Ten Square Games S.A.

Earnings Release • Nov 20, 2023

TheManagement Board of Ten Square Games S.A., headquartered in Wrocław,Poland (the _quot;Company_quot;, the _quot;Issuer_quot;) informs that on November 20, 2023,after analyzing the final year's asset impairment tests, it decided tocreate write-downs on the value of assets held.

Inthe consolidated statements, the write-down relates to goodwillresulting from the acquisition of Rortos S.r.l. and amounts to EUR 9.4million [cost]. At the same time, the estimated amount to be paid out asearnout payments changed with the update of the financial forecasts ofthe acquired company. The decrease in the liability from the valuepreviously presented in the report was estimated at EUR 4.5 million[income]. Together, the above actions will result in a _#8364;4.9 millionreduction in the Group's result in the fourth quarter of 2023.

Inthe standalone report, the write-down relates to the value of theacquired shares of Rortos S.r.l. and amounts to EUR 11.6 million [cost].At the same time, the estimated amount to be paid out as earnoutpayments changed with the update of the financial forecasts of theacquired company. The decrease in the liability from the valuepreviously presented in the report was estimated at EUR 4.5 million[income]. Together, the above actions will result in a EUR 7.1 milliondecrease in the Parent Company's result in the fourth quarter of 2023.

Atthe same time, the Management Board of Ten Square Games notes that thefinal amount of write-downs may change both due to the occurrence ofunforeseen events until the end of 2023, but also additional factorsaffecting the financial model of the acquired company may be taken intoaccount during the preparation of the final annual report. The finalamount of the write-down, and thus the impact on both consolidated andstandalone results, will be reported in the annual reports publishedcustomarily in late March/early April of the following year.

TheManagement Board would like to emphasize that the posting of the abovewrite-down is strictly non-cash in nature and, in the opinion of theManagement Board, does not affect the running of the business and doesnot in any way imply a change in strategy. The write-down is due to theneed to re-estimate the financial model for the coming years, which ischaracterized by very high uncertainty in the mobile gaming industry,hence the Group has assumed a very conservative development model forthe Italian company. Rortos S.r.l has 3 major games in its portfolio,which generate ongoing cash flow, and several smaller projects. The maingames are Real Flight Simulator, Airline Commander and Wings of Heroes.The level of cash flow in the first two titles has been relativelyconstant over the past few years and is the studio's main source ofincome. The latest production, i.e. the Wings of Heroes game, is underintensive rebuilding, with a team of outstanding specialists from bothPoland and Italy working on it, and a significant improvement in thegame's performance seems to be the prospect of time. The original modelsfor recognizing the acquisition of the company were based on stableflows for the Real Flight Simulator and Airline Commander games, whichis indeed the case, and a significant impact on the results of the newtitle as early as 2023 and 2024. Given the nature of the industry, thismodel is clearly fraught with enormous uncertainty. Today, the ParentCompany's Management Board believes that further implementation ofRortos' plans and growth in the value of Wings of Heroes are possible,but their pace is slower and is due to the specifics of F2P productdevelopment. However, wanting to reflect the state of the Group's assetsas closely as possible, the Management Board decided to write down thevalue of the assets held in accordance with IAS 36.