MANAGEMENT BOARD REPORT ON THE
ACTIVITIES OF THE CD PROJEKT GROUP
BETWEEN 1 JANUARY AND 31 DECEMBER 2021
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE2
This report on the activities of the CD PROJEKT Group and CD PROJEKT S.A., in its key aspects contains infor-
mation related to the separate financial statement of CD PROJEKT S.A. Due to the fact that the activities and
separate financial statement of CD PROJEKT S.A. have a dominant influence on the activities and consolidated
financial statement of the CD PROJEKT Group, information presented in subsequent sections of this report will
refer to consolidated financial statement of the Group, whose scope covers the activities and financial result
of CD PROJEKT S.A.
Disclaimer
This English language translation has been prepared solely for the convenience of English-speaking readers.
Despite all the eorts devoted to this translation, certain discrepancies, omissions or approximations may
exist. In case of any dierences between the Polish and the English versions, the Polish version shall prevail.
CD PROJEKT, its representatives and employees decline all responsibility in this regard.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE3
Esteemed Shareholders,
It is with pleasure that I hand over to you our annual report which contains an
overview of key business events along with a summary of our 2021 financial results.
The past year was a period of change. The release of Cyberpunk 2077 gave us
much food for thought while also filling us with resolve. The lessons we have
learned guided us in updating our Group’s development strategy, in which we
focused on changing the way we develop games and communicate with the
outside world, as well as on further expanding our team. In 2021 we put in place
a strong foundation, enabling us to improve the eciency of our development
and project management processes – among others, by introducing the Agile
model, as well as by redefining and strengthening the role of CTO. Even tho-
ugh we’ve only completed the first stage of this journey, our work is already
becoming more ecient.
Our strategy update also heralded greater openness to M&A activities. True to word, we concluded two
such transactions in the past year. The gamedev studios based in Vancouver and Boston add to our shared
experience and know-how, and enable us to further grow our business – by recruiting talented professionals
in these respective regions, and by carrying out autonomous work on new, ambitious projects, which we will
eventually oer to gamers.
From the point of view of brand management – we continue to attach great importance to the Cyberpunk
franchise, which we regard as one of the pillars of our future growth, and on which we have been hard at work
this past year. The updates and patches for Cyberpunk 2077 have been appreciated by the gaming community,
and the game’s next-gen console release, published in 2022, was warmly received. We are currently working
in a major expansion for the game, and we believe in the long-term appeal of Night City adventures.
One of the key elements of the RED 2.0 transformation process is our strategic partnership with Epic Games and
use of Unreal Engine 5 to power our future games. In this context, we’re happy to have been able to announce –
in March of the current year – that we had initiated work on the next instalment in The Witcher franchise, based
on the new engine and by applying our new approach to development. We’re very eager to revisit the universe
we know and love. A new saga begins, and we share our anticipation with gamers throughout the world!
We realize there’s much work ahead of us, but watching our transformation and the direction in which we’re
heading fills us with satisfaction. I would like to extend my deepest thanks to our employers for their involve-
ment, and to gamers and shareholders for their continued trust and support. After all, our goal remains the
same – to create peerless works which oer unforgettable entertainment and contribute to the long-term value
of CD PROJEKT.
Respectfully,
Adam Kiciński
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE4
Table of Contents
6 Brief description of the CD PROJEKT Group
7 Activity profile
10 Values and ethics
12 CD PROJEKT S.A. on the capital market
16 CD PROJEKT Group activity profile
21 Organizational structure of the CD PROJEKT Group
23 Disclosure of business segments, products and services, outlets, suppliers and clients
43 Disclosure of external and internal factors aecting further growth of the CD PROJEKT Group
46 Disclosure of significant achievements in the scope of research and development activities
47 Disclosure of significant agreements
47 Risk management at the Group
60 Financial results of the CD PROJEKT Group
61 Overview of key economic and financial indicators disclosed in the consolidated and separate financial
statement
91 Corporate Governance
92 Entity contracted to audit financial statements
93 Shareholders controlling at least 5% of the vote at the General Meeting
94 Agreements which may result in changes in the proportions of shares held by shareholders and bondholders
96 Information regarding the control system of employee share programs
96 Disclosure of the purchase of own shares
97 Company shares held by members of the Management Board and the Supervisory Board
97 Management structure
98 Composition of the Management Board of CD PROJEKT S.A.
99 Changes in the composition of the Management Board of CD PROJEKT S.A.
100 Composition of the Supervisory Board of CD PROJEKT S.A.
100 Changes in the composition of the Supervisory Board of CD PROJEKT S.A.
101 Gross compensation of members of the Management Board and Supervisory Board of CD PROJEKT S.A.
103 Compensation paid out in the framework of share-based incentive schemes
105 Assignment of benefits to Management Board members
105 Remuneration of Supervisory Board members
106 Changes in basic management practices at the Company and its Group
106 Corporate governance policies
107 Disclosure of significant legal proceedings
Key events of 2021
CD PROJEKT RED continued its work on updating Cyberpunk 2077, releasing 5 patches and
3 hotfixes in 2021
1
In March CD PROJEKT unveiled its updated strategy for the coming years, which involves,
among others, transformation of the Studio (called RED 2.0) and parallel development of two
AAA games starting in 2022
Within the framework of the RED 2.0 transformation project, 17 cross-functional agile teams
have been established – these teams are now at work on the Cyberpunk 2077 expansion,
among others
Two development studios – Digital Scapes (later rebranded as CD PROJEKT RED Vancouver)
and The Molasses Flood – joined the Group
CD PROJEKT paid out its highest-ever dividend, at 504 million PLN, i.e. 5 PLN per share
WitcherCon – an event targeting fans of The Witcher franchise, co-organized with Netflix –
took place on 9 and 10 July
In July the Group released The Witcher: Monster Slayer its first location-based AR mobile
game, developed by Studio Spokko
Thronebreaker: The Witcher Tales was released for Android devices in June
1 Altogether, between 10 December 2020 and the publication date of this report, 7 patches and 6 hotfixes
have been released
01
BRIEF DESCRIPTION
OF THE CD PROJEKT GROUP
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
7 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Activity profile
CD PROJEKT S.A. (also referred to as CD PROJEKT or the Company), headquartered in Warsaw, conducts
business activities in the dynamically growing global digital entertainment segment. These activities have been
ongoing on the domestic market for nearly 30 years under the CD PROJEKT brand name, and began by distri-
buting foreign games in Poland (note that the corresponding activity segment, handled by the Group’s CDP.pl
subsidiary, was disaggregated in 2014). Pivotal moments in the Group’s history came in 2002 with the esta-
blishment of the CD PROJEKT RED development studio, which initiated work on the Company’s first major
RPG
2
– The Witcher – as well as in 2008, with the launch of GOG.COM.
The CD PROJEKT Group currently conducts operating activities in two key segments: CD PROJEKT RED
and GOG.COM.
2 Role Playing Game – a storyline-driven game based on a consistent narrative.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
8 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
CD PROJEKT RED
Developing and publishing videogames and tie-in products which exploit the commercial appeal of brands
owned by the Company.
GOG.COM
Digital distribution of videogames via the Company’s proprietary GOG.COM platform and the GOG GALAXY
application.
During the reporting periods 97.6% of the CD PROJEKT Group’s sales revenues were generated by exports.
Throughout 2021 North America and Europe accounted for 73.2% and 15.8% of the Group’s sales respectively.
86.5% of the Group’s sales were carried out via digital distribution channels, including GOG.COM as well as
external platforms such as Steam, PlayStation Store, Xbox Games Store, Origin, Amazon, Humble Bundle, Epic
Games Store and App Store.
Map 1 The CD PROJEKT Group around the world
 Headquarters (CD PROJEKT RED, GOG.COM and Spokko)
 CD PROJEKT RED dev studio
 Branch oces
 Media and community managers
 Local subsidiaries of the Group
 The Molasses Flood
São Paulo
Perugia
Dubai
Wrocław
Kraków
Warsaw
Berlin
Los Angeles
Boston
Shanghai
Tokyo
Seoul
Paris
Londyn
Vancouver
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
9 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
GROWTH STRATEGY
In March 2021 a Strategy Update was published by the Group, defining its mission statement as follows:
■ To create revolutionary story-driven RPGs, which go straight to the heart of gamers from around the world;
■ To be counted among the world’s top three video game developers;
■ To ensure a lasting place for our brands in the global popular culture.
The document also charts three major areas where changes and growth is expected:
■ RED 2.0 – the transformation of the studio will entail, among others, a change in its philosophy and approach
to developing AAA games, implementing a more agile production cycle to enable parallel work on products
representing two major franchises; changes in management practices and the work environment to foster
expansion of the team and talent support, and changing ways in which the studio communicates with gamers;
■ Brand development – going beyond AAA RPGs and exploiting the appeal of both The Witcher and Cyberpunk
through new products, collaborations, media types and formats, in order to further enhance the reach, reco-
gnition and strength of both brands;
■ Online development – enriching our IPs and future games with online elements.
A thorough presentation of the assumptions underpinning the strategy update can be found on the Company
website.
The Company’s solid financial backbone is one of the elements which will support its further growth, enabling
it to maintain creative independence and seek new ways of improvement, both as a business and as a studio –
thus realizing its mission statement.
Scheme 1 Videogame development business model at CD PROJEKT RED
Own IP and full
control over the
creation process.
Focus on 2
franchises and a
limited number of
products.
In-house team of
experienced
developers who
consistently prioritize
quality.
Own tools and
know-how enabling
development of
immersive
open-world RPGs.
Gamers-first
business philosophy
enabled by
independent
publishing activities.
Direct digital
distribution of
console/PC games.
Global reach –
collaboration with
handpicked
distributors of box
editions of
videogames.
Honest and direct
communication with
gamers.
Full control over
message.
BACK OFFICE, INCLUDING HR, ACCOUNTING, FINANCES, LEGAL DEPT.,
ADMINISTRATION, TAXES, INVESTOR RELATIONS, IT, ERP
DEVELOPMENTCREATION TECHNOLOGY PUBLISHING DISTRIBUTION PRIORITY: GAMERS
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
10 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Values and ethics
The Group’s organizational culture is based on fair treatment of all stakeholders. In our dealings with sharehol-
ders, gamers and team members, we strive to be as transparent and ethical as possible.
Core values which guide the Group in its activities are as follows:
■ Quality is our priority
■ A talented and passionate team is our strength
■ We stand for tolerance, honesty and openness
■ We regard independence as a cornerstone of creative freedom
■ Gamers are always in our focus
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
11 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
In our daily work, we promote the following attitudes among team members:
These values are an important aspect of our organizational culture. They support us in pursuing our goals, and
they help make CD PROJEKT unique. Further information about the CD PROJEKT organizational culture can
be found in the CD PROJEKT Group’s 2021 Sustainability Report.
Compliance with the law,
internal and external
regulations, and
ethics principles
Attitudes
promoted among
team members
Professionalism
Honesty
Fair playTolerance
Creativity
Involvement
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
12 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
CD PROJEKT S.A. on the capital market
The CD PROJEKT brand has been present on the Warsaw stock exchange since 2010, when – as a result of
an investment agreement concluded in 2009 by CDP Investment sp. z o.o.
3
and Optimus S.A., along with their
respective shareholders – Optimus purchased 100% of shares in CDP Investment while existing shareholders
of CDP Investment acquired Optimus S.A. shares. The formal merger between both companies was carried
out in December 2010.
100 738 800 Company shares are traded on the Main Market of the Warsaw Stock Exchange under the conti-
nuous trading system. Key shareholders of CD PROJEKT S.A. are its co-founders – Marcin Iwiński and Michał
Kiciński. Other major shareholders who are also members of the Company’s Management Board are Adam
Kiciński – President of the Board, and Piotr Nielubowicz – Vice President and CFO.
Chart 1 Company shareholding structure as of the publication date of this report**
* According to a notice filled on 26 May 2021
**According to Current Report no. 9/2022 of 1 April 2022 the aggregate percentage share of votes controlled by The Goldman Sachs Group
Inc. as a result of holding shares (0.41%) and other financial instruments (4.68%) was 5.09% as of 29 March 2022
In 2021 a change in the ownership structure of large stock packages took place following the vesting of the gro-
upwide incentive program, in force between 2016 and 2019. 84 176 newly issued Series M shares were admitted
to organized trading, following their take-up by entitled parties in the exercise of 84 176 subscription warrants
entitling holders to claim newly issued shares in the framework of a conditional increase in the Company share
capital. Consequently, by the end of 2021 the number of Company shares outstanding increased by 84 176.
As of the publication date of this report there remain 32 000 unexercised Series B subscription warrants entitling
holders to claim the equivalent number of Series M shares. These warrants will expire on 31 October 2022.
Remaining shares
66.0%
Adam Kiciński
4.0%
Piotr Nielubowicz
6.8%
Michał Kiciński*
10.4%
Marcin Iwiński
12.8%
Founders and
Management Board
members
3 Former CD PROJEKT Group holding company
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
13 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Since March 2018 CD PROJEKT has belonged to the WIG20 index which represents 20 of the largest and
most liquid companies listed on the Warsaw Stock Market. As of 5 April 2022 the Company contributes 5.3%
to the value of this index.
CD PROJEKT belongs to the WIG.GAMES5 sectoral index which covers five largest videogame developers
listed on the Warsaw market. Due to its significantly larger market capitalization compared to other companies
whose stock makes up the index, the contribution of CD PROJEKT S.A. to WIG.GAMES5 has been limited – as
of 5 April 2022 it stands at 41.7%.
A new index, WIG-Gry, was launched on 21 March 2022, representing videogame developers traded on the
main market of the Warsaw Stock Exchange. As of 5 April 2022 the Company contributes 73.3% to this index.
CD PROJEKT is also part of the WIG-ESG index launched in September 2019. WIG-ESG aggregates companies
regarded as socially responsible, i.e. those which adhere to social responsibility principles particularly with
regard to environmental, social, economic and corporate governance issues. As of 5 April 2022, CD PROJEKT
contributes 4.9% to the WIG-ESG index.
Chart 2 CD PROJEKT S.A. stock price and the WIG20 index between 1 January and 31 December 2021
Between 1 January and 31 December 2021 the Company stock price fluctuated between 153.38 PLN (1 June
2021) and 365.00 PLN (28 January 2021). During this period the stock price decreased by 29.8%, to 192.90 PLN
at the close of the trading day on 30 December 2021. Over the same period the WIG20 index gained 14.3%
while the main WIG index gained 21.5%.
At the end of 2021 the Company’s market capitalization was 19.4 billion PLN.
50
60
70
80
90
100
110
120
130
140
CD PROJEKT WIG20
01.2021 02.2021 03.2021 04.2020 05.2020 06.2020 07.2020 08.2020 09.2020 10.2020 11.2020 12.2020
11.2021
04.2021 05.2021 06.2021 07.2021 08.2021 09.2021 10.2021 12.202103.202102.202101.2021 11.2021
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
14 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Chart 3
Average daily value of trade in CD PROJEKT S.A. shares (by month) between 1 January
and 31 December 2021 (PLN millions)
In 2021 the liquidity of CD PROJEKT S.A. stock, measured in terms of value of trade, decreased. The aggregate
value of trade for 2021 was 34.5 billion PLN compared to 45.9 billion PLN the year before. The average daily value
of trade was 137 million PLN (out of 958 million PLN for the WIG20 index), compared to 182 million PLN in 2020.
A decrease was also observed in the average number of transactions per trading day – from 11 307 to 10 732.
Chart 4
Market capitalization of CD PROJEKT S.A. at the end of the year and aggregate value of trade
in CD PROJEKT S.A. stock between 1 May 2010 and 31 December 2021 (PLN billions)
0
10
20
30
40
50
2010*
2012
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Value of trade Market capitalization
*between 01.05.2010 and 31.12.2010
0
50
100
150
200
250
300
350
400
450
500
550
January
March
May
July
September
November
2020 2021
Average daily value
of trade; 2020 – 182
million PLN
Average daily value
of trade; 2021 – 137
million PLN
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
15 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Table 1 Key indicators of CD PROJEKT S.A. stock
2021 2020 Change
Net earnings per share (PLN) 2.07 11.92 -82.7%
Quantity of shares in trading (in thousands) at end of period 100 738 800 100 654 624 0.1%
Highest closing price during fiscal year (PLN) 365.00 460.80 -20.8%
Lowest closing price during fiscal year (PLN) 153.38 216.10 -29.0%
Price at beginning of period (PLN) 276.40 286.80 -3.6%
Price at end of period (PLN) 192.90 274.70 -29.8%
Average price during period (PLN) 198.98 356.55 -44.2%
P/E ratio at end of period 93.0 24.0 287.5%
Market capitalization at end of period (PLN thousands) 19 432 515 27 649 825 -29.7%
Average number of transactions per trading day 10 732 11 307 -5.1%
Average daily value of trade (PLN thousands) 137 257 182 233 -24.7%
Average daily trading volume (shares) 633 562 536 374 18.1%
As of the publication date of this report 23 brokerage houses, both foreign and domestic, issue recommendations
concerning Company stock. A full list of analysts and brokerage houses which issue recommendations concerning
Company stock can be found on the CD PROJEKT website at https://www.cdprojekt.com/en/investors/analysts/.
02
CD PROJEKT GROUP ACTIVITY PROFILE
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
17 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
CD PROJEKT Group activity profile
MARKET ENVIRONMENT AND GROWTH PROSPECTS OF THE CD PROJEKT GROUP
The CD PROJEKT Group conducts its business in the global videogame market which is among the fastest
growing branches of the global economy. Newzoo – respected analysts of the videogame and e-sports
markets – estimate that by 2024 the global videogame market will have expanded to 218.8 billion USD
4
, which
implies a cumulative annual growth rate (CAGR) of 5.0% for the 2021-2025 period. According to PWC’s “Global
Entertainment & Media Outlook 2021-2025”
5
report, the videogame and e-sports markets is expected to grow
by 5.1% annually during this period.
The growth outlook of the Group is aected not only by the increasing popularity of this form of entertainment
as an approachable and attractive mass market oering, but also by the increasing sophistication and realism
of products oered, increasing availability and aordability of gaming hardware, further development of digital
means of reaching potential gamers and new game distribution channels.
GLOBAL VIDEOGAME INDUSTRY
Newzoo
4
– a renowned global provider of games and e-sports analytics – estimates the volume of the global
videogame market at 180.3 billion USD at the end of 2021, which corresponds to a 1.4% increase over the 2020
year-end value and a 23.7% increase compared to the end of 2019. In the past year only the mobile market
segment achieved growth (by 7.3% y-o-y, reaching 93.2 billion USD). Sales of PC and console games decreased,
which Newzoo attribute, among others, to a lower number of new releases compared to 2020. According to
these estimates the PC market shrank by 0.8%, reaching 36.7 billion USD, while the console market shrank by
6.6%, to 50.4 billion USD at the end of 2021.
4 The Games Market and Beyond in 2021: The Year in Numbers, Newzoo, 22 December 2021, accessed on: 17 February 2022,
newzoo.com/insights/articles/the-games-market-in-2021-the-year-in-numbers-esports-cloud-gaming/
5 Perspectives from the Global Entertainment & Media Outlook 2021–2025, PwC, accessed on 17 February 2022, summary available at:
pwc.com/gx/en/entertainment-media/outlook-2021/perspectives-2021-2025.pdf
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
18 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Chart 5 Global videogame market in 2021 by device type (%)
6
Estimates published by ESA (Entertainment Software Association)
7
concerning the US market, which is the most
important region from the point of view of the Group’s activities, confirm the domination of smartphones in this
area, although their advantage over PCs and consoles is not particularly pronounced. 57% of American gamers
include smartphones among their most frequently used gaming devices, with consoles and PCs coming in at
46% and 42% respectively.
GAMERS
The global gaming community is growing each year, both quantitatively and in terms of involvement (time
spent playing). Newzoo
8
estimates that at the end of 2021 there were nearly 3 billion gamers worldwide. 2.8
billion of them accessed mobile games, while the PC and console gaming communities numbered 1.4 billion
and 0.9 billion people respectively. In 2024 the total figure is expected to top 3.3 billion. Given that the 2015
there were fewer than 2 billion gamers, the cumulative annual growth rate for 2015-2024 is projected at 5.6%.
6 The Games Market and Beyond in 2021: The Year in Numbers, Newzoo, 22 grudnia 2021 r., accessed on 17 February 2022,
newzoo.com/insights/articles/the-games-market-in-2021-the-year-in-numbers-esports-cloud-gaming/
7 2021 Essential Facts About the Video Game Industry, accessed on 17 February 2022,
theesa.com/resource/2021-essential-facts-about-the-video-game-industry/
8 2015-2024 Global Players, accessed on 17 February 2022, newzoo.com/key-numbers/
PC – browser games
1%
Tablets
7%
PC – box and digital editions
19%
Consoles
28%
Smartphones
45%
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
19 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Chart 6 Global gaming community in 2015-2024 (billions)
9
55% of gamers
10
– over 1.6 billion – reside in the Asia-Pacific region. This is followed by Middle East and Africa
(434 million gamers) and Europe (408 million gamers). Middle East and Africa reported the strongest growth
in 2021, having increased by 10.1% compared to 2020. Latin America and North America accounted for 289
million and 212 million gamers respectively.
Chart 7 Global gaming community in 2021 by region (%)
10
2015
2016
2017
2018
2019
2020
2021
2022P
2023P
2024P
3.32
3.22
3.09
2.96
2.81
2.64
2.49
2.33
2.17
2.03
North America
7%
Latin America
10%
Europe
14%
Middle East and Africa
15%
Asia and Pacific
54%
9 2015-2024 Global Players, accessed on 17 February 2022, newzoo.com/key-numbers/
10 2021 Global Players Per Region, accessed on 17 lutego 2022, newzoo.com/key-numbers/
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
20 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
According to ESA
11
, 67% of US residents past age 18 and 76% of under-18s play videogames – an annual increase
by 3 and 6 percentage points respectively. 45% of gaming community members identify as female. The most
populous age group is the 18-34 bracket, accounting for 38% of the total 227 million-strong US gaming community.
Chart 8 US gamers by age bracket (%)
10
10 2021 Global Players Per Region, accessed on 17 February 2022, newzoo.com/key-numbers/
11 2021 Essential Facts About the Video Game Industry, accessed on 17 February 2022,
theesa.com/resource/2021-essential-facts-about-the-video-game-industry/
over 65
7%
55-64
9%
45-54
12%
35-44
14%
18-34
38%
below 18
20%
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
21 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Organizational structure of the CD PROJEKT Group
As of 31 December 2021 the CD PROJEKT Group consists of the parent entity – CD PROJEKT S.A. – and seven
subsidiaries: GOG sp. z o.o., CD PROJEKT Inc., CD PROJEKT Co. Ltd. (undergoing liquidation), Spokko sp. z
o.o., CD PROJEKT RED STORE sp. z o.o., CD PROJEKT RED Vancouver Studio Ltd. and The Molasses Flood
LLC (a subsidiary of CD PROJEKT Inc.)
Chart 9 CD PROJEKT Group at the end of 2021 (capital and voting share)
CD PROJEKT S.A.
CD PROJEKT Co. Ltd.
(in liquidation)
CD PROJEKT Inc.
*
GOG sp. z o.o.
*
CD PROJEKT STORE sp. z o.o.
*
100%
100% 60%
100%
100%
The Molasses Flood LLC
CD PROJEKT RED Vancouver Studio Ltd.
Spokko sp. z o.o.
100%
74%
*
Consolidated companies
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
22 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Table 2 Basic activity profile of each member company of the CD PROJEKT Group as of 31 December 2021
Company Scope of activity
CD PROJEKT S.A.
The principal scope of activity of the company, carried out through its CD PROJEKT
RED studio, involves development and publishing of videogames, selling the associated
distribution rights, as well as manufacturing, selling or licensing tie-in products which
exploit the popularity of brands owned by the Group. CD PROJEKT S.A. also serves
as the holding company of the CD PROJEKT Group, and coordinates the activities of
subsidiaries which comprise the Group.
GOG sp. z o.o.
The company distributes videogames through online channels to customers from around
the world, enabling them to purchase games, remit payment and download purchased
products to their personal computer. The company also owns the GOG.COM proprietary
global digital distribution platform and the GOG GALAXY application.
CD PROJEKT Inc.
The company coordinates publishing and promotional activities related to products
marketed by CD PROJEKT S.A. and GOG.COM, and manages sales of merchandise
through the CD PROJEKT RED GEAR online store throughout North America (with an
oce in Los Angeles).
CD PROJEKT Co. Ltd.
(undergoing liquidation)
This company, with a registered oce in Shanghai, is currently undergoing liquidation.
Its principal scope of activity involved representing the CD PROJEKT Group in China
(coordinating publishing and marketing activities).
CD PROJEKT RED
Vancouver Studio Ltd.
This gamedev studio, based in Vancouver, develops videogames within the framework
of CD PROJEKT RED.
CD PROJEKT RED
STORE sp. z o.o.
This entity manages the CD PROJEKT RED GEAR merch store and markets tie-in products
associated with CD PROJEKT RED videogames to customers throughout the EU.
Spokko sp. z o.o.
This gamedev studio specializes in mobile releases and is responsible for the development
of The Witcher: Monster Slayer.
The Molasses Flood LLC
This gamedev studio, based in Boston, is working on a separate project based upon
one of CD PROJEKT Group’s IPs.
