leveraging the Group’s track, data and product catalogue. Some of the Group’s key Allegro Ads initiatives include sponsored offers (to increase penetration of the service among merchants on the Group’s e-commerce marketplace), internal digital display (to drive GMV on the platform), data-driven campaigns or “MDP” (development of data-driven tool enabling highly targeted CPM campaigns) external networks (further scaling of the Group’s integration with Google and Facebook Ads to drive traffic to the Group’s e-commerce marketplace) and other content-based solutions (to create branded content as a self-service). Advertising services mostly resell content that is created at minimal cost through the process of providing visiting consumers with shoppable offer listings that meet their search criteria. Opportunities to monetize this content therefore grow in line with growth in the marketplace and therefore there is minimal incremental cost, resulting in advertising producing very high margin revenue streams that can be reinvested in the further development of the marketplace.# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

The Genero is a result not only of the increased traffic that is directed to the Group’s e-commerce marketplace, but also from insights that can be used to improve retail basics and an expanded advertising reach. Genero provides consumers with price comparison listings for products that they are interested in purchasing. Merchants pay for click-through leads from the Genero listing to the merchant’s own e-stores, either based on standard price lists or by bidding for position in promoted spots on the listings. In addition, Genero provides check-out services to some of its merchant partners, charging higher commissions for processing. Retail transactions with an end consumer on their behalf. As content is provided for free by the merchant’s listing on the price comparison platform, Genero’s price comparison services have historically produced high margins for the Group. These margins and growth rates have been gradually coming down as the cost of acquiring e-commerce search traffic for the platform has risen significantly in the past two years. The Genero management team has responded to these challenges by focusing on investments to increase monetization per visit through develop-ing Genero check-out services and optimizing traffic acquisition strategies, focusing on expanding the number of partner merchants and scaling up the product catalog. Moreover, efficiency is being increased through investment in self-service tools and process automation.

RAISING AMBITION IN FINTECH WITH THE ESTABLISHMENT OF ALLEGRO PAY CONSUMER FINANCE SERVICES

Over the years, the Group has built a successful financial services business using a third-party model offering a range of buyer and merchant products through partnerships and other forms of collaboration with leading financial players. The Group believes that there is significant upside potential in integrating the Group’s financial services with its e-commerce marketplace, which is expected to drive both buyer and merchant engagement, improve conversion rates and further accelerate the flywheel. The Group believes there is significant potential in integrating its financial services with its core platform to better address the market opportunity in Poland.

In 2021, the Group continued to develop Allegro Pay, its own proprietary fintech oﬀer. Allegro Pay allows for postpaid payments (known as Buy Now Pay Later, or BNPL loans) or splitting loans into convenient 3, 5, 10 or 20-month installments, giving greater financial flexibility to Active Buyers and ensuring safer and easier buying online. Allegro Pay provides a simple user experience for buyers (less than one minute to sign-up, one click to pay and less than 15 seconds to buy) driving conversion, data-driven credit decisions, and has been built on top of the existing Allegro platform. Buyer reaction to Allegro Pay has been very positive with sector-leading NPS scores of 93.8 as of Q4 2021.

In 2021 Allegro Pay reached important development milestones and met all its key targets for 2021. In September 2021 Allegro Pay widened its availability to all customers wishing to apply for up to PLN 4,500 purchasing limit by leveraging the P S/F access to wider credit checking capabilities to include even new Allegro Active Buyers with no purchasing history. Full customer eligibility drove further acceleration in the growth of Allegro Pay.

On 11 October 2021 Allegro Pay sp. z o.o. signed Receivables Purchase Agreement with AFON Bank, concerning the purchase by AFON of consumer loan receivables originated by Allegro Pay. Instalment loans sold under the agreement with AFON are de-recognized from the Group’s balance sheet. This dedicated external funding for continued fast loan origination and multi-year scaling of Allegro Pay will significantly reduce the consumption of net working capital for instalment loans going forward, while the fast-rotating BNPL loans will remain on the Allegro’s balance sheet. Utilizing the off-balance sheet financing significantly increases Allegro’s ROC (Return On Invested Capital) from Allegro Pay and is expected to enable faster growth of the Group’s fintech oﬀer.

DYNAMIC GROWTH ACCELERATION IN ALLEGRO PAY

Dynamic growth acceleration in Allegro Pay was reflected in raised 2021 loans issued guidance. Following the Q4 2021 growth, the Group raised the initial 2021 annual targets for Allegro Pay to over PLN 4,500 million in loans issued (up from the initial target of over PLN 3,000 million). With the year-end gross loans balance of PLN 365.4 million (net of PLN 183.6 million of receivables sold to AFON in Q4 2021) and a total of PLN 1,993.4 million of cumulative loans originated throughout 2021, Allegro Pay has exceeded the annual target by PLN 753 million of loans issued.

Going forward Allegro Pay will be scaled up and further improved in 2022 and is expected to become the leading financial services product on the marketplace, in terms of the value of loans written. Allegro Pay hopes to write PLN 7,000 million of loans in 2022. The Group intends to fund the BNPL loan book, with on balance sheet loans rising to approximately PLN 700 million by the end of 2022, and sell its new instalment loans to AFON in line with the arrangements already in place. In the medium term, the Group aims to grow Allegro loans written to approximately 20% of annual marketplace GMV, optimising for increased impact on GMV and total returns relative to the on balance sheet loan book of 30% per annum.

BROADENING THE POLISH PLATFORM

In addition to Allegro Pay, the Group has an extensive future product roadmap with a focus on consumer products in the near term and with the potential for the oﬀering to be expanded to include merchant financing, B2B payments and financing as well as insurance oﬀerings over time.

The Group believes that there are various opportunities to strengthen its current business’s footprint into certain related opportunities which include B2B as well as adjacent verticals in which Allegro is not currently active or runs subtle operations, or through expanding value chain solutions such as logistics or financial services supporting buyers and merchants. The Group will also consider, and pay complete its organic initiatives with, opportunistic acquisitions. The Group has an execution track record in both on-line, including recent acquisitions of eBilet, Finai, and Opennet.

GEOGRAPHIC EXPANSION

In addition, the Group has the ambition to grow outside of Poland in the medium term. International expansion could bring benefits to both Polish buyers and merchants, as well as international ones. The Group believes that the introduction of a shared and more diverse buyer and merchant pool would further increase the product assortment breadth on the Group’s e-commerce marketplace and the price competitiveness of products available to buyers both locally and internationally, and also allows for seamless access to multiple geographies from Polish and non-Polish merchant perspectives.

TECHNOLOGY PLATFORM

The Group is a technology business with a world-class technology development team (including A/I machine learning teams, product teams, and design teams) based in five tech hubs across Poland. The Group’s technology platform is designed using a domain-driven design paradigm that allows the whole platform to be split into logical components that reflect business processes. This design assures the lowest possible dependencies between domains to support the fast flow of business process development.

The Group has a scaled and modular technology platform built in-house that is business-focused, easy to deploy, and maintain. The microservice, container-based architecture enables the rapid, frequent, and reliable delivery of large, complex applications, through both desktop internet browsers as well as mobile devices.

While the Group’s platform has historically been optimized to support users in Poland, with content prepared in the Polish language, the technology team has been gradually developing and introducing an architecture and content that facilitates internationalization of the Allegro platform. The first step was making merchant onboarding and administrative possible in English and Chinese to attract international sellers to sell cross-border to Poland. During 2021 an English language front-end has been developed which, when launched, will enable English speaking buyers from all over the European Union to shop conveniently on Allegro.

The architecture under the English language platform can be replicated relatively quickly to add further instances of the platform in additional languages, making expansion into other markets feasible with relatively low incremental technology development cost.# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

e. Management

For the years ended 31 December 2021, the Group comprised Allegro.eu, as well as intermediate holding company Adinan Midco with their registered office in Luxembourg and companies conducting operating activities in the territory of Poland—Allegro.pl, Allegro Pay, Allegro Finanse, Ceneo.pl, eBilet Polska, OpenNet.pl, Xpress Couriers and Skynet Customs Brokers. Each of the Polish operating Companies and their subsidiaries have their registered offices located in Poland. In addition, Allegro.pl owns the Allegro All for Planet Foundation, which is not consolidated due to its immateriality. Starting from 30 September 2021 Emploi Beneﬁt Trust has been included in the Group Consolidated Financial Statements (for further information see note 23). The chart below presents the structure of the Group as of 31 December 2021.

In 2023 Ceneo.pl sold 50% of shares in Trade Analytics Instytut Badań Ekocommerce to Allegro.pl.

As a result of the merger and liquidations performed within the Group on 21 December 2023, Adinan Topco, Adinan Holdco, Adinan Bondco, and Adinan Seniorco were absorbed into Allegro.eu and Adinan Midco.

(1) Period covered by consolidation 01.01.2021–31.12.2021
Allegro.eu S.A.
Luxembourg

The Group seeks to offer a high level of infrastructure and data security, based on a layered approach. Each security layer, including distributed denial-of-service protection, detection systems, web application firewalls and other tools protect the platform. The Group is committed to the security of consumers’ experience on its marketplaces. The Group undertakes administrative and technical measures to protect its systems and the consumer data those systems process and store. The Group has developed policies and procedures designed to manage data security risks. The Group employs technical security defenses that are being periodically reviewed by internal and external auditors, penetration testers, and security researchers. Additionally, the Group takes part in an open bug bounty program and uses third parties to assist in its security practices as well as prevent and detect fraud.

SALES AND MARKETING

The Group has strong brands, including Allegro, Ceneo, and eBilet, and continues to raise brand awareness among both buyers and merchants by enhancing and expanding its service offerings and fostering rapid adoption through increased brand anity, public relations and strategic partnerships. The Group also leverages its direct sales force and account management teams to facilitate the acquisition and support of larger merchants. Direct marketing, especially online, has also been an effective merchant acquisition channel. This includes display advertising, search engine marketing, social media and direct mail campaigns.

Adinan Midco S.à r.l.
Luxembourg, 100%

Adinan Super Topco
Employee Benefit Trust (1)
Luxembourg, 100%

Jerzy Niedzwiadek
Allegro.pl Sp. z o.o.
Poland, 100%

OpeNet.pl Sp. z o.o.
Poland, 100%

Fundacja Allegro All for Planet
Poland, 100%

eBilet Polska
Sp. z o.o.
Poland, 100%

Xpress Couriers
Sp. z o.o.
Poland, 100%

Skynet Customs Brokers
Sp. z o.o.
Poland, 100%

Polskie Badaniaa Internetu
Sp. z o.o.
Poland, 15,60%

Ceneo.pl Sp. z o.o.
Poland, 100%

Allegro Pay Sp. z o.o.
Poland, 100%

Allegro Finanse Sp. z o.o.
Poland, 100%

102

103

III. Management

Allegro.eu, being a company incorporated and existing under the laws of Luxembourg, has a unitary management system in which the Board of Directors includes both executive Directors (dealing with the day-to-day management) and non-executive (supervising) Directors — as opposed to the majority of Polish companies, having both the management board and the supervisory board. In 2021, the Board had eight members, of which two were considered independent.

The Board of Directors is vested in the broadest powers to manage the businesses of the Company and to authorise and/or to perform all acts of administration necessary or useful to implement the Company’s corporate purpose as described in the Articles of Association, except for matters expressly reserved by laws or the Articles of Association to the general meeting of shareholders. The Board of Directors has annulment of responsibilities, which include approving the Group’s annual budget, overseeing significant acquisitions and disposals, and managing the Group’s financial statements.

The Board of Directors held 11 meetings in 2021.

The table below sets out the name, age, position, year of appointment and the year in which the current term expires for each of the Directors of the Company.

Name	Age	Position / Year of Appointment	Year term expires	Resigned on
Darren Huston	57	Non-Executive Chairman	2026	—
François Nuyts	49	Executive Director	2026	—
Jonathan Eastick	55	Executive Director	2026	—
David Barker	54	Cinven	2026	—
Richard Sanders	50	Permira	2026	—
Paweł Padusinski	45	Mid Europa Partners	2026	—
Nancy Cruickshank	51	Independent Non-Executive Director	2026	—
Carla Smits-Nusteling	56	Independent Non-Executive Director	2026	—

The Board of Directors meets when required by the Company’s business, and at least once per quarter. It can only validly deliberate if a majority of the directors are present or represented. The resolutions of the Board of Directors are passed by an assimple majority of the votes of the voting Directors present or represented, not considering abstentions.

The Board of Directors held 11 meetings in 2021.

The table below sets out the name, age, position, year of appointment and the year in which the current term expires for each of the Directors of the Company.

DARREN HUSTON

Darren Huston is the Chairman of the Group. Mr. Huston joined the Group as Executive Chairman in January 2017 and was appointed as a member of the Board of Directors on 12 May 2017 and upon the conversion of Allegro.eu into a publicly limited liability company (société anonyme), Mr. Huston was appointed as a Director as of 27 August 2023. Previously, Mr. Huston was CEO of Borking.com and Group CEO of the Priceline Group and he has also held various roles with Microsoft (including as CEO of Microsoft Japan) and Starbucks Company. Mr. Huston is also the CEO and founder of BlackPinescapes Capital Partners. Mr. Huston has over 25 years of managerial and leadership experience.

Mr. Huston holds an MBA degree from Harvard University and an MBA in Economics from the University of British Columbia.

FRANÇOIS NUYTS

François Nuyts is the CEO of the Group. Mr. Nuyts joined the Group as CEO in August 2018 and was appointed as a member of the Board of Directors on 1 September 2023. Mr. Nuyts is also a member of the management board of Allegro.pl and a member of the management board of Ceneo.pl. Previously, Mr. Nuyts held various management roles with Amazon across Western Europe (England, France, Spain, and Italy) where he was apart of its rapid expansion. Mr. Nuyts has over 20 years of experience in management and strategy consulting, including roles with Accenture and Kellogg’s.

Mr. Nuyts holds an MBA degree from Bason College and MA.

JONATHAN EASTICK

Jon Eastick is the CFO of the Group. Mr. Eastick joined the Group as CFO in February 2018 and was appointed as a member of the Board of Directors on 1 September 2023. Mr. Eastick is also a member of the management board of Allegro.pl and a member of the management board of Ceneo.pl. Previously, he was director at Ernest & Young. Mr. Eastick has over 35 years of experience in finance and management, including over 15 years of previous experience in CFO roles at Netia, Polska Telefonia Cyfrowa, and Lucent Technologies Poland.

Mr. Eastick holds a Bachelor of Science in International Trade and Development Economics from London School of Economics and Political Science and is a British Chartered Accountant.

DAVID BARKER

David Barker led Cinven’s investment in Allegro and has been a member of the supervisory boards of the Allegro.pl and Ceneo.pl operating companies since 2017. He was appointed as a member of the Board of Directors on 1 September 2023. Mr. Barker joined Cinven in 1998 and is a partner and member of the Investment Committee at Cinven. He has been involved in many of Cinven’s technology, media, and telecom investments.

Mr. Barker holds a BA degree from Cambridge university.

RICHARD SANDERS

Richard Sanders led Permira’s investment in Allegro and has been a member of the supervisory boards of the Allegro.pl and Ceneo.pl operating companies since 2017. He was appointed as a member of the Board of Directors on 1 September 2023. Mr. Sanders joined Permira in 1999 and is a partner and member of the Investment Committee. At Permira, Mr. Sanders is the Co-Head of Technology and has extensive experience in the sector.

Mr. Sanders holds an MA degree from Oxford university and an MBA degree from Stanford university.

104

105

III.# Non-financial report

PAWEŁ PADUSIŃSKI
Paweł Padusiński leads Mid Europe Partners, investment in Allegro and has been a member of the supervisory boards of the Allegro.pl and Ceneo.pl operating companies since 2017. He was appointed as a member of the Board of Directors on 1 September 2020. Mr. Padusiński is a partner and the head of the Warsaw office at Mid Europe Partners where he has worked since 2005. Prior to joining Mid Europe Partners, Mr. Padusiński worked in the corporate finance department at PricewaterhouseCoopers in Warsaw. Mr. Padusiński holds an M.Sc. in Finance, Banking and Strategy Management from the Warsaw School of Economics.

NANCY CRUICKSHANK
Nancy Cruickshank was appointed as a member of the Board of Directors on 1 September 2020. Ms. Cruickshank is currently SVP Chief Digital Officer at Carlsberg, having held a non-executive position with the company for 18 months prior to joining the executive team. Ms. Cruickshank is also on the board of Bango Plc and Flutter Entertainment Plc. Previously, she was CEO and Founder of MySchoohcase, a fresh and contemporary beauty retailer enabled by smart technology. Ms. Cruickshank has worked in the digital industry for almost 20 years, including launching Conde Nast online in 1998, overseeing

Teleghraph Media Group’s digital businesses and developing the fashion and beauty park leader. Handbag.com between 2001 and 2005, leading to a successful sale to Hearst Corporation in 2005. Ms. Cruickshank holds a Bachelor of History from the University of Leeds.

CARLA SMITS-NUSTELING
Carla Smits-Nusteling was appointed as a member of the Board of Directors on 1 September 2020. Ms. Smits-Nusteling is currently Chairwoman of the Board of Tele2 AB, Non-Executive Director and Audit Chair of Nokia Corporation, lays judge of the Enterprise Court of the Asterdam Court of Appeal, and as Board Member of Stichting Continuiteit Ahilde Den Haag, an organization organized under the laws of the Netherlands to safeguard the interests of Koninklijke Ahilde Haag N.V. Previously, Ms. Smits-Nusteling was non-executive director of ASM NV (2015-2021), CEO and member of the Board of Management of Royal KPN N.V. and she held several finance and business-related positions at Royal KPN N.V. and PostNL. Ms. Smits-Nusteling holds a Master’s degree in Business Economics from the Erasmus University of Rotterdam and an Executive Master of Finance and Control degree from the VU university of Amsterdam.

To comply with principles contained in the Best Practice for the Warsaw Stock Exchange listed companies, we introduced as <span class="non-breaking-# REMUNERATION AND NOMINATION COMMITTEE

The Remuneration and Nomination Committee consists of Nancy Cruickshank, Darren Huston (who serves as chairperson of the Remuneration and Nomination Committee), and Carla Spits-Nusteling.

SUMMARY OF REMUNERATION AND NOMINATION COMMITTEE ACTIVITIES IN 2021

In 2021 the Remuneration and Nomination Committee held 4 meetings in total, on 1 March, 28 June, 22 September and 20 November. Key focus areas and discussion points of the Committee were:

Review and approval of 2020 annual bonus pool and recommendations for Board Members and key managers of Allegro.pl and Ceneo.pl,
Review and approval of 2021 remuneration of Allegro.eu Directors and Allegro.pl/Ceneo.pl Board Members and key managers as well as of Allegro Incentive Plan for 2021-2025 grants,
Review and approval of Allegro.pl and Ceneo.pl Board Members and Key Managers’ remuneration benchmarking,
Review of 2021 Pay Policy and proposed changes to the 2022 Pay Policy.
Review and approval of changes in Allegro Incentive Plan.
Review of 2021 Employee Engagement survey results.
Approval of updates to Diversity Policy. Review of Diversity and Inclusion plan and implementation.

108
109

III. Non-financial report

6.3. Shareholders of the Company

Based on the most recent available information, to the best of Management’s knowledge, the Group’s shares are held by the following entities.

Name	Number of shares	% of shares in the share capital	Number of votes at the General Meeting	% of votes at the General Meeting
Cidinan S.à r.l.	286,778,572	28.03%	286,778,572	28.03%
Permira VI Investment Platform Limited	286,778,572	28.03%	286,778,572	28.03%
Mepinan S.à r.l.	63,728,574	6.23%	63,728,574	6.23%
Free Float	385,970,096	37.72%	385,970,096	37.72%
Total:	1,023,255,814	100.00%	1,023,255,814	100.00%

As the Group’s shares are only admitted to trading on the WSE, the Group has not opted to comply with the Ten Principles of Corporate Governance of the Luxembourg Stock Exchange.

In accordance with the WSE Rules, the Company as an

entity listed on the Warsaw Stock Exchange should observe the principles of corporate governance set out in the WSE Best Practices for governing bodies of publicly listed companies and their shareholders. A new edition of WSE Best Practices was introduced in March 2021, covering new areas of corporate governance, e.g. climate, sustainable development, diversity on corporate bodies, and equal pay. The new edition of WSE Best Practices entered into force on 1 July 2021, which means that in the 1st half of the year 2021, the former version, i.e. WSE Best Practices 2019, were applied, and in the second half – a new one.

Under the WSE Rules, publicly listed companies disclose information on their compliance with corporate governance rules and the scope of information to be provided. If a charter rule is not complied with by a publicly listed company on apparent basis or has been breached incidentally, such publicly listed company is required to disclose this fact in the form of a concurrent report.

Following the WSE Rules, on 30 July 2021 the Group published its 1st Best Practice 2021 compliance report. The practices where the Group is not compliant with the WSE Best Practices (new edition 2021), are discussed in the compliance report, are discussed below. Besides, the Board monitors and assesses the issues of compliance of the Group with the WSE Best Practices on an ongoing basis. To date, no cases of permanent or incidental breach have been reported.

6.4. Compliance with corporate governance recommendations and principles contained in the Best Practice for the Warsaw Stock Exchange listed companies

6.4.1. Companies shall disclose at least on an annual basis the amounts expensed by the company and its group in support of culture, sports, charities, the media, social organizations, trade unions, etc. If the company or its group pays such expenses in the reporting year, the disclosure presents avail of such expenses.
The principle is not applied.

Comments of the Company: The Company cannot guarantee that the above principle will be implemented and does not intend to disclose full information on such expenses, as covered by business secrecy. However, it is not excluded that the Company will disclose such information in the future.

6.4.2. Companies should have in place a diversity policy applicable to the management board and the supervisory board, approved by the supervisory board and the general meeting, respectively. The diversity policy defines diversity goals and criteria, among others including gender, education, expertises, age, professional experience, and specific targets dates and the monitoring systems for such goals.
With regard to gender diversity of corporate bodies, the participation of the minority group in each body should be at least 30%.
The principle is not applied.

Comments of the Company: The principle is applied only partially. The Company has introduced a Diversity Policy, applicable to the Board of Directors. The Diversity Policy defines goals and criteria required by this principle. However, as of the date of this statement, the participation of women in the Board of Directors has reached 25% (2 out of 8 Directors). The Company expects to reach at least the diversity benchmark in the future as it follows its Diversity Policy.

6.4.3. Decisions to elect members of the management board or the supervisory board of companies should ensure that the composition of these bodies is diversified by appointing persons ensuring diversity, among others in order to achieve the target minimum participation of the minority group of at least 30% according to the goals of the established diversity policy referred to in principle 6.4.2.
The principle is not applied.

Comments of the Company: The principle is applied only partially. Decisions to elect members of the Board of Directors are made whilst taking into consideration the principle of diversity. However, the recommended target minimum participation of the minority in terms of gender has not been achieved yet.

6.4.4. In addition to its responsibilities laid down in the legislation, the supervisory board prepares and presents an annual report to the annual general meeting once per year. Such report includes at least the following: assessment of the rationality of expenses referred to in principle 6.4.1.
The principle is not applied.

Comments of the Company: The Company intends to present information mentioned in the principle 6.4.1, except point 6.4.1.5, as such expenses referred to in principle 6.4.1 are not to be disclosed.

6.4.5. Companies should enable their shareholders to participate in a general meeting by means of electronic communication (e-meeting) if justified by the expectations of shareholders notified to the company, provided that the company is in a position to provide the technical infrastructure necessary for such general meeting to proceed.
The principle is not applied.

Comments of the Company: Due to technical and organizational issues caused by the pandemic of COVID-19, as well as due to existing legal risks related to electronic form of the general meeting, the Company did not enable active participation of shareholders in its general meeting outside of its seat in Łuzembourg. The company has so far held only one general shareholder meeting since its listing as an applicable company. The Company may implement such measures in the future once COVID-19 restrictions are reduced and it becomes practical to do so and provided that no significant legal risks related to this form of the general meeting are identified.

6.5. Companies provide avail of real-life broadcast of the general meeting.
The principle is not applied.

Comments of the Company: Due to technical and organizational issues, the Company has not implemented measures enabling avail real-life broadcast of the general meeting. The Company does not exclude the possibility of implementing such measures in the future.

6.6. in accordance with principle 5.3.5.
where a company pursues sponsorship, charity or other similar activities, it should publish information about the relevant policy in its annual activity report.
The principle is not applied.

Comments of the Company: The Company cannot guarantee that the above principle will be implemented and does not intend to introduce the sponsorship policy at present as the sponsorship activity is negligible for the Group’s operations. However, it is not excluded that the Company will introduce and publish such policy in the future.

6.7.5. ascertain showing the division of duties and responsibilities among members of the management board drawn up according according to principle 5.3.4.
The principle is not applied.

Comments of the Company: The principle is not applied.# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

ALTER DOMUS MASTER SERVICES AGREEMENTS

The Company and Business Office Services S.à r.l. (an affiliate of Alter Domus Luxembourg S.à r.l., which is a "Supervisory portfolio company," "Alter Domus") have entered into a services agreement pursuant to which several services are provided to the Company, including the provision of approximately 80 square meters of dedicated furnishes office space. These services benefit the Group since 1 October 2023. The term of the agreement is set at twelve months and is renewable. The agreement may be terminated at any time during the initial or the subsequent term, subject to a notice period of three months.

The Group also entered into a Master Services Agreement with Alter Domus on 21 September 2023 pursuant to which Alter Domus has agreed, with effect of 12 October 2023, to provide the Group with a certain number of services including amongst others (i) accounting and reporting compliance services, (ii) corporate and secretarial administration services, (iii) directors services, (iv) domiciliation services, (v) corporate tax compliance services, (vi) VAT compliance services and (vii) country-by-country reporting services.

CULTURE AMP LTD

Allegro.pl sources services from Culture Amp Ltd, a "Supervisory portfolio company."

GENESYS SOFTWARE LICENSES

Allegro.pl uses various pieces of software under license from Genesys Telecommunications Laboratories B.V., a "Supervisory portfolio company." Maintenance and related services are provided by Whirly sp. z o.o., a "related" entity that distributes Genesys software.

OTHER ARRANGEMENTS WITH RELATED PARTIES

Certain current or former executive directors (or entities under their control) have entered into contracts through which they agree to provide strategic, operational and financial advisory services in exchange for a monthly fee retained and additional remuneration.

INVESTMENT OPPORTUNITIES

The Group has historically operated certain investment opportunities for the Company’s Board and key employees of the Group. All such investment opportunities were settled at or around the time of the Group’s IPO. According to § 27 "Related Party Disclosures", entities and persons are considered to be related to a company if the entity or closely relative of the person:

controls the company or is involved in its joint management, exercises significant influence over this company or holds a key position in the management of the company or apparent entity;
is a member of the same group of companies;
is also associated with the company within the meaning of § 28 "Investments in Associated and Joint Ventures" or a joint venture in which the company is a partner with within the meaning of § 31 "Interests in Joint Ventures";
to the same extent as the company is a joint venture of the same third parties;
is acompamy that is controlled by a related party, is significantly influenced by it or is subject to joint management, in which related party of that company is involved or in which such agent holds a key position in the management; or
is anension fund established for the benefit of the employees of the company or for the benefit of an entity related to that company for payments after termination of the employment relationship.

2.1 Certain relationships and related party transactions

Material transactions and legal relationships which existed between the Group and the above-mentioned related persons and entities in the current financial year 2021 as well as in the previous year, that are required to be reported in connection with § 27 "Related Party Disclosures" are set forth forth in Note 35 (Related Party Transactions) to the Annual Financial Statements.

The Group has entered into the following transactions with its shareholders and their affiliates.

FEES FOR ADVISORY SERVICES PROVIDED BY SHAREHOLDERS AND OTHER FEES

The Group has previously entered into advisory services agreements with each of Cinven, Permira and Mid Europa Partners (or in each case, their affiliates), whereby such entities have agreed to provide certain advisory and consulting services which the Group requests. These services have included advising and consulting services relating to business activities of the Group, analysis of the Group’s business activities in relation to the e-commerce environment in the Polish and European markets, monitoring the performance of the Group and associated advisory services and certain other agreed services.

On 18 April 2023, Allegro.pl submitted additional economic analyses to the UK, President, including an economic report prepared by external economists that supports the above arguments. The economic report also points out that OŠA has brought-brought benefits for SP Sellers and improved the platform's attractiveness and as a result has proactive effects. The Group believes that Allegro.pl has ceased most of the actions criticized by the UK President by the end of 2023, and all such actions had ceased by the end of 2023.

On August 2023 the UK President requested from Allegro.pl documents from 2015 to 2023 relating to: questions and complaints sent by SP Sellers regarding OŠA; search algorithms and access to data collected by Allegro.pl; Allegro.pl’s documents on various aspects of OŠA activity and Allegro.pl actions towards OŠA; and sales targets of Allegro.pl employees. The UK President also requested information on supermarkets and hypermarkets that were active as sellers on the platform in 2023 and 2024. Allegro.pl is expecting further requests for information from the UK President in the future. Such proceedings usually last between one and three years. Allegro.pl is cooperating fully with the UK President, not only by answering questions, but also by proactively providing relevant evidence.

If the UK President is satisfied with Allegro.pl’s responses, the proceedings will end. If the UK President decides to pursue the case, he must issue an attestation of objections justifying the charges and Allegro.pl will then have the right to respond. If the UK President decides that Allegro.pl holds an adamant position and has abused it, he will issue an infringing decision, with or without aeen. The UK President may also order the effects of the infringing to be remedied.

In present cases establishing new theories of harm (into which Allegro.pl believes the offending alleged in these proceedings would fall), it is generally expected that the antitrust authority will not impose aeen. If aeen is to be imposed, then in accordance with the Competition Act, it could be as high as 10% of the turnover of Allegro.pl in the financial year preceding the decision. Fines in the past cases involving abuse of dominant position by major Polish companies with the highest turnover levels have generally ranged from 0.001% to 1% of the annual turnover of the company concerned.

The Group expects that if the UK President were to issue a decision imposing the payment of aeen, such decision would not be immediately enforceable.# 118

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT

for the years ended 31 December 2021

INFORMAL INFORMATION REQUESTS FROM THE UOKIK PRESIDENT

In particular, by amending the clauses under investigation, and/or to remedy the effects of the alleged infringement, the case may end with an accord with the UOKIK President and no one imposed. The Group expects that if the UOKIK President were to issue a decision imposing a fine, such decision would not be immediately enforceable. Actual decision by the UOKIK President would only become enforceable after two rounds of appeal proceedings before the relevant courts have been completed. In the past, similar proceedings against other Polish companies generally took two to five years from the date of the decision. As of the date of this Report, it is not possible to assess the probability of the UOKIK President ultimately deciding to impose a fine against Allegro.pl, the probability of such fine being upheld against Allegro.pl by the relevant courts or the quantum of exposure, and therefore the Group has not created any provision.

EXPLANATORY PROCEEDINGS RELATED TO THE COOPERATION BETWEEN ALLEGRO.PL AND SELLERS ON 5 SEPTEMBER 2023

On 5 September 2023, the UOKIK President stated in a press release that he initiated explanatory proceedings into Allegro.pl’s rules of cooperation with sellers in order to determine whether Allegro.pl gains unjustified advantages at the expense of its clients. According to this press release, the UOKIK President will analyze in particular the conditions of charging and reimbursing fees and the rules for determining their amount. As part of the explanatory proceedings, the UOKIK President will also analyze the principles of functioning of the UOKiK’s SMART program. On 24 September 2023, the Group received an informal notification that, pursuant to the Competition Act, the UOKIK President has commenced explanatory proceedings into Allegro.pl’s rules of cooperation with sellers. In October 2023 Allegro.pl received questions related to the above-mentioned matter. Allegro.pl is expecting to receive requests for information from the UOKIK President within these explanatory proceedings relating to its cooperation with clients in the future.

119 ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT

for the years ended 31 December 2021

INFORMAL INFORMATION REQUESTS FROM THE UOKIK PRESIDENT

EXPLANATORY PROCEEDINGS RELATED TO THE COOPERATION BETWEEN ALLEGRO.PL AND SELLERS

APPEAL AGAINST THE UOKIK PRESIDENT’S DECISION RELATED TO ALLEGRO.PL’S ALLEGED FAILURE TO PROVIDE IN ITS TERMS AND CONDITIONS DETAILED DESCRIPTION OF THE RULES APPLICABLE TO THE BLOCKING OF ASSIGNED ACCOUNT(S) WHEN THE SELLER APPLIES FOR REFUND OF THE COMMISSION DUE TO THE BUYER’S FAULT

On 7 February 2015, the UOKIK President issued decision No. DDK 1/2015, stating that Allegro.pl infringes collective consumer interests by failing to provide in its terms and conditions detailed description of the rules applicable to the blocking of assigned account(s) when the seller applies for refund of the commission due to the buyer’s fault. The UOKIK President, however, has not imposed any fine on Allegro.pl for this infringement.

Allegro.pl appealed against the decision of the UOKIK President to the Competition Court and subsequently to the Court of Appeal. The Court of Appeal in its judgment of 2 June 2015 upheld the initial decision. The decision is final. Allegro.pl no longer blocks assigned accounts when the seller applies for the return of the commission due to the buyer’s fault.

120

RISK MANAGEMENT POLICY

The Group has defined its risk management policy in order to facilitate understanding by all employees and ensure consistent approach in measuring and mitigating various types of risks. The policy sets out the framework structure of risk management, the scope of the system, and its rules. It describes the risk management approach applied by the Group and the individual system components.

ROLES AND RESPONSIBILITIES

The existing processes ensure accountability for risk management. The scopes of responsibilities and competencies of the individuals involved in the process are set out below. All employees of the Group are responsible for risk identification and reporting.

All employees	Risk owners and coordinators	Financial Controlling	Line-Line Risk Committee (executive directors)	Audit Committee (independent non-executive directors; non-executive directors)	Board of Directors	Compliance	Security	Data Privacy	Fraud Prevention	Revenue Assurance	Risk Manager	Internal Audit
•	•	•	•	•	•						•	•
•	•		•	•	•						•	•
•	•			•							•	•
	•				•						•
	•										•
	•										•
		•				•	•	•	•	•

The following roles and teams have been designated as part of the adopted risk management model:
* Board of Directors
* Audit Committee
* Risk Committee
* Risk Manager
* Risk Owner
* Risk Coordinator
* Employees

2. Risk Management System, Risk Factors, and Regulatory Matters

The Group operates a risk management system where all employees participate in performing risk management and internal control activities. The risk management system is designed in a way allowing us to identify, measure, manage, and monitor the risks that might affect the achievement of our strategic, operational, financial, reporting, and compliance objectives across all businesses and corporate functions, as well as development projects team.

