MANAGEMENT BOARD REPORT ON CD PROJEKT
GROUP ACTIVITIES FOR THE PERIOD BETWEEN
1 JANUARY AND 31 DECEMBER 2023
2
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
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 as a whole, 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 efforts devoted to this translation, certain discrepancies, omissions or approximations may
exist. In case of any differences between the Polish and the English versions, the Polish version shall prevail.
CD PROJEKT, its representatives and employees decline all responsibility in this regard.
3
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Dear readers,
On behalf of the Management Board of CD PROJEKT it is my plea-
sure to hand over to you our annual report which summarizes key
business events and our financial results achieved in 2023.
The highlight of the reporting period was the September release
of Phantom Liberty – the large expansion for Cyberpunk 2077.
Strongly positive reception of this release on the part of gamers
and game industry representatives fills us with great pride, as do its
excellent sales figures. The base game itself – following additional
changes and upgrades – also enjoys excellent reviews and contin-
ues to rank among the most frequently purchased games globally.
We take this as confirmation of the great power and potential of
the franchise. This is important for us in business terms, but also
from the strategic viewpoint, given that in the future we intend
to expand the Cyberpunk franchise with many new products. Some of those products go beyond the field
of video games, where the next big challenge – following strong reception of the Cyberpunk: Edgerunners
anime series – involves a live action project set in the Cyberpunk universe, co-developed with the Anonymous
Content production studio.
One of our declared strategic goals in recent quarters was to carry out parallel work on two large-scale proj-
ects. Development of the first installment of the new Witcher trilogy has now progressed to more advanced
stages, which, coupled with successful completion and release of Phantom Liberty, proves that we can
achieve this goal while meeting our efficiency and quality objectives. Another notable process underway at
CD PROJEKT RED – in the context of scaling up our activities and developing multiple parallel projects – is the
launch of our new Boston hub, which has already begun work on a new Cyberpunk game. We also continue
our work on other previously announced releases: Sirius, The Witcher Remake as well as Hadar – an entirely
new IP for which we’re developing a universe from scratch.
Ongoing changes also affect us as Members of the Management Board. Together with Adam Badowski we’re
eager to face the challenges which await us as new Joint CEOs. However, our means of operating, and our
strategy in particular, do not change. We want our franchises to remain part of the global popular culture, and
we intend to accomplish this by telling incredible stories in our games, as well as presenting fans with new
forms of entertainment and new ways to interact with our brands.
Our intent is to enable the Company to make this next great leap. We believe that with phenomenal, talented
people on board, and with support from gamers and shareholders, we will be successful.
Respectfully,
Michał Nowakowski
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Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Table of contents
6 Key events of 2023
7 Brief outline of the CD PROJEKT Group
8 Activity profile
12 Mission, values and ethics
13 CD PROJEKT S.A. on the capital market
16 CD PROJEKT Group activity profile
20 Organizational structure of the CD PROJEKT Group
22 Disclosure of business segments, products and services, outlets, suppliers and clients
41 Disclosure of external and internal factors affecting further growth of the CD PROJEKT Group
43 Disclosure of significant achievements in the scope of research and development
44 Disclosure of significant agreements
44 Risk management at the Group
55 Results of operation of the CD PROJEKT Group
56 Discussion of the key economic and financial figures disclosed in the consolidated
and separate financial statements
86 Statement regarding the implementation of Corporate Governance Polices
87 Statement
87 Applicable corporate governance policies
92 Internal control and risk management
95 Shareholders who hold major stock packages
95 Holders of securities which provide special control rights
96 Limitations on the exercise of voting rights
96 Limitations on transferability of ownership rights to the Issuer’s securities
97 Rules regarding appointment and dismissal of managers
97 Right to adopt decisions concerning issue or buy-back of the Issuer’s shares
97 Rules regarding amendment of the Issuer’s Articles of Association
98 General Meeting
100 Managerial and supervisory bodies
109 Diversity policy
110 Corporate Governance - supplementary information
111 Entity contracted to audit financial statements
111 Agreements which may result in changes in the proportions of shares held by shareholders and bondholders
113 Information regarding the control system of employee share programs
114 Disclosure of the purchase and redemption of own shares
115 Company shares held by members of the Management Board and the Supervisory Board
115 Gross remuneration of members of the Management Board of CD PROJEKT S.A.
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Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
119 Remuneration of Supervisory Board members
120 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
120
Agreements between the Issuer and members of its managing bodies concerning compensation in the event
of their resignation or dismissal, including dismissal or recall as a result of a merger
120
Transactions between the Issuer and members of its managing and supervisory bodies not otherwise reported
121 Changes in basic management practices at the Company and its Group
121 Disclosure of significant legal proceedings
124 Statement concerning non-financial disclosures
6
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Key events of 2023
■ 26 September saw the global release of Phantom Liberty – a storyline expansion
for Cyberpunk 2077, widely acclaimed by gamers and gaming industry repre-
sentatives alike
■ On 5 October CD PROJEKT announced collaboration with the Anonymous
Content production studio to co-develop a new live action project set in the
Cyberpunk universe
■
The global release of Cyberpunk 2077: Ultimate Edition took place
on 5 December. This bundle consists of the base game and the
Phantom Liberty expansion
■ On 8 December, at The Game Awards – the gaming industry’s most
prestigious awards ceremony – Cyberpunk 2077 was named “Best
Ongoing Game”
■
In Q4 CD PROJEKT RED launched a hub in Boston, which began
conceptual work on Project Orion – the sequel to Cyberpunk 2077
■ In 2023 CD PROJEKT RED releases reached notable cumulative sales
milestones:
- over 75 million copies of The Witcher trilogy games sold
- over 50 million copies of The Witcher 3: Wild Hunt sold
- over 25 million copies of Cyberpunk 2077 sold
- over 5 million copies of Cyberpunk 2077: Phantom Liberty
expansion sold between its release date on 26 September and
the end of 2023
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
01
BRIEF OUTLINE
OF THE CD PROJEKT GROUP
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Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
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 distrib-
uting foreign games in Poland. Pivotal moments in the Group’s history came in 2002 with the establishment of
the CD PROJEKT RED studio, which initiated work on the Company’s first major RPG – 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.
1 Role Playing Game – a storyline-driven game based on a consistent narrative.
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Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
CD PROJEKT RED
Development and publishing video games and managing the Company’s franchises, including through creation
and production of tie-in products.
GOG.COM
Digital distribution of videogames via the Company’s proprietary GOG.COM platform and the GOG GALAXY application.
During the reporting periods 97.5% of the CD PROJEKT Group’s sales revenues were generated by exports.
Throughout 2023 North America and Europe accounted for 70.9% and 18.8% of the Group’s sales respectively.
92.4% of the Group’s sales came from digital distribution carried out through GOG.COM and external platforms.
Map 1 The CD PROJEKT Group around the world
São Paulo
Wrocław
Kraków
Warszawa
Berlin
Los Angeles
Boston
Shanghai
Tokyo
Seoul
Paris
Vancouver
Madrid
Headquarters (CD PROJEKT RED, GOG.COM)
CD PROJEKT RED dev studio
Branch offices
Media and community managers
Publishing team representatives
CD PROJEKT RED Inc. and The Molasses Flood
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Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
GROWTH STRATEGY
Strategic directions related to development and support for the team, along with transformation of the
videogame development process are presented in the CD PROJEKT Group Strategy Update published in
2021 (including the accompanying video commentary) as well as in our Strategy Update which focuses on
long-term plans for developing key projects and was published in 2022.
In the framework of its strategy, in the coming years the Studio intends to develop and publish the following
releases:
■ A new Witcher trilogy, the first installment of which is the game codenamed Polaris;
■ Project Sirius (a game with multiplayer features, developed by The Molasses Flood);
■ The Witcher Remake (developed in collaboration with Fool’s Theory);
■ Project Orion – the sequel to Cyberpunk 2077.
In addition, CD PROJEKT RED is carrying out internal work on a new, proprietary IP codenamed Hadar.
In line with the adopted strategy, in late 2023 CD PROJEKT RED launched a new hub in Boston (which is
separate from The Molasses Flood). This hub will be tasked with work on the new game set in the Cyberpunk
universe – Project Orion.
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Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
CD PROJEKT has also revealed that it was carrying on with the franchise flywheel concept, which involves
developing an ecosystem of mutually supporting products, rooted in the potential of the Studio’s franchises.
The Group has announced openness to collaboration with external partners in order to create new ways to
interact with its franchises – this will also enable our internal team to focus on development of revolutionary
RPGs and, later on, enrich the ecosystems with games offering multiplayer features.
The strategy of the CD PROJEKT Group is described in detail in materials available on the Company website.
Chart 1 CD PROJEKT Group – business model
Presenting gamers with ambitious,
innovative, high-quality games
Parallel development projects
supporting an ambitious release
schedule
Offering unique development
opportunities and career
advancement options for team
members while retaining
creative autonomy
Steady stream of revenues
and earnings - enabling
financial independence
Development and expansion of
franchises by creating synergies
and supporting recognition of
our brands beyond the field of
videogames
Supporting and harnessing synergies
in the context of our franchises
Collaboration with experienced
quality-focused partners in expanding our
franchises to new fields of entertainment
(beyond videogames)
Management and protection of intellectual property
related to globally recognized franchises, beloved
by fans throughout the world
Maintaining control over the creative process
– caring for the quality of products
which comprise our franchises
Games developed by experienced
teams which prioritize quality
Parallel production by CD PROJEKT RED
development studios in Poland, USA
and Canada, and The Molasses Flood
Applying own tools and know-how to
development of open-world story-driven RPGs
Development of games in the context of
a strategic partnership which involves
the use of Unreal Engine
to support open-world gameplay
Carrying out global marketing and
sales campaign – by internal PR, Marketing
and Biz Dev teams
Maintaining dialogue with gamers
in 11 languages
FRANCHISE
MANAGEMENT
PUBLISHING
TECHNOLOGY
PRODUCTION
INTELLECTUAL
PROPERTY
STAKEHOLDER VALUE
7
OUR KEY CAPITAL
INTELLECTUAL CAPITAL
Franchise rights: The Witcher and Cyberpunk,
in selected fields of exploitation
TECHNOLOGICAL CAPITAL
Gamedev technologies and tools
RELATIONS AND SOCIAL CAPITAL
Strong communities
established around our products
Longstanding trust-based relations
with business partners
PRODUCT CAPITAL
Portfolio of available games and tie-in products
HUMAN CAPITAL
Team of experienced developers, highly skilled
in creating and producing games,
centered around a shared set of values
Internal publishing team with experience
in leading global marketing campaigns,
successfully promoting sales of our games
Effective backoffice team supporting our operations
FINANCIAL CAPITAL
Financial reserves
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Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Mission, values and ethics
Our mission is to create revolutionary role-playing games with unforgettable storylines which inspire gamers.
In 2023 we reformulated the core set of values by which we want to be guided at CD PROJEKT RED:
■ Be ambitious
■ Set the goal and persevere
■ Be honest with everyone at all times
■ Be kind and respectful to all around you
■ Always remember about the gamers
These values are an important part of our organizational culture, support us in carrying out our mission and
help make CD PROJEKT unique. More information about CD PROJEKT’s organizational culture can be found
in the CD PROJEKT Group Sustainability Report for 2023.
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Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
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. 99 910 510 Company
shares are traded on the Main Market of the Warsaw Stock Exchange under the continuous trading system. Key
shareholders of CD PROJEKT S.A. are its co-founders – Marcin Iwiński (incumbent Chairman of the Supervisory
Board) and Michał Kiciński. Other major shareholders who are also members of the Company’s Management
Board are Piotr Nielubowicz – Chief Financial Officer and Adam Kiciński – Chief Strategy Officer.
Chart 2 Company shareholding structure as of the publication date of this report
Remaining shares
66%
Adam Kiciński
4%
Piotr Nielubowicz
7%
Michał Kiciński*
10%
Marcin Iwiński
13%
Founders and
Management Board
Members
*According to a notice filled on 13 November 2023
* According to a notice filled on 13 November 2023
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 Exchange. As of 5 March 2024 the Company contributes 2.5%
to the value of this index.
CD PROJEKT also belongs to two WSE sectoral indices: WIG.GAMES5, which covers five largest videogame
developers listed on the Warsaw market, and WIG-Gry, which represents all game developers traded on the stock
exchange. 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 restricted – as of 5 March 2024
it stands at 39.6%, whereas its contribution to WIG-Gry on the same date is 62.8%.
CD PROJEKT is also part of the WIG-ESG index which aggregates companies regarded as socially responsible.
As of 5 March 2024 CD PROJEKT contributes 2.7% to the value of this index.
14
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Chart 3 CD PROJEKT S.A. stock price and the WIG20 index between 1 January and 31 December 2023
70
80
90
100
110
120
130
140
CD PROJEKT WIG20
01.2023 02.2023 03.2023 04.2023 05.2023 06.2023 07.2023 08.2023 09.2023 10.2023 11.2023 12.2023
Between 1 January and 31 December 2023 the Company stock price fluctuated between 101.65 PLN
(16 October 2023) and 170.00 PLN (16 June 2023). During this period the stock price decreased by 11.3%, to
115.00 PLN at the end of trading on 29 December 2023. Over the same period the WIG20 index gained 30.7%
while the main WIG index gained 36.5%.
At the end of 2023 the Company’s market capitalization was 11.5 billion PLN.
Chart 4
Average daily value of trade in CD PROJEKT S.A. shares (by month) between 1 January and
31 December 2023 (PLN millions)
0
10
20
30
40
50
60
70
80
90
100
January March May July September November
2022 2023
Average daily
value of trade;
2022 - 64 million PLN
Average daily
value of trade;
2023 - 48 million PLN
The aggregate value of trade for 2023 was 11.9 billion PLN compared to 16.0 billion PLN the year before. The
average daily value of trade was 48 million PLN, compared to 64 million PLN in 2022. A decrease was also
observed in the average number of transactions per trading day – from 6 861 to 5 999.
15
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
Chart 5 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 2023 (PLN billions)
0
10
20
30
40
50
2010*
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Value of trade Market capitalization
*between 01.05.2010 and 31.12.2010
* Od 01.05.2010 do 31.12.2010
Table 1 Key indicators of CD PROJEKT S.A. stock
2023 2022 Change
Net earnings per share (PLN) . . .%
Quantity of shares in trading (in thousands) at end of period -.%
Najwyższy kurs akcji na zamknięciu w roku obrotowym (w zł) . . -.%
Lowest closing price during fiscal year (PLN) . . .%
Price at beginning of period (PLN) . . -.%
Price at end of period (PLN) . . -.%
Average price during period (PLN) . . .%
P/E ratio at end of period . . -.%
Market capitalization at end of period (PLN thousands) -.%
Average number of transactions per trading day -.%
Average daily value of trade (PLN thousands) -.%
Average daily trading volume (shares) -.%
As of the publication date of this report 24 brokerage houses, both foreign and domestic, issue recommen-
dations concerning Company stock. The full list of analysts and brokerage houses which issue recommenda-
tions concerning Company stock can be found on the CD PROJEKT website at https://www.cdprojekt.com/en/
investors/analysts/.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
02
CD PROJEKT GROUP ACTIVITY PROFILE
17
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
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 one of the most
dynamic branches of the global economy. Newzoo – respected analysts of the videogame and e-sports
markets – estimate that by 2026 the volume of the global videogame market will reach 205.4 billion USD,
which implies a cumulative annual growth rate (CAGR) of 3.7% for the 2023-2026 period. According to PWC’s
“Global Entertainment & Media Outlook 2023–2027” report, the videogame and e-sports market is expected
to grow by 7.9% annually during this period.
The growth outlook of the Group is affected not only by the increasing popularity of this form of entertainment
as an approachable and attractive mass market offering, but also by the increasing sophistication and realism
of products offered, growing availability and affordability of gaming hardware, and further development of
digital distribution channels.
GLOBAL VIDEOGAME INDUSTRY
Newzoo
2
estimates the volume of the global videogame market at 184.0 billion USD at the end of 2023, which
corresponds to a 0.6% increase compared to the 2022 year-end value.
In the past year growth was reported in the PC gaming segment – by 5.3% y/y, reaching 38.4 billion USD at
the end of 2023, as well as in the console segment, which grew by 1.7% y/y, to 53.1 billion USD. In contrast, the
mobile segment shrank by 1.4% y/y, shrinking to 90.5 billion USD.
2 Newzoo’s Games Market Estimates and Forecasts, Newzoo, 8 February 2024, accessed on 10 February 2024, https://newzoo.com/
resources/blog/games-market-estimates-and-forecasts-2023
3 Perspectives from the Global Entertainment & Media Outlook 2023–2027, PwC, 21 June 2023, accessed on 10 February 2023 r, sum-
mary available at https://www.pwc.com/gx/en/industries/tmt/media/outlook/insights-and-perspectives.html
18
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Chart 6 Global videogame market in 2023 by device type (%)
Estimates published by ESA (Entertainment Software Association) concerning the US market, which is the most
important region from the point of view of the Group’s activities, confirm domination of smartphones in this area
(with 64% of respondents listing smartphones among their most frequently used gaming devices), followed by
gaming consoles (54%) and PCs (43%).
GAMERS
The global gaming community continues to grow each year, both quantitatively and in terms of engagement
(i.e. time spent playing). Newzoo estimates that at the end of 2023 there were 3.3 billion gamers worldwide. In
2026 the total figure is expected to reach nearly 3.7 billion. Given that in 2021 there were fewer than 3.1 billion
gamers, the cumulative annual growth rate for 2021-2026 may reach 3.7%.
52% of gamers – over 1.7 billion – reside in the Asia-Pacific region. This is followed by the Middle East and
Africa (557 million gamers) and Europe (446 million gamers). The Middle East and Africa reported the strongest
growth in 2023, having increased by 11.3% compared to 2022. Latin America and North America accounted for
335 million and 237 million gamers respectively in 2023.
4 Newzoo’s Games Market Estimates and Forecasts, Newzoo, 8 February 2024, accessed on 10 February 2024.,
https://newzoo.com/resources/blog/games-market-estimates-and-forecasts-2023
5 2023 Essential Facts About the Video Game Industry, accessed on 10 February 2024, https://www.theesa.com/2023-essential-facts/
6 Newzoo’s Global Games Market Report 2023, 8 February 2024, accessed on 10 February 2024,
https://newzoo.com/resources/trend-reports/newzoo-global-games-market-report-2023-free-version
PC – browser games
1%
PC – box and digital editions
21%
Consoles
29%
Smartphones
49%
184 billion USD
19
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Chart 7 Global gaming community in 2023 by region (%)
According to ESA, nearly 213 million US residents spend at least one hour a week playing videogames. Overall,
62% of US residents past age 18 and 76% of under-18s play videogames. 46% of gaming community members
identify as female.
7 Newzoo’s Global Games Market Report 2023, 14 November 2023, accessed on 10 February 2024,
https://newzoo.com/resources/trend-reports/newzoo-global-games-market-report-2023-free-version
8 2023 Essential Facts About the Video Game Industry, accessed on 10 February 2024, https://www.theesa.com/2023-essential-facts/
North America
7%
Latin America
10%
Europe
14%
Middle East and Africa
17%
Asia and Pacific
52%
20
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Organizational structure of the CD PROJEKT Group
As of 31 December 2023, the CD PROJEKT Group consists of the parent entity – CD PROJEKT S.A. – and five
subsidiaries: GOG sp. z o.o., CD PROJEKT RED Inc., CD PROJEKT RED Vancouver Studio Ltd., The Molasses
Flood LLC and CD PROJEKT SILVER Inc.