The above member companies of the CD PROJEKT Group, with exception of CD PROJEKT Co. Ltd., Spokko sp.
z o.o., CD PROJEKT RED Vancouver Studio Ltd. and The Molasses Flood LLC were subject to full consolidation
as of 31 December 2021. Detailed information can be found in the Consolidated Financial Statement of the
CD PROJEKT Group for 2021.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
23 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Disclosure of business segments, products and
services, outlets, suppliers and clients
In 2021 the Group conducted business activities in two segments:
■ CD PROJEKT RED,
■ GOG.COM.
CD PROJEKT RED
Target and scope of business activities
Developing and publishing videogames represents the main area of activity of the CD PROJEKT RED studio. It
bases upon brands owned by the Company – CD PROJEKT RED is globally recognized for Cyberpunk 2077 and
for its series of The Witcher games – all of which are its flagship brands. It also develops GWENT: The Witcher
Card game, an online card game with built-in microtransaction support.
The segment’s activity covers creation and publication of videogames, licensing the associated distribution
rights as well as manufacturing, distributing or licensing tie-in products which exploit the commercial appeal
of brands owned by the Company.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
24 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
In the scope of its publishing activities the Company also assumes responsibility for its promotional and adver-
tising campaigns, and maintains direct relations with the player base via electronic and social media channels
(see the Communications section) as well as through regular participation in trade fairs.
This segment also includes the online merch store at gear.cdprojektred.com which markets products to fans
of CD PROJEKT RED brands.
Key products
Videogame development commenced in 2002 and initially focused on the studio’s RPG debut: The Witcher.
This game, set in Andrzej Sapkowski’s fantasy world, was released in 2007 to global acclaim, garnering over
100 awards and accolades.
As of the publication date of this report, key releases in the Company’s portfolio include The Witcher, The Witcher
2: Assassins of Kings, The Witcher 3: Wild Hunt, two expansion packs for the latter (Hearts of Stone and Blood
and Wine) as well as Cyberpunk 2077 – the Studio’s first game set in the Cyberpunk universe, launched on 10
December 2020.
In 2018 the Company released the full version of GWENT: The Witcher Card Game (PC. iOS, Android), as well
as a single-player game – Thronebreaker: The Witcher Tales (PC, iOS, Nintendo Switch, Xbox One, PlayStation
4), built around similar gameplay mechanics.
On 17 June 2021 Thronebreaker: The Witcher Tales was released for Android devices.
On 15 February 2022 CD PROJEKT RED released the dedicated next-gen console edition of Cyberpunk 2077.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
25 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Scheme 2 CD PROJEKT RED releases; 2007-2022
Key sources of revenue
Sales of CD PROJEKT RED games are mainly carried out under the following business models:
■ sales of territorial distribution rights (for box and digital editions), settled post factum on the basis of monthly or
quarterly sales reports / licensing reports submitted by the Company’s business partners;
■ supplies of physical box editions to the Company’s business partners for retail resale;
■ supplies of batches of activation codes which permit the game to be downloaded and installed;
■ sales carried out through optional microtransactions in GWENT: The Witcher Card Game (incl. kegs, meteorite
dust, add-ons, passes).
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
17.05.2011
The Witcher 2: Assassins of Kings (PC)
30.10.2007
The Witcher (PC)
17.04.2012
The Witcher 2: Assassins of Kings (X360)
19.05.2015
The Witcher 3: Wild Hunt (PC, Xbox One, PS4)
13.10.2015
The Witcher 3: Wild Hunt – Hearts of Stone
(PC, Xbox One, PS4)
31.05.2016
The Witcher 3: Wild Hunt – expansion pack: Blood and Wine
(PC, Xbox One, PS4)
15.10.2019
The Witcher 3: Wild Hunt Complete Edition (Nintendo Switch)
23.10.2018
Thronebreaker: The Witcher Tales (PC)
GWENT: The Witcher Card Game (PC)
29.10.2019
GWENT: The Witcher Card Game (iOS)
4.12.2018
Thronebreaker: The Witcher Tales (Xbox One, PS4)
GWENT: The Witcher Card Game (Xbox One, PS4)
24.03.2020
GWENT: The Witcher Card Game (Android)
10.12.2020
Cyberpunk 2077 (PC, Xbox One, PS4, Stadia)
15.02.2022
Cyberpunk 2077 (Xbox Series X|S, PS5)
28.01.2020
Thronebreaker: The Witcher Tales (Nintendo Switch)
9.07.2020
Thronebreaker: The Witcher Tales (iOS)
17.06.2021
Thronebreaker: The Witcher Tales (Android)
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
26 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Digital distribution agreements concluded by the Company are typically settled in monthly cycles, while distri-
bution of physical videogame editions follows quarterly reporting cycles. Depending on the specific partner or
contract, the Company also collects licensing reports – these are submitted 30, 45 or 60 days following the
end of each reporting period (typically each month or quarter).
In 2021 the most important CD PROJEKT RED products from the point of view of revenues were:
■ Cyberpunk 2077,
■ The Witcher 3: Wild Hunt, together with its expansions – Hearts of Stone and Blood and Wine.
Revenues were also generated – to a lesser degree – by micropayments in GWENT: The Witcher Card Game
and Thronebreaker: The Witcher Tales. Additionally, the Company oered earlier instalments in The Witcher
franchise, including The Witcher and The Witcher 2: Assassins of Kings, both of which continue to attract players
and generate revenues.
By the publication date of this report aggregate sales of games from The Witcher saga topped 65 million copies,
including more than 40 million copies of The Witcher 3: Wild Hunt.
The sell-through figures for Cyberpunk 2077 shown below represent the Company’s estimates concerning
purchases of the game by retail clients in physical outlets.
In 2021 64% of Cyberpunk 2077 units sold were digital editions of the game.
Chart 10 Cyberpunk 2077 – retail sales to gamers (sell-through) by distribution type (units sold; source: Com-
pany estimates based on information collected from distributors)
2020
2021
Physical distribution Digital distribution
27%
73%
64%
36%
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
27 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
In 2021 the PC edition accounted for the largest share of Cyberpunk 2077 unit sales.
Chart 11
Cyberpunk 2077 – retail sales to gamers (sell-through) by platform type (units sold; source: Company
estimates based on information collected from distributors)
Map 2 Purchases of Cyberpunk 2077 by region (2021)
North America
37,2%
South America
2,4%
Europe
35,2%
Asia
16,6%
Africa
4,4%
Australia
2,5%
1,7% unknown
2020 2021
PC PlayStation 4 Xbox One
28%
17%
56%
20%
22%
58%
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
28 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
The Witcher 3: Wild Hunt continued to sell well in 2021: with regard to the number of units sold, this was the
second best year in the game’s history. Digital channels accounted for 94% of these sales.
Chart 12 Sales of The Witcher 3 by distribution channel (units sold; sell-in figure)
12
The observed growth in the share of digital distribution in total sales is due to the global shift towards digital
purchases among consumers, and also due to the comparatively longer shelf life of digital releases compared
to physical (box) editions.
In 2021, much like in the preceding years, most purchases of The Witcher 3: Wild Hunt involved the PC edition
of the game.
Chart 13 Sales of The Witcher 3 by hardware platform (units sold; sell-in figure)
12
2015 2016 2017 2018 2019 2020 2021
Physical distribution Digital distribution
62%
68%
76%
81%
32%
38%
24%
19%
83%
16%
17%
84% 94%
6%
2015 2016 2017 2018 2019 2020 2021
PC PlayStation 4 Xbox One Nintendo Switch
43%
46%
35%
33%
21%
42%
50%
54%
32%
15%
15%
13%
11%
10%
26%
53%
9%
7%
31%
52%
5%
11%
19%
65%
12 historical figures have been revised
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
29 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Map 3 Purchases of The Witcher 3 by region (2021)
Key suppliers and clients
Within the CD PROJEKT RED activity segment, the Group carries out active distribution of its games for various
hardware platforms, through leading digital distribution platforms (e.g. Steam, PlayStation Store, Xbox Games
Store, Epic Games Store, Nintendo, Stadia, Apple App Store, Google Play and Humble Bundle, along with its
own proprietary GOG.COM platform) as well as traditional distribution channels, in cooperation with leading
global distributors (such as BANDAI NAMCO Entertainment Europe S.A.S., Warner Bros. Home Entertainment,
Epicsoft Asia PTE LTD, Bandai Namco Entertainment Australia PTY LTD, Cenega S.A., Spike Chunsoft Co., Ltd.,
Soft Club LLC).
In 2021 sales to two clients exceeded 10% of the Group’s consolidated sales revenues and totaled 265 675
thousand PLN and 150 911 thousand PLN respectively (29.9% and 17.0% of the Group’s sales revenues respecti-
vely). These clients are not aliated with CD PROJEKT S.A. or any of its subsidiaries. No other client accounted
for more than 10% of the Group’s consolidated sales revenues.
The videogame development process relies on certain bought-in tools and technical solutions; however, these
do not result in significant concentration of supply. No CD PROJEKT RED supplier accounted for more than 10%
of the consolidated revenues of the Group in 2021.
Communication
CD PROJEKT RED prides itself on direct and honest communication with the global gaming community under the
“Gamers first” policy. Player relations are carried out primarily through social media channels. CD PROJEKT RED
actively manages over 90 social media profiles in over a dozen languages, both global and local (such as the
BILIBILI and Weibo platforms in China, and the Naver Cafe platform in Korea).
North America
21,1%
South America
8,8%
Europe
37,8%
Asia
30,2%
Africa
0,3%
Australia
1,7%
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
30 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Scheme 3 Followers and subscribers of CD PROJEKT RED social media profiles as of 10 March 2022
Key product and marketing events
Cyberpunk 2077
On 13 January 2021 in an ocial video feed, Marcin Iwiński confirmed that the Studio would continue to work
on updating Cyberpunk 2077. The feed also presented plans regarding further work on the game in 2021, inc-
luding patches and updates, as well as free DLC. By the publication date of this report CD PROJEKT RED had
released a total of 13 updates for Cyberpunk 2077, introducing numerous gameplay improvements.
In 2021 Cyberpunk 2077 received a number of awards. The game was acknowledged by gaming outlets –
among others for its storyline, characters, soundtrack and RPG gameplay. It was also named 2020 Game of the
Year by CD Action, Gry Online, IGN, Benchmark, Filmweb (PL) and Gameheadquarters (US) and SECTOR (SK).
Cyberpunk 2077 was furthermore nominated for the highly prestigious BAFTA and VES awards. At CEEGA’21
(Central & Eastern European Game Awards) held in Poznań, Cyberpunk 2077 won three trophies: Best Audio,
Best Narrative and the gala’s main award – Best Game. For its part, the Japanese editorial board of IGN named
Cyberpunk 2077 Game of the Year and also presented it with awards for Best Sound and Best Visual Eects.
On 21 June the digital availability of Cyberpunk 2077 was reinstated on PlayStation Store.
On 20 October 2021 CD PROJEKT RED announced that the planned releases of next-gen versions of
Cyberpunk 2077 and The Witcher 3: Wild Hunt would be postponed to the first and second quarter of
2022 respectively.
Cyberpunk 2077 won further accolades in early 2022: the game was nominated, among others, for Steam
Awards 2021, eventually carrying the “Story-Rich Game” category.
On 15 February 2022 CD PROJEKT RED’s ocial Twitch channel hosted a stream devoted to key new featu-
res and changes introduced by Patch 1.5 for Cyberpunk 2077. As the stream was drawing to a close, studio
representatives surprised the audience by announcing that the patch had just been released on all supported
bilibili
882 thousand followers
YouTube
250 thousand followers
Instagram
745 thousand followers
Twitch
424 thousand followers
Weibo
214 thousand followers
Twitter
1.1 million
followers
Facebook
483 thousand followers
LinkedIn
214 thousand followers
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
31 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
hardware platforms, including next-gen consoles, alongside the new edition of Cyberpunk 2077 targeting
Playstation 5 and Xbox Series X|S. A five-hour trial version of the game was made available free of charge to
all gamers, for a period of one month. The launch of the game’s next-gen edition was also accompanied by
a reinvigorated marketing campaign titled “Love it, or burn it”, which encouraged gamers to return to Night
City and see for themselves how Cyberpunk 2077 had changed since its original release in December 2020.
Scheme 4 Followers and subscribers of Cyberpunk 2077 social media profiles as of 10 March 2022
GWENT
Three GWENT expansions sharing a common storyline and introducing 26 new cards each were released in
2021: “Once upon a Pyre”, “Thanedd Coup” and “Harvest of Sorrow”. The third sezon of the GWENT Masters
series was also organized during this period.
On 9 April 2021 CD PROJEKT RED announced that GWENT: The Witcher Card Game would be released for
macOS devices incorporating the Apple M1 chip. The new macOS release support cross-platform gameplay
and enables synchronization with supported PC (via GOG.COM and Steam), iOS and Android editions.
In January 2022 the Company announced that it was working on a new project dubbed “Golden Nekker”, which
builds upon GWENT gameplay. In an interview for the IGN media service Studio representatives confirmed that
an entirely new single-player GWENT card-based adventure was under development.
Instagram
747 thousand followers
Twitter
1.6 million followers
Steam Community
1.2 million followers
Reddit
888 thousand followers
Facebook
797 thousand followers
YouTube
1.5 million
followers
VK
155 thousand followers
Discord
168 thousand followers
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
32 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Scheme 5 Followers and subscribers of GWENT social media profiles as of 10 March 2022
Events related to The Witcher videogame series
On 28 January 2021 CD PROJEKT RED announced that The Witcher 3: Wild Hunt would be available for Nin-
tendo Switch in two versions: the Complete Edition bundle (consisting of the base game, both expansions and
all free DLCs) as well as a collection of standalone products.
On 10 February 2021 Go on Board publishers and CD PROJEKT RED jointly announced a new board game:
The Witcher: Old World. The game takes place many years before the time of Geralt of Rivia. Gamers will play
as adepts of one of five witcher schools: School of Wolf, Viper, Cat, Bear or Grin. The game’s crowdfunding
campaign was launched on 25 May on Kickstarter and Zagramw.to, and closed on 10 June having gathered
nearly 38 million PLN. These funds will be used to prepare additional contents of the game. All supporters will
also receive exclusive add-ons. The ocial release of The Witcher: Old World in two language editions (Polish
and English) is scheduled for the second half of 2022.
On 7 May 2021 CD PROJEKT RED celebrated the 10th anniversary of the release of The Witcher 2: Assassins of
Kings, as well as six years of market availability of The Witcher 3: Wild Hunt. As part of this double anniversary,
a variety of social media activities targeting the Witcher community were organized in May.
On 1 June 2021 the Studio announced that The Witcher 3: Wild Hunt – Game of the Year Edition had been made
available to PlayStation Now subscribers.
WitcherCon – the first ever event for fans of The Witcher universe, organized in collaboration with NETFLIX –
took place on 9 and 10 June. In conjunction with this event, Twitch and YouTube held broadcasts featuring
unique content as well as a range of engaging panel discussions.
During one of the WitcherCon panels the Studio announced The Witcher: Ronin – a new comic, inspired by
the traditions of feudal Japan where Geralt is a ronin following the trail of yuki onna – also known as the Lady
of Snow. Additionally, CD PROJEKT RED announced that the dedicated next-gen version of The Witcher 3:
Wild Hunt, exploiting the additional potential of Xbox Series X, PlayStation 5 and PCs, will include unique items
inspired by the Netflix series.
WeChat
40 thousand followers
Other
63 thousand followers
Instagram
41 thousand followers
Facebook
528 thousand
followers
114 thousand followers
Twitter
YouTube
101 thousand followers
VK
90 thousand followers
Reddit
116 thousand followers
Weibo
59 thousand followers
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
33 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
WitcherCon was also attended by Studio Spokko, which presented new con-
tent for The Witcher: Monster Slayer – a location-based AR mobile game set
in The Witcher universe.
21 July 2021 marked the ocial launch of The Witcher: Monster Slayer. Within
the game, users of iOS and Android devices may assume the role of freshly
trained monster hunters. With help from advanced augmented reality, loca-
tion and daytime tracking features, the game features encounters with over
a hundred monsters from The Witcher universe. Within one month of release
the game had been downloaded 1.7 million times, with strong ratings on App
Store and Google Play (4.5/5 and 4.1/5 respectively).
In August 2021 a Kickstarter crowdfunding campaign for the collector’s edition
of The Witcher: Ronin took place. The campaign attracted nearly 15.5 thousand
supporters and reached over 750% of its original goal. The comic began
shipping in March 2022.
In October a special event called Monsters’ Fall was organized in the world of
The Witcher: Monster Slayer. The chance of encountering rare and legendary
monsters was increased, along with the interaction range and overall monster
population. A series of Monster Weeks was also brought to the game, with new
timed quests appearing each week. Additional changes involved daily quests,
the weather and time display system as well as the scheme for introducing new
beasts to the game, whereby gamers can encounter a new monster species
every two weeks.
On 21 March 2022 CD PROJEKT RED announced that it was working on a new saga within The Witcher videogame
series. The corresponding social media announcement teased a new medallion. Within one day of publication,
the tweet (posted on the ocial The Witcher profile) attracted over 300 thousand likes and was shared more
than 70 thousand times, making it the most popular tweet ever posted by CD PROJEKT RED (a near fivefold
increase in likes and shares over the previous record holder – i.e. the *beep* tweet teasing Cyberpunk 2077,
posted in 2018). The Studio also announced that the next big game set in The Witcher universe would be
based on Unreal Engine 5.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
34 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Scheme 6 Number of followers and subscribers of The Witcher social media profiles as of 10 March 2022
GOG.COM
Target and scope of business activity
The GOG.COM platform was launched in August 2008. Its initial mission was to revitalize major PC cult clas-
sics and oer them for sale to international customers with particular focus on English-speaking countries, i.e.
United States, Canada, United Kingdom and Australia. The platform is now oered in English, French, German,
Russian, Chinese and Polish – this includes full game localizations as well as dedicated customer support and
integration with locally popular payment channels, accepting payments in thirteen currencies. GOG.COM also
carries releases for the macOS and Linux operating systems.
Activities carried out in the GOG.COM segment focus on digital distribution of videogames via the Company’s
proprietary GOG.COM distribution platform and the GOG GALAXY application. The platform enables customers
to purchase games, remit payment and download game files to their personal devices, while the GOG GALAXY
application provides – among others – automatic updates, cloud saves, online and cross-play features. It is also
responsible for the online features of GWENT, as well as for processing in-game sales and payments within
the PC edition of the game.
Payments collected by GOG sp. z o.o. from customers are split with the Company’s suppliers as agreed upon in
distribution contracts. Typical contracts require the Company to submit sales reports to its suppliers in monthly or
quarterly cycles, not later than 30 days following the close of the given reporting period. With regard to certain
older products the company may be contractually permitted to adapt them to the requirements of modern ope-
rating systems, or to enable multiplayer gameplay if such features were originally provided by the given game.
YouTube
377 thousand followers
VK
126 thousand followers
Facebook
1.6 million
followers
Twitter
1.3 million followers
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
35 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Scheme 7 Number of followers and subscribers of GOG.COM social media profiles as of 10 March 2022
Key products
As of the publication date of this report, the GOG.COM digital distribution platform oers over 6200 products
from more than 1000 partners. This includes both timeless classics and fresh releases from such well-known
brands as Bethesda, Disney, Electronic Arts, Ubisoft, Konami and Warner Bros.
The key dierence between GOG.COM and its competition is its strong customer focus and the “gamers first”
approach. This is evidenced, among others, by supporting the concept of ownership by striving to ensure that
single-player gamers are distributed in the DRM-free model, free of restrictions which might otherwise prevent
customers from enjoying their purchases. Products oered on GOG.COM are also richly featured and usually
include bonus content such as soundtracks, maps and wallpapers. All games bought on GOG.COM can be
returned within 30 days of purchase – the GOG.COM returns policy is among the most customer-friendly on
the digital distribution market.
In addition to the above, GOG.COM ensures compatibility of its games with current versions of MS Windows,
macOS and popular distributions of Linux, which is a particular advantage in the case of classic games and
contributes to preservation of videogame history.
The Group uses GOG.COM to market its own products directly to end users – this includes The Witcher and
The Witcher 2: Assassins of Kings, The Witcher 3: Wild Hunt (along with its expansion packs – Hearts of Stone
and Blood and Wine, also oered as the Game of the Year Edition), Thronebreaker: The Witcher Tales and
Cyberpunk 2077. Owing to GOG GALAXY in-game purchases placed by users of the PC edition of GWENT
take advantage of GOG’s sales and payment services.
Key sources of revenue
Revenues obtained in the GOG.COM segment are directly dependent on the popularity of the oered games
and their respective sales volumes. The Company continuously expands the scope of its cooperation with
suppliers and seeks access to new, attractive products. GOG.COM is also home to seasonal and one-o sales
campaigns, including summer, fall and Christmas bargain packages as well as other events which introduce
new means of attracting gamers.
Other
40 thousand followers
Instagram
20 thousand followers
Facebook
478 thousand
followers
Twitter
421 thousand followers
Twitch
66 thousand followers
VK
46 thousand followers
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
36 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Another notable source of revenue in the GOG.COM segment in 2021 was Thronebreaker: The Witcher Tales
and GWENT: The Witcher Card Game, both of which were co-developed by GOG in the framework a consortium
agreement. In this scope, revenues attributed to the GOG.COM segment comprise:
■ the GOG sp. z o.o. share of revenues from in-game sales to final customers in the PC edition (excluding the
Chinese market), as stipulated by the consortium agreement,
■ the GOG sp. z o.o. share of revenues from in-game sales handled by external partners (including the Chinese
partner), as stipulated by the consortium agreement.
GOG.COM’s involvement in the GWENT consortium concluded at the end of 2021. Starting from 2022, GOG
will not bear its share of expenses or obtain the corresponding share of revenues generated by this project.
GWENT: The Witcher Card Game and Thronebreaker: The Witcher Tales will remain available for GOG.COM
customers; however, cooperation and settlements between GOG.COM and CD PROJEKT S.A. will be based
on standard practices related to digital distribution of videogames.
Key product and marketing events
Digital distribution of videogames
As of the publication date of this report, the GOG.COM catalog of products numbers over 6200 items.
In 2021 the catalogue was expanded, among others, with the following games: Pathfinder: Wrath of the Ri-
ghteous, Metro Exodus Enhanced Edition, Biomutant, Loop Hero, Mechwarrior 5: Mercenaries, EVERSPACE
2, Psychonauts 2, Inscryption, The Medium, Timberborn, Stronghold Warlords, Trails of Cold Steel IV, Curse of
the Dead Gods, Solasta and Gamedec. GOG.COM also added classic games, including several games from
the Star Trek series, Blood Omen: Legacy of Kain, Commander Keen Complete Pack, Voodoo Kid, Operation
Body Harvest, Corridor 7 and M.U.L.E.
Sales support
With regard to digital distribution sales support focuses primarily on securing distribution rights to new, appe-
aling videogames, and on seasonal sales campaigns.
Key promotional campaigns supporting GOG.COM sales in the first half of 2021 included the We Love Games
Sale, celebrating Valentine’s Day; the subsequent annual Spring Sale oering discounts on over 3 thousand
titles, as well as more than 20 games which users could enjoy free of charge as demos prepared especially
for this occasion, and the annual Summer Sale held in June – the largest to-date event of 2021, involving over
3.5 thousand games.
In the third quarter GOG.COM organized several promotional activities, including GOG Games Festival, French
Week and a special birthday sale. September was branded as the RPG Month, with a range of articles and video
feeds devoted to this genre, along with fresh releases and attractive discounts.
In line with tradition, the highlight of the fourth quarter was the Winter Sale, which involved over 4.5 thousand
games and was GOG.COM’s biggest promotional event of 2021. The platform’s sales were also boosted by
Black Friday and Cyber Monday events.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
37 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Key suppliers and clients
GOG.COM markets games via online channels directly to millions of individual users worldwide. As such, the
segment does not have key clients in the usual sense of the term.
Chart 14 Sales of products and goods by GOG.COM in 2021 and 2020 by territory
The territorial breakdown of sales in 2021 was similar to 2020 figures. In 2021 the largest group of customers
came from the United States (37%), followed by Germany (14%), the United Kingdom (7%) and Poland (6%).
As of 31 December 2021 no single supplier in the GOG.COM segment accounted for more than 10% of the
Group’s consolidated revenues.
KEY CORPORATE EVENTS
On 21 January 2021 the Management Board of the Company announced its current policy concerning diversi-
fication of surplus current cash. The policy specifies that debt instruments held by the Company may account
for not more than 50% of the Company’s current financial assets, which are defined as the sum of the following:
cash and near-cash, bank deposits with maturity periods longer than 3 months, Polish State Treasury bonds,
other bonds guaranteed by the Polish State Treasury and bonds issued by foreign governments, estimated at
the price specified in the corresponding forward contract hedges.
On 29 January 2021 the Company was notified of a civil class action lawsuit filed in the US District Court for the
Central District of California by five natural persons who had purchased videogames via the Steam platform
which is owned by Valve Corporation (“Valve”). The lawsuit names Valve along with other developers and pu-
blishers of videogames, including the Company and its subsidiary which forms part of the Group – CD PROJEKT
Inc., as defendants. The Plaintis asked the court to adjudicate whether the terms of the Steam Distribution
Agreement violate US competition law. On 9 April 2021 the Company announced that allegations directed
against CD PROJEKT S.A. and CD PROJEKT Inc. had been withdrawn from the filing and that consequently
these entities had been excluded from the ongoing lawsuit.