An inherent quality of any actions taken by the Group is the uncertainty of process implementation and achievement of the goals set. The impact of such uncertainty on processes and their goals is defined as a risk. The purpose of risk management is to increase the probability that the Group achieves its objectives and delivers its projects by taking measures to mitigate the risk to an acceptable level.

The purposes of the systemic risk management approach adopted by the Group include:
* minimizing the risks affecting the achievement of goals and implementation of tasks;
* taking full advantage of the business opportunities and mitigating the risk of lost opportunities;
* improving the effectiveness of internal processes by relying on and constantly improving the existing corporate governance;
* efficient use of financial, human, and material resources as well as prevention of financial losses; and
* improving service quality.

5. Risk Management System

122

RISK MANAGEMENT PROCESS

Proper identification of the environment affecting the organization and its risks is the basis for the effective implementation of the risk management process and affects each stage of the process. The analysis of the internal and external environment is the basis for risk assessment and may take into account relations with external stakeholders, trends affecting the organization’s goals, governance and organizational structure, organizational culture, norms, standards, and guidelines adopted by the organization.

An important part of Group’s risk management and internal control systems are the following key sets of risk management processes:
* Risk identification and measurement processes – risks are identified in every functional area of Group’s operations, recorded in the Group Risk Register, and evaluated in accordance with methodology placed in risk management procedure.
* Risk mitigation and control – for every risk recorded in the risk register, Risk Owners define their internal control activities designed and implemented to mitigate existing risks.
* Risk evaluations – performed by Risk Owners are collected by Risk Manager in the system in order to update the Group risk register and prepare regular risk reports. The Risk Committee performs reviews of risk reports on a quarterly basis.
* Risk monitoring – Risk Owners are responsible for ongoing risk monitoring. Their work is overseen by the Risk Officer as part of the periodic risk assessment and by the internal audit.

Role Summary of responsibilities within Risk Management

Role	Summary of responsibilities
Board of Directors	• Oversight of corporate risk, • Determining the scope of risk management, • Determining the directions of the risk management system development, and • Establishing the risk appetite levels.
Audit Committee	• Oversight of Group’s system of internal controls, including the risk management framework and the work of the Internal Audit function. • Evaluation of the effectiveness of internal control and risk management systems; • Preliminary evaluation of documents concerning internal control and risk management systems; • Evaluation of the results of internal controls, therein internal audits, and schedules of elimination of detected errors in selected areas • Performing regular reviews of risk reports.
Risk Committee	• Defining risk management strategies and submitting them to the Board for approval. • Reviewing operational risks and providing the management with information on the operational risk appetite and tolerance. • Identifying and assessing the risk to which the organization is exposed as well as providing resources that are required for risk management in general and for the management of that particular risk. • Performing gap analyses to find out whether or not a risk has been omitted during the identification process.

Monitoring the Group’s risk profile - its current and potential exposure to all types of risks.
Reviewing and assessing the probability that the effects of these risks will materialise and of all mitigating measures that affect these risks.
Reviewing the risk owners and management of specific risks so as to ensure common understanding of roles and responsibilities.
Ensuring the development of risk culture and awareness in the entire company.
Undertaking relevant activities to protect health and lives, reduce material losses, recover business processes, and sustain reputation in case of security incidents or a crisis.

Risk Manager

Keeping a register of risks for the Company that should be updated at least once a year or more frequently, in line with the risk management rules.
Ensuring the proper functioning of the risk management process in each organizational unit,
Ensuring communication in the entire risk management process,
Providing up-to-date information on risk management to the Management,
Creating and improving the risk management system documentation,
Determining the scope rights and responsibilities for risk management in the units,
Developing, implementing and coordinating the risk management strategy in cooperation with the Management, and verifying the risk mitigation plans.
Supporting and educating Group employees to build risk awareness and adherence to the risk management policy and procedures.
Maintaining Group Risk Register.

Risk Owner

Management of assigned risks, including the acceptance of the periodic risk assessment in their respective area,
Accepting the risk mitigation plans.

Risk Coordinator

Risk reporting as part of risk management, including periodic assessment of the risk assigned,
Defining and implementation of risk mitigation plans;
Implement and maintain Key Risk Indicators

Employee

Performing regular internal control activities being an integral part of business processes;
Providing required information for risk evaluation and risk monitoring purposes;
Taking active part in the process of risk identification and evaluation.

124
125

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT
for the years ended 31 December 2021

III. Non-financial report

Any risk the impact of which is rated at 5 is defined as a high risk by default. A risk mitigation plan must be developed for that risk, should it materialise.

The following table presents how we address risk management responses in conjunction with various risk scoring results.

| Risk level | Risk score | Risk management responses # ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

THE GROUP'S BUSINESS DEPENDS ON A STRONG BRAND, WHICH THE GROUP MIGHT NOT BE ABLE TO MAINTAIN OR ENHANCE THROUGH ITS INVESTMENTS TO INCREASE BRAND AWARENESS, AND UNFAVORABLE FEEDBACK FROM MERCHANTS OR CONSUMERS, OR NEGATIVE PUBLICITY COULD MATERIALLY ADVERSELY AFFECT ITS BRAND.

The Group believes that the Allegro brand under which it operates has significantly contributed to the growth of its business. The Group believes that the strong awareness of the Allegro brand in Poland contributes to higher unpaid traffic on its websites and lower marketing costs as the significant majority of traffic on its websites in 2021 was generated by consumers either directly typing Allegro websites addresses or was related to customer relationship management, social media, search engine optimization channels or other sources of free traffic. Therefore, the Group believes that maintaining and enhancing the Allegro brand is critical to the Group's ability to expand and retain its base of consumers, merchants, and brands.

The Group has invested significant amounts of its revenue to increase brand awareness, user acquisition, and consumer and merchant loyalty, and expects to continue to spend significant amounts in the future to attract new, and retain existing, consumers and merchants. For example, the Group has incurred and will continue to incur significant expenses in marketing through a broad range of media to attract website traffic, increase consumer and merchant loyalty and encourage repeat purchases in order to increase revenue and maintain its brand awareness and recognition.

These expenses include substantial outlays for offline marketing, in particular television advertising, and online marketing such as paid search engine marketing or affiliate programs, under which the Group pays third parties to refer visitors from third-party websites to the Group's websites. The Group's decisions regarding investment in user acquisition are driven by its analysis of the prospect contribution generated from consumers and merchants that the Group acquired in earlier periods. There can be no assurance that the Group's assetissement of user acquisition investment and resulting net revenue from such consumers and merchants, including those relating to the effectivenesses of the Group's marketing expenditures, will prove to be correct or that the Group's marketing efforts and other promotional activities will achieve what the Group considers an optimal mix of advertising tactics at a cost that the Group considers economically viable. Furthermore, the Group cannot guarantee that certain methods of advertising that it currently utilizes will not become less effective or that potential increased competition in the retail market will not result in andecreased return on the Group's marketing investment. The Group's online partners might be unable to deliver the anticipated number of user visits or impressions, or visits that are attracted to the Group's websites by such campaigns might not make purchases as anticipated. Moreover, changes to search engine algorithms or terms of services could exclude the Group's websites from, or rank them lower in, search results.

The Group's brand may be adversely affected if its public image or reputation is tarnished by negative publicity. Product recalls, product liability claims, breaches of corporate social responsibility, the presence of counterfeit goods that violate the Group's terms and conditions or other fraudulent activity in the Group's e-commerce marketplace that is not detected by its anti-fraud technology could significantly harm the Group's reputation and on the popularity of the Group's websites.

If the Group is unable to maintain or enhance its brand image, if its brand image is damaged by negative publicity, or if its brand is not accepted by consumers, this could have a material adverse effect on its business, financial condition and results of operations.

THE GROUP'S SUCCESS DEPENDS ON THE CONTINUED GROWTH OF E-COMMERCE AND THE CORRESPONDING SHIFT FROM OFFLINE TO ONLINE SHOPPING IN THE MARKETS IN WHICH IT OPERATES.

The Group depends on the continued development and growth of the Polish retail market, including the online retail and the e-commerce segment in which it currently operates, as well as corresponding markets and segments in other geographies it may seek to enter in the future. Based on projections from Euronitor as of January 2023, the Polish retail market is projected to grow at CAGR of 5.4% from an estimated PLN 555.5 billion in 2021 to PLN 877.4 billion in 2025 and online retail in Poland, which remains underpenetrated relative to many other countries, is projected to grow at CAGR of 12.5% from PLN 144.3 billion in 2021 to PLN 255.5 billion in 2025. The Group's short-term and medium-term outlooks are based on its belief that it can facilitate actual growth that exceeds these projections. There is no guarantee, however, that the Polish retail market and the online retail segment in Poland will grow at rates projected by Euronitor, at the growth rates that the Group believes may occur, or at all. While the recently observed intensifcation of competition may lead to faster growth in the e-commerce segment than would otherwise be the case, it may also lead to relative losses of segment share for the Group that overall result in slower actual growth. Losses of share, slowing growth, stagnation, or contraction in the market and segment in which the Group operates in Poland, or in geographies where it may operate in the future, could have a material adverse effect on its business, financial condition, and results of operations.

DETERIORATION IN POLAND'S ECONOMIC CONDITIONS OR A WORSENING GLOBAL ECONOMY COULD MATERIALLY ADVERSELY AFFECT THE GROUP'S BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS.

The Group conducts its operations in Poland and therefore the macroeconomic situation in Poland has a material impact on the business, financial condition and results of operations of the Group. The economic situation in Poland depends on a number of factors, including Polish government attempts to influence the economy, such as setting levels of taxation, formulating government budgets and regulation, influencing the money supply, interest rates, exchange rates and the labor market. The Polish demographic situation, macroeconomic conditions in Europe and globally and inflow of funds from the European Union also affect the economic situation in Poland.

While the lockdown measures that have been introduced by the Polish Government from time to time since March 2020 in response to the COVID-19 pandemic have created tailwinds of demand for the e-commerce segment, prolonged economic slowing down in Poland resulting from the ongoing COVID-19 pandemic or other causes could damage the Group's operations. Vaccine uptake in Poland, although above 58% of the population as of 2021 year end, is well below levels achieved in many Western European countries and it remains uncertain how effective particular vaccines will be against newly emerging variants of the virus. Against this background, it is not possible to predict if the Polish government will be able to avoid any future lockdown measures impacting the Polish retail market (the last one was in Q4 2021) or whether any future measures may be so severe as to damage the Polish economy to an extent that the COVID-19 pandemic starts to have a negative impact on the e-commerce segment.The provided text appears to be a garbled representation of an HTML or PDF document. It is not in a format that can be directly converted into readable Markdown. The characters are not standard English letters or symbols, and there are many unexplained character sequences (e.g., "").

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THE POPULARITY OF THE ALLEGRO MARKETPLACE IS PARTIALLY DEPENDENT ON ITS REPUTATION FOR OFFERING CONSUMERS HIGHLY ATTRACTIVE PRICES ACROSS A LARGE RANGE OF SELECTION.

The Group relies on various tools to assist its merchants to provide consumers with access to the lowest prices available across the Polish retail market and build the perception of the Allegro marketplace as the market leader for low prices. This includes systematic monitoring of prices of popular products across competitive e-commerce and online stores. When better prices are found elsewhere, this is termed as “Price Defect” and measures are taken to try to eliminate the Price Defect. These measures include i) providing merchants with pricing benchmarks and nudges to reduce price to a specific level to accelerate sales, ii) discounting take rate in exchange for reaching a specific price point and iii) taking over price setting for a specific product or products, with the consent of the listing merchant, to change prices in real time to eliminate measured Price Defects, in exchange for discounting take rates.

The Group can provide no assurance that these methods will be fully effective in competing with e-commerce competitors, particularly e-commerce retailers, who own their own inventory and fully control pricing of their selection. In particular, the pricing information monitored may include errors or omit particular competitors’ prices, resulting in acting on incorrect pricing information. Therefore there may be insufficient interest from merchants to participate in these pricing programs or merchants may deliberately price their products high to try to obtain rebates on take rates and thereby improve their profitability and sales. While the Group constantly works to improve the efficiency of these pricing tools, the Group cannot guarantee that these tools will be fully effective at all times and any significant loss of the Allegro marketplace’s reputation for offering highly attractive prices could have a material adverse effect on sales volume, consumer frequency and other marketplace metrics, as well as have adverse financial results.

THE LOSS OF OR A FAILURE TO HIRE AND RETAIN HIGHLY SKILLED SENIOR MANAGERS AND OTHER KEY PERSONNEL OR A FAILURE TO MAINTAIN GOOD RELATIONSHIPS WITH THE GROUP'S WORKFORCE COULD MATERIALLY ADVERSELY AFFECT THE GROUP'S BUSINESS.

The Group's future success depends, in part, on the performance of its senior management team, which possesses significant experience in the Group's industry. The loss of any members of senior management could harm the Group's business.

In addition, the competence and commitment of the Group's employees are important factors for the Group's successful development and management of opportunities and risks. Therefore, the Group's success also depends on its ability to attract, train, motivate and retain highly qualified individuals, while building its corporate culture. A lack of qualified and motivated personnel could impair the Group's development and growth or harm its reputation. The Group faces significant and increasing competition from local, European and global competitors for qualified personnel, including those in information technology positions. The loss of qualified personnel, high employee turnover, or persistent difficulties in filling job vacancies with suitable applicants could have a material adverse effect on the Group's ability to compete effectively in its business and considerable expertise could be lost by the Group or access thereto gained by the Group's competitors. In addition, to attract or retain qualified personnel, the Group might have to offer increased compensation packages and other benefits which could lead to higher personnel costs. Any failure to attract, train, motivate or retain skilled personnel at reasonable costs could result in a material adverse effect on the Group's business, financial condition and results of operations.

The Group has previously offered the Company’s Board and key employees of the Group investment opportunities in the Group in order to attract and retain highly qualified individuals. These investment crystallized at the Group’s IPO in October 2023, through conversion into ordinary shares of the Group, traded on the Warsaw Stock Exchange. Each participating manager had the opportunity to sell a minority of their ordinary shares at the IPO and the remaining shareholdings were subject to a lock-up period that expired twelve months after the IPO in October 2024. A much higher rate of attraction than before the IPO has been observed among the individuals who were invested in the Group during 2023 and the Group may continue to see an increased level of attraction of these individuals in the future. The Group can provide no assurance that, following the crystallization of these investments, continued employment will be consistent with the expectation, personal goals or career goals of all of those individuals who were invested in the Group at the time of the IPO. Although Management has implemented incentive schemes, including share-based incentive schemes, beginning in 2021, to ensure that total compensation remains competitive with comparable listed companies and ensures access to new talent willing to join the Group, it may not be sufficiently attractive to retain those employees who crystallized investments at the IPO.

In accordance with the binding requirements of the Polish labour code, the Group has in the past prioritized hiring talent under employment contracts in preference to business-to-business arrangements, even though the latter often produce lower tax and social security burdens for both the contractor and the hiring organization. With effect from 2023 the Polish government has introduced new legislation which has deteriorated the Group’s position in that it i) materially further increases the financial benefits of B2B arrangements for contractors relative to the situation in 2021 (e.g. by decreasing the tax rate taxation from 15% to 12% for B2B IT developers) and ii) introduces specific avoidance rules that disallow an organization currently employinges from switching to B2B arrangements with the same employer without first severing their relationship with the organization for at least 3 months.

These rule changes materially increase the threat that the Group’s employed talent may be attracted by B2B arrangements offered by other organizations while, at the same time, making it even more difficult to offer B2B arrangements to the Group’s existing employees. The Group can provide no assurance that these rule changes will not materially affect the Group’s ability to retain existing talent at current or moderately higher levels of remuneration and may lead to slower delivery of projects key to securing the Group’s growth.

Personnel expenses represent a significant cost factor for the Group's business. Although none of the Group's employees is currently subject to any collective bargaining agreement, there can be no assurance that labour disputes, work stop# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

THE GROUP'S E-COMMERCE MARKETPLACE DEPENDS ON A NUMBER OF THIRD-PARTY SERVICE PROVIDERS FOR THE DISTRIBUTION OF MERCHANTS' PRODUCTS TO CONSUMERS. ANY INABILITY OR REFUSAL OF SUCH PROVIDERS TO DELIVER OR STORE FOR COLLECTION PRODUCTS SOLD THROUGH THE GROUP'S E-COMMERCE MARKETPLACE IN A SAFE AND TIMELY MANNER OR ANY CHANGES IN THEIR SHIPPING TERMS AND COSTS OR SERVICE QUALITY COULD SIGNIFICANTLY HARM THE REPUTATION OF THE GROUP'S E-COMMERCE MARKETPLACE.

For distribution of the merchandise that the Group's consumers purchase online, the Group's e-commerce marketplace depends on the services of a number of third-party logistics providers. Changes in shipping terms and costs, for example due to higher fuel costs, or the inability or refusal of third-party service providers to deliver the products sold through the Group's e-commerce marketplace in a safe and timely manner could potentially harm the reputation of the Group's e-commerce marketplace and have an adverse effect on the Group's businesses. The Group has long-term agreements with a number of third-party logistics providers. These service level agreements have the aim of securing package volumes needed for the Group's operations at predictable costs and at required service quality; however, certain of these agreements are scheduled to be renewed in 2024 and there can be no assurance that they will be renewed on acceptable terms. Although the Group provides large volumes and is therefore attractive to third-party service providers, there are a limited number of third-party service providers who can provide services to the Group at the necessary scale. Any deterioration in the financial condition of any third-party service provider, or any deterioration in the Group's relationships with third-party service providers, could have an adverse impact on the quality of the Group's logistics processes and distribution costs and could have an adverse effect on the Group's businesses. Financial condition and results of operations.

Moreover, in addition to traditional delivery services, many of the Group's consumers choose out-of-home delivery options such as InPost parcel lockers or other pick-up/drop-off locations across Poland, including Żabka stores, Orlen stations and Ruch kiosks. Parcel lockers, as a piece of out-of-home delivery solution, are assisted of postal deposit boxes that online shoppers can use to collect packages 24 hours, seven days a week and are a popular delivery option for Polish consumers. InPost is the largest supplier of parcel lockers in Poland. The Group has entered into long-term framework agreement with InPost for the delivery of parcels to lockers, however, any potential future decreases in cooperation or service charge increases could affect the attractiveness of this delivery option. This could affect consumers’ willingness to make purchases on the Group's e-commerce marketplace, which in turn could lead to an adverse effect on the Group's sales as well as the quality of the Group's logistics processes and distribution costs and could have an adverse effect on the Group's businesses. Financial condition and results of operations.

THE ONGOING COVID-19 PANDEMIC, INCLUDING THE RESULTING GLOBAL ECONOMIC UNCERTAINTY AND MEASURES TAKEN IN RESPONSE TO THE PANDEMIC, AND OTHER FUTURE POTENTIAL NATURAL DISASTERS OR OUTBREAKS, COULD MATERIALLY IMPACT THE GROUP'S BUSINESS AND FUTURE RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

A novel strain of coronavirus causing COVID-19 disease (COVID-19), first identified in China in late 2019, has spread throughout the world. On 11 March 2020, the World Health Organization confirmed that its spread and severity had escalated to the point of pandemic. COVID-19 infections reached Poland in March 2020 and the Polish authorities have implemented numerous measures to try to contain the virus, such as travel bans and restriction, lockdowns, quarantines and shutdowns of businesses and workplaces, social distancing, limiting or banning social gatherings and mass events. The measures have so far been intensified and eased four times as the infection rates have increased and eased again. From December 2020, vaccination programs have rolled out across Poland and the EU. Vaccination rates in Poland have reached 59% of double-vaccinated by the end of 2021 and this has given some relief to hospitalization rates, relative to new COVID-19 infection rates, during 2021 and in early 2022.

While some government imposed measures have stayed in place continuously, notably the recommendation to work from home if possible, the Polish government has not required covered shopping centers to close since March 2020 and only once closed all non-essential retail stores, between mid-March and early May of 2020. As a result of these measures, especially impacting the retail sector, and the general negative impact of COVID-19 restrictions on the economy generally, retail sales growth fell from 9.5% in 2019 to -3.0% in 2020, recovering to growth by 12.9% in 2021. Whilst the fall in general demand is clearly drag on the e-commerce segment, periodic restrictions on offline retail created an surge in penetration of the online retail segment in total retail sales during 2020 as consumers began to rely heavily on online purchases and learned new purchasing habits. During 2021, while much of this additional demand for online purchases has been retained, easier access to offline stores than in 2020 and the additional sense of personal safety provided by vaccination has led to an expected slowing in the rate of increase in online penetration for 2021. Based on the most recently available independent studies [1], growth in the online retail segment has been estimated at 18.5% for 2019, 55.3% for 2020 and a preliminary estimate of 25.1% for 2021 subject to potential revisions.

As of the date of this Management Report, it is not possible to predict how long the COVID-19 pandemic will continue, as new strains of the virus appear and may be more contagious and/or more dangerous than earlier strains, requiring governments to reintroduce some of the most severe measures seen back in 2020. Moreover, it is not possible to accurately predict to what extent the additional demand initiated by the e-commerce segment due to the pandemic and the related restrictions will remain once the pandemic and the restrictions have fully passed. The post-pandemic demand trajectory for e-commerce accordingly depends on the speed of economic recovery after restrictions are finally eased and the degree to which consumers prefer have permanently shifted towards online shopping. It is not possible for the Group to predict the interaction of these factors with any certainty and therefore our plans and expectations may prove to be materially different from actual outcomes and result in materially different growth rates, financial and operating performance.

The spread of COVID-19 has led the Group to modify its operational practices, and it may take further actions required by authorities or that it determines are in the best interests of its employees, consumers, merchants and other stakeholders. The Group has implemented a "work-from-home" policy which has been used by nearly all of the Group's employees. For the Group's employees who work in the Group's warehouses and/or cannot work remotely, the Group has implemented additional protective procedures, including equipping employees with personal protective equipment (e.g. masks, gloves, disinfectants, hand sanitizers), implementing social distancing, staggering employee working hours across three shifts throughout the day, increasing the frequency of cleaning in the Group's facilities, and installing thermal imaging cameras. There is no certainty that such measures will be sufficient to mitigate the risks posed by COVID-19, and the implementation of such measures (or their insufficiency) could result in increased employee absences due to illness and harm the Group's ability to perform some of its critical functions and serve its users. Implementing these testing and compensation rules may be costly to the Group and lead the Management to delay returning to normal use of its offices than would otherwise have been the case if this law does not come into effect.

[1] Source: Euronitor International e-commerce segment estimates, as of January 2023# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

The user experience available on the marketplace and consistent progress over time is an important growth driver for the Group. Home working and close-collaboration over video conferencing is clearly suboptimal compared to teating at the office using purpose designed facilities and this could lead to a slower rate of progress in the development of the marketplace platform over time and slow the Group’s growth. The Group is investing heavily in expanding its workforce and in the leasing and fitting out of larger offices to house this workforce once social distancing restrictions and high risk of infection from COVID-19 have passed. There is a risk that any employees may strongly prefer to continue home working or that continued restrictions reduce the accepted density in the offices, significantly reducing the cost efficiency of office space relative to the market norms before the pandemic. If this should occur, it may have a significant impact on the Group’s financial results and operating performance.

While the COVID-19 pandemic has led to faster growth of marketplace GMV to date, the Group’s ability ticket sales business, which represented 1.3%, 3.4% and 3.0% of the Group’s GMV for the years ended 31 December 2021, 2022 and 2023 respectively, has been disrupted by extended shut-downs of the live entertainment events industry in response to the COVID-19 pandemic, particularly between Q4 2022 and Q4 2023. In the second half of 2023, restrictions on live entertainment events have been much more moderate and ticket sales have recovered significantly, although some restrictions remain and many could be reimposed if the severity of the pandemic increases once more. If the live entertainment events industry does not return sufficiently for the albeit business to return to its pre-COVID-19 levels, the Group may be required to impair the value of its investment and write off certain amounts of net assets. The degree to which COVID-19 impacts the Group’s business, results of operations, and financial condition will depend on future developments of the issues described above and, which, as of the date of this Report, are highly uncertain and cannot be predicted.

Users may commit fraud or other illegal activities when using any platform the Group operates, which could harm the Group’s reputation, expose the Group to civil or criminal liability and affect the Group’s financial performance. The Group cannot rule out the possibility that any of the foregoing may occur and cause harm to the Group’s business or reputation in the future. If any of the foregoing were to occur, the Group’s business, results of operations and financial condition could be materially adversely affected. This risk may further increase given upcoming changes in the online marketplace related legislation (including but not limited to the Digital Services Act, revision of the General Products Safety rules), which will impose additional burdens and more liability for users’ goods and behaviors.

CHANGES IN THE NUMBER OF CONSUMERS RETURNING GOODS COULD INCREASE THE GROUP'S COSTS AND HARM ITS BUSINESS.

The Group’s return policies are consistent with Polish consumer regulations and provide that a consumer can return a purchase where the merchant is an entrepreneur (i.e. a person conducting business or professional activity rather than a private person not conducting business) provided that the consumer notifies the merchant within 14 days of receiving the goods and ships the item within 14 days of providing such notification. If the Group fails to manage and meet consumer expectations with regard to the purchased products or if the return rates of the Group’s consumers increase for other reasons (e.g. changes in consumer behavior or the abuse of the Group’s return policy by persons not actually willing to purchase the Group’s products), this could increase the Group’s costs (relating to returns for S4R purchases) and the Group could lose current or potential consumer or merchants, which would impact its marketplace revenue and retail revenue. Certain of the Group’s retail competitors offer more flexible return policies. Moreover, the Group’s consumers may expect the period in which purchases can be returned to be extended from the present 14 days. In such a case, the Group cannot exclude the possibility that consumers dissatisfied with the 14 days return period will decide to buy products from the Group’s competitors who offer the possibility of returns after 14 days, which could cause the loss of the Group’s consumers. These factors could have a material adverse effect on the Group’s business, financial condition and results of operations.

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT

GROUP NON-FINANCIAL REPORT

THE GROUP WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH TO SERVICE ITS DEBT AND SUSTAIN ITS OPERATIONS. THE GROUP'S ABILITY TO GENERATE OR RAISE SUFFICIENT CASH DEPENDS ON MANY FACTORS BEYOND THE GROUP'S CONTROL.

The Group’s ability to make principal or interest payments when due on the Group’s indebtedness, including the Group’s obligations under the New Facilities Agreement, to the extent required to be paid in cash, and to fund the Group’s ongoing operations or planned capital expenditures, will depend on the Group’s future performance and ability to generate cash, which, to ascertain extent, is subject to general economic, financial, competitive, legislative, legal, regulatory and other factors, as well as other factors discussed in these "Risk Factors", many of which are beyond the Group’s control.

As at 31 December 2021, the Group’s main credit facility is the New Facilities Agreement, covering a loan of PLN 5.5 billion which falls due on 29 October 2025 and a revolving credit facility of PLN 0.5 billion, which was undrawn throughout 2023. In addition, the Group has secured an Additional Facility of PLN 1.3 billion to help fund the Mall Group acquisition once all regulatory approvals have been received. This Additional Facility is available until 31 December 2024 and shall be repaid within six months from its draw-down to close the Mall acquisition. On 3 February 2024, the Group entered into a further revolving credit facility for an additional PLN 0.5 billion to provide the Group with additional financing availability.

The Group anticipates funding the repayment of the Additional Facility from the issuance of new Polish złoty bonds by Allegro as part of a senior unsecured bond issuance program announced by the Group on 20 November 2021. If the Polish złoty bond markets are not open to the Group at commercially reasonable terms, or not at all, then alternative sources of refinancing the Additional Facility would have to be sought, or a substantial part of the Group’s undrawn revolving credit facilities would need to be drawn down.

If at the maturity of the Additional Facility or the Group's New Facilities, the Group does not have sufficient cash flows from operations and other capital resources to pay the Group's debt obligations, or to fund the Group's other liquidity needs, the Group may be required to refinance or restructure the Group’s indebtedness. Furthermore, the Group may need to refinance all or a portion of its indebted on or prior to their stated maturity (all of the Group’s indebtedness at 31 December 2021 falls due in October 2025). If the Group is unable to refinance or structure all or a portion of the Group’s indebtedness or obtain such refinancing or restructuring on acceptable terms, the Group may be forced to sell assets, or raise additional debt or equity financing in amounts that could be substantial or the holders of the Group’s debt may accelerate the Group’s debt and, to the extent such debt is secured on the Group’s assets. The type, timing and terms of any future financing, restructuring, asset sales or other capital raising transactions will depend on the Group’s cash needs and the prevailing conditions in the financial markets. The Group cannot provide assurance that it will be able to accomplish any of these measures in a timely manner or on commercially reasonable terms, if at all. In such an event, the Group may not have sufficient assets to repay all of the Group's debt. In addition, the terms of the New Facilities Agreement may limit the Group's ability to pursue any of these measures.

THE INTERESTS OF THE COMPANY'S SIGNIFICANT SHAREHOLDERS MAY# CONFLICT WITH THE INTERESTS OF OTHER SHAREHOLDERS.

As a result of their ownership of shares of the Company and their representation on the Board of Directors, significant shareholders have, and will continue to have, directly or indirectly, the ability to influence the Company’s legal and capital structure, the outcome of matters requiring action by shareholders, and other major decisions regarding the Group’s operations. Any conflicts between senior management and the Group’s significant shareholders could adversely affect the Group and its operations. Further, the significant shareholders may have other businesses interests and/or portfolio companies that may conflict with those of the Group or with potential transactions the Group may wish to undertake. In addition, the Group’s businesses and operations, including its image, brand or its ability to refinance its indebted, to the extent financial institutions deem such ownership as materially adverse to their willingness to undertake any such refinancing or other capital raising may be negatively impacted by the actions of its significant shareholders. There can be no assurances that the interests of the Group’s significant shareholders will be consistent with the interests of the other shareholders or the Group, or that the significant shareholders will exercise their rights for the benefit of all shareholders.

THE GROUP IS DEPENDENT ON THIRD-PARTY PROVIDERS FOR ITS MARKETING, CLOUD AND OFFICE INFRASTRUCTURE SOFTWARE AND ON SOCIAL NETWORKING AND MESSAGING SERVICES FOR COMMUNICATING WITH ITS USERS.

The Group depends on third-party providers for the software the Group uses to operate its business. For example, the Group presently licenses business software from Google and any change in the avail- ability of such software could cause a significant interruption to the Group’s business. The Group also relies on social networking and messaging services, including telephone and chat services, to communicate with its users. Changes to the terms and conditions of these services could limit the Group’s promotional capabilities, and there could be a decline in the use of such social networking services by existing and potential consumers and merchants. Increasingly the Group uses cloud-based services to run analysis and store data utilized by its core marketplace and price comparison platforms. Any interruption in availability of cloud services could degrade the quality of the user experience on the platforms while rapid increases in costs could cause the Group to increase capital investment to reduce dependence on cloud-based services. An interruption to the Group’s business as a result of the unavailability of software or the Group’s inability to communicate with its users using social networking and messaging services, including telephone and chat services, could negatively impact the Group’s reputation and have an adverse effect on the Group’s financial condition and results of operation.

ALLEGRO.EU S.A. GROUP CONSOLIDATED REPORT for the years ended 31 December 2021

THE GROUP DEPENDS ON PRZELEWY24 AND PAYU FOR ITS PAYMENT PROCESSING AND ANY DETERIORATION IN ITS RELATIONSHIPS WITH SUCH THIRD-PARTY SERVICE PROVIDERS OR ANY FAILURE OF SUCH SERVICES TO FUNCTION PROPERLY, COULD HAVE A MATERIAL ADVERSE EFFECT ON ITS BUSINESS, RESULTS OF OPERATIONS OR FINANCIAL CONDITION.

The Group is dependent on Przelewy24 and PayU for its payment processing, which together process the vast majority of the payments on the Group’s e-commerce marketplace. Any disruption in the availability of their service could affect whether sales are able to be processed on the Group’s e-commerce marketplace as well as the timely payment of funds to the Group’s vendors. Disruptions in the functioning of the Group’s e-commerce marketplace could negatively impact the Group’s reputation, diminish the value of its brands and have a material adverse effect on its business, results of operations and financial condition.

Furthermore, any malfunction with respect to either of their payment processing functions could lead to user claims that purchases or payments were not properly authorized or were transmitted in error, as well as risks that consumers have insufficient funds and the risk of fraud. While the Group has implemented a fraud detection system based on machine learning tools, any failure to avoid or limit losses from fraudulent transactions could damage the Group’s reputation and result in increased legal expenses and fees.

If the Group is unable to depend on Przelewy24 and PayU as a result of a disruption to the payment system or a termination of the Group’s contractual arrangements with these payment service providers, the Group may incur additional costs or face a decrease in transaction revenue, which could have a material adverse effect on its business, results of operations and financial condition.

THE GROUP’S 1P RETAIL BUSINESS IS SUBJECT TO PROFITABILITY, INVENTORY AND REGULATORY RISKS AND THESE MAY INCREASE IF THE RELATIVE SIZE OF THE 1P RETAIL BUSINESS IN RELATION TO THE 3P MARKETPLACE BUSINESS INCREASES SIGNIFICANTLY.

Potential significant growth of the Group’s 1P retail business could expose the Group to profitability risk, inventory risk and regulatory risk. The Group’s 1P retail business has less favorable structural economics, including lower EBITDA/Net Revenue, than the Group’s 3P business. As a result, if increased competition or other factors cause the Group to significantly increase its 1P retail business as a percentage of its overall business, the Group may be less profitable than it has been historically. The Group’s merchants may also decrease their active offers on the Group’s platform as a result of a real or perceived threat of direct competition from the Group’s 1P retail business. Although the Group seeks to improve the structural economics of its 1P retail operations, it expects its 1P retail business to remain less profitable compared to its 3P businesses.

Inventory risk may adversely affect the Group’s operating results because of seasonality, quick changes in product cycles and pricing, defective products, changes in user demand and user spending patterns, changes in consumer tastes with respect to its products, spoilage and other factors. The Group seeks to predict these trends, as overstocking or understocking products the Group sells could lead to lower sales, missed opportunities or excessive markdowns, each of which could have a material impact on the Group’s financial and operating results.