Chart 8 CD PROJEKT Group at the end of 2023 (capital and voting share)
CD PROJEKT S.A.
GOG sp. z o.o.*
CD PROJEKT RED Vancouver Studio Ltd.
*Spółki objęte konsolidacją
CD PROJEKT RED Inc.*
100%
100%
100%
CD PROJEKT SILVER Inc.
The Molasses Flood LLC
82%
100%
*Consolidated companies
21
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Table 2
Basic activity profile of each member company of the CD PROJEKT Group as of 31 December 2023
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 based on the Company’s IP,
selling the associated distribution rights, as well as manufacturing, selling, licensing and
publishing tie-in products. 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 (offices in Warsaw, Kraków and Wrocław).
GOG sp. z o.o.
The company distributes videogames through online channels to customers from around
the world. The company also owns the GOG.COM proprietary global digital distribution plat-
form and the GOG GALAXY application (office in Warsaw).
CD PROJEKT RED Inc.
The company coordinates development work on Project Orion and participates in publish-
ing and promotional activities focused on CD PROJEKT Group projects (office in Boston).
CD PROJEKT RED
Vancouver Studio Ltd.
The company coordinates development in the framework of the CD PROJEKT RED studio
(office in Vancouver).
The Molasses Flood
LLC
This gamedev studio is working on the project codenamed Sirius (office in Boston).
CD PROJEKT SILVER
Inc.
A company established to participate in development of entertainment products tied to
CD PROJEKT brands.
The above member companies of the CD PROJEKT Group, incorporated as of 31 December 2023, except
for CD PROJEKT RED Vancouver Studio Ltd., The Molasses Flood LLC and CD PROJEKT SILVER Inc., were
subject to full consolidation. Detailed information can be found in the Consolidated Financial Statement of the
CD PROJEKT Group for 2023.
22
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Disclosure of business segments, products and
services, outlets, suppliers and clients
In 2023 the Group conducted business activities in two segments:
■ CD PROJEKT RED,
■ GOG.COM.
CD PROJEKT RED
Target and scope of business activities
Activities within this segment focus on the Company’s franchises – The Witcher and Cyberpunk – and involve
the following:
■ developing and publishing videogames;
■ coordinating promotion, distribution and sales of own products;
■ managing the Group’s franchises and IP;
■
collaborating with external partners in the scope of creating, selling, licensing or publishing tie-in products
based on the Group’s franchises.
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
as well as through participation in trade fairs.
23
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
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.
The Studio’s key product portfolio currently includes the following videogames:
■ The Witcher;
■ The Witcher 2: Assassins of Kings;
■ The Witcher 3: Wild Hunt with two expansion packs – Hearts of Stone and Blood and Wine;
■ Cyberpunk 2077 with its expansion pack – Phantom Liberty, released on 26 September 2023.
Since 2018 the Studio has been developing GWENT: The Witcher Card Game along with two tie-in releases:
Thronebreaker: The Witcher Tales and GWENT: Renegade Mage. In 2023 CD PROJEKT RED handed over the
game’s development tools to the player community – in the scope of the GWENTfinity initiative.
24
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Key sources of revenue
Sales of CD PROJEKT RED games are carried out under the following core 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.
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 2023 the most important CD PROJEKT RED products from the point of view of revenues were:
■ Cyberpunk 2077, together with its expansion – Phantom Liberty,
■ 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 offered 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.
The Company also obtained revenues from tie-in products (in the framework of the “franchise flywheel” concept)
associated with The Witcher and Cyberpunk franchises.
Cyberpunk 2077
The bulk of CD PROJEKT RED revenues in 2023 came from Cyberpunk 2077 together with its Phantom Liberty
expansion.
On 5 October 2023 the Studio announced that sales of Cyberpunk 2077 had topped 25 million copies. Strong
sales of the base game were supported by the release of the Phantom Liberty expansion and the associated
promotional campaign. Phantom Liberty – which launched on 26 October 2023 for the PC, Xbox Series X|S
and PlayStation 5 – sold over 5 million copies by the end of 2023.
On 5 December 2023 digital and physical versions of Cyberpunk 2077: Ultimate Edition were released for
next-gen consoles and the PC. The bundle includes the base game, the Phantom Liberty storyline expansion,
along with all existing updates and free DLC packages.
25
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Chart 9 Cyberpunk 2077 and Phantom Liberty – sales by distribution type (units sold; sell-in figure)
Similarly to the preceding years, the PC edition of the game accounted for the largest share of Cyberpunk 2077
sales in 2023.
Chart 10 Cyberpunk 2077 and Phantom Liberty – sales by hardware platform (units sold; sell-in figure)
Negative values reported for 2021 are due to returns of the game from distributors.
9 I) historical figures have been revised; II) sales of Cyberpunk 2077: Ultimate Edition (which contains the base game and the expan-
sion) are recognized in both bars representing 2023; III) Phantom Liberty itself was not distributed as a physical product – the physical
distribution volume represented by the “Phantom Liberty (2023)” bar corresponds to sales of Cyberpunk 2077: Ultimate Edition
10 I) historical figures have been revised; II) sales of Cyberpunk 2077: Ultimate Edition (which contains the base game and the expan-
sion) are recognized in both bars representing 2023
2020 2021 2022 2023 2023
Physical distribution Digital distribution
42%
58%
96%
8%
88%
96%
4%
12%
Cyberpunk 2077
Phantom Liberty
2020
2021
2022
2023
2023
PC PlayStation Xbox
37%
18%
46%
27%
55%
18%
59%
66%
27%
21%
14%
13%
Cyberpunk 2077 Phantom Liberty
26
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Map 2 Purchases of Cyberpunk 2077 and Phantom Liberty by region (2023)
The Witcher 3: Wild Hunt
The Witcher 3: Wild Hunt continued to sell well in 2023. In December 2022 the Studio released a dedicated
next-gen console of the game, along with a large update for the PC version, which will support effective sales
of the game on next-gen platforms in future years.
Digital channels accounted for 92% of The Witcher 3 sales in the reporting period.
Chart 11 Sales of The Witcher 3 by hardware platform (units sold; sell-in figure)
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.
11 historical figures have been revised
North America
34.8%
South America
3.6%
Europe
36.1%
Asia
22.3%
Africa
0.7%
Australia
2.5%
2015 2016 2017 2018 2019 2020 2021 2022 2023
Physical distribution Digital distribution
61%
68%
75%
80%
32%
39%
25%
20%
83%
16%
17%
84%
93%
7%
96%
4%
92%
8%
61%
68%
75%
80%
32%
39%
25%
20%
83%
16%
17%
84%
93%
7%
95%
5%
27
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
In 2023, much like in the preceding years, most purchases of The Witcher 3: Wild Hunt involved the PC edition
of the game.
Chart 12 Sales of The Witcher 3 by hardware platform (units sold; sell-in figure)
Map 3 Purchases of The Witcher 3 by region (2023)
Key business partners and suppliers
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, Apple App Store, Google Play, Humble Bundle and GEEKAY, 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, U&I Entertainment LLC).
12 historical figures have been revised
2015 2016 2017 2018 2019 2020 2021 2022 2023
PC PlayStation Xbox Nintendo Switch
43%
48%
36%
33%
21%
42%
49%
54%
32%
14%
15%
13%
11%
10%
27%
52%
9%
7%
31%
52%
6%
11%
19%
64%
6%
13%
18%
64%
58%
25%
11%
7%
North America
21.7%
South America
7.5%
Europe
39.4%
Asia
29.5%
Africa
0.3%
Australia
1.6%
28
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
In 2023 sales to two clients exceeded 10% of the Group’s consolidated sales revenues and totaled
495 240 thousand PLN and 217 886 thousand PLN respectively (40.3% and 17.7% of the Group’s sales revenues
respectively). These clients are not affiliated 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 2023.
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).
Key product and marketing events
Cyberpunk 2077
CD PROJEKT RED’s key product of 2023 was Phantom Liberty – a large expansion for Cyberpunk 2077. The
Studio focused on putting the finishing touches and promoting its newest project, culminating in its global
release on 26 September.
In June 2023 hands-on presentations of Phantom Liberty were held – among others – in Warsaw, Los Angeles,
Tokyo and Sao Paulo. Representatives of gaming media and the gaming community had the chance to person-
ally play the expansion. In subsequent months, in the framework of Phantom Liberty Tour – a series of events
targeting fans of the Cyberpunk franchise – fans were given the opportunity to play the expansion and meet
CD PROJEKT RED creators at eight venues around the world.
The global release of Phantom Liberty for the PC, PlayStation 5 and Xbox Series X|S took place on
26 September 2023. The expansion was very well received by industry representatives and gamers alike. As of
20 March 2024 its average user rating on Steam (which represents the largest share of sales of the expansion,
and where ratings are submitted only by verified purchasers) was “very positive”, with 89% gamer reviews being
favorable. By the end of 2023 over 5 million copies of Phantom Liberty had been sold.
29
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
In 2023 CD PROJEKT RED also focused on further improvements to Cyberpunk 2077, resulting in Update 2.0,
released on 21 September and introducing numerous gameplay changes. In October the Studio announced
that over 25 million copies of Cyberpunk 2077 had been sold. The recent round of updates and enhancements
was also appreciated by fans of Cyberpunk 2077 – as of 19 March 2024 92% of Steam reviews submitted over
the preceding 30 days were positive.
On 5 December 2023 digital and physical versions of Cyberpunk 2077: Ultimate Edition were released for
next-gen consoles and the PC. The bundle includes the base game, the Phantom Liberty storyline expansion,
along with all existing updates and free DLC packages.
Both Cyberpunk 2077 and Phantom Liberty received prestigious awards in 2023. In November Phantom Liberty
won Best Game Expansion and Best Game Trailer at the Golden Joystick 2023 gala, while in December
Cyberpunk 2077 triumphed in the Best Ongoing Game category at The Game Awards.
CD PROJEKT also continues to develop the Cyberpunk franchise in other fields of entertainment. In October
2023 Cyberpunk 2077: Big City Dreams, a comic created by Bartosz Sztybor from CD PROJEKT RED, received
the prestigious Hugo award in the Best Graphic Story category – the first ever awarded to a Polish author.
In the same month CD PROJEKT also announced collaboration with the Anonymous Content production studio
to co-develop a new live action project set in the Cyberpunk universe.
In Q4 2023 the newly established Boston CD PROJEKT RED team began conceptual work on Project Orion –
the sequel to Cyberpunk 2077.
30
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
The Witcher universe
January saw the global release of the box set of The Witcher 3: Wild Hunt – Complete Edition for next-gen
consoles. In November the Studio announced that it would release a modding tool for the game, enabling
gamers and modders from around the world to create their own adventures set in The Witcher universe. This
free tool is scheduled to come out in 2024.
In 2023 characters from The Witcher universe made guest appearances in global productions such as Lost
Ark, where players could choose to play as Geralt of Rivia, and Fortnite, where Geralt, Ciri and Yennefer joined
the roster of playable characters.
Going beyond videogames – in June 2023 The Witcher: Old World, a board game developed by Go On Board
in collaboration with CD PROJEKT RED, hit the shelves, while in October a crowdfunding campaign for another
board game – titled The Witcher: Path of Destiny – was launched on the Gamefound platform. This campaign
is scheduled to last until the end of March 2024.
In October 2023 GWENT: The Witcher Card Game entered the GWENTfinity phase, and was handed over to
the community which will now take care of further development of this card game.
Other events
On 23 January 2023 the Company announced the RED Playtesting Program – a new initiative which encour-
ages gamers to engage in the development process of the Studio’s games. At playtesting sessions organized
at CD PROJEKT RED’s Warsaw campus invited participants can review elements of games which are currently
in production, and share their impressions and comments with the dev team. This will help us further adapt our
games to the expectations of the gaming community.
On 20-24 March 2023 San Francisco hosted the Game Developer Conference – one of the keystone global
events which focus on the gamedev industry. CD PROJEKT RED was represented by over thirty specialists who
delivered talks and participated in panel discussions, sharing their knowledge and experience gained during
development of Cyberpunk 2077.
On 28 April 2023 Forbes Polska named CD PROJEKT RED Poland’s best employer in the IT industry, and the
second best employer overall.
31
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
On 19 June 2023 CD PROJEKT and Futuregames Warsaw announced a strategic partnership to promote edu-
cational activities in the framework of the gamedev industry. Futuregames Warsaw – a Swedish school which
organizes courses for gamedev adepts at CD PROJEKT’s Warsaw campus – began hosting activities for program-
mers, designers and artists on 4 October. Owing to CD PROJEKT support, organizers provide a 50% discount
on first-year tuition, scholarships for up to nine top students, and 30-day internships for selected participants.
CD PROJEKT RED GEAR Store – an online outlet which markets gadgets to fans of The Witcher and Cyberpunk
games – reopened on 18 July 2023. The store is currently managed by an external partner – DPI Merchandising.
On 2-6 September 2023 CD PROJEKT RED and EC1 co-organized the Promised Land Art Festival in Łódź.
During this four-day event representatives of the videogame, motion picture and creative arts industries had
the opportunity to participate in interesting lectures, discussion panels, workshops and networking sessions –
sharing their experiences and establishing new contacts.
On 7 September we announced recruitment for the 3rd edition of “Girls in the Game!” – our internship programs
aimed at girls interested in pursuing a career in the gamedev industry. Over a thousand applications were
received at the first stage of recruitment. 21 selected interns will participate in a yearlong gamedev course under
individual mentorship of CD PROJEKT RED specialists, and will receive 12-month financial support to cover the
costs of educational activities and other upkeep. The third edition of the program was officially opened on
10 February 2024.
On 23 November CD PROJEKT RED announced a new podcast, titled AnsweRED, and published its first epi-
sode. The AnsweRED Podcast is the first such activity in the Studio’s history, entirely devoted to issues related
to development of videogames.
32
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
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 offer them for sale to international customers. In 2023 the platform was offered in English, French,
German, Russian, Chinese, Polish and Ukrainian – this includes full website and game localizations, dedicated
customer support, social media activity carried out in local languages, 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 this 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.
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 oper-
ating systems, or to enable multiplayer gameplay if such features were originally provided by the given game.
Key products
As of the publication date of this report, the GOG.COM digital distribution platform offers over 9000 products
from more than 1200 partners. This includes both timeless classics and fresh releases from such well-known
brands as Sony, Bethesda, Disney, Electronic Arts, Ubisoft, Konami and Warner Bros.
The key difference between GOG.COM and its competition is its strong customer focus and the “gamers first”
approach. This is evidenced, among others, 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 offered on GOG.COM are also richly featured and usually include bonus content such as soundtracks,
maps and wallpapers.
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 games set in
The Witcher universe, as well as Cyberpunk 2077 together with its expansion – Phantom Liberty.
33
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Key sources of revenue
Revenues obtained in the GOG.COM segment are directly dependent on the popularity of the offered 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-off sales
campaigns, including summer, fall and Christmas bargain packages as well as other events which introduce
new ways to attract gamers.
Key product and marketing events
Digital distribution of videogames
In 2023 the GOG.COM catalogue grew by over a thousand new titles, including Yakuza: Like A Dragon, Baldur’s
Gate III, Days Gone, Uncharted, Fallout 4, Warhammer 40,000: Rogue Trader, Cyberpunk 2077: Phantom Liberty,
Pharaoh: A New Era, Wartales, System Shock, Age of Wonders 4, Warhammer: Dawn of War, Jagged Alliance
3 and Shadow Gambit: The Cursed Crew.
Sales support
Key promotional campaigns on GOG.COM in 2023 included seasonal sales: Winter Sale, Spring Sale and
Summer Sale. The latter offered over 5,400 games at bargain prices, while the Winter Sale, covering over
6 thousand games, was the largest promotional activity to have taken place on GOG.COM in 2023. Increased
activity on the platform also coincided with Black Friday, Cyber Monday and Halloween sales. The GOG.COM
team organized other promotional activities, such as targeted sales focusing on specific genres, as well as
events celebrating various indie and classic games. A special anniversary sale, enriched with additional activities,
was organized to celebrate GOG’s 15th birthday.
Cyberpunk 2077: Phantom Liberty
Preorders of Cyberpunk 2077: Phantom Liberty launched on GOG.COM on 11 June 2023.
One week following the expansion’s release date (26 September 2023) we announced that 10% of the three
million copies of Phantom Liberty sold until that point had been purchased on GOG.COM. Throughout all of
2023 GOG.COM accounted for over 460 thousand of the total sales of CD PROJEKT RED’s newest release
(over 5 million units).
34
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Key suppliers and clients
GOG sp. z o.o. 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 13 Sales of products and goods by GOG.COM in 2023 and 2022, by territory
In terms of territorial breakdown, sales in 2023 followed the pattern established in the preceding years.
In 2023 the largest group of GOG.COM customers came from the United States (32%), followed by Germany
(14%), Poland (8%) and France (6%).
As of 31 December 2023 no single supplier in the GOG.COM segment accounted for more than 10% of the
Group’s consolidated revenues.
Other territories
25%
Spain
2%
Australia
3%
Canada
4%
United Kingdom
6%
France
6%
Poland
8%
Germany
14%
USA
32%
Other territories
26%
Australia
3%
Canada
4%
France
4%
United Kingdom
5%
Poland
10%
Germany
13%
USA
35%
2022 2023
35
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
KEY CORPORATE EVENTS
On 31 January 2023 the Company purchased from the remaining shareholders of its subsidiary, Spokko sp. z o.o.,
a total of 135 shares with a nominal value of 50.00 PLN each, as a result of which the Company became the owner
of 100% (i.e. 1089) of shares of this subsidiary. The Management Board of the Company also announced that
a merger plan between the Company (as the acquirer) and Spokko sp. z o.o. (as the target company) had been
agreed upon. On 6 June 2023 the Ordinary General Meeting of CD PROJEKT adopted a resolution concerning
the merger between the Company and Spokko sp. z o.o. On 31 August 2023 the District Court for the City of
Warsaw registered the merger between CD PROJEKT S.A. and Spokko sp. z o.o. in the register of entrepreneurs.
On 28 February 2023 the District Court for the City of Warsaw in Warsaw registered the merger between the
Company and its subsidiary – CD PROJEKT RED STORE sp. z o.o. with its registered seat in Warsaw (as the
target company) – in the register of entrepreneurs.
On 20 March 2023 the Management Board of the Company announced its decision concerning recognition,
in its accounts, of an impairment allowance on to-date development expenditures related to Project Sirius,
which is developed by The Molasses Flood. This decision was based on the outcome of evaluation of the
scope and commercial potential of the Project in its original shape. Total development expenditures incurred
by Project Sirius by the end of 2022 were 33.4 million PLN, and this amount burdened the financial result of
the Company and the CD PROJEKT Group for 2022. On 11 May 2023 the Management Board of the Company
announced that work on defining a new framework for Project Sirius had concluded, as a result of which a deci-
sion was reached to continue the Project, reusing a significant portion of results achieved thus far. Consequently,
some of the previously recognized impairment charges on expenditures on development projects incurred in
2022 – in the amount of 21.5 million PLN – were reversed, while 2.7 million PLN in development expenditures
related to the Project in Q1 2023 was written off.