Other territories
21%
Russia
3%
Australia
3%
Canada
4%
France
5%
Poland
6%
United Kingdom
7%
Germany
14%
USA
37%
Other territories
21%
Russia
3%
Australia
3%
Canada
4%
France
5%
Poland
6%
United Kingdom
7%
Other territories
25%
China
3%
Australia
3%
Canada
4%
United Kingdom
5%
France
5%
Russia
6%
Poland
6%
Germany
11%
USA
31%
2020 2021
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
38 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
In February 2021 CD PROJEKT fell victim to a hacking attack targeting its servers and CD PROJEKT RED re-
sourced residing thereupon. Backups, which the Company had been creating on a regular basis, remained
intact. The Management Board decided to immediately release information related to the attack and announced
that it would not negotiate with hackers. The CD PROJEKT team was informed of the risks and recommended
actions in relation to the attack. The incident was also reported to the appropriate authorities – the police
and the Personal Data Protection Oce. The Company also immediately moved to establish collaboration
with providers of IT security services and commissioned a set of forensic analyses. In parallel, work began on
restoring the aected systems. This involved using current backups to restore data which had been encrypted
by hackers, scanning all personal computers used at the Company for malicious software and deploying new
solutions to enhance IT security at the Group. The compromised resources have been fully restored and the
entire infrastructure brought back into operation.
The Group subsequently commissioned an independent external audit of a wide range of its security arran-
gements. This was followed by drawing up a plan of further actions and improvements in the field of security,
including IT security – these are currently being rolled out in a progressive fashion. Key changes involved
the Company’s network architecture and systems securing network access. All edge devices were replaced
and the network trac monitoring and analysis framework was redesigned. Following analysis of the internal
permission management framework, access to key systems upgraded with next-generation security services.
The Company’s IT infrastructure was also subjected to audits and network penetration tests. Finally, security
awareness courses were organized for all employees.
In March 2021 following exercise of 84 176 subscription warrants issued in the framework of the Company’s
incentive program covering the years 2016-2019, another batch of newly issued shares was assigned to entitled
parties as a conditional increase in the Company share capital, pursuant to Resolution no. 21 of the Ordinary
General Meeting of Shareholders of 24 May 2016. The shares were admitted to organized trading on 31 March
2021. As a result of the admission of Series M shares to organized trading, the Company share capital was
conditionally increased by 84 176 thousand PLN, reaching 100 738 000 PLN divided into 100 738 800 shares
with a nominal value of 1 PLN each.
On 30 March 2021 the Management Board published the CD PROJEKT Group Strategy Update. The new
strategy includes, as one of its main points, a transformation of the CD PROJEKT RED studio, and of its game
development methodology. This will enable to Studio to conduct parallel development of two AAA projects,
which is set to commence in 2022. The updated strategy also entails strengthening of the Company’s core
IP – The Witcher and Cyberpunk – among others by entering new product areas, other than RPGs, and building
expertise in the area of online gameplay. The updated strategy was discussed at length in a slide deck and
video presentation available on the Company website.
On 22 April 2021 the Management Board of CD PROJEKT S.A. submitted a recommendation to the General
Meeting concerning allocation of the net profit obtained by CD PROJEKT S.A. in 2020, in the amount of 1 132
234 728.22 PLN. The Board recommended that 503 694 000.00 PLN be divided among shareholders in the
form of a dividend (at 5 PLN per share), with the remaining 628 540 728.22 PLN reassigned to the Company’s
reserve capital. The Supervisory Board subsequently endorsed this recommendation, which proposed a record
date of 1 June and a payment date of 8 June 2021.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
39 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
The General Meeting (GM) held on 25 May 2021 voted to approve statements and reports prepared by the
Company’s managerial bodies, grant discharge to members of the Management Board and Supervisory Board
on account of the performance of their duties during the previous financial year, and pay out a dividend, at 5 PLN
per share, financed from the Company’s net profit in 2020. The General Meeting also approved an amendment
to the Articles of CD PROJEKT S.A., systematizing the list of activities in which the Company engages, and ap-
proved a change in the remuneration of Supervisory Board members. Given the expiration of the Supervisory
Board’s term of oce, the GM appointed Ms. Katarzyna Szwarc, Mr. Michał Bień, Mr. Piotr Pągowski, Mr. Maciej
Nielubowicz and Mr. Jan Łukasz Wejchert to the Supervisory Board for the next term. All materials related to
the General Meeting, including the wording of all adopted resolutions, can be found at www.cdprojekt.com.
On 26 May 2021 the Company was notified by one of its shareholders, Mr. Michał Kiciński, that his share in
the total number of votes at the General Meeting had exceeded 10%. Following purchase of 365 410 shares
of Company stock on the regulated market of the Warsaw Stock Exchange, Mr. Michał Kiciński held 10 433 719
shares and controlled 10 433 719 votes, representing 10.36% of the Company share capital and 10.36% of the
total number of votes respectively.
On 15 June 2021 the Management Board disclosed the decision by Sony Interactive Entertainment concerning
resumption of digital distribution of Cyberpunk 2077 in PlayStation Store eective on 21 June 2021.
On 29 June 2021 the Company announced that it had received a transcript of a lawsuit filed against the Com-
pany and members of its Management Board by a law firm representing the lead plainti and other eligible
holders of US securities traded under the ticker symbols “OTGLY” and “OTGLF”. Court proceedings were
subsequently suspended (in December 2021) pending negotiations, as a result of which on 27 January 2022
the Company was notified by its law firm of the conclusion of a formal Stipulation Agreement expressing the
terms of settlement. Detailed information can be found in the section titled “Disclosure of significant legal
proceedings” elsewhere in this report.
On 8 July 2021 the Company announced that it had signed an agreement concerning purchase of the Ca-
nadian Digital Scapes gamedev studio (later rebranded as CD PROJEKT RED Vancouver Studio Ltd.) with which
CD PROJEKT RED had been collaborating since 2018. The Vancouver studio joined CD PROJEKT RED’s three
existing development teams – based in Warsaw, Kraków and Wrocław respectively – to jointly work on future
projects.
On 1 October 2021 CD PROJEKT RED, in association with the “Perspektywy” educational foundation announced
a scholarship program for young girls interested in pursuing a career in the gamedev industry. “Dziewczyny w
grze!” (Girls at Play!) is Poland’s first gamedev scholarship and mentoring program which specifically targets
women – particularly high school students and inhabitants of small population centers. Participants are enrolled
in a gamedev training course, supervised by a mentor – a CD PROJEKT RED representative. Financial support
to cover the costs of education and professional development is also provided.
On 22 October 2021 the Company announced that it had concluded an investment agreement concerning pur-
chase by CD PROJEKT Inc. (a subsidiary of CD PROJEKT S.A.) of The Molasses Flood gamedev studio based in
Boston. In line with the agreement, CD PROJEKT Inc. acquired 60% of The Molasses Flood and a framework of
transactions was agreed upon whereby CD PROJEKT Inc. would acquire the remainder of the studio, enabling
its employees to be integrated in the organizational framework of the CD PROJEKT Group. The Boston studio,
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
40 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
founded in 2014, will closely collaborate with CD PROJEKT RED while retaining autonomy. It is currently working
on a separate project based upon one of CD PROJEKT’s IPs.
In the fourth quarter of 2021 the Management Board of CD PROJEKT decided to wind down its CD PROJEKT
Co. Ltd. subsidiary, headquartered in Shanghai. The company is currently undergoing liquidation proceedings.
Its main goal was to represent the CD PROJEKT Group in China (by coordinating publishing and promotional
events) – henceforth these activities will be carried out from Poland, with support from a local community and
media manager based in Shanghai.
EVENTS FOLLOWING THE BALANCE SHEET DATE
On 26 January 2022 the Supervisory Board of the Company adopted a resolution appointing Mr. Paweł Za-
wodny and Mr. Jeremiah Cohn to the Management Board of CD PROJEKT S.A. eective on 1 February 2022.
As Management Board Member, Mr. Paweł Zawodny is responsible for the technological and organizational
transformation of CD PROJEKT RED, while Mr. Jeremiah Cohn coordinates the activities of the Group’s marketing
and communication departments, and supervises franchise development.
On 3 March 2022 the Management Board of the Company announced that it had suspended sales of CD PROJEKT
Group products and distribution of games on the GOG.COM platform in Russia and Belarus.
On 21 March 2022 the Company announced that it had concluded negotiations and signed a licensing and
partnership agreement with Epic Games Epic Games International S.à r.l. The agreement concerns use of Unreal
Engine by the Company as well as cooperation between the parties in the scope of enhancing and improving
the engine. Under the agreement the Company gains the right to develop and publish games powered by Un-
real Engine 4, 5 and subsequent versions. Epic Games will also provide dedicated technical support for games
published by the Company. The agreement was concluded for a period of 15 years with a prolongation option.
It places no restriction on the number of games created with the use of Unreal Engine.
On 25 March 2022 the Management Board of the Company announced its current policy concerning diversi-
fication of surplus current cash. The updated policy specifies that debt instruments held by the Company may
account for not more than 80% (up from 50%) of the Company’s current financial assets, which are defined as
the sum of the following: cash and near-cash, bank deposits with maturity periods longer than 3 months, Polish
State Treasury bonds, other bonds guaranteed by the Polish State Treasury and bonds issued by foreign go-
vernments, estimated at the price specified in the corresponding forward contract hedges. The updated policy
also includes rating criteria for foreign bonds, and allows for up to 15% of total financial assets to be allocated
to unhedged securities denominated in USD or EUR.
On 13 April 2022 the Management Board of the Company announced that, based on recommendations from
persons in charge of development, the Company has decided to have its in-house development team conduct
the remaining work on the next-gen version of The Witcher 3: Wild Hunt. The Company also informed that it has
been in a process of evaluating the scope of work to be done and thus had to postpone the game’s release,
previously scheduled for Q2 2022.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
41 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
EFFECT OF THE POLITICAL AND ECONOMIC SITUATION IN UKRAINE
ON THE ACTIVITIES OF THE CD PROJEKT GROUP
Eect on sales
In response to the Russian armed invasion of Ukraine, on 3 March 2022 the Management Board of CD PROJEKT
decided to suspend sales of CD PROJEKT Group products as well as games distributed on the GOG.COM plat-
form on the territory of Russia and Belarus.
The Company estimates that throughout the 12-month period between March 2021 and February 2022 the
aggregate share of Russia and Belarus in revenues from sales of products in the CD PROJEKT RED segment
and in GOG.COM sales revenues amounted to 5.4% and 3.7% respectively.
At an early stage of hostilities the Polish currency (in which most expenses borne by the Group are denomina-
ted) weakened substantially against USD and EUR, i.e. the main currencies in which the Group obtains sales
revenues. Given that most of the Group’s sales are exports, this strengthening of foreign currencies against
the domestic currency should be viewed as a favorable circumstance.
Risks associated with the current political and economic situation in Ukraine
The Company continually monitors the eects of the current political and economic situation in Ukraine, Russia
and Belarus upon the activities of the CD PROJEKT Group.
The Company has terminated, or is in the process of terminating collaboration with Russian suppliers. At the
present time the Company does not intend to initiate any further collaboration with Russian or Belorussian entities.
As of the publication date of this report the Group’s operating activities proceed unhindered, and the eect of
the Russian armed invasion of Ukraine do not have a significant negative impact on the Group’s operations.
In the Management Board’s opinion the current political and economic situation in Ukraine does not aect
the quantitative data contained in the financial statement, does not provide a reason to suspect impairment of
assets, should not have a significant negative eect on the Group’s earnings in 2022, and does not jeopardize
continuation of the Company’s activities within 12 months of the conclusion of the reporting period. Given the
unprecedented character of current events and significant uncertainty associated therewith – particularly the
lack of reliable knowledge concerning the duration of the Russian invasion – as of the publication date of this
report it is impossible to accurately predict the long-term eects of the invasion upon the condition and earnings
of the Company and its Group. Any assessments and forecasts in this regard are fraught with uncertainty, and
will be subject to further monitoring and analysis by the Group.
Insofar as possible, the above assessment reflects the Company’s knowledge as of the publication date of
this report.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
42 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
DISCLOSURE OF SEASONAL OR CYCLICAL ACTIVITIES
CD PROJEKT RED
The revenues and financial result of the CD PROJEKT RED segment are strongly aected by the videogame
release schedule. CD PROJEKT RED usually takes between 2 and 5 years to produce a game. Initial develop-
ment work occurs before the previous game in the series is complete and ready to be released.
Chart 15 Eect of new releases on the quarterly revenues from sales of products, goods and materials by
CD PROJEKT RED in 2011-2021 (PLN thousands)
CD PROJEKT RED also engages in smaller-scale projects – such as add-ons for its own games or adapting
existing products to work on new gaming platforms. Such projects may be carried out directly by the Company
or by its external partners, and their implementation usually takes several months (up to about a dozen).
With regard to games which have already been released, their yearly sales breakdown is dependent on the
schedule of periodic sale campaigns. In most cases, strong sales are reported in the second and fourth quarter,
while the first and the third quarter (the latter of which overlaps with the summer vacation season) see weaker
sales.
For GWENT: The Witcher Card Game, operated in the game-as-a-service model, the revenue stream depends
on the overall popularity of the service and on the appeal of new in-game content released to gamers.
In addition to pure development activities, the Company also actively manages its franchises in other fields,
working to continually expand its target audience, and exploring new media types and platforms.
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
Q1/2011
"The Witcher 2" (PC) Q2/2011
Q3/2011
Q4/2011
Q1/2012
"The Witcher 2" (X360) Q2/2012
Q3/2012
Q4/2012
Q1/2013
Q2/2013
Q3/2013
Q4/2013
Q1/2014
Q2/2014
Q3/2014
Q4/2014
Q1/2015
"The Witcher 3" Q2/2015
Q3/2015
Expansion: "Hearts of Stone" Q4/2015
Q1/2016
Expansion: "Blood and Wine" Q2/2016
Q3/2016
Q4/2016
Q1/2017
Q2/2017
Q3/2017
Q4/2017
Q1/2018
Q2/2018
Q3/2018
"GWENT", "Thronebreaker" Q4/2018
Q1/2019
Q2/2019
Q3/2019
"The Witcher 3" (Nintendo Switch) Q4/2019
Q1/2020
Q2/2020
Q3/2020
"Cyberpunk 2077" Q4/2020
Q1/2021
Q2/2021
Q3/2021
Q4/2021
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
43 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
GOG.COM
The digital videogame distribution market, which is the main area of activity of GOG.COM, is characterized
by seasonal fluctuations in revenues. On an annual basis, the highest revenues are typically obtained in the
fourth quarter while the lowest revenues correspond to the third quarter. Sales in Q2 and Q4 are boosted by
promotional activities organized in these periods.
The sales volume is also strongly dependent on the timing of new releases in each reporting period.
Chart 16 Sales of goods and materials in the GOG.COM segment in 2018-2021 (PLN thousands)
Up until the end of 2021 the GOG.COM segment had also been obtaining revenues from microtransactions
carried out within GWENT: The Witcher Card Game.
Disclosure of external and internal factors affecting
further growth of the CD PROJEKT Group
Future growth of the Company and its Group is critically dependent on the ability to retain world-class creative
professionals and experts, and to attract a growing number of specialists, both Polish and foreign, to work on
the Group’s future releases. Strategic directions related to talent acquisition, team development and support
are presented in the CD PROJEKT Group Strategy Update (including the attached video commentary) and in
the CD PROJEKT Group’s 2021 Sustainability Report.
0
40,000
80,000
120,000
160,000
200,000
Q1
Q2
Q3
Q4
2018 2019 2020 2021
Cyberpunk 2077
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
44 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Ongoing expansion of the team and upscaling of development work calls for eective management of pro-
duction and publishing activities at the Company HQ in Warsaw and at its branch oces in Kraków, Wrocław,
Vancouver, Los Angeles, Boston, Seoul and Tokyo. The market performance of each new release is an important
aspect of the Studio’s reputation as a developer of top-quality, highly sought-after entertainment products. It also
underpins the value and recognition of brands such as The Witcher, Cyberpunk and CD PROJEKT RED, upon
which the long-term development strategy of the Company and its Group is founded. Moreover, the activities of
CD PROJEKT Group member companies are aected by external factors such as the macroeconomic outlook,
legal reforms and changes in taxation. In this sense, CD PROJEKT is in a similar position to many other compa-
nies conducting business on domestic and international markets.
Key internal and external factors which, in the Board’s opinion, may prove detrimental to the Group’s activities
and growth prospects are listed in the risk assessment section elsewhere in this report.
With regard to further quarterly periods in 2022 the CD PROJEKT Group intends to develop its activities in
an organic manner. Additionally, while introducing the Group’s strategy update the Management Board also
announced increased openness to mergers and acquisitions, in order to assist the growth of CD PROJEKT RED
and support implementation of the Group’s strategy.
CD PROJEKT RED
Key factors which determine the growth of the CD PROJEKT RED segment include ongoing projects, the scale
of development work associated with those projects and their perceived popularity among gamers. In this con-
text, the most significant factors shaping the current results of the CD PROJEKT Group include the popularity of
previously published games set in The Witcher and Cyberpunk universe, as well as – in future periods – events
surrounding the development and market reception of further development projects.
In the coming quarters CD PROJEKT RED will focus on releasing the next-gen edition of The Witcher 3: Wild
Hunt, releasing a large expansion for Cyberpunk 2077 and launching the CYBERPUNK: EDGERUNNERS anime
series, which will enrich the Studio’s franchise with a new format and improve its global recognition.
Another important milestone for CD PROJEKT RED, scheduled for the coming quarters, involves integration of
the Studio’s development processes with a new game engine – specifically, Unreal Engine 5 – on the basis of
the licensing and partnership agreement concluded with Epic Games in March 2022. Use of this engine should
significantly streamline the game development process. The Company’s strategic partnership with Epic Games
involves further work on UE5 in the scope of support for open-world games, and adaptation and optimization of
its elements to match the conceptual framework of future projects. In addition, Epic Games has also committed
itself to providing dedicated technical support for CD PROJEKT RED games. Working with UE5 also significantly
broadens the Studio’s recruitment opportunities given that Unreal Engine is familiar to many game developers.
Maintaining the observed growth dynamics and expansion of the CD PROJEKT RED segment will depend on
further enhancement of its world-class videogame development skillset and on the capacity for eective com-
munication with the global gaming community. Both aspects are crucial for Studio’s ongoing transformation –
labeled RED 2.0 – which aims, among others, to apply a more agile approach to the videogame development
process, thereby improving quality, shortening future marketing campaigns and ensuring that such campaigns
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
45 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
are based on more polished content. In project management terms, maintaining two separate major franchises
(The Witcher and Cyberpunk), along with several independent development teams, will enable the Company to
conduct parallel work on several projects, beginning in 2022, and will smoothen its long-term release schedule.
This migration towards a dual franchise model supported by several independent product lines also permits
optimization of manufacturing and financial activities, mitigates important risk factors and makes it easier for
Company employees to seek professional fulfillment.
GOG.COM
Sales in the GOG.COM segment sales have, in the recent years, benefitted from customers’ increasing tendency
to turn to online channels for purchases.
GOG.COM growth also depends on seeking additional brand-new products to add to its lineup. Accordingly,
GOG sp. z o.o. actively communicates with leading global developers and publishers of videogames, continually
expanding its list of business partners and products oered. Each new release on GOG.COM contributes to
the platform’s popularity and drives up sales. In addition to adding new products GOG sp. z o.o. also seeks to
expand its user base by attracting new gamers – those who have not yet set up a GOG.COM account. During the
recent years the Company has been successful in this regard, owing to its PR activities and synergies resulting
from cooperation with CD PROJEKT S.A. The GOG.COM customer pool continues to grow at a steady pace.
Further growth of activities in the GOG.COM segment, including the potential to acquire unique know-how and
experience, and to fully leverage the Company’s technological expertise, will be influenced by development
of features which support sales on the platform, including better integration of GOG GALAXY monetization
mechanisms with the GOG.COM storefront, as well as increased focus on expanding the GOG.COM catalogue
with classic games.
OTHER FACTORS
The growth of the CD PROJEKT Group will also be aected by development work and other activities carried
out by its subsidiaries – Spokko and The Molasses Flood. Spokko intends to continue developing The Witcher:
Monster Slayer, thus naturally contributing to the Group’s know-how and ensuring its presence on the mobile
game market, which is currently the fastest growing market segment. As for The Molasses Flood, it is developing
a new game based on one of CD PROJEKT IPs, with a view towards establishing a new product line for the Group.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
46 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Disclosure of significant achievements in the scope
of research and development activities
With regard to development of videogames – R&D initiatives, including the ongoing search for new solutions
and more eective use of existing technologies, constitute a core aspect of the Group’s business profile and
significantly aect its daily activities.
R&D work related to videogame development begins at the conceptual phase and lasts while successive pro-
totypes are made available for testing and optimization, ensuring compatibility, usability and playability – all
the way to the final product.
Development activities
In 2021 development activities were carried out in the framework of the following projects:
■ Thronebreaker: The Witcher Tales for Android devices – work has concluded and the game was released on
17 June 2021;
■ Cyberpunk 2077 for next-gen consoles – work has concluded and the next-gen version was released on 15
February 2022, after the balance sheet date;
■ The Witcher 3: Wild Hunt for next-gen consoles – in collaboration with Saber Interactive;
■ Cyberpunk 2077 expansion;
■ CYBERPUNK: EDGERUNNERS anime series – in collaboration with Studio Trigger.
Research activities
In 2021 research activities were carried out in the framework of the following projects:
■ New project carried out by The Molasses Flood and based on one of CD PROJEKT Group’s IPs – the prelimi-
nary research phase concluded at the end of 2021; the project has since entered development (which entails
capitalization of further investment expenditures);
■ The next AAA game set in The Witcher universe (announced on 21 March 2022).
The above list is limited to projects which have been ocially announced. Further exploratory and research work
has been carried out in the framework of other, unannounced projects; in addition, the Company continued to
expand and improve its earlier games, including in particular Cyberpunk 2077 and GWENT.
In 2021 CD PROJEKT RED also carried out preparatory work related to collaboration with the Warsaw Technical
University. The aim of this collaboration would be to facilitate R&D activities in the scope of new technologies
which may be of future use to the Company.
A new, dedicated development team is at work on RED Play – a multiplatform framework for managing the
Studio’s game portfolio and support communication between CD PROJEKT RED and the gaming community.
In 2018 CD PROJEKT was granted the status of a Research and Development Center (RDC). On 11 August 2021
the Ministry of Development, Labor and Technology issued a decision confirming that the Company engages
in R&D activities and upholding its RDC status.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
47 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Disclosure of significant agreements
13
No significant agreements were concluded by CD PROJEKT during the reporting period.
Risk management at the Group
Risk management
The CD PROJEKT Group is exposed to a range of risks, both financial and non-financial, associated with its
operating activities. In 2021 a Risk Management Procedure was introduced at the Group, formalizing methods
of managing and mitigating strategic risks.
Risk management at the Company comprises a clearly defined set of rules which permit identification, assessment
and analysis of risks, as well as further action in order to achieve an acceptable level of risk given the identified
threats and thereby mitigate the consequences of potential circumstances which may have a negative eect
on the activities of CD PROJEKT S.A., including its financial stability.
A clear assignment of competences has been introduced as part of the risk management process. A Risk
Management Committee has been established, comprising the so-called risk owners, i.e. top managers and
executives who coordinate processes in respective branches of the Company. Risk management at the Com-
pany’s subsidiaries is the responsibility of their respective management boards.
The Company performs analysis of risks to determine their likelihood of occurrence and impact. The former
analysis acknowledges control mechanisms and their eectiveness, while the latter is based on potential con-
sequences (financial and otherwise) for the Company.
The significance of a risk is calculated by multiplying the likelihood of occurrence by the impact, as listed in
the risk value matrix. Following analysis of each risk, the Risk Management Committee submits results to the
Management Board for approval, whereupon the Board may decide on further steps, depending on the signi-
ficance of the risk. The Management Board may decide to accept, mitigate, transfer or avoid the risk. When the
given risk exceeds the acceptability threshold, its owner, in collaboration with the Risk Management Committee,
must develop suitable control mechanisms and mitigation actions, then submit them to the Management Board
for approval.
Significant (strategic) risks
The following risks have been identified as significant. The description of each risk is accompanied by a list of
actions which have been undertaken to mitigate the potential consequences of its materialization.
13 An agreement is regarded as significant if the projected total value of liabilities arising under the agreement exceeds 10% of the conso-
lidated assets of the Group.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
48 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
While due diligence was applied in identifying and describing the risks described below, in the course of its
daily activities the Group may be exposed to new types of risks which it had not previously faced, or which
had not been heretofore identified.
BUSINESS MODEL RISKS
Risk associated with focusing on a limited number of projects with long investment cycles and unpre
-
dictable commercial potential
Description: CD PROJEKT RED focuses on developing single-player role-playing games. The Studio’s ambition
is to create multilayer RPGs with nonlinear storylines, based on cutting-edge technological solutions. Given
the scope of such projects and their development lifecycles which span multiple years, these games – often
referred to as “AAA” – require above-average development and marketing budgets. A hypothetical unsuccessful
release of another AAA game by CD PROJEKT RED may potentially result from e.g. failure to meet gamers’ high
expectations with regard to quality, gameplay appeal or content, technical issues associated with the game or
negative reviews by journalists and market experts. Materialization of the risk associated with focusing on a
limited number of projects with long investment cycles and unpredictable commercial potential might suppress
sales and have a detrimental eect on the Company’s and Group’s future earnings.