While the Group strives to follow all relevant rules and principles in relation to consumer protection and the fair treatment of merchants, the Group’s 1P retail business could also be subject to enhanced regulatory review in relation to allegations of infringing on consumer protection rules or anticompetitive business practices. Each of these risks will be enhanced if the size of the Group’s 1P retail business grows, especially if the growth is significant relative to the Group’s 3P e-commerce marketplace business. Any of these risks, if materialize, could have a material adverse effect on the Group’s business, result of operations and financial condition.

THE GROUP IS SUBJECT TO VARIOUS RISKS WHICH MAY NOT BE ADEQUATELY INSURED.

The Group is exposed to risks due to external factors beyond its control, including, but not limited to, accidents, vandalism, natural hazards, acts of terrorism, damage and loss caused by fire, power failures or other events, that could potentially lead to the interruption of the Group’s business operations, personal injuries, damage to third-party property or the environment. For example, the Group relies on third-party data center providers, whose facilities could suffer catastrophic failure as a result of physical damage or cyberattack and subject the Group to losses beyond those for which it is insured. In addition, the Group’s activities relating to the direct sale of goods involve specific risks such as fire, falls from height, objects falling from storage shelving and during movement, or tragic movements which could result in damage to equipment, damage to the property of third parties and personal injury or death. Accidents or other incidents that occur at the Group’s warehouse or involve the Group’s personnel or operations could result in claims for damages against the Group and could damage the Group’s reputation. Although the Group insures itself against such losses to an available and at cost it deems appropriate, the Group’s insurance policies are subject to exclusions and limitations, and the Group cannot guarantee that all material events of damage or loss will be fully or adequately covered by an applicable insurance policy. As a result, the amount of any costs, including ones or damages that the Group might incur in such circumstances, could substantially exceed any insurance the Group has to cover such losses. In addition, the Group’s insurance providers could become insolvent. In case of any of these events occurring, alone or in combination, they could have a material adverse effect on the Group’s business, financial condition and results of operation.

RISKS RELATED TO THE ACQUISITION OF MALL GROUP AND WE | DO CZ (TOGETHER "ACQUIRED ENTITIES")

THE RISK OF FAILURE TO MEET THE CONDITIONS CLOSING THE TRANSACTIONS

There is a risk of non-authorization of the takeover transaction in the absence of approvals from the relevant antitrust authorities. As at the publication date of this report, the Group has obtained (i) the EU clearance in Slovenia and (ii) consents to complete the transaction granted by the relevant antitrust authorities in the Czech Republic, the Slovak Republic, Ukraine and Slovenia.# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

The Group will make every effort to ensure that the transaction is finalized within the time limit specified in the SPA agreement, but if certain antitrust authorities do not consent to the acquisition due to fault other than on the part of the sellers, or the conditions for obtaining approvals are unacceptable for the Group and the closing of the transaction does not take place within the time limit specified in the SPA agreement, the Group has undertaken to pay the sellers agently for withdrawal from the contract in the amount of EUR 50 million, with no right for the sellers to claim additional damages.

RISK OF LITIGATION WITH THE SELLERS

The Mall Group and WĘDOK acquisition is a complex transaction, including up to EUR 50 million of additional price adjustment based on business performance between signing and 31 March 2023. There is a risk of possible claims for damages between the parties to the transaction depending on future events and circumstances. As a result the Group can provide no assurance that it will not become involved in lengthy, complex and costly litigation with the sellers should any aspect of the implementation of the transaction become aggravated for dispute. The costs of such litigation and any eventual adverse settlement may lead to2.

FOREIGN EXCHANGE RISK IN THE ACQUISITION TRANSACTION

The cash portion of the base purchase price for the Acquired Entities is expressed and payable in EUR. This creates an exchange rate risk resulting from the fact that the Group obtains most of its revenues in PLN. An increase in the EUR exchange rate against PLN will translate into an increase in the amount of PLN necessary to purchase the currency needed to finalize the transaction. This risk has been mitigated by the Group entering into a hedging arrangement with a bank on 10 November 2021 to secure adeate¹ contingent¹ forward conversion rate to purchase EUR with PLN. The nominal amount of the transaction is 100% of the base cash component of the price, being EUR 77 million with the forward PLN/EUR rate ranging from 4.5584 on 31 January 2022 to 4.8745 on 31 March 2023, depending on the actual date of closing the acquisition. If the transaction does not close, then the Group resigns from taking delivery of the EUR in accordance with the hedging arrangement.

The currency risk applies not only to the cash part of the base purchase price of the Acquired Entity, but also to the mechanism of increasing the price (earn-out) after closing the transaction if the Acquired Entity achieves the financial results specified in the SPA agreement for its financial year 2022 ending on March 31, 2023. The price increase can be up to EUR 50 million and is payable in EUR. This part of the purchase price is not covered by the foreign currency hedging arrangement described above.

There is no currency risk in relation to the part of the price payable in shares due to the fact that the exchange rate according to the SPA for the Acquired Entities from November 1, 2021 (SPA) is fixed at 4.5584 PLN/EUR.

CURRENCY RISK FOR THE CONSOLIDATED RESULTS AND DIVIDEND INFLOWS OF THE GROUP

After analyzing the acquisition of the Acquired Entities, the Group will consolidate their financial results and pay in the future receive dividend incomes if the Acquired Entities become profitable. At the same time, the Acquired Entities and their subsidiaries generate revenues mainly in currencies other than PLN, i.e. EUR, CZK, HUF and HRK. Any strengthening of the PLN exchange rate against these currencies will have a negative impact on the Group’s consolidated financial results expressed in PLN and on the PLN value of any dividends to be received.

RISK RELATED TO CHANGES IN THE VALUE OF THE ACQUIRED ENTITY IN THE TRANSITIONAL PERIOD VERSUS THE FAIR VALUE OF THE CONSIDERATION TO BE PAID AT COMPLETION OF THE ACQUISITION.

There is a risk that in the period between the signing of the SPA and the finalization of the acquisition of the Acquired Entities, their value will decrease. This can be influenced by both market and other external factors, as well as internal factors impacting the operational effectiveness of the business in realizing its plans. At the same time, the Group has no direct influence on the operation and strategy of the Acquired Entities, and therefore this risk is beyond its control.

Any impairment of the Acquired Entities may be partially offset by the price adjustment mechanism upon closing of the transaction. The price increase by an adjustment of EUR 50 million is conditional upon the Acquired Entities meeting specific shorter EBTDA/GMV margin growth targets for the financial year ending March 31, 2023. Failure to meet these objectives will result in no increase in the purchase price above EUR 881 million, or anAprice increase of only a part of EUR 50 million from partial realization of the targets calculated on aproximate basis.

Regardless of the fair value of the Acquired Entities at the time of finalizing the acquisition, the base part of the purchase price is fixed at EUR 881 million, including an amount of up to EUR 70.5 million to be settled through issuance of up to 55.974.396 shares at a valuation of EUR 1.44 per share (PLN 55.98 per share translated to euro at an exchange rate of EUR 4.5584) . The fair value of consideration actually paid for shares of the Acquired Entities at the date of closing the transaction, expressed in PLN, will accordingly fluctuate depending on the actual EUR/PLN exchange rate on the date of closing and the actual market value of the Group’s ordinary share trading on the Warsaw Stock Exchange on the date of closing the transaction.

Furthermore, the acquisition has been structured with a so-called lock-box mechanism with an adate of 31 March, 2021, the end of the Acquired Entities’ previous financial year for which audited accounts are available. As a result, the final consideration to be paid by the Group for the Acquired Entities shall include any additional net debt accumulated by the Acquired Entities between the lock-box date and the date of closing the acquisition. Historically the Acquired Entities have required external funding to continue their operations, but the Group has no direct control over their financial performance and net cash consumption prior to taking over ownership and management control. Accordingly the fair value of consideration to be paid at closing to re?nance additional net indebtedness incurred since the lock-box date represents an additional cost of obtaining control of the Acquired Companies and the amount to be paid cannot be accurately estimated due to uncertainty over the date of closing and in respect to business performance in the meantime.

As a result of the above factors, the Group can provide no assurance that the fair value of the consideration to be paid for the Acquired Entities, expressed in PLN, will not rise by the time of closing of the acquisition nor can it assure that the fair value of the Acquired Entities will not fall in the period between signing the SPA and the closing of the acquisition.# GROUP CONSOLIDATED MANAGEMENT REPORT

for the years ended 31 December 2021

III. Non-financial report

The countries in which the Mall Group operates (New Countries) to its predominantly market-place business model (SP), which has already proven itself in Poland as capable of producing strong growth and margins, and in which the Group has extensive experience and competence. As a result, the Group has estimated that the SP model can reach over two-thirds of GMW from the current ten percent level in the Acquired Entities and be responsible to a large extent for the growth of Mall Group revenues and profits in the future. The following needs to be achieved to make this key objective possible:

Enabling approx. 150 thousand Polish and non-ternational SP perchants already operating on the Group's platform to sell their offers in the New Countries and for ausustantial proportion of these merchants to opt in to selling into the New Countries
Leveraging functionalitites already available in the Group's SP marketplace software in the New Countries by preparing translated versions of the web pages and other content so that consumers in the New Countries can comfortably make SP transactions with the Group's current and future merchant base
Leveraging functionalities already available in the Group's SP marketplace software to encourage merchant based in the New Countries to list their offers and transact with consumers on the Mall Group marketplace in the New Countries and, if they so wish, also in Poland.

There are various risks associated with this transofrmation towards a SP marketplace model, including but not limited to:

technical difficulties may be encountered in integrating the existing websited that may delay the transforation or deteriorate the user experience provided to merchants or consumers
fewer merchants than anticipated may be willing to sell cross-border, resulting in either poorer selection or aneed to provide greater financial incentives to deliver the desired scale of market-place experience to local consumers
consumers in the countries currently served by Mall may not adjust to the user experience offered by a marketplace e-commerce model, or be reluctant to shop with merchants who are not locally based, resulting in lower shopping frequency and consumer numbers
Fluctations in exchange rates or fundamental changes in costs of doing business in Poland relative to the countries served by the Mall Group today may erode all or some of the price level advantages identified by the Group as aocomp.
petitive merchants may respond more aggressively than anticipated, making it more difficult to realize projected increases in customer base, purchasing frequency or desired take-rates from the marketplace transforation
difficulties for the Group and for its merchants in managing cross-border transactions, such as compliance with different regulations or complexity in providing customer care or managing returns, may prove greater than anticipated and lead to a poorer experience for consumers and merchants, leading to a negative impact on anancila performance of the market-place
Integration of the existing Mall Group sales platforms with the Group's platforms

The Group's strategy towards the Mall Group provides for the integration of its online sales platforms with the Group's existing market-place. The successful implementation of the Mall Group transforation strategy by the Group depends to a large extent on the quick and efficient integration of these platforms. It is aocondition for acquiring new sellers and, as a result, extending the sales offer and price competitiveness of the Mall Group's current offer for its active buyers. It is also expected to improve the convenience of making purchases on the part of consumers. Any delays in platform integration and possible other failures in this respect will negatively affect the Group's financial results, including both growth and profit margins. Moreover, if the extended selection provided by the Group's Polish and international merchants is not sufficiently attractive to consumers in the New Countries, or if the user experience and convenience does not meet their expectations, the Group may acquire fewer new Active Buyers to the combined platforms in the New Countries than planned, resulting in slower growth and lower profit margins.

Cross-border goods logistics in Mall Group
The Group plans that in the future, Polish and international SP merchants already operating on the Group's platform, who will start distributing their goods to Mall Group customer for in New Countries, will account for a large part of the Mall Group's revenues. Due to the greater complexity of logistics processes for cross-border sales, delivery times may be longer than assumed in the Group's planning assumptions. Extended delivery times would reduce the convenience of shopping for active buyers shopping on the combined platform and could reduce their willingness to continue purchasing from the combined Group, with a consequent negative impact on growth and profit margins.
Risks of underestimating the costs of inte-gration and operating expensed of operating in the revised SP focused model in the New Countries
In preparing its business case for acquiring and transforning the Mall Group into a market-place driven e-commerce business, the Group made certain assumptions as to the cost and timing of the work necessary to integrate the existing platforms and transfor the Mall Group's operating model. Should it turn out the costs of this activity will be higher than included in the Group's plans, this may lead to a worsening of the Group's financial performance and cash flows from the acquisition. Furthermore, operating expensed to support the new operating model for the Mall Group, including but not limited to wages and salaries, marketing, logistics and customer care expensed, may prove to be higher than assumed and lead to lower margins and lower free cash flow generation than assumed when deciding to enter into the SP.# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT

for the years ended 31 December 2021

III. Non-financial report

The Group may be subject to civil claims for damages in relation to the alleged or actual infringement of competition or consumer law. Damages actions can be triggered by as-standing-alone action or by an action that follows apub-lic enforcement decision such as a decision of the UK President or the European Commission. To ensure effective enforcement of such claims, appropriate enforcement legal frame-work has been under development in recent years through-out the European Union to, among other things, introduce adictive harmonizing rules on numerous issues arising in competition damages claims and introduce collective redress mechanisms. This frame-work seeks to strengthen the position of private claimant’s seeking damages by removing substantive and procedural obstacles for claimants to prove an infringement and establish damages. The number of such claims is also growing in Poland (both stan-alone cases and cases based on apriori infringement decision of the UK President or of the EC), increasing the existing or potential liability to which the Group is exposed.

The UK President is empowered under the Pol-ish Act of February 26, 2007 on Competition and Consumer Protection (unified text: Journal of Laws of 2023, item 1604, as amended) (the "Competition Act") to initiate administrative proceedings concerning the protection of competition or the protection of consumers, including as-abusive clauses in stan-dard agreements with consumers. Additional-ly, both the UK President and the EC may instigate proceeding pursuant to the Articles 101 and 102 of the Treaty on the Functioning of the European Union (the "TFEU"). Pursuant to the Competition Act, on 9 December 2019, the UK President commenced antitrust proceeding against Allegro.pl concerning the alleged abuse of dominant position by Allegro.pl on the Polish market for online B2C inter-mediary sales services by favoring its own retail sales ac-tivity on its plat-form, in particular the ac-tivity of the Official Allegro Store, over the sales ac-tivities of third-party merchants ( "SP Sellers") oper-ating on its plat-form. The proceeding were preceded by preliminary investigation stage that the UK President commenced in June 2017. The antitrust proceeding are still in the evidence-gathering stage and the outcome is uncertain. Allegro.pl is expecting further requests for information from the UK President in the future.

On 6 September 2023, the UK President stated in apress release that he initiated explan-atory proceeding into Allegro.pl's rules of cooperation with sell-ers in order to deter-mine whether Allegro.pl gains un-justi-fied ad-van-tages at the ex-pense of its cli-ents. On 17 September 2023, the Group received aformal no-tifica-tion that, purs-uant to the Competition Act, the UK President has commenced explan-atory proceeding into Allegro.pl's rules of cooperation with sell-ers. On 25 September 2023, the Group received aformal no-tifica-tion that, purs-uant to the Competition Act, the UK President has commenced proceeding against Allegro.pl to investigate whether Allegro.pl uses or has used abusive clauses in its terms and conditions.

On 22 December 2021 the UK President opened explan-atory proceeding in the field of consumer protection related to: 1) conditions of presenta-tion and forder-ation of consumer rev-iews published on the Allegro.pl plat-form and 2) conditions of providing sell-ers with the func-tionality that en-ables them to lim-it the possibil-ity to pur-chase goods and serv-ices offered on the Allegro.pl plat-form for cer-tain consum-ers.

See section 6.1.8. Legal Proceedings for further information on regulatory proceedings relating to Allegro.pl.

Claims and investigations by regulatory agencies such as the UK President or the EC, even if without grounds, typ-ically are very expensive to defend, require sig-nificant man-age-ment time and involve neg-ative publicity. If a UK President or EC investigation were to conclude with an adverse to the Group or if the Group were to enter into asettlement arrangement, the Group may be required to change its busi-ness prac-tices substantially. Alternatively, if the Group were to enter into acommitment arrangement, the Group may be required to change its busi-ness prac-tices substantially in order to imple-ment the commitments. Both the UK President and the EC have the power to impose fines up to 10% of the turnover of the company concerned in the last fi-nancial year for breach of competition rules or, in the case of the UK President, for breach of consumer protection rules. Fines imposed by the EC may also be calculated based on the turnover of the group to which the company concerned belonging, with fines of up to 10% of group turnover in the last financial year for breach of competition rules. Any adverse deter-mination could also result in sig-nificant adverse publicity or reputational harm, and could result in, or complicat-e, other inquiries, investigations or lawsuits in future. Consumer protection or other investi-gations. Furthermore, the Group can provide no assurance as to the timing of the above mentioned proceeding relating to Allegro.pl, or that the UK President or the EC will not initiate further regulatory proceeding.

Such fines, any adverse decisions in proceeding, changes to the way the Group can operate, or negative publicity generated there-from, may have aterial adverse effect on the Groups busi-ness, fi-nancial condition and results of operation.

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT

The Group is aware of certain pending legal disputes between individuals associated with Bola Investment Limited ("Bola") and a third party individual (“Claimant”) relating to the ownership of a minority stake of shares in EBILET SP. ZOO.

that was the former owner of e-Bilet Polska sp. z o.o. ( "e-Bilet Polska"). e-Bilet Polska has been part of the Group since April 2019. e-Bilet sp. z o.o. is not, and has never been, part of the Group. Based on information available to the Group and based on the assessment of the Group’s legal advisor as of the date of this Report, the Group has no reason to believe that the outcome of the pending disputes known to the Group would have a terial impact on the Group.

The Group has become aware that the Claimant has filed against Bola and Allegro.pl a lawsuit with the Regional Court in Poznań demanding annulment of agreements concerning the purchase of shares in e-Bilet sp. z o.o. allegedly concluded between Bola and Allegro.pl. However, until now Allegro.pl has not been served by the Regional Court in Poznań with any documents, and to the best knowledge of the Group the Regional Court has rejected the lawsuit in question due to formal reasons (this decision is not yet final and binding).

The Group is subject to a variety of regulations, including but not limited to data protections laws, consumer protection laws, regulations governing e-commerce and competition laws, and future regulations might impose additional requirements and other obligations on the Group's business.

Laws and regulations applicable to e-commerce, as well as laws and regulations of broader application that apply to the Group's business (in particular, competition law), and to public companies generally, are evolving at a rapid pace and can be subject to differing interpretation. Moreover, (as in detail described in previous reports and below) anumber of legal acts are being prepared at the EU level that will increase the degree of regulations and therefore compliance costs and risk for both the e-commerce and broadly understood tech sector. Given the extensive scope and timing of the changes, the Group cannot guarantee that its practices have complied or will comply fully with all applicable laws and regulations and their interpretation. Any failure, or perceived failure, by the Group to comply with any of these laws or regulations could result in damages to the Group’s reputation and of revenue, and any legal or enforcement action brought against the Group as a result of actual or alleged non-com-pliance could further damage its reputation and result in substantial-ly increased legal expenses and/or penalties. Furthermore, legislative and regulatory bodies may extend the scope of current laws or regulation, enact new laws or regulations or issue revised rules or guidance regarding privacy, data protection and consumer protection.

Adverse changes in laws or regulations appli-cable to the Group could cause the Group to incur substantial costs or require the Group to change its business practices and could compromise its ability to pur-sue its growth strat-egy effectively. This is the case for, for example, under the General Data Protection Regulation (EU) 2016/679 ("GDPR"), which became effective on 25 May 2018. The GDPR imposes additional obligations on com-panies regarding the handling of personal data and provides certain individual privacy rights to persons whose data is stored. Compliance with existing, proposed and recently enact-ed laws (including implementation of the privacy and process enhancement called for under GDPR) and regulations can be costly, and any compliance failure may also give rise to civil liability, administrative orders to stop processing personal data (including injunctive relief), fines or even crimi-nal charges, and could subject the Group to legal and reputational risks. The Group collects, stores and uses data in the ordinary course of its operations that is protected by data protection laws. Although

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ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT
for the years ended 31 December 2021
III. Non-financial report
The Group is aware of certain pending legal disputes between individuals associated with Bola Investment Limited ("Bola") and a third party individual (“Claimant”) relating to the ownership of a minority stake of shares in EBILET SP. Z O.O.
that was the former owner of e-Bilet Polska sp. z o.o. ("e-Bilet Polska"). e-Bilet Polska has been part of the Group since April 2019. e-Bilet sp. z o.o. is not, and has never been, part of the Group. Based on information available to the Group and based on the assessment of the Group’s legal advisor as of the date of this Report, the Group has no reason to believe that the outcome of the pending disputes known to the Group would have a terial impact on the Group.
The Group has become aware that the Claimant has filed against Bola and Allegro.pl a lawsuit with the Regional Court in Poznań demanding annulment of agreements concerning the purchase of shares in e-Bilet sp. z o.o. alleged-ly concluded between Bola and Allegro.pl. However, until now Allegro.pl has not been served by the Regional Court in Poznań with any documents, and to the best knowledge of the Group the Regional Court has rejected the lawsuit in question due to formal reasons (this decision is not yet final and binding).
THE GROUP IS SUBJECT TO A VARIETY OF REGULATIONS, INCLUDING BUT NOT LIMITED TO DATA PROTECTIONS LAWS, CONSUMER PROTECTION LAWS, REGULATIONS GOVERNING E-COMMERCE AND COMPETITION LAWS, AND FUTURE REGULATIONS MIGHT IMPOSE ADDITIONAL REQUIREMENTS AND OTHER OBLIGATIONS ON THE GROUP'S BUSINESS.
Laws and regulations applicable to e-commerce, as well as laws and regulations of broader application that apply to the Group's business (in particular, competition law), and to public companies generally, are evolving at a rapid pace and can be subject to differing interpretation. Moreover, (as in detail described in previous reports and below) anumber of legal acts are being prepared at the EU level that will increase the degree of regulations and therefore compliance costs and risk for both the e-commerce and broadly understood tech sector. Given the extensive scope and timing of the changes, the Group cannot guarantee that its practices have complied or will comply fully with all applicable laws and regulations and their interpretation. Any failure, or perceived failure, by the Group to comply with any of these laws or regulations could result in damages to the Group’s reputation and of revenue, and any legal or enforcement action brought against the Group as a result of actual or alleged non-com-pliance could further damage its reputation and result in substantial-ly increased legal expenses and/or penalties. Furthermore, legislative and regulatory bodies may extend the scope of current laws or regulation, enact new laws or regulations or issue revised rules or guidance regarding privacy, data protection and consumer protection.
Adverse changes in laws or regulations appli-cable to the Group could cause the Group to incur substantial costs or require the Group to change its business practices and could compromise its ability to pur-sue its growth strat-egy effectively. This is the case for, for example, under the General Data Protection Regulation (EU) 2016/679 ("GDPR"), which became effective on 25 May 2018. The GDPR imposes additional obligations on com-panies regarding the handling of personal data and provides certain individual privacy rights to persons whose data is stored. Compliance with existing, proposed and recently enact-ed laws (including implementation of the privacy and process enhancement called for under GDPR) and regulations can be costly, and any compliance failure may also give rise to civil liability, administrative orders to stop processing personal data (including injunctive relief), fines or even crimi-nal charges, and could subject the Group to legal and reputational risks. The Group collects, stores and uses data in the ordinary course of its operations that is protected by data protection laws. Although# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

The Group takes precautions to protect user data in accordance with the privacy requirements provided for under applicable laws. The Group may fail to do so and certain user data may be leaked as a result of human error, wilful misconduct or technological failure or otherwise be used inappropiately. The Group works with independent and third-party suppliers, partners, dealers, service providers and call centers, and the Group cannot eliminate the risk that such third parties could also experience system failures involving the storing or trans-mission of proprietary information. Violation of data protection laws or regulations by the Group or one of the Group's partners or suppliers may result in nes, reputational harm or temporary or definitive limitations (including agen) on data processing and could have an ethereal adverse effect on the Group s business, results of operations or financial condition.

ADVERSE JUDGMENTS OR SETTLEMENTS RESULTING FROM LEGAL PROCEEDINGS COULD EXPOSE THE GROUP TO MONETARY DAMAGES AND LIMIT THE GROUP'S ABILITY TO OPERATE THE GROUP'S BUSINESS.

Local and international laws and regulation governing the collection, use, retention, sharing and security of consumer data. These laws and regulations are changing especially rapidly and these issues are expected to be further regulated at the EU level. Data protection is a particularly sensitive and politically charged issue in Europe, and any actual or alleged failure by the Group to comply with applicable laws or regulations could have asignificant adverse effect on the Group s reputation and popularity with existing and potential consumers and merchants.

Local and international governmental authorities continue to evaluate the privacy implications inherent in the use of cookies and other methods of online tracking for behavioral advertising and other purposes. Certain government have enacted or are considering measures that could significantly restrict the ability of companies to engage in these activities, such as by regulating the level of consumer notice and consent required before a company can employ cookies or other electronic tracking tools. Additionally, some providers of consumer device and web browsers have implemented, or have announced plans to implement, means to make it easier for internet users to prevent the placement of cookies or to block other tracking technologies, which, if widely adopted, could result in asignificant reduction in the effectiveness of the use of cookies and other methods of online tracking.

New laws, regulations, or development in industry practice or consumer behavior might result in the loss or asubstantial reduction in the Group s ability to use such practices to effectively market products, or might adversely affect the Group s ability to attract new merchants or consumers on effective terms.

The realization of any of such risks, alone or in combination, could have an ethereal adverse effect on the Group s business, financial condition and results of operations.

THE USE OF OPEN SOURCE SOFTWARE COULD INCREASE THE GROUP'S RISK THAT HACKERS COULD GAIN UNAUTHORIZED ACCESS TO THE GROUP'S SYSTEMS AND THE GROUP COULD BE SUBJECT TO LITIGATION IF THIRD PARTIES CHALLENGE THE GROUP'S RIGHTS TO USE SUCH SOFTWARE ON AN EXCLUSIVE BASIS.

Some of the Group's software and systems contain open source software, which may pose certain risks to the Group's software and solutions. The licenses applicable to open source software typically require that the source code subject to the license be made available to the public and that any modifications or derivative works to open source software continue to be licensed under open source licenses. Although the Group does not intend to use or modify open source software without holding the necessary licenses, the Group could, however, face claims from third parties alleging the infringing of their intellectual property rights, or demanding the release or license of the open source software or derivative works developed by the Group using such software (which could include the Group's proprietary source code) or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation, require the Group to purchase, publicly release the affected portions of the Group's source code, limit the licensing of the Group's technologies or cease offering the implicated solutions.

THE CONTROL AND PREVENTION MECHANISMS OF THE GROUP'S COMPLIANCE STRUCTURE MIGHT NOT BE SUFFICIENT TO ADEQUATELY PROTECT THE GROUP FROM ALL LEGAL OR FINANCIAL RISKS. INTEGRATING RECENTLY ACQUIRED BUSINESSES TO COMPLY WITH SUCH STRUCTURES TAKES TIME AND INCREASES COMPLIANCE RISKS FOLLOWING RECENT ACQUISITIONS

A management system for governance, risk and compliance, which includes standards of conduct, corruption prevention, competition law compliance, prevention of conflicts of interest, information and data protection, prevention of unla<0xC2><0xAD>ful discrimination and protection of company property and know-how has been established in the Group's main operating subsidiaries: Allegro.pl and Ceneo.pl. In addition, Allegro.pl and Ceneo.pl have introduced agending code of conduct for compliance with the corporate social responsibility regulations for the suppliers of the group. The supplier's codes may also be accepted. Based on the recommendati<0xC2><0xAD>on of the Polish Ministry of Finance, Allegro.pl and Ceneo.pl have established an complex verification process in vendor creation. Abbrevi<0xC2><0xAD>on of financial documents, registration documents and the correctnes of bank accounts should alter out unsuitable service providers. Guidelines such as procurement policy, tender procedure, controlling procedure and legal procedure have also been introduced and are intended to minimze all unautho<0xC2><0xAD>rized practices, violations of the law, corruption and fraud, especially with regard to purchasing practices, or other adverse consequen<0xC2><0xAD>ces of non-compliance within the Group.

In addition, all purchasing processes in Allegro.pl and Ceneo.pl are based on integrated IT systems that allow full transparency of liabi<0xC2><0xAD>lity creation. Ab<0xC2><0xAD>reach of the regulation can certainly damage the Group s reputation and significantly impair the Group s business, financial and earning position. This policy and the oversight of the Group's internal compliance and legal departments might not be sufficient to prevent all unauthorized practices, legal infringements, corruption and fraud, in particular in purchasing practices, or other adverse consequen<0xC2><0xAD>ces of non-compliance within the Group's organization or by or on behalf of the Group's employees.

The limitations of capacities may further be exacerbated by growing regulatory requirements that will be imposed on the Group under currently negotiated EU legislation and due to expansion of the Group activities. Any failure in compliance could harm the Group's reputation and have adverse effect on the Group's business, financial condition and results of operations.

In addition, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source license<0xC2><0xAD>rs generally do not provide contractual protections with respect to the software. Also, the license<0xC2><0xAD>rs are not obliged to maintain their software or provide any support. There is a<0xC2><0xAD>certain risk that the authors of the open source software cease updating and atten<0xC2><0xAD>ding to the software. Engineering the software updates by the Group could be expensive and time-consuming. The use of open source software can also present additional security risks because the source code for open source software is publicly available, which could make it easier for hackers and other third parties to determine how to breach the Group's sites and systems that rely on open source software.

The realization of any of such risks, alone or in combination, could have an ethereal adverse effect on the Group's business, financial condition and results of operations.# III. Non-financial report

THE INABILITY TO ACQUIRE, USE OR MAINTAIN THE GROUP'S INTELLECTUAL PROPERTY RIGHTS, INCLUDING ALLEGRO AND CENEO TRADEMARKS AND DOMAIN NAMES FOR ITS SITES COULD SUBSTANTIALLY HARM THE GROUP'S BUSINESS, RESULTS OF OPERATIONS OR FINANCIAL CONDITION.

The Group believes the Group's user data (as a part of the Group's trade secrets and databases), copyrights, trade secrets, patents, proprietary technology and similar intellectual property are critical to the Group's success, and the Group relies on trademark, copyright, patent and trade secret protection, agreements and other methods with the Group's employees and others to protect the Group's proprietary rights. In addition, the Group has developed, and the Group anticipates that it will continue to develop, a substantial number of programs, processes and other know-how on a proprietary basis (but partly based on open source codes) that are of key importance to the successful functioning of the Group's businesses, however know-how has an unclear and vague legal status, with no direct regulations on this matter. The Group might not be able to obtain effective intellectual property protection in every country in which the Group is active or in which such protection is relevant, and the Group's efforts to protect the Group's intellectual property could require the expenditure of significant financial, managerial and operational resources. Allegro part of the Group's intellectual property rights could be challenged or invalidated through administrative processes or litigation, and the Group cannot be certain that others will not independently develop or otherwise acquire equivalent or superior technology or intellectual property rights. In addition, the Group may consider revising its current intellectual property policies, especially concerning its intellectual property strategy outside of Poland.

The Group is the registrant of Polish trademarks for its operating businesses, including Allegro and Ceneo, and has also registered internet domain names containing "Allegro", "Ceneo" and other operating businesses' names for the Group's websites. The Group has also registered trademarks and respective domain names in certain international jurisdictions. With respect to several of these trademarks the Group has endeavored to enter into coexistence agreements for specific countries or situations. The Group has also registered selected internet domain names for some of its operating entities. Domain names are generally regulated by internet regulatory bodies and are also subject to trademark law and other related law of each country. If the Group does not have or cannot obtain reasonable terms the ability to use its trademarks or "allegro" private brand in a particular country, or to use or register its domain name, the Group could be forced either to incur significant additional expenses to market the Group's services within that country, including the development of a "new brand" and the creation of new promotional materials, or to elect not to offer its services in that country.

Furthermore, the regulations governing domain names and laws protecting marks and similar proprietary rights could change in ways that block or interfere with the Group's ability to use relevant domains or the Group's current brand. In addition, the Group might not be able to prevent third parties from registering, using or retaining domain names that interfere with the Group's consumer communications or infringe or otherwise decrease the value of the Group's marks, domain names and other proprietary rights. Regulatory bodies may establish additional generic or country-code top-level domains or may allow modification of.

INTERPRETATION OF POLISH LAWS AND REGULATIONS MAY BE UNCLEAR AND POLISH LAWS AND REGULATIONS MAY CHANGE.

Although the Company is an entity formed under the laws of Luxembourg, the key operating companies of the Group have been established and operate under Polish law. The Polish legal system is based on statutory law enacted by the parliament of Poland. A significant number of regulations relating to the issue of securities, shareholders' rights, foreign investments, issues related to corporate operation and corporate governance, commerce, taxes and business activity have been introduced and changed in recent years and/or may be changed in the future. For example, in July 2023, new restrict-tions on in certain Polish companies can lead into force. Certain Polish regulations have been subject to different interpretations and may in the future be interpreted in an inconsistent manner. Moreover, not all court decisions are published in official journals and, as a matter of general rule, they are not binding in other cases and are therefore of limited importance as legal precedent. In recent years, the Polish government has proposed or implemented a number of changes to the judicial system. Some of those changes have attracted the attention of EU institutions and have been questioned by members of the Polish legal community who perceive them as potential threats to both judicial independence and the rule of law. Ongoing tensions between the government and the judiciary may potentially indirectly result in some additional delays to the proceedings. If the stability of the Polish judicial system deteriorates, it may make the outcome of various legal proceedings in which the Group is or may be involved in relation to its businesses less predictable than it is presently. The Group cannot provide assurance that its interpretation of Polish laws and regulations will not be challenged and any suchful challenge could result in fines or penalties or could require the Group to modify its practices, all of which could have an aterial effect on the Group's businesses, financial condition and results of operations.

INTERPRETATION OF LUXEMBOURGISH LAWS AND REGULATIONS MAY BE UNCLEAR AND LUXEMBOURGISH LAWS AND REGULATIONS MAY CHANGE.

As the Company and Adina Midco S.à r.l. are both entities incorporated and governed by the laws of Luxembourg, both entities must comply with all relevant Luxembourgish laws and regulations. The Luxembourgish legal system is based on statutory law enacted by the parliament of Luxembourg. A significant number of regulations relating to the issue of securities, shareholders' rights, issues related to corporate operation and corporate governance, taxes and business activity have been introduced and changed in recent years and/or may be changed in the future. Certain Luxembourgish regulations have been subject to different interpretations and may in the future be interpreted in an inconsistent manner.