An Extraordinary General Meeting of the Company took place on 18 April 2023. Shareholders voted, among
others, to approve the new incentive programs A and B for the 2023-2027 period, along with the associ-
ated conditional increase in the Company share capital and issue of subscription warrants with exclusion of
pre-emption rights for existing shareholders. The EGM also voted to lower the share capital by redeeming
860 290 shares previously purchased by the Company on 5-24 October 2022. The full text of resolutions
adopted by the EGM is available on the Company website.
On 31 May 2023, as a result of decisions undertaken by the Board of Directors of CD PROJEKT Inc. (currently
operating under the name CD PROJEKT RED Inc.) and CD PROJEKT S.A. (its sole shareholder) the capital of
the former company was increased by 720 thousand USD, to 6 020 thousand USD. The increased nominal
value of existing units was fully paid up by the Company. On the same day CD PROJEKT Inc. entered into an
agreement with The Molasses Flood LLC and one of that company’s existing members, as a result of which it
purchased additional units of The Molasses Flood LLC, becoming the holder of 70.91% (i.e. 390 000) of its units.
Subsequently, on 27 October 2023 CD PROJEKT RED Inc. entered into an agreement under which it purchased
additional units of The Molasses Flood LLC from another one of its erstwhile members, thereby becoming the
36
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
holder of 81.82% (i.e. 450 000) of its units. On 29 December 2023 the capital of CD PROJEKT RED Inc. was
increased by 800 thousand USD, to 7 920 thousand USD. The increased nominal value of existing units was
fully paid up by the Company. The reason for this capital contribution was to facilitate finalization of payment
for 120 000 units of The Molasses Flood LLC, which had been purchased by CD PROJEKT RED Inc. under
agreements concluded on 31 May 2023 and 27 October 2023 respectively.
In line with the previous Management Board recommendation, endorsed by the Supervisory Board, on 6 June
2023 the Ordinary General Meeting of the Company decided to allocate 99 911 thousand PLN from profit
obtained in 2022 towards a dividend (at 1 PLN per participating share), while reassigning 241 162 thousand PLN
to reserve capital. On the same day the Ordinary General Meeting also adopted, among others, resolutions
concerning approval of the financial statements for 2022, granting discharge to members of the Company’s
governing bodies, amending the Company Articles and expressing an opinion on the Supervisory Board’s
report on remuneration.
On 26 June 2023 the District Court for the City of Warsaw registered changes comprising, among oth-
ers, a reduction in the Company share capital by 850 290 PLN and the corresponding redemption of
860 290 of the Company’s own shares (i.e. shares previously bought back by the Company for redemption in
the course of a buy-back program carried out between 5 and 24 October 2022). As a result, as of the publi-
cation date of this report, the Company share capital amounts to 99 910 510 PLN and consists of 99 910 510
ordinary bearer shares with a nominal value of 1.00 each, arranged into series bearing labels from A to M. The
total number of votes afforded by all Company shares outstanding is 99 910 510.
On 10 July 2023, as a result of decisions adopted by the Board of Directors of CD PROJEKT Inc. (currently
operating under the name CD PROJEKT RED Inc.) and CD PROJEKT S.A. (its sole shareholder), the name of
the company was changed from CD PROJEKT Inc. to CD PROJEKT RED Inc., and its principal seat was relocated
to Boston (Waltham), MA.
On 26 July 2023 the Management Board of the Company announced a decision on reconciling the scale
and structure of the Company’s team with its operating requirements and development/publishing plans
implemented in the framework of the CD PROJEKT Group strategy. This resulted in reduction of employment,
affecting approximately 9% of employees at the CD PROJEKT RED Studio. The process concluded in Q1 2024.
On 21 September 2023 the Supervisory Board of CD PROJEKT S.A., in order to ensure uniformity of names of
positions held by members of the Management Board, decided that as of the day of registration of amendments
to the Company Articles, which ultimately took place on 9 October 2023:
■
Mr. Adam Kiciński, incumbent President of the Management Board, would hereinafter hold the position of
Member of the Management Board for the current term;
■
Mr. Piotr Nielubowicz, incumbent Vice President of the Management Board for financial affairs, would hereinafter
hold the position of Member of the Management Board for the current term.
On the same day, the Management Board of CD PROJEKT S.A., pursuant to Management Board Regulations,
decided to adopt additional official names for Members of the Management Board, corresponding to their
respective duties. Further information can be found in the section titled Statement regarding the implementation
of corporate governance policies elsewhere in this report.
37
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
On 5 October 2023 Mr. Adam Kiciński, CEO of CD PROJEKT S.A. notified the Company of his intent to seek
appointment as Member of the Supervisory Board of the Company in 2025, which would entail his resig-
nation from membership of the Management Board, effective at the end of 2024. The full content of the
notification submitted by Mr. Kiciński’s to the parent Company is appended to Current Report no. 39/2023.
In light of the above-mentioned decision, the Management Board of CD PROJEKT S.A. decided upon changes
in the internal division of responsibilities entrusted to Members of the Management Board with regard to
specific areas of Company activities. These changes would enter into force on 1 January 2024 and entail
changes in the description of roles and names of positions held by members of the Management Board, to wit:
■ Adam Kiciński holds the position of Chief Strategy Officer (CSO);
■ The position of Chief Executive Officer (CEO) is held jointly by Adam Badowski, who had heretofore held the
position of Chief Creative Officer and been affiliated with the parent Company for 20 years, and Michał Nowa-
kowski, who had heretofore held the position of Chief Commercial Officer and been affiliated with the parent
Company for 18 years. Adam Badowski and Michał Nowakowski shall hereinafter officially introduce themselves
as Joint Chief Executive Officers (Joint CEO).
On 23 October 2023 the capital of CD PROJEKT RED Inc. was increased by 1 100 thousand USD, to
7 120 thousand USD. The increased nominal value of existing units was fully paid up by the Company. The
reason for this capital contribution was to facilitate the final stage of the process of purchasing 60% of units of
The Molasses Flood LLC (third payment batch).
EVENTS FOLLOWING THE BALANCE SHEET DATE
On 20 February 2024, at an Extraordinary General Meeting of CD PROJEKT, the Earnings Condition (cumulative
consolidated net earnings for the years 2024-2027) was set in the framework of Incentive Program B at 3 billion PLN
for entitlements assigned in 2024. All materials related to this General Meeting, including resolutions adopted thereby,
are available at the Company’s website.
38
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
EFFECT OF THE POLITICAL AND ECONOMIC SITUATION IN UKRAINE
ON THE ACTIVITIES OF THE CD PROJEKT GROUP
Effect 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.
Risks associated with the current political and economic situation in Ukraine
The Company continually monitors the effects of the current political and economic situation in Ukraine, Russia
and Belarus upon the activities of the CD PROJEKT Group.
The Company has terminated collaboration with Russian and Belarussian suppliers. At the present time the
Company does not intend to initiate any further collaboration with such entities.
As of the publication date of this report the Group’s operating activities proceed unhindered, and the effect of the
Russian armed invasion of Ukraine does not have a direct significant negative impact on the Group’s operations.
In the Management Board’s opinion, the current political and economic situation in Ukraine does not affect
the quantitative data contained in the financial statement, does not provide a reason to suspect impairment of
assets, should not have a significant negative effect on the Group’s earnings in 2024, 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 effects 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.
DISCLOSURE OF SEASONAL AND CYCLICAL ACTIVITIES
CD PROJEKT RED
The revenues and financial result of the CD PROJEKT RED segment are strongly affected by the videogame
release schedule. CD PROJEKT RED usually takes between 3 and 6 years to produce a game. Previously, the
Studio had focused on a single large development project at a time, with initial conceptual work on a new
game occurring before the previous game was complete and ready to be released. Currently, CD PROJEKT
Group carries out parallel development of four games (one of which is being developed in collaboration with
an external dev team).
39
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Chart 14 Effect of new releases on the quarterly revenues from sales of products, goods and materials by
CD PROJEKT RED in 2011-2023 (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.
With regard to games which have already been released, their yearly sales breakdown is dependent on the
schedule of periodic promotional activities. 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.
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
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
Q1/2022
Q2/2022
Q3/2022
Q4/2022
Q1/2023
Q2/2023
Expansion: ”Phantom Liberty” Q3/2023
Q4/2023
40
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
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 15 Sales of goods and materials in the GOG.COM segment in 2019-2023 (PLN thousands)
0
40,000
80,000
120,000
160,000
200,000
Q1
Q2 Q3
Q4
2019 2020 2021 2022 2023
Cyberpunk 2077
Phantom
Liberty
41
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
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 creators
and specialists, and to attract a growing number of experts, both Polish and foreign, to work on the Group’s
future releases. Strategic directions related to talent acquisition, team development and support were pre-
sented in 2021 in the CD PROJEKT Group Strategy Update (including the attached video commentary) and in
the CD PROJEKT Group Sustainability Report for 2023.
Another important factor which may support the Group’s growth is effective implementation of CD PROJEKT RED’s
development plans announced in October 2022 as part of the Group’s Strategy Update, along with further
broadening of the recognizability and popularity of the Group’s franchises (including via cooperation with
external entities), and enriching games based on the Group’s proprietary IP with multiplayer gameplay elements.
Important external and internal factors which are specific to the Group and which may, in the Management
Board’s opinion, potentially have a negative effect on the Group’s activities and growth prospects, are described
in the risk assessment section elsewhere in this report.
In addition to the above, the activities of CD PROJEKT Group member companies are affected 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 companies conducting business on domestic and international markets.
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 context,
the most significant factors shaping the current results of the CD PROJEKT Group include the popularity of previ-
ously published games set in The Witcher and Cyberpunk universe. In future periods the growth prospects and
earnings posted by the Group will depend on the progress and market reception of new development projects.
Regarding the upcoming quarterly periods, a particularly important area of activity covers ongoing development
of previously announced projects, along with upscaling of activities carried out in the framework of the newly
established CD PROJEKT RED North America dev studio.
Another notable process at CD PROJEKT RED – in the context of the studio’s development – is the ongoing
deployment of Unreal Engine 5, improving the engine’s support for open-world games, as well as adaptation
and optimization of parts of the engine to align it with the creative underpinnings of future projects, which is one
of the main assumptions of our strategic collaboration with Epic Games. Use of this engine should significantly
streamline the game development process. The Company’s agreement with Epic Games also involves dedicated
technical support for CD PROJEKT RED releases on the part of Epic Games. Working with UE5 significantly
broadens the Studio’s recruitment opportunities given that Unreal Engine is familiar to many game developers.
42
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Maintaining the observed growth dynamics of the CD PROJEKT RED segment will depend on further enhance-
ment of its world-class videogame development skillset and on the capacity for effective communication with the
global gaming community. Both aspects are crucial for Studio’s ongoing transformation – labeled RED 2.0 – which
aims, among others, to apply the agile methodology in the videogame development process, thereby improving
product quality. The growing team, along with an increasing number and scale of ongoing development project,
necessitates proper management of individual teams and production processes at CD PROJEKT RED facilities
in Europe (with hubs in Warsaw, Kraków and Wrocław) and North America (Vancouver and the newly established
Boston office) along with The Molasses Flood (Boston), as well as publishing activities carried out mainly by teams
based in Warsaw, Los Angeles, Berlin, Seoul, Tokyo and local representatives in other countries. Ensuring the
success of each release is important in order for the Company to be perceived as a creator of eagerly anticipated
high-quality entertainment products, and for building the long-term value and recognition of The Witcher/Cyberpunk
franchises, the emerging third franchise, and the Studio itself – which is the cornerstone of further development of
the Company and its Group. With regard to project management, maintaining two distinct franchises – The Witcher/
Cyberpunk – along with several autonomous dev teams has enabled the Studio to carry out parallel development
work on multiple projects, starting in 2022. Migration to a dual franchise publishing model (with a third franchise to
be added in the future) supported by several independent, parallel projects paves the way for potential optimiza-
tion of production and financial activities, increases the frequency of releases along with the associated revenues,
mitigates important risk factors and makes it easier for Company employees to seek professional fulfillment.
GOG.COM
Sales in the GOG.COM segment have, in the recent years, benefitted from customers’ increasing tendency
to turn to online channels for purchases.
GOG.COM growth also depends on raising awareness of the platform among gamers and 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
offered. 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 fea-
tures 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.
43
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
OTHER FACTORS
The growth of the CD PROJEKT Group will also be affected by development work carried out by its subsidiary –
The Molasses Flood. In addition, the Boston studio is working on a separate game set in The Witcher universe,
codenamed Sirius.
Disclosure of significant achievements
in the scope of research and development
Research and development work, including the ongoing search for new solutions, evaluating their effective-
ness and identifying ways to apply them constitutes a core aspect of CD PROJEKT RED’s business profile
and the studio’s daily activities.
R&D work related to videogame development begins at the conceptual phase and lasts while successive
prototypes are made available for testing and optimization, ensuring compatibility, usability and playability –
all the way to the final product: a ready-for-release videogame.
Development activities
In 2023 development activities were carried out in the framework of the following projects:
■
Cyberpunk 2077: Phantom Liberty, a large expansion for Cyberpunk 2077 – project completed; expansion released
on 26 September 2023;
■ New game set in The Witcher universe, codenamed Polaris;
■ Project Sirius, carried out by The Molasses Flood and belonging to The Witcher franchise.
Research activities
In 2023 research activities were carried out in the framework of the following projects:
■ Project Orion – a game set in the Cyberpunk universe;
■ Project Canis Majoris – a game set in The Witcher universe;
■
internal conceptual work on a third franchise upon which future videogame releases will be based (codenamed
Hadar);
■ Artificial Intelligence – research on use or creation of AI-based tools to support future product development.
In addition to the above, there was ongoing work on new technologies, as well as further development and improvements
to existing games, mainly Cyberpunk 2077 (including preparations for the release of its Ultimate Edition) and GWENT.
A 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.
44
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Within the framework of the Data, Insight & Experiences project – an internal laboratory dedicated to research on game
functionality, user experience (UX) and immersion – in 2023 we carried out desk research on accessibility features in
games (for gamers with special needs resulting e.g. from disabilities), in order to chart directions for further research work
in the coming years. We also engaged in research on practical user experience analyses based on the Polaris project.
In 2018 CD PROJEKT gained the status of a Research and Development Center (RDC). On 23 August 2023 the
Ministry of Development, Labor and Technology issued a decision confirming that the Company engages in R&D
activities and upholding its RDC status.
In 2023 the GOG team worked on improving user experience (UX) features and development of new proprietary
recommendation technologies aimed at presenting users with personalized content.
Disclosure of significant agreements
13
CD PROJEKT did not enter into any significant agreements during the reporting period.
Risk management at the Group
Risk management process
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. In December 2023 we updated this procedure and began to apply
an enhanced risk management process.
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 effect
on the activities of the Company, including its financial stability. While identifying strategic risks, we also work
to identify opportunities which may ameliorate the circumstances related to risks under analysis, and determine
means of handling risks (which may involve acceptance, mitigation, transfer or avoidance of the given risk).
13 An agreement is regarded as significant if the projected total value of liabilities arising under the agreement exceeds 10% of the
consolidated assets of the Group
45
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
In order to support 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 comprising
respective areas of activity at the Company.
Support in the risk management process is provided by the Privacy & Compliance team which operates in the
framework of the Company’s legal department. Risk management at CD PROJEKT Group subsidiaries is the
responsibility of their respective management boards.
Each risk identified at the Company is subjected to analysis in order to determine its impact and likelihood of
materialization. In determining this likelihood the Company acknowledges existing control systems and their
effectiveness, while impact assessment is based on potential consequences for the Company – both financial
and otherwise.
The significance of a risk is calculated by multiplying the likelihood of occurrence by the risk’s impact, as listed
in the risk value matrix. Following analysis of each risk, the Risk Management Committee submits results for
approval by a member of the Management Board responsible for the specific area to which the risk applies.
That Member of the Management Board may then decide on further steps, depending on the significance of
the risk. The decision may be 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, develops suitable
control mechanisms and remedial actions.
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.
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 has not 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 multifaceted role-playing games with nonlinear storylines
and 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 devel-
opment and marketing budgets, the vast bulk of which must be expended before any revenues are generated
by the corresponding project. A hypothetical unsuccessful release of an 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.
Sales revenues in the wake of an unsuccessful release may not cover earlier expenditures on development
and promotion of the game.
46
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Actions taken: We prioritize developing innovative high-quality products. We believe that ensuring high quality of
our releases is the best way to mitigate the risk of sales underperformance. Moreover, in line with our Strategy, in
the coming years we intend to base our growth on successive expansion of our product portfolio. This involves,
among others, long-term commitment to our franchises, ensuring that they are globally recognized, along with
upscaling our production capabilities to be able to deliver more games while maintaining quality, and to introduce
aspects of multiplayer gameplay. We also want to expand our activities to cover new fields of use, which includes
new media and platform types. To mitigate this risk we also estimate the commercial potential of future prod-
ucts, test them at every stage of development and keep track of emerging technological and market solutions.
Risk associated with entering new market segments
Description: Entering new market segments, where we may not yet possess extensive experience and know-how,
provides an opportunity to reach a wider audience, which might then be enticed to take up interest in our games,
but on the other hand carries the risk of project failures and may cause us to incur additional costs. Investing in
new market segments may call for collaboration with new external partners, which, in turn, might cause difficulties
in ensuring optimal project management, i.e. making sure that collaborative activities are performed in a timely
fashion, that our IP is appropriately understood, or that our quality expectations are honored. This could ultimately
drive up costs, lead to abandonment of projects, or potentially harm our reputation.
Actions taken: When we decide to embark on a new project, in order to ensure optimal control we 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. We are diligent in selecting potential contractors and in building
relations based on shared values and quality standards.
Risk of failure to meet production goals
Description: Engaging in R&D activities related to development and distribution of top-quality AAA games rep-
resents the core business of the CD PROJEKT Group. AAA development is a complex, creative process which
involves many potential ways of implementing the project’s vision. This may entail communication problems or
produce deficient or suboptimal game components. If such problems go undetected, or if they are detected at
a late stage of development, additional costs and risks may ensue.
Carrying out innovative, creative work requires that the risk of encountering failures in the development process
be accepted. It also calls for trust in creators. It may be impossible to accurately evaluate and validate ongoing
work at the exploratory stage, or even during development, before the expected results or milestones are reached.
AAA development is also frequently characterized by complex and iterative development cycles and long
production schedules, which requires creators to adapt to the changing market, accurately predict gamers’
preferences, and follow up on trends created by competing gamedev studios. The risk of incorrectly scheduling
development processes related to a given release is an inherent aspect of innovative R&D work carried out
by the Group. The ability to meet production goals is also affected by technological development, i.e. ongoing
changes in programming tools, software, available technologies and gaming platforms. Products released on
the market are characterized by steady increases in complexity and sophistication in terms of the underlying
technologies and artistic merit – which also increases the length and complexity of the associated develop-
ment processes. Rapid technological progress necessitates fast adaptation through continuous refinement of
solutions, retaining the ability to offer ever more sophisticated products.
47
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
In 2022 we decided to enter into a licensing and partnership agreement with Epic Games International
S.à r.l., which specifies the conditions under which we may apply Unreal Engine in our games, and establishes
a framework for collaboration on further development and improvements in the engine, so as to adapt it to the
requirements of open-world games. Developing and publishing games based on Unreal Engine requires us to
familiarize ourselves with this technology and successfully apply it in practice, as well as to develop a range of
new tools or otherwise adapt existing tools used by the Studio’s creators. Basing future releases on a licensed
engine, i.e. Unreal Engine, may also introduce a dependency of the Studio’s basic business activities upon
collaboration with the license provider.