Actions taken: In line with the CD PROJEKT Strategy, in the coming years the Studio wants to base its growth on
successive rollout of new products. Both flagship franchises will be enriched with additional content (other than
large AAA games) and projects representing new market segments, including new media and platform types.
Focusing on a limited number of key projects should provide the team with a comfortable work environment,
required to ensure the quality of future products.
Risk associated with entering new market segments
Description: Entering new market segments, where the Company may not yet possess extensive experience
and know-how, carries a risk of project failures and may cause the Company to incur additional costs or fail to
obtain the expected revenues. In turn, investing in the development of own activities in collaboration with exter-
nal partners, or – alternatively – taking over existing companies or teams may result in diculties in ensuring
optimal project management and integrating new entities or teams with the Group, and may also increase costs
or prevent the Company from obtaining the expected revenues.
Actions taken: When deciding to initiate a new project, in order to ensure optimal control, Group member com-
panies take action to develop in-house skills and competences by recruiting experts and specialists who are
familiar with the given field. In selected cases expansion to new fields may be carried out in collaboration with
external partners who possess greater experience in that context.
Risk of failure to meet development goals
Description: Engaging in R&D activities related to development and distribution of top-quality AAA games repre-
sents the core business model of CD PROJEKT RED, Spokko and The Molasses Flood. These kinds of projects
are often characterized by long, complex and iterative development cycles, which requires the Company to adapt
to the changing market, accurately predict gamers’ preferences and follow up on trends created by competing
gamedev studios. The Company faces the risk of incorrectly scheduling its development processes, which is
an inherent aspect of innovative R&D work carried out by the Group.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
49 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
The ability to meet development goals is also aected by technological progress, i.e. changes related to pro-
gramming tools, software, technologies and gaming platforms applied in the development process. The digital
entertainment industry, which represents the CD PROJEKT Group’s primary area of activity, is characterized by
increasing complexity of technologies and IT tools. Technological progress proceeds in lockstep with growing
expectations on the part of consumers of CD PROJEKT Group products, which, in turn, drives competition on
the digital entertainment market. New products tend to be increasingly complex and sophisticated, both with
regard to the underlying technologies and artistic merit. This rapid pace of development necessitates frequent
corrective actions, development of improved systems and increasing sophistication of the products oered.
Technological changes may also influence the means by which games are delivered to the final customer, me-
thods of interacting with and monetizing digital entertainment, as well as the capabilities of gaming platforms.
In 2022 the Company decided to enter into a licensing and partnership agreement with Epic Games Epic Games
International S.à r.l. The agreement concerns use of Unreal Engine by the Company as well as cooperation
between the parties in the scope of enhancing and improving the engine to adapt it to the needs of open-world
games. However, creating and publishing games based on Unreal Engine requires the Company to familiarize
itself with this technology, adapt the tools used by its developers, or develop entirely new tools. Furthermore,
basing games on a licensed engine (i.e. Unreal Engine) may render the Company’s basic business activities
dependent on collaboration with the license provider.
Materialization of the risk of failing to meet development goals may result, among others, in a decrease or loss
of trust on the part of investors and gamers, a lowering of the Company’s position on the market and a reduction
in sales revenues or increase in costs.
Actions taken: In order to meet its development goals the Company strives to deliver games on time while
upholding high quality standards. In the CD PROJEKT Group Strategy Update, published on 30 March 2021, the
Management Board announced long-term changes to enhance the flexibility and comfort of the CD PROJEKT
work environment and the game development process. This transformation, called RED 2.0, involves a shift
to the agile development model. In line with the adopted principles gamer experience should be prioritized,
which is why the Studio works to uniformize and improve its project management methods to facilitate a more
ecient production process. To this end, interdisciplinary teams are being set up, each equipped with the ap-
propriate expertise and skills. Members of such teams can exchange knowledge and experience; additionally,
the Studio continues to expand its game development workforce. The Company also introduces solutions aimed
at enhancing communication and transparency in collaboration between teams, works to introduce clearly
defined roles and responsibilities in the decision-making process, and institute a training program to build the
necessary agile development skillsets.
Member companies of the CD PROJEKT Group continue to monitor technological progress related to hardware
and software insofar as such progress may aect their activities. The goal of this monitoring is to adapt strategies
taking into account breakthroughs in videogame quality, development or distribution processes.
The licensing and partnership agreement concluded with Epic Games International S.à r.l. enables the Company
to use cutting-edge IT solutions and participate in their further development. Applying this external technology
also provides an opportunity to improve the Company’s internal toolkit, and to involve team members (particu-
larly programmers) in close collaboration with Epic Games in order to exchange experience. The partnership
with Epic Games is long-term and strategic in nature – the contract was concluded for a period of 15 years,
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
50 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
with a prolongation option. It does not restrict the number of games which the Company may develop with the
use of Unreal Engine, and provides for dedicated technical support for the Company’s products on the part
of Epic Games. The existing proprietary REDengine, which powers Cyberpunk 2077, will remain in use in the
upcoming expansion for that game.
Risk of losing key suppliers
Description: In the course of its operations, the Group relies on external suppliers for certain specialized appli-
cations and software required in the development of games, along with the associated licenses. The Group’s
member companies also collaborate, on an ongoing basis, with creators, developers, subcontractors and
publishers. Terminating cooperation with suppliers of products or services required in ongoing projects may
negatively aect sales and impact the Group’s earnings. The strategic licensing and partnership agreement
signed in 2022 with Epic Games International S.à r.l., which also provides for dedicated technical support for
the Company’s products on the part of Epic Games, entails the risk of terminating cooperation with this key
business partner, which would aect the Company’s development schedule, as well as the related goals and
financial expenditures.
Actions taken: The Group minimizes the risk of losing key suppliers by maintaining good trade relations with
business partners and by actively seeking new collaboration opportunities. Member companies of the Group
actively monitor the market and may take steps to replace selected components or tools used in the production
process, should such changes become necessary. To mitigate the risk of losing key suppliers the Company
takes steps to ensure far-reaching contractual protections. The licensing and partnership agreement with Epic
Games International S.à r.l. was signed for a period of 15 years with a prolongation option; the agreement also
does not restrict the number of games which can be developed with the use of Unreal Engine.
Risk of temporary restriction of access to distribution channels which carry the Group’s products, or to
certain markets and hardware platforms
Description: The Company distributes its own products via physical channels (retail outlets) as well as digitally,
which – except for the Group’s proprietary GOG.COM platform – relies on cooperation with external distributors.
Company games may be withdrawn from selected storefronts and their return to such storefronts may depend
on multiple factors, some of which may be outside of Company control. There is also a risk of temporary una-
vailability of Company products in certain distribution channels due to dissolution or expiration of distribution
agreements. Temporary withdrawal of Company products from certain traditional and digital distribution chan-
nels may negatively aect sales of such products and thereby impact the Company’s and Group’s earnings.
Development of games for “closed” platforms, such as gaming consoles or iOS devices, and distributing games
on markets where the applicable legislation calls for certification (e.g. China) requires direct cooperation with
the certifier. Changes in local regulations or internal requirements and procedures aecting the Group’s busi-
ness partners are a significant risk, as is termination of cooperation between the developer and the platform
proprietor, delays in the certification process, denial of certification or revocation of previously granted certifi-
cation. Each of those events may adversely impact revenues from sales of the Group’s products on selected
territories or platforms.
Actions taken: To minimize the risk of unavailability of CD PROJEKT RED products the Company cooperates
with a broad range of distribution partners and works to ensure that its products meet the demands of platform
owners as well as consumers. As for risks associated with denial of certification and, consequently, the inability
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
51 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
to market products on certain territories and on certain hardware platforms, in justifiable cases the Company
engages with local partners who possess the experience and knowledge required to secure certification of the
game (or of its new editions or supplementary content) prior to its rollout on the given market.
Cybersecurity risks related to leakage, loss or unauthorized modification of data
Description: Data storage and data processing in IT systems carries the risk of leakage, loss or unauthorized
modification. Cybersecurity risks go beyond corruption or destruction of data and the associated financial loss,
and may include theft of intellectual property, loss of productivity or loss of reputation. Cybersecurity risks may
involve internal or external circumstances, whether intentional or inadvertent, which result e.g. from cyberattacks,
deployment of malicious software or other breaches of security.
Actions taken: To minimize cybersecurity risks the Group has developed a plan based on the “defense in depth”
principle, with multiple overlapping security systems. The Group continues to roll out and improve technical
measures which contribute to the security of its IT infrastructure. Security requirements are uniformized and
iterated to ensure that access to information and data processing are performed in a controlled manner. An
important aspect of the Group’s approach to cybersecurity is a series of internal training courses related to IT
security, raising awareness of threats related to social manipulation as well as phishing. The Group continues
to monitor its data processing systems to ensure appropriate technical safeguards against potential evasion
of security measures.
Risk of unavailability of IT infrastructure or services
Description: The risk of unavailability of IT infrastructure or services refers to unforeseen events which prevent
access to the IT infrastructure, business applications and software used in the development process, or structures
and systems needed to ensure continuity of operations, including the GOG.COM and GOG GALAXY platforms.
IT systems, including servers and networks, including Internet access devices, may be subject to outages and
technical malfunctions, which may negatively aect the continuity or eciency of ongoing development projects.
Such risks may result from internal as well as external causes, including human error, time pressure, DDOS
attacks or unavailability of SaaS resources. They are also aected by the current “remote work” model, which
calls for additional technical arrangements, as well as the Group’s reliance on electrical power, which – in the
case of a protracted power outage – would require restoration of development environments at backup locations.
Actions taken: In order to minimize the risk of unavailability of IT infrastructure or services, IT teams monitor the
selection of IT tools used to ensure high availability of critical systems and services. Given that most of these
systems are located on the Group’s premises, the main server room has been equipped with uninterrupted
power supply devices, access control systems as well as alarms and systems which monitor key environmental
parameters. All servers are backed up in accordance with a formalized procedure. The Information Security
team screens the Group’s suppliers and develops plans to ensure continuity of operations and regular testing.
LEGAL RISKS
Risk associated with regulatory compliance
Description: The activities of the CD PROJEKT Group are subject to a wide range of legal regulations which may
dier depending on the territory where Group member companies carry out activities and distribute products,
services or licenses. Numerous aspects require constant legal oversight, especially as relates to protection of
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
52 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
intellectual property, antitrust regulations, consumer rights or labor law. Frequent changes in the applicable
laws or interpretations, occurring both in Poland and abroad, carry the risk of noncompliance or infringement
on the part of the Group’s member companies. Some changes in legal regulations may fail to acknowledge the
specific nature of the videogame industry, exposing Group member companies to major unforeseen expenditu-
res as they work to maintain legal compliance. Each change in legal regulations or interpretations thereof may
potentially have a negative impact on the Group’s activities, causing financial loss, legal action taken against
the Group, or loss of reputation.
Large portions of sale, purchase and licensing agreements concluded with foreign parties fall within the jurisdic-
tion of countries indicated by the Group’s business partners. This creates the risk of incorrect interpretations of
foreign law or of the provisions of contracts governed by foreign law. Such exposure to multiple legal systems
also carries the risk of potential inadvertent breaches of foreign law.
Actions taken: The Company takes a number of actions to mitigate the risk of noncompliance. Changes in
regulations, case law and best practices are monitored on an ongoing basis, as are the ocial communiques
issued by public authorities and supervisory bodies (this monitoring is performed by the internal legal team
and also subcontracted to specialized law firms). By formalizing its compliance processes and establishing a
distinct Privacy & Compliance department, tasked with monitoring and coordinating the Company’s compliance
requirements (both internal and external), the Company attempts to ensure that upcoming legal changes
are taken into account ahead of time, and that appropriate safeguards and adaptations are put in place at
the Group’s member companies. Furthermore, the Company also works to raise the expertise of personnel
charged with maintaining compliance, through training courses, certification and involvement in expert panels,
including at conferences devoted to the legal aspects of carrying out business activities in Poland as well as
on the international stage.
Risk associated with processing personal data
Description: The risk associated with processing personal data aects a range of data processing activities
carried out by Group member companies which fall within the scope of Polish and foreign legal regulations on
territories where the Group conducts its business. Such risk may materialize e.g. through infringement of the
confidentiality, integrity or availability of personal data, resulting in significant financial penalties. It may also
involve noncompliance with legal regulations which govern privacy, causing Group member companies to
incur excessive administrative costs (whether operational or financial) in order to ensure proper observance
of such regulations.
Should data protection measures – whether existing at present or expected to be rolled out in the future – prove
insucient, exposure, corruption or loss of personal data may ensue. This may be caused by IT system failures,
human error or malicious third-party interference.
Actions taken: With regard to processing of personal data, CD PROJEKT Group member companies are as-
sisted by internal mechanisms in place at the Group, as well as by external entities. The Group takes action to
mitigate and control risks associated with processing personal data. This includes internal audits, confidentiality
audits carried out in the framework of specific projects, data protection and privacy impact analysis, and ad-hoc
consultations held for the benefit of employees who supervise processing of personal data. Additionally, a de-
dicated Privacy & Compliance department has been established at the Company, tasked, among others, with
organizing regular training courses related to protection of personal data and information security in general,
as well as with assisting Group member companies in minimizing the presented risk.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
53 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Risk associated with intellectual property rights
Description: Products and services oered by Group member companies are based upon intellectual property.
Eective acquisition, licensing and protection of intellectual property rights (including trademarks) held by the
Group is therefore an important aspect of the Group’s activities.
In the course of their operating activities, including in the videogame development process, Group member com-
panies acquire copyright to third-party works or images on the basis of contracts concluded with authors. The
Group invests substantial eort in monitoring intellectual property (e.g. as relates to images, names or items);
however, given the large number of such entities as well as the variability of legal regulations which extend
protection to their creators throughout various territories, the risk of inadvertent infringement of third-party IPR,
ineective acquisition of copyright, or acquisition of copyright from an unauthorized party, cannot be entirely
ruled out. An important risk also relates to third-party infringement of Company rights caused by illegal distri-
bution of products oered by Group member companies.
Due to the global reach of CD PROJEKT Group products and services, it is natural to oer such products and
services in local languages and using national alphabets. This, however, involves the risk that a brand name or
trademark held by the Company may conflict with an existing trademark, giving rise to copyright infringement
claims. In addition, the Group may be unable to locally register some of its trademarks due to their resemblance
to trademarks which have already been registered.
Group member companies monitor the impact of intellectual property regulations upon the Group’s activities;
however, claims related to inadvertent infringement of third-party IPR cannot be ruled out. It should be noted
that any claim filed against the company in conjunction with potential infringement of intellectual property rights,
patents or trademarks may negatively aect the Group’s reputation and growth prospects
Actions taken: The CD PROJEKT Group is actively involved in activities related to protection of intellectual
property. It continually works to analyze and adapt its contracts to the existing legal circumstances in order to
minimize the above-mentioned threats. In doing so, the Group enlists the assistance of domestic and foreign
law firms. As a result, the legal safeguards present in the Group’s third-party contracts are iteratively improved.
To protect its own brands, the Group registers trademarks throughout the European Union and elsewhere. It
also monitors, on an ongoing basis, the registration of trademarks by third parties, and conducts analysis of
existing trademarks before deciding on names for its own products. Furthermore, the Group performs ongoing
legal verification of its products and services in order to prevent infringement of third-party IPR, and takes action
to combat infringement of its own IPR – among others, by monitoring online auction portals and distribution plat-
forms in Europe, the United States and Asia. Auctions which violate the Group’s IPR are regularly struck down,
depending on the solutions oered by the given portal.
Risk associated with improper assessment or unauthorized access to inside information
Description: As an issuer of securities, the Company must observe disclosure obligations and perform assess-
ment of emerging information to determine whether it might constitute inside information. Given the need to
assess the confidentiality of information prior to its disclosure, the Company runs the risk of incorrectly conc-
luding that certain information does not constitute inside information, and, consequently, failing to meet its
disclosure obligations, which may result in fines or other penalties. Employees and collaborators of the Group
gain access to information which may be regarded as inside information in the course of participating in the
Group’s operations. This includes e.g. information about future unannounced projects, estimated release dates,
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
54 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
significant transactions, financial results or marketing plans. Improper discharge of disclosure obligations thro-
ugh unauthorized disclosure of inside information, whether intentional or unintended, may result in financial
penalties and impact the Company’s and the Group’s financial standing.
Actions taken: The Company has instituted a set of regulations governing circulation and protection of inside
information at the CD PROJEKT Group, listing events which the Company regards as representing inside in-
formation. The Company also maintains lists of individuals who have access to inside information, and advises
these individuals of their rights and responsibilities in this regard. Moreover, the Company signs non-disclosure
agreements with its employees, collaborators and business partners. These agreements specify the basic
responsibilities associated with potential access to inside information. The Group works to train and raise the
awareness of its employees and collaborators with regard to circulation of inside information at the Group’s
member companies.
Risk associated with changes or diering interpretations of legal regulations, and with subsidies
Description: Significant changes are occurring in tax law. Legislative bodies have imposed additional reporting
obligations upon taxpayers and introduced a range of new restrictions related e.g. to qualifying expenditures
to cost categories, while also introducing new forms of tax relief, enabling taxpayers to reduce their overall tax
burden. When deciding to make use of such relief, the CD PROJEKT Group must develop appropriate internal
documentation and settlement standards, which, in turn, may potentially be brought into question by tax authorities.
Group member companies also benefit from subsidies which support ongoing investment and development
projects. Relying on this form of funding may involve a risk of having the relevant documentation, justifications
for funding requests or calculations and settlements questioned by the authorities – while the projects are in
progress as well as following their conclusion.
Actions taken: To minimize the risk of rejection of its fiscal or subsidy-related settlements, the Group has es-
tablished an internal tax unit, charged with overseeing such settlements as well as overall compliance with
tax law. This unit monitors legislative processes and interpretations issued by tax authorities, and implements
procedures which aim to systematize internal procedures and guarantee proper discharge of fiscal obligations
by the Group. In specific cases the Group’s member entities also enlist the help of external tax experts, both
domestic and foreign.
TEAMRELATED RISKS
Risk associated with departure of team members
Description: The risk associated with departure of team members, including a high churn rate, is an important
threat to the continuity of the Group’s operations and attainment of its business objectives. Talent and com-
mitment are highly prized in the gamedev industry, and there is strong competition among commercial entities
wishing to attract skilled professionals. Loss of key team members may harm innovation, the pace of work and
the quality of products and processes. It may also cause the Company to forfeit unique opportunities and, as
a consequence, blunt its competitive edge.
Actions taken: The CD PROJEKT Group involves its employees in large-scale, ambitious and innovative pro-
jects, which oer many opportunities for career and personal development. The Group’s internal training and
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
55 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
workshop curriculum actively supports development of capabilities and soft skills. In addition to professional
training, the Group also oers competitive salary and compensation packages by monitoring trends related
to various job positions.
The Group has instituted a system of annual bonuses (profit sharing) for all team members. Bonuses assigned
under this system depend on the Group’s net profit, or that of its individual segments, for the given financial
year. CD PROJEKT also presents persons regarded as crucially important for the Group and who meet its in-
ternal criteria with an option to enroll in long-term incentive programs where participants may become eligible
to claim Company shares at a predetermined historical price. Persons employed by member companies of the
Group have access to competitive benefits packages (including medical care, fitness programs, internal gym,
healthy food at the oce, etc. – the composition of the benefits package varies between subsidiaries and oce
locations). The Group also supports flextime arrangements and oers a customizable work model (oce work,
remote work or a mix of both).
Regardless of the actions undertaken by the Group, a certain level of churn is unavoidable and natural. Given
the specific nature of the Group’s activities, which focus on long-term projects, such churn typically increases
in periods following each release.
Risk associated with availability and recruitment of specialists
Description: The activities and growth prospects of CD PROJEKT Group member companies are greatly de-
pendent on maintaining an experienced, knowledgeable and motivated workforce. The videogame industry is
among the most dynamically expanding industries in the world, which results in fierce competition for access
to specialized talent. Given the observed economic growth and opening of foreign markets, the Group’s de-
velopment plans call for continual recruitment of employees, both Polish and foreign. The inability to attract
world-class specialists, or the loss of experienced employees, might impact the quality and release schedule
of Group products, and therefore also the Group’s growth rate and financial result.
Actions taken: Member companies of the Group work to expand and upgrade their internal HR and recruit-
ment departments, including through candidate experience surveys, periodic analysis of their outcomes, and
introducing new solutions which assist in the search for new specialists. Recruitment indicates are monitored
and analyzed on a monthly, quarterly and annual basis with respect to the number of job applications, process
duration, number of employment oers and principal sources of prospective candidates. The Group works to
enhance its recruitment process by applying a customized approach to recruitment (depending on position)
and attempting to streamline the process for candidates. It also engages in internal and intragroup recruitment.
A relocation package is oered to foreign nationals who arrive in Poland, with a range of activities available
in order to ease their immigration and settlement. Hired candidates are oered salary packages and other
benefits, as listed in the Actions taken section of the preceding risk description. The Company also operates
an internal recommendation system whereby existing employees may point out prospective candidates for
employment. In addition, in 2021 a dedicated Employer Branding unit was established to coordinate long-term
activities aimed at promoting CD PROJEKT’s image as a desirable “employer of choice”. The goal of these ac-
tivities is to attract fresh talent and gain a competitive advantage. The team familiarizes prospective candidate
with various aspects of employment at the CD PROJEKT Group – an attractive environment in which to further
one’s professional career.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
56 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Risk of noncompliance with employment regulations
Description: Given the number and diversity of individuals employed at the Group there is a risk of violating
employment regulations in the course of daily activities at Group member companies. In this context the Group
may be subject to periodic inspections carried out by institutions and authorities authorized to perform such
inspections, as well as to lawsuits filed by former employees alleging breaches of labor law and employment
regulations. Such noncompliance may also cause undesirable dynamics in employer-employee relations, and
undermine the substance of civil law agreements related to the videogame development cycle.
Actions taken: With regard to proper management of employment risks, the Company undertakes a range of
activities to safeguard its team members. Each team at the Company is assigned a HR Partner; furthermore,
procedures which regulate the rights and responsibilities of employees are implemented and enforced – this
includes a procedure for counteracting undesirable conduct in employee relations, as well as a formal Di-
versity Policy. Employees are able to anonymously or personally report any irregularities, including breaches
of employment regulations, and there are systems in place which protect the confidentiality of such reports
and their authors, and which protect whistleblowers from potential retribution. The Company also works to
ensure transparent internal communication related to employment, including changes in regulations, types of
agreements, absences, leaves (including parental leave) and feedback options.
FINANCIAL RISKS
Risk of loss of liquidity and credit risk
Description: Improper management of working assets, dependence on a single client or a narrow group of
clients, and excessive concentration of cash assets at a single financial institution may jeopardize the Group’s
liquidity. Additionally, when agreeing to deferred payment for products sold, or obtaining licensing revenues
which are typically accounted for and remitted post factum after the close of the given accounting period, the
Group faces the risk of insolvency of its contractors. In the course of its activities the Group encounters con-
centration of demand, where sales to individual clients exceed 10% of the Group’s aggregate sales revenues.
Actions taken: The Group actively manages its working assets, monitoring its financial resources and debt in
relation to equity and financial result, both current and anticipated, as well as its future investment plans. As of
the publication date of this report the CD PROJEKT Group has no outstanding debt under any credit or loan
agreement. Surplus cash is deposited in several banks with which Group member companies collaborate in
order to diversify allocation of their cash and deposits. Additionally, CD PROJEKT S.A., which holds the bulk
of the Group’s financial resources, invests part of these reserves in treasury bonds and bonds guaranteed by
the State Treasury.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
57 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
As of 31 December 2021 CD PROJEKT S.A. held treasury bonds with a total balance sheet value of 477 415
thousand PLN.
Treasury bonds held on 31.12.2021 S&P Fitch Moody’s
Polish State Treasury bonds (denominated in PLN) A- A- A2 248 754
US Treasury bonds (denominated in USD) AA+ AAA AAA 204 144
German Treasury bonds (denominated in EUR) AAA AAA AAA 24 517
Total treasury bonds held 477 415
The goal of liquidity management at the Group is to ensure the highest possible level of security required for
the Company to discharge its obligations and permit unhindered implementation of videogame development,
publishing and investment plans. To mitigate the risk of client insolvency, the Group performs ongoing moni-
toring of the collection of receivables. Collection of impaired receivables is subcontracted to external entities
which specialize in such activities.
Currency risk
Description: Due to the global scope of its activities the Group obtains most of its revenues in foreign currencies.
Consequently, the Group is exposed to risks associated with sudden changes in exchange rates, particularly
the strengthening of PLN against foreign currencies.
Most of the publishing and distribution contracts to which CD PROJEKT S.A. is party (as a videogame developer)
are settled in foreign currencies – typically in USD or EUR. As a result, the strengthening of PLN against USD or
EUR is regarded as an unfavorable circumstance by the Group, reducing its revenues from distribution and licen-
sing contracts. GOG sp. z o.o. obtains revenues in 13 currencies, including primarily USD, and to a lesser extent
EUR, PLN, GBP, RUB, CAD, AUD and others, while expenses are mostly borne in USD and PLN. Accordingly, the
weakening of currencies in which GOG.COM obtains revenues against USD or PLN is, as a rule, viewed as an
unfavorable circumstance by the CD PROJEKT Group, reducing the revenues and profitability of GOG sp. z o.o.