THE GROUP USES STANDARDIZED SALES, PURCHASE AND SUPPLY AGREEMENTS AS WELL AS STANDARDIZED TERMS AND CONDITIONS IN THE MAJORITY OF SITUATIONS WHERE IT IS POSSIBLE TO DO SO, WHICH INCREASE THE POTENTIAL THAT SOME OR ALL CONTRACT TERMS USED THEREIN MAY BE INVALID OR UNENFORCEABLE IF ANY CLAUSE IS HELD TO BE VOID.

The Group maintains legal relationships with a large number of persons, including merchants, suppliers and manufacturers. In this context, the Group also uses standardized documents, standard-form contracts and standardized terms and conditions in the vast majority of cases where it is possible to do so. If such documents, contracts or terms and conditions are found to contain provisions that are disadvantageous to the Group, or if clauses in such documents or contracts are declared invalid and thus dis-pleased by statutory provisions that are unfavorable to the Group, a large number of standardized documents, contracts or terms and conditions could be affected. Additionally, standard-ized terms under Polish law have to comply with the statutory law on general terms and conditions, which means they are subject to rigid fairness control by the courts regarding their content and the way they, or legal concepts described therein, are presented to the other contractual party by the person using them. The standard is even stricter if they are used vis-à-vis consumers. As a general rule, standardized terms are invalid if they are not transparent, clearly worded, or if they are unbalanced or discriminat-e against the other party inappropiately. Due to frequent changes to the legal framework, particularly regarding court decisions relating to general terms and conditions, the Group may be unable to avoid risks from the use of such standardized contractual terms. The invalidity or unenforceability of the standardized documents, standard-form contracts and standardized terms and conditions that the Group uses could have material adverse effects on the Group's businesses, financial condition and results of operations.# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

The Group could face legal and financial liability for the sale of items that infringe on the intellectual property and distribution rights of others and for information and material disseminated through its platforms. Although the Group’s terms of use clearly prohibit the sale of counterfeit items or any items infringing upon third parties’ intellectual property rights on the Group’s platform and the Group has implemented solutions to exclude goods and services that have been determined to violate its terms of use, the Group is not able to detect and remove every item that may infringe on the intellectual property rights of third parties. As a result, the Group has received in the past, and anticipates receiving in the future, communications alleging that certain items posted on or sold through the Group’s sites violate third-party copyrights, trademarks or other intellectual property rights or other proprietary rights. Brand and content owners and other proprietary rights owners have actively asserted their purported rights against online companies, including Allegro. In addition, to litigation from rights owners, the Group may be subject to regulatory, civil or criminal proceedings and penalties if governmental authorities believe the Group has aided and abetted in the sale of counterfeits or other unlawful products. Such claims, whether or not meritorious, could result in significant additional expenses and redirect management attention.

The realization of any of such risks, alone or in combination, could have a material adverse effect on the Group’s business, financial condition and results of operations.

THE GROUP COULD FACE LEGAL AND FINANCIAL LIABILITY FOR THE SALE OF ITEMS THAT INFRINGE ON THE INTELLECTUAL PROPERTY AND DISTRIBUTION RIGHTS OF OTHERS AND FOR INFORMATION AND MATERIAL DISSEMINATED THROUGH ITS PLATFORMS.

By starting Allegro fulfillment, the Group also enters into new area of possible infringements arising out of the sale of counterfeit items or any items infringing upon third parties’ intellectual property rights. Similarly to aforementioned possible infringements due to the sale of those goods on the platform, despite having clearly stated in appropriate terms that such practices are forbidden and having appropriate processes and solutions to prevent these practices, the Group is not able to detect and remove every item that may infringe on the intellectual property rights of third parties when providing Allegro fulfillment. Despite these measures, some owners of intellectual property rights may consider the Group’s efforts insufficient, and the Group anticipates that it will continue to receive legal claims from content and intellectual property owners alleging violations of their rights, which could result in substantial monetary awards, penalties or costly injunctions against the Group.

It should also be noted, that generally the fulfillment area is also still new from the laws’ perspective, and may be subject to changing trends in judicature and legislature.

It is also possible that third parties could bring claims against the Group for defamation, libel, invasion of privacy, negligence or other claims based on the nature and content of the materials disseminated through the Group’s platforms, particularly material disseminated by the Group’s merchants. While applicable regulations require hosting providers to have actual knowledge of any illegal content on their platforms in order to have any potential liability, certain regulations are vague and unclear with respect to the e-commerce platform providers’ responsibility to actively monitor transactions or take action to prevent infringing activities. If the Group or other online services providers are held liable or potentially liable for information carried on or disseminated through their platforms, the Group may have to implement measures to reduce its exposure to this liability. Any measures that the Group may need to implement may involve spending substantial resources and/or discontinuing certain services. Any costs that the Group incurs as a result of liability or asserted liability could have a material adverse effect on its business, financial condition and results of operations.

The Group could also face legal and financial liability for the alleged infringement of the intellectual property of third parties related to the conduct of its businesses.

CHANGES IN POLISH TAX REGULATIONS MAY HAVE AN ADVERSE EFFECT ON THE GROUP'S RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

The Polish tax system is characterized by change and uncertainty as tax regulations are frequently amended, subject to numerous and sometimes contradictory interpretations. In recent years, annumber of new tax regulations have come into force that were prepared in agile relatively short time and implemented with short grace periods. Other tax reporting or compliance obligations or new tax regulations may be introduced, which could also affect the Group’s operations. Certain of these regulations have had (e.g. voluntary and mandatory split payment mechanisms) and may have (e.g. so-called hidden dividends) an impact on the Group’s businesses and financial condition, including cash flows. Due to the short lead times in Polish publishing laws or secondary legislation, the Group may not always have sufficient time to program new requirements into its systems, or may be unable to determine what changes need to be made prior to the new laws coming into force. This may lead to fines or penalties for non-compliance.

In July 2018, the General Anti-Avoidance Rule (GAAR) entered into force which, to ascertain extent, may be applied retroactively (as described below). Therefore, since July 2018 any reference to the Polish tax regulations, including for the purpose of this Report, includes the GAAR.

The Group cannot exclude the possibility that further tax law amendments will be introduced in Poland or that new tax burdens will be imposed on e-commerce activities.

Tax laws in Poland may also need to be amended in order to implement new EU legislation.

The instability of the Polish tax system stems not only from changes in the law, but also from the reliance by tax regulators on court interpretations, which are also subject to potential changes and reversals. The lack of well-established regulations results in unclear and inconsistent interpretations, which lead to uncertainties and conflicts in application.

As a result, the Group faces the risk that its activities in selected areas could be unsuited to the changing regulations and the changing practice in their application. There is also a risk that the tax rulings already obtained and applied by the Group in Poland will be changed or deprived of their protective power, which could lead to tax exposure for the Group.

Due to the fact that potential disputes with the Polish tax authorities cannot be ruled out, the tax authorities could challenge the tax settlements of companies in the Group regarding non-time-barred tax liabilities (including the due performance of the remitter’s obligations by companies in the Group) and determine tax liabilities for these entities, which may have a material adverse effect on the business, financial standing, growth prospects or results of the Group.

Tax settlements, together with other areas of legal compliance (e.g. customs duty) may be subject to review and investigation at any time by the tax authorities.# AMENDED WITHHOLDING TAX (WHT) REGIME IN POLAND.

A new pay / refund mechanism was introduced in Poland in 2019; however, its application was suspended by the Ministry of Finance. As of 2022 this mechanism, after some amendments, entered into full force.

The mechanism applies to passive payments (dividends, interest, royalties) made to related foreign entities exceeding PLN 2 million per annum (summed up per each particular recipient). The excess over that amount is subject to standard 19% WHT rate. The payer is obliged to withhold the tax and remit it to the tax office. If agitated payment qualifies for an exemption (e.g. based on the Parent-Subsidiary or Interest Royalties Directive) or reduced WHT due-pay-tax treaty rate, in particular such payment is made for the beneficial owner, as taxpayer or in certain cases tax remitter can apply for a WHT refund.

Since those rules are rather general and vague, the Ministry of Finance is currently working over official explanatory notes which are expected in Q4, 2022. The working of the notes will be crucial to the understanding of the beneficial owner concept.

These new rules may be applicable to interest and dividends payments within the Group and may – at least temporarily – increase the interest cost borne by Allegro.pl and Ceneo.pl. Potential denial of the WHT refund may have adversarial effect on the Group’s financial standing, resulting in increased borrowing cost.

DIGITAL SERVICES TAXES HAVE BEEN PROPOSED, PARTIALLY IMPLEMENTED, AND MAY BE BROADENED BY POLAND, SOME OF THE EU MEMBER STATES, THE EUROPEAN UNION OR THE OECD, AND OTHER TAXES MAY BE IMPOSED ON THE E-COMMERCE SEGMENT OR E-COMMERCE PLATFORMS.

Tax authorities worldwide are currently reviewing the appropriate treatement of companies engaged in e-commerce and/or the digitized economy. It is likely that in the future countries might attempt to impose new digital services taxes or sales taxes on the Group’s businesses or levy additional income or other taxes relating to the Group’s activities.

The European Commission was supposed to publish a proposal for a digital levy, which would help the EU to tax the digital economy and support the EU’s budget and borrowing due to COVID-19 spending. However, due to progress at the OECD Inclusive framework negotiations, the digital levy and other considered Digital Services Taxes (DSTs) in the EU have been put on hold. Currently, 14 countries are in ongoing negotiations on Pillar I, which reallocates taxing rights and Pillar I, which sets a framework for Minimum Taxation. The idea is that Pillar I will replace the need for DSTs.

Previously Pillar I was crafted at taxing digital companies. However, due to ongoing negotiations the scope has now changed to the 193 largest MNCs. As part of Pillar I negotiations, countries that have implemented a DST or similar measure, suspended these taxes. The biggest risk is that the OECD Member Countries do not agree on an final version of Pillar I, or that not all Member Countries implement Pillar I into domestic law. This would lead to the rein_troduction of the currently suspended DSTs, such as those of France and Italy, as well as the EU ret_aining its proposal for a digital levy.

The OECD aims to have an final agreement on Pillar I by the end of 2023. The EU for its part has already put forward a proposal to redirect the profits of Pillar I to the EU budget. Overall these have been very welcome developments.

The Polish Ministry of Finance presented in February 2021 its own detailed proposal for legislation on taxing i.a. digital advertising services; however, also these works were suspended due to the pending OECD compromise. The Group notes that while the motivation for these digital services taxes is to minimize tax optimization schemes by multinational businesses agile to operate across borders, the Group’s key operating companies currently carry out business activities in Poland and its entire income is subject to Polish corporate income tax irrespective of where the income is earned. However, if taxes similar to those described above were to be imposed on the Group with no offsetting relief in the future, the Group may be put at a significant competitive disadvantage to its competitors.

Furthermore, the Group cannot predict the effect of any future attempts to impose sales, income or other taxes specifically on the e-commerce segment. New or revised taxes, in particular sales taxes, VAT and similar taxes, would likely increase the cost of doing business online and decrease the attractiveness of advertising and selling products over the internet. New taxes could also lead to significant increases in administrative costs necessary to capture data, collect and remit taxes and ensure compliance. Any of these events occurring alone or in combination, have adversarial effect on the Group’s businesses, financial condition and results of operation.

AN INCREASED FOCUS BY THE RELEVANT TAX AUTHORITIES ON RELATED PARTY TRANSACTIONS MAY CAUSE THE GROUP’S POLICIES TO UNDERGO MORE SCRUTINY, AND THE GROUP MAY BE SUBJECT TO TAX AUDITS AND CHALLENGES IN RELATION TO SUCH TRANSACTIONS.## III. Non-financial report

POLISH TAX RULINGS MAY BE SUBJECT TO REVIEW.

When concluding and performing related-party transactions, the Group takes special care to ensure that such transactions comply with the applicable transfer pricing regulations. However, due to the specific nature of related-party transactions, the complexity and ambiguity of legal regulations governing the methods of examining the applied prices, as well as the difficulties in identifying comparable transactions for reference purposes, no assurance can be given that specific companies in the Group will not be subjected to inspections or other investigative activities undertaken by the tax authorities. The tax authorities may have a different view of the Group’s compliance with transfer pricing and may attempt to challenge the arms-length nature of some of the Group’s related party transactions. Should the methods of determining arms-length terms for the purpose of the above transactions be challenged, resulting in, for example, the assessment of additional taxes, this may have a material adverse effect on the Group’s financial condition, results of operation and the price of the Shares. Moreover, an increased focus by the Polish tax authorities on related party transactions may cause the Group’s policies to undergo more scrutiny, and the Group may be subjected to audits and challenges in relation to such transactions.

Poland applies a tax ruling system that generally protects taxpayers or tax remitters, or in certain cases the groups of taxpayers or tax remitters, against negative tax consequences of their actions if: (i) a tax ruling is obtained prior to the tax effect of an action or prior to an action which is subject to a tax ruling, (ii) the taxpayer or tax remitter complies with the tax treatment of the action conferred in a tax ruling and (iii) the matter subject to a tax ruling is not subject to tax proceedings initiated, conducted or ended by the tax authorities at the time the tax ruling application is filed. Tax rulings can protect a taxpayer or tax remitter against negative tax consequences only if facts presented for the purpose of a tax ruling truly and accurately describe a real action subject to such tax ruling and its circumstances.

The tax authorities may review the facts presented by the taxpayer or tax remitter and compare them with what subsequently occurs. If they find that the facts are different or not adequate, then a tax ruling will not protect the taxpayer or tax remitter against negative tax consequences. Tax rulings that relate to any matters subject to or challenged under the GARR are not binding and will not protect a taxpayer or tax remitter against negative tax consequences. If the Polish tax authorities were successful in challenging the application of certain tax rulings that the Group relied upon, this could have material adverse impact on the Group’s businesses, financial condition and results of operation.

THE INTERPRETATION OF POLISH TAX LAWS RELATED TO THE TAXATION OF INVESTORS MAY BE INCONSISTENT, AND SUBJECT TO CHANGE, AND IT IS POSSIBLE THAT A NON-POLISH INVESTOR MAY BE SUBJECT TO POLISH TAX AS A RESULT OF INVESTMENT IN THE OFFER SHARES UNDER THE CURRENT POLISH TAX LAWS.

The Polish legal system, and specifically Polish tax law, is characterized by frequent changes, ambiguity and inconsistent application; therefore, judicial decisions relating to the application of Polish tax law regulations are frequently inconsistent. This applies in particular to issues relating to the taxation of income generated by investors in relation to their acquisition, holding and disposal of shares in a non-Polish company admitted to or organized trading on the WSE, such as the Offer Shares. In particular, Polish regulations on the source of income may treat income from the Offer Shares as earned in Poland and subject to Polish income tax unless the respective double tax treaty to which Poland and the investor’s residence state applies. Furthermore, no assurance may be given that amendments to tax laws that are unfavorable to investors will not be introduced or that the tax authorities will not establish a different interpretation of tax provisions that is unfavorable to investors, which could have an adverse effect on effective tax burdens and the actual profit of investors from their investment in the Shares.

As a result of the above factors, the risk connected with Polish tax law may be greater than in other countries. This risk could have material adverse effects on the offering in Poland.

TAX AUTHORITIES ARE CURRENTLY UNDERTAKING TAX AUDITS IN THE GROUP’S MAIN OPERATING COMPANIES WHICH MAY, ALONG WITH ANY FUTURE TAX AUDITS, RESULT IN ADDITIONAL COSTS FOR THE GROUP.

Based on publicly available information, the Group notes that tax audits in Poland in recent years have been carefully targeted and are increasingly effective. In particular, the audits have been targeted on large taxpayers or taxpayers from particular business sectors based on the information obtained by tax authorities from standard audit rules, such as JPK (Zjednolity plik kontrolny) files, which are the Polish equivalent of the SAF-T international standard for electronic exchange of reliable accounting data from organizations to national tax authorities. Since 1 July 2018, all Polish taxpayers have been obliged to provide JPK files at the request of tax authorities during VAT proceedings, verification activities or tax and customs audits.

Polish tax authorities have recently focused on, among other things, corporate income tax, including withholding tax, and transfer pricing settlements, and have paid special attention to any group restructuring actions, intra-group settlements, new or innovative offerings and their terms and conditions, as well as debt financing.

The Group performs in-depth legal and tax analyses before carrying out reorganizations and transactions, and making innovative offerings. Moreover, whenever possible, the Group has obtained individual tax rulings conforming the correctness of the tax treatment to be adopted or actually adopted. Therefore, the Group believes that all transactions performed in the past have been correctly categorized for tax purposes, in particular in line with binding legal and tax provisions.

At present, the Group is undergoing four separate tax audits – two in Central.pl (regarding VAT settlements for 2016/2017 and 2018) and two in Allegro.pl (regarding VAT settlements for 2016/2017 and 2018). The audits commenced in December 2020 and are still in the initial phase. Initial 3-month deadlines for completion of these audits have been several times postponed and now the audits are expected to be completed till the end of February 2023. In the current tax environment, the Group cannot exclude the risk that the tax authorities (e.g. during those tax audits) may take a different approach to tax treatments from the ones adopted by the Group. Should the Group become aware of the tax authorities taking different approach on one or more issues during the course of these audits, the Group will reassess its approach to the topic creating controversy and may conclude, depending on its assessment of the merits of the tax authorities’ arguments, that provisions for additional tax liabilities, penalties and interest should be created, having an negative impact on the Group’s financial results.

Tax inspections, which are often lengthy, may force the Group to engage its resources and, as a result, to bear additional costs. Moreover, the results of tax inspections themselves might prove different than subsequent resolutions of the administrative courts (in case the resolutions of tax authorities are appealed).

Any tax audit could produce findings unfavorable to the Group and, if upheld following due process, may have material adverse effect on the Group’s businesses, financial condition and operational results.# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

The 2021 EU VAT e-commerce package introduced new rules governing the VAT obligations for B2C e-commerce sellers and electronic interfaces, including marketplaces. This 2021 EU VAT e-commerce package introduced significant changes based on which electronic interfaces, including marketplaces, facilitate cross-border sales to consumers via third parties are treated as "deemed suppliers" and VAT collectors in certain cases. This fulfills liability regime made electronic interfaces, including marketplaces, responsible for charging and collecting VAT on deemed supplier transactions.

The deemed supplier regime is obligatory for cases where goods which are stored within the EU and shipped within the EU by non-EU merchants, regardless of the value of these goods and voluntarily for cases where goods which are: fulfilled following placemen of a buyer's order on the marketplace, imported from outside the EU of net value not exceeding EU €150, sold on a platform by Polish and non-EU merchants. So far, the Group has not implemented the voluntary scenario as the benefits of the "Import One Stop Shop" system are not guaranteed and the risk of double taxation still exists.

Furthermore, the rules are still being subject to further discussions at the EU level and the "Import One Stop Shop" scenario may become obligatory for all marketplaces. In such a situation, as the "OSS" system is prone to misuses, there is risk of double taxation and it will require significant and time consuming development by the Group. Moreover, there are ongoing discussions at the EU level to make the marketplaces responsible for collection of customer duties. No details are known yet.

THE GROUP MAY HAVE EXPOSURE TO GREATER THAN ANTICIPATED TAX LIABILITIES.

As of the date of this Report, the Group has allied presence in jurisdictions outside of Poland. Its presence abroad may result either from its own retail activity (within the 13 mode) or from its merchants and/or consumers making cross-border transactions (within the SP mode). The Group may, however, be subject to different forms of taxation or reporting obligations in other jurisdictions, including, but not limited to, income tax, value added tax or sales tax. Tax law and administration is complex and often requires the Group to make subjective determinations. Changes in tax laws or their interpretation or application or changes in the amount of taxes imposed on companies could increase the Group's future tax burden. If the Group fails to manage these risks adequately, or if one or more of these risks materializes, this could have a material adverse effect on the Group's reputation, business condition and results of operation.

RISKS RELATED TO THE SHARES FUTURE SALES OR THE POSSIBILITY OF FUTURE SALES OF A SUBSTANTIAL NUMBER OF THE SHARES BY THE SHAREHOLDERS MAY MATERIALLY ADVERSELY AFFECT THE MARKET PRICE OF THE SHARES.

The significant shareholders of the Company as well as Directors and Senior Managers and other members of management of the Company may sell substantial numbers of their shares on the public market. Such sales could make it more difficult for the Company to raise capital through the issuance of equity securities in the future.

DIVIDENDS AND GAINS FROM DISPOSITIONS OF THE SHARES MAY, IN CERTAIN CIRCUMSTANCES, BE SUBJECT TO POLISH TAX WHEN RECEIVED OR EARNED BY NON-POLISH TAX RESIDENTS.

The Group faces the risk that its activity and/or transactions in selected areas could be reviewed under the general anti-avoidance rule. The GARR regulations apply to all tax benefits gained following the date the GARR entered into force as a general anti-tax abuse law, in addition to existing anti-abuse regulations related to mergers, spin-offs, qualified exchanges of shares and exempt dividend distributions. Under certain conditions the tax authorities may also review past transactions under the GARR. The GARR allows the tax authorities to disregard alleged valid transaction (relationship) for tax purposes if the primary aim or one of the primary aims of the transaction was tax avoidance, where "tax avoidance" is interpreted as "an act (or series of acts) applied primarily in order to receive tax benefit, which in certain circumstances defeats the object and purpose of the tax act, provided the manner of conduct in a particular case was artificial." Conduct will be considered artificial if, under the existing circumstances, it would not be applied by an «reasonable» entity who is guided by goals being in line with the laws and it is connected with lawful purposes other than tax benefits cont_radictory to the object and purpose of aable act. In order to assess if a particular act was artificial, attention should be paid to: (i) unjustified division of an operation, (ii) the involvement of intermediary entities without business substance, (iii) elements directed to achieve result identical or similar to the initial state of facts, (iv) elements that cancel or exclude each other, (v) economic risk exceeding the planned benefits other than tax benefits to the degree that it must be decided that aation of entity would not have chosen to act that way, (vi) situations where the tax benefit obtained is not reflected in an economic risk borne by the entity or in its cash flow, (vii) prot before tax which is insignificant in comparison to the tax benefit which does not result directly from the actual incurred economic loss and (vii) engaging the entity which does not conduct business activity or does not pay significant economic function or which has its seat or place of residence in aritory applying harmful tax competition.

Tax benefit refers to anitution in which: (i) a liability has not arisen, the date when a liability arises has been deferred or the tax liability has been reduced or overstaded; or (ii) a loss has arisen or its amount is overstated; or (iii) a overpayment or aright to claim a refund has arisen, or the amount of a overpayment or tax to be refunded has increased; or (iv) there is no obligation to collect the tax by a remitter if this obligation results from the circumstances indicated in point (i) above.

The Group faces the risk that its activity and/or transactions in selected areas could be reviewed under the GARR, including transactions performed before the GARR regulations entered into force. Any potential decisions regarding GARR could be unfavorable to the Group and may have a material adverse effect on the Group’s business, financial condition and operational results.

ALLEGRO.PL FACES RISKS RELATED TO ITS STATUS AS A POSTAL OPERATOR.

Allegro.pl has recently been classified as a postal operator and in that capacity its operations are subject to various industry regulations and ongoing oversight from the Polish authority charged with regulating postal operators, the Office of Electronic Communications (Urząd Komunikacji Elektronicznej, U K E).

Continued growth in this segment of the Group's operations as a result of initiatives to improve the Group's logistics and other services could entail additional regulatory requirement. Any failure by the Group to comply with applicable laws and regulations could result in penalties, which could have a material adverse effect on the Group’s business, financial condition and results of operations.

The regulatory environment for postal and courier services within the European Union is currently undergoing changes and certain proposed new EU-wide legislation relating to, among other things, cross-border, universal postal services and cyber-security requirements is anticipated. Any such regulatory changes may have direct impact on the Group's operations or an indirect impact through the Group's suppliers. Moreover, the Group cannot rule out the possibility that in the future new taxes or similar payments may be imposed on postal operators such as Allegro.pl, in order to support the financial performance of the Polish public postal operator's universal postal service. Under the existing postal regulations, if Allegro.pl generates revenue from universal postal service or equivalent postal services (other than courier services) it may be required to participate in such support. Failure by the Group to manage these risks adequately or the occurrence of one or more of these risks could have a material adverse effect on the Group's reputation, business condition and results of operations.# Regulatory Matters

INTRODUCTION

The Group's operations are subject to numerous laws, rules and regulations resulting from both EU and domestic laws in Poland. The regulatory requirements applicable to the Group's businesses activities are subject to change, as they are continuously adapted at the national, European, and international level. A number of draft proposals were published in 2022 and 2021 that will have an overall impact on the digital economy and e-commerce. The regulatory debate at the EU and national level focuses largely on online platforms and online marketplaces (draft Digital Services Act, draft General Product Safety Regulation) and pay reserves resulting in additional obligations and costs (e.g. digital taxation, draft Article. Intelligent regulation). Moreover, EU legislations are reflecting on regulating other businesses relevant issues, such as third countries subsidies, businesses to businesses and businesses to government sharing, platforms' work, sustainability of products and any others.

If the Group fails to comply with any of these laws and regulations, the Group may be subject to civil liability, administrative orders, fines, or even criminal sanctions. Such failure may also have an adverse impact on the Group's reputation.

Below, we outlined selected information on certain aspects of the regulatory and legal environment that are applicable to Group's key businesses activities. Such information is not exhaustive and it is not intended to provide a comprehensive description of the regulatory and legal requirements in the relevant jurisdiction.

REVISIONS OF THE E-COMMERCE DIRECTIVE AND THE DRAFT DIGITAL SERVICES ACT AND DRAFT DIGITAL MARKETS ACT

In December 2020 the European Commission has published two regulatory proposals relevant for digital services and e-commerce platforms: Digital Services Act (DSA) [^1] and Digital Markets Act (DMA), formerly referred to as ex ante rules [^2]. Both draft regulations introduce heavily financial penalties for failure to comply.

Digital Services Act redefines platform’s obligations regarding acting illegal content (notice and action mechanism), trusted [‘enforcers’] , increases platform’s obligations regarding transparency vs. users (incl. on recommendations and advertising, content moderation, automated decision-making), introduces seller’s verification (traceability) obligations, and reporting obligations vs. national competent authorities and the European Commission. Stricter enforcement tools, incl. financial sanctions up to the 5% annual turnover were proposed. In the course of legislative works further provisions related specifically to online marketplaces’ liability for third party goods were added.

Digital Market Act introduces obligations and limitiations to certain businesses’ practices for ‘gatekeeper’ platforms’ such as prohibition to combine data between gatekeeper services; with third party data, data from users on consent, prohibition of self-preferencing practices, prohibition from limiting businesses users’ access to users and businesses users’ right to sell outside (lower prices), limits in bundling of services, data sharing obligations, and limits to use of data.

Although currently Allegro.eu does not fall under the gatekeeper definition, this act may apply to Allegro.eu in the future, especially in case of further DMA. Both legislative processes are expected to be finalised in 2024, but may prolong if consent is not achieved. The legal acts will be applicable not earlier than in 2025. [^3] [^4]

[^1]: Proposal for a regulation of the European Parliament and of the Council on a harmonised rule on the Internal Market for Digital Services (Digital Services Act) and amending Directive 2000/31/EC [^4].
[^2]: Proposal for a regulation of the European Parliament and of the Council on contesting and fair markets in the digital sector.
[^3]: Proposal for a regulation of the European Parliament and of the Council on a harmonised rule for digital services in the Internal Market (Digital Services Act) and amending Directive 2000/31/EC.
[^4]: Proposal for a regulation of the European Parliament and of the Council on contesting and fair markets in the digital sector.

CYBERSECURITY

In the EU, the cybersecurity regime has been harmonised under the EU Directive 2016/1148 of the European Parliament and of the Council of 6 July 2016 concerning measures for a high common level of security of network and information systems across the Union (the ‘NIS Directive’) which entered into force on 8 August 2016. The NIS Directive requires essential service operators within critical infrastructure sectors, such as the energy, transport or banking sector, as well as digital service providers, (e.g. online marketplaces) to carefully review existing network security mechanisms, to implement state-of-the-art security measures which shall ensure a level of security for their infrastructure appropriate to the risk of the respective entity as well as to establish proper notification measures to promptly notify the competent authority of any incident which has a substantial impact on the service offered in the European Union.

The NIS Directive is further supplemented by the Commission Implementing Regulation (EU) 2018/1515 of 26 September 2018 laying down rules for further specification of the elements to be taken into account by digital service providers for managing the risks posed to the security of network and information systems and for the parameters for determining whether an incident has a substantial impact.

The NIS Directive has been implemented in Poland by the Act of 5 July 2018 on the National Cybersecurity System, which sets out detailed obligations within the framework of the NIS Directive and provides for penalties for breaches that may be imposed by the Polish Minister of Digitalization.

WORKS ON THE NEW EU LEGAL FRAMEWORK FOR AI

In April 2021 a proposal for regulation for laying down harmonised rules on Artificial Intelligence was published by the European Commission. The proposal defines Artificial Intelligence; prohibits the use of certain AI systems seen as intrusive or manipulative; sets the requirements for high risk AI systems and rules on putting AI systems on the EU market and into service. It provides transparency obligations for certain AI systems and sets rules on market monitoring, including sanctions up to 30,000,000 € or up to 6% of total world-wide annual turnover for the previous financial year. Among others, the use of AI systems for creditworthiness assessment, in the employment context and biometric identification are perceived as high risk application.

The proposal, if adopted as proposed by the EC, will imply careful assessment of used AI algorithms in the company, required to maintain risk management systems for high risk applications, ongoing of data governance, reporting and documentation requirements. They will increase compliance cost and—given new framework and unclear definition related to use of AI.

DATA PRIVACY GENERAL REGULATIONS

As part of its regular operations, the Group processes significant quantities of personal data. Therefore, the Group has implemented robust privacy policies and IT solutions to ensure compliant processing of personal data.

The General Data Protection Regulation that entered into force in May 2018 sets out the general framework for the European data privacy regime. Fines for breach of the GDPR may be significant, depending on circumstances of an individual breach. In the worst scenario, they can go as high as 4% of the turnover of the Group. Moreover, the supervisory authority may restrict further use of data in question, which could potentially impact the Group's operations. At the local level the GDPR is supplemented by the local legislation.

The following items illustrate selected areas of data privacy protection which are of particular relevance in the e-commerce sector:

Email advertising: Subject to certain exceptions, email advertisements (e.g. newsletters, product recommendations or sales announcements) may only be sent to addresses who have given their explicit prior consent. The EU rules governing email marketing are set forth in the GDPR and, operating as also specialists in relation to the GDPR, in the e-Privacy Directive (Directive 2002/58/EC as amended). The general rule under the e-Privacy Directive, is that the use of email for direct marketing purposes is only permitted in respect of subscribers or users (of the public electronic communications networks services concerned) who have given their prior consent (opt-in). These rules may further change as the e-Privacy Directive is currently under review.
Web analytics: We web analytics technologies such as cookies or tracking tools (e.g. Google Analytics) enable the operator of a website to personalise its offers and marketing to better match the users’ interests. Even though most web analytics tools anonymize or pseudonymize collected data,# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

PROTECTION OF COMPETITION AND CONSUMERS

Due to the nature of the Group’s businesses, the Group is subject to various regulations on competition and consumer protection.

PROTECTION OF COMPETITION

Competition restricting practices (anti-competitive agreements and abuse of dominance) are prohibited under the Competition Act and the TFEU. The protection of competition is monitored at the European level by the European Commission and at the domestic level by the UKi President. The UKi President also has the right to apply EU competition law directly (Articles 101 and 102 TFEU) if the infringing acts trade between EU member states.

PROTECTION OF CONSUMERS

Under the Competition Act, the UKi President, acting in public interest, is responsible for implementing the consumer protection policy. The UKi President conducts proceedings concerning (i) practices infringing collective consumer interests and (ii) abusive clauses in standard agreements with consumers. The Group must also comply with various consumer protection laws regulated at the EU level.

POTENTIAL SANCTIONS FOR BREACH OF COMPETITION OR CONSUMER LAWS

The UKi President may issue a decision and impose a fine of up to 10% of the individual company’s turnover generated in the year preceding the imposition of the fine for, inter alia, (i) breach of Polish (or EU) competition law, (ii) recognizing the practice as infringing collective consumer interests or (iii) recognizing the provisions of standard form contracts as abusive. The UKi President may also (i) enforce abandonment of the practice/abusive clause or (ii) order the company to remedy the effects of an infringing. Additionally, if a company fails to comply with the UKi President’s decision, the UKi President may impose a fine of up to EUR 10,000 (approximately PLN 45.47) per each day of such delay.

The UKi President may also impose fines on individuals (management) of up to PLN 2.0 million, if it is found they contributed deliberately to the violation of laws on anti-competitive agreements (except for bid-rigging, which is a criminal offense), collective consumer interests or to the use of abusive contractual clauses (up to PLN 5.0 million in consumer cases in the financial sector). This sanction cannot be imposed on individuals in case of abuse of dominance.

An agreement/provision that amounts to an infringing is invalid in its entirety or in relevant part.

In specific circumstances, the Competition Act provides for the possibility of concluding the proceedings by means of an accompanying decision. The company may propose accompanying implementation that will allow it to eliminate the practice or its effects and the UKi President, recognizing that the proposed commitment will enable it to achieve these objectives, may impose, by way of an administrative decision, an obligation to implement this commitment. At the same time, the company avoids ones being imposed for the infringing.

The UKi President may impose a fine on accompanying as high as to EUR 50.0 million (approximately PLN 230.7 million) for any failure to provide information, for providing false or misleading information or for lack of cooperation during an inspection or search conducted by the UKi President in connection with the proceedings.

Additionally, the EC has the power to impose fines of up to 10% of the turnover of the company concerned in the last financial year for breach of EU competition rules. This 10% limit may also be based on the turnover of the group to which the company concerned belongs.

The Group may be subject to civil claims for damages in relation to the alleged or actual infringing of competition or consumer law. Damages actions can be triggered by ex-officio action or by an action that follows ex-post enforcement decision such as a decision of the UKi President or the EC. To ensure effective enforcement of such claims, a legal framework has been under development in recent years throughout the European Union to, among other things, introduce directives on numerous issues arising in competition damages claims and introduce collective redress mechanisms. This framework seeks to strengthen the position of private claimants seeking damages by removing substantive and procedural obstacles for claimants to prove an infringing and establish damages.