Failing to meet development goals, including in the context of production time, quality or entertainment appeal,
may result, among others, in additional costs, reduced sales revenues, impairment charges on development
expenditures, or a loss of reputation for the Studio.
Actions taken: In order to meet our development goals we strive to deliver games in a timely manner while
upholding high quality standards. In the framework of the RED 2.0 transformation process we have introduced
the Agile development methodology at the Studio. The Studio also works to uniformize and improve its project
management practices to facilitate a more efficient production process. To this end, interdisciplinary teams are
being set up, each equipped with the appropriate expertise and skills. Members of such teams can exchange
knowledge and experience while having access to training programs. We carefully manage the availability of
positions and respond to project needs in order to ensure appropriate staffing of dev teams. We also introduce
solutions aimed at enhancing communication and transparency in collaboration between teams, providing a clear
definition of roles and responsibilities in the decision-making process, and instituting a training curriculum to
build the necessary Agile development skillset. Production milestones are based on exchange of information
between teams and on transparency, which facilitates ongoing verification of progress and enables us to react
to potential mistakes. Member companies of the CD PROJEKT Group continue to monitor technological progress
and, whenever possible, introduce changes which may benefit the quality, production or distribution of games.
Implementation of CD PROJEKT’s strategy, which entails simultaneous development of multiple AAA games, is
strongly reliant on standardizing requirements at key stages of each project and evaluation of the development
process, in order to optimize costs and mitigate recurring risks. Consequently, in 2023 we rolled out a uniform
milestone definition and verification system. This model, which we call RED GDF (Game Development Frame-
work), is already being used to evaluate progress in ongoing projects and continues to be intensively devel-
oped, which enables us to base our decision-making process on consistent standards, thereby contributing to
increased predictability and effectiveness of development work.
Risk related to collaboration with key suppliers
Description: In the course of their activities, Group member companies cooperate with many external entities.
The Group relies on these entities, among others, for specialized applications and software, licenses, game
assets, entire games or parts thereof, and other services required in its daily work. Offloading certain activities
to experienced contractors may increase the efficiency of ongoing projects, but may also represent a risk.
Choosing the wrong contractor or terminating cooperation with a key supplier of essential products or services
may impair the progress of ongoing projects, harm sales and thereby have a detrimental effect on the financial
performance and reputation of Group member companies.
48
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
In 2022 the Company entered into a strategic partnership with Epic Games International S.à r.l., based on
a licensing and partnership agreement, which provides, among others, for dedicated technical support for the
Company’s products on the part of Epic Games. The scope of the partnership entails (among others) the risk
of terminating cooperation with this key business partner, which would affect the Company’s development
schedule, as well as the related goals and expenditures.
With regard to digital distribution of games carried out by GOG sp. z o.o., the risk related to cooperation with
suppliers is an integral aspect of the associated business model. GOG sp. z o.o. purchases distribution rights
from external entities; hence, operations of the digital distribution segment are dependent on cooperation with
IPR holders (developers and publishers).
Actions taken: The Group minimizes the risk associated with key suppliers by maintaining good trade relations
with its existing business partners and by actively seeking new collaboration opportunities. In 2022 a procure-
ment policy was introduced at the Company, encompassing, among others, best practices in terms of com-
munication and business negotiations with partners. The Company also provides training for employees who
engage in procurement processes. Member companies of the Group work to make sure that business relations
are appropriately structured – starting with selection of suppliers, through price quotations and negotiations,
all the way to delivery. Member companies of the Group also actively monitor the market and may take steps
to replace selected products or services, should such changes become necessary. To mitigate this risk, Group
member companies strive to secure far-reaching contractual protections. The licensing and partnership agree-
ment 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.
With regard to GOG sp. z o.o. activities, the risk of terminating cooperation with partners is diversified by the
large number of entities with which we collaborate in this segment (GOG.COM distributes content from over
1200 partners). In order to further mitigate this risk, GOG sp. z o.o. takes action to maintain good relations with
key publishers whose products are responsible for the bulk of the segment’s revenue stream (this involves,
among others, dedicated marketing campaigns, ongoing improvements to the publishing process, and nego-
tiations which aim at expanding the product catalogue).
Risk of 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 denied presence or withdrawn from selected storefronts, and their introduction or return to such
storefronts may depend on multiple factors, some of which may be outside of Company control. In particular, devel-
opment of games for “closed” platforms, such as gaming consoles or iOS devices, and directly distributing games
on markets where the applicable legislation calls for certification (e.g. China) requires direct cooperation with the
certifier. Failure to meet certification criteria is a risk, as are changes in local laws or regulations affecting the certifier,
termination of cooperation with the platform proprietor, delays in the certification process, denial of certification,
revocation of previously granted certification, or loss of access to a given market by GOG.COM or another distributor
which carries Company products. Each of those events may adversely impact revenues from sales of the Group’s
products on selected territories or platforms. Restriction of sales in selected traditional or digital distribution channels
may affect the Group’s revenues and therefore also its earnings. The impact of this risk depends on many factors, such
as the importance of the product, market share of the given distributor or the region to which the restriction applies.
49
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Actions taken: To minimize the risk of restricted availability of CD PROJEKT RED products the Company coop-
erates with a broad range of distribution partners. In order to minimize the risk of not being able to distribute
products on certain territories or platforms, e.g. as a result of legislative changes or unforeseen restrictions
affecting distribution channels, 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. Group member companies also keep track of legislative changes
in key markets which may have a negative impact on the distribution of games. This should enable them to
react to such changes in a timely manner, and mitigate the potential negative impact on their own operations.
Risk associated with unavailability of IT infrastructure or services, including cybersecurity risk
Description: Given the specific nature of our activities and the ongoing development of the digital entertainment
industry, products and services offered by the CD PROJEKT Group rely ever more heavily on the reliability,
availability and security of IT infrastructures. IT systems, including servers, network infrastructure and Internet
access devices may be susceptible to interference and outages caused by various factors, which may, in turn,
negatively impact operations or effectiveness of ongoing projects. This risk may manifest itself, among others,
in unavailability of on-premises or SaaS infrastructure caused by hacking, server downtime, lack of network
connectivity or failures on the part of service providers.
Actions taken: To minimize the risk of unavailability of infrastructure or services, IT teams oversee the selection
of IT solutions in order to ensure sufficient availability of critical systems and services. All data centers with
which we collaborate are equipped with emergency power systems, fire suppression systems and mandatory
access control; additionally, key aspects of their operations are monitored by specialized teams. Selection
of external services is based on a holistic approach which involves verification of third-party parameters and
operating procedures, thus ensuring that they meet our requirements. Internally, we work to minimize the risk of
attacks on our resources and infrastructure by deploying specialized tools and training techniques which raise
cybersecurity awareness among users. Additionally, our internal procedures serve to mitigate the “Shadow IT”
phenomenon, where employees use IT services or software which has not been authorized by the IT & Secu-
rity Department. Our solutions undergo regular audits, and we engage in consultations with domain experts.
These actions – which together represent an ongoing process – ensure that our security is consistently being
evaluated against existing and emerging threats. Our data processing infrastructure is also permanently mon-
itored to ensure appropriate safeguards and prevent actions which might lead to unauthorized access to data.
50
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
LEGAL RISKS
Risk of regulatory noncompliance
Description: The activities of the CD PROJEKT Group are subject to a wide range of legal regulations which may
differ depending on the territory where Group member companies carry out activities, where our employees or
shareholders are physically present, and where your products are offered. This calls for monitoring of our legal
environment in various jurisdictions, especially as relates to protection of intellectual property, personal data
protection, corporate law (including stock market regulations), 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, potentially forcing us to
incur major unforeseen expenditures as we work to maintain legal compliance. Due to changing interpretations,
lack of official guidelines governing application of legal provisions, and insufficient case law, the process of
effectively managing legal risks faces numerous challenges.
Actions taken: In 2022 compliance was disaggregated within our organizational structure, under the supervision
of the Chief Compliance Officer. We also established a dedicated Privacy & Compliance team as part of our legal
department, tasked with monitoring Company and Group activities, among others with respect to the appropriate
regulations (external and internal). We try to proactively adapt our internal regulations and processes to upcoming
legal changes. Whenever necessary, we update our internal processes as required. We perform ongoing assessment
of changes in legal regulations, guidelines, best practices, case law and notifications issued by the appropriate
public authorities and supervisory bodies. We carry out internal audits, analyses of each project, and internal
training for our employees. In the process of ensuring regulatory compliance, we make use of our own resources
as well as services procured from specialized law firms and other entities (such as the Personal Data Protection
Inspectorate). We also work to ensure that information provided to employees and consumers is expressed in simple
terms and consistent with good legal design principles, ensuring that it is appropriately understood by recipients.
Risk associated with intellectual property rights
Description: Our products and services are based upon intellectual property. Effective acquisition, licensing and
protection of intellectual property rights is therefore an important aspect of our activities.
Given that our products and services are marketed in many different countries, it is natural to offer them in
local languages and under local names. This, however, involves the risk that some of these names may conflict
with existing trademarks, giving rise to trademark infringement claims. In addition, we may be unable to locally
register some of our trademarks due to their resemblance or equivalence to trademarks which have already
been registered.
There is also a risk of inadvertent infringement of third-party property rights, including IPR. Such situations
might arise e.g. in the case of improperly worded contractual provisions in licensing or IP purchase agreements,
erroneous assessment of the boundaries of permitted use, or unawareness on the part of creators of IPR and
protection thereof in various countries around the world.
In 2023 a new challenge emerged in relation to the spread of tools which apply generative artificial intelligence
(GAI) to assist in creation of various works, including videogames. Use of GAI raises many legal concerns,
including lack of IPR protection for content on which GAI relies, or potential infringement of third-party IPR.
51
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
In addition to the above, we face issues related to infringement of our own IPR, e.g. through unauthorized
distribution of our games and merchandise which exploits our IPR. The Company is furthermore at risk of
third-party registration of trademarks related to our games, as well as reuse of our game assets in third-party
creations and products.
Actions taken: At CD PROJEKT we continually analyze and improve the provisions of contracts which ensure
that rights to use certain works or images in our games are properly acquired from third parties. In order to
secure our own IPR, we register trademarks throughout the European Union and elsewhere. We also monitor,
on an ongoing basis, registration of trademarks by third parties, and perform ongoing legal verification of our
products and services to prevent infringement of third-party IPR. We take action to combat infringement of our
own IPR – among others, by monitoring online auction portals and distribution platforms in Europe, the United
States and Asia. Auctions which violate our IPR are regularly struck down, depending on the solutions offered
by the given portal. A dedicated Privacy & Compliance team has been established within our legal department,
tasked, among others, with monitoring and coordinating the Company’s needs with regard to intellectual prop-
erty. We also organize regular training courses and prepare internal IPR recommendations for our employees.
Since 2023 we have been monitoring the development of GAI technologies, and we are analyzing opportunities
for incorporating them in our activities, along with the associated risks.
Risk associated with changes or differing interpretations of fiscal regulations, and with subsidies
Description: Significant changes are occurring in tax law. Emerging regulations often impose additional reporting
obligations upon taxpayers and introduce new restrictions related e.g. to eligibility of expenditures as tax-de-
ductible revenues. Conflicts between interpretations of fiscal regulations issued by public authorities give rise
to uncertainties with regard to the correctness of our tax reporting. When deciding to make use of tax relief,
CD PROJEKT must develop appropriate internal documentation and settlement standards, which, in turn, may
potentially be brought into question by tax authorities. The Company also benefits from subsidies which support
ongoing investment and development projects. Relying on this form of funding may involve the risk of having
the relevant documentation, justifications for funding requests, or calculations and settlements, questioned by
the authorities – while the corresponding projects are in progress as well as after they have concluded.
Actions taken: We work to ensure that our settlements comply with fiscal regulations and that all other duties
arising from tax law are properly discharged. Our internal Tax Department, assisted by external consultants –
both Polish and foreign – monitors legislative processes and interpretations issued by fiscal authorities, and
develops procedures which aim to guarantee proper discharge of fiscal obligations by the Group. We take
initiative to improve interpretations of tax law, and participate in public consultations which accompany the
legislative process. When drawing up requests for subsidies, we enlist the assistance of external consultants
who specialize in such matters.
52
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
TEAMRELATED RISKS
Risk related to recruitment and retention of employees, and team building
Description: The activities and growth prospects of our Group are largely reliant on the availability, knowledge,
experience, talent and motivation of our employees. Employee churn presents an important danger to oper-
ational continuity and our ability to meet our declared business goals. It induces the need to seek employees
on the labor market, which is sometimes problematic due to the low availability of individuals who possess the
required skills. Departure of key team members may hamper innovation, slow down development work, harm
the quality of production processes and cause us to forfeit unique ideas – all of which might reduce the appeal
of our games and blunt our competitive edge. It may also result in increased costs (e.g. related to recruitment)
and unrealized financial gains (e.g. due to production delays, disruption and loss of quality).
The risk of losing employees may be exacerbated, among others, by improper recruitment procedures, noncom-
petitive remuneration and benefits, insufficient managerial support, or lack of career advancement opportunities.
Given the number of persons employed at the Group, and the diversity of our team, we face the risk of irregular-
ities, including undesirable dynamics in employee relations. Such irregularities have the potential to undermine
team cohesion and carry legal consequences for the Group or harm its public image.
Notable risks in this area also involve low engagement on the part of employees, lack of effective collabora-
tion between teams, or crunch time – which may disrupt employees’ work-life balance, thereby impacting our
organizational efficiency. Improper management of such issues may furthermore result in lack of motivation and
elevated stress levels among employees, with a potential trickle-down effect on churn rate and quality of work.
Actions taken: Promoting a healthy organizational culture where everyone enjoys equal rights is key from
the point of view of existing employees as well as potential candidates involved in recruitment activities. We
undertake a range of actions to increase the engagement of employees, protect their rights and continually
provide them with development opportunities. Our program of training courses, workshops and webinars
supports competence building, developing soft skills and counteracting irregularities.
In the scope of employee engagement, we periodically organize team meetups where employees are able
to share their ideas, opinions and concerns. This open dialogue enhances mutual trust and involvement on
the part of RED team members. The Company promotes a positive organizational culture and a set of shared
values, which encompasses honesty, transparency, ambition and being goal-oriented, in addition to respect
and cooperation, regarded as the cornerstone of team cohesion and engagement.
In 2023 we adopted the new SpeakUp! whistleblowing policy, together with a set of procedures for reporting
improper conduct and other irregularities, all expressed in simple terms. All our employees and candidates taking
part in recruitment processes are able to report irregularities while maintaining full confidentiality and anonymity.
To bolster managerial performance and foster a collaborative culture, we continually work to assist our managers
in developing key skills while retaining a clear view of what is expected of them. We also engage in initiatives
which promote inclusive leadership – this includes organizing workshops and training courses focused on
diversity, equality and engagement of all team members. Through effective performance management practices,
we ensure clarity in defining goals and monitoring progress. The aim of our actions – those already undertaken
53
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
as well as those currently being planned – is to foster an open, supportive organizational culture which supports
efficiency, innovation and job satisfaction among employees.
We pursue an active remuneration policy which supports the strategic goals of CD PROJEKT while also acknowl-
edging existing market conditions and remuneration standards. Our employees obtain a range of benefits
(e.g. private medical care, cafeteria benefit system, access to external sports facilities, internal gym, healthy
food at the office, etc.) For employees relocating to Poland from abroad we have developed a relocation plan,
augmented by additional activities which help them adapt to their new surroundings.
We continually work to improve our employment-related processes, e.g. by measuring key indicators related to
employee churn, retention and headcount. Irrespective of these activities, a certain level of churn is unavoidable
and regarded as 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.
We also continually monitor aspects which may affect employee retention – e.g. through a comprehensive
engagement survey or broad analyses of HR data. Based on results of these analyses we take appropriate
action to mitigate risks related to recruitment and retention of employees, as well as team building.
FINANCIAL RISKS
Financial risks identified by the Group are described in the Consolidated Financial Statement of the
CD PROJEKT Group for 2023.
ENVIRONMENTAL RISKS
Risk associated with environmental and climate protection
Description: For the CD PROJEKT Group, risks associated with environmental and climate protection involve,
on the one hand, migration to a low-emissions economy which is resilient to climate change, and on the other
hand, actual effect of climate change upon the activities of Group member companies. These risks involve
market aspects (e.g. increased energy costs), regulatory aspects (e.g. the need to adapt to EU climate change
regulations), technological aspects (increased investment costs) and reputational aspects. They also encom-
pass the need to secure our infrastructure against extreme weather events and long-term changes in climate
patterns. In this scope we also identify certain opportunities – such as the option to use eco-friendly solutions
in new buildings being constructed on the CD PROJEKT campus.
Actions taken: Minimizing environmental impact and introducing solutions which benefit the environment are
among the Group’s priorities. In 2022 we adopted an Environmental Policy, while in 2023 we formally deployed
an Environmental Management System consistent with the ISO 14001 standard and the EMAS regulation. In
2023 we also submitted to an external environmental audit which confirmed that CD PROJEKT meets all the cri-
teria imposed by the aforementioned standards. On 19 February 2024 the General Directorate for Environmental
14 Eco-Management and Audit Scheme is an environmental certification system endorsed by the EU, based on Regulation (EC)
No 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organisations
in a Community eco-management and audit scheme (EMAS). Registration in the EMAS system and submitting to an EMAS audit con-
firms that the organization meets high standards related to environmental protection.
54
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Protection entered CD PROJEKT in the EMAS registry under registration ID PL 2.14-009-98. We perform ongoing
analysis of changes in legal regulations, identify and assess our effect on the environment, and set measurable
indicators in this regard. Since 2021 we have been computing and reporting the Group’s carbon footprint; in
2022 this calculation was expanded to cover all of Scope 3 emissions (i.e. our entire value chain). We have set
direct emissions reduction goals in Scopes 1 and 2 to be achieved by 2030, in line with the Paris Agreement.
In 2023 we again carried out a materiality assessment of climate risks, pursuant to TCFD guidelines. Further
information about the CD PROJEKT Group’s investments in eco-friendly solutions, along with climate-related
risks and opportunities, can be found in the CD PROJEKT Group Sustainability Report for 2023.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
03
RESULTS OF OPERATION
OF THE CD PROJEKT GROUP
56
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Discussion of the key economic and financial
figures disclosed in the consolidated and separate
financial statements
CONSOLIDATED INCOME STATEMENT
Table 3 Consolidated income statement of the CD PROJEKT Group (in PLN thousands)
01.01.2023 –
31.12.2023
01.01.2022 –
31.12.2022
*
change change %
Sales revenue .%
Sales of products .%
Sales of services - -.%
Sales of goods for resale and materials .%
Cost of sales of products, services, goods
for resale and materials
.%
Costs of products and services sold .%
Cost of goods for resale and materials sold .%
Gross profit/(loss) on sales .%
Selling expenses .%
Administrative expenses .%
Other operating income .%
Other operating expenses - -.%
(Impairment)/reversal of impairment
of financial instruments
- -
Operating profit/(loss) .%
Finance income .%
Finance costs - -.%
Profit/(loss) before tax .%
Income tax .%
Net profit/(loss) .%
*restated data
57
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
DESCRIPTION AND ASSESSMENT OF THE FACTORS AND UNUSUAL EVENTS
AFFECTING THE RESULTS OF OPERATIONS OF THE CD PROJEKT GROUP IN 2023
The most important event which was not observed in the comparative period and, at the same time, had
a material impact on the results of operations of the CD PROJEKT Group in 2023 was the release of the
Phantom Liberty expansion to Cyberpunk 2077 and the following related developments:
■ an increase in Sales revenue in both segments of the Group;
■ an increase in Costs of products and services sold in the CD PROJEKT RED segment due to the commence-
ment of amortization of expenditure on the expansion and a change in the amortization pattern of the basic
Cyberpunk 2077 game;
■ an increase in expenditure on promotion (Selling expenses) in the CD PROJEKT RED segment.