Group member companies also make purchases of products and services in foreign currencies – in these cases,
the weakening of PLN against such currencies may result in unfavorable exchange rate dierences.
Actions taken: CD PROJEKT S.A. attempts to minimize its exposure to fluctuations in exchange rates, however
the corresponding risks cannot be entirely eliminated. Regarding risks inherent in investing in foreign treasury
bonds, denominated in the issuer’s currency, the Company’s exposure to variable exchange rates is limited by
concluding osetting forward currency sale transactions whenever financial resources are transferred to the
corresponding investment accounts.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
58 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
The following table summarizes the forward contracts concluded in 2021 for each currency.
Forward contract
currency
Value of forward contracts
(foreign currency units)
Value of forward contracts
(PLN equivalent, according
to forward exchange rates)
Estimated fair value of
forward contracts as of 31
December 2021 (PLN)
EUR 5 550 25 425 (455)
USD 49 740 184 921 (17 451)
Total 210 346 (17 906)
In line with its surplus cash diversification policy adopted in March 2022, CD PROJEKT S.A. may allocate up to
15% of its total cash assets to unhedged securities denominated in USD and EUR.
GOG Sp. z o.o. secures cash flows associated with existing or future trade contracts denominated in foreign
currencies by concluding forward currency exchange transactions. As a rule, these contracts correspond to
gross currency exposure (i.e. the full amount of the anticipated cash flow).
Risk associated with interest rates and inflation
Description: The overall condition of the global economy, including political, economic and military crises as
well as the spread of pandemics may aect the activities, financial standing and earnings of the CD PROJEKT
Group. A negative pandemic-related, macroeconomic or political outlook may hinder access to sources of fi-
nancing, drive up the prices of goods and services, induce consumers to adopt a conservative stance, or result
in restrictions upon the sale of products as a result of economic sanctions or local regulations.
The monetary policy pursued by the Polish National Bank with regard to interest rates aects the inflation rate
in Poland and, consequently, may aect the Group’s financial revenues. Given that surplus cash is invested,
among others, in bank deposits and treasury bonds, a decrease in interest rates may lead to a reduction in such
revenues. Financial gains obtained from allocating surplus cash to bank deposits and investment in treasury
bonds not fully oset losses due to inflation.
Changes in interest rates may also aect the market valuation of treasury bonds.
Actions taken: Group member companies monitor the impact of global economic conditions upon their respective
markets and adjust their actions accordingly, to the best of their abilities. The risk related to variable exchange
rates and market expectations regarding inflation is partly mitigated by investing some of the Company’s surplus
cash assets in bank deposits, Polish State Treasury bonds, bonds guaranteed by the Polish State Treasury and
foreign treasury bonds whose issuers’ credit rating is not worse than Aa3 according to Moody’s. The Company
also takes care to diversify the maturity schedules of said instruments.
In the current macroeconomic conditions it is eectively impossible to fully secure the amassed cash assets
against inflation while also preserving their security.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
59 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
ENVIRONMENTAL RISKS
Risk related to regulatory and market pressure to undertake activities related to environmental and climate protection
Description: The risk of facing pressure to undertake activities in the scope of environmental and climate pro-
tection results from the increasing expectations on the part of business partners and regulators, and is associa-
ted with dynamic changes in environmental law – both domestic and European. Newly introduced legislation
related to environmental and climate-centric transformation under the European Green Deal requires Group
member companies to monitor emerging regulations and adapt to changes, among others by disclosing their
greenhouse gas emissions, investigating the mutual links between Group member company activities and
climate changes, and taking concrete steps to reduce harmful emissions throughout the value chain. Potential
noncompliance with environmental law may result in administrative penalties and loss of reputation. Environ-
mental risks also apply to ownership, leasing and use of business properties, where additional expenses are
incurred while undergoing transformation to a zero-emissions energy-ecient economic model.
Actions taken: Minimizing environmental impact and introducing solutions which benefit the environment are
among the Group’s priorities. In 2021 the Management Board of CD PROJEKT S.A. decided to initiate prepa-
rations for the deployment of an environmental management system which involves, among others, ongoing
analysis and staying up to date with the relevant regulations, assessment of the environmental consequences
of the Group’s activities against the backdrop of measurable indicators, and analysis of the Group’s compliance
in this regard. The Company is also preparing to institute a formal Environment Policy. It carries out periodic
audits of its compliance with environmental regulations and works to raise environmental awareness of its
team members by becoming involved win actions which benefit the environment and the climate. In 2022 the
Company intends to expand its identification of emission sources and its carbon footprint to include Scope 3
(i.e. other indirect emissions in the value chain) and undertake measures to reduce such emissions. Moreover,
the Company monitors its environmental indicators and the associated costs, including consumption of energy
and water, waste management and atmospheric emissions, and rolls out novel environmentally-conscious
technologies. The Company’s energy eciency and environmental impact are improved on a regular basis,
facilitating control and mitigation of potential environmental risks.
03
FINANCIAL RESULTS
OF THE CD PROJEKT GROUP
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
61 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Overview of key economic and financial indicators disclosed
in the consolidated and separate financial statement
DESCRIPTION AND ASSESSMENT OF FACTORS AND UNUSUAL CIRCUMSTANCES
AFFECTING THE GROUP’S FINANCIAL RESULT IN 2021
No unusual circumstances aecting the CD PROJEKT Group’s activities occurred in 2021.
KEY FACTORS AFFECTING THE FINANCIAL RESULT OF THE CD PROJEKT GROUP
2021 was the first year of post-release sales of CD PROJEKT RED’s newest videogame – Cyberpunk 2077, which
launched on 10 December 2020. As a result, events related to Cyberpunk 2077 and the CD PROJEKT RED
segment in general had a significant eect on the CD PROJEKT Group’s earnings, assets, liabilities, equity
and cash flows in the reporting period. Key factors aecting the Group’s activities in 2021 which had no direct
counterpart in 2020 (with regard to type or scale) are listed below:
■ collection of trade receivables associated with the game’s release resulted in a record balance of cash flows
from operating activities for the reporting period, at 967 825 thousand PLN;
■ CD PROJEKT S.A. paid out its highest-ever dividend to shareholders, at 503 694 thousand PLN;
■ expenses associated with intensive work on updates and further development of Cyberpunk 2077 increased
the reported cost of products and services sold by 80 792 thousand PLN;
■ following the decision to change the underlying game engine and conclusion of a licensing and partnership
agreement with Epic Games International S.à r.l., the Company gained access to multiplayer solutions available
in Unreal Engine 4 and 5, as a result of which it abandoned further R&D work on adding multiplayer elements
to REDEngine. The corresponding to-date expenditures, at 20 806 thousand PLN, were reassigned from Fixed
Assets to Other operating expenses.
■ Changes in provisions for returns and expenses (unrelated to provisions for remuneration dependent on the
Company’s financial result), resulting mainly from settlement of sales and expenses with key distributors of
physical editions of Cyberpunk 2077 during the game’s release period and throughout four subsequent quar-
ters, resulted in the following:
■ provisions for returns – the surplus of provisions dissolved over provisions created during the repor-
ting period was 58 301 thousand PLN, resulting in a corresponding increase in Revenues from sales of
products (parallel to recognition of provisions for expenses, as indicated below),
■
provisions for expenses – the surplus of provisions created over provisions dissolved during the re-
porting period was 77 118 thousand PLN, resulting in an increase in the reported Cost of products and
services sold,
■ the cumulative eect of the above operations was a reduction in the Company’s gross profit for the
reporting period by 18 817 thousand PLN.
■ GOG.COM revised its earlier projections due to a change in expectations which do not constitute rectification
of an error concerning depreciation of existing client technologies and features, which have been deemed to
not support sales, recognizing 13 775 thousand PLN in Other operating expenses.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
62 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Table 3 Selected data from the segmented consolidated profit and loss account of the CD PROJEKT Group
(PLN thousands)
01.01.2021 –
31.12.2021
01.01.2020 –
31.12.2020*
01.01.2021 –
31.12.2021
01.01.2020 –
31.12.2020*
01.01.2021 –
31.12.2021
01.01.2020 –
31.12.2020
01.01.2021 –
31.12.2021
01.01.2020 –
31.12.2020
CD PROJEKT GROUP CD PROJEKT RED segment GOG.COM segment Consolidation eliminations
Sales revenues 888 172 2 138 875 701 739 1 895 913 199 983 343 748 -13 550 -100 786
Revenues from sales of products 691 564 1 839 932 678 507 1 786 145 8 264 12 937 4 793 40 850
Revenues from sales of services 5 865 2 242 8 103 5 251 286 132 -2 524 -3 141
Revenues from sales of goods and
materials
190 743 296 701 15 129 104 517 191 433 330 679 -15 819 -138 495
Cost of products, services, goods and
materials sold
250 234 491 364 118 547 347 436 144 458 243 653 -12 771 -99 725
Cost of products and services sold 107 391 256 105 104 933 252 340 4 236 5 963 -1 778 -2 198
Cost of goods and materials sold 142 843 235 259 13 614 95 096 140 222 237 690 -10 993 -97 527
Gross profit (loss) from sales 637 938 1 647 511 583 192 1 548 477 55 525 100 095 -779 -1 061
Selling costs 299 225 408 016 239 160 341 633 60 382 67 344 -317 -961
General and administrative costs 71 949 66 435 65 413 59 426 6 735 7 195 -199 -186
Other operating revenues 17 376 8 535 18 999 8 835 1 640 1 469 -3 263 -1 769
Other operating expenses 51 231 24 421 34 065 25 243 20 609 813 -3 443 -1 635
(Impairment)/reversal of impairment of
financial instruments
-6 -97 -6 -97 - - - -
Operating profit (loss) 232 903 1 157 077 263 547 1 130 913 -30 561 26 212 -83 -48
Financial revenues 9 523 17 081 3 831 15 912 5 692 1 169 - -
Financial expenses 23 318 9 209 15 036 6 278 8 380 3 032 -98 -101
Profit (loss) before tax 219 108 1 164 949 252 342 1 140 547 -33 249 24 349 15 53
Income tax 10 200 14 801 13 664 11 097 -3 458 3 694 -6 10
Net profit (loss) 208 908 1 150 148 238 678 1 129 450 -29 791 20 655 21 43
* adjusted
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
63 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
CLARIFICATIONS REGARDING THE SEGMENTED CONSOLIDATED
PROFIT AND LOSS STATEMENT OF THE CD PROJEKT GROUP
CD PROJEKT RED
In the CD PROJEKT RED segment Sales revenues were reported at 701 739 thousand PLN, which is 63.0% less
than the 2020 figure. This year-over-year dierence is due to sales of Cyberpunk 2077 in its release window
(in Q4 2020). Compared to the 2019, i.e. the last financial year preceding the release of Cyberpunk 2077,
CD PROJEKT RED’s sales revenues were higher by 332 407 thousand PLN (90% increase).
Revenues from sales of products, at 678 507 thousand PLN (reduction by 62.0% compared to 2020), which
represent 96.7% of the segment’s total revenues, comprise:
a) revenues generated by Cyberpunk 2077;
b) revenues generated by The Witcher 3: Wild Hunt and its expansions (Hearts of Stone and Blood and Wine);
c) settlement of provisions for returns of Cyberpunk 2077, created in late 2020, resulting in increased sales
revenues during the reporting period (by 58 301 thousand PLN, which represents the surplus of provisions
dissolved over provisions created during the reporting period – this, however, was oset by the surplus of
provisions for expenses created over the corresponding provisions dissolved during the reporting period, as
described further on in this section);
d) revenues generated by GWENT: The Witcher Card Game;
e) royalties associated with CD PROJEKT RED’s franchises;
f) royalties associated with The Witcher 2, The Witcher and Thronebreaker: The Witcher Tales.
Revenues from sales of services in 2021 amounted to 8 103 thousand PLN (54.3% increase) and comprised
mainly revenues from barter advertising deals, revenues from services provided to aliates, and shipping fees
paid by customers of the CD PROJEKT RED GEAR merch store.
Revenues from sales of goods and materials in the CD PROJEKT RED segment were reported at 15 129 tho-
usand PLN (85.5% decrease). This figure comprises mainly revenues from sales of box sets and elements of
box sets of the Studio’s own videogames (including carrier media, boxes, figurines and gadgets) to external
distributors – primarily The Witcher 3 – as well as sales carried out by the CD PROJEKT RED GEAR merch store,
which markets tie-in products associated with the Group’s games and brands to fans throughout Europe and
North America. The reported increase in revenues over the reference period was mainly influenced by sales
of physical goods related to the release of Cyberpunk 2077.
The Cost of products, services, goods and materials sold, directly osetting sales, was reported at 118 547
thousand PLN and decreased by 65.9% compared to the 2020 year-end figure.
The Cost of products and services sold, at 104 933 thousand PLN, decreased by 58.4% compared to 2020.
This line item represents depreciation of development projects at CD PROJEKT S.A. – mainly development
of videogames.
In line with the accounting policies in force at the Group expenditures on development projects for which a
reliable estimate of the quantity and volume of sales budgets can be provided, are depreciated in proportion to
the consumption of economic benefits, measured as the number of copies sold. For other projects, the Group
recognizes depreciation using the straight-line method. For projects whose development costs were subject
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
64 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
to depreciation in 2021 the following rules apply:
■ 40% of Cyberpunk 2077 development expenditures was recognized as costs in 2020, in the release quarter,
while the remaining 60% will be depreciated throughout a five-year economic use period, at 3% per quarter –
52% of the corresponding expenditures had been depreciated by the balance sheet date;
■ GWENT development expenditures were depreciated using the straight-line method, throughout three years
following the game’s full ocial release (October 2018) – depreciation of these development expenditures
concluded at the end of September 2021;
■ Development expenditures related to Thronebreaker: The Witcher Tales (released in October 2018) and The
Witcher 3: Wild Hunt for Nintendo Switch (released in October 2019) are depreciated throughout three years
following their respective releases; however, in their case depreciation is based on the expected breakdown
of future revenues, projected on the basis of sales data for past projects. Depreciation of past development
expenditures related to these projects will conclude at the end of August 2022.
The reported reduction in the value of this line item compared to yearend 2020 is mainly due to lower than before
depreciation of Cyberpunk 2077, but also to completion of depreciation of GWENT: The Witcher Card Game.
Additionally, eective on 31 December 2021, the Company revised its projections regarding the economic eects
of key distribution contracts concerning physical editions of Cyberpunk 2077, setting aside 18 848 thousand
PLN in provisions for final settlement of expenses related to such contracts.
This line item also includes the Group’s own costs related to the reported revenues from sales of services.
The Cost of Goods and materials sold in the CD PROJEKT RED segment in 2021 was 13 614 thousand PLN,
which is 85.7% less than in 2020. This line item comprises the cost of producing box sets, elements thereof,
and franchise products which are then sold to distributors in the CD PROJEKT RED segment.
In 2021 the CD PROJEKT RED segment generated 583 192 thousand PLN in Gross profit from sales, which is
62.3% less than in 2020 (the release year of Cyberpunk 2077).
Selling costs in the CD PROJEKT RED segment were reported at 239 160 thousand PLN, having decreased
by 30.0% compared to yearend 2020.
In the CD PROJEKT RED segment the main contribution to selling costs came from maintenance of previo-
usly published products, at 95 993 thousand PLN. This value includes, among others, the cost of servicing
Cyberpunk 2077, including intensive development work on the game’s updates (which had no counterpart
in the reference period) as well as costs related to further development of GWENT: The Witcher Card Game.
Additionally, during the reporting period the CD PROJEKT RED segment reported significant promotional
expenditures – primarily support for sales of Cyberpunk 2077, which includes costs and provisions for settle-
ment of the promotional campaign accompanying the game’s release, as provided for in key physical distribu-
tion contracts, in addition to costs related to preparations for the next-gen release, which took place after the
balance sheet date.
This line item also aggregates costs related to fixed and result-dependent remuneration of the Studio’s internal
publishing teams, as well as costs of result-dependent remuneration of board members at the Group’s mem-
ber companies.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
65 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
General and administrative expenses in the CD PROJEKT RED segment were reported at 65 413 thousand
PLN, having increased by 10.1% compared to the reference period. These expenses include:
■ fixed and result-dependent remuneration of administrative teams and external support costs related to compa-
nies which make up the segment and qualify for this category – the reported increase was due to expansion
of the workforce and upscaling of the segment’s activities over the past 12 months;
■ costs related to future videogame projects (23 985 thousand PLN vs. 1 889 thousand PLN in 2020) during
their early (exploratory) phase, before actual development begins (at which point further costs are capitalized
as Expenditures on development projects in the Fixed assets category) – this is the main reason behind the
reported increase in General and administrative expenses compared to the reference period;
■ fixed remuneration of board members at the Group’s member companies;
■ estimation of entitlements assigned under the 2020-2025 incentive program – decrease by 1 026 thousand
PLN at CD PROJEKT S.A. due to a negative outlook regarding the Company’s ability to meet its stated earnings
goals throughout the duration of the program, as declared by the Management Board at the end of 2021.
Other operating revenues, at 18 999 thousand PLN, comprised mainly revenues obtained by the CD PROJEKT RED
segment from subleasing of oce space belonging to the commercial campus in Warsaw (at Jagiellońska 74
and 76), along with subsidies received in this segment.
Regarding Other operating expenses, in 2021 the segment reported 34 065 thousand PLN in such expenses
(increase by 8 822 thousand PLN, i.e. 34.9%). In addition to standard maintenance and upkeep of oce space
subject to subleasing, this category also comprises the following categories, which, together, are responsible
for the increase compared to the 2020 year-end figure:
■
costs related to abandonment of R&D work on adding multiplayer features to REDEngine (20 806 thousand PLN)
in the wake of the Company’s decision to change its underlying technology base and conclude a licensing and
partnership agreement with Epic Games International S.à r.l. which regulates the Company’s access to Unreal
Engine 4 and 5 (both of which already contain advanced multiplayer features), as well as joint work on further
development and improvement of that engine;
■ provisions for the uninsured portion of costs related to the legal settlement in the class action lawsuit pending
before the US District Court for the Central District of California.
The CD PROJEKT RED segment generated 3 831 thousand PLN in Financial revenues in 2021. The bulk of
these revenues was from settlement and estimation of forward exchange rate hedges related mainly to foreign
currency bonds purchased by CD PROJEKT S.A., as well as interest from bonds.
Financial expenses in the reporting period, at 15 036 thousand PLN, were dominated by surplus negative
exchange rate dierences.
The segment’s consolidated Gross profit in 2021 amounted to 252 342 thousand PLN – 888 205 thousand
PLN less than in 2020 (77.9% decrease).
Income tax due for 2021 was 13 664 thousand PLN.
The consolidated Net profit of the CD PROJEKT RED segment for 2021 was 238 678 thousand PLN, which is
890 772 thousand PLN (78.9%) less than the year before.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
66 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
GOG.COM segment
In the GOG.COM segment, 2021 Sales revenues were reported at 199 983 thousand PLN, which is 41.8% less
than in 2020. The reported decrease compared to the reference period was mainly due to record-breaking
2020 sales achieved as a result of the release of Cyberpunk 2077. Compared to yearend 2019, the Company’s
sales revenues increased by 23.3%.
The bulk of GOG.COM’s 2021 sales revenues (95.7%) was related to Revenues from sales of goods and ma-
terials. These cover digital distribution of products licensed from external supplies directly to end clients, via
the GOG.COM platform and the GOG GALAXY application. The highlight of 2021 in the GOG.COM segment
was the release of a series of Activision classics: Star Trek Armada I and II. The platform’s catalogue was also
expanded with other fresh releases, including Pathfinder: Wrath of the Righteous, Psychonauts 2, Everspace
2 and Biomutant, along with classics such as Blood Omen: Legacy of Kain, along with Star Trek™: Armada and
Star Trek™: Elite Force, both of which enjoy a cult following.
Revenues from sales of products, at 8 264 thousand PLN (36.1% decrease compared to the reference pe-
riod) covered GOG’s share of revenues generated by GWENT: The Witcher Card Game and Thronebreaker:
The Witcher Tales, apportioned in line with GOG’s consortium agreement with CD PROJEKT RED.
The Cost of products, services, goods and materials sold, directly osetting sales, was reported at 144 458
thousand PLN, having increased by 40.7% compared to the 2020 year-end figure.
The Cost of goods and materials sold in the GOG.COM segment in 2021 was 140 222 thousand PLN – 41.0%
less than in 2020. The entirety of this figure comes from the cost of sales of goods licensed from external
suppliers on the GOG.COM platform; the reported decrease is mainly due to a reduction in the volume of sales
of such goods and materials.
The Cost of products and services sold, at 4 236 thousand PLN, was 29.0% lower than in 2020. This line item
mainly comprises depreciation of development expenditures related to GWENT: The Witcher Card Game and
Thronebreaker: The Witcher Tales.
In 2021 the GOG.COM segment reported 55 524 thousand PLN in Gross profit from sales – 44 569 thousand
PLN (44.5%) less than in 2020, which was marked by the release of Cyberpunk 2077.
Selling costs in the GOG.COM segment were reported at 60 382 thousand PLN, having decreased by 10.3%
compared to yearend 2020. Among the expenditures reported by GOG.COM in the context of upkeep of
the GOG.COM platform and GOG.COM’s share of expenditures related to maintenance and development
of GWENT: The Witcher Card Game (apportioned under a consortium agreement), the following should be
regarded as dominant:
■
remuneration of the team responsible for maintenance, development and promotion of the GOG.COM platform
as well as for maintenance and further development of GOG GALAXY;
■ transaction costs related to processing payments on GOG.COM;
■ costs of IT services involved in processing sales;
■
marketing costs related to GOG.COM and GOG GALAXY – in the reporting period these included mainly
promotion of digital distribution of videogames via GOG.COM, and – to a lesser extent – ongoing marketing
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
67 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
support for GWENT: The Witcher Card Game, where GOG.COM bears some of the associated costs in line
with its consortium settlements;
■ depreciation, including of finished development projects.
GOG.COM’s participation in the GWENT consortium concluded at the end of 2021. Accordingly, from 2022
onwards GOG will neither bear its share of costs nor receive revenues generated by this project. GWENT:
The Witcher Card game and Thronebreaker: The Witcher Tales will remain available to GOG.COM clients; ho-
wever, cooperation and settlements between GOG.COM and CD PROJEKT S.A. will follow standard practices
applicable to business deals and settlements on the digital videogame distribution market.
General and administrative expenses in the GOG.COM segment were reported at 6 735 thousand PLN, which
is 6.4% less than in the reference period. This line litem mainly comprises remuneration of administrative teams,
fixed remuneration of board members, expenditures related to the incentive program and costs of bought-in
services which qualify for this category.
The reported decrease in General and administrative expenses compared to the reference period was mainly
due to a reduction in costs recognized under the 2020-2025 incentive program. Estimation of entitlements
granted under the program produced a figure of -101 thousand PLN (compared to 391 thousand PLN during
the reference period) as a result of the Management Board’s negative assessment of the Company’s ability to
meet the earnings goals defined for the full duration of the program, performed at the end of 2021.
Other operating revenues in the GOG.COM segment, at 1 640 thousand PLN, comprise mainly reinvoicing
revenues and sales of other services, including intragroup IT services.
GOG.COM recognized Other operating expenses at 20 609 thousand PLN for the reporting period. This line
item is mainly aected by the following one-time events, which, taken together, contribute to the significant
increase over the 2020 year-end figure:
■
revision of past assumptions related to depreciation of existing client technologies and features, which have been
deemed to not support sales – resulting in additional expenses recognized in 2021, at 13 775 thousand PLN;
■ provision for potential CIT arrears related to ongoing administrative proceedings at the customs oce. As of
the publication date of this report, no quantitative decision has been issued. GOG.COM and its legal counsel
dispute the position expressed by the fiscal authorities; however, the management board of the subsidiary has
decided to exercise prudence and recognize the aforementioned provision;
■ costs related to a revision of estimates regarding recoverable long-term prepayments (referred to as minimum
guarantees) remitted by GOG.COM to suppliers of digital content marketed on the GOG.COM platform.
In 2021 the GOG.COM segment reported 5 692 thousand PLN in Financial revenues – a 386.9% increase com
-
pared to 2020. This increase is mainly due to recognition of exchange rate hedges, most of which are related
to foreign-currency liabilities payable to suppliers.
Financial expenses for the reporting period reached 8 380 thousand PLN. This figure, along with the reported
increase (by 176.4%), was mostly due to surplus negative exchange rate dierences and recognition of an
estimated provision for interest on potential CIT arrears related to administrative proceedings at the customs
oce (as previously described in the section concerning Other operating expenses).
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
68 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
The reported increase in negative exchange rate dierences is mainly due to estimation of liabilities due to
suppliers as of the balance sheet date, and generally corresponds to estimation of exchange rate hedges
aggregated with Financial revenues.
The segment’s Pre-tax loss for 2021 was 33 249 thousand PLN, compared to 24 349 thousand PLN in gross
profit for 2020.
The segment’s Net loss for 2021 was 29 791 thousand PLN, compared to 20 655 thousand PLN in net profit
for 2020.