POTENTIAL UPCOMING CHANGES TO THE POLISH COMPETITION AND CONSUMER LAW

New powers of the UKi President: (i) to impose fines for antitrust infringing not only on the direct infringer but also on the controlling parent company and its managers and (ii) to impose structural remedies.
Fine for antitrust infringing can be calculated taking into account the turnover of the whole capital group to which the infringing belongs;
Fine for antitrust infringing on the business association can be calculated based on the turnover of all its members, which in certain cases are jointly and severally liable for the payment.
Limitation of the scope of Legal Professional Privilege.
Suspension of limitation period by any action of the OC CC related to the case.

CONSUMER CREDIT REGULATIONS

Consumer credit regulations are currently under revision both at the Polish and EU level. Works on the review of EU Consumer Credit Directive (2008/48/EC), published on 20 June, are ongoing. Proposals introduce annumber of additional reporting requirements, precontractual information obligations and interest rate caps. Sanctions up to 40% of the infringing credit turnover in the Member States concerned shall be adopted by Member States. It will apply to all consumer credits regardless of the amount and length of the loan (minimum amounts were removed, as well as the exemption for short credits).

In September 2021 Polish Government published draft of the Anti Usury bill. It includes, among other things, reduction in limits on non-interest costs of consumer loans, supervision of the Financial Supervision Authority over the lending industry and agent on lending with fund from bond issues and loan crowdfunding. The draft introduces pre-contractual obligation for entities granting consumer loans to obtain and verify information on consumers’ income and expenses, regardless of the amount of the loan and its purpose. It also increases the documentation requirements from clients – e.g. documents from the employer, bank statements. If adopted under current form it may impact the creditworthiness assessment process by Allegro Pay and have a negative impact on conversion. The draft was heavily criticized by the industry and is expected to be changed under the legislative process.

PRODUCT SAFETY

Retailers who place products on the market in the European Union have to ensure that the products are safe. This is also the purpose of the Directive 2001/95/EC of the European Parliament and of the Council on general product safety (the "Directive on Product Safety") according which manufacturers must put on the market products which comply with the general safety requirement. In addition, they must provide consumers with the necessary information in order to assess as regards products inherent threat, particularly when this is not directly obvious and they must take the necessary measures to avoid such threat (e.g. withdraw products from the market, inform consumers, recall products which have already been supplied to consumers, etc.). In this context it is important to know that under the Directive on Product Safety just like under most other European and national legislation on product safety – an importer (i.e. in most cases a retailer) of a product that was produced in a country outside of the European Union qualifies as the manufacturer of the product.

According to the Directive on Product Safety distributors are obliged to supply products that comply with the general safety requirement, to monitor the safety of products on the market and to provide the# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

MARKETING AND USE OF EXPLOSIVES PRECURSORS

Under the new Regulation (EU) 2019/1148 of 20 June 2019 on the marketing and use of explosives precursors, amending Regulation (EC) No 1907/2006 and repealing Regulation (EU) No 98/2013, which entered into force in February 2021, online market places such as yours will need to:
* ensure that users selling regulated explosives precursors know their obligations (Art. 7.3);
* take measures to help users comply with verification obligations (Art. 8.4); and
* have in place measures to detect suspicious transactions and report attempted or suspicious transactions within 24 hours (Art. 9.2 & 9.4).

The Group has introduced processes and necessary IT changes to ensure compliance with this Regulation and Polish implementing laws.

PAYMENT SERVICES AND AML REQUIREMENTS

As is the case for many other e-commerce businesses, the Group’s operations are heavily dependent on the provision of payment services. While payment services have historically been provided by third-party payment service providers, the Group launched its own payment services in the second half of 2020, making applicable payment service regulations directly applicable to the Group. Allegro Finanse sp. z o.o. is registered as a domestic payment institution (SPIU) and applied to the Polish Financial Supervision Authority (PFSA) on 6 December 2021 to obtain the status of domestic payment institution (DPIU). The submission of the application is due to the fact that the monthly transaction value limit of EUR 1.5 million provided for SPI has been exceeded by Allegro Finance in November. The SPI and DPI licenses are described below.

Payment services in Poland are regulated and in general, companies undertaking such activities require authorisation from the PFSA, in which the PFSA specifies the payment services that the payment institution is authorised to provide. At the national level, the payment services are primarily regulated by the Act on Payment Services of 19 August 2011 (Journal of Laws of 2023 item. 794, as amended) (the APS). APS contains provisions which are national implementation of the Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and Repealing Directive 2007/64/EC (PSD2).

The payments services and issuance of electronic money is supervised by the PFSA to the extent and subject to the conditions stipulated in the Act on Financial Market Supervision of 21 July 2023 (Journal of Laws 2023, item. 2059, as amended). In the same time, the President of the NBP supervises the payment systems within the meaning of Art. 1.1 of the Act of 24 August 2001 on settlement of monetary transactions and the rules of oversight of these systems (Journal of Laws of 2021, item. 2022, as amended), the payment schemes within the meaning of the APS, as well as participates in the supervision of: (i) domestic payment institutions which provide the acquiring service; (ii) entities which operate security settlement systems; and (iii) entities which operate security clearing systems.

Under the APS, the provision of payment services is an licensable activity (unless one of the exemptions provided for in the APS applies). Only entities listed in Article 7.2 of the APS, under the specific conditions set out in the APS, may become payment service providers. Payment service providers may be provided by a payment institution. The term "payment institution" covers DPIs in Poland and institutions licensed in other EU Member States to provide payment services (EU payment institutions). In order to begin providing payment services in Poland as an DPI, an authorisation from the PFSA is required. In case of acquiring services, the President of the National Bank of Poland must issue an opinion before the relevant authorisation is granted (opinion is issued upon the PFSA's request). The authorisation (and the opinion) can be obtained based on an application filed with the PFSA by the legal entity with registered office in Poland that intends to provide payment services in Poland. In the authorisation, the scope of payment services that may be provided by a DPI is specified. The PFSA may withdraw the authorisation at any time in the circumstances described in the APS (however, other supervisory measures are also available to the# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

The possibility includes power to: request to dismiss or to suspend the managing person responsible for irregularities, limit the scope of DPÉ’s activity, impose a fine on the managing person or on the DPÉ itself. The authorization expires if an DPÉ has not started payment services activity within twelve months from the day authorization has been granted, as well as in case an DPÉ does not provide payment services over a period of over six consecutive months or more. Expiry must be expressly stated in the PFÁ’s decision.

Certain requirements laid down in the APS must be satisfied by an entity that intends to provide payment services in Poland. If an DPÉ wants to provide most of the payment services (listed in Articles 5.4–5.5 of the APS), it must have share capital of at least EUR 1,250,000 or its equivalent in złoty. Contributions to cover the share capital may not originate from accredited facility or loan or be in any way encumbered or originate from illegal or undisclosed sources. The DPÉ must also hold the required amount of own funds (the minimum requirement for own funds specified in the APS). Depending on the scope of services, the DPÉ is obliged to have relevant instruments for the purpose of securing claims arising from the activities conducted by the DPÉ (e.g. bank guarantee, third-party liability insurance, insurance guarantee).

The DPÉ is supervised by the PFÁ, which results in reporting and other obligations under the APS for the DPÉ. Among other things, the DPÉ is obliged to submit its audited annual financial statements (and if consolidated, the consolidated annual financial statements) and interim financial statements to the PFÁ in the time limit laid down in the APS.

Direct or indirect disposals of shares in an DPÉ is subject to the limitations set out in the APS. PFÁ has to be notified of the intention to acquire or take up, directly or indirectly, shares of an DPÉ in another sufficient to reach or exceed 50%, 75%, or 50%, respectively, of the total number of votes at the decision-making body or ashare in the share capital, or if, by virtue of the acquisition, such an DPÉ would become a subsidiary or co-subsidiary of that entity. Similar obligation is imposed on an opponent seller, in case it intends to dispose, directly or indirectly, of qualifying holdings in the DPÉ.

In case of an SPÉ, the account information service provider (conducting solely account information service, the ‘AISPO’) and the payment services of once, the license from the PFÁ is not required, however with the exception of AISPO, such entities can perform its activities only in Poland and after being entered in the register kept by the PFÁ. The activity of SPÉ, AISPO, and payment services ofces is an aggregated activity within the meaning of the Act on Entrepreneur law of 11 March 2011 (consolidated text: Journal of Laws 2022, item 144, as amended), which basically means that they may only be taken up following entry in the register and submission of statements on fulfillment of requirements for such businesses laid down in the relevant legal act (in this case APS).

In case of SPÉs, some limitations as to maximum amount of funds per user and types of payment services that the SPÉ is allowed to conduct apply, furthermore, the average of the total amount of payment transactions for the provisions twelve months made by the SPÉ, including through agents, cannot exceed the amount equivalent to EUR 1.5 million per month. The SPÉ is also supervised by the PFÁ, and certain reporting and other obligations under the APS may apply.

The DPÉ, the SPÉ, the payment services offices and branches of the EU payment institutions are among other entities considered ‘obliged entities’ (institutions) within the meaning of the Act of 1 March 2011 on Counteracting Money Laundering and Terrorist Financing (consolidated text: Journal of Laws 2022, item 1459, as amended) and therefore obliged to conduct financial security measures, including customer due diligence; appointing a senior management responsible for the fulfillment of the obligations set out in the Act; and designing AML Compliance officer).

It is also worth mentioning that the PFÁ may issue the recommendations on good practices for the prudent and stable management of DPÉs in order to protect the interests of users or holders of electronic money.

Breach of various duties under the APS may result in significant fines, including criminal liability.

In the context of Financial Services, it is worth noting that on 27 September 2023 the European Commission published the Digital Operational Resilience Act (DORA) [1]. The proposal aims to bring the requirements relating to ICT risk management in the financial services sector and guidelines issued separately by the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA), under one rule. As of today, Allegro is compliant with the PSzF 2. and EBA Guidelines on operational risk and major incident reporting. This framework is already quite robust and includes many of the requirements laid out in DORA. Additionally, certain cybersecurity related obligations may be introduced.

OUTSOURCING SERVICES

In order to facilitate cooperation between banks and payment services providers and users of the Group’s e-commerce marketplace, the Group is providing certain services to banks and payment services, which constitutes qualified outsourcing regulated under, respectively, the Polish Banking Act of 29 August 1997 (consolidated text: Journal of Laws 2021, item 1457, as amended) and the APS.

In that capacity, the Group’s activities may fall under supervision of the PFÁ.

PACKAGING WASTE

In relation to the Group’s activities, in particular retail activities, the Group is subjected to various reporting, recycling and other obligations under Polish Act on Waste of 14 December 2022 (consolidated text: Journal of Laws 2023, item 767, as amended) and the Polish Act of 15 June 2015 on dealing with packaging and packaging waste (consolidated text: Journal of Laws 2023, item 1566, as amended). These acts implement, among others, the European Parliament and Council Directive 94/62/EC of 20 December 1994 on packaging and packaging waste and Directive 2004/12/EC of 19 November 2004 on waste as well as subsequent amendments to these directives. The ongoing transposition of the above-mentioned directives into the national law in Poland may extend the statutory obligations of the Allegro group, in the form of increased reporting and financial burdens.

The European Commission will reflect on the modernization of the Directive as part of the European Green Deal, which aims at making the EU climate neutral in 2050. Reaching this target will require action by all sectors of the economy, including investing in environmentally friendly technologies supporting industry to innovate. This may imply further obligations on retailers and possibly on other entities.

INTERIM FDI REGIME

General

The below amendments to the Polish Act on the Control of Certain Investments of 24 July 2015 entered into force on 24 July 2023 and will remain binding for two years from that date.

The revised interim foreign investment regime (the ‘FDI Regime’) was introduced in response to the negative effects that COVID-19 pandemic may have on valuations of Polish businesses. Any transaction that falls within the scope of the FDI Regime will have to be notified to the UKi UK President, who has the right to object to the contemplated transaction.

The FDI Regime will apply to all EU-listed companies that have their registered offices in the territory of Poland and whose revenue from the sale of goods or services in Poland in any two financial years preceding the notification was at least EUR 10 million (PLN 45.1 million). As the Company is incorporated in Luxembourg, therefore, any number of restrictions under the FDI Regime will not apply to trading in the Company’s shares.

However, the FDI Regime may apply to some of the Group’s Polish operating companies due to their software-related activities. In such case, indirect acquisition of an dominant position over such Polish operating companies (including by way of acquiring dominant position over the Group) by a foreign investor (as defined below) will be a transaction that has to be notified under the FDI Regime.

Foreign Investor

The FDI Regime will recognize as a ‘foreign investor’:
* in the case of natural persons, those who are not citizens of an EU/EEA country; and
* in the case of other entities, those that do not have their registered seat in an EU/EEA country or have not had their registered seat in EU/EEA country for two years or more.

In the case of indirect investments (e.g. through subsidiaries or special purpose vehicles), the entity (or person) at the top of the foreign investor group structure is considered pursuant pursuant to the above criteria. Similarly, if the investment is made by portfolio managers or other agents, the client is taken into account.

Notification

The notification should be filed before the signing of any preliminary agreement obliging an investor to make the acquisition or, in the case of the acquisition of a ‘WSE-listed company by way of of public tender or other offer, before the tender offer is announced.

Once the notification has been filed, the foreign investor may sign the preliminary agreement or announce the tender offer, which will be conditional on receipt of clearance from the President of UKi UK.# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

Consequences of Non-Compliance

Any transaction made in breach of the §4 Regime (without notification or without approval) will be null and void and the investor will be unable to exercise its rights (including any voting rights) under the shares acquired. §In case of taking control over a parent company of a Polish protected entity; only the latter sanction will apply.

Investment made without approval is a criminal offence subject to penal imprisonment from six months to five years and a fine of up to PLN 50 million. Moreover, anyone managing the subsidiary or exercising voting rights on behalf of a foreign investor, who fails to notify the President of UKiO of the foreign investment of a certain kind (such as across-border merger outside of Poland) is liable to a fine of up to PLN 50 million, after imposition of six months to five years and both of these sanctions jointly.

Proposals for regulation of the European Parliament and of the Council on digital operati onal resilience for the financial sector and amending Regulations (EC) No 1060/2014, (EU) No 978/2014, (EU) No 1177/2014 and (EU) No 1279/2014

186 187

Consequences of Non-Compliance

3. Our Approach to Environmental, Social and Corporate Governance

ESG and sustainability are strategically and comprehensively managed by Allegro. Environmental, social and governance (ESG) issues are a part of Allegro’s daily business activities as well as in the long-term strategy plans. Therefore, in 2020 Allegro’s CSZ and sustainability strategy for 2020-2023 was developed. It defines Allegro’s long-term priorities in this area.

The Group’s CSZ & Sustainability Strategy continues our important social and educational programs, adding considerable emphasis on environmental issues. Therefore, in accordance with our cooperation with customers, merchants, business partners, employees, and other stakeholders we actively pursue Sustainability Goals. As a(...) Allegro has a significant impact on the Polish economy and society. Through R&D and technology investments, we create a(...) effect that scales up much beyond our own direct contribution. Our innovations and initiatives increase resilience and fuel the growth of our customers and merchants, as well as business partners. In our approach we focus on the environmental aspects of e-commerce operations, while constantly pushing our ambitions forward and identifying further goals to be achieved.

The Group’s long-term sustainability goals are expected to help our customers make responsible choices, through exposure to and promotion of sustainable products by optimizing Allegro.pl product search based on fair and transparent criteria. We are working on added space for those looking for eco-friendly products because we want to make it easier for buyers to find products with certificates, and to promote sellers in this market segment. We aim to raise awareness of the best practices in sustainable packaging and logistics, giving both sellers and buyers the knowledge and tools to promote circular use of resources across our value chains. We intend to encourage more merchants to use eco-friendly packaging. We educate our merchants and customers on the developing Allegro Academy e-learning platform. The Group measures, among all, its environmental impact, runs annual GHG (greenhouse gas) emissions monitoring and pursues an agenda to reduce average GHG emissions per GMV.

The strategy was approved and adopted by the Board of Directors. The results of its implementation are monitored continuously, and are presented to the management as well as published in the annual ESG report.

3.1. Corporate, Environmental, and Social Responsibility

3.1.1. ALLEGRO’S SUSTAINABILITY STRATEGY FOR 2020-2023

188 189

Pillars of the Group’s CSZ and Sustainability Strategy: Long-term sustainability goal for each pillar

OUR main achievements in 2021:

| Pillar | Goal # ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

Management Committee for CSR & Sustainability

approval of strategic directions and goals, as well as recommendations for changes/activities
approval of reports on the implementation of the Allegro CSR Strategy
supervising the integration of CSR strategy and initiatives with Allegro’s business goals
selection of priority areas and long-term strategic planning

Management Committee (CEO & Board of Directors)

OPERATIONAL ROLE

MANAGERS AND COMPANY EMPLOYEES:

Contributing to creating and updating the strategy
Involvement in implementing various initiatives
Progress reporting

CSR & SUSTAINABILITY TEAM:

Coordinating the implementation of the CSR & Sustainability strategy
Monitoring results and progress in terms of specific goals
Cooperation with project teams to execute specific actions/initiatives
Reporting the results of specific actions and overall progress in the implementation of the strategy, as well as drafting strategy progress reports
Communicating, both internally and externally, the actions that were taken.

Allegro.eu’s highest governing body, the Board of Directors, takes ESG-related matters into account when performing its supervisory duties. ESG is discussed at meetings of the Board of Directors. The Company has established a CSR & Sustainability Management Committee, which includes General Counsel and Corporate Affairs Director, Communications Director and Chief Security Officer. The Steering Committee includes the CEO and the Board of Directors. The duties of the Committees are described above. ESG issues are also raised at meetings of the Management Board, and are taken into account in business decisions that are made.

Allegro.pl’s Sustainability & CSR team consists of several experts in the field of ESG and sustainability, additionally supported by investor relations, compliance and HR experts. The Sustainability Delivery Experience team includes professionals dealing with sustainable development in full, deliveries and logistics services, including last mile. All of them work closely together to meet the ESG strategy goals and are also involved in reporting.

ALLEGRO.PL JOINS UN GLOBAL COMPACT (“UNGC”)

In 2021, Allegro.pl joined the UN Global Compact, an initiative of the Secretary-General of the United Nations that brings together companies and institutions which consider sustainable development important. By joining the UN Global Compact, the company pledged to implement policies and global UN initiatives, focusing on environmental protection and countering the climate crisis. It is also a commitment to the Sustainable Development Goals, as defined by the United Nations in its 2030 Agenda. Joining the UN Global Compact is attested to our genuine commitment to the CSR & Sustainability strategy and our environmental pledge. We educate sellers on sustainable development and implement the climate agenda in our supply chain. Global Compact brings together over 12,000 companies and 5,000 institutions from 160 countries. This means that Allegro is joining a large international community, for whom the conversation about sustainable growth is extremely important.

In 2021 Allegro joined The Ethical Standards Committee of UN Global Compact Network Poland. The company was involved in work on diversity, inclusion, ethical issues as well as sharing good practices. In 2022 Allegro intends to continue being active in The Ethical Standards Committee and Climate Positive Program of UN Global Compact Network Poland.

As a UNGC participant, we report on our progress on the implementation of the Ten Principles of the UN Global Compact.

| Area | UN Global Compact Principles | Link to CSR & Sustainability Strategy 2020-2023 | Action taken # Environmental Responsibility

Read more about TCFD disclosure in Environmental Responsibility Section

Social Risk

The Group’s brand may be adversely affected if its public image or reputation is tarnished by negative publicity. Product recalls, product liability claims, breaches of corporate social responsibility, the presence of counterfeit goods that violate the Group’s terms and conditions or other fraudulent activity in the Group’s e-commerce marketplace that is not detected by its anti-fraud technology could significantly harm the Group’s reputation and business. User complaints or negative publicity about its websites, products, delivery times, returns processes, the working conditions of its employees (or those of the employees of any of its subcontractors or suppliers), user data handling and security practices, or customer support, including on internet-based platforms such as blogs, online ratings, review services and social media websites, could have a significant negative impact on the Group’s reputation and on the popularity of the Group’s websites.

Responsibility Towards Customers and Merchants

Business ethics

Risk Related To Human Rights

The control and prevention mechanisms of the Group’s compliance structure might not be sufficient to adequately protect the Group from all human rights violations such as unequal employee treatment (hiring, remuneration, training and promotion, etc.) or other violations involving third-party partners and suppliers.

Human Rights Compliance

Labour Practices

The loss of qualified personnel, high employee turnover, or persistent difficulties in filling job vacancies with suitable applicants could have a material adverse effect on the Group’s ability to compete effectively in its businesses and considerable expertise could be lost by the Group or access thereto gained by the Group’s competitors. In addition, to attract or retain qualified personnel, the Group might have to offer increased compensation packages and other benefits which could lead to higher personnel costs. Any failure to attract, train, motivate or retain skilled personnel at reasonable costs could result in a material adverse effect on the Group’s business, financial condition and results of operations.

The work-related hazards and hazardous situations and the risk of a work-related injury or ill health, including accidents and occupational diseases could also adversely affect the Group’s business. The COVID-19 pandemic has profound implications for employees who are required to continue operating in the workplace (especially at the warehouse). Employees working remotely may not have ergonomic and appropriate workspaces at home.

Responsibility for the workplace

Risk Of Corruption And Other Violation

The incidents of corruption or bribery (kickback, facilitation payment, payment extortion, cyber extortion), conflicts of interests or other inappropriate behaviour could affect the Group, as well as failure to adequately protect customers’ personal data.

Business ethics

Risk of cybersecurity and private data breaches

The Group relies on third-party data center providers, whose facilities could suffer as a result of a cyberattack. Cybersecurity, management of private data and ensuring a sufficient level of security for our infrastructure are important parts of our operations.

194

195

ALLEGRO.EU S.A.

GROUP CONSOLIDATED MANAGEMENT REPORT

for the years ended 31 December 2021

The Board of Directors oversees matters of sustainable development and climate, especially by monitoring and supervising the company’s CSR & Sustainability strategy. At the same time, since climate and environmental risks are subject to risk management and the Risk Management Policy, all Allegro Group employees are responsible for risk identification and reporting. The role of the Board of Directors is to supervise corporate risk, define the scope of risk management, define directions for the development of the risk management system, and determine risk appetite levels.

In line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), Allegro.eu carefully maps climate risks and, even more broadly, environmental risks. The process of identifying, assessing and managing climate risks is part of the overall risk management process at Allegro.eu Group. Read more about TCFD disclosure in the Environmental Responsibility Section.

The Group’s ambition is to be an accelerer platform for diverse, talented and ambitious teams and individuals, who thrive in a fast-paced, changing and complex environment. Our employees are committed to high performance, continuously looking for development opportunities and aspiring to the next big challenge, wherever it comes from.

We create a demanding but caring working environment, support the professional and personal development of our employees and create equal opportunities in what we do. The table below presents our employment structure.

At the end of 2021, the entire Allegro.eu team consisted of 4,848 people, exactly 1,559 more than a year ago. That means in 2021 Allegro.eu hired almost twice as many new employees as in 2020.

3.2. Responsibility for the workplace

3.2.1. EMPLOYMENT MATTERS

Allegro ranks among the best employers in the Poland’s Best Employers 2021 Forbes ranking.

In the latest ranking prepared by Forbes and Statista, we came in first among employers in the retail and wholesale industry. We are all the more pleased with our success because we owe it largely to the votes of our employees.

The presented number of workers takes into account people working at the following companies: Allegro.pl, Ceneo.pl, eBilet.pl, Allegro Finance, Allegro Pay, Opennet, Xpress Couriers, Skynet Custom Brokers, Adinan Midco, and Allegro.eu.

^[40] All data as of 31 December 2021
^[41] The data include active and suspended workers.
^[42] Number of total employees in 2020 has been retrospectively adjusted to include 130 temporary agency workers in the Bardonie warehouse (previously excluded from the headcount of 4,159 reported in 2020).

Types of contracts at Allegro.eu Group

	2021	2020	2019
Contract of employment	3,613	2,721	2,194
Contractors (B2B)	535	240	17
Work agencies & outsourced service	700	328	268
IN TOTAL	4,848	3,289	2,479

STRUCTURE OF WORKFORCE [21]

196

197

ALLEGRO.EU S.A.

GROUP CONSOLIDATED MANAGEMENT REPORT

for the years ended 31 December 2021

Form of Employment

	2021	2020	2019
Permanent employment contracts	79.4%	79.4%	79.2%
Fixed-term employment contracts	20.6%	20.6%	20.8%

Form of employment broken down by gender

	2021	2020	2019
Permanent employment contracts – women	33.2%	32.1%	32.0%
Fixed-term employment contracts – women	9.5%	9.7%	9.6%
Permanent employment contracts – men	46.2%	47.2%	47.2%
Fixed-term employment contracts – men	11.1%	10.9%	11.2%

Workplace

	2021	2020	2019
Poznań Office	45.3%	51.3%	57.0%
Warsaw Office	33.5%	30.7%	25.5%
Wrocław Office	6.5%	7.2%	8.2%
Kraków Office	4.7%	3.7%	2.3%
Toruń Office	3.0%	3.5%	3.8%
Bąrdonia (Retail distribution center)	2.8%	2.6%	2.6%
Adinan (Fulfillment center)	2.6%	—	—
Remote	1.2%	—	—
Other	0.4%	1.0%	0.6%

Legal Entity	2021	2020	2019
Allegro.pl	4,212	2,933	2,227
Ceneo.pl	219	198	194
Allegro Pay	126	61	—
eBilet.pl	59	56	56
Opennet	67	30	—
Allegro.eu	7	6	—
Allegro Finance	10	3	—
Adinan Midco	2	2	2
Xpress Couriers	141	—	—
Skynet Custom Brokers	5	—	—
Allegro.eu Group	4,848	3,289	2,479

PROFESSIONAL AND PERSONAL DEVELOPMENT OF OUR EMPLOYEES

We want Allegro to be a place full of challenges and opportunities for our employees. We provide support in professional development to everyone, guaranteeing equal opportunities in all aspects of employment, and offer competitive salaries and benefits. In return, we expect professional ambition and willingness to develop, the ability to cope with a rapidly changing and complex environment, and the awareness that our work, innovations and solutions affect the daily purchases of millions of consumers.

We are very pleased with the high marks that we receive in the annual surveys from our employees.

Professional development of employees is crucial for the development of Allegro. We have prepared a large selection of training sessions, workshops and conferences for them, available through a special development platform called MindUp. It includes training in the so-called soft skills, technical training, managerial programs and development tools.

ALLEGRO DEVELOPMENT MODEL

Allegro Essentials are the values that accompany us in our daily work. They define a consistent set of attitudes and behaviours shared by all Allegro employees. These are:

Raising the bar
Customer centricity
Agile
Curiosity, learning and growth
Contribution to others’ success
Honesty and respect

Allegro Essentials are a cornerstone pointing to what builds our unique corporate culture and creates an atmosphere of success that pushes us forward. In other words, Allegro Essentials represent a consistent view of what makes us successful at Allegro. They are described clearly so that everyone can recognise and apply them. Allegro Essentials have been based on nearly 1,100 responses to questions in the 2020 Baza questionnaire (How would you describe Allegro’s culture?) and created in cooperation with the Management Team.

ALLEGRO FACTORS

Career Levels is a system that classifies all roles at Allegro into levels. Its purpose is to introduce transparency and organize our internal job structure, and to provide employees with a clear vision of their career path within the company. We have defined 10 Career Levels, although this number may increase as the company grows.

Allegro.pl selected 5 important competencies across all our roles and people, which we called level factors. Allegro factors include five competencies that are# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

Training [23]

	2021	2020	2019
Total number of training participants	4,107	5,247	4,416
Women	45%	45%	32%
Men	55%	55%	68%
Number of unique participants	1,726	1,416	1,386
% of employees who participated in at least one training course	55%	59%	74%
women	726	638	443
men	1,000	778	943
Average hours of training per employee	6.2	8.2	0.74
Average hours of training per woman	6.4	9.4	nd
Average hours of training per man	6.0	8.6	nd

TRAINING SESSIONS

In 2021, the company conducted 458 internal training sessions with a total of 4,107 participants. On average, there were 6.2 hours of training per employee, compared to 8.2 hours in 2020. In 2021, an average number of hours of training per woman is 6.4, and 6.0 in the case of men. At Allegro, we do not analyze training hours in distribution across the employment structure.

In 2021, female employees participated in a similar number of training courses as in the previous year, taking into consideration the increase in employent. 41% of Allegro employees are women, and women constituted 45% of all training participants. [23] The data includes active workers.

Internal training	2021	2020	2019
Number of internal training sessions	458	501	443
Average rating of trainings (on a scale of 1 to 5)	4.5	4.5	4.5
Number of internal trainers	241	171	191

The presented data concerns only Allegro.pl, Allegro Pay, and Allegro Finance employees, as employees of other companies do not have access to the MINDUP training platform where the data comes from. Training was also not monitored in other entities.

Data including: Allegro.pl, Allegro Pay and Allegro Finance.

MINDUP, THE EDUCATION PROGRAM FOR ALL EMPLOYEES, INCLUDES:

Development activities categorized into 4 groups:
- (1) individual contributors,
- (2) leaders and team managers,
- (3) senior managers further broken down into activities dedicated to developing key competencies called Allegro Factors (e.g. Impact, Managing complexity, Communication)
other development tools, e.g. mentoring, coaching, assessment and development centers, and diagnostic tools such as Extended DISC or Clift OnStrengths assessment
short formats of learning, e.g. webinars, e-learning courses, articles
internal workshops within business-specific development academies, e.g. Commerce Academy, CX Leader Academy
application forms for external events, including conferences, training sessions as well as studies, etc., to cover the cost of conferences, training as well as postgraduate courses — as per the internal regulations
language classes.

Additionally, we run the JUKE project where we invite inspiring guests for Allegro employees to meet, and the Health Action — we organize workshops and lectures about general well-being and healthy lifestyle.

In 2021, we continued gridLayoutina (grępotefor-remote), a special program on effective remote work, which includes psychological guidance, workshops and webinars, as well as practical content and advice.

SUPPORT FOR DEGREE PROGRAMS OR CERTIFICATIONS

An important element of our development offer is financial support provided by the Company to employees willing to study and gain professional qualifications at renowned universities, as well as the opportunity to participate in paid conferences or individual coaching sessions.

All rules and regulations regarding personal development are provided in the Work Regulations, Training regulations and Terms of Participation in Employee Training Courses in effect in Allegro.pl Sp. z.o.o., Allegro Pay Sp. z.o.o. and Allegro Finance Sp. z.o.o.; Postgraduate studies — Terms of training contracts.

MANAGERIAL AND LEADERSHIP DEVELOPMENT TRAINING

Allegro conducts many trainings and webinars at managerial level, such as:

the Neuroscience of Creating Clarity in a Complex World,
Leader of MPowigator, i.e. MPower Demo,
Strategy Leader, or how to build strategies in a Complex World,
Happiness in team work for leaders/managers,
Stress: enemy and friend — how to build the leader's emotional resistance,
Inclusive leadership — how an inclusive leader builds an accepted, creative and highly effective team,
NVC — reconciling family and professional roles and satisfaction with life.

Leaders could also join leadership development programs, e.g. AllegroGrow program dedicated for directors, StepUP (Transformation leadership) program for senior managers, or WarmUp program for first time leaders. 25 leaders (92% of directors) are part of AllegroGrow program (10 started on 3rd Dec, 2021); 25 (27% of senior managers) attend StepUP program. The 9th editions of WarmUp program were run for 97 people in 2021. The scope of this training covers Allegro factors: impact on business, leadership, managing complex problems, communication with clarity and positivity, and well-being. The participants could develop leadership skills: effective communication, communicating complex information, persuasive communication, motivating others to take action, responding to stressful situations, inspiring others to accept change.

Summarizing the year 2021 in managerial and leadership development training:

from the group of team leaders and managers/project managers — 1,797 participants attended the training thatds 503 people (82% of the whole group)
from the group of senior managers and directors — 168 participants were part of the training thatds 97 leaders (95% of the whole group).

Allegro.eu encourages employees to share their knowledge and best practices, both inside and outside the organization. As part of the Allegro Tech initiative, employees participate as speakers in a number of open events, including Allegro Tech Live, Allegro Tech Labs, Allegro Tech Meeting, and UY Research Confett.

Summarizing the year 2021 in Allegro Tech, 180 speakers attended 97 external events and 18 events organized independently by Allegro Tech. Allegro Tech published 12 podcasts and the Allegro Tech blog had as many as 1,721,187 unique views. The company introduced a new format of Allegro Tech events dedicated to non-employees and organized two external conferences — Allegro Tech Meeting and UY Research Confetti. The program included 27 presentations and 9 thematic blocks. 803 people registered for the event.

Allegro runs a mentoring program and an internal mobility program where employees temporarily change their workplace for two weeks to three months. The main goals of this program are:

supporting sharing knowledge between teams so that the visiting employees can learn about another area of activity and use this knowledge in their projects when they return to their teams;
retaining talented employees. If an employee is considering changing jobs, they can first check how they would fit into another project before they decide to change the team permanently;
supporting changes in the business/organization unit. Any employee can participate in the program, provided that both their current and prospective supervisors agree and that there are benefits for all parties that are involved.

PERFORMANCE MANAGEMENT

Performance Management is a process where the individual performance of each employee can be assessed consistently based on objective, factual and evidence-based feedback against business goals and demonstrated behaviors. Employees are assessed twice a year.

Promotion path is closely related to employee evaluation and is based on an objective assessment of the level of competencies and skills, based on a set of criteria that are especially relevant to us (such as the impact on the work of the organization, the need for solving complex problems analytically and innovatively, communication skills and expert knowledge). [24] The data includes active workers. [25] Excluding ébile.pl employees and employees on atrial period.

Employee assessment	2021	2020	2019
% of employees assessed	94.7%	93.9%	92.5%
Women	91.3%	86.4%	85.2%
Men	97.0%	99.3%	97.5%

Career# III. Non-financial report

ANNUAL ENGAGEMENT SURVEY – BAZA

We create an friendly workplace and regularly check the level of commitment of our employees. Every year we conduct an engagement survey, which we treat as the basic source of information about our company as a workplace. By analyzing the survey results, we are able to better understand what translates to employee engagement, as well as identify areas we should work on. The company tracks performance over time and implements the recommended findings and conclusions.