The release of the expansion, followed by Cyberpunk 2077: Ultimate Edition, had a positive effect on the sales
of the basic version of Cyberpunk 2077. Combined with the sales of The Witcher 3: Wild Hunt, the release of the
expansion enabled the CD PROJEKT Group to achieve the second best result in its history at Net profit level.
58
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
DISCUSSION OF THE CONSOLIDATED INCOME STATEMENT OF
THE CD PROJEKT GROUP BY OPERATING SEGMENT
CD PROJEKT RED segment
Table 4 Income statement of the CD PROJEKT RED segment (in PLN thousands)
01.01.2023 –
31.12.2023
01.01.2022 –
31.12.2022
*
change change %
Sales revenue .%
Sales of products .%
Sales of services - -.%
Sales of goods for resale and materials - -.%
Cost of sales of products, services, goods
for resale and materials
.%
Costs of products and services sold .%
Cost of goods for resale and materials sold .%
Gross profit/(loss) on sales .%
Selling expenses .%
Administrative expenses .%
Other operating income .%
Other operating expenses - -.%
(Impairment)/reversal of impairment
of financial instruments
- -
Operating profit/(loss) .%
Finance income .%
Finance costs - -.%
Profit/(loss) before tax .%
Income tax .%
Net profit/(loss) .%
* restated data
59
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
An increase in Sales of products of the CD PROJEKT RED segment in 2023 compared with 2022 was mainly
due to a successful launch of the Phantom Liberty expansion to Cyberpunk 2077. The launch, supported by
a marketing and communication campaign, took place on 26 September, and in the second half of 2023 the
segment recognized in revenues the total value of both pre-orders and sales in the first quarter after the launch.
Revenue from the sale of the Phantom Liberty expansion accounted for nearly 40% of the segment’s total sales
for the year. Moreover, Cyberpunk 2077: Ultimate Edition, a version which, in addition to the basic version of the
game, also included the expansion, was released in the fourth quarter of 2023. This had a positive impact on
sales of all the Cyberpunk products which, as a result, accounted for approximately 80% of Sales of products
of CD PROJEKT RED in 2023. Sales of products of this segment also comprised:
■ revenue relating to Witcher 3: Wild Hunt and expansions: Hearts of Stone and Blood and Wine;
■ licence revenue from franchises;
■ revenue from the games GWENT: The Witcher Card Game, Witcher 2, Thronebreaker: The Witcher Tales and
The Witcher.
In 2023, Sales of services comprised, in particular, revenue relating to services provided to related entities.
Sales of goods for resale and materials of the CD PROJEKT RED segment in 2023 comprised mainly revenue
from the sale of ready-made physical sets and elements of physical sets of own titles (media, boxes, figurines,
gadgets), mainly The Witcher 3 and Cyberpunk 2077, to distributors as well as sales of franchise products of
CD PROJEKT RED.
The Cost of products, services, goods for resale and materials sold of the CD PROJEKT RED segment com-
prised mainly the Cost of products and services sold, where mainly the cost of amortization of expenditure
on development projects associated with the games released is presented. The value of the said item in 2023
comprised mainly the amortization of expenditure on Cyberpunk 2077, including its expansion Phantom Liberty.
In connection with the launch of the expansion and the planned introduction of Cyberpunk 2077: Ultimate Edition to
the market, the useful economic life was assessed and expected benefits from all assets associated with the
Cyberpunk 2077 game were estimated. Based on the analysis performed, it was decided that:
■ starting from the third quarter of 2023, all projects will be amortized according to the same pattern;
■ assets will be amortized until the end of 2028;
■ the reducing balance method of amortization will be used, with the following amortization pattern:
• 20% in the third quarter of 2023;
• 20% in the fourth quarter of 2023;
• 5% in each quarter of 2024;
• 3.5% in each quarter of 2025;
• 2.5% in each quarter of 2026;
• 2% in each quarter of 2027 and 2028,
with the amortization rates specified above being applied to the balance of expenditure on development
projects relating to the production of Cyberpunk 2077 game, its editions for new generation consoles Xbox
Series X|S and PlayStation 5 and to the initial value of the asset relating to the Phantom Liberty expansion, not
recognized in the Company’s costs as at the end of June 2023.
60
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
In 2023, the Cost of goods for resale and materials sold contained the cost of manufacture of ready-made
physical sets, their elements and franchise products sold to distributors.
The costs of promotion of the studio’s products had the largest share in the Cost of sales of the CD PROJEKT RED
segment in 2023. They related mainly to the promotion of the Phantom Liberty expansion and to the support of
the sales of the Cyberpunk 2077 game, including Cyberpunk 2077: Ultimate Edition released in December 2023.
Moreover, in 2023 a significant part of the item discussed related to the costs of servicing and updating the prod-
ucts of the CD PROJEKT RED segment, mainly the Cyberpunk 2077 game and GWENT: The Witcher Card Game,
as well as The Witcher 3: Wild Hunt (edition of the game for new generation consoles Xbox Series X|S and
PlayStation 5, issued in December 2022).
The Administrative expenses of the CD PROJEKT RED segment comprise, in particular:
■
remuneration of the administrative teams and the external costs of third party services classified in this category
which, in step with an increase in the scale of operations of the segment’s companies, are growing gradually;
■ remuneration of the management (including performance-related remuneration for a given period);
■ costs of work on the future games incurred at an initial stage (research phase) preceding the execution of the
projects (development phase) and the start of their capitalization as part of Expenditure on development proj-
ects forming part of Non-current assets (PLN 20 002 thousand in 2023 compared with PLN 4 593 thousand
in 2022); the increase in expenditure in 2023 compared with the prior year is due to the increased intensity of
the work on the Orion, Canis Majoris and Hadar projects;
■
the cost associated with the functioning of the existing incentive plan and the implementation of the
new Incentive Plans A and B, including the costs of accounting for the modification of entitlements in the
existing incentive plan in connection with their replacement with entitlements in the new Incentive Plans
(PLN 16 642 thousand in 2023 compared with PLN 4 160 thousand in 2022 in total in the CD PROJEKT RED
segment).
An increase in Administrative expenses in 2023 compared with 2022 was mainly due to an increase in expen-
diture on work on the future games in the research phase, an increase in performance-related remuneration
of the management for the current year, and an increase in the cost relating to accounting for the functioning
of the existing incentive plan and the implementation of the new Incentive Plans.
As regards Other operating income and expenses, as a rule, the Group recognizes mainly the revenue gen-
erated by CD PROJEKT RED from the lease of office space (and the accompanying maintenance costs) in the
real estate complex located at ul. Jagiellońska 74 and 76 in Warsaw, and subsidies received. However, in the
period under discussion, the following factors had a material impact on the value and a net increase in the
balance of these items:
■
a partial reversal of the impairment write-down of the expenditure incurred by the end of 2022 on development
projects (of PLN 21 531 thousand) and a write-off of a part of the project expenditure incurred in the first quarter
of 2023 (PLN 2 745 thousand) in connection with the determination of the new framework for the Sirius project
developed by The Molasses Flood studio;
■ recognition of PLN 16 344 thousand worth of revenue relating to the utilization of the tax relief for an innovative
employee by CD PROJEKT S.A. in this item.
61
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
In 2023, the CD PROJEKT RED segment showed a significant surplus of Finance income over Finance costs
and a significant increase in that surplus compared with the prior period. This is mainly due to interest income
received on bank deposits and bonds and the reversal of a write-down of non-current financial assets recog-
nized in 2022 resulting from an impairment test of the shares in a subsidiary Spokko sp. z o.o., relating to the
decision to phase out The Witcher: Monster Slayer project and to reorganize the CD PROJEKT Group in 2023
by merging CD PROJEKT S.A. (as the acquirer) and Spokko sp. z o.o. (as the target company). The reversal of
write-downs related to the finalization of the merger process.
Moreover, in 2023, the CD PROJEKT RED segment reported an increase in interest income on bank deposits
and bonds which, combined with the settlement and measurement of derivative financial instruments hedging
financial instruments denominated in foreign currencies held by CD PROJEKT S.A., and gains on redemption
of Treasury bonds, exceeded net foreign exchange losses.
Income tax expense for 2023 comprised primarily:
■
withholding tax collected in other jurisdictions on royalties paid to the Company (including adjustments relating
to prior years);
■ current income tax calculated in Poland using a preferential IP BOX tax rate of 5%;
■ deferred income tax, which was affected mostly by a decrease in the deferred tax asset resulting from the utili-
zation of a part of the R&D tax relief to which the Company is entitled in connection with taking advantage of the
tax relief for an innovative employee (at the same time, due to using the tax relief for an innovative employee,
Other operating income increased accordingly).
The consolidated Net profit of the CD PROJEKT RED segment for 2023 amounted to PLN 470 748 thousand
and was PLN 129 255 thousand (37.8%) higher than in the comparative period.
62
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
GOG.COM segment
Table 5 Income statement of the GOG.COM segment (in PLN thousands)
01.01.2023 –
31.12.2023
01.01.2022 –
31.12.2022
*
change change %
Sales revenue .%
Sales of products - - - -
Sales of services .%
Sales of goods for resale and materials .%
Cost of sales of products, services, goods
for resale and materials
.%
Costs of products and services sold - -.%
Cost of goods for resale and materials sold .%
Gross profit/(loss) on sales .%
Selling expenses .%
Administrative expenses .%
Other operating income - -.%
Other operating expenses .%
(Impairment)/reversal of impairment
of financial instruments
- - - -
Operating profit/(loss) .%
Finance income - -.%
Finance costs - -.%
Profit/(loss) before tax .%
Income tax - -.%
Net profit/(loss) .%
* restated data
Sales of goods for resale and materials had the largest share in the Sales revenue of the GOG.COM segment.
They include the digital distribution of games from GOG.COM’s external suppliers to final customers, carried
out via the GOG.COM platform and the GOG GALAXY application.
63
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
An increase in Sales revenue in relation to the comparative period was largely due to an increase in Sales of
goods for resale and materials which resulted from the launch of two of the most anticipated titles for users
of the GOG platform: Cyberpunk 2077: Phantom Liberty and Baldur’s Gate 3.
In addition, as part of the ever-expanding offering of the GOG.COM shop, nearly 900 new games premiered
in 2023 alone.
Cost of goods for resale and materials sold of the GOG.COM segment corresponds to the cost of games
sold and its increase in the reporting period is mainly due to higher sales of goods for resale and materials of
the segment.
Among the Selling expenses shown in the GOG.COM segment, related to the functioning of the GOG.COM plat-
form, the following have the most significant share in the segment’s Selling expenses:
■
the remuneration of the team responsible for operating, development and promotion of the GOG.COM platform;
■ transaction costs related to the processing of payments on the GOG.COM platform;
■ the costs of the ICT infrastructure related to making sales;
■ the costs of the marketing activities concerning the GOG.COM website and the GOG GALAXY application –
in the analysed period, these were primarily the costs of a promotion related to the digital distribution of games
on the GOG.COM platform;
■ the amortization/depreciation expense, including the amortization of completed development projects.
An increase in Selling expenses of the GOG.COM segment in the reporting period was due to, amongst others,
an increase in sales and the corresponding increase in those selling expenses which depend on the revenue
level, including, amongst others, the cost of payment processing and the costs of delivering digital content to
end users, with the rate of increase in costs being significantly lower than the rate of increase in revenue due
to, among other things, a number of cost-optimization initiatives carried out by GOG.
The main components of the Administrative expenses of the GOG.COM segment are remuneration of the
administrative teams, fixed remuneration of the Company’s Management Board, as well as the costs of the
incentive plan and other external services classified in this category. An increase, in relation to the comparative
period, in the level of Administrative expenses in the period discussed was largely due to one-time costs asso-
ciated with external services relating to the analysis and implementation of new technology solutions, namely
the systems supporting financial processes and the costs of tax advisory services in the area of international
transactions.
The total balances of Other operating income and Other operating expenses of the GOG.COM segment
in 2023 were affected mostly by:
■
costs relating to remeasurement of the estimated recoverable amount of the non-current part of advance
payments (the so-called minimum guarantees) made to the providers of digital content offered on the GOG.
COM platform;
■ income resulting from remeasurement of liabilities of GOG sp. z o.o. as at the balance sheet date;
■ settlements relating to provisions for potential tax liabilities.
64
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
In 2023, the GOG.COM segment reported similar balances of Finance income and Finance costs.
In 2023, the Net profit of the segment amounted to PLN 10 255 thousand compared with the Net profit
of PLN 5 248 thousand in the comparative period.
Table 6 Net profitability ratio – Alternative Performance Measure
01.01.2023 –
31.12.2023
01.01.2022 –
31.12.2022
01.01.2023 –
31.12.2023
01.01.2022 –
31.12.2022
01.01.2023 –
31.12.2023
01.01.2022 –
31.12.2022
CD PROJEKT Group CD PROJEKT RED GOG.COM
Net profit margin
(Net profit / sales revenues)
.% .% .% .% .%
.%
The Net profitability ratio presents additional information, indicating what part of Sales revenue remains within
the enterprise in the form of a Net profit after covering all the costs and tax charges shown in the Income state-
ment. An increase in the value of this ratio means an increase in the effectiveness of the activities carried out,
related to the level of the Sales revenue earned. The ratio used is a standard and commonly used measure
in financial analysis, and its usefulness was analysed in terms of the information provided to investors on the
effectiveness of the activities of the CD PROJEKT Group and its segments.
An increase in the Net profitability ratio of the Group in 2023 compared with the prior year was due to its
improvement in both operating segments, the key reason for which was the release of the Phantom Liberty
expansion in September 2023.
65
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
INCOME STATEMENT OF CD PROJEKT S.A.
Table 7 Income statement of CD PROJEKT S.A. (in PLN thousands)
01.01.2023 –
31.12.2023
01.01.2022 –
31.12.2022
*
change change %
Sales revenue .%
Sales of products .%
Sales of services - -.%
Sales of goods for resale and materials .%
Cost of sales of products, services, goods for resale and
materials
.%
Costs of products and services sold .%
Cost of goods for resale and materials sold .%
Gross profit/(loss) on sales .%
Selling expenses .%
Administrative expenses .%
Other operating income .%
Other operating expenses - -.%
(Impairment)/reversal of impairment
of financial instruments
- -
Operating profit/(loss) .%
Finance income .%
Finance costs - -.%
Profit/(loss) before tax .%
Income tax .%
Net profit/(loss) .%
* restated data
66
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
DISCUSSION OF THE INCOME STATEMENT OF CD PROJEKT S.A.
CD PROJEKT S.A. is the Parent Company of the CD PROJEKT Group and, at the same time, the largest entity in
both the Group and the CD PROJEKT RED segment. Therefore, a commentary on the Income statement of the
CD PROJEKT RED segment (excluding the impact of the significantly smaller subsidiaries) corresponds directly
to the operations and results of CD PROJEKT S.A.
In 2023, the Sales revenue of CD PROJEKT S.A. amounted to PLN 1 036 542 thousand and was 34.2%
higher than the Company’s Sales revenue for 2022. The Company’s Net Profit for 2023 amounted to
PLN 474 705 thousand and was 39.4% higher than in the prior year.
In 2023, the value of the Sales revenue and Net profit of CD PROJEKT S.A. accounted for, respectively, 99.9%
and 100.8% of the Sales revenue and Net profit disclosed in the Income statement of the CD PROJEKT RED
segment discussed above.
67
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF THE CD PROJEKT GROUP
Table 8 Consolidated statement of financial position of the CD PROJEKT Group (in PLN thousands)
31.12.2023 31.12.2022
*
change change %
NON-CURRENT ASSETS .%
Property, plant and equipment .%
Intangible assets .%
Expenditure on development projects .%
Investment properties - -.%
Goodwill .%
Shares in non-consolidated subordinated
entities
- -.%
Prepayments and deferred costs .%
Other financial assets .%
Deferred tax assets - -.%
Other receivables - -.%
CURRENT ASSETS .%
Inventories - -.%
Trade receivables .%
Current income tax receivable - -.%
Other receivables .%
Prepayments and deferred costs .%
Other financial assets .%
Bank deposits over months .%
Cash and cash equivalents - -.%
TOTAL ASSETS .%
* restated data
68
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
31.12.2023 31.12.2022
*
change change %
EQUITY .%
Share capital - -.%
Supplementary capital .%
Share premium .%
Treasury shares - - -
Other reserves .%
Foreign exchange differences on
translation
- - -
Retained earnings / (Accumulated losses) - - - .%
Net profit (loss) for the period .%
NON-CURRENT LIABILITIES .%
Other financial liabilities .%
Other liabilities - -.%
Deferred tax provision - - -
Deferred income - -.%
Provision for retirement and similar
benefits
.%
Other provisions .%
CURRENT LIABILITIES - -.%
Other financial liabilities - -.%
Trade payables - -.%
Current income tax liabilities - -.%
Other liabilities .%
Deferred income - -.%
Provision for retirement and similar
benefits
.%
Other provisions - -.%
TOTAL EQUITY AND LIABILITIES .%
* restated data
69
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
DISCUSSION OF THE CONSOLIDATED STATEMENT OF
FINANCIAL POSITION OF THE CD PROJEKT GROUP
Assets
Expenditure on development projects, in which the Group recognizes expenditure on the development of new
products and technologies, incurred and deferred, had the largest share in the value of the Group’s Non-current
assets as at the end of 2023. An increase in this item in 2023 is the result of the expenditure incurred by the
CD PROJEKT RED segment on the production of games (the Phantom Liberty expansion released in the year
discussed, and future projects Polaris and Sirius) and the reversal of write-downs on the Sirius project, which
reached a higher total value than amortization of completed productions.
The balance of Property, plant and equipment primarily consists of:
■ the value of the real estate complex at ul. Jagiellońska 74 and 76, the recognized part thereof being the part
to be used by CD PROJEKT S.A. for its own purposes;
■
plant and machinery, where the Group recognizes, among other things, computers, servers and other electronic
devices used in its activities;
■ assets in respect of the right of use of leased office space (with the adequate value of Other financial liabilities
in respect of concluded contracts on the lease of space being recognized on the Equity and liabilities side at
the same time).
An increase in Property, plant and equipment in the period discussed was mainly due to expenditure on network
infrastructure and workstations for developers (plant and machinery), expenditure on on-going and completed
construction work at the CD PROJEKT campus in Warsaw (assets under construction) and reclassification of
a part of investment properties to real properties intended for own use (buildings and structures).
The most significant items recognized in Intangible assets are mainly the value of the CD PROJEKT corporate
brand and the The Witcher trademark, as well as the value of the copyrights and computer software held by
the Group.
Goodwill is another material component of the Non-current assets of the CD PROJEKT Group and is com-
posed of amounts resulting from accounting for the merger of the parent company with the CDP Investment
Group on 30 April 2010 and accounting for the acquisition of a development studio located in Wrocław by
CD PROJEKT S.A. from Strange New Things sp. z o.o. sp. k. on 18 May 2018. The Goodwill reported did not
change over the discussed period.