Table 4 Net profit margin – alternative approach to measuring earnings
01.01.2021 –
31.12.2021
01.01.2020 –
31.12.2020
01.01.2021 –
31.12.2021
01.01.2020 –
31.12.2020
01.01.2021 –
31.12.2021
01.01.2020 –
31.12.2020
CD PROJEKT Group CD PROJEKT RED GOG.COM
Net profit margin
(Net profit / sales revenues)
23.5% 53.8% 34.0% 59.6% -14.9% 6.0%
The net profit margin provides additional information regarding the part of sales revenues which remains in
possession of the enterprise (as net profit) following deduction of all applicable costs and tax burdens reported
in the profit and loss account. An increase in this ratio indicates higher eciency of business activities relative
to sales revenues. The net profit margin is a standard and commonly used indicator in financial analyses. Its
usefulness has been analyzed with regard to information on the eectiveness of CD PROJEKT Group and its
individual activity segments, supplied to investors.
In 2021 the Group’s net profit margin was 23.5%.
The reported decrease of this coecient in the CD PROJEKT RED segment (34.0% in 2021 vs. 59.6% in 2020)
is mainly due to its temporary spike in 2020 (release year), along with the previously described specific circu-
mstances which aect the segment’s 2021 earnings:
■ maintenance expenditures related to Cyberpunk 2077;
■ settlement, on the basis of current sales reports and agreements previously concluded with distributors, of
provisions set aside in late 2020 for settlement of revenues and expenses related to Cyberpunk 2077, which
had the following eect on net profitability during the reporting period:
■
provisions for returns – surplus of provisions dissolved over provisions created, at 58 301 thousand PLN,
increasing 2021 revenues, i.e. increasing the denominator of the net profitability coecient (oset by
changes in provisions for expenses, as described below);
■ provisions for expenses – surplus of provisions created over provisions dissolved (parallel to the afo-
rementioned dissolution of provisions for returns), at 77 118 thousand PLN, increasing the Company’s
reported expenses.
■ The cumulative eect of these changes is a reduction in the Company’s gross profit by 18 817 thousand
PLN, which also results in a reduction in its net profit, i.e. the numerator of the net profitability coecient.
■ recognition (in the reporting period) of costs related to early-phase work on new projects;
■ recognition of costs related to abandonment of work on adding multiplayer features to REDEngine as a result
of the Company’s decision to switch to Unreal Engine.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
69 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
GOG.COM’s reported negative net profitability (-14.9% vs. 6.0% in 2020) is due to a deterioration of the seg-
ment’s Gross profit from sales, which was encumbered by additional costs related to increased depreciation
of technologies, and recognition of provisions for tax liabilities and interest associated therewith.
SELECTED DATA FROM THE PROFIT AND LOSS ACCOUNT OF CD PROJEKT S.A.
Table 5 Selected data from the profit and loss account of CD PROJEKT S.A. (PLN thousands)
01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020*
Sales revenues 692 196 1 883 645
Revenues from sales of products 678 566 1 786 270
Revenues from sales of services 5 502 1 840
Revenues from sales of goods and materials 8 128 95 535
Cost of products, services, goods and materials sold 111 002 338 760
Cost of products and services sold 102 946 249 476
Cost of goods and materials sold 8 056 89 284
Gross profit (loss) from sales 581 194 1 544 885
Selling costs 241 785 344 565
General and administrative costs 59 030 54 875
Other operating revenues 19 321 8 904
Other operating expenses 34 371 25 309
(Impairment)/reversal of impairment of financial instruments -6 -97
Operating profit (loss) 265 323 1 128 943
Financial revenues 3 876 16 013
Financial expenses 14 965 6 120
Profit (loss) before tax 254 234 1 138 836
Income tax 14 121 10 780
Net profit (loss) 240 113 1 128 056
* adjusted
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
70 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
CLARIFICATIONS REGARDING THE PROFIT AND LOSS ACCOUNT OF CD PROJEKT S.A.
CD PROJEKT S.A. is the parent company of the CD PROJEKT Group and the largest entity within the Group
as well as within the CD PROJEKT RED segment. Consequently, clarifications regarding the consolidated
profit and loss account of the CD PROJEKT RED segment (excluding the eects of its far smaller subsidiaries –
CD PROJEKT RED STORE sp. z o.o. and CD PROJEKT Inc.) – are generally applicable to the activities and
results of CD PROJEKT S.A.
In 2021 CD PROJEKT S.A. reported 692 196 thousand PLN in Sales revenues, which is 63.3% less than in
2020. The Company’s Net profit for 2021 was 240 113 thousand PLN, i.e. 78.7% less than in the preceding year.
Sales revenues and net profit obtained by CD PROJEKT S.A. represented 98.6% and 100.6% of the revenues
and consolidated net profit of the CD PROJEKT RED segment respectively, as discussed in detail above.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
71 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF THE CD PROJEKT GROUP
Table 6 Selected data from the consolidated statement of financial position (PLN thousands)
31.12.2021 31.12.2020*
FIXED ASSETS 905 846 759 999
Property, plant and equipment 115 234 105 349
Intangibles 58 393 59 790
Expenditures on development projects 350 195 406 798
Investment properties 48 988 48 841
Goodwill 56 438 56 438
Shares in subsidiaries excluded from consolidation 38 520 8 195
Deferrals 11 434 11 676
Other financial assets 178 540 51 588
Deferred income tax assets 47 418 11 003
Other receivables 686 321
WORKING ASSETS 1 252 889 2 130 300
Inventories 15 886 6 957
Trade receivables 125 293 1 205 603
Current income tax receivables 98 -
Other receivables 113 498 70 210
Deferrals 13 763 13 383
Other financial assets 307 765 106 444
Bank deposits (maturity beyond 3 months) 265 000 164 368
Cash and cash equivalents 411 586 563 335
TOTAL ASSETS 2 158 735 2 890 299
* adjusted
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
72 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
31.12.2021 31.12.2020*
EQUITY 1 894 356 2 183 177
Parent entity shareholders’ equity 1 894 356 2 183 177
Share capital 100 739 100 655
Supplementary capital 1 425 647 774 851
Supplementary capital from sale of shares above nominal value 115 909 113 844
Other reserve capital 47 994 45 547
Exchange rate dierences 1 591 1 091
Retained earnings -6 432 -2 959
Net profit (loss) for the reporting period 208 908 1 150 148
LONG-TERM LIABILITIES 36 112 166 153
Other financial liabilities 21 080 16 006
Other liabilities 2 860 3 173
Deferred revenues 6 424 963
Provisions for employee benefits and similar liabilities 380 398
Other provisions 5 368 145 613
SHORT-TERM LIABILITIES 228 267 540 969
Other financial liabilities 25 802 2 933
Trade liabilities 53 380 115 444
Current income tax liabilities 24 446 1 742
Other liabilities 10 042 33 134
Deferred revenues 31 548 47 758
Provisions for employee benefits and similar liabilities 7 4
Other provisions 83 042 339 954
TOTAL EQUITY AND LIABILITIES 2 158 735 2 890 299
* adjusted
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
73 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
CLARIFICATIONS REGARDING THE CONSOLIDATED STATEMENT OF
FINANCIAL POSITION OF THE CD PROJEKT GROUP
Assets
At the end of 2021 the Group’s Fixed assets were jointly valued at 905 846 thousand PLN, having gained
145 847 thousand PLN since the end of 2020 (19.2% increase).
Property, plant and equipment, at 115 234 thousand PLN, represents mainly:
■ value of the property complex at Jagiellońska 74 and 76, purchased in October 2019, corresponding to parts
of the complex which are used by CD PROJEKT S.A. for its own purposes;
■ machinery and equipment, which comprises, among others, servers and other electronic devices used in the
Group’s activities;
■ assets representing the usufruct of leased oce space (with the corresponding recognition of liabilities arising
from oce space lease agreements, represented as Other financial liabilities).
The aggregate value of Property, plant and equipment increased by 9 885 thousand PLN in the reporting
period (9.4% increase).
Regarding Intangibles, jointly valued at 58 393 thousand PLN at the end of 2021, the largest contribution to
the reported figure comes from the CD PROJEKT brand name and The Witcher trademark, with a combined
value of 33 199 thousand PLN, along with other intellectual property rights held by the Group (18 158 thousand
PLN) and computer software (6 791 thousand PLN). The total value of the Group’s Intangibles did not change
significantly during 2021.
Expenditures on development projects, which cover work on new products and technologies at Group mem-
ber companies, had a 2021 year-end balance of 350 195 thousand PLN, having decreased by 56 603 thousand
PLN since 31 December 2020 (13.9% increase). Expenditures on development projects in progress were repor-
ted at 66 701 thousand PLN, while depreciation of past projects – primarily Cyberpunk 2077, which launched
in December 2020 – oset this figure by 102 688 thousand PLN. Additionally, an impairment allowance in the
amount of 20 616 thousand PLN was recognized in the CD PROJEKT RED segment due to abandonment of
work on adding multiplayer features to REDEngine.
The next important contribution to the CD PROJEKT Group’s Fixed assets in the reporting period came from
Goodwill (56 438 thousand PLN). Goodwill is defined as the positive dierence between the cost of establishing
a business combination (also known as acquisition or takeover cost) and the parent company’s share in the
net fair value of all assets and liabilities (including contingent liabilities) of the controlled entity on the date of
acquisition. The bulk of the reported figure (46 417 thousand PLN) is a result of the merger between the parent
entity and the CDP Investment Capital Group which occurred on 30 April 2010. along with settlement of the
purchase of the Wrocław-based development studio from Strange New Things sp. z o.o. sp. k., which occurred
on 18 May 2018 (10 021 thousand PLN). The reported goodwill did not change in 2021.
Investment properties, valued at 48 988 thousand PLN, comprise parts of the commercial property complex at
Jagiellońska 74 and 76 which are subjected to subleasing. The reported increase – by 147 thousand PLN – results
from the surplus of renovation expenditures over the aggregate value of depreciation, properties dismantled and
reassignment to PP&E (as Buildings and structures – for properties which the Group uses for its own purposes).
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
74 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Shares in subsidiaries excluded from consolidations had a 2021 year-end value of 38 520 thousand PLN. The
reported increase is due to acquisition of the Canadian Digital Scapes studio (later rebranded as CD PROJEKT RED
Vancouver), which occurred in July 2021, and subsequent acquisition of a 60% stake in the Boston-based The
Molasses Flood gamedev studio, which occurred in October 2021.
Other financial assets are subdivided into short-term assets (307 765 thousand PLN) and long-term assets
(178 540 thousand PLN) for an aggregate 2021 year-end balance of 486 305 thousand PLN (increase by
328 273 thousand PLN, i.e. 207.7%). This line item mainly represents the value of treasury bonds purchased by
CD PROJEKT S.A. in the framework of diversifying allocation of surplus cash.
At the end of 2020 the CD PROJEKT Group held 1 252 889 thousand PLN in Working assets. The balance of
working assets decreased by 877 411 thousand PLN compared to the end of 2020 (41.2% decrease).
The value of the Group’s Inventories was reported at 15 886 thousand PLN, having increased by 8 929 tho-
usand PLN (128.3%) since the end of 2020. The reported figure represents mainly box sets and components of
box sets of the Studio’s own videogames supplied to external distributors – mainly Cyberpunk 2077 – as well
as inventories held by the CD PROJEKT RED GEAR merch store which markets tie-in products associated with
the Group’s releases to customers based in Europe and North America.
Trade receivables represent an important contribution to the Group’s aggregate Working assets. As of 31
December 2021 these receivables had an aggregate value of 125 293 thousand PLN (89.6% decrease). This
figure mainly aggregates CD PROJEKT RED receivables arising in connection with Q4 2021 licensing reports,
which are submitted to the Company after the balance sheet date. The 2020 year-end spike (at 1 205 603
thousand PLN) was due to trade receivables associated with sales of Cyberpunk 2077 in its release window,
most of which remained outstanding on the previous balance sheet date.
The Group’s Other receivables had a 2021 year-end value of 113 498 thousand PLN, which represents an in-
crease by 43 288 thousand PLN compared to the end of 2020. This figure primarily comprises withholding tax
deducted at source by CD PROJEKT RED’s foreign licensees and reportable in the Company’s annual tax dec-
laration, along with VAT settlements and prepayments for products and services in the CD PROJEKT RED sector.
Short- and long-term Deferrals (13 765 thousand PLN and 11 434 thousand PLN respectively) were mainly aec-
ted by the so-called minimum guarantees (not included in the profit and loss account as of the balance sheet
date), i.e. prepayments made by GOG.COM to its suppliers in relation to future licensing royalties associated
with distribution of games on the GOG.COM platform (15 230 thousand PLN). Deferrals also include prepay-
ments related to marketing activities, as well as license fees which are settled by CD PROJEKT RED over time.
Throughout 2021 the total value of deferrals did not undergo appreciable changes.
The aggregate value of Cash and cash equivalents and Bank deposits (maturity beyond 3 months) was 676 586
thousand PLN, having decreased by 51 117 thousand PLN since the end of 2020 (7.0% decrease). Factoring in
the value of other liquid assets, i.e. treasury bonds, on 31 December 2021 the Group held 1 154 001 thousand
PLN in financial reserves – 279 313 thousand PLN more than at the end of 2020.
The Group’s total assets had a 2021 year-end value of 2 158 735 thousand PLN. 42.0% of this figure correspon-
ded to fixed assets (compared to 26.3% at the end of 2020), with the remaining 58.0% representing working
assets (73.7% at the end of 2020).
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
75 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Equity and liabilities
As of 31 December 2021, the CD PROJEKT Group’s Equity had a value of 1 894 356 thousand PLN – 288 821
thousand PLN less than at the end of 2020 (13.2% decrease). The main reasons for this change are the pay-
ment of a dividend (at 503 694 thousand PLN) to CD PROJEKT S.A. shareholders and the total comprehensive
income for the reporting period (increasing equity by 208 908 thousand PLN).
The Group’s 2021 year-end Long-term liabilities had a value of 36 112 thousand PLN, ewhich represents a
decrease by 130 041 thousand PLN (78.3%) since the end of 2020. The main reason for this decrease is the
reclassification – from long- to short-term liabilities – of Other provisions in the CD PROJEKT RED segment,
related to settlement of Cyberpunk 2077 sales in the game’s release window. These provisions were created
at the end of 2020 in anticipation of settlement of certain distribution agreements, which would contractually
occur after four full quarters have elapsed since the game’s release quarter.
During the reporting period, following reclassification, these provisions (separately for each contract) were
either consumed, increased or dissolved, depending on the outcomes of negotiations with distributors. Further
information can be found in the commentary section describing Other short-term provisions (below) as well as
in Note 30 of the Consolidated Financial Statement of the CD PROJEKT Group for 2021.
Other financial liabilities, which are further subdivided into short- and long-term liabilities (25 802 thousand
PLN and 21 080 thousand PLN respectively) increased by 27 943 thousand PLN (147.5%). This line item mainly
represents liabilities related to perpetual usufruct of land comprising the properties at Jagiellońska 74 and 76
in Warsaw (pursuant to IFRS 16). However, the reported increase was instead related to revaluation of exchange
rate hedges associated with foreign-currency bonds held by the Group, as well as partial payment for shares
in The Molasses Flood, which had a deferred payment date.
The aggregate value of Short-term liabilities was 23 092 thousand PLN at the end of 2021 and decreased by
312 702 thousand PLN in the reporting period (57.8%).
Trade liabilities, which had a year-end value of 53 380 thousand PLN, decreased by 62 064 thousand PLN
(53.8%) compared to the end of 2020. Main contributions to this line item come from licensing royalties owed
by GOG.COM – royalties arising in the fourth quarter of 2021 but payable in future reporting periods – as well
as (to a lesser degree) current trade liabilities in the CD PROJEKT RED segment, which decreased following
the release of Cyberpunk 2077, thus accounting for the decrease in the aggregate figure.
Other liabilities, at 10 042 thousand PLN, decreased by 22 869 thousand PLN compared to the end of 2020.
The aggregate figure is mainly comprised of current tax liabilities (VAT, PIT, withholding tax) and social security
liabilities.
The Group’s Deferred revenues were reported at 37 972 thousand PLN and decreased by 10 749 thousand
PLN in the reporting period. This line item comprises primarily the following:
■ CD PROJEKT RED – future period sales – the so-called minimum guarantees, i.e. prepayments paid or payable
by foreign publishers and distributors in relation to licensing royalties for sales carried out in future reporting
periods;
■ CD PROJEKT RED and GOG.COM – deferred revenues related to subsidies;
■
GOG.COM – deferred revenues corresponding to transactions with customers (including Store Credit and
Wallet contributions).
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
76 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
■
GOG.COM – future period sales – value of preorders of games scheduled for release in future reporting periods.
Other short-term provisions had a reported year-end value of 83 042 thousand PLN and decreased by 256 912
thousand PLN (75.6%) compared to the end of 2020. The reported figure comprises:
■ provisions for remuneration dependent on the Group’s financial result, and other compensation (44 856 tho-
usand PLN);
■
provisions for other expenses, including mainly costs related to collaboration with distributors of physical
editions of Cyberpunk 2077 which have not been invoiced as of the balance sheet date (38 186 thousand PLN).
The reported change compared to 31 December 2020 is mainly due to the following:
■
lower balance of provisions for remuneration dependent on the Group’s financial result in 2021 (44 856 thousand
PLN) compared to 2020 (256 130 thousand PLN),
■ full settlement (by way of consumption or dissolution) of short-term provisions for returns in the amount of 48
924 thousand PLN created at the end of 2020 in association with the release of Cyberpunk 2077 (along with
provisions for returns reclassified from long-term to short-term provisions).
■
increase in the balance of short-term provisions for other expenses (mainly settlements with distributors of
physical editions of Cyberpunk) – by 3 286 thousand PLN (from 34 900 thousand PLN at the end of 2020 to
38 186 thousand PLN at the end of 2021).
With regard to short- and long-term provisions for returns and expenses other than remuneration dependent
on the Group’s financial result (i.e. mainly related to Cyberpunk 2077 sales and the associated expenses), the
following changes in consolidated figures occurred in 2021:
229 437 thousand PLN – total balance at the end of 2020,
-214 256 – balance of provisions consumed in 2021,
+28 373 thousand PLN – surplus of provisions created in 2021 over provisions dissolved in 2021,
=43 554 thousand PLN – total balance at the end of 2021 (including 38 186 thousand PLN in short-term provi-
sions and 5 368 thousand PLN in long-term provisions).
The aggregate value of other short- and long-term provisions decreased from 485 567 thousand PLN at the
end of 2020 to 88 410 thousand PLN at the end of 2021, i.e. by 397 157 thousand PLN (81.8%).
As of 31 December 2021 equity accounted for 87.8% of the aggregate equity and liabilities of the CD PROJEKT
Group, with the remaining 12.2% corresponding to short- and long-term liabilities.
The Group’s segmented consolidated statement of financial position can be found in the Consolidated financial
statement of the CD PROJEKT Group for 2021.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
77 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
STRUCTURING OF CONSOLIDATED ASSETS AND LIABILITIES WITH REGARD TO LIQUIDITY
At the close of 2021 the CD PROJEKT Group held assets with a balance sheet value of 2 158 735 thousand
PLN. Highly liquid financial reserves, held in bank account and treasury bonds (both domestic and foreign) were
estimated at 1 154 001 thousand PLN (53.9% of the aggregate figure). Limited-liquidity assets (PP&E, Expendi-
tures on development projects, Investment properties, Shares in subsidiaries excluded from consolidation and
Inventories) had an aggregate value of 568 823 thousand PLN (26.3% of total).
Aggregate trade receivables and other short-term receivables had a 2021 year-end value of 238 791 thousand
PLN, while short- and long-term liabilities amounted to 264 379 thousand PLN. At the end of 2021 the Group
had no outstanding debt under any external credit or loan agreement.
The Group’s financial reserves – cash, bank deposits and t-bonds – ensure high liquidity, provide funding for
development of new videogames and technologies along with promotional activities carried out in support of
anticipated releases, permit further investments and constitute a buer which enables the Group to react to
unforeseen circumstances or exploit emerging opportunities
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
78 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
SELECTED DATA FROM THE STATEMENT OF FINANCIAL POSITION OF CD PROJEKT S.A.
Table 7 Selected data from the statement of financial position of CD PROJEKT S.A. (PLN thousands)
31.12.2021 31.12.2020*
FIXED ASSETS 887 663 738 694
Property, plant and equipment 99 632 101 050
Intangibles 59 086 60 125
Expenditures on development projects 347 822 384 625
Investment properties 61 436 48 841
Shares in subsidiaries excluded from consolidation 43 447 24 567
Deferrals 4 741 5 535
Other financial assets 178 540 53 465
Goodwill 49 168 49 168
Deferred income tax assets 43 418 11 286
Other receivables 373 32
WORKING ASSETS 1 173 501 2 006 389
Inventories 13 539 3 827
Trade receivables 123 821 1 255 867
Other receivables 113 163 48 922
Deferrals 4 015 3 366
Other financial assets 308 168 107 125
Bank deposits (maturity beyond 3 months) 265 000 164 368
Cash and cash equivalents 345 795 422 914
TOTAL ASSETS 2 061 164 2 745 083
* adjusted
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
79 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
31.12.2021 31.12.2020*
EQUITY 1 869 049 2 127 165
Equity attributable to shareholders of the parent entity 1 869 049 2 127 165
Share capital 100 739 100 655
Supplementary capital 1 366 952 737 542
Supplementary capital from sale of shares above nominal value 115 909 113 844
Other reserve capital 49 515 47 068
Retained earnings -4 179 -
Net profit (loss) for the reporting period 240 113 1 128 056
LONG-TERM LIABILITIES 29 756 164 990
Other financial liabilities 14 757 14 917
Other liabilities 2 860 3 173
Deferred revenues 6 403 910
Provisions for employee benefits and similar liabilities 368 377
Other provisions 5 368 145 613
SHORT-TERM LIABILITIES 162 359 452 928
Other financial liabilities 18 620 2 053
Trade liabilities 16 028 73 024
Current income tax liabilities 24 445 1 296
Other liabilities 4 059 4 933
Deferred revenues 23 042 42 286
Provisions for employee benefits and similar liabilities 5 3
Other provisions 76 160 329 333
TOTAL EQUITY AND LIABILITIES 2 061 164 2 745 083
* adjusted
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
80 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
CLARIFICATIONS REGARDING THE STATEMENT OF FINANCIAL POSITION OF CD PROJEKT S.A.
CD PROJEKT S.A. is the parent company of the CD PROJEKT Group and the largest entity within the Group as
well as within the CD PROJEKT RED segment. Consequently, clarifications regarding the consolidated statement
of financial position of the Group (except for data referring directly to the GOG.COM segment and the eects
of subsidiaries – CD PROJEKT RED STORE sp. z o.o. and CD PROJEKT Inc.) – are generally applicable to the
activities and results of CD PROJEKT S.A.
The balance sheet total of CD PROJEKT S.A. at the end of 2021 was 2 061 164 thousand PLN and was lower
than the balance sheet total of the CD PROJEKT Group by 97 571 thousand PLN, representing 95.5% of the
Group’s consolidated assets. At the end of 2020 the corresponding dierence was 145 216 thousand PLN, with
CD PROJEKT S.A. accounting for 95.0% of the Group’s consolidated assets.
Key dierences between the consolidated statement of financial position of the CD PROJEKT Group and the
separate statement of financial position of CD PROJEKT S.A. are as follows:
■ Shares in subsidiaries – as the holding company for other member companies of the Group, CD PROJEKT S.A.
discloses in its separate financial statement the value of shares in subsidiaries which it holds. At the end of 2021
the corresponding figure was 43 447 thousand PLN. The value of these shares is either subject to consolidation
eliminations or disaggregated as Shares in subsidiaries excluded from consolidations;
■ Investment properties disclosed in the separate financial statement of CD PROJEKT S.A., at 61 436 thousand
PLN, are discounted in the consolidated financial statement by the value of properties leased to aliates;
■ Other asset and liability categories – the separate financial statement is exclusive of values contributed by
other member companies which belong to the Group, including in particular the contributions of GOG sp. z
o.o. whose balance sheet total represents 4.5% of the CD PROJEKT Group’s consolidated balance sheet total.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
81 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
SELECTED DATA FROM THE CONSOLIDATED STATEMENT OF
CASH FLOWS OF THE CD PROJEKT GROUP
Table 8 Selected data from the consolidated statement of cash flows (PLN thousands)
01.01.2021 –
31.12.2021
01.01.2020 –
31.12.2020
OPERATING ACTIVITIES
Net profit (loss) 208 908 1 150 148
Total adjustments: 766 750 (460 131)
Depreciation of PP&E, intangibles, expenditures on development projects
and investment properties
17 764 13 559
Depreciation of expenditures on development projects recognized as cost
of products and services sold
86 965 254 105
Profit (loss) from exchange rate dierences (15 047) 2 220
Interest and profit sharing (228) (7 188)
Profit (loss) from investment activities 55 282 (5 440)
Change in provisions (311 449) 366 499
Change in inventories (8 929) 5 905
Change in receivables 1 036 886 (1 083 890)
Change in liabilities excluding credits and loans (85 023) 77 319
Change in other assets and liabilities (11 127) (100 033)
Other adjustments 1 656 16 813
Cash flows from operating activities 975 658 690 017
Income tax on pre-tax profit (loss) 4 337 1 039
Withholding tax paid abroad 5 863 13 762
Income tax (paid)/reimbursed (18 033) 6 890
Net cash flows from operating activities 967 825 711 708
INVESTMENT ACTIVITIES
Inflows 257 135 823 545
Sales of intangibles and PP&E 241 22
Sales of shares in subsidiary 19 -
Closing bank deposits (maturity beyond 3 months) 164 368 754 581
Maturation of bonds 82 715 59 426
Interest on bonds 1 703 115
Inflows from settlement of forward contracts 7 887 1 801
Other inflows from investment activities 202 7 600
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
82 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Outflows 870 930 929 931
Purchases of intangibles and PP&E 27 969 18 516
Expenditures on development projects 155 401 203 076
Purchase of investment properties and activation of future costs 2 085 8 336
Loans granted 4 340 4 500
Acquisition of subsidiary 19 306 -
Purchase of bonds and the associated purchase fees 396 829 209 441
Opening bank deposits (maturity beyond 3 months) 265 000 486 054
Other outflows from investment activities - 8
Net cash flows from investment activities (613 795) (106 386)
FINANCIAL ACTIVITIES
Inflows 2 189 126 124
Net inflows from sale of own shares and issue of stock in the exercise of
options granted under the incentive program
2 149 126 124
Collection of receivables arising from financial lease agreements 40 -
Outflows 507 968 217 517
Purchase of own shares in order to enable exercise of options granted
under the incentive program
- 214 259
Dividends and other payments due to equity holders 503 694 -
Payment of liabilities arising from lease agreements 3 733 2 857
Interest payments 541 401
Net cash flows from financial activities (505 779) (91 393)
Total net cash flows (151 749) 513 929
Balance of changes in cash and cash equivalents (151 749) 513 929
Cash and cash equivalents at beginning of period 563 335 49 406
Cash and cash equivalents at end of period 411 586 563 335
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
83 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
CLARIFICATIONS REGARDING THE CONSOLIDATED STATEMENT
OF CASH FLOWS OF THE CD PROJEKT GROUP
In the scope of its Operating activities in 2021 the CD PROJEKT Group reported 967 635 thousand PLN in
positive net cash flows, i.e. 255 927 thousand more than in the reference period (36.0% increase).