The survey is confidential and we benchmark the results against those of the best technology companies in the world. In 2021, we achieved an engagement score similar to the 2020 Baza result. In 2021 the survey covered all Allegro.eu companies.

Career path – % of promoted women	2021	2020	2019
to managerial functions	2.47%	1.7%	1.4%
to director positions	0.28%	0.26%	0.0%
to level-C positions	0.0%	0.0%	0.0%

Career path – % of promoted men	2021	2020	2019
to managerial functions	3.94%	2.79%	2.89%
to director positions	0.34%	0.13%	0.0%
to level-C positions	0.0%	0.0%	0.0%

Percentage of employees receiving regular performance and career development reviews [26]

Employee assessment is a process that applies to everyone with at least 3 months of work experience, including employees returning from leave (i.e. long-term sick leave, parental leave, paternity leave). Returning employees typically do not work long enough to get their performance appraised. This is the main reason why the rate presented above is below 100%, especially for women.

Annual Engagement Survey – Allegro.pl, AllegroPay and Allegro Finance 2021

	New Tech 2021 [26]	2020	2019
Engagement score	74%	74%	78%
Company Confidence	90%	80%	91%
Performance	91%	n/a	89%
Teamwork & Ownership	88%	80%	88%
Learning & Development	85%	75%	85%
Collaboration & Communication	86%	73%	85%
Culture	85%	n/a	85%
Enablement	84%	79%	84%
Management	84%	78%	83%
Alignment & Involvement	79%	83%	79%
Leadership	74%	81%	79%
Feedback & Recognition	72%	70%	75%
BaZa Action	61%	n/a	64%
Remote work	76%	n/a	n/a
Work & Life blend	61%	54%	n/a
Diversity & Inclusion	87%	n/a	n/a
Participation in the survey	93%	n/a	94%

Annual Engagement Survey – Ceneo.pl 2021

	New Tech 2021 [27]	2020	2019
Engagement score	78%	74%	77%
Company Confidence	82%	80%	80%
Performance	n/a	n/a	n/a
Teamwork & Ownership	90%	80%	1%
Learning & Development	85%	75%	82%
Collaboration & Communication	85%	73%	87%
Culture	81%	n/a	81%
Enablement	87%	79%	82%
Management	86%	78%	84%
Alignment & Involvement	81%	83%	80%
Leadership	84%	81%	83%
Feedback & Recognition	82%	70%	78%
BaZa Action	55%	n/a	55%
Remote work	79%	n/a	n/a
Work & Life blend	60%	54%	n/a
Diversity & Inclusion	88%	n/a	n/a
Participation in the survey	92%	n/a	96%

Annual Engagement Survey – eBilet.pl 2021

	New Tech 2021 [28]	2020	2019
Engagement score	63%	83%	n/a
Company Confidence	98%	91%	n/a
Performance	n/a	n/a	n/a
Teamwork & Ownership	72%	n/a	n/a
Learning & Development	67%	85%	n/a
Collaboration & Communication	82%	n/a	n/a
Culture	74%	n/a	n/a
Enablement	75%	n/a	n/a
Management	81%	n/a	n/a
Alignment & Involvement	73%	n/a	n/a
Leadership	82%	n/a	n/a
Feedback & Recognition	59%	79%	n/a
BaZa Action	n/a	n/a	n/a
Remote work	71%	n/a	n/a
Work & Life blend	50%	92%	n/a
Diversity & Inclusion	n/a	n/a	n/a
Participation in the survey	100%	n/a	n/a

[26] Culture App [27] Culture App [28] Culture App

[29] Staff costs in the reference period included PLN 22.2 million in respect of share based compensation for managers who had invested in the Management Investment Plan that was settled at the IPO, thereafter PLN 25.7 million related to shares granted to employees at the IPO, as well as PLN 3.3 million related to COVID-19 support for employees. For FY 2021 one-off items included in staff costs comprised PLN 18.7 million of share-based payment costs related to the new Allegro Incentive Plan and PLN 1.3 million spent on protective equipment against COVID-19.

REMUNERATION

At Allegro, we strive to attract and retain the most talented people. We recruit the best candidates with great development potential. We offer our employees the opportunity to participate in large and complex projects, extensive development opportunities and an competitive remuneration package. Our remuneration policy is aimed at acquiring, motivating and retaining employees who represent the highest level of competence and experience. It is based on equal treatment of employees and creates an agreeable workflow that ensures that everyone who performs the same tasks is equally compensated.

Staff costs increased by PLN 85.1 million, or 15.3% from PLN 490.1 million in FY 2020 to PLN 555.2 million in FY 2021. Excluding one-off costs in both periods, staff costs increased by 31.5% YoY, driven by growth by 17.4% YoY in the number of employees, with recruitment concentrated in the organization's key areas such as Technology, Commerce, Delivery Experience and Customer Experience. Staff costs also include one-off costs of PLN 1.3 million resulting from COVID-19 support for employees. The company did not reduce salaries or benefits of any employee in response to COVID-19.

EVALUATION OF THE COMPANY LEVEL AND REMUNERATION AUDIT

To be able to benchmark ourselves against the local and global market, we decided to approach Mercer, the well-known J.O.E. evaluation company, for support. Their methodology is based on a detailed analysis of the scope of duties in the workplace. 5 factors are largely consistent with Mercer's methodology, but represent Allegro's specific context, outlining skills and competences necessary for our business to grow, as well as keeping competitive advantage over current and future competitors. In 2020, we completed the evaluation of positions at Allegro.pl.

At Allegro, we conduct an annual remuneration review process, which involves evaluating jobs. In 2020 and 2021 an independent audit of job evaluation was carried out. The audit confirmed that the selected methodology was correctly applied to the evaluation of positions in the Group, and that the salaries in positions classified with it were compared with the relevant market data from the methodology provider.

Allegro ensures the right to assign or living wage in line with the Polish labour law. The remuneration of each employee of Allegro.eu Group is above the country minimum wage.

The Remuneration Policy is part of The Remuneration Regulations.

ALLEGRO SHAREHOLDER CULTURE

Obtaining the status of agublic company has given the Group an opportunity to introduce the Allegro Incentive Plan (AIP), a long-term incentive program based on Allegro.eu shares, enabling employees to become co-owners. This is a unique program in terms of the scale and scope of the transfer of shares.

In October 2020, at the time of the Company’s IPO all employees employed at Allegro.eu under an employment contract at the time received a one-off allocation of 25 Allegro.eu shares. The shares were awarded free of charge one year later in October 2021.

The second part of the AIP is applicable to use shares to motivate and reward current and future employees in key management positions, product managers, and experts. The status of agublic company enables Allegro to use shares to build long-term employee involvement in the company's development. The program was launched in April 2021. The first tranche of 25% of the total AIP award value is set to vest in April of 2022.

TALENT ACQUISITION

We want the best people to work at Allegro, and we evaluate our job candidates using objective criteria. We use a standardized competence-based behavioral interview, and the recruitment process is supported by the so-called Hiring Squad, i.e. a group of specialists from various fields and at various levels of their careers, whose task is to make the final selection of the person who will be employed.

Regardless of the recruitment outcome, each person applying to work at Allegro receives feedback. We place particular emphasis on information provided to those whom we have decided not to hire. We point out gaps in their competencies and suggest educational materials that may help fill in these gaps, should the candidate decide to re-apply in the future.

SUMMER E-XPERIENCE

Every year we open our doors to people starting their professional careers. The paid internship program called Summer e-Xperience allows them to get to know how the largest e-commerce platform in Poland operates, and the best-performing interns have a chance to stay with the company. In 2021, 78 people (45% women) took part in the e-Xperience program, of which as much as 88% were employed at Allegro (41% app. women).

All program participants are supervised by an agent. Not only can they take part in the training but also prove themselves, working independently on real projects and challenges. The Summer e-Xperience program is recommended by 100% of the trainees who attend it.

ALLEGRO RECEIVED THE PRESTIGIOUS EB EXCELLENCE AWARDS FOR EMPLOYER BRANDING

Allegro received the main prize in the Employer Branding strategy category. The jury recognized our activities promoting Allegro as an employer on the labour market in Krakow. In the summary of the implemented initiatives, our comprehensive approach, various channels of reaching potential candidates.# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

In 2021, 118 people took part in the two-day on-boarding process, including 58 people returning after a furlough absence.

New joiners	2021	2020	2019
Women	506	289	206
Men	687	394	265
Aged <30	652	414	295
Aged 31–51	530	220	163
Aged >51	11	0	0

Employee turnover rate [30]	2021	2020	2019
Total	14.2%	8.9%	10.5%
Women	13.5%	9.3%	12.1%
Men	14.7%	8.5%	9.4%

Average number of years of employment in the company	2021	2020	2019
Total	3.46	3.56	3.74
Women	3.23	3.40	3.58
Men	3.62	3.66	3.86

[30] Employee turnover rate (%) = employees who leave the company / average number of employees in the analyzed period. The average employee turnover rate in 2019 in Poland was between 18% and 28%, according to external reports by Mercer and Korn Ferry published in 2020. The data includes active worker.

In the past years Allegro has been successfully attracting, developing and retaining talent, keeping attrition levels below the market average. The past two years, with COVID-19 pandemic disrupting retail and technology sectors, created strong demand for Allegro expertise – locally and from global players. In general terms, we witnessed increased total attrition, however it remains in line with market dynamics and globalizing talent market.

EMPLOYEE REPRESENTATION

Allegro employees are not covered by collective bargaining agreements, and Employee Representation (Reprezentacja Pracowników) is the lawfully elected employee representative body. The company does not provide any pension plans other than those required by local labor law. More about the Human Rights Policy in the Human Rights compliance section.

3.2.2. DIVERSITY IN THE WORKPLACE

At Allegro, only competences count. An employee’s age, gender, political views, beliefs, origin or religion do not matter to us. We see no obstacles in the differences, but rather view it as an opportunity to build a competitive advantage and create an inspiring workplace. We treat everyone equally and we require the same from every person employed in our company.

We create an inclusive work environment, free of prejudice, and one that fosters the development of people with different views and experiences. In 2019, we introduced the Anti-Discrimination and Anti-Bullying Policy as well as the Whistleblowing Procedure. This policy states that all employees, especially managers, should treat their colleagues with dignity and uphold the principles of ethics. All employees become familiar with these principles during the on-boarding process and also receive regular training.

We introduced a diversity policy that defines good practices and processes conducive to the creation of a diverse and creative workplace. The company also holds anti-harassment and anti-discrimination training sessions, the purpose of which is to support the recognition and prevention of undesirable behavior and the creation of positive relations between employees.

PROGRAMS TO INCREASE WORKFORCE DIVERSITY

Allegro believes in the power of diversity to establish a creative workplace through:
* Adoption of non-discrimination, anti-bullying policy and Diversity policy and Stay Fair approach to report irregularities
* Introduction of webinars and trainings, which help us build inclusive and diverse working environment
* Minimizing bias in recruitment, promotion and pay review, by underlining the importance of knowledge and competences in our processes. Our recruitment process is based on objective and substantive criteria and its various stages are organized according to established patterns and rules to provide a similar experience to all candidates, regardless of gender, ethnic origin, beliefs, or other criteria
* Internal Mobility
* Supporting initiatives related to diversity and inclusiveness, such as Dare Together, Hackathon Accessibility, Poznań Mentoring Walk
* In 2021 Allegro.eu announced to all employees the Allegro Declaration that presents the company's core D&I principles:
* Merit and competency based decisions (merit based processes involving proactive actions to minimize unconscious bias in the decision-making process;
* Diverse working environment that accepts various ideas and encourages innovative and creative solutions;
* Inclusive and diverse workforce that matches our target customer base so that our products/services reflect a broad range of perspectives;
* Balanced organization in terms of women/men representation, especially in leadership positions.

Furthermore, in 2021 Allegro.eu introduced the D&I Champions – an agro group of Allegro employees who have supported building an inclusive work with their actions. They will recommend, advise and approve all programs, approaches and strategies that will help Allegro D&I, but also listen to Allegro employees to enhance the company's activities by adding new proposals in response to specific needs.

Allegro.eu also introduced a series of dedicated webinars, workshops and events that celebrated Global D&I Month in October 2021. The webinars focused on topics of unconscious biases, inclusive leadership and management of diverse working environments. The workshops enabled our employees to share their thoughts, opinions and ideas on how we can create an even more inclusive Allegro in the future.

Allegro.eu supports initiatives that promote diversity and openness. In 2018–2021, representatives of the company took part in more than 50 events on this subject. In 2021 these included WomenTech Global, Women in Technology and Kolida Business (Wom-en in Business 2021). Allegro.eu was also involved in Dare Together – Poland's biggest individual three-month mentoring program led by female experts for women wishing to start their careers in the industry. Allegro also runs an internal mentoring program.

All employees know the Anti-discrimination and Anti-bullying Policy as well as the Whistleblower Procedure as soon as they come to work at the company. In 2020, the company introduced the Diversity Policy.

Anti-discrimination and Anti-bullying Policy training sessions and training sessions on the handling of reports on or instances of bullying or harassment: employee participation rate	2021	2020	2019
Training sessions (annual online workshop for all employees and contractors)	73%	88.8%	92.8%
Onboarding training sessions (monthly training session for all joiners – new employees and contractors)	100%	100%	100%

Anti-discrimination and anti-bullying Policy	2021	2020	2019
Reported cases of discrimination and harassment in Allegro	2	5	2

All reports regarding suspected discrimination and harassment have been thoroughly verified. Some cases were referred to the Ethics Committee. No allegations were confirmed in any of the reported cases. Following the verification of applications, several improvements were recommended and introduced.

The company supports a confidential reporting channel and whistleblowing system – read more in the Business ethics, anti-corruption and bribery policy and Human rights compliance sections. Allegro also provides managers, employees and contractors with training on the handling of reports or instances of bullying or harassment.

DIVERSITY AND INCLUSION

Allegro makes every effort to be an equal opportunity employer; a place where every employee is respected and supported in achieving their highest potential. We create a work environment where everyone can speak up to remove barriers to success, collaborate with others, and bring their best ideas to life.

In 2020 the Board of Directors adopted the Diversity Policy to emphasize the importance of these issues. Here are the most important measures that foster diversity:
* Adoption of the “Stay Safe/Stay Fair” Code of Conduct
* Adoption the policy of counteracting discrimination and harassment
* Adoption the whistling policy
* Conducting diversity promotion training
* Striving for equal treatment of all employees, regardless of gender, gender identity, age, race, form of employment, political views, psychosexual orientation, disability, health condition, nationality, ethnic origin, religion, creed, non-domination status, beliefs, trade union membership, marital status or lifestyle, also when assessing an employee and making decisions regarding employment and promotion

Supporting women choosing a career in the technology industry
Supporting diversity in the selection of members of the Board of Directors
Supporting diversity and inclusion initiatives
Creating more opportunities to change positions within the company
Monitoring and reporting on activities

Workers [32]	2021	2020	2019
Women	1,416 (40.8%)	1,133 (41.8%)	912 (41.6%)
Men	2,056 (59.2%)	1576 (58.2%)	1,280 (58.4%)
Women in senior management roles	191 (28.6%)	122 (28.2%)	98 (28.9%)
Men in senior management roles	477 (71.4%)	310 (71.8%)	241 (71.1)
Women in executive management roles (C-Level)	2 (25%)	2 (25%)	0 (0%)
Men in executive management roles (C-Level)	6 (75%)	6 (75%)	5 (100%)

[32] The data includes active employees.
Women accounted for 40.8% of all Allegro.eu active workers in 2021.# Non-financial report

Non-financial report       

DIVERSITY INDICATORS [33]

  

SIGNING THE DIVERSITY CHARTER


*  
*    
*  
*  
*   
* 
*  
*    

THE 2021 LINKEDIN TALENT AWARDS

 

Allegro.eu Group	2021	2020	2019
Women	40.8%	41.8%	41.6%
Men	59.2%	58.2%	58.4%
New joiners – women	42.4%	42.2%	43.7%
New joiners – men	57.6%	57.8%	56.3%
% of employees with disabilities	0.7%	0.7%	0.9%
Women with disabilities	0.4%	0.5%	0.5%
Men with disabilities	0.3%	0.3%	0.4%
Aged <30	40.2%	38.4%	37.4%
Aged 31-50	58.8%	60.8%	62.0%
Aged >51	1.0%	0.8%	0.6%
Aged <30 – women	42.2%	40.7%	38.9%
Aged 31-50 – women	57.2%	59.2%	60.9%
Aged >51 – women	0.6%	0.2%	0.2%
Aged <30 – men	38.8%	36.8%	36.3%
Aged 31-50 – men	59.8%	62.1%	62.9%
Aged >51 – men	1.4%	1.1%	0.8%
% of foreign employees	0.9%	1.1%	0.8%
% of foreign employees – women	0.3%	0.3%	0.2%
% of foreign employees – men	0.6%	0.8%	0.6%

ALL EMPLOYES 212 213

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT
for the years ended 31 December 2021

III. Non-financial report

Remuneration [34]

	2021	2020	2019
Women’s remuneration against average remuneration	96.7%	95.2%	95.7%
Men’s remuneration against average remuneration	102.1%	102.7%	101.5%
Women’s remuneration against men (men=100%)	94.3%	91.9%	92.9%

Managers

	2021	2020	2019
Women	28.6%	28.0%	29.0%
Men	71.4%	72.0%	71.0%
Aged <30	11.8%	8.7%	10.1%
Aged 31-50	86.4%	89.3%	88.7%
Aged >51	1.8%	2.0%	1.2%
Aged <30 – women	11.5%	8.8%	10.9%
Aged 31-50 – women	87.5%	91.2%	89.1%
Aged >51 – women	1.0%	0.0%	0.0%
Aged <30 – men	11.9%	8.7%	9.7%
Aged 31-50 – men	86.0%	88.5%	88,7%
Aged >51 – men	2.1%	2.8%	1.6%

Experts and specialists

	2021	2020	2019
Women	36.5%	37.5%	34.5%
Men	63.5%	62.5%	65.5%
Aged <30	39.8%	37.5%	35.8%
Aged 31-50	59.8%	62.3%	64.0%
Aged >51	0.4%	0.2%	0.2%
Aged <30 – women	34.4%	33.6%	32.7%
Aged 31-50 – women	65.3%	66.4%	67.3%
Aged >51 – women	0.3%	0.0%	0.0%
Aged <30 – men	42.8%	39.8%	37.5%
Aged 31-50 – men	56.6%	59.8%	62.3%
Aged >51 – men	0.6%	0.4%	0.2%

Experts & specialists’ remuneration [36]

	2021	2020	2019
Women experts’ & specialists’ remuneration against average experts’ & specialists’ remuneration	96.2%	93.3%	92.0%
Men experts’ & specialists’ remuneration against average experts’ & specialists’ remuneration	102.4%	102.9%	101.7%
Women experts’ & specialists’ remuneration against men experts’ & specialists’ (men=100%)	93.8%	90.1%	92.5%

Managers’ remuneration [35]

	2021	2020	2019
Women managers’ remuneration against average managers’ remuneration	92.8%	93.3%	92.0%
Men managers’ remuneration against average managers’ remuneration	102.7%	102.1%	101.3%
Women managers’ remuneration against men managers (men=100%)	90.1%	90.8%	88.9%

[37] 
[35] 
[36] 

MANAGERS EXPERTS AND SPECIALISTS




Board members	2021	2020	2019
Board members – women	2	2	not applicable
Board members – men	6	6	not applicable
Board members aged <30	0	0	not applicable
Board members aged 31-50	3	4	not applicable
Board members aged >51	5	4	not applicable

	2021	2020	2019
Employees who took parental leave	84	79	74
Employees who returned to work after parental leave	99	60	71
Employees who returned to work after parental leave in the previous year and continued to be employed for 12 months after the return	52	58	59
Employees who went on parental leave – women	77	74	59
Employees who returned to work after parental leave – women	90	55	54
Employees who returned to work after parental leave in the previous year and continued to be employed for 12 months after the return – women	48	52	49
Employees who took parental leave – men	7	5	15
Employees who returned to work after parental leave – men	9	5	17
Employees who returned to work after parental leave in the previous year and continued to be employed for 12 months after the return – men	4	6	10


 

COMPLIANCE WITH THE PRINCIPLES OF THE UN GLOBAL COMPACT

  

HEALTH AND SAFETY OF OUR EMPLOYEES

           
* 
*  
* 
*  
* # ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT

for the years ended 31 December 2021

The Group has been monitoring the effects of the Occupational Safety and Health Policy and the number of work accidents. In 2021, only two minor accidents were recorded. The company has introduced Health and Safety Instruction (Instrukcje BHP) and the Training Procedure (Procedura Szkoleniowa), as well as the Accident Procedure for both commuting-related and work-related situations. The COVID-19 pandemic changed our reality, as most of the employees worked from home, as recommended. Given the need to adapt the occupational risk assessment to the current situation, we have updated this document with additional provisions related to COVID. Occupational risk assessment consists of detailed identification and analysis of threats to which employees are exposed, depending on their position. It enables us to verify whether sufficient measures have been introduced to reduce or eliminate threats and to determine what still needs to be done. All employees became acquainted with the new regulations during mandatory e-learning training.

There is a special alias and dedicated channel on the company messenger for communication with the health and safety department. Our offices as well as our supply points (warehouses and depots) have been designed to be comfortable and safe, and safety procedures allow us to eliminate situations that may pose a threat to the health of our employees. Allegro complies with all regulations that concern health and safety training. Each employee hired in 2021 has undergone mandatory initial training. In accordance with current regulations, we also conduct periodic safety training for selected types of positions and for employees working longer in our organization. Participation in such training is mandatory, and failing to complete it may result in exclusion from work.

NUMBER OF ACCIDENTS

Number of accidents	2021	2020	2019
Minor accidents	2	1	5
Serious accidents	0	0	1
Fatal accidents	0	0	0

PROMOTION OF EMPLOYEE HEALTH

We help Allegro employees take care of their physical condition. The Health Action (Akcja Zdrowie), which Allegro has been running for many years, is a series of workshops, consultations and webinars promoting general well-being and a healthy lifestyle. In 2021, it was organized via the MindUp training platform and focused on remote work as part of Zidaneinalna. It included consultations with psychologists, physiotherapists and nutritionists, two „power speeches”, and 15 webinars. The topics of the webinars concerned health, hygiene and ergonomics of remote work, diet and nutrition, body immunity, yoga, relaxation, and mental resilience, as well as coping during the pandemic and beyond.

WE SUPPORT EMPLOYEES DURING THE PANDEMIC

In response to the COVID-19 pandemic:

We continue to recommend remote work while giving the opportunity to work from the office to those willing to do so who have been vaccinated or recovered from COVID-19 in the past six months.
Every new employee receives a „PLN 1.000” voucher to equip their home office.
Training is organized online.
We ensure a safe environment in our warehouses and offices.

In 2021, we continue to follow, among all, our remote work and safety guidelines in our warehouses. With the help of an „equal external company”, as follows.up, we also audited our Distribution Centre in Adampol to assess the possibility of coronavirus transmission, and implemented all counter-measures to minimise the risk of infection, both in the office and in the warehouse. Warehouse employees who cannot work remotely have been provided with all necessary personal protective equipment. We have also implemented a „social distance” system, divided working hours into shifts, increased cleaning frequency and installed thermal imaging cameras.

EMPLOYEE BENEFITS

In addition to competitive pay, each person employed at Allegro has access to attractive benefits. These can be adapted to individual preferences. We are constantly expanding the list of benefits offered to our teams under the My Benefit System. Employees can choose the most attractive benefits using credit points awarded to them every month:

Medical care for employees and their relatives
Sports cards for employees and their children and possibly their plus ones
Co-financing kindergarten, nursery or childcare
Transport allowance or company parking space, season ticket for buses, or petrol
Restaurant card to use catering services in the offices or in nearby restaurants
Shopping voucher, cinema tickets and much more.

The benefits that we offer to our employees also include Secret Santa coupons, gifts for Children’s Day and Christmas, gadgets and gifts at company events, as well as fruit and vegetables delivered to the office. In addition, our employees can take out life insurance at an affordable price not only for themselves but also for their spouse/partner and child. Every year, we celebrate Children’s Day in all locations together with our employees and their children. We organize many attractions at the event, including art workshops, games with children’s entertainers, sweets, etc. In 2021, we could not organise Children’s Day due to the COVID-19 pandemic; instead, all employees got an additional day off, and their children received gifts.

KINDERGARTEN AND NURSERY FOR CHILDREN OF ALLEGRO EMPLOYEES

The company’s „WOW” kindergarten and nursery for children of Allegro employees in Poznań has 57 places in three kindergarten groups, and 20 in the nursery. The educational program focuses on comprehensive development of children, who participate in numerous music and movement activities (rhythmical, dance, sport, music therapy), language (English) and art activities. The program is further diversified with theatrical performances and creative workshops on healthy lifestyle, the environment, sustainable development and more. In 2000, as a way to support parents who were left alone at home with children, the employees of the kindergarten and nursery prepared interesting ways to spend time together during quarantine, using a special Slack channel. In 2021, the kindergarten and nursery staff participated in an NVC training to respond to the needs of children even better.

COMMUNICATION WITH EMPLOYEES

There are many channels of communication with employees at Allegro, including our Insite-social media platform and our [allegro] Slack channel, where employees can ask questions about the company’s strategy and employee matters. We also have Allegro Home, a page with the most important documents, links and other information.

In 2021, we organized the Allegro Outlook 2021 meeting for all of our employees, where they could learn about the company’s strategy and new projects, and ask questions to the Management Board. Quarterly Allegro Business Updates meetings (attended by an average of 250 employees) were also organized, where the company presented its results and the most important business news. We also held an additional meeting with the Management Board to discuss Mall Group’s acquisition.

EMPLOYEE VOLUNTEERING

At Allegro, we are proud to support employee volunteering. Employees are involved not only in well-known nationwide initiatives such as WOŚP or Szlachetna Paczka but also in numerous local charitable and educational activities. In 2021 volunteers from Allegro organized mentoring for students, supporting their social projects under „My Świeże Ale!”, an educational project developed in partnership with Fundacja Wolinie „Teriei”. Read more about volunteers in the Social Impact Section.

Employee volunteering program	2021
Volunteers	100
Hours of volunteering	400

Protect Detect React

The Group approaches its risk management system very seriously and established a compliance framework. The framework ensures compliance with corporate social responsibility (CB2) regulations for suppliers cooperating with the Group. The Suppliers’ Code of Conduct should be accepted by each Key Vendor whose annual sales to Allegro exceed PLN 10 million. Based on the recommendations of the Polish Ministry of Finance, Allegro.pl and Ceneo.pl have established a complex verification process for vendors. Financial documents, company registration documents and bank accounts are reviewed to reject unreliable service providers.# Non-financial report

Non-nancial report 
* Transparency policy
* Policy against discrimination and bullying
* Whistle-blowing procedures
* Antitrust Compliance Policy
* Anti-fraud, counterfeiting and terrorism
* Financing policies
* Security policy

Allegro has introduced the following regulations and processes:
* Anti-corruption rules
* Regulations for accepting and ordering gifts and benefits
* Diversity policy
* Procedure in the event of an inspection
* Procedure for concluding agreements
* Tax governance policy
* Vendor verification procedure and Suppliers Code of Conduct
* Training policy
* Allegro-eu charity, social and sponsoring activities policy
* Human Rights Policy, and more.

The Ethics Committee oversees compliance with the Code of Ethics, examining and resolving the reported violations.

Composition of the Ethics Committee

Director or Business Partner
Head of Legal or assigned lawyer
Manager of the division the violation concerns
Representative of employees selected by the Employees Representation
Chief Security Officer (CSO)

The Code of Ethics is periodically reviewed and is available to employees.

EMPLOYEE TRAINING ON ETHICAL STANDARDS

The company has introduced mandatory training in compliance and ethics. An ethics and compliance training and communication plan has also been developed and is being implemented.

New employees get to know our Code during an
assigning of the mandatory Onboarding Stay Safe/Stay Fair training. Once a year our employees participate in training devoted to our Code of Ethics policies (Transparency policy, Policy against discrimination and bullying, Whistle-blowing procedures, Antitrust Compliance Policy, Anti-fraud, counterfeiting and terrorism, Financing policies, Security policy) and personal data protection, in order to improve their knowledge, build competence and raise awareness.

Being an ethical company also involves complying with the law. At Allegro, we operate within the law and we stay abreast of all relevant changes and industry regulations. We keep adjusting our services, policies and processes accordingly.

The Allegro irregularity reporting system is available to the company’s employees and contractors. It is subject to the guidelines for handling complaints and grievances related to non-compliance with the Code of Ethics.

All employees are obligated to be trained on all policies during the onboarding session. All of the employees are required to declare that they will adhere to the policies. Additionally, every year we are providing obligatory training on the policies to every employee, including contractors. The channels used to train in ethics include e-learning, email, added internal platform (Internet), meetings, posters, competitions and other forms of communication.

WHISTLEBLOWING SYSTEM

At Allegro, we have a whistleblowing system for reporting violations. It guarantees confidentiality and safety of the whistleblowers, including protection from retaliatory action. Our system is open and accessible for everyone in the company (notifications can also be submitted anonymously via a special form available online). It is subject to the guidelines for reviewing complaints and grievances against Code of Ethics violations. We have launched a special online platform, introduced added online form, and made a special email address and phone number available. Every notification is reviewed, and acted on where appropriate. In 2021, we had two notifications concerning our Transparency Policy. We investigated both thoroughly and penalized the transgressing employees appropriately.

We have introduced a system for corporate governance, risk management and compliance across all Allegro operations. It spans operational standards, corruption prevention, compliance with the competition law, preventing conflict of interest, information and data protection, preventing unlawful discrimination and protection of the company property and know-how. Our system extends not only to the regulations relevant to Allegro but also the terms of cooperation with suppliers: the purchasing policy and additional requirements for suppliers, including the Suppliers Code of Conduct and the Questionnaire for Suppliers and Business Partners for every Key Vendor (i.e. a supplier whose yearly contract exceeds PLN 1,000,000). Following the guidelines of the Ministry of Finance, Group companies have introduced a comprehensive verification process for choosing suppliers. Reviewing financial documents, company registration documents and bank accounts enables to reject service providers whose credentials raise concerns.

All employees undergo obligatory training on all of the most important policies during their onboarding training session. They also sign a declaration where they undertake to comply with the rules listed in these policies. Additionally, we oblige training every year for all our employees.

At Allegro, we are well aware of the fact that the procurement process can create corruption risks. This is why the activity of the departments responsible for purchasing is screened for corruption risks, and is subject to anti-corruption supervision. No single case of corruption was recorded in 2021.

COMPLIANCE WITH ANTI-CORRUPTION AND ANTI-MONOPOLY REGULATIONS, AS WELL AS REGULATIONS SAFEGUARDING COLLECTIVE INTERESTS OF CONSUMERS.

We ensure the highest quality and safety of products offered on the Allegro platform, as well as service and delivery quality. We cooperate very closely with UKiK and local consumer ombudsmen. In response to their specific needs, we have set up additional email address that makes it easier for them to contact our employees. In 2021, Allegro was not subject to any financial penalty or sanction for legal non-compliance or violating the rules governing supplies, or the use of products and services.

HUMAN RIGHTS COMPLIANCE

Allegro.eu runs its business ethically and expects the same from its business partners, employees and contractors. As a sustainability and responsibility leader, the company responds to stakeholders’ expectations as well as international and domestic regulations and guidelines, complying with all applicable laws. Allegro.eu respects human rights enjoyed by its employees and contractors, and expects respect for human rights from business partners.

Allegro.eu’s responsibility for respecting human rights stems from universally recognized human rights, which, at minimum, are consistent with the rights enshrined in the International Bill of Human Rights/The Universal Declaration of Human Rights, and the fundamental rights set out in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work. We respect human rights in business relationships by upholding labour rights, freedom of association, as well as the UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises (OECD Guidelines). As a member of the UN Global Compact, Allegro declares compliance with the Ten Principles of the UN Global Compact and is involved in meeting Sustainable Development Goals (SDGs). Moreover, Allegro.eu is familiar with the United Nations' instruments related to the rights of indigenous peoples, women, and national and ethnic, religious and linguistic minorities, children, people with disabilities, as well as migrant workers and their families.

In January 2023 the Board of Allegro.eu accepted the Allegro.eu Human Rights Policy. The policy applies to all employees, contractors and business partners. It sets out the requirements for Allegro.eu own operations (concerning employees, direct activities, products or services), as well as recommendations for suppliers and partners specified in other additional documents and policies, such as the Suppliers Code of Conduct. In 2023 we are going to implement additional training for employees on the Human Rights Policy.

Allegro.eu respects human rights by:
a. Avoiding causing or contributing to adverse human rights impacts through their own activities, and address such impacts when they occur
b. Seeking to prevent or mitigate adverse human rights impacts that are directly linked to the Group’s operations, products or services by their business relationships, even if they have not contributed to those impacts.

Allegro.eu intends to exercise due diligence to avoid violating the rights of others and to take action in response to any development that could have a negative impact on enforcing human rights that the company could contribute to directly.

	2021	2020	2019
Policy on anti-money laundering and combating terrorism	0	0	0
Transparency Policy	2	2	2

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021
III.# Non-financial report

HUMAN RIGHTS POLICY ASSUMPTIONS

Allegro aims to:
a. identify potential human rights impacts and where they could occur.
b. identify the scope of Allegro’s due diligence risk identification process, whether it covers only the company’s own operations, or also the value chain and other activities, as well as the process preceding entering into new businesses relationships (mergers, acquisitions, joint ventures, etc.).
c. identify the issues Allegro has specifically addressed in the due diligence process, as well as the vulnerable groups monitored throughout the process.
d. underline the importance of the whistling and confident reporting system.
e. prevent adverse human rights impact, including actions that prevent or restrict an individual from enjoying his or her human rights.
f. educate and improve the competence of the Group’s employees and contractors in human rights.
g. support and educate suppliers and business partners on human rights.
h. actively engage in initiatives and activities focused on broad education and promotion of the important role of business for human rights.