The balance of Investment properties consists of the values of the properties at ul. Jagiellońska 74 and
ul. Jagiellońska 76, the parts thereof classified as earmarked for lease. A decrease in this item is due to the
reclassification of a part of the buildings to those intended for own use, and to depreciation.
The value of Shares in non-consolidated subordinated entities as at the end of 2023 comprised shares
in The Molasses Flood LLC in Boston and CD PROJEKT RED Vancouver Studio Ltd. held by CD PROJEKT S.A.
A decrease in this item is due to the final settlement of the merger of Spokko sp. z o.o. and CD PROJEKT S.A.
70
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Current and non-current Other financial assets as at the end of 2023 comprise:
■ the value of domestic and foreign Treasury bonds (or bonds secured with guarantees of foreign governments)
purchased by CD PROJEKT S.A. as part of the diversification of credit risk, including the measurement of deriv-
ative financial instruments hedging the value of bonds in foreign currencies;
■ the value of loans granted to non-consolidated related entities, where an increase in the balance is due to
granting the financing for refurbishment of and equipment for an office to The Molasses Flood LLC;
■ the value of investment in private equity funds operating in the gaming sector.
The value of Inventories as at the end of 2023 consisted mainly of ready-made physical sets and elements of
physical sets of the editions of games of own production intended for external distributors and franchise goods
for resale relating to CD PROJEKT RED’s brands. A decrease in inventories is due to the ongoing completion
of orders and the phasing out of the operations of the existing CD PROJEKT RED GEAR mail-order shop due
to a change in the mode of its functioning.
The consolidated balance of Trade receivables as at 31 December 2023 comprised mainly receivables resulting
from licence reports received after the balance sheet date, relating to sales in the periods of the last quarter of
the year in the CD PROJEKT RED segment. Its increase compared with the end of 2022 was directly attributable
to higher sales, compared with the prior year, in the CD PROJEKT RED segment in the last quarter of the year.
The balance of the Group’s Other receivables during 2023 comprised mainly receivables in respect of the with-
holding tax deducted by foreign recipients of the licences granted by the CD PROJEKT segment, VAT settlements,
advances to suppliers in respect of future deliveries of goods for resale and services and security deposits.
The consolidated value of the current and non-current Prepayments and deferred costs recognized as at the end
of the analysed period was mainly affected by the amount of the so-called minimum guarantees, i.e. advances
and prepayments made by GOG.COM to its suppliers towards fees for the distribution of games offered on the
GOG.COM platform, not recognized in the income statement by the balance sheet date. The increase in the
discussed item is mainly due to the conclusion of new contracts by GOG.COM for subsequent products which
will join the list of games available on GOG.COM. In addition, the item includes, amongst others, deferred fees
for software, licences and rights and prepayment related to marketing activities.
The total value of financial reserves in the form of Cash and cash equivalents, Bank deposits over 3 months
and liquid financial assets in the form of purchased Treasury bonds (recognized in total in current and non-cur-
rent Other financial assets) held by the Group as at 31.12.2023 amounted to PLN 1 309 459 thousand, i.e.
PLN 218 454 thousand more than the balance as at the end of the prior year.
As at the end of 2023, Non-current assets accounted for 55.5% and Current assets for 44.5% of Total assets
of the CD PROJEKT Group.
Equity and liabilities
An increase in the CD PROJEKT Group’s Equity during 2023 was mainly due to the net profit earned and the
settlement of costs of the incentive plans in an amount exceeding a decrease in equity resulting from the pay-
ment of dividend for 2022 and the accounting for the merger with Spokko sp. z o.o.
71
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
In current and non-current Other financial liabilities, as at the end of 2023 the Group recognized mainly liabilities
in respect of the perpetual usufruct of land at the Jagiellońska 74 and Jagiellońska 76 complexes in Warsaw
and liabilities in respect of payment of a part of the purchase price of the shares in The Molasses Flood with
a deferred payment term. A decrease in the said item during 2023 is mainly due to the settlement of a part of
the liability relating to the payment of the purchase price of the shares in The Molasses Flood.
The decrease in the Group’s Trade payables as at the end of 2023 is mainly due to trade payables of
the CD PROJEKT RED segment relating to the services provided to this segment.
The value of the Group’s Other liabilities as at 31 December 2023 comprised mainly current tax liabilities
(VAT, PIT) and social security liabilities.
In Deferred income (current and non-current) as at the end of 2023, the Group’s segments recognized mainly:
■
CD PROJEKT RED – the so-called minimum guarantees, i.e. advances towards royalties related to sales in future
periods, received or receivable from publishers and distribution partners;
■ CD PROJEKT RED and GOG.COM – deferred income related to subsidies;
■
GOG.COM – deferred income settlements with the Company’s customers (including the Store credit and Wallet
granted);
■ GOG.COM – the value of pre-orders for games with a release date in future periods, placed by customers.
The decrease in the balance compared with the end of 2022 is mainly due to a drop in the balance of minimum
guarantees in the CD PROJEKT RED segment in connection with the settlement of the sales made in the period
and the settlement of a subsidy in the CD PROJEKT RED segment.
The balance of current and non-current Provision for retirement and similar benefits includes primarily
a holiday pay provision in the CD PROJEKT RED segment.
The decrease in the balance of Other provisions (current and non-current) of the CD PROJEKT Group concerned
mainly the CD PROJEKT RED segment, where:
■ the balance of provisions for performance-based remuneration decreased due to the payment of bonuses for
2022 in the current period, combined with the introduction of a change to the remuneration policy of CD PROJEKT
RED in the current year, which reduced the performance-based bonus in favour of fixed remuneration and the
introduction of share-based incentive plans;
■ there was an excess of newly recognized provisions for other costs over the balance of provisions utilized.
In the Equity and liabilities of the CD PROJEKT Group as at the end of 2023, Equity represented 92.0%, whereas
Current and non-current liabilities represented 8.0%.
The consolidated statement of financial position by business segment of the Group is contained in the
Consolidated financial statement of the CD PROJEKT Group for 2023.
72
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
DESCRIPTION OF THE STRUCTURE OF ASSETS
AND EQUITY & LIABILITIES OF THE CONSOLIDATED BALANCE SHEET,
INCLUDING FROM THE PERSPECTIVE OF LIQUIDITY
As at the end of 2023, the CD PROJEKT Group had assets with a carrying value of PLN 2 613 438 thousand. Within
these assets, liquid financial reserves maintained in bank accounts, in the form of bank deposits and Treasury
bonds or bonds guaranteed by (foreign and domestic) governments amounted to PLN 1 309 459 thousand
and represented 50.1% of total assets. Assets with limited liquidity (Property, plant and equipment, Expenditure
on development projects, Investment properties and Shares in non-consolidated subordinated entities) totalling
PLN 782 560 thousand represented 29.9% of total assets. As at 31 December 2023, the sum of Trade receiv-
ables, Other current receivables and Inventories amounted to PLN 254 837 thousand, whereas the total value
of current and non-current liabilities amounted to PLN 209 948 thousand. As at the end of 2023, the Group
did not have any external liabilities in respect of loans or borrowings.
The accumulated cash and cash equivalents, deposits and Treasury bonds ensure the Group’s high liquidity
and may be used to secure the financing of the Group’s further development, including the financing of the
development of future products and technologies, promotional support for scheduled premières, securing future
investment opportunities and ensuring provisions for possible unplanned situations or emerging opportunities.
73
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
STATEMENT OF FINANCIAL POSITION OF CD PROJEKT S.A.
Table 9 Statement of financial position of CD PROJEKT S.A. (in PLN thousands)
31.12.2023 31.12.2022
*
change change %
NON-CURRENT ASSETS .%
Property, plant and equipment .%
Intangible assets - -.%
Expenditure on development projects .%
Investment properties - -.%
Goodwill .%
Investments in subordinated entities .%
Prepayments and deferred costs - -.%
Other financial assets .%
Deferred tax assets - -.%
Other receivables - -.%
CURRENT ASSETS .%
Inventories - -.%
Trade receivables .%
Current income tax receivable - -
Other receivables - -.%
Prepayments and deferred costs .%
Other financial assets .%
Bank deposits over months .%
Cash and cash equivalents - -.%
TOTAL ASSETS .%
* restated data
74
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
31.12.2023 31.12.2022
*
change change %
EQUITY .%
Share capital - -.%
Supplementary capital .%
Share premium .%
Treasury shares - - -
Other reserves .%
Retained earnings / (Accumulated losses) - - - -
Net profit (loss) for the period .%
NON-CURRENT LIABILITIES .%
Other financial liabilities - -.%
Other liabilities - -.%
Deferred income - -.%
Provision for retirement and similar
benefits
.%
Other provisions .%
CURRENT LIABILITIES - -.%
Other financial liabilities .%
Trade payables - -.%
Current income tax liabilities - - -
Other liabilities .%
Deferred income - -.%
Provision for retirement and similar
benefits
.%
Other provisions - -.%
TOTAL EQUITY AND LIABILITIES .%
* restated data
75
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
DISCUSSION OF THE STATEMENT OF FINANCIAL POSITION OF CD PROJEKT S.A.
CD PROJEKT S.A. is the Parent Company of the CD PROJEKT Group and, at the same time, the largest entity
in both the Group and the CD PROJEKT RED segment. Therefore, a commentary on the statement of financial
position of the Group, excluding information relating to the GOG.COM segment and the impact of the statement
of financial position of the subsidiaries, covers the operations and results of CD PROJEKT S.A. to a large extent.
As at the end of 2023, the total assets of CD PROJEKT S.A. amounted to PLN 2 517 921 thousand and were
PLN 95 517 thousand lower than the total assets of the CD PROJEKT Group, representing 96.3% of the Group’s
total assets.
The largest differences between the consolidated statement of financial position of the CD PROJEKT Group
and the separate statement of financial position of CD PROJEKT S.A. relate to the following items:
■
investments in subordinated entities – CD PROJEKT S.A., as the owner of the other Group companies on
a stand-alone basis, discloses the value of investments in subordinated entities which amounted to PLN 57 229
thousand as at the end of 2023 and is eliminated at the Group consolidation level or is presented in Shares
in non-consolidated subordinated entities;
■ Other items of Assets and Liabilities – on a stand-alone basis, they do not take into account the values result-
ing from the consolidation of the financial statements of other Group companies, including, in particular, with
regard to the items indicated, amounts attributable to the subsidiary GOG sp. z o.o. whose total assets represent
4.7% of the total assets of the CD PROJEKT Group.
76
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
CONSOLIDATED STATEMENT OF CASH FLOWS OF THE CD PROJEKT GROUP
Table 10 Consolidated statement of cash flows of the CD PROJEKT Group (in PLN thousands)
01.01.2023 –
31.12.2023
01.01.2022 –
31.12.2022
*
OPERATING ACTIVITIES
Net profit/(loss)
Total adjustments:
Depreciation and amortization of property, plant and equipment, intangible
assets, expenditure on development projects and investment properties
Amortization of development projects recognized as cost of goods sold
Foreign exchange (gains)/losses
Interest and shares in profits ( ) ( )
(Gains)/Losses on investing activities ( )
Increase/(Decrease) in provisions ( )
(Increase)/Decrease in inventories
(Increase)/Decrease in receivables ( ) ( )
Increase/(Decrease) in liabilities, excluding loans and borrowings ( )
Change in other assets and liabilities ( ) ( )
Other adjustments
Cash from operating activities
Income tax expense
Withholding tax paid abroad
Income tax (paid)/refunded ( ) ( )
Net cash from operating activities
INVESTING ACTIVITIES
Inflows
Sale of intangible assets and property, plant and equipment
Repayment of loans granted
Sale of shares in a subsidiary -
Expiry of bank deposits over months
Redemption of bonds
Interest on bonds
Interest received on deposits
Inflows from execution of forward contracts -
Other inflows from investing activities
77
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
01.01.2023 –
31.12.2023
01.01.2022 –
31.12.2022
*
Outflows
Acquisition of intangible assets and property, plant and equipment
Expenditure on development projects
Expenditure on intangible assets -
Acquisition of investment properties and capitalization of expenditure
Loans granted
Purchase of shares in subsidiaries
Contribution to the capital of a subsidiary -
Placement of bank deposits over months
Purchase of private equity interests in the gaming sector
Purchase of bonds and cost of their purchase
Outflows from execution of forward contracts -
Net cash from investing activities ( ) ( )
FINANCING ACTIVITIES
Inflows
Net proceeds from the sale of shares and issue of shares
in the execution of the incentive plan
-
Payment of finance lease liabilities
Interest paid -
Outflows
Purchase of treasury shares for redemption -
Dividends and other distributions to shareholders
Payment of lease liabilities
Interest paid
Net cash used in financing activities ( ) ( )
Net increase/(decrease) in cash and cash equivalents ( ) ( )
Change in cash and cash equivalents in the balance sheet ( ) ( )
Cash and cash equivalents as at the beginning of the period
Cash and cash equivalents as at the end of the period
* restated data
78
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
DISCUSSION OF THE CONSOLIDATED STATEMENT
OF CASH FLOWS OF THE CD PROJEKT GROUP
Under Operating activities in 2023, the CD PROJEKT Group showed net cash inflows of PLN 610 881 thousand,
i.e. PLN 204 850 thousand higher than in 2022.
The consolidated net profit was adjusted for:
I. Non-cash items (an increase in total):
■ Depreciation/Amortization – mainly of Property, plant and equipment and Intangible assets;
■
Amortization of development projects, recognized as the cost of sales, corresponding primarily to
the amortization of expenditure on development projects related to Cyberpunk 2077 together with the
Phantom Liberty expansion and The Witcher 3 edition for new generation consoles, Xbox Series X|S
and PlayStation 5, launched in the reporting period;
■ Foreign exchange gains (losses), an increase resulting mainly from the translation of foreign Treasury
bonds;
■ Gains/(Losses) on investing activities, a decrease resulting mainly from the settlement and measure-
ment of derivative financial instruments, the reversal of write-downs of shares in subsidiaries and the
reversal of a write-down of the Sirius project asset;
■ (Increase)/decrease in provisions (an increase);
■ Other adjustments, an increase resulting mainly from the elimination of accounting for the costs of the
incentive plan, accounting for the business combination of subsidiaries and adjustments to the amorti-
zation/depreciation recognized in the cost of sales and operating expenses.
II. Items related to changes in current assets and current liabilities (a decrease in total):
■ (Increase)/decrease in inventories, an increase in the balance of cash flows as a result of a drop in
inventories;
■ (Increase)/decrease in receivables, a decrease in the balance of cash flows as a result of an increase
in the balance of receivables in the CD PROJEKT RED segment as at the end of 2023;
■ Increase/(decrease) in liabilities except for loans and borrowings, a decrease in the balance of cash
flows as a consequence of a decrease in the Group’s liabilities;
■ Increase/(decrease) in other assets and liabilities, a decrease in the balance of cash flows resulting
mainly from accounting for the minimum guarantees for royalties from sales previously received by
CD PROJEKT RED and an increase in the balance of the so-called minimum guarantees contracted
during the reporting period by GOG.COM with its suppliers;
III. Item recognized in other sections of the statement of cash flows – Interest and shares in profits, resulting
in a decrease in the cash flows shown under operating activities;
IV. The difference between the corporate income tax recognized in the income statement (an increase) and
the tax actually paid during 2023, taking into account settlements related to withholding tax.
The largest impact on the negative balance of Net cash flows from investing activities during 2023 resulted from
transactions relating to the management of financial reserves (transactions involving bank deposits and bonds)
and investments in Expenditure on development projects, mainly those relating to the production of games
in the CD PROJEKT RED segment, and Acquisition of intangible assets and property, plant and equipment.
79
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
The negative balance of Net cash from investing activities of the CD PROJEKT Group in 2023 was mainly due
to the payment of dividend.
In total, in 2023, the CD PROJEKT Group generated Net cash outflows of PLN 99 773 thousand. At the same
time, the total balance of financial reserves which comprise Cash and cash equivalents, Bank deposits over
3 months and Treasury bonds purchased increased by PLN 218 454 thousand. In the same period, the Group
paid a dividend of PLN 99 911 thousand and invested PLN 272 655 in the development of new games and
technologies.
80
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
STATEMENT OF CASH FLOWS OF CD PROJEKT S.A.
Table 11 Statement of cash flows of CD PROJEKT S.A. (in PLN thousands)
01.01.2023 –
31.12.2023
01.01.2022 –
31.12.2022
*
OPERATING ACTIVITIES
Net profit /(loss)
Total adjustments:
Depreciation and amortization of property, plant and equipment, intangible
assets, expenditure on development projects and investment properties
Amortization of development projects recognized as cost of goods sold
Foreign exchange (gains)/losses
Interest and shares in profits ( ) ( )
(Gains)/Losses on investing activities ( )
Increase/(Decrease) in provisions ( )
(Increase)/Decrease in inventories
(Increase)/Decrease in receivables ( ) ( )
Increase/(Decrease) in liabilities, excluding loans and borrowings ( )
Change in other assets and liabilities ( ) ( )
Other adjustments
Cash from operating activities
Income tax expense
Withholding tax paid abroad
Income tax (paid)/refunded ( ) ( )
Net cash from operating activities
INVESTING ACTIVITIES
Inflows
Sale of intangible assets and property, plant and equipment
Repayment of loans granted
Sale of shares in a subsidiary -
Expiry of bank deposits over months
Redemption of bonds
Interest on bonds
Interest received on deposits
Inflows from execution of forward contracts -
Other inflows from investing activities
81
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
01.01.2023 –
31.12.2023
01.01.2022 –
31.12.2022
*
Outflows
Acquisition of intangible assets and property, plant and equipment
Expenditure on development projects
Expenditure on intangible assets -
Acquisition of investment properties and capitalization of expenditure
Loans granted
Purchase of shares in a subsidiary -
Contribution to the capital of a subsidiary
Placement of bank deposits over months
Purchase of private equity interests in the gaming sector
Purchase of bonds and cost of their purchase
Outflows from execution of forward contracts -
Net cash from investing activities ( ) ( )
FINANCING ACTIVITIES
Inflows
Net proceeds from the sale of shares and issue of shares in the execution of
the incentive plan
-
Payment of finance lease liabilities
Interest paid -
Outflows
Purchase of treasury shares for redemption -
Dividends and other distributions to shareholders
Payment of lease liabilities
Interest paid
Net cash used in financing activities ( ) ( )
Net increase/(decrease) in cash and cash equivalents ( ) ( )
Change in cash and cash equivalents in the balance sheet ( ) ( )
Cash and cash equivalents as at the beginning of the period
Cash and cash equivalents as at the end of the period
* restated data
82
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
DISCUSSION OF THE STATEMENT OF CASH FLOWS OF CD PROJEKT S.A.
CD PROJEKT S.A. is the Parent Company of the CD PROJEKT Group and, at the same time, the largest entity
in both the Group and the CD PROJEKT RED segment which accounts for 84.3% of the Group’s sales and
controls, as at the end of 2023, 96.3% of the Group’s cash and cash equivalents, deposits and investments
in Treasury bonds, and has the largest impact on cash flows of the entire CD PROJEKT Group, as part of its
operating, investing and financing activities. Therefore, a commentary on the statement of cash flows of the
Group, excluding information relating directly to the GOG.COM segment and the immaterial impact of smaller
subsidiaries, covers, in principle, the operations and results of CD PROJEKT S.A.