The Group’s net earnings, at 208 908 thousand PLN, constitute the basis for calculation of operating cash flows,
and are subsequently adjusted by the following:
I. Non-cash items (total: -164 829 thousand PLN):
■ Depreciation (+17 764 thousand PLN);
■
Depreciation of expenditures on development projects recognized as cost of products and services sold (+86
965 thousand PLN) – mainly depreciation of development expenditures related to Cyberpunk 2077, GWENT:
The Witcher Card Game, The Witcher 3: Wild Hunt – Complete Edition for Nintendo Switch and Thronebreaker:
The Witcher Tales;
■ Profit (loss) from exchange rate dierences (-15 047 thousand PLN);
■ Profit (loss) from investment activities (+55 282 thousand PLN) – recognition of impairment allowances on
fixed assets and estimation of exchange rate hedges securing purchases of foreign treasury bonds;
■
Changes in provisions (-311 449 thousand PLN), resulting from the dierence between remuneration dependent
on 2020 earnings (Cyberpunk 2077 release year) remitted in the current year, and provisions for remuneration
dependent on 2021 earnings, as well as from settlement of CD PROJEKT RED provisions for returns and ad-
justments to licensing reports for Cyberpunk 2077, created at the end of 2020;
■ Other adjustments (+1 656 thousand PLN).
II. Items related to changes in working assets and short-term liabilities (total: +931 807 thousand PLN):
■ Changes in inventories (-8 929 thousand PLN);
■ Changes in receivables (+1 036 886 thousand PLN), primarily representing a decrease in the balance of trade
receivables since the end of December 2020 due to the high volume of sales realized towards the end of
2020 (mostly associated with the release of Cyberpunk 2077 – the bulk of these royalties were collected in
the first half of 2021);
■ Changes in liabilities except credits and loans (-85 023 thousand PLN), primarily aected by the reported
decrease in trade and financial liabilities, along with current income tax adjustments;
■ Changes in other assets and liabilities (-11 127 thousand PLN) mainly related to allocation of a portion of reta-
ined earnings recognized before 2021.
III. Item recognized elsewhere in the cash flow statement – Interest and profit sharing (-288 thousand PLN);
IV. Dierence between income tax due as reported in the profit and loss account for 2021 and income tax
actually paid in the reporting period (-7 833 thousand PLN).
Throughout 2021 the Group generated 613 795 in negative net cash flows from Investment activities, compared
to 106 386 in negative cash flows in the preceding year. This figure comes mainly from the following:
■ allocation of surplus cash to t-bonds and bank deposits with maturity periods longer than 3 months, together
with interest and inflows from exchange rate hedges (-405 156 thousand PLN);
■ outflows related to investments in assets – Expenditures on development projects (development of games
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
84 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
and technologies) at 155 401 thousand PLN, along with other Fixed assets at 30 054 thousand PLN;
■ payments related to Acquisition of subsidiaries (19 306 thousand PLN) – primarily of two gamedev studios:
The Molasses Flood (based in Boston) and Digital Scapes (currently operating under the name CD PROJEKT
RED Vancouver);
■ Loans granted to aliates excluded from consolidation (4 340 thousand PLN)
In 2021 the Group generated 505 779 thousand PLN in negative cash flows from Financial activities (com-
pared to 91 393 thousand PLN in negative cash flows during the reference period). In 2021 cash flows from
financial activities were dominated by the payment of a dividend, at 503 694 thousand PLN, to shareholders
of CD PROJEKT S.A.
Altogether, in 2021 the CD PROJEKT Group generated 151 749 thousand PLN in negative Net cash flows, com-
pared to 513 929 thousand PLN in positive net cash flows during the reference period.
Despite the payment of a dividend with a total value of 503 694 thousand PLN, throughout 2021 the balance
of the Group’s financial reserves – i.e. cash on hand, bank deposits and other financial assets corresponding
mainly to treasury bonds – increased by 279 313 thousand PLN, to 1 154 001 thousand PLN. During this period
the Group incurred investment expenditures related to development of new videogames and technologies,
engaged in intensive marketing campaigns promoting its products, and acquired two gamedev studios.
SELECTED DATA FROM THE STATEMENT OF CASH FLOWS OF CD PROJEKT S.A.
Table 9 Selected data from the statement of cash flows of CD PROJEKT S.A. (PLN thousands)
01.01.2021 –
31.12.2021
01.01.2020 –
31.12.2020
OPERATING ACTIVITIES
Net profit (loss) 240 113 1 128 056
Total adjustments: 802 191 (551 010)
Depreciation of PP&E, intangibles, expenditures on development projects and
investment properties
12 658 5 647
Depreciation of expenditures on development projects recognized as cost of
products and services sold
82 736 248 164
Profit (loss) from exchange rate dierences (15 118) 2 223
Interest and profit sharing (343) (7 246)
Profit (loss) from investment activities 41 323 (5 438)
Change in provisions (307 704) 359 214
Change in inventories (9 712) 4 658
Change in receivables 1 067 693 (1 110 415)
Change in liabilities excluding credits and loans (57 773) 47 553
Change in other assets and liabilities (13 846) (111 936)
Other adjustments 2 277 16 566
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
85 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Cash flows from operating activities 1 042 304 577 046
Income tax on pre-tax profit (loss) 8 263 (2 982)
Withholding tax paid abroad 5 858 13 762
Income tax (paid)/reimbursed (17 143) 7 254
Net cash flows from operating activities 1 039 282 595 080
INVESTMENT ACTIVITIES
Inflows 263 407 824 849
Sales of intangibles and PP&E 1 015 17
Expenditures on development projects reassigned in the framework of a
consortium agreement
152 312
Sales of shares in subsidiary 19 -
Repayment of loans granted 5 301 1 049
Closing bank deposits (maturity beyond 3 months) 164 368 754 581
Maturation of bonds 82 715 59 426
Interest on bonds 1 703 115
Inflows from settlement of forward contracts 7 887 1 801
Other inflows from investment activities 247 7 548
Outflows 875 004 920 760
Purchases of intangibles and PP&E 27 789 16 321
Expenditures on development projects 155 265 196 100
Purchase of investment properties and activation of future costs 2 085 8 336
Loans granted 7 339 4 500
Acquisition of subsidiary 7 679 -
Purchase of bonds and the associated purchase fees 396 829 209 441
Opening bank deposits (maturity beyond 3 months) 265 000 486 054
Capital contribution to subsidiary 13 018 -
Other outflows from investment activities - 8
Net cash flows from investment activities (611 597) (95 911)
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
86 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
FINANCIAL ACTIVITIES
Inflows 2 189 126 124
Net inflows from sale of own shares and issue of stock in the exercise of
options granted under the incentive program
2 149 126 124
Collection of receivables arising from financial lease agreements 40 -
Outflows 506 993 216 565
Purchase of own shares in order to enable exercise of options granted under
the incentive program
- 214 259
Dividends and other payments due to equity holders 503 694 -
Payment of liabilities arising from lease agreements 2 834 2 015
Interest payments 465 291
Net cash flows from financial activities (504 804) (90 441)
Total net cash flows (77 119) 408 728
Balance of changes in cash and cash equivalents (77 119) 408 728
Cash and cash equivalents at beginning of period 422 914 14 186
Cash and cash equivalents at end of period 345 795 422 914
CLARIFICATIONS REGARDING THE SEPARATE STATEMENT OF CASH FLOWS OF CD PROJEKT S.A.
CD PROJEKT S.A. is the parent company of the CD PROJEKT Group and the largest entity within the Group as
well as within the CD PROJEKT RED segment, responsible for 77.9% of the Group’s consolidated sales, contro-
lling (as of 31 December 2021) 94.4% of the Group’s cash assets, bank deposits and t-bond investments, and
having a decisive influence on cash flows reported by the Group. Consequently, clarifications regarding the
consolidated statement of cash flows of the Group (except for data referring directly to the GOG.COM segment
and the eects of subsidiaries – CD PROJEKT RED STORE sp. z o.o. and CD PROJEKT Inc.) – are generally
applicable to the activities and cash flows at CD PROJEKT S.A.
DISCLOSURE OF THE FEASIBILITY OF INVESTMENT PLANS
On 31 December 2021 the Group had no outstanding liabilities under any credit or loan agreements, and held
1 154 001 thousand PLN in its own cash assets, bank deposits and treasury bonds. The balance of the Group’s
trade receivables at the end of 2021 was 125 293 thousand PLN, while the balance of its short-term liabilities
was 228 267 thousand PLN. Future investment plans are expected to be financed with the Group’s own reso-
urces along with positive cash flows from operating activities. As of the publication date of this report the Group
anticipates no diculty in securing adequate financing for its near-term investment plans.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
87 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
DIVIDEND PAYMENTS
CD PROJEKT S.A. does not have a formalized dividend policy. The Company aims to provide sucient working
assets to continue and further develop its business activities. Should the Company’s stated objectives be met
and a sucient level of liquidity ensured, the Company’s managing bodies may consider returning the achieved
earnings, or parts thereof, to shareholders.
Given the cyclical nature of the Company’s activities (which entails long-term investments in development of
videogames, and strong impact of the degree to which game releases are successful upon the Company’s
earnings and cash flows), each year managing bodies of the Company perform a separate assessment of the
existing circumstances, and decide whether to recommend to the General Meeting that part of the Company’s
net profit be returned to shareholders, e.g. in the form of a dividend.
In formulating its recommendation, the Management Board takes into account the Group’s financial standing,
its existing and projected operating revenues, financial requirements related to anticipated investments and
potential acquisitions, the overall macroeconomic conditions, and any other factors which the Management
Board deems relevant.
DISCLOSURE OF CREDITS AND LOANS IN 2021
Throughout 2021 the CD PROJEKT Group had no outstanding debt under any credit or loan agreement.
DISCLOSURE OF CREDITS AND LOANS GRANTED IN 2021
In 2021 no member company of the CD PROJEKT Group granted any credits or loans to external entities.
CD PROJEKT Inc., CD PROJEKT RED STORE sp. z o.o. and Spokko sp. z o.o. have access to financing under
loan agreements concluded with CD PROJEKT S.A.
DISCLOSURE OF GUARANTEES AND SURETIES GRANTED IN
2021, AND OTHER OFFBALANCE SHEET ITEMS
Information regarding guarantees, sureties and other o-balance sheet items can be found in the Consolidated
Financial Statement of the CD PROJEKT Group for 2021.
DISCLOSURE OF THE CURRENT ECONOMIC AND FINANCIAL STANDING OF THE GROUP
In recent years the Group has consistently remained profitable, posting positive cash flows from operating ac-
tivities. Recent development activities, culminating in the release of Cyberpunk 2077 – the largest such event
in the Group’s history – elevated the Company and the Group to a new level both in terms of business and
financials, while also revealing certain areas which require improvements.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
88 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Throughout the reporting period the parent Company worked to implement the tenets of its adopted strategy,
which aims to streamline internal structures and development processes in order to permit parallel work on
two AAA projects. In addition to work on Cyberpunk 2077 updates and development of the game’s next-gen
console edition (released on 15 February 2022) the Group also carried out R&D activities in the scope of fu-
ture development projects. The Group holds significant cash reserves and its current economic and financial
standing may be regarded as stable.
DISCLOSURE OF THE PROJECTED ECONOMIC AND FINANCIAL STANDING OF THE GROUP
In line with the CD PROJEKT Group Strategy Update, published on 30 March 2021, in the coming years the
Group’s activities will focus on existing and new projects in the framework of two franchises: The Witcher and
Cyberpunk. As for 2022, the Company has announced the following new releases:
■ Cyberpunk 2077 – next-gen console edition (released on 15 February 2022);
■ The Witcher 3: Wild Hunt – next-gen console edition;
■ CYBERPUNK: EDGERUNNERS – a 10-episode anime series developed in collaboration with Studio Trigger– an
acclaimed Japanese animation studio, and Netflix – one of the world’s leading streaming platforms;
■ The Golden Nekker Project – a single-player card game built upon GWENT gameplay mechanics.
As of the publication date of this report the Board regards the Group’s economic and financial standing as
stable and does not perceive any threats to its liquidity or solvency within 12 months of the balance sheet date.
DISCLOSURE OF TRANSACTIONS WITH AFFILIATES
In 2020 the CD PROJEKT Group engaged mainly in the following types of transactions with aliates:
■ sales of licenses between CD PROJEKT S.A., GOG sp. z o.o., Spokko sp. z o.o. and The Molasses Flood LLC,
as required by these companies’ respective business profiles;
■ procurement of accounting, HR, legal, financial, administrative and managerial services from CD PROJEKT S.A.
by its subsidiaries;
■ subleasing of oce space by CD PROJEKT S.A. to GOG.COM sp. z o.o., Spokko sp. z o.o. and CD PROJEKT
RED STORE sp. z o.o.;
■
procurement of CD PROJEKT Inc. services by CD PROJEKT S.A. and GOG sp. z o.o. in the scope of coordinating
promotional and publishing activities in North America;
■ procurement of services from CD PROJEKT Co., Ltd. (currently undergoing liquidation) by CD PROJEKT S.A. in
the scope of coordinating promotional and publishing activities in China;
■
loans granted to CD PROJEKT Inc., CD PROJEKT RED STORE sp. z o.o. and Spokko sp. z o.o. by CD PROJEKT S.A.;
■ collaboration in the scope of maintaining the online merch store, licensing and developing merchandise – be-
tween CD PROJEKT S.A. (videogame developer and IP holder) and CD PROJEKT RED STORE sp. z o.o. and
CD PROJEKT Inc. (operators of merch stores on their respective territories);
■ other minor transactions associated with day-to-day activities (e.g. reinvoicing joint expenses).
Transactions between aliates are concluded on market terms as required by the business profiles of each
member of the CD PROJEKT Group. A detailed description of procedures which govern transactions between
aliates is included in the Consolidated Financial Statement of the CD PROJEKT Group for 2021.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
89 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
In 2021 CD PROJEKT S.A. and GOG sp. z o.o. cooperated in the framework of development of GWENT: The Witcher
Card Game and Thronebreaker: The Witcher Tales. This cooperation was regulated by a consortium agreement
whereby each company would bear a portion of GWENT project expenses, and was entitled to the corresponding
share of the associated revenues. The consortium agreement was formally dissolved on 31 December 2021.
DISCLOSURE OF THE MAIN DOMESTIC AND FOREIGN INVESTMENTS
AND OF THE STRUCTURE OF THE MAIN CAPITAL DEPOSITS
At the end of 2021 important contributions to the Group’s reported assets came from cash (411 586 thousand
PLN), bank deposits with maturity periods exceeding 3 months (265 000 thousand PLN), domestic treasury
bonds (248 754 thousand PLN) and foreign treasury bonds (228 661 thousand PLN). Surplus cash is deposited
in Poland as well as abroad, in banks which cooperate with the Group or invested in low-risk financial instru-
ments (in line with the principle of diversifying the deposit and investment portfolio). As of 31 December 2021
the aggregate value of cash, cash equivalents, bank deposits and t-bonds was 1 154 001 thousand PLN.
The business activities of the Group, and particularly of CD PROJEKT S.A., are directly associated with develop-
ment and distribution of videogames. Development of new releases constitutes the primary investment activity
of the Group and its parent Company. R&D expenditures are disclosed as part of the Fixed Assets category,
in the Expenditures on development projects line item. At the end of 2021 the cumulative balance of these
expenditures was 350 195 thousand PLN, which corresponds to a y/y decrease of 56 603 thousand PLN. Fur-
ther information regarding changes in expenditures on development projects throughout 2021 can be found
in the commentary section accompanying the consolidated statement of financial position of the CD PROJEKT
Group, elsewhere in this report. CD PROJEKT RED intends to continue building its production capabilities and
increasing the quantity and scale of ongoing projects.
Following purchase of investment properties located in Warsaw at Jagiellońska 74 and 76 (in 2018 and 2019),
the CD PROJEKT Group began redeveloping its campus, adapting it to its needs and specific profile of its
activities. The Group intends to carry on with this process in the coming years.
Detailed information regarding individual components of the Group’s property, plant and equipment can be
found in the commentary section accompanying the consolidated statement of financial position, elsewhere
in this report.
At the end of 2021 the CD PROJEKT Group controlled the following foreign subsidiaries, wholly owned by
CD PROJEKT S.A.:
■ CD PROJEKT Inc. (Los Angeles),
■ CD PROJEKT Co., Ltd. (Shanghai; currently undergoing liquidation),
■ CD PROJEKT RED Vancouver Studio Ltd. (acquired in 2021).
Additionally, in 2021, CD PROJEKT Inc. acquired 60% of shares in The Molasses Flood LLC (Boston).
The Company’s domestic subsidiaries are as follows:
■ GOG sp. z o.o. (wholly owned),
■ Spokko sp. z o.o. (74% of shares),
■ CD PROJEKT RED STORE sp. z o.o. (wholly owned).
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
90 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
As of 31 December 2021, the aggregate value of shares in domestic and foreign subsidiaries reported in the
separate financial statement of CD PROJEKT S.A. (the Group’s holding company) was 43 447 thousand PLN.
Throughout 2021 the CD PROJEKT Group financed its current activities and investments with its own funds.
DISCLOSURE OF SIGNIFICANT DIFFERENCES BETWEEN THE FINANCIAL RESULTS REPORTED IN
THE ANNUAL FINANCIAL STATEMENT AND EARLIER PROJECTIONS COVERING THE GIVEN YEAR
The CD PROJEKT Group never published any financial projections for 2021. Consequently, no description of
the significant dierences between the Group’s actual results and earlier projections is provided.
DISCLOSURE OF THE APPROPRIATION OF REVENUES GENERATED BY ISSUING CAPITAL
MARKET INSTRUMENTS UP UNTIL THE PUBLICATION DATE OF THE REPORT
As a result of exercise of entitlements assigned under the incentive program in force between 2016 and 2019,
the Company:
1. throughout 2020 carried out:
■ buy-back of its own shares, expending 214 259 thousand PLN;
■ sale of the aforementioned shares and issue of new shares, obtaining a total of 126 124 thousand PLN in the
associated revenues;
2. in 2021 issued new shares, obtaining a total of 2 149 thousand PLN in the associated revenues.
Revenues obtained by the Company from issuing new stock in the framework of the aforementioned incentive
program partly oset the expenses related to the buy-back of stock, which was carried out to facilitate execution
of entitlements assigned under the program.
04
CORPORATE GOVERNANCE
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
92 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Entity contracted to audit financial statements
On 14 May 2020 the Supervisory Board of CD PROJEKT S.A. selected Grant Thornton Polska sp. z o.o. sp. k.
with a registered oce in Poznań as the entity contracted to conduct a review of the semiannual financial
statement and audit the annual financial statement of the Company and its Group for 2020 and 2021. Grant
Thornton Polska sp. z o.o. sp. k. has also been contracted to audit the financial statement of GOG sp. z o.o.,
CD PROJEKT RED STORE sp. z o.o. and Spokko sp. z o. o.
Based on a statement issued by the Superisory Board, the Management Board of the Company declares the
following:
■ Grant Thornton Polska sp. z o.o. sp. k. with a registered oce in Poznań, along with members of the audit team,
fulfill the necessary criteria to ensure preparation of an unbiased and independent audit of the annual separate
financial statement of CD PROJEKT S.A. and the consolidated financial statement of the CD PROJEKT Group for
the fiscal year ending on 31 December 2021, as defined under the relevant legislation, standards of professional
conduct and professional ethics guidelines;
■
The CD PROJEKT Group observes existing regulations governing rotation of auditing companies and head
auditors, as well as mandatory grace periods associated therewith;
■
CD PROJEKT S.A. has instituted a policy regulating selection of auditing companies and procurement by
CD PROJEKT S.A. from auditing companies, their aliates or members of their business networks, of additional
services not directly related to financial audits, including services which auditing companies are conditionally
authorized to perform.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
93 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Shareholders controlling at least 5% of the vote at the General Meeting
The Company’s share capital amounts to 100 738 800 PLN, divided into 100 738 800 shares with a nominal
value of 1 PLN per share. The shareholding structure is determined on the basis of formal notices issued by
shareholders who control at least 5% of the total number of votes at the General Meeting of Shareholders.
Table 10 Shareholders controlling at least 5% of the vote at the General Meeting as of the publication date
of this report
Number of shares % of share capital
Number of votes at
the GM
% of total number
of votes at the GM
Marcin Iwiński 12 873 520 12.78% 12 873 520 12.78%
Michał Kiciński* 10 433 719 10.36% 10 433 719 10.36%
Piotr Nielubowicz 6 858 717 6.81% 6 858 717 6.81%
other shareholders 70 572 844 70.06% 70 572 844 70.06%
*As disclosed in Current Report no. 33/2021 of 26 May 2021
According to Current Report no. 9/2022 of 1 April 2022 the aggregate percentage share of votes controlled
by The Goldman Sachs Group Inc. as a result of holding shares (0.41%) and other financial instruments (4.68%)
was 5.09% as of 29 March 2022.
The percentage share in the Company’s share capital and in the total number of votes at the General Meeting
is calculated on the basis of the most recent notices received from Company shareholders as of the publication
date of this report.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
94 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Agreements which may result in changes in the proportions
of shares held by shareholders and bondholders
INCENTIVE PROGRAM COVERING THE YEARS 20162019
As of the publication date of this report, there remain 32 000 unexercised Series B subscription warrants issued
to participants of the Company’s incentive program covering the years 2016-2019 (entitling holders to take up
the equivalent number of shares). These warrants will expire on 31 October 2022.
INCENTIVE PROGRAM COVERING THE YEARS 20202025
Pursuant to General Meeting adopted on 28 July 2020 and 22 September 2020, a third edition of the Company
incentive program, covering the years 2020-2025, was formally instituted. In line with the adopted stipulations,
a total of 4 000 000 entitlements may be granted under the program. The program may also vest by issuing and
assigning to entitled parties a certain quantity of subscription warrants which incorporate the right to acquire
parent Company shares issued in the framework of a conditional increase in the Company share capital, or,
alternatively, by extending an oer to entitled parties to purchase Company shares which will have previously
been bought back by the Company on the open market. Acquisition and exercise of subscription warrants or
the purchase of the parent Company’s own shares by the entitled parties, as appropriate, is predicated upon
attaining certain goals and criteria defined under the program. These include earnings goals (80% of entitle-
ments), market goals (20% of entitlements), individual goals (in selected cases) as well as – in all circumstances –
fulfillment of a loyalty criterion up until the day the attainment of the program’s goals and criteria is declared.
Result goal - 80% of entitlements
Base variant, entitling participants to exercise their entitlements at the base price:
Achieving consolidated net earnings from continuing activity for the Group as a whole, increased by costs re-
lated to estimation of the granted entitlements as entered in the Group’s accounts for each verification period,
of at least:
a) for the financial years 2020-2023 – 6 billion PLN and at least 59.02 PLN per Company share outstanding
on the final date of the corresponding verification period, or
b) for the financial years 2020-2024 – 7 billion PLN and at least 68.86 PLN per Company share outstanding
on the final date of the corresponding verification period, or
c) for the financial years 2020-2025 – 8.3 billion PLN and at least 81.65 PLN per Company share outstanding
on the final date of the corresponding verification period.
Alternative variant whereby any of the above stated goals are achieved one year in advance, entitling partici-
pants to exercise their entitlements at a discount:
Achieving consolidated net earnings from continuing activity for the Group as a whole, increased by costs
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
95 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
related to estimation of the granted entitlements as entered in the Group’s accounts for each verification
period, of at least:
a) for the financial years 2020-2022 – 6 billion PLN, or
b) for the financial years 2020-2023 – 7 billion PLN, or
c) for the financial years 2020-2024 – 8.3 billion PLN, or
d) for the financial years 2020-2025 – 10 billion PLN and at least 98.37 PLN per Company share outstanding
on the final date of the corresponding verification period.