Allegro has been developing the Human Rights Due Diligence Process to identify and assess potential impacts and risks related to respecting human rights:
a. Human rights due diligence
b. Human rights risks tracking
c. Mitigation actions
d. Remediation actions
e. Assessment of potential human rights issues
f. Monitoring the effectiveness of the actions taken by the Group
Allegro commits to prevent:
a. human trafficking
b. forced labour
c. child labour
Allegro commits to respect:
a. freedom of association
b. the right to collective bargaining
c. equal remuneration
d. right to non-discrimination

Allegro employees are not covered by collective bargaining agreements and are represented by the Employee Representation. Read more about non-discrimination and equal remuneration in the Diversity in the workplace section.

COMPLIANCE WITH LABOUR STANDARDS AND HUMAN RIGHTS

Allegro complies with the applicable legal regulations and adheres to the International Labour Organization Declaration on Fundamental Principles and Rights at Work, the ILO Guidelines for Multinational Enterprises, UN Guiding Principles on Business and Human Rights as well as Ten Principles of UN Global Compact. In 2021 and 2020 there were no incidents or instances of violation of labour or human rights.

SUPPLIERS CODE OF CONDUCT

In 2021, we cooperated with over 5,000 reliable companies that provided us with products and services necessary for Allegro to operate efficiently. Choosing a supplier for Allegro.pl/Cenéo.pl is a multi-step process that ensures we identify the best offer and that we are contracting a reliable vendor.

Allegro.pl/Cenéo.pl vendor selection process:
* Step 1 | Analysis of vendors and solutions
* Step 2 | Assessment of the vendor’s credibility and potential
* Step 3 | Examination of at least three commercial offers
* Step 4 | Negotiating the terms of cooperation
* Step 5 | Acceptance of the terms and signing an association agreement

At Allegro, we distinguish between two groups of vendors: those who provide products that are retailed in the Official Allegro Store, [1] (official Sklep Allegro 1) and vendors whose products and services we use internally for business purposes (e.g. administrators of buildings where our offices are located, suppliers of media and software solutions, IT systems, data centers, technology and advisory solutions, advertising and marketing services, and other services and products).

We want to make sure that our suppliers respect principles that are similar to ours. If the total value of contracts with a supplier exceeds PLN 1,000,000, then the Allegro.pl/Cenéo.pl supplier is enrolled in the monitoring and evaluation program, and is required to accept and sign the Supplier’s Code of Conduct and the Questionnaire for Suppliers and Business Partners, as well as submit a written declaration of compliance with the Allegro Code of Ethics (Kodeks Allegro) and the Ten Principles of the UN Global Compact initiative. This enables us to verify their ethical, social and environmental practices. In 2021, 95% of the suppliers that were subjected to evaluation met the criteria. They represented 10% of all new contracts (the data doesn’t include e-bilety.pl). The particulars of Allegro.pl’s supply chain and vendor characteristics are internal information of the company.

Supplier assessment

	2021	2020
% assessed new vendors that met the social, environmental and ethical standards	95%	99%
% of all new vendors assessed	10%	9.7%

The data doesn’t include e-bilety.pl.

In accordance with the recommendation of the Ministry of Finance, the group companies have established a complete verification process for vendors. Financial documents, company registration documents and bank accounts are reviewed to reject unreliable service providers. We have also introduced a procurement policy, tendering procedures, controlling procedures and legal procedures aimed at minimising any unlawful practices, violations of the law, corruption and fraud as well as other negative consequences of non-compliance within the Group. In addition, all procurement processes at Allegro.pl and Ceneo.pl are based on integrated IT systems that ensure full transparency of compliance with the procedures.

We have introduced a system for corporate governance, risk management and compliance across all Allegro operations. It spans operational standards, corruption prevention, compliance with the competition law, preventing conflict of interest, information and data protection, preventing unlawful discrimination and protection of the company property and know-how. Our system extends not only to the regulations relevant to Allegro but also to the terms of cooperation with suppliers; the purchasing policy and additional requirements for suppliers, including the Suppliers Code of Conduct and the Questionnaire for Suppliers and Business Partners for every Key Vendor (i.e. a supplier whose yearly contract exceeds PLN 1,000,000). Following the guidelines of the Ministry of Finance, Group companies have introduced a complete verification process for choosing suppliers. Reviewing financial documents, company registration documents and bank accounts enables to reject service providers whose credentials raise concerns.

Responsibilities of vendors and business partners according to the Ten Principles of the UN Global Compact:

Compliance
Respecting human rights
Ensuring the highest standards and work conditions for employees
Protecting the natural environment

AGREEMENTS AND REGULATIONS IN FORCE

CUSTOMER SAFETY

In our CS6: sustainability strategy for 2023-2026 we set an objective to ensure the safety and comfort of our customers, and to protect their privacy and consumer rights. The safety and convenience of customers and merchants are of key importance to Allegro. The safety of Allegro customers is ensured by:

Buyer Protection Program
Rights Protection Cooperation Program
Preventing the sale of counterfeit items on the platform
Reporting violations of rights and responding quickly
Cooperation with government agencies to withdraw products that do not meet certain standards or are not allowed on the market:
Signing the memorandum of understanding on the sale of counterfeit goods on the internet facilitated by the European Commission
Cooperation with the Office of Competition and Consumer Protection (UOKiK), and with municipal and district Consumer Ombudsman, among all in the form of joint consultations, opinions and analyses
Joining the Anti-Spog Coalition together with the Polish Spog Alert and the Office of Competition and Consumer Protection
Rules on Forbidden and Restricted Items
Safe Online Shopping program (Bezpieczne zakupy)
My Sales Quality | transparent feedback from buyers# III. Non-financial report

RIGHTS PROTECTION COOPERATION PROGRAM

The Rights Protection Cooperation Program was created to eliminate illegal items and service offers from Allegro. We verify reports regarding violations of:
* industrial property rights (for example, selling counterfeited items)
* copyright (for example, the use of images without the copyright owner's permission).

We protect:
* brand owners' rights
* sellers—often unaware of violations—from legal consequences
* buyers from purchasing goods which violate the law.

In addition, we want to raise awareness of intellectual property rights, their protection, and violations.

To protect buyers, Allegro cooperates with owners of exclusive rights under the Rights Protection Co-operation Program, with over 1,700 brands currently on board. We also partner with the leading brands by enforcing the Memorandum of Understanding on the sale of counterfeited goods on the internet.

EU TECH CREDO

As a member of the (European Tech Alliance, EUTA) and other businesses organizations in Poland and at the EU level, we contribute to the regulatory dialogue. Our objective is to create optimal conditions for innovation, provide proper support for merchants, and ensure safe and user-friendly for consumers, as well as applying fair for all participants, including scale-ups. On order to feed into the pending EU debates, Allegro presented its EU Tech Credo, in which we underline how key it is that EU policies are effectively built on principles such such as proportionality, smart regulation, and coherence between the different policy objectives and legal provisions. Rules regulating platforms, obligations, taxes, innovative payment solutions, the use of artificial intelligence and data should allow us to innovate and develop cutting-edge services without slowing down the processes or creating unjustified burdens.

Allegro sees the legal framework as an important factor of success and competitiveness for all EU companies. This is why we have been advocating for rules that support EU companies in innovations and in leveraging new technologies to improve services for consumers. We see it as our aim to constantly focus on improving our customers’ and partners’ experience, help propel investments and innovation, and employ great talent. At the same time, we believe that EU rules can help make the bloc a Digital Single Market that allows companies to operate and thrive across countries, ensuring that rules established here apply and are enforced equally to all companies that make business across Europe.

BUYER PROTECTION PROGRAM (BPP)

Thanks to the guaranteed seamless shopping experience at every stage of the process, as many 91.39% of our customers consider shopping on the Allegro platform safer. They can rely on the recommendations and comments submitted by other customers. To make sure customers can enjoy even superior protection, Allegro introduced the Buyer Protection Program, which guarantees they will recover their money should any problems with their purchases arise.

Protection extends to all offers on Allegro and Allegro Lokalnie, where payment was made by bank transfer or via the platform. Customers who experienced issues with attraction on Allegro (e.g. did not receive the purchased products or are found after withdrawing from the contract, or the received product does not fit the description or has arrived damaged) are eligible for a refund of up to PLN 10,000. The reporting procedure is simplified to the bare minimum (e.g. consumers no longer need to enter their bank account number on the BPP form). It is sufficient to complete an online form, which is made even simpler if the issue was reported in"

Buyer Protection Program at Allegro
| | 2021 | 2020 | 2019 |
|---|---|---|---|
| % of customers who consider shopping on Allegro safer or just as safe as on other platforms | 91.39% | 93.03% | 92.0% |
| NPS among Allegro customers using the BPP | +80.02 | +71.32 | +66.73 |
| Average number of transactions on Allegro.pl per one BPP refund | 4,883 | 7,440 | 12,030 |
| Average time it takes to receive a refund | 5 days | 5 days | 5 days |
| Average time it takes to receive a refund – S.A. services users | 12h | 12h | 12h |

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231

RIGHTS PROTECTION COOPERATION PROGRAM

The Rights Protection Cooperation Program was created to eliminate illegal items and service offers from Allegro.

We verify reports regarding violations of:
* industrial property rights (for example, selling counterfeited items)
* copyright (for example, the use of images without the copyright owner's permission).

We protect:
* brand owners' rights
* sellers—often unaware of violations—from legal consequences
* buyers from purchasing goods which violate the law.

In addition, we want to raise awareness of intellectual property rights, their protection, and violations.

EU TECH CREDO

As a member of the European Tech Alliance, EUTA and other businesses organizations in Poland and at the EU level, we contribute to the regulatory dialogue. Our objective is to create optimal conditions for innovation, provide proper support for merchants, and ensure safe and user-friendly for consumers, as well as applying fair for all participants, including scale-ups. On order to feed into the pending EU debates, Allegro presented its EU Tech Credo, in which we underline how key it is that EU policies are effectively built on principles such as proportionality, smart regulation, and coherence between the different policy objectives and legal provisions. Rules regulating platforms, obligations, taxes, innovative payment solutions, the use of artificial intelligence and data should allow us to innovate and develop cutting-edge services without slowing down the processes or creating unjustified costs or unfair administrative burdens.

BUYER PROTECTION PROGRAM (BPP)

Buyer Protection Program at Allegro

	2021	2020	2019
% of customers who consider shopping on Allegro safer or just as safe as on other platforms	91.39%	93.03%	92.0%
NPS among Allegro customers using the BPP	+80.02	+71.32	+66.73
Average number of transactions on Allegro.pl per one BPP refund	4,883	7,440	12,030
Average time it takes to receive a refund	5 days	5 days	5 days
Average time it takes to receive a refund – S.A. services users	12h	12h	12h

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231

PRODUCT SAFETY PLEDGE

As a signatory of the Product Safety Pledge, we have launched an dedicated website, to inform our customers about our commitments under this mechanism. We have also provided answers to frequently asked questions such as: Why was my offer removed? Where can I find information on unsafe products? What is the Safety Gate? Who decides if my product is unsafe? We have also provided links to the Safety Gate database and national competent authorities.

Allegro was one of the first European companies to join the Product Safety Pledge. This is an initiative of the European Commission and the largest e-commerce platform's aimed at ensuring consumer safety and educating customers. The Product Safety Pledge supports national and European market surveillance authorities in eliminating dangerous products from the market.

Allegro’s joining this initiative is an important aspect of our presence in Brussels as one of the largest European technology companies, and strengthens credibility in our relations with EU institutions that want to leverage our 25 years of experience in and knowledge of consumer protection on the internet.

On a daily basis Allegro reviews new listings against the list of dangerous products in the Safety Gate, and monitors alerts issued by Polish authorities.

COOPERATION WITH PUBLIC AUTHORITIES AND OTHER STAKEHOLDERS

In order to facilitate cooperation with the national authorities responsible for market surveillance, Allegro established a single point of contact for interested parties. We also organized several meetings where we presented our internal policies and procedures.

We continue our cooperation with public authorities by carrying out consultations as part of adecicated contact path. It is also worth emphasizing our direct participation during such events as: May, 17th 2021 webinar organized by Consumer Opbudsmen (and employees of commercial inspection and UOKiK employees), October 8th International Consumer Science Conference. During the speeches, we emphasized the pro-consumer method of solving post-transaction problems of Allegro customers and promoted adedicated path of contact with Allegro on awidely forum.

FIGHT AGAINST CONSUMER EXCLUSION

It is our priority to ensuring that our platform works efficiently and offers diverse consumers quick and safe shopping experience, guaranteeing the safety of our employees, clients and business partners.

ACCESSIBILITY OF ONLINE SHOPPING: CONTACT CHANNEL FOR THE DEAF

In November 2021 Allegro introduced another innovation to make online shopping even more accessible. The new contact channel allows Deaf users to have avidder chat with online assistance from Polish sign language interpreter. In addition to support in shopping, the platform also introduced dedicated contact channels for visual or hearing impaired users collecting parcels from One Box by Allegro parcel machines.

Contacting our consultants with the assistance of Polish sign language interpreter will elevate our service to customers with hearing loss, who so far had access to channels such as e-mail or traditional chat. Via conference with will allow us to offer them support faster, which we believe will increase customer satisfaction. At the same time, we’re committed to providing full technical support to everyone who uses our One Box by Allegro parcel machines, which is why every machine has Braille markings and features a code that allows to connect online with Allegro Interpreter.

The new contact channel for the Deaf is not the first initiative of the platform to prevent digital exclusion. Allegro has also adapted its app to the needs of people with full or partial vision loss, and has been consulting community partners to ensure that its new services are designed from the start with the various needs of customers in mind.

SILVER GENERATION

We worked to make our services accessible to people aged 65+, as this age group has continued to face# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

EDUCATION PROGRAMME FOR YOUNG PEOPLE AND CHILDREN

The Bezpieczne Zakupy program is addressed to schoolchildren aged 13–18 and students, one of the age groups that shop the most online. Participants learn about the most common threats in online shopping, how to verify sellers, how to safely pay for purchases in cyberspace and how to protect against identity theft. In 2021 we organized 54 workshops, most of them online, for over 5,000 participants.

ADVERTISING AND MARKETING RESPONSIBILITY

Selling and displaying advertisements is regulated by:
* Terms and conditions of selling and displaying ads on Allegro.pl
* Terms and conditions of ads

The company ensures the message stays clear and unambiguous across all channels of communication with the customer, including marketing material, and the company's business model has been designed with the best interests of the customer in mind.

CUSTOMER EXPERIENCE

The Customer Experience team remains available to customers at all times, quickly and efficiently answering questions and providing support. They communicate in various channels: the Allegro Help tape, email, the traditional contact form, Allegro chat, via the call back service (requesting a call back from a consultant) and Messenger. Seniors who would like to create an account or find out more about shopping on Allegro can call dedicated Hotline for Seniors.

In 2023, we launched the Allegro Gadane community, a new platform where buyers and sellers are offered access to insights and feedback submitted by other users. In its second year, Allegro Gadane recorded over 5.5 million visits, and thanks to the content posted by the community, as many as 565,000 issues were resolved. Thanks to gamification (e.g. ranks, rankings, etc.) and friendly interactions with others, several hundred committed users answering questions have formed into a group that devotes time to helping others.

At Allegro, we regularly survey customer satisfaction. Every customer who interacts with us pays a complete online survey, in which they can share their opinion about the quality of service and about how their specific issue was resolved.

The high satisfaction of buyers has earned us the best-in-class Net Promoter Score (NPS) of 78.7 in 2021 vs. 75.4 in 2020.

The platform's rules and regulations are paramount for Allegro, which is why we constantly monitor merchants and offers, and examine all issues as they are reported. Examples include the Buyer Protection Program, the feedback system or starting a discussion with the merchant (using a communication platform where the buyer and the merchant can solve alleged complaints directly with each other or, at the customer's request, also with the assistance of an Allegro employee).

Discussions	2021	2020	2019
Number of opened discussions	4.8 million	3.9 million	1.4 million
% of discussions resolved successfully	98%	97%	96%

OUT-OF-COURT PROCEDURES FOR CONSUMERS

A consumer who is a consumer pay initiates out-of-court proceedings to resolve a complaint and pursue claims before the Permanent Arbitrator at the Consumer Court at the Provincial Inspector of Trade Inspection in Poznań. Information on how to initiate such proceedings and on the dispute settlement procedures can be found at https://www.ukik.gov.pl in the section "Consumer disputes settlement" (Polish: "Rozstrzyganie sporów konsumenckich"). Consumers may also use the EU ODR platform available at: https://ec.europa.eu/consumers/odr. Detailed information on how to file a complaint can be found here: https://allegro.pl/pomoc/system-rozstrzygania-wewnetrznego-sporow-konsumenckich-av7xkbejyfde.

3.4.4. RESPONSIBILITY TOWARDS MERCHANTS

Over 133,000 professional merchants were doing business on Allegro in 2021, most of which are small and medium-sized enterprises – a very important pillar of the Polish economy. They create jobs and are a source of income for families all around Poland. Allegro has been investing in educating merchants and customers.

Subscription offers access to an array of tools supporting sales on Allegro, which make it easier to manage merchants' businesses and make it more effective.

ALLEGRO’S PROGRAMS AND TOOLS FOR MERCHANTS

Allegro’s ambition is to build an convenient space for merchants with a variety of features, which will allow them to manage sales on the platform effectively. We offer various programs to existing as well as new Sellers, so that they can discover the available tools, learn how to manage their offers and boost their businesses with programs designed for their segment, life cycle, activities on the platform, etc.

The Welcome program – dedicated to new merchants who want to start selling on Allegro. The main goal of this project is to eliminate entry barriers and encourage merchants to start selling faster. New sellers are offered professional support, have access to various tools, and receive discounts and commission refunds.

The Super Seller program – dedicated to all Sellers who run a business on Allegro. Sellers who perform well based on objective criteria such as sales volume, speed of delivery, feedback, and how efficiently complaints are handled, receive an indexed quality rating that qualifies them as Super Sellers. The program enables us to assure the best quality of services provided by our Sellers. The key benefit for merchants is the Super Seller tag displayed next to the offers, which makes the Seller stand out. In addition, Super Sellers receive a pool of Allegro Coins (Money), which are automatically added to their offers.

Merchant Development Program – targeted at mature accounts from the VOP and TOP Brand Seller group. The main goal of the project is to accelerate the development dynamics of the largest and highly specialized partners.

Activation programs – aimed at helping Sellers grow by rewarding them for taking specific actions on the platform.

Allegro’s tools and services for merchants include Allegro Ads, Allegro Finance, Promote Your Offers, Streamline Your Sales, Post Listings, Loans and Leasing for Businesses, My Sales Quality and Free On-line Training.

Send with Allegro is a new order fulfillment tool. Allegro has introduced a new deferred payment service for transactions between businesses. It enables sellers to sell and buy with an extended invoice payment due date. Trade Analytics is an analytical tool that allows merchants to find answers to the most frequently asked questions about selling on Allegro. Sellers can also take advantage of dedicated programs.# Non-financial report

SALES QUALITY: SUCCESSFUL SELLERS AND THE SELLER QUALITY ADMIN

The Seller Quality Admin is for managing sales and monitoring trends in sales. We precisely calculate all metrics and display information about the quality of the merchants’ sales. Thanks to this, they are able to quickly identify strengths as well as weaknesses they need to work on. The available information makes it easier to manage the quality of sales, and helps merchants to grow their businesses on Allegro. Sales rating serves as feedback about attraction and is posted by the buyer. Ratings can be submitted with an adscriptive comment. Thanks to the sales overview, merchants can see which areas of their businesses are received well by buyers, and which need improving.

Most Allegro processes are automated, which makes it possible to achieve economies of scale, and to personalize the educational or advertising offer to meet and exceed the merchants’ expectations.

EDUCATIONAL PROGRAM

In addition to training and webinars, the Allegro Academy activates merchants and helps them grow their businesses.

ALLEGRO ACADEMY

Allegro Academy is a free online education program. In 2020, an educational platform offering free online courses was created, which is currently available in two languages – Polish and English. In 2021, courses were created also in Chinese. The platform is free for all Allegro.pl users, who can take on-line courses, sign up for webinars or listen to podcasts. The course content includes videos by experts and animations, manuals, articles, find maps, and additional materials. At akademia.allegro.pl, Allegro employees and external experts cover many topics, from selling on Allegro, through advertising and promotion, to personal development and shopping safely online.

The Allegro Academy was created to share knowledge, help the businesses selling on Allegro grow, and support buyers. In our numerous courses, webinars and podcasts you will find practical information about sales, advertising and promotion, as well as personal development. Thanks to the great variety of topics, input of internal and external experts, and an attractive format, businesses from all around Poland, mainly small and medium-sized companies, will find out how to grow their businesses.

This is a unique tool on the market, thanks to its range and selection of topics, as well as popularity with the target audience. It is free for everyone. Here are examples of courses that are offered:
* Shopping safely online – 8 rules
* Start selling on Allegro and many other courses on how to increase sales on the platform, including Visual design for the Allegro platform, Zero waste packaging, Online analytics, Professional communication in business, and Crises in communication with customers.

The courses contain over 700 videos from experts and animations, manuals, articles, find maps, and additional materials.

Allegro Academy	2021	2020
Number of Allegro Academy courses	72	50
incl. Allegro Academy courses in English	18	7
Number of tutorials for merchants and buyers	95	60
incl. Allegro Academy tutorials in English	40
Number of webinars	454	177
Number of webinar participants	51,962	18,791
Number of unique users who visited the Allegro Academy	1,080,996	962,087
YouTube channel views	3.4m	876,700
Hours of videos watched on the YouTube channel	39.8 thousand	8,800
Number of experts in the Allegro Academy	54 (6 external)	51 (5 external)

TRAINING AND WEBINARS

The main purpose is to create a space for merchants, where we not only share knowledge, but also enable interaction. A space where merchants can share their opinions or doubts, and discuss them with an expert. The meetings organized by Allegro should promote a sense of Partnership, help us build new solutions and give Merchants confidence that their voice is being heard. Webinars are available in Polish, English and Chinese as well.

INTERNAL COMPLAINT-HANDLING SYSTEM

Allegro.pl will provide for an internal complaint-handling system within the meaning of Article 11(1) of Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting fairness and transparency for business users of online intermediation services. Complaints which concern issues listed in said Regulation can be submitted by users at https://na.allegro.pl/skarga. In 2021, we received 1,035 complaints out of over 2,200,000 total requests addressed to our customer service.

OUT-OF-COURT PROCEDURES FOR MERCHANTS

Allegro.pl attempts to amicably settle disputes with business users who use Allegro to offer items to consumers, through an independent mediator, upon prior consent of Allegro.pl to mediation. Should the user refer to in the previous sentence propose mediation to Allegro.pl and after Allegro.pl has accepted this proposal, mediation will be conducted by a mediator from the European mediation institution, in accordance with the mediation rules applied by the institution. Allegro.pl will bear a reasonable part of the total costs of mediation, which will be determined by the parties on accession by case basis. The list of mediators and mediation rules are available from eminstytut.gmin.

236 237

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

III. Non-financial report

3.4.5. CUSTOMER & DATA PRIVACY, CYBERSECURITY AND DATA PROTECTION

The Group’s rules and policies include:
* Security policy (including cybersecurity)
* Incidents Management Process
* DATA circulation procedure
* Rules on storing personal data at Allegro.pl sp. z o.o.
* Procedure for exercising the rights to Allegro.pl users’ data
* Procedure for notification of personal data breaches to the Personal Data Protection Office
* Business Continuity Policy

At Allegro, customer satisfaction starts from ensuring safety and confidence that the purchase will be successful. Managing cybersecurity is one of our priorities. We commission the Cybersecurity Maturity Assessment (Ocena Dojrzałości Cyberbezpieczeństwa), which is an annual external audit carried out by an external company. In the most recent review in 2021, Allegro.pl scored higher than the market average and higher than two years ago. We have multiple security solutions in place, all of which are being monitored and improved on an on-going basis. We also introduced a privacy and public bug bounty program, which means that we enabled users to alert our IT department about security vulnerabilities detected on our platform. We also have a Computer Emergency Response Team, CERT Allegro, which is an interdisciplinary team set up to make Allegro more secure, and build awareness of security issues among our employees and users.

CERT Allegro responds to cybersecurity threats, shares information, knowledge and experience related to cyber threats with other external CERT teams and supports raising security awareness among employees and users. We are agent of Trusted Introducer, an initiative of the biggest European organisation of cyber threat response teams. We are also active members of various working groups, including the ABA Polska Group for Cybersecurity (chaired by one of our employees) and the Working Group for Cybersecurity in the Supply Chain at the Chancellery of the Prime Minister.

We also take good care of personal data. We are fully compliant with the GDPR. We carefully monitor the decisions and guidelines issued by the Personal Data Protection Office (UODO) and the ERO (European Data Protection Board), which we review and, if necessary, adjust our actions. All Allegro employees undergo training in security policy and GDPR. We also carry out audits to verify compliance with the provisions of the GDPR. The external audit in September through December 2023 did not reveal any significant shortcomings.

During 2021 there were no serious incidents or data breaches. The most serious incident in 2021 which was reported to UODO regarded a registered letter between Ceneo.pl and one of the partners containing the agreement and PA with Ceneo.pl employees’ personal data. The postal operator was unable to explain where the package was. In light of ENSA guidelines followed by the Group in case of Data Protection Incidents, we were obliged to report it.

In 2021, in connection with complaints submitted to the President of the Personal Data Protection Office, Allegro was awarded 5 new proceedings. The five proceedings completed in 2021 resulted in a reprimand issued by the Office (3 concerning Allegro.pl and 1 concerning ebileta.pl) and one positive decision (Allegro.pl).

In 2021, no penalties were imposed on Allegro for violating personal data protection regulations. At every stage of data collection and processing, we make sure to comply with the obligation to inform the customer about the purpose and scope of processing their data, and about the right to access and rectify them.

The rules and policies adopted by Allegro related to customer privacy, data protection and cybersecurity include:
* Security policy (including rules for managing security incidents)
* Procedure for handling and reporting significant incidents to CERT Polska
* Procedure for registering and managing data security incidents
* DATA circulation procedure
* Rules for personal data storage
* Procedure for reporting personal data breaches to the Personal Data Protection Office
* Business continuity management policy

Our highest priority is to ensure a high level of security of infrastructure and data, by applying a layered approach. The platform is protected by multiple security layers, including protection against distributed denial-of-service attacks, bot detection systems or web application firewalls.

We make every effort to ensure the safety of consumers, and to protect systems and consumers’ data that are processed and stored in them. We# III. Non-financial report

3.5.4. ENVIRONMENTAL MANAGEMENT

The Group engages in activities and initiatives consisting in:
* Developing projects reducing Allegro.eu's emissions and energy consumption;
* Reducing emissions related to shipping Allegro.eu orders;
* Developing low-emission logistics centers for businesses selling on the Allegro platform;
* Introducing circular economy model, including certified 100% recycled packaging and reusable packaging;
* Offering climate education to stakeholders, including clients and the society, in particular education and improvement of competences of the Group's employees related to climate and the environment. Our buildings in Warsaw, Poznan and Krakow obtained a BREEAM [38] with very high results in this category in Poland.

Our data center is implementing a project to improve energy efficiency, build a back-up-ovoltaic system and use co-generation at the data processing center. The purpose of all these initiatives is to save more electrical energy and reduce air pollution caused by emissions. In place is an intelligent energy management system that helps reduce CO2 emission.

3.5.5. ENVIRONMENTAL INDICATORS [38]

Allegro.eu Group measures and discloses data on carbon footprint in three scopes (1, 2, and 3), which reflect the scale of our environmental impact. Carbon footprint is a measure of the impact company activities have on the amount of carbon dioxide (CO2) produced through the burning of fossil fuels and is expressed as an average weight of CO2 emissions produced in tonnes.

Allegro.eu's GHG emissions include:

Scope 1: all direct emissions related to operations. For Allegro.eu Group, this includes natural gas, fuel consumption for vehicles and refrigerant leaks.
Scope 2: indirect GHG emissions from consumption of purchased electricity and heat.
Scope 3 indirect GHG emissions not covered in Scope 2 that occur throughout the value chain. This includes purchased goods and services (water supply, sewage, paper, packaging and also marketing, consultancy services and consultancy), capital goods, energy and fuel-related activities not included in Scope 1 or Scope 2, waste generated in Operations, Business Travel, Employee Commuting, Downstream Transportation and Distribution, End-of-Life Treatment of Sold Products, Downstream Leased Assets.

Compared to 2020, Scope 1 [GHG] emission per GMV (kt CO2e/m PLN) decreased by 0.3% (market-based method [39]) and 10.7% (location-based method [40]) in 2021. This decrease resulted primarily from the growing share of RES in electricity purchases.

Compared to 2020, GHG Scope 1&2 emissions increased by 22.9% (market-based method) and 21.2% (location-based method) in 2021. This increase resulted primarily from strong operational growth and increased electricity consumption at the data centers.

In order to reduce its GHG emission impact, in 2021 Allegro.eu decided to join the Science-Based Target initiative and develop a decarbonization strategy in line with the Paris Agreement within two years.

Scope 1 direct emissions increased by 123% yoy (market-based) because of higher natural gas demand. This increase resulted from natural gas (real estate heating) and fuel (petrol, diesel, LPG, hybrid cars) consumption for vehicles.

Scope 2 emissions increased by 18.5% yoy (market-based) and 5.5% yoy (location-based) due to higher consumption of purchased electricity as the new logistic infrastructure was introduced. In 2021, almost 20% of electricity consumed by Allegro.eu Group was generated from RES. In 2020 company didn't have any RES with-in its electricity purchase mix.

Scope 3 GHG emission increased 50% yoy, mainly driven by Allegro.eu business development (more shipments and more packaging being consumed in this period), as well as investments in the roll-out of proprietary parcel locker network. [37] B2EEAM ratings range from Acceptable (Eco-sheme only) to Pass, Good, Very Good, Excellent to Outstanding. [38] Data includes: Allegro.pl, Ceneo.pl, eBilet.pl, Allegro Finanse, Allegro Pay, Opennet, Y-press Courier (October-December 2021). [39] Market-based method: electricity-related emissions calculated using the energy seller's specific emission factor. In the market-based method, indicators for energy suppliers were used. [40] Location-based method: electricity-related emissions calculated using country average emission factor. In the case of the location-based method, the average emission factor for Poland was used. [41] The greenhouse gases identified and included in the calculation are CO2, CH4 and N2O, which have been expressed as CO2 equivalent. No biogenic CO2 emissions have been identified. The emissions in 2020 were selected as the base year. The sources of emission factors were KOBiZE publications (The National Centre for Emission Management) for gasoline, diesel, natural gas, electricity and heat. For other emission the main source was the DEFR data base (Department of Environment, Food and Rural Affairs in the British Government). GWP factors were adopted based on the Fourth Assessment Report (AR4). Calculations were made for each subsidiary and the results were consolidated according to operational control. 100% of emissions from individual locations of the Allegro Group were taken into account. The amount of emissions from the production of consumed electricity was calculated according to two methods: location-based (electricity-related emissions calculated using country average emission factor) and market-based (electricity-related emissions calculated using the energy seller's specific emission factor). In the case of the location-based method, the average emission factor for Poland was used. In the market-based method, indicators for energy suppliers were used. [42] Please note that emission from electricity includes also emission generated by Allegro employees working from home. [43] Cat. 1 – Purchased Goods and Services, Cat. 2 – Capital goods, Cat. 3 – Fuel & Energy-Related Activities Not Included in Scope 1 or Scope 2, Cat. 5 – Waste Generated in Operations, Cat. 6 – Business Travel, Cat. 7 Employee Commuting, Cat. 9 – Downstream Transportation and Distribution, Cat. 12 – End-of-Life Treatment of Sold Products, Cat. 13 – Downstream Leased Assets.

GHG emission [t CO2e]	2021	2020 adjusted *	YoY	2020	2019
methodology
Scope 1	526.70	250.58	110.2%	226.10	320.75
Scope 2 (location-based)	9,244.37	8,763.48	5.5%	8,286.30	7,509.56
Scope 2 (market-based)	10,598.02	8,941.53	18.5%	8,464.35	7,452.01
Scope 3	189,087.83	126,201.76	49.8%	3,046.33	2,809.84
Scope 1+2+3 (location-based)	198,858.91	135,215.82	47.1%	11,063.18	10,640.15
Scope 1+2+3 (market-based)	200,212.56	135,393.87	47.9%	11,733.01	10,582.60

Scope 2 [t CO2e]	2021	2020 adjusted *	YoY	2020	2019
methodology
Electricity consumption (market-based method)	10,095.27	8,359.38	20.8%	7,882.21	7,042.43
Electricity consumption (location-based method)	8,741.62	8,181.33	6.9%	7,212.37	7,099.98
Heat	502.75	582.15	-13.6%	582.15	409.58

Scope 3 [t CO2e]	2021	2020	YoY	2020	2019
Cat. 1 – Purchased Goods and Services	97,748.03	75,030.71	30.3%	340.99	188.20
Cat. 2 – Capital goods	30,798.93	14,642.84	110.3%	-	-
Cat. 3 – Fuel & Energy-Related Activities Not Included in Scope 1 or Scope 2	2,849.11	1,254.50	127.1%	1,248.02	1,249.88
Cat. 5 – Waste Generated in Operations	13.90	4.93	181.9%	4.93	0.23
Cat. 6 – Business Travel	133.88	73.55	82.0%	73.55	649.21
Cat. 7 Employee Commuting	3,060.00	3,060.00	0.0%	-	-
Cat. 9 – Downstream Transportation and Distribution	54,455.03	32,041.77	70.0%	1,285.38	639.70
Cat. 12 – End-of-Life Treatment of Sold Products	14.96	6.41	133.4%	6.41	3.29
Cat. 13 – Downstream Leased Assets	14.00	87.04	-83.9%	87.04	79.32

Scope 1 [t CO2e]	2021	2020	YoY	2020	2019
Natural gas	384.27	190.92	101.3%	190.92	226.84
Diesel	27.73	20.35	36.3%	14.18	4.20
Petrol	51.73	37.61	37.5%	21.00	48.71
Hybrid cars	51.96	1.69	2,974.6%	—	—
LPG	11.01	—	—	—	—

Source of GHG emissions [t CO2e] [41]
The greenhouse gases identified and included in the calculation are CO2, CH4 and N2O, which have been expressed as CO2 equivalent. No biogenic CO2 emissions have been identified. The emissions in 2020 were selected as the base year. The sources of emission factors were KOBiZE publications (The National Centre for Emission Management) for gasoline, diesel, natural gas, electricity and heat. For other emission the main source was the DEFR data base (Department of Environment, Food and Rural Affairs in the British Government). GWP factors were adopted based on the Fourth Assessment Report (AR4). Calculations were made for each subsidiary and the results were consolidated according to operational control. 100% of emissions from individual locations of the Allegro Group were taken into account. The amount of emissions from the production of consumed electricity was calculated according to two methods: location-based (electricity-related emissions calculated using country average emission factor) and market-based (electricity-related emissions calculated using the energy seller's specific emission factor). In the case of the location-based method, the average emission factor for Poland was used. In the market-based method, indicators for energy suppliers were used. [42] Please note that emission from electricity includes also emission generated by Allegro employees working from home. [43] Cat. 1 – Purchased Goods and Services, Cat. 2 – Capital goods, Cat. 3 – Fuel & Energy-Related Activities Not Included in Scope 1 or Scope 2, Cat. 5 – Waste Generated in Operations, Cat. 6 – Business Travel, Cat. 7 Employee Commuting, Cat. 9 – Downstream Transportation and Distribution, Cat. 12 – End-of-Life Treatment of Sold Products, Cat. 13 – Downstream Leased Assets.# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

III. Non-financial report

Calculations of the GHG emissions were prepared in accordance with the standards: The Greenhouse Gas Protocol Corporate Accounting and Reporting Standard Revised Edition, GHG Protocol Scope 2 Guidance, and Corporate Value Chain (Scope 3) Accounting and Reporting Standard using Inventory and Screening approach ᴹ in case the first option could not be used (Screening approach was implemented using tools recommended by GHG Protocol and Science Based Targets initiatives).