DISCUSSION OF THE FEASIBILITY OF INVESTMENT PLANS
As at 31 December 2023, the Group had no liabilities in respect of loans and borrowings and held its own cash,
deposits and Treasury bonds and bonds guaranteed by governments totalling PLN 1 309 459 thousand. As
at the end of 2023, the Group’s trade receivables amounted to PLN 193 520 thousand and its current liabili-
ties amounted to PLN 171 174 thousand. The planned sources of funding for future investment plans include
accumulated own funds and future net cash inflows from operating activities. As at the date of publication of
this report, the Group does not anticipate any problems in securing funds for the implementation of its invest-
ment plans in the foreseeable future.
DIVIDENDS
CD PROJEKT S.A. does not have a formal dividend policy. The Company aims to have sufficient working cap-
ital to conduct and develop its business activities. If the indicated objectives are secured and the Company
is funded adequately, the Company’s management will consider distributing the net profit generated to the
shareholders, in whole or in part.
Due to the cyclical nature of the business (usually associated with a multi-year period of investment in game
production and the high impact of release periods on the Group’s results and cash flows), each year the Com-
pany’s management takes an individual decision regarding the recommendation to the General Meeting on
distributing a portion of net profit to shareholders, e.g. in the form of a dividend.
When deciding to recommend payment of a dividend, the Management Board takes into account, among other
things, the Group’s financial position; the current and anticipated operating results of the Group; demand for
capital resulting from investments and potential acquisition activities; the macroeconomic situation and other
factors which the Management Board may deem material.
83
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
INFORMATION ON LOANS AND BORROWINGS IN 2023
In 2023, the CD PROJEKT Group did not have any liabilities in respect of external loans or borrowings.
INFORMATION ON LOANS GRANTED IN 2023
In 2023, none of the CD PROJEKT Group companies granted any loans to non-Group entities. The Molasses
Flood LLC used the financing in the form of a loan from CD PROJEKT S.A.
INFORMATION ON SURETIES AND GUARANTEES GRANTED IN 2023
AND OTHER MATERIAL OFFBALANCESHEET ITEMS
Information on sureties and guarantees and other material off-balance-sheet items is presented in the
Consolidated financial statement of the CD PROJEKT Group for 2023.
INFORMATION ON THE CURRENT ECONOMIC AND FINANCIAL
POSITION OF THE GROUP
In recent years, the Group conducted profitable operations which generated net cash inflows. The work completed
in recent years, crowned by the largest première of the Cyberpunk 2077 game in the Group’s history, moved
the Company and the Group to a new business and economic level, while showing the areas which require
improvements in the future.
During the reporting period, the Parent Company released a large expansion to Cyberpunk 2077,
Phantom Liberty, which was very well received by the sector media and players. Due to strong sales of both
the expansion and the basic edition of the Cyberpunk 2077 game, 2023 was the second best year in terms
of the net profit earned in the Group’s history. At the same time, the Group continued improving its internal
organization and production processes which enabled it to start working on several projects in parallel.
The Group has financial reserves and its current economic and financial position is stable.
INFORMATION ON THE ANTICIPATED ECONOMIC AND FINANCIAL
POSITION OF THE GROUP
In accordance with an updated strategy of the CD PROJEKT Group announced on 4 October 2022, focusing
on the long-term development of its key projects, in the coming years the Group’s activities will be based on
the existing and new productions realized under the The Witcher and Cyberpunk brands as well as under the
third franchise, as part of which a video game with the code name Hadar is being developed. The performance
of research and development work associated with subsequent projects will require ongoing funding and com-
mitment from the team. At the same time, there are plans to actively continue the sale of CD PROJEKT RED’s
already released productions, which - based on historical data - are characterised by a multi-year life cycle. The
sales of the games already released will be supported by new product launches and franchise flywheel events.
84
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
As at the date of publication of this report, the Management Board believes that the Group’s financial and eco-
nomic position is stable and does not anticipate any threats to liquidity or restrictions to the Group’s solvency
in the period of 12 months after the balance sheet date.
TRANSACTIONS WITH RELATED ENTITIES
Within the activities of the CD PROJEKT Group in 2023, there were mainly the following types of transactions
between related entities:
■
sale of licences between CD PROJEKT S.A. and GOG sp. z o.o., The Molasses Flood LLC, as part of the activities
carried out by the individual entities;
■
sale relating to research and development projects involving the creation of games and technologies by
CD PROJEKT RED Inc., The Molasses Flood LLC and CD PROJEKT RED Vancouver Studio Ltd. for CD PROJEKT S.A.;
■ provision of services such as: accounting, human resources and payroll management, legal, financial, adminis-
trative and management services rendered mainly by CD PROJEKT S.A. to related entities;
■ lease of office 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. and sublease of office space between The Molasses Flood LLC and CD PROJEKT RED Inc.;
■ sale of CD PROJEKT RED Inc.’s services to CD PROJEKT S.A. related to the coordination of publishing and
promotional activities in North America;
■ a loan granted to The Molasses Flood LLC by CD PROJEKT S.A.;
■ other transactions, arising from current operating activities, e.g. costs of employee relocation or reinvoicing
jointly incurred costs.
Transactions between related entities are concluded on an arm’s length basis as part of the normal business
activities carried out by the CD PROJEKT Group entities. Detailed information about the terms and condi-
tions of the transactions between related entities is contained in the Consolidated financial statement of the
CD PROJEKT Group for 2023.
DESCRIPTION OF THE MAIN DOMESTIC AND FOREIGN INVESTMENTS
AND THE STRUCTURE OF THE MAIN CAPITAL INVESTMENTS
At the end of 2023, material items of the Group’s Assets comprised Cash and cash equivalents (PLN 178 054
thousand), Bank deposits with maturity of more than 3 months (PLN 338 205 thousand), domestic Treasury
bonds (PLN 568 715 thousand) and foreign Treasury bonds or bonds guaranteed by foreign governments
(PLN 224 485 thousand). Surplus cash is invested both domestically and abroad, in deposits with banks
cooperating with the Group or in low-risk financial instruments (respecting the principle of diversification of
deposits placed and investments made). As at 31 December 2023, Cash and cash equivalents, deposits and
bonds amounted to PLN 1 309 459 thousand.
The business activities of the Group, and CD PROJEKT S.A. in particular, are directly related to the production
and release of video games. The ongoing production of new projects is at the same time the main focus of the
Group’s and the Parent Company’s investments. Expenditure incurred on new development projects is presented
within Non-current assets under Expenditure on development projects. The balance of expenditure incurred
85
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
as at the end of 2023 amounted to PLN 527 182 thousand and increased by PLN 52 013 thousand compared
with the end of 2022. CD PROJEKT RED’s intention is to further increase the production capacity, number and
scale of its projects in line with the strategy announced in October 2022.
In connection with the acquisition of the properties at ul. Jagiellońska 74 and 76 in Warsaw in 2018 and 2019,
the Group began the process of revitalising the CD PROJEKT campus by adapting it to the needs and specific
nature of its business. In 2023, the construction of a car park was completed and the construction of a new
office building began. The Group intends to continue this process in the coming years.
A detailed description of the individual items making up the Group’s Non-current assets is included in the com-
mentary on the Consolidated statement of financial position of the Group in this report.
At the end of 2023, the CD PROJEKT Group had the following wholly owned subsidiaries of CD PROJEKT S.A.
operating abroad:
■ CD PROJEKT RED Inc. (Boston, Waltham, USA),
■ CD PROJEKT RED Vancouver Studio Ltd. (Vancouver, Canada).
Moreover, CD PROJEKT RED Inc. holds 100% of the shares in CD PROJEKT SILVER Inc. (Los Angeles, USA)
and 82% of the shares in The Molasses Flood LLC (Boston, Waltham, USA).
At the end of 2023, GOG sp. z o.o. was the Company’s only domestic subsidiary within the CD PROJEKT Group
(100% of the shares).
The total value of investments in domestic and foreign subordinated entities disclosed in the separate financial
statements of CD PROJEKT S.A. (the Group’s holding company) amounted to PLN 57 229 thousand at the end
of 2023.
In 2023, the CD PROJECT Group financed its current operations and investment projects with its own funds.
EXPLANATION OF THE DIFFERENCES BETWEEN THE FINANCIAL RESULTS REPORTED
FOR 2023 AND THE PREVIOUSLY PUBLISHED FORECASTS FOR A GIVEN YEAR
The CD PROJEKT Group has not published any financial forecasts for 2023, therefore, no explanations are
given for the differences between the financial results shown in the report.
DESCRIPTION OF THE UTILIZATION OF ISSUE PROCEEDS
BY THE COMPANY BY THE DATE OF PUBLICATION OF THE REPORT
In the period from 1 January to 31 December 2023, the Company did not issue any securities.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
04
STATEMENT REGARDING THE IMPLEMENTATION
OF CORPORATE GOVERNANCE POLICIES
87
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Statement
This statement regarding the implementation of corporate governance policies at the CD PROJEKT Group and
CD PROJEKT S.A. in 2023 is a distinct part of the Management Board Report on the Activities of the CD PROJEKT
Group and CD PROJEKT S.A. in 2023, pursuant to § 70 section 6 item 5 of the Finance Minister’s Regulation of
29 March 2018 concerning current and periodic information to be published by issuers of securities, and conditions
for recognizing as equivalent the information required by the laws of a non-member state (JL 2018, item 757).
Applicable corporate governance policies
In 2023 CD PROJEKT S.A. (further referred to as we and/or the Company) is subjected to corporate governance
policies set forth in the 2021 Code of Best Practice for WSE Listed Companies (annexed to Stock Exchange
Council resolution of 13/1834/2021 of 29 March 2021).
The aforementioned document can be accessed on the Warsaw Stock Exchange website at https://www.gpw.
pl/best-practice2021.
As of the preparation date of this statement, our COMPLY ratio stands at 86%. Information regarding application
of policies contained in the 2021 Code of Best Practice for WSE Listed Companies is available on our website
under the Corporate Governance tab. This tab also contains our statements regarding application of corporate
governance policies in past years. Our statement regarding application of policies contained in the 2021 Code
of Best Practice for WSE Listed Companies provides explanations in the context of policies we apply, as well
as those which have not heretofore been applied.
Chart 16 COMPLY ratio of the Company
We currently do not apply nine policies listed in the 2021 Code of Best Practice: policies numbered 2.1, 2.2,
2.11.6, 3.1, 3.3, 3.4, 3.6, 3.7 and 3.10.
73%
2021
76%
2022
84%
2023
86%
2024
88
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
DISCLOSURE POLICY AND INVESTOR COMMUNICATIONS
All policies related to disclosure policy and investor communications are applied.
Our Company maintains a clear information policy. We strive to provide all stakeholders with equal access to infor-
mation regarding our activities, in both Polish and English [1.1]. We organize meetings, conferences and calls with
investors, analysts, experts and media representatives, and we try to answer their questions [1.6-1.7]. Our earnings
are published as soon as possible after the close of each reporting period [1.2]. We have adopted a business
strategy which acknowledges our ESG ambitions. The Strategy, along with our actions and achievements, can
be found on our website under the Strategy and Sustainability tabs [1.3-1.4]. Our Sustainability Report, along with
CD PROJEKT’s financial statements, provide information on charities which we support financially [1.5].
MANAGEMENT BOARD AND SUPERVISORY BOARD
Policies applied:
Appointment to the Management Board and Supervisory Board is contingent upon possessing the required com-
petences, skills and experience. Membership of the Management Board represents the main area of professional
activity for all Management Board members [2.6]. Members of the Management Board may not hold membership
of the governing bodies of any entity external to the CD PROJEKT Group, except as expressly authorized by the
Supervisory Board [2.7]. The scope of involvement of Supervisory Board Members enables them to properly dis-
charge their duties [2.8]. Two members of the Supervisory Board meet independence criteria and have no actual
and material links to any shareholder who controls at least 5% of the total number of votes at the Company [2.3].
Chairpersonship of the Audit Committee is reserved to a Supervisory Board member who is not also the Chairper-
son of the Supervisory Board [2.9]. Management Board and Supervisory Board resolutions are adopted in open
ballots. A secret ballot may be held upon request, in matters indicated in the Code of Commercial Companies [2.4].
Members of the Supervisory Board and Management Board who oppose the given resolution are entitled to have
their dissent registered in the minutes [2.5]. We provide the Supervisory Board with appropriate administrative,
technical and organizational resources to enable efficient operation [2.10]. The Supervisory Board submits to the
General Meeting an annual report on its activities, including, among others, the composition of the Supervisory
Board and its committees, indicating members who meet independence criteria, along with a consolidated overview
of the Company’s situation, acknowledging its internal control systems, risk management, compliance, internal
audit, assessment of the discharge of disclosure obligations related to corporate governance, and justification of
expenditures specified in principle 1.5 [2.11].
Policies not applied:
[2.1] Companies should have in place a diversity policy applicable to the management board and the super-
visory board, approved by the supervisory board and the general meeting, respectively. The diversity policy
defines diversity goals and criteria, among others including gender, education, expertise, age, professional
experience, and specifies the target dates and the monitoring systems for such goals. With regard to gender
diversity of corporate bodies, the participation of the minority group in each body should be at least 30%.
89
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Explanation: Thus far, the Supervisory Board and the General Meeting have not adopted formal diversity
regulations related to the Company’s governing bodies. Since 2019 a Diversity Policy has been in force at the
Company. Pursuant to this policy, a general non-discrimination principle applies to members of the Management
Board and Supervisory Board, as well as to all team members. Furthermore, we are a signatory to the Diversity
Charter, which prohibits workplace discrimination and obligates its signatories to engage in activities which
foster and promote diversity. Diversity, equality and respect for human rights are all basic values enshrined in
the Rules of the Game. CD PROJEKT Group Business and Ethics Standards.
[2.2] Decisions to elect members of the management board or the supervisory board of companies should
ensure that the composition of those bodies is diverse by appointing persons ensuring diversity, among
others in order to achieve the target minimum participation of the minority group of at least 30% according
to the goals of the established diversity policy referred to in principle 2.1.
Explanation: Compliance with this policy depends on the diversity of available candidates and the outcome
of votes held by the Supervisory Board (with regard to members of the Management Board) or the General
Meeting (with regard to members of the Supervisory Board). Appointment of Management Board and Super-
visory Board members is based primarily on factors which include professional experience, knowledge and
education. As of the submission date of this statement, we have not attained a minority participation level of
30% with regard to gender.
[2.11.6] In addition to its responsibilities laid down in the legislation, the supervisory board prepares and
presents an annual report to the annual general meeting once per year. Such report includes at least
information regarding the degree of implementation of the diversity policy applicable to the management
board and the supervisory board, including the achievement of goals referred to in principle 2.1.
Explanation: Reports submitted by the Supervisory Board do not specify the extent to which the diversity policy
is implemented in relation to the Management Board and the Supervisory Board, including the achievement
of the corresponding objectives. As noted in the explanation accompanying policy 2.1, thus far the Supervi-
sory Board and the General Meeting have not adopted formal diversity regulations related to the Company’s
governing bodies. Should the Company decide to adopt such regulations, the Supervisory Board’s report will
include the corresponding disclosures.
INTERNAL SYSTEMS AND FUNCTIONS
Policies applied:
Oversight of the internal control system is the responsibility of the Management Board and persons employed
by the Company in the context of accounting, financial and operational control. Risk management is the
responsibility of holders of executive positions (referred to as risk owners). Compliance is the responsibility of
the Chief Compliance Officer [3.2]. Persons responsible for compliance and risk management answer directly
to appropriate members of the Management Board [3.5]. The Management Board submits to the Supervisory
Board annual assessments of the effectiveness of systems and functions specified in policy 3.1. This assessment
is included in successive reports on Management Board activities, and the effectiveness of the aforementioned
systems and functions is subject to verification by the Audit Committee [3.9].
90
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Policies not applied:
[3.1] Listed companies maintain efficient internal control, risk management and compliance systems and an
efficient internal audit function adequate to the size of the company and the type and scale of its activity;
the management board is responsible for their functioning.
Explanation: We partly deviate from this policy insofar as we have not established a distinct internal audit function.
Internal control is implemented on the basis of our existing managerial framework, including the finance and
accounting departments. A formalized risk management process is in place, based on the Risk Management
Procedure and the Compliance Policy which guides us in managing compliance-related matters. There is no
distinct internal audit unit; however, we declare that if a decision is made to establish such a unit as part of our
organizational framework, we will comply with this policy.
[3.3] Companies participating in the WIG20, mWIG40 or sWIG80 index appoint an internal auditor to head
the internal audit function in compliance with generally accepted international standards for the professional
practice of internal auditing. In other companies which do not appoint an internal auditor who meets such
requirements, the audit committee (or the supervisory board if it performs the functions of the audit com-
mittee) assesses on an annual basis whether such person should be appointed.
Explanation: There is currently no internal auditor or dedicated audit unit at the Company. Should an internal
auditor be appointed, we will comply with this policy.
[3.4] The remuneration of persons responsible for risk and compliance management and of the head
of internal audit should depend on the performance of delegated tasks rather than short-term results of
the company.
Explanation: Base remuneration of risk managers and compliance officers is fixed and follows existing market
standards. Internal audit has not been disaggregated in our structure as a distinct organizational unit; hence
we are unable to comment upon the remuneration provided to such a unit.
[3.6] The head of internal audit reports organisationally to the president of the management board and
functionally to the chair of the audit committee or the chair of the supervisory board if the supervisory board
performs the functions of the audit committee.
Explanation: There is currently no internal auditor or dedicated audit unit at the Company. Should an internal
auditor be appointed, we will comply with this policy.
[3.7] Principles 3.4 to 3.6 apply also to members of the company’s group which are material to its activity
if they appoint persons to perform such tasks.
Explanation: We partly deviate from this policy – with regard to appointing individuals responsible for risk
management and internal audit functions at the Group’s significant member companies. Our subsidiaries have
restricted organizational frameworks which are adapted to the size of each such entity. With regard to compli-
ance management, our subsidiaries individually appoint persons responsible for this activity.
91
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
[3.10] Companies participating in the WIG20, mWIG40 or sWIG80 index have the internal audit function
reviewed at least once every five years by an independent auditor appointed with the participation of the
audit committee.
Explanation: There is currently no internal auditor or dedicated audit unit at the Company. Should an internal
auditor be appointed, we will comply with this policy.
GENERAL MEETING AND SHAREHOLDER RELATIONS
All policies related to general meetings and shareholder relations are applied.
We work to ensure that our dialogue with shareholders enables proper exercise of their rights without obstruct-
ing operations of the Company’s governing bodies [4.10]. Shareholders may participate in the General Meeting
and exercise voting rights remotely, using electronic communication tools [4.1]. General Meetings are recorded,
with live streams and recordings posted on our corporate website [4.3]. When selecting the date and venue of
a General Meeting we try to enable the greatest possible number of shareholders to participate [4.2]; the same
also applies to media representatives [4.4]. Should a General Meeting be convened in the manner specified in
Art. 399 § 2-4 and Art. 400 § 3 of the Code of Commercial Companies, the Management Board shall take action
to enable the General Meeting to be held [4.5]. The Supervisory Board issues opinions on all draft resolutions
submitted by the Management Board to the General Meeting [4.7]. Draft resolutions submitted to the General
Meeting are published on our website, along with the corresponding justifications. Should a shareholder demand
to include a particular matter in the meeting agenda – we will ask them to present a suitable justification for
the proposed resolution [4.6]. While the General Meeting is in progress, any shareholder may introduce draft
resolutions in matters covered by the meeting agenda. Notwithstanding this right, our Guide to the CD PROJEKT
General Meeting contains basic provisions related to submission of draft resolutions by shareholders prior to the
General Meeting, pursuant to policy 4.8 [4.8]. Information about candidates for appointment to the Supervisory
Board, together with their resumes, are posted on our website well in advance of the General Meeting. Each
member of the Supervisory Board submits a statement concerning fulfillment of criteria applicable to members
of the Audit Committee, as well as on the existence of actual and materials relations between themselves and
any shareholder who controls at least 5% of the total number of votes in the Company [4.9.1-4.9.2]. Members of
the Management Board and Supervisory Board take part in General Meetings insofar as is necessary to address
shareholders’ questions [4.11]. Regarding resolutions concerning the issue of shares with subscription rights,
should such circumstances arise, the corresponding resolution will specify the issue price or the mechanism
of setting the price [4.12]. Thus far, resolutions concerning issue of shares with exclusion of subscription rights
have been adopted only in the context of incentive programs, were regarded as aligned with the Company’s
interest, and did not constitute a violation of rights held by existing shareholders of the Company who did not
participate in the take-up of such shares [4.13]. Decisions regarding allocation of profit achieved during the given
financial year are preceded by analysis of our financial resources, along with long-term production, investment
and publishing plans. Thus far, we have not instituted a fixed dividend policy. The final decision regarding allo-
cation of profit and payment of a dividend rests with the General Meeting [4.14].
92
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
CONFLICT OF INTERESTS, RELATED PARTY TRANSACTIONS
All policies related to conflicts of interest and related party transactions are applied.
Members of the Management Board should notify the Supervisory Board of any conflict of interest which
has arisen, or may arise, in connection with their duties [5.1]. If a Member of the Management Board or of the
Supervisory Board believes that the given decision contradicts the Company’s interest, their dissenting opinion
is recorded in the meeting minutes [5.2]. All transactions with affiliated parties are concluded in the interest of
the Company or its Group, and in accordance with internal regulations governing related party transactions,
which mandate that such transactions should be carried out in the Company’s interest [5.3]. In situations where
a related party transaction requires approval by the supervisory Board, the Supervisory Board may avail itself
of third-party opinions [5.5]. In situations where a related party transaction requires approval by the General
Meeting, the Supervisory Board shall prepare an opinion concerning the advisability of such a transaction [5.6]
and shareholders will be provided with information required to assess whether the transaction is in the Com-
pany’s interest [5.7]. The Management Board of the Company decides upon conditions and means of carrying
out buy-back programs in a way which ensures that shareholders’ interest is respected. This is done in the
form of a resolution [5.4].
REMUNERATION
All policies related to remuneration are applied.
Remuneration offered to members of the Management Board and Supervisory Board, as well as other top
managers, is sufficient to ensure recruitment, retention and incentivization required to properly manage the
Company and supervise its operations [6.1]. Members of the Supervisory Board obtain fixed monthly remu-
neration in association with discharging their duties as members of the Supervisory Board, as mandated by
a General Meeting resolution. Members of the Audit Committee obtain additional fixed monthly remuneration
in association with their involvement in the Audit Committee [6.4-6.5]. In adopting incentive programs we are
guided, among others, by the need to secure optimal conditions for long-term improvement of financial results
posted by the Company and the Group, along with long-term growth in Company value [6.2]. Our long-term
incentive program for members of the Management Board and other top managers is based on financial and
non-financial criteria covering periods which are, in each case, at least three years long [6.3].
Internal control and risk management
Internal control processes are carried out in the framework of existing managerial structures, including the
activities of the Accounting, Finance and Legal Departments. The management board of each member company
of the CD PROJEKT Group is responsible for that company’s internal control system.
In 2021 we rolled out a Risk Management Procedure at CD PROJEKT S.A., which specifies rules for identifying,
assessing and monitoring risks. In 2023 this procedure was updated and risk management processes optimized.
93
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Risks are assessed in a continuous manner through identification and analysis of threats and opportunities
which may affect our current activities. Risks related to preparation of financial statements are mitigated by
a variety of actions, including mechanisms which ensure security of our IT systems.
Risk management at member companies of the CD PROJEKT Group is the responsibility of the management board
of each company. Oversight of risk management at the Company is the responsibility of the Audit Committee.
Internal control and risk management processes related to preparation of financial statements and consolidated
financial statements include the following:
INTERNAL PROCEDURES
Our control-related activities are rooted in internal regulations (including policies, rulebooks, procedures) which
specify the range of duties and responsibilities of our employees, in particular members of the Accounting and
Financial Control Departments.
ACCOUNTING AND FINANCIAL CONTROL
Our accounts are managed by an internal Accounting Department, whose duties include:
IT SYSTEMS
Accounting and financial data which serves as the basis for our financial statements is processed in ERP finan-
cial/accounting systems. Our IT systems, among others, facilitate financial management, enable circulation of
financial and accounting data, support electronic document flows, generate complex financial reports and assist
in planning, budgeting and verifying financial results.
Security, availability, confidentiality and integrity of information processed in IT systems is the responsibility of
the IT Security team, as well as (in terms of legal and regulatory compliance) – the Privacy & Compliance team.
MANAGING
ACCOUNTS
ACCOUNTING
SERVICES
STATUTORY
REPORTING
PREPARING
FINANCIAL
STATEMENTS
PREPARING REPORTS
FOR THE MANAGEMENT
BOARD
94
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
OVERSIGHT OF THE PREPARATION OF FINANCIAL STATEMENTS
Financial statements are prepared in accordance with the following regulations:
■ CD PROJEKT S.A. Accounting Policy,
■ International Accounting Standards,
■ Accounting Act of 29 September 1994.
Supervising proper preparation of financial statements is the responsibility of the CFO.
Preparation of separate financial statements at the Group’s subsidiaries is the responsibility of their respective
management boards. Financial statements at the Group’s subsidiaries are subsequently submitted for approval
to their respective Shareholders’ Meetings.
AUDITS AND REVIEWS OF FINANCIAL STATEMENTS
Separate and consolidated annual financial statements are subjected to formal audits, while semiannual financial
statements are subjected to reviews by independent licensed auditors, pursuant to the Act of 11 May 2017 on
statutory auditors, audit firms and public supervision.
Review reports accompanying semiannual financial statements are submitted to shareholders, while audit
reports accompanying annual financial statements are submitted to shareholders and to the General Meeting.
The entity contracted to carry out audits and reviews of the Company’s financial statement is selected by the
Supervisory Board. Further information about CD PROJEKT’s auditor can be found in the section titled “Entity
authorized to perform audits of financial statements” further below.
FINANCIAL
STATEMENT VERIFIED
BY THE MANAGEMENT
BOARD
FINANCIAL
STATEMENT ASSESSED
BY THE SUPERVISORY
BOARD
FINANCIAL
STATEMENT APPROVED
BY THE GENERAL
MEETING
95
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Shareholders who hold major stock packages
Up-to-date information about CD PROJEKT’s shareholding structure is updated on an ongoing basis
and can be found under the Shareholders tab on our website.
The Company’s share capital amounts to 99 910 510 PLN, divided into 99 910 510 shares with a nominal value
of 1 PLN per share. The shareholding structure is determined on the basis of formal notifications issued by
shareholders who control at least 5% of the total number of votes at the General Meeting of Shareholders.
Shareholders controlling at least 5% of the vote at the General Meeting as of 31 December 2023 and as of the
publication date of this report:
Shareholder Qty. of shares
Percentage share
in share capital (%)
Number of
votes controlled
Percentage share
of total number
of votes at the GM (%)
Marcin Iwiński .% .%
Michał Kiciński
*
.% .%
Piotr Nielubowicz .% .%
* As disclosed in the most recent notification submitted to the Company on 13 November 2023
Holders of securities which provide special control rights
All shares of the Company are ordinary bearer shares which do not incorporate any special rights, including
control rights.
96
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Limitations on the exercise of voting rights
Limitations on the exercise of voting rights by shareholders are detailed in §25a and b of the Company
Articles.
In accordance with Company Articles, the following restrictions apply to the exercise of voting rights:
■ no shareholder (acting singlehandedly or jointly, in the case of groups of entities) may exercise more than 20%
of voting rights incorporated by all Company shares outstanding on the day of the General Meeting,
■ if a shareholder (acting singlehandedly or jointly, in the case of groups of entities) is entitled to exercise voting
rights at the General Meeting from stock packages held under different legal titles, the votes they control are
subject to cumulation,
■
if, as a result of the aforementioned cumulation, the number of voting rights controlled by the given shareholder
(acting singlehandedly or jointly, in the case of groups of entities) exceeds 20% of the total number of votes,
these votes are subject to reduction.
According to §25b of the Company Articles, restriction of voting rights does not apply to parties controlling 50%
or more than 50% of the total number of votes at the Company solely when the shares have been purchased
by way of a public tender offer to acquire all remaining shares of the Company.
Except for the above, no other limitations apply to the exercise of voting rights, including temporal restrictions
on voting or other provisions under which, in cooperation with the Company, ownership of securities is deprived
of some rights incidental thereto.
Limitations on transferability of ownership rights
to the Issuer’s securities
The CD PROJEKT S.A. Articles of Association do not provide for any limitations on transferability of ownership
rights to the Issuer’s securities.
97
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Rules regarding appointment and dismissal of managers
Key provisions regarding appointment and dismissal of managers are described in the Company Articles,
Management Board Regulations and the Act of 15 September 2000 - Code of Commercial Companies.
The Management Board consists of one or more members. Members of the Management Board are appointed
and dismissed by the Supervisory Board for a joint four-year term. Supervisory Board resolutions concerning
appointment, dismissal or suspension of Management Board members require a 4/5 supermajority of votes.
Right to adopt decisions concerning issue
or buy-back of the Issuer’s shares
The Company Articles do not provide for any special empowerment of the Management Board in the context
of deciding to issue or buy back Company shares.
Rules regarding amendment
of the Issuer’s Articles of Association
Any change in the Issuer’s Articles of Association requires a suitable General Meeting resolution, pursuant to
the provisions of the Code of Commercial Companies, along with a corresponding entry in the court register.
Any announcement of a convocation of a General Meeting whose agenda includes proposed amendments
to the Company Articles should include a description of existing statutory provisions as well as the full text of
any proposed amendments.
According to the Company Articles, responsibility for collating the consolidated text of the amended Articles
rests with the Supervisory Board.
98
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
AMENDMENTS TO COMPANY ARTICLES ADOPTED IN 2023
In 2023 the Company Articles were amended by General Meeting resolutions adopted on 18 April 2023 and
6 June 2023.
Amendments introduced by General Meeting resolutions adopted on 18 April 2023 (officially registered on
26 June 2023) concerned, among others:
■ repealing provisions related to conditional increases in share capital and assigning the right to take up shares
to holders of subscription warrants issued in the framework of Company incentive programs for the years
2016-2021 (2016 Program) and 2020-2025 (2020 Program), given the conclusion of the 2016 Program and
discontinuation of the 2020 Program (amendments to § 8 sections 1, 2 and 3 of the Articles);
■ introducing provisions concerning conditional increases in the Company share capital and assigning the right
to take up shares to holders of subscription warrants in light of the introduction of Incentive Programs A and B
for the years 2023-2027 (adding sections 4-7 to § 8 of the Articles);
■ amending provisions related to the volume of the Company’s share capital due to its reduction as a result of
redemption of Company shares (amendments to § 7 section 1 of the Articles).
Amendments introduced by General Meeting resolutions adopted on 6 June 2023 (officially registered on
9 October 2023) concerned, among others:
■ amendments related to uniformization of the names of positions held by Management Board members, which
chiefly consist in expunging references to the “President of the Management Board” (amendments to § 11,
§ 12 and § 19 section 3 of the Articles);
■
introducing a provision which enables the Company to make advance payments which count toward dividends
(adding section 6 to § 28 of the Articles).
General Meeting
Organization of the General Meeting and its key prerogatives are described in the Company
Articles, Management Board Regulations and the Act of 15 September 2000 - Code of Commercial
Companies.
ORGANIZATION OF THE GENERAL MEETING
The General Meeting is the highest governing body of the Company, and may be called on an ordinary
or extraordinary basis. General Meeting resolutions require a 3/5 supermajority of votes, except in matters
where the applicable regulations call for a higher supermajority.
99
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
The General Meeting is called to order by the Chairperson or Deputy Chairperson of the Supervisory Board.
If neither is present, the General Meeting is called to order by a member of the Supervisory Board, or a person
specifically appointed for this duty by the Management Board.
In addition to notarized minutes of the General Meeting, the General Meeting Chairperson may appoint a Sec-
retary to prepare distinct minutes of the General Meeting, or parts thereof. The Secretary does not need to be
a registered participant of the General Meeting.
General Meetings are held in Warsaw. Shareholders may take part in the proceedings personally, by a proxy,
or using electronic communication tools (e-GM), in accordance with the Terms and Conditions of Participation
in the General Meeting of CD PROJEKT S.A. using Remote Electronic Communication Tools.
COMPETENCES OF THE GENERAL MEETING AND SHAREHOLDER RIGHTS
The General Meeting, among others:
■ approves financial statements and grants discharge to members of governing bodies;
■ adopts resolutions concerning allocation of profit and payment of dividends;
■ appoints and dismisses members of the Supervisory Board and determines their remuneration;
■ is empowered to determine the maximum amount of expenses related to remuneration of Supervisory Board
advisors, which the Company may incur during the given financial year;
■ adopts resolutions concerning issue of convertible bonds and priority bonds;
■ appoints intermediaries in disputes between the Company and members of its Management Board.
The Company respect shareholder rights as defined by the Act of 15 September 2000 – Code of Commercial
Companies, including the right to:
■ demand convocation of a General Meeting;
■ participate in the General Meeting and exercise voting rights – personally or through a proxy;
■ submit and object to draft resolutions;
■ obtain information about the Company to the extent defined by the applicable laws.
Upon request of a shareholder eligible for participation in the General Meeting, a Ballot Committee is appointed.
Ballot Committee members are elected from among all persons eligible for participation in the General Meeting.
Each shareholder is entitled to nominate a single candidate.
A Chairperson is appointed from among all persons eligible for participation in the General Meeting, with each
shareholder entitled to nominate a single candidate.
100
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
GENERAL MEETINGS IN 2023
Two General Meetings were held in 2023 – on 18 April 2023 (Extraordinary General Meeting) and on
6 June 2023 (Ordinary General Meeting). Key resolutions adopted at the General Meetings are described in
the “Key corporate events” section elsewhere in this report. The full wording on these resolutions is available
on the Company’s website.
Managerial and supervisory bodies
MANAGEMENT BOARD OF CD PROJEKT S.A.
Organization of the Management Board and its key prerogatives are described in the Company Articles,
Management Board Regulations and the Act of 15 September 2000 - Code of Commercial Companies.
Composition of the Management Board as of the preparation date of this report
Michał Nowakowski – Joint Chief Executive Officer, Member of the Board
Jointly-responsible for the company’s long term vision, coordinates the company’s activ-
ities and its management. In particular responsible for the Company’s business strategy
and effective sales policy. Supports development of new product lines and manages the
Company’s back catalog (franchise flywheel). Shapes long-term business relations with key
partners. Represents company in relation with the investors.
Directly supervises the following:
Business development | Comic Book and Animation narrative | Investor Relations
Adam Badowski – Joint Chief Executive Officer, Member of the Board
Jointly-responsible for the company’s long term vision, coordinating the company’s activities
and its management. In particular responsible for the Company’s creative vision, and for
managing, developing and maintaining the Company’s creative teams. Develops and defines
the unique image and style which distinguish the Company and its products on the market.
Directly supervises the following:
Game direction | Story | Global Art | Audio & Music | Localization & English adaptation
101
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Adam Kiciński – Chief Strategy Officer, Member of the Board
Responsible for the Company’s strategy and for its implementation.
Directly supervises the following:
Strategy
Piotr Nielubowicz – Chief Financial Officer, Member of the Board
Responsible for the Company’s financial strategy, and for financial and non-financial report-
ing and legal area. Oversees strategic corporate projects, key investments and Company’s
climate and environmental policy.
Directly supervises the following:
Finance | Accounting | Taxes | Legal
Piotr Karwowski – Joint Chief Operating Officer, Member of the Board
Responsible for the Company’s game development processes and optimization of its
operational capabilities, including in-house production, external games development and
management of the Group’s studios. Additionally oversees development of online and
user experience competencies.
Directly supervises the following:
Game production | Studio operations | IT & Security | Online | UX
Paweł Zawodny – Joint Chief Operating Officer, Member of the Board
Responsible for shaping the Company’s tech strategy and optimization of its operational
capabilities. Plays a pivotal role in driving both the technological and organizational
transformation of CD PROJEKT RED. Oversees the Company’s activities in the scope of
employment, talent management and work methodology, ensuring they are aligned with
the Company’s broader transformation objectives.
Directly supervises the following:
HR | Culture, Diversity & Inclusion | Technologies (including R&D)
Jeremiah Cohn – Chief Marketing Officer, Member of the Board
Responsible for the Company’s global marketing strategy, product communication and brand-
ing in support of franchise development. Oversees efforts to build recognition of the Company,
its IP, and product releases by shaping engagement with fans and the gamers community.
Directly supervises the following:
Marketing | PR | Franchises
102
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Changes in the composition of the Management Board in 2023
and up until the preparation date of this report
Since 1 January 2023 the Management Board of the Company consists of seven Members. No changes in
the composition of the Management Board occurred in 2023 and up until the preparation date of this report.
Several corporate events related, among others, to changes in the names of positions held by Members of the
Management Board occurred in 2023, as previously disclosed by the Company in the justification accompanying
draft resolution no. 22 of 6 June 2023, including as follows:
On 21 September 2023 the Supervisory Board of the Company, in order to ensure uniformity of names of positions
held by Members of the Management Board, decided that as of the date of registration of the corresponding
amendments to Company Articles, which ultimately occurred on 9 October 2023:
■
Adam Kiciński, incumbent President of the Management Board, will hold the position of Member of the
Management Board for the current term of office,
■
Piotr Nielubowicz, incumbent Vice President of the Management Board for financial affairs, will hold the position
of Member of the Management Board for the current term of office.
In addition, on the same day, the Management Board of the Company, acting pursuant to Management Board
Regulations of the Company, has decided to adopt additional names of functions assigned to Members of the
Company Management Board which reflect the internal division of responsibilities related to specific areas of
the Company’s business activities and the roles performed at the Company by the Management Board Members.
As a result, Management Board Members will use the following additional function names:
■ Adam Kiciński – Chief Executive Officer (CEO),
■ Piotr Nielubowicz – Chief Financial Officer (CFO),
■ Adam Badowski – Chief Creative Officer (CCO),
■ Michał Nowakowski – Chief Commercial Officer (CCO),
■ Paweł Zawodny – Joint Chief Operating Officer (Joint COO),
■ Piotr Karwowski – Joint Chief Operating Officer (Joint COO),
■ Jeremiah Cohn – Chief Marketing Officer (CMO).
On 5 October 2023 Mr. Adam Kiciński, CEO of CD PROJEKT S.A. notified the Company of his intent to seek
appointment as Member of the Supervisory Board of the Company in 2025, which would entail his resignation
from membership of the Management Board, effective at the end of 2024. The full content of the notification
submitted by Mr. Kiciński’s to the parent Company is appended to Current Report no. 39/2023.
In light of the above-mentioned