Market goal – 20% of entitlements
Entitlements exercised at base price:
A goal predicated upon the change in the price of CD PROJEKT S.A. stock on the Warsaw Stock Exchange in
such a way that the percentage dierence between the closing price of CD PROJEKT S.A. stock on the verifi-
cation date and the corresponding closing price on 22 September 2020 is more than 100% greater than the
corresponding change in the value of the WIG index over the same period.
With regard to entitlements assigned thus far, the base exercise price is 390.59, while the discounted price is
317.06 PLN.
As of the publication date of this report there are 2 275 000 entitlements outstanding under the 2020-2025
incentive program.
According to the terms and conditions of the 2020-2025 incentive program, first verification of the attainment
of its result goal may not occur before the Company’s earnings for 2022 are ocially approved.
Based on the Group’s 2020 and 2021 earnings, as well as assumptions concerning further years covered by
the incentive program, the Management Board has performed an analysis of the feasibility of attaining the result
goal as defined for the entire duration of the program, and has consequently revised its projections, declaring
that the most likely outcome is that the result goal for the duration of the program cannot be attained.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
96 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Information regarding the control system of employee share programs
An incentive program under which Company shares may be awarded, covering the activities of the Company
and its Group in the 2020-2025 period, was approved by the General Meetings of Shareholders on 28 July
2020 and 22 September 2020. A detailed set of terms and conditions was endorsed by the Supervisory Board
and subsequently approved by the Management Board on 30 October 2020.
Implementation of the aforementioned program is directly supervised by the Supervisory Board and Manage-
ment Board of CD PROJEKT S.A.
Disclosure of the purchase of own shares
No purchases of own shares took place during the reporting period.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
97 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Company shares held by members of the Management
Board and the Supervisory Board
Table 11 Shares held by members of the Management Board and Supervisory Board of the Company*
Name Position
as of
14.04.2022
as of
31.12.2021
as of
01.01.2021
Adam Kiciński President of the Board 4 046 001 4 046 001 4 046 001
Marcin Iwiński Vice President of the Board 12 873 520 12 873 520 12 873 520
Piotr Nielubowicz Vice President of the Board 6 858 717 6 858 717 6 858 717
Adam Badowski Board Member 692 640 692 640 692 640
Michał Nowakowski Board Member 580 290 580 290 580 290
Piotr Karwowski Board Member 108 728 108 728 108 728
Paweł Zawodny Board Member 18 508 n/a n/a
Katarzyna Szwarc
Chairwoman of the Supervisory
Board
10 10 10
Maciej Nielubowicz Supervisory Board Member 51 51 51
* based on declarations filed with the Company
Persons discharging managerial and executive responsibilities at CD PROJEKT S.A. do not directly hold any
shares of entities aliated with CD PROJEKT S.A.
Management structure
Pursuant to domestic regulations expressed in the Commercial Companies Code, in addition to the General Me-
eting of Shareholders, the Company’s ocial bodies include the Management Board and the Supervisory Board.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
98 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Composition of the Management Board of CD PROJEKT S.A.
Marcin Iwiński – Vice President of the Board for International Aairs
Coordinates the Company’s international activities and the corresponding policies. Takes part in
supervising and managing the Company’s foreign subsidiaries. Co-develops and coordinates global
publishing plans. Coordinates and participates in shaping relations with the gaming community.
Adam Badowski – Board Member
Heads the CD PROJEKT RED development studio which is owned by the Company. Co-deve-
lops the conceptual framework and artistic vision of projects carried out at CD PROJEKT RED.
Michał Nowakowski – Board Member
Co-develops and coordinates the Company’s global publishing activities. Oversees formulation
and implementation of the Company’s sales policies.
Piotr Karwowski – Board Member
Supervises the Group’s activities related to online games and services, as well as cybersecurity.
Also responsible for the activities and development of the GOG.COM segment, and of GWENT.
Paweł Zawodny – Board Member
Serves as Chief Technology Ocer (CTO) and head of production at CD PROJEKT RED.
Oversees the technological and organizational transformation of CD PROJEKT RED.
Jeremiah Cohn – Board Member
Responsible for overseeing the marketing and communication departments as Chief Marketing
Ocer (CMO). Also manages the newly established franchise development team.
Adam Kiciński – President of the Board
Oversees formulation of the Company’s and its Capital Group’s business strategies and supports
their practical implementation. Coordinates Company activities in the scope of investor relations.
Piotr Nielubowicz – Vice President of the Board; Chief Financial Ocer
Coordinates the Company’s financial and accounting branches; ensures that the Company
meets its financial reporting obligations. Participates in investor relations.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
99 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Management Board members represent the Company and its Management Board. Management Board mem-
bers cooperate with one another, share information regarding important matters aecting the Company, jointly
manage the Company and jointly bear the associated responsibility. The Management Board, acting as a col-
lective body, formulates the Company’s strategies, develops its financial plans and manages the Company in
such a way as to ensure implementation of these strategies and plans. The Management Board has embraced
the concept of collective management in order to enhance its own capabilities for strategic thinking, build
upon its positive energy and uphold the belief that nothing is truly impossible. Deep mutual trust, coupled with
a shared set of core beliefs and ethics, enable the Management Board to discharge its duties eciently and
without undue bureaucracy.
Chart 18
Tenure of incumbent members of the Management Board as employees at the Group’s member
companies (in years)
Changes in the composition of the Management
Board of CD PROJEKT S.A.
No changes in the composition of the Company Management Board occurred in 2021.
On 25 May 2021 the Supervisory Board of the Company adopted resolutions appointing all incumbent members
of the Management Board (listed below) to a new term of oce:
Adam Kiciński – President of the Board
Marcin Iwiński – Vice President of the Board for International Aairs
Piotr Nielubowicz – Vice President of the Board; Chief Financial Ocer
Adam Badowski – Board Member
Michał Nowakowski – Board Member
Piotr Karwowski – Board Member
Following the balance sheet date, on 26 January 2022, two additional persons were appointed to the Mana-
gement Board of CD PROJEKT S.A. as Board Members: Paweł Zawodny and Jeremiah Cohn – eective on 1
February 2022 in both cases.
Paweł Zawodny
Jeremiah Cohn
Piotr Karwowski
Michał Nowakowski
Adam Badowski
Piotr Nielubowicz
Adam Kiciński
Marcin Iwiński
28
28
23
19
17
15
8
4
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
100 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Composition of the Supervisory Board of CD PROJEKT S.A.
The incumbent members of the Supervisory Board of CD PROJEKT S.A. are as follows:
Changes in the composition of the Supervisory
Board of CD PROJEKT S.A.
On 17 May 2021 Mr. Krzysztof Kilian tendered his resignation from the Supervisory Board of the Company,
eective on the day of the General Meeting convened on 25 May 2021.
On 25 May 2021 the Ordinary General Meeting appointed Mr. Jan Łukasz Wejchert to the Supervisory Board.
In addition, all other incumbent members of the Supervisory Board, i.e.:
■ Ms. Katarzyna Szwarc
■ Mr. Michał Bień
■ Mr. Piotr Pągowski
■ Mr. Maciej Nielubowicz
were appointed by the General Meeting to a new term of oce.
Chairwoman of the Supervisory Board; Audit Committee Member
Deputy Chairman of the Supervisory Board;
Audit Committee Member meeting independence criteria
Secretary of the Supervisory Board; Audit Committee Member
Supervisory Board Member; Chairman of the Audit Committee
Supervisory Board Member; Audit Committee Member meeting independence criteria
Katarzyna Szwarc
Piotr Pągowski
Maciej Nielubowicz
Michał Bień
Jan Łukasz Wejchert
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
101 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Gross compensation of members of the Management
Board and Supervisory Board of CD PROJEKT S.A.
On 27 August 2020, acting under authorization expressed in Resolution 19 of the Ordinary General Meeting of
28 July 2020, the Supervisory Board of the Company adopted Resolution 1, instituting a remuneration policy
at CD PROJEKT S.A.
The policy specifies, among others, the make-up of variable remuneration, criteria and deferment periods for
disbursement of variable remuneration, as well as non-monetary benefits which may be assigned to members
of the Management Board as part of their fixed remuneration.
ADAM KICIŃSKI, PRESIDENT OF THE BOARD
Mr. Kiciński’s base remuneration paid by CD PROJEKT S.A. in 2020 was 420 thousand PLN, all of which repre-
sented his base salary. In 2021 this base salary remained unchanged at 420 thousand PLN. In 2021 Mr. Kiciński
also received bonuses under the incentive program in force at the Company. This variable portion of his salary
associated with the net earnings of the Group in 2020, was 24 241 thousand PLN, while the portion associated
with the net earnings of the Group in 2021 was 4 387 thousand PLN. The latter portion had not been disbursed
as of the balance sheet date.
MARCIN IWIŃSKI, VICE PRESIDENT OF THE BOARD
Mr. Iwiński’s base remuneration paid by CD PROJEKT S.A. in 2020 was 336 thousand PLN, all of which repre-
sented his base salary. In 2021 this base salary remained unchanged at 336 thousand PLN. In 2021 Mr. Iwiński
also received bonuses under the incentive program in force at the Company. This variable portion of his salary
associated with the net earnings of the Group in 2020, was 24 241 thousand PLN, while the portion associated
with the net earnings of the Group in 2021 was 2 194 thousand PLN. The latter portion had not been disbursed
as of the balance sheet date.
PIOTR NIELUBOWICZ, VICE PRESIDENT OF THE BOARD
Mr. Nielubowicz’s base remuneration paid by CD PROJEKT S.A. in 2020 was 348 thousand PLN, all of which
represented his base salary. In 2021 this base salary remained unchanged at 348 thousand PLN. In 2021 Mr.
Nielubowicz also received bonuses under the incentive program in force at the Company. This variable portion
of his salary associated with the net earnings of the Group in 2020, was 24 241 thousand PLN, while the portion
associated with the net earnings of the Group in 2021 was 4 387 thousand PLN. The latter portion had not been
disbursed as of the balance sheet date.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
102 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
ADAM BADOWSKI, BOARD MEMBER
Mr. Badowski’s base remuneration paid by CD PROJEKT S.A. in 2020 was 397 thousand PLN, all of which
represented his base salary. In 2021 this base salary amounted to 398 thousand PLN. In 2021 Mr. Badowski
also received bonuses under the incentive program in force at the Company. This variable portion of his salary
associated with the net earnings of the Group in 2020, was 16 738 thousand PLN, while the portion associated
with the net earnings of the Group in 2021 was 3 029 thousand PLN. The latter portion had not been disbursed
as of the balance sheet date.
MICHAŁ NOWAKOWSKI, BOARD MEMBER
Mr. Nowakowski’s base remuneration paid by CD PROJEKT S.A. in 2020 was 360 thousand PLN, all of which
represented his base salary. In 2021 this base salary remained unchanged at 360 thousand PLN. In 2021 Mr.
Nowakowski also received bonuses under the incentive program in force at the Company. This variable por-
tion of his salary associated with the net earnings of the Group in 2020, was 16 738 thousand PLN, while the
portion associated with the net earnings of the Group in 2021 was 3 029 thousand PLN. The latter portion had
not been disbursed as of the balance sheet date.
PIOTR KARWOWSKI, BOARD MEMBER
Mr. Karwowski’s base remuneration paid by CD PROJEKT S.A. in 2020 was 102 thousand PLN, all of which
represented his base salary. In 2021 this base salary was increased to 185 thousand PLN. Prior to the end of
2020 Mr. Karwowski participated in the incentive program in force at GOG sp. z o.o. as a board member thereof.
His compensation, disbursed in 2021 by GOG sp. z o.o. in association with the aforementioned function, is
disclosed in the table below. Since 2021 Mr. Karwowski also participates in the incentive program in force at
CD PROJEKT S.A. His variable remuneration assigned under this program and associated with the net earnings
of the Group in 2021 was 3 029 thousand PLN, and had not been disbursed as of the balance sheet date.
Table 12 Compensation paid to members of the Management Board of CD PROJEKT S.A. during their tenure
as members of the Company’s managerial bodies, and paid by the Company’s subsidiaries in asso-
ciation with discharging managerial duties at these subsidiaries (PLN thousands)
01.01.2021–31.12.2021 01.01.2020–31.12.2020
Marcin Iwiński 24 24
Piotr Karwowski 4 791 946
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
103 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Compensation paid out in the framework of
share-based incentive schemes
The share-based incentive program for 2016-2019 was instituted by the Extraordinary General Meeting of 24
May 2016 for the benefit of key employees of the Company and other Group member companies, as well as
other persons regarded as having crucial influence on their earnings. The program’s conditions were specified
in resolutions adopted by the General Meeting of 24 May 2016, the related Terms and Conditions document as
well as further resolutions issued by the Company’s Supervisory Board and Management Board. The program
vested as a result of the Group’s earnings in the 2016-2019 period, and, consequently, in 2020 entitled parties
belonging to the Management Board of CD PROJEKT S.A. (specifically, Mr. Adam Kiciński, Mr. Marcin Iwiński,
Mr. Piotr Nielubowicz, Mr. Adam Badowski, Mr. Michał Nowakowski and Mr. Piotr Karwowski) exercised their
assigned subscription warrants and acquired Company stock. The value of potential benefits and quantity of
entitlements assigned to members of the Management Board in conjunction with their enrollment in the 2016-
2019 incentive program are listed in the following table.
Table 13 Number of entitlements and potential value of monetary benefits (in PLN thousands) assigned to
members of the Management Board under the 2016-2019 incentive program.
value of potential benefits
Name Position Entitlements granted
01.01.2020–
31.12.2020
01.01.2021–
31.12.2021
Adam Kiciński President of the Board 800 thousand 853 -
Marcin Iwiński Vice President of the Board 800 thousand 853 -
Piotr Nielubowicz Vice President of the Board 800 thousand 853 -
Adam Badowski Board Member 600 thousand 640 -
Michał Nowakowski Board Member 600 thousand 640 -
Piotr Karwowski Board Member 120 thousand 110 -
Pursuant to resolutions of the General Meetings of 28 July 2020 and 22 September 2020 a third edition of
the Company’s incentive program was instituted, covering the years 2020-2025. The program involves key
employees and collaborators of the Company and other companies constituting its Group, as well as other
persons regarded as having influence on the financial results of the Company and its Group, as specified in
resolutions adopted on 28 July 2020 and 22 September 2020 by the General Meeting of CD PROJEKT S.A.,
the Terms and Conditions of the Incentive Program and the corresponding resolutions of the Supervisory Board
and Management Board. The value of potential benefits assignable to members of the Management Board
under the incentive program for 2020-2025 is listed in the table below.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
104 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Table 14
Entitlements assigned and potential value of monetary benefits (in PLN thousands) obtainable
by members of the Management Board in light of their involvement in the 2020-2025 incentive
program
value of potential benefits
Name Position Entitlements granted 01.01.2020-31.12.2020 01.01.2021-31.12.2021
Adam Kiciński
President of the
Board
200 thousand 536 -9
Marcin Iwiński
Vice President of
the Board
200 thousand 536 -9
Piotr Nielubowicz
Vice President of
the Board
200 thousand 536 -9
Adam Badowski Board Member 200 thousand 536 -9
Michał Nowakowski Board Member 200 thousand 536 -9
Piotr Karwowski Board Member 200 thousand 536 -9
Paweł Zawodny Board Member 40 thousand n/a n/a
Jeremiah Cohn Board Member 40 thousand n/a n/a
The value of potential benefits listed in the above tables, payable to participants of successive editions of long-
-term share-based incentive programs for Management Board members is based on the fair value of assigned
entitlements on the grant date, as calculated by a licensed actuary. These values have been duly recognized
as Group expenditures in the years 2020 and 2021 respectively. The 2021 figure incorporates the change in
Management Board’s projections regarding the attainability of the goals set for 2020-2025 under the current
incentive program.
The dierence between the market value of CD PROJEKT shares and their respective take-up or purchase
prices, calculated for the given exercise date under the terms of successive incentive programs may dier
significantly from the estimation prepared by the actuary on the grant date and recognized on the Group’s
balance sheet. Future benefits obtainable by participants of the program will depend on the share price at the
moment of purchase or take-up of shares by entitled parties. With regard to entitlements assigned thus far, the
base take-up or purchase price payable by entitled parties (following attainment of the program’s goals and
other criteria) is 390.59 PLN, while the corresponding discount price is 371.06 PLN.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
105 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Assignment of benefits to Management Board members
The variable portion of the Management Board members’ compensation under the groupwide incentive program
is strictly dependent on the net financial result of the Group and settled in annual cycles.
Remuneration of Supervisory Board members
Table 15 Gross remuneration paid out to members of the Supervisory Board of CD PROJEKT S.A. in 2020
and 2021 (PLN thousands)
Name 01.01.2021-31.12.2021 01.01.2020-31.12.2020
Katarzyna Szwarc – Chairwoman of the Supervisory Board 135 120
Piotr Pągowski – Deputy Chairman of the Supervisory Board 87 72
Maciej Nielubowicz – Secretary of the Supervisory Board 87 72
Michał Bień – Supervisory Board Member; Chairman of the Audit Committee 87 72
Krzysztof Kilian – Supervisory Board Member 29 72
Jan Łukasz Wejchert – Supervisory Board Member 58 n/a
DISCLOSURE OF RETIREMENT BENEFITS AND SIMILAR COMPENSATION PAYABLE TO
FORMER MEMBERS OF THE ISSUER’S EXECUTIVE, SUPERVISORY OR ADMINISTRATIVE
BODIES, AND OF ANY LIABILITIES ASSOCIATED WITH SUCH BENEFITS, SPECIFYING
THE AGGREGATE AMOUNTS FOR EACH CATEGORY OF RECIPIENTS
As of 31 December 2021 the Company had no such liabilities.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
106 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
AGREEMENTS BETWEEN THE ISSUER AND MEMBERS OF ITS MANAGING AND SUPERVISORY
BODIES CONCERNING COMPENSATION IN THE EVENT OF THEIR RESIGNATION OR DISMISSAL
As of 31 December 2021 and as of the preparation date of this report all members of the Company’s managing
bodies discharged their duties on the basis of appointment resolutions adopted by the Supervisory Board,
and there were no provisions in force regulating compensation in the event of their resignation or dismissal.
TRANSACTIONS BETWEEN THE ISSUER AND MEMBERS OF ITS MANAGING
AND SUPERVISORY BODIES NOT OTHERWISE REPORTED
In 2021 there were no significant transactions with members of the managing and supervisory bodies of
CD PROJEKT S.A. not disclosed elsewhere in this report.
The following transactions are not regarded as significant: medical coverage fees, use of company cars, reim-
bursements and incidental purchases of Group products by members of the Management Board or Supervisory
Board on the same terms as those oered to the rest of the team.
Changes in basic management practices at the Company and its Group
No significant changes in basic management policies aecting the Company and its Group occurred in 2021.
Corporate governance policies
CD PROJEKT S.A. follows the corporate governance policies listed in the “Best Practice for WSE Listed Com-
panies 2021” document, published as an attachment to Resolution no. 13/1834/2021 of the Supervisory Board
of the Warsaw Stock Exchange on 29 March 2021. Details concerning the implementation of specific corporate
governance policies at CD PROJEKT S.A. in 2021 can be found on the Company website at https://www.cdpro-
jekt.com/en/investors/corporate-governance/.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
107 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Disclosure of significant legal proceedings
The following legal proceedings took place during the reporting period (the presented status is valid for the
publication date of this report):
LITIGATION IN WHICH CD PROJEKT S.A. IS THE PLAINTIFF OR CLAIMANT
CD PROJEKT S.A. (formerly Optimus S.A.) vs. State Treasury
On 15 February 2006 the Management Board of Optimus S.A. filed a complaint in the District Court for the City
of Kraków, 1st Civil Department seeking monetary damages from the State Treasury in the amount of 35 650.6
thousand PLN in relation to decisions issued by the Inspector of Treasury Control concerning VAT liabilities
allegedly incurred by the Company’s legal predecessor. On 24 November 2003 the Supreme Administrative
Court in Warsaw vacated these decisions as unlawful.
On 9 December 2008 the District Court for the City of Kraków issued an interlocutory judgment holding the
Optimus claim valid in rem. This judgment concerned the validity of the Company’s claim for monetary damages.
On 19 May 2009 this judgment was vacated by the Appellate Court for the City of Kraków, 1st Civil Department,
which remanded the case to the District Court for further proceedings.
On 1 August 2014 the District Court for the City of Kraków issued a final judgment closing the proceedings in
the court of first instance. The District Court’s judgment awarded the Company 1 090.5 thousand PLN plus
statutory interest for the period between 15 November 2005 and the remittance date, dismissing the lawsuit
on all other counts.
On 9 October 2014 the Company filed an appeal against the District Court’s judgment with regard to those
sections in which the District Court dismissed the Company’s claims, and also the section concerning the cost
of legal proceedings associated with the case. A parallel appeal against the section in which the District Court
arms the Company’s claims was filed by the State Treasury. On 21 December 2018 the Appellate Court over-
ruled the judgment of the court of first instance by dismissing the Company’s lawsuit in its entirety.
On 19 April 2019 the Company filed a cassation appeal against the portion of the judgment which reverses the
earlier judgment of the District Court in Kraków by dismissing the lawsuit, as well as the portion in which the
judgment dismisses the Company’s appeal concerning the costs of legal proceedings.
On 24 November 2021 the Supreme Court dismissed the Company’s cassation appeal.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
108 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
CRIMINAL PROCEEDINGS IN WHICH CD PROJEKT S.A. IS RECOGNIZED AS THE VICTIM
Case against natural persons (including former members of the Management Board of Optimus S.A.) char-
ged with acting against the Company’s interests
In case no. XVIII K 126/09, following indictment filed by the District Attorney in the District Court for the City of
Warsaw, on 27 October 2016 the District Court convicted Mr. Michał L., Mr. Piotr L. and Mr. Michał D. of violating
sections 296 §1, 296 §3 and others of the Penal Code. The Company acted as an auxiliary prosecutor in the
court of first instance and will retain this status until the trial has concluded. Having found the defendants guilty,
the Court awarded the Company 210 thousand PLN in damages under Art. 46 of the Penal Code. According
to the operative part of the judgement total losses sustained by the Company as a result of the defendants’
actions were estimated at not less than 16 million PLN (this figure follows from standard regulations applicable
to criminal trials). The Company subsequently filed an appeal against the judgment, contesting, among others,
the amount of damages awarded to the Company. On 26 October 2017 the Appellate Court vacated the judg-
ment of the court of first instance and remanded the case to be retried in full. The parent company continues
to act in the capacity of an auxiliary prosecutor.
LITIGATION IN WHICH CD PROJEKT S.A. IS NAMED AS THE DEFENDANT
Class action lawsuit filed against CD PROJEKT S.A. concerning US securities
On 25 December 2020 and subsequently on 15 January 2021 the Management Board of the Company re-
ceived information concerning the filing of civil class action lawsuits in the US District Court for the Central
District of California, by law firms acting on behalf of groups of holders of securities traded in the USA under
the ticker symbols “OTGLY” and “OTGLF” and based on Company shares, whereby the plaintis call for the
court to adjudicate whether the actions undertaken by the Company and members of its Management Board
in connection with the release of Cyberpunk 2077 constituted a violation of federal laws, i.a. by misleading
investors and, consequently, causing them to incur damages. In subsequent months the Company was notified
of two further lawsuits filed in the aforementioned court, both of which were materially consistent with the
lawsuit described above, and also named CD PROJEKT as the defendant. None of these complaints specified
the quantity of damages sought.
On 18 May 2021 the Company was notified that the court had consolidated the aforementioned lawsuit and
named a lead plainti. Following consolidation, all four lawsuits were merged into a single case.
On 29 June 2021 the Company announced that it had received a transcript of a lawsuit filed against the Com-
pany and members of its Management Board by a law firm representing the lead plainti and other eligible
holders of US securities traded under the ticker symbols “OTGLY” and “OTGLF”. The lawsuit is not materially
dierent from earlier lawsuits filed in this matter, and likewise, does not specify the amount of damages sought.
On 12 August 2021 the Company filed a responsive pleading, asking that the complaint be dismissed by the
court. Subsequently, on 5 October 2021 the Company was notified that the plaintis had responded with their
own pleading which objected against the complaint being dismissed, to which the Company responded on
17 November 2021, again asking for the complaint to be dismissed.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A. between
1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise)
109 CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
On 7 December 2021 the Company entered into settlement negotiations with the plaintis, as a result of
which on 16 December 2021 a Settlement Term Sheet was signed whereupon the Company agreed to pay a
settlement in the amount of 1 850 000 USD in exchange for which the plaintis would relinquish any claims
against the Company. This settlement was then endorsed by the Company’s insurer, i.e. Colonnade Insurance
S.A. (Polish division).
On 27 January 2022, after the balance sheet date, the Company concluded a formal Stipulation Agreement
which confirmed the provisions of the Settlement Term Sheet.
Similarly to the Term Sheet, the Stipulation Agreement expressly rejects any admission of wrongdoing on the
part of the Company or other defendants named in the case.
The Company expects the settlement procedure to conclude within several months of the publication date
of this report.
Adam Kiciński
President of the Board
Marcin Iwiński
Vice President
of the Board
Piotr Nielubowicz
Vice President
of the Board
Adam Badowski
Board Member
Michał Nowakowski
Board Member
Piotr Karwowski
Board Member
Paweł Zawodny
Board Member
Jeremiah Cohn
Board Member