The table below presents our consumption indicators of energy, materials, water, waste and travels which were used to GHG emission calculation.

Energy [GJ]

methodology adjusted * 2020	2021	2020	2019
Electricity [GJ]	57,589.91	40,935.77	38,301.20
Heating [GJ]	5,209.83	6,032.60	6,032.60
Natural gas [GJ]	6,933.79	3,445.61	3,445.61
Petrol [GJ]	1,651.73	543.24	303.24
Diesel [GJ]	373.56	274.20	191.34
Total [GJ]	71,758.82	51,231.42	48,273.99

(retail distribution center and fulfillment center)

Energy consumption

methodology adjusted * 2020	2021	2020	2019
Electricity consumption (in MWh)	15,997.20	11,371.05	10,639.22
Electricity usage from renewable sources (RES)	3,234.64	—	—

Materials purchased in the offices

methodology adjusted * 2020	2021	2020	2019
Paper [reams]	1,698	2,438	2,438
Envelopes [pcs]	40,000	70,000	70,000
Ticket paper [kg]	—	1,671.90	1,671.90

Packaging used in a warehouse [ton]

methodology adjusted * 2020	2021	2020	2019
Cardboard packaging ᴹ 100% of recycled paper	555.19	234.85	234.85
Original stretch film ᴹ un-recycled	54.17	48.80	48.80
Half-pallet wood	91.54	9.97	9.97
100% recycled foil ᴹ are 100% recyclable
HDPE foil	0	7.30	7.30

Waste

methodology adjusted * 2020	2021	2020	2019
Total waste [t]	340.62	185.00	183.76
Recycled waste [t]	297.86	179.60	179.60
Non-recycled waste [t]	42.76	6.58	6.58

Business travel

methodology adjusted * 2020	2021	2020	2019
Flight [km]	587,903.92	292,295.00	292,295.00
Train [km]	730,680.00	552,543.00	552,543.00
Cars [km]	232,895.44	146,620.93	146,620.93

Utilities consumption

methodology adjusted * 2020	2021	2020	2019
Electricity consumption [MWh]	15,997.20	11,371.05	10,639.22
Heating [GJ]	5,209.83	6,032.60	6,032.60
Natural gas [m³]	189,759.00	94,296.82	94,296.82
Petrol [l]	49,384.10	16,241.94	9,066.31
Diesel [l]	10,342.06	7,591.40	5,297.29
LPG [l]	7,072.92	—	—

(retail distribution center and fulfillment center)

Water consumption

methodology adjusted * 2020	2021	2020	2019
Water consumption [m³]	5,656.66	4,627.03	4,627.03
Water and effluents emission [t CO2e]	2.44	5.07	5.07
Water reclaimed (recycled/reused) [m³]	0	0	0
Untreated wastewater discharged [m³]	5,656.66	4,627.03	4,627.03

Water withdrawal is only used for offices and employees’ needs, not for production purposes.
Data from 2019 does not include warehouse waste.
* Please note that in order to be fully compliant with SBT requirements Allegro supplemented its GHG calculation by the following categories of Scope 3: Purchased Goods and Services (cat. 1), Capital Goods (cat. 2), Downstream Transportation and Distribution (cat. 3) and Employee Commuting (cat. 7) using Screening approach ᴹ the methodology adjusted for 2020 was also implemented.
No refrigerants were released in 2019 and 2020 and 2021.

3.5.5. SUSTAINABLE DELIVERY EXPERIENCE

We support our customers in reducing their carbon footprint with the delivery of products by One Fulfillment by Allegro, One Point by Allegro (pick-up points), green ATMs: One Box by Allegro and sustainable packaging.

One Fulfillment by Allegro is a comprehensive service for merchants that includes storing, packaging and delivering orders, as well as providing customer service throughout the delivery process. Distribution of products purchased on Allegro from a single logistics center will further reduce delivery times, provide high-quality customer service, and reduce the environmental impact.

LAST MILE SUSTAINABILITY

As of the beginning of November 2021, Allegro started to roll out its own network of parcel lockers, One Box by Allegro. Allegro customers can now join a range of sustainability initiatives when collecting their orders. The map of Poland at one.allegro.pl is turning greener and greener, most notably around Warsaw, Poznań, Bydgoszcz, Gdańsk, Gdynia, Łódź, Wrocław, Katowice, and Kraków. As at the end of 2021, Allegro has grown 1,111 green machines.

THE NEW NETWORK WILL CONSIST OF AT LEAST 3,000 GREEN PARCEL LOCKERS ACROSS POLAND BY THE END OF 2022

The One Point by Allegro network has also introduced other environmentally friendly delivery options. We operate a shared network of next-day pick-up points, offering customers the opportunity to collect their orders on the next day after shipping, and ensuring sellers convenient way to send and manage orders within a single platform. The carbon footprint of using AMPs or pick-up points is lower compared to the courier option.

PROMOTING REUSE AND CIRCULAR ECONOMY AMONG CLIENTS

Allegro has prepared additional features to meet its social responsibility and sustainability ambitions. After collecting their first parcel, customers can bring used electrical equipment to a parcel locker to be recycled and given a second life. In addition, for every tenth parcel picked up, the platform will plant a personalized dedication to the customer. This is only the beginning, with new environmentally friendly initiatives underway as the platform develops its One Box by Allegro network.

Apart from the convenience of delivery, which is key to both customers and sellers, Allegro ambitions span innovation in agro-sense and paying more attention to the needs of the planet, as reflected in the amount of waste we produce, the aesthetic appeal of the cities we live in and the amount of greenery surrounding us. These issues have also been identified, withou hesitation, by the buyers, who have experienced the ongoing pandemic. Allegro is developing the One brand by following its strategy of ‘one better method for merchants, buyers and the planet’. These are just some of the first out of many initiatives that will form the core part of the One by Allegro green delivery and returns services in the coming months.

SUSTAINABLE PACKAGING

Our ambition is for at least 2.5 million parcels ordered on Allegro every month to be shipped in eco-friendly packaging by 2025.
We want all products sent by the official Allegro Store and the one Fulfillment by Allegro service to be packed using sustainable packaging materials such as certified packaging, paper tape and filler, and we intend to implement more processes to minimise waste and lower the carbon footprint across the supply chain.

We have introduced eco-friendly packaging options for sellers at very competitive prices. At Allegro, we order such packaging in huge quantities and at wholesale rates, and we do not earn any profit on resale. The packaging has international certificates confirming that the raw materials used for their production come from recycling, have been obtained in a sustainable manner throughout the entire chain, and are suitable for recycling.

SECOND LIFE OF PRODUCTS – ALLEGRO LOKALNIE

Up to 85% of online shoppers buy and sell second-hand goods online. Allegro Lokalnie is a place where buyers can find items from private sellers and enjoy the same good experience as when buying from professional sellers. With Allegro Lokalnie, it is even easier to buy and sell, and find attractive-priced unique items. You can also be sure that you are shopping online safely. As an addition, the items are often second-hand, and Allegro Lokalnie gives them a second life, in line with the circular economy’s principles of reusing.

Allegro Lokalnie is the second most popular C2C e-commerce platform in Poland (according to the Gemius/PBI survey of September 2021).

FIGHT FOR CLEAN AIR

One of the most important environmental problems in Poland is the quality of the air we breathe. Many Polish cities are at the top of the lists of the most polluted cities in Europe. One of the culprits are domestic coal stoves that do not meet the norms.

In March 2023, we signed a cooperation agreement with the Ministry of Economic Development, Labour and Technology, Polish Smog Alert (Polski Alarm Smogowy) as well as the chairman of the Office of Competition and Consumer Protection (UOKiK). As part of the Anti-Smog Coalition (Koalicja Antysmogowa) we have decided to remove from our platform all offers with coal stoves that fail to meet the legal requirements. In 2021 we removed 745 offers.

Additionally, to ensure an even higher level of safety, Allegro introduced an «provision in its regulations that stoves can only be offered for sale if the required documentation (certificates) is attached to the offer.

TAKING CARE OF ANIMALS

As wildlife protection is extremely important for Allegro, we have been cooperating for years with PTOp Szalanda ᴹ Polish Nature Conservation Society. Our main goal is to eliminate offers of endangered species (CATS) and help combat illegal wildlife trafficking. Thanks to the cooperation, we# ALLEGRO PARTICIPATES IN UN ENVIRONMENT'S CLIMATE LEADERSHIP PROGRAM

Climate Leadership is a partnership of business leaders who understand the necessity of climate change action and see it as an opportunity for development. In cooperation with external experts of the Program, companies develop and then implement solutions that measurably reduce their negative impact on the global climate. Allegro joined the program as part of its project of implementing circular economy principles. One of the assumptions of Climate Leadership is that each participant should propose a commitment that will bring about measurable changes counteracting the climate crisis. The Climate Leadership program was launched by UNEP Warsaw Centre and powered by the UN Environment Programme.

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4. Social impact

Allegro.eu Group conducts charitable, social and sponsorship activities, as well as corporate social responsibility (CSR) activities. Allegro’s social impact spans technical education, including youth education, charity work and employee involvement in social activities.

Allegro All for Planet Foundation operates within the Group. Through the activity of Allegro All for Planet, since 2018 we have been trying to increase ecological awareness among Poles and promote environmentally friendly behaviour. Combining ecology and sustainable transport with technology, we have created an employee volunteering program. The Foundation also supports various social programs of other Polish NGOs.

The social impact activities have been outlined in the Allegro CSR • Sustainability Strategy for 2023•2025. The main goals are:

Investing in education and development skills for young people
- Long-term educational programs for the youth (open-ended or selected groups) to foster entrepreneurial and tech skills
- Educational and mentoring initiatives for the youth
- Cooperation with universities to increase the applicability of university courses and development of skills that increase students’ employability
Supporting communities we operate in
- Continuation and scaling of Allegro Charytatywni
- Continuation and scaling of existing initiatives
- Cooperation with selected charities
- Local fundraising on Allegro Lokalnie
- More extensive employee volunteering programs
- Participation in Hackathons that address issues affecting Allegro stakeholders (e.g. senior users, the disabled) and support sustainable development (e.g. climate change, smart cities)
Social, charity and sponsorship activities policy
- Creating and introducing the policy for social, charity and sponsorship activities, which will identify the scope of activities and outline how Allegro.eu operates in this area.

On December 2021 Allegro.eu Group implemented the Allegro.eu Charity, Social and Sponsoring Activity Policy. The Policy confirms that the profile of social, charity and sponsoring activities is determined by the Group’s strategy and the decisions of the Board, subject to assessment and dialogue with stakeholders. These activities will be in line with the standards and good practices of corporate social responsibility, industry codes, the Group’s code of ethics as well as internal policies and regulations.

The social and charitable activities of the Group have been inscribed into the company’s foundation since its establishment, reflecting the idea that technology has the power to solve any social problems. Group Companies share their knowledge, support education in technology, help those in need by using our platform to organize charity auctions and AllegroKole.pl fundraisers, and through the activity of the Allegro All for Planet Foundation (which will be renamed in the near future to Allegro Foundation).

Information about charity, social and sponsor activities are publicly available. The company is monitoring expenses as well as in-kind donations: donations of products or services, projects/partnerships, etc.

As a beneficiary of the UN Global Compact, Allegro confirms that sponsoring, social, and charity activities are executed in accordance with the Ten Principles of the UN Global Compact, and that it pursues Sustainable Development Goals, contributing to meeting the 2030 Agenda for Sustainable Development.

The goal of Allegro.eu Charity, Social and Sponsoring Activity Policy is to establish the obligations of the Group, its Employees, Contractors and staff members with aview to discharging the Company’s obligations pertaining to charitable, social and sponsor activities. The policy ensures transparency of expenses on charity, social and sponsoring initiatives made by the Group. The Policy organizes and identifies the overarching goals of charitable, social and sponsorship activities of the Group.

The Policy prohibits any kind of political involvement on the part of the company. The Policy also prohibits sponsoring of and donations to political parties, their political organizations or institutions of similar nature, as well as persons holding public offices and politicians. Charitable activities in the form of donations may not involve making donations to trade unions, employers’ organizations, professional self-governing bodies, or sports clubs established as commercial companies. This prohibition also includes military organizations or persons, as well as the arts industry.

Donation to social and charity organizations, and to support culture
| | 2021 |
| :------------------------------------------------------------------------- | :---------- |
| Expenditure incurred to support charitable institutions and social organizations, and as charity donations * | PLN 4.3 million |
| Expenditure incurred to support culture ** | PLN 0.5 million |

* including donation to Allegro All for Planet Foundation, the Great Orchestra of Christmas Charity (Wielka Orkiestra Świątecznej Pomocy - Leukemia Foundation, Lekarze Lekarzom Foundation, Zwoleńie Wzosinie Foundation, Stowarzyszenie WSOP as well as other organizations and institutions.
** including The Allegro Prize and The Best Book of the Year.

In accordance with the Allegro.eu's Policy of Charity, Social and Sponsoring Activities, in 2021 the company made no expenses to support trade unions or political parties, and made no donations to the media.

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SOCIAL AND CHARITY INITIATIVES

At Allegro, we believe technology has the power to solve many social problems. We share knowledge, support technological education and help those in need by using our platform to organize charity auctions.

Social and charity initiatives	2021	2020
Charytatywni.Allegro.pl platform: amount raised	PLN 39.3 million	PLN 19.4 million
incl. Great Orchestra of Christmas Charity auctions	PLN 30.1 million	PLN 14.9 million
Charytatywni.Allegro.pl platform: number of offers	845,614	838,500
Charytatywni.Allegro.pl platform: number of organizations	425	401
Donations from Allegro clients (Noble Cart) for Szlachetna Paczka	PLN 1 050 040	PLN 535,000
Number of people enrolled in the PFR's School of Pioneers (Szkola Pionierów PFR)	50	50
Allegro Lokalnie Collections - amount raised	251	178
	PLN 170,000**
Allegro Lokalnie Collections - number of collections	257	178**
Employees volunteering program	100 employees volunteers	200 employees***
	400 hours of volunteering
	77 projects***

** Since July 2021
*** Supporting employee engagement campaigns

ALLEGRO CHARYTATYWNI

Throughout the seven years of its activity, Allegro Charytatywni provides how much demand there is for an online space that brings together those who can offer support to those who need it. Allegro Charytatywni is an online space where any public benefit organization can raise funds to achieve goals that it considers especially important. No fees or commissions are charged. We provide the necessary technological tools and engage selected initiatives as partners. Allegro customers who wish to support a given person or cause can put their items on sale, and the proceeds will be donated to a cause of their choice, or buy unique items on charity auctions. In some of the charity auctions customers can make adjacent payment. In most cases, they opt for the Virtual Collection Box (Wirtualna Puszka) or adjust Payment transfer.

ALLEGRO CHARYTATYWNI RESULTS IN 2021:
* Almost PLN 39.3 million raised
* 845,614 offers
* 955 charity goals benefiting 247 NGOs

ALLEGRO FOR THE GREAT ORCHESTRA OF CHRISTMAS CHARITY

Allegro has supported the Great Orchestra of Christmas Charity (WOŚP) since its inception. 20 years of cooperation have translated into nearly PLN 80 million transferred to the account of the Great Orchestra of Christmas Charity Foundation. An additional PLN 31 million was donated to the Foundation following the 29th Grand Finale. All funds were used to purchase for laryngology, otolaryngology and head diagnostics equipment.

In 2021, we supported the Orchestra in the following ways:
* Auctions on the platform;
* Rzeczero.pl • platform for celebrities and Allegro customers to put items on sale, with proceeds being donated to initiatives that WOŚP is collecting money for in the given year. Donors are also encouraged to record videos describing the items they are putting on sale;
* Virtual Collection Box (Wirtualna Puszka);
* Via streams;
* Participation in the Grand Finale in the studio;
* Allegro Staff (Zespół Allegro), volunteering by Allegro employees.

THE 29TH FINALE OF THE GREAT ORCHESTRA OF CHRISTMAS CHARITY SET ANOTHER RECORD:
* Over 205,300 offers and Virtual Collection Box donations helped raise PLN 30.4 million for WOŚP.
* This amount is over twice as high as in the previous year. Allegro helped break the record by# ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

SUPPORTING SZLACHETNA PACZKA

Generating 1 million złoty to the Great Orchestra of Christmas Charity.
25,000 teams posted about totaling over 5,000,000 actions on Allegro. The engaged foreign teams included even the Polish Polar Station in Hornsund in Spitsbergen. Allegro customers also eagerly turned to their computer screens and smart-phones to support the Foundation.
In 7 weeks, the aukcje.woroszy.org.pl website was visited by over 8.5 million unique users, and mobile devices generated as much as 77% of the overall traffic.

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ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021 III. Non-financial report

SUPPORTING SZLACHETNA PACZKA

For years, Allegro has been supporting Szlachetna Paczka (Noble Gift). In December 2021 our customers could, for the second time, add additional to their order to support this initiative. About of 94,871 charity shopping actions under the Noble Gift campaign helped collect PLN 15,050,347 to support disadvantaged families.

70 of Allegro.eu volunteers, together with their 700 volunteers, prepared Noble Gifts for 55 families struggling financially. During the Weekend of Miracles (Weekend Cudów), the parcels of about value of over PLN 175,000 reached the need to fulfill their dreams and satisfy all needs.

Read more about Allegro Tech and tech education in the work-place section.

LONG-TERM EDUCATIONAL PROGRAMS FOR YOUNG PEOPLE

As part of partnership and knowledge sharing activities, since 2018 Allegro has been a strategic partner of the Polish Development Fund (PFR) School of Pioneers (Szkoła Pionierów) initiative, an intensive educational and mentoring program for young and beginning entrepreneurs in the new tech industry. The aim of the program is to help people starting their careers create innovative projects that, in the long term, may be commercialised and launched on the Polish market, and then globally. Since its inception, 200 Pioneers have completed our educational program. In 2021, there were 50 graduates in 12 founding teams, who took part in workshops on 25 different topics. The fourth edition of the PFR School of Pioneers was to prepare the business owners to the challenges their companies will face in the age of green transformation. The program participants can choose from 7 green challenges or work on their own solutions.

Since August 2019, Allegro has also been the partner of the Central House of Technology, supporting the education of the youth and sharing practical knowledge. Allegro is the partner of the „Technologia” educational path, and the company experts are happy to share their knowledge at meetings and workshops organized for the young, based on the ST&EM method (Science, Technology, Engineering, the Arts, Mathematics).

MAM SWOJE ALLE

In 2021 we continued Mam Swoje Alle (Have my Alle), an educational project developed by Allegro in partnership with Fundacja Szlachetne Serce. Its goal is to develop and promote entrepreneurship competencies among students (12 years old or older). Thanks to public fundraisera through Allegro Vokalinie, they can raise funds for social initiatives of their choice. Furthermore, over 50 volunteers from Allegro offered mentoring to the students, supporting their social projects.

COLLECTIONS ON ALLEGRO LOKALNIE

Since 2020, Allegro Lokalnie has made it possible to launch fundraising initiatives. Every customer can support local, social initiatives while shopping. Allegro customers can also put items on sale in a selected fundraising initiative. All you need to do is find the initiative you want to support and specify what percentage of the proceeds (10% to 100%) will be donated to the goal of your choice. The auctioned item will be visible both on Allegro Lokalnie and Allegro.pl. This will allow the owner to reach as many as 24 million visitors.

From July 2020 to December 2021, beneficiaries collected over PLN 35,000. As many as 87% of all completed fundraisers, the full amount of money needed to achieve the given goal was raised.

DONATION TO THE DOCTORS FOR DOCTORS FOUNDATION:

Thanks to the donation from Allegro, the Doctors for Doctors Foundation (Fundacja Lekarze Lekarzom) bought as many as 15 medical devices. Antibacterial lamps were delivered to medical facilities in every province. The devices were handed to the representatives of hospitals on 19 March 2021, during a conference of the Doctors for Doctors Foundation held at the headquarters of the Supreme Medical Chamber in Warsaw.

SUPPORTING CULTURE

THE ALLEGRO PRIZE COMPETITION IS AN OPPORTUNITY FOR VISUAL ARTISTS

The Allegro Prize competition has given publicity to artists from around the world. The jury consisting of well-known figures such as Andrzej Chyra, Natalia Sieleń, Valeria Napoleon, and Rafał Milach discussed new talented artists and offered them the opportunity to present their art to a large audience. 5 winners were chosen and 10 distinctions awarded. The total amount of the awards was PLN 50,000. In 2021 the jury chose three winners and awarded 10 honourable mentions. Paweł Debski, Latifa Zafar Attai, and Ewa Ciepielewska are the three artists who impressed the jury with their works and won the second edition of the international competition for visual artists – Allegro Prize 2021.

BEST BOOK OF THE YEAR 2020 AND SUPPORTING THE BOOK INDUSTRY

Allegro became involved in the 2020 edition of the Best Book of the Year, a country-wide organized together with Lubimy Czytać (Polish Goodreads). A socially responsible category was created in 2021 to support the book industry. The online book segment was devastated by the pandemic no less than other industries. Participants could vote for one of the five well-known Promoting readers and supporting booksellers during the pandemic. As the poll organizer, Allegro supported these institutions with a donation of PLN 250,000 for their declared charity goals.

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ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021 III. Non-financial report

3.7. Taxonomy

The EU taxonomy (Regulation EU 2023/2053) is a classification system, establishing a list of environmentally sustainable economic activities. Under the Taxonomy Regulation, the European Commission can make up the actual list of environmentally sustainable activities by defining technical screening criteria for each environmental objective through delegated acts. EU Taxonomy is a system enabling uniform classification of sustainable activities, which is to support investors in making investment decisions.

Following the analysis of all the activities described in the taxonomy (NACE), in the case of the Allegro.eu Group, revenues, capital expenditures and operating expenses are from the following taxonomy-eligible activities:

Data processing; website management (hosting) and similar activities
Road freight services
Software, IT consultancy and related activities

The basis for calculating the share of taxonomy-eligible was the Group’s financial statement for the year 2021.

Allegro.eu Group	taxonomy-eligible 2021	Percentage of taxonomy-eligible economic activity in total turnover	0.38%
Percentage of taxonomy-eligible economic activity in total capital expenditures	6.32%
Percentage of taxonomy-eligible economic activity in total operating expenditures	7.86%
Turnover 2021	Percentage of taxonomy-eligible economic activity in total turnover	0.38%
		Percentage of non-taxonomy-eligible economic activity in total turnover	99.62%

3.7.1. TURNOVER ACCOUNTING PRINCIPLES

Following the analysis of all the activities described in the taxonomy (NACE), the taxonomy-eligible revenues constituted 0.38% (PLN 20.75 million) of all revenues from the Group’s activities in the financial year 2021.

In the case of the Group, these revenues include revenues from the following taxonomy-eligible activities:

Data processing; website management (hosting) and similar activities
Road freight services
Software, IT consultancy and related activities

These activities include the provision of hosting services for external clients as well as transport and courier services. Hosting services are understood as making all IT components available to an external client in order to support the client’s business activities, including: structured cabling, switchboards, cooling elements, servers, areal walls, routers, switchers, back-up devices and other components made available to the client that make up the IT system operated by the customer as well as device ordering and data storage services.

The basis for calculating the share of taxonomy-eligible revenues in all revenues from the Group’s operations was the Group’s financial statement for the year 2021. The allocation of revenues according to the taxonomy was possible thanks to the Group’s advanced controlling tools, facilitating the analysis of financial results from many angles.

CONTEXT

Due to the temporary nature of disclosures for 2021, including:

no comparative period
no reporting on alignment of activities with the taxonomy

no qualitative information is disclosed regarding:

quantitative breaks of the numerator to illustrate the key drivers of the change in NACE during the reporting period, such as contract rev. (lease revenue), or other revenue sources;
amounts relating to economic activities aligned with the taxonomy, conducted for the entire enterprise consumption;
an explanation of qualitative key elements of changes in NACE in relation to turnover during the reporting period.

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3.7.2. CAPITAL EXPENDITURES

3.7.3.# OPERATING EXPENDITURES CAPEX 2021

Percentage of taxonomy-eligible economic activity in total CAPEX: 6.32%
Percentage of non-taxonomy-eligible economic activity in total CAPEX: 93.68%

OPEX 2021

Percentage of taxonomy-eligible economic activity in total OPEX: 7.86%
Percentage of non-taxonomy-eligible economic activity in total OPEX: 92.14%

ACCOUNTING PRINCIPLES

Following the analysis of all the activities described in the taxonomy (NACE), the taxonomy-eligible capital expenditure is 9.45% (41.55%) of all capital expenditure from the Group’s activities in the Financial year 2021. In the case of the Group, these expenditure include CAPEX from the following taxonomy-eligible activities:

Data processing; website management (hosting) and similar activities

As taxonomy eligible capital expenditures were identified only assets or processes related to taxonomy-eligible economic activities. Capital expenditures were not analysed in terms of the purchase of products from taxonomy-eligible economic activity and individual measures facilitating to the target activity to become low-carbon or to reduce greenhouse gas emissions.

The basis for calculating the share of taxonomy-eligible capital expenditure in all CAPEX from the Group’s operations was the Group’s financial statement for 2021 (additions to tangible assets, intangible assets, Right-of-Use Assets presented in notes 16-“Intangible assets” and 17-“Property, plants and equipment” of Consolidated Financial Statement). The allocation of capital expenditure according to the taxonomy was possible thanks to the Group’s advanced controlling tools, which enable the analysis of financial results from any angles.

ACCOUNTING PRINCIPLES

Following the analysis of all the activities described in the taxonomy (NACE), the taxonomy-eligible operating expenses is 7.86% (9.54%) of all operating expenses from the Group’s activities in the Financial year 2021 (understoood as direct non-capitalised costs that relate to research and development, build-in renovation measures, short-term leases, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment by the undertaking or third party to whom activities are outsourced that are necessary to ensure the continued and effective functioning of such assets). In the case of the Group, these expenses include expenses from the following taxonomy-eligible activities:

Data processing; website management (hosting) and similar activities

Operating expenses were not analysed in terms of the purchase of products from taxonomy-eligible economic activity and individual measures facilitating to the target activity to become low-carbon or to reduce greenhouse gas emissions.

The basis for calculating the share of taxonomy-eligible operating expenses in all operating expenses of the Group’s operations was the Group’s Financial statement for 2021. The allocation of operating expenses according to the taxonomy was possible thanks to the Group’s advanced controlling tools, which enable the analysis of financial results from any angles.

CONTEXT

Due to the temporary nature of disclosures for 2021, including:

no comparative period
no reporting on alignment of activities with the taxonomy

No qualitative information is disclosed in the aspect of:

significant changes that occurred during the reporting period with respect to the implementation of capital expenditure plans, quantitative breaks down of the numerator to illustrate the key drivers of the change in CAPEX for capital expenditure during the reporting period
qualitative explanations of key elements of changes in CAPEX in relation to capital expenditure during the reporting period
other expenses related to the day-to-day servicing of material fixed assets, which were included in the calculation of operating expenses both in the denominator and in the numerator

CONTEXT

no comparative period
no reporting on alignment of activities with the taxonomy

No qualitative information is disclosed regarding:

quantitative breakdowns of the numerator to illustrate the key drivers of the change in OPEX for operating expenses during the reporting period
qualitative explanations of key elements of changes in OPEX in relation to operating expenses during the reporting period
other expenses related to the day-to-day servicing of material fixed assets, which were included in the calculation of operating expenses both in the denominator and in the numerator

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

Description of the nature of taxonomy-eligible economic activities

Taxonomy-eligible economic activities of the Group

3.7.4 INFORMATION ON THE ASSESSMENT OF COMPLIANCE WITH REGULATION (EU) 2020/852

Data processing; website management (hosting) and similar activities
Provision of hosting services for external clients. Hosting services are understood as making all IT components available to an external client in order to support the client’s business activities, including: structured cabling, switches, cooling elements, servers, firewalls, routers, switches, backup devices and other components made available to the client that make up the IT system supported by the customer as well as device ordering and data storage services.

Road freight services
Transport and courier services

Software, IT consultancy and related activities

The data presented in the taxonomy is free from double counting as this data comes from the controlling system supporting the Group’s management accounting. This system consists of assets of separate, financial organizational units whose financial data (revenues, capital expenditures and operating expenses) are reported on the chart of accounts and auxiliary items in accordance with the adopted accounting principles.

Operating expenses were not analysed in terms of the purchase of products from the taxonomy-eligible economic activity and individual measures facilitating to the target activity to become low-carbon or to reduce greenhouse gas emissions.

The basis for calculating the share of taxonomy-eligible operating expenses in all operating expenses of the Group’s operations was the Group’s financial statement for 2021. The allocation of operating expenses according to the taxonomy was possible thanks to the Group’s advanced controlling tools, which enable the analysis of financial results from any angles.

EXPLANATION OF HOW DOUBLE-COUNTING WAS AVOIDED WHEN ASSIGNING KPIS FOR TURNOVER, CAPITAL EXPENDITURE AND OPERATING EXPENSES TO DIFFERENT BUSINESS ACTIVITIES IN THE NUMERATOR

All employees	Risk owners and coordinators	Financial Controlling	Line-Line Risk Committee (executive directors)	Audit Committee (independent non-executive directors; non-executive directors)	Board of Directors	Compliance	Security	Data Privacy	Fraud Prevention	Revenue Assurance	Risk Manager	Internal Audit
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All employees	Risk owners and coordinators	Financial Controlling	Line-Line Risk Committee (executive directors)	Audit Committee (independent non-executive directors; non-executive directors)	Board of Directors	Compliance	Security	Data Privacy	Fraud Prevention	Revenue Assurance	Risk Manager	Internal Audit
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AI assistant

Allegro.eu S.A. — Annual Report (ESEF) 2021

ANNUAL REPORT OF ALLEGRO.EU S.A. GROUP for the year ended 31 December 2021

TABLE OF CONTENTS

Letter from the CEO

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

INVESTOR RELATIONS

ADVERTISING REVENUE

PRICE COMPARISON REVENUE

RETAIL REVENUE

OPERATING EXPENSES

PAYMENT CHARGES

COST OF GOODS SOLD

NET COSTS OF DELIVERY

MARKETING SERVICE EXPENSES

STAFF COSTS

IT SERVICE EXPENSES

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

PLN m (unaudited)

PROFIT BEFORE INCOME TAX

INCOME TAX EXPENSES

PLN m (unaudited)

Reconciliation of Adjusted net profit

PLN m (unaudited)

NET PROFIT

ADJUSTED NET PROFIT

OTHER COMPREHENSIVE INCOME

TOTAL COMPREHENSIVE INCOME

2.2.2. REVIEW OF FY 2021 RESULTS

RESULTS OF OPERATIONS

Consolidated statement of comprehensive income, PLN m (audited)

REVENUE

MARKETPLACE REVENUE

ADVERTISING REVENUE

PRICE COMPARISON REVENUE

RETAIL REVENUE

OPERATING EXPENSES

PAYMENT CHARGES

COST OF GOODS SOLD

NET COSTS OF DELIVERY

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

MARKETING SERVICE EXPENSES

STAFF COSTS

IT SERVICE EXPENSES

OTHER EXPENSES

NET IMPAIRMENT LOSSES ON FINANCIAL AND CONTRACT ASSETS

TRANSACTION COSTS

OPERATING PROFIT BEFORE AMORTIZATION AND DEPRECIATION

AMORTIZATION

DEPRECIATION

OPERATING PROFIT

II. Business report

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

2.2.4. INDEBTEDNESS

NET CASH USED IN INVESTING ACTIVITIES

NET CASH USED IN FINANCING ACTIVITIES

3. Summary of key developments

3.1.1. AGREEMENT TO ACQUIRE THE MALL GROUP A.S. AND WE|DO CZ S.R.O

3.1.2. Acquisitions

3.1.2. ACQUISITION OF X-PRESS COURIERS

3.1.3. COVID-19 Impact

II. Business report

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

1.7. Funding

4. Remuneration Report

4.1. Adoption of the Remuneration Policy

4.2. Purpose and scope of the Remuneration Policy

4.3. Remuneration of Executive Directors and Key Managers

4.3.1.# FIXED REMUNERATION

II. Business report

ALLEGRO.EU S.A. GROUP CONSOLIDATED MANAGEMENT REPORT for the years ended 31 December 2021

4.3.2. SHORT – TERM VARIABLE REMUNERATION

Corporate Bonus Pool

II. Business report

Allegro Incentive Plan

Overall Plan Limits

Individual Limits

Source of Shares

Timing of Awards

Performance Conditions

Allegro.eu S.A. Annual Report (ESEF) 2021

All employees	Risk owners and coordinators	Financial Controlling	Line-Line Risk Committee (executive directors)	Audit Committee (independent non-executive directors; non-executive directors)	Board of Directors	Compliance	Security	Data Privacy	Fraud Prevention	Revenue Assurance	Risk Manager	Internal Audit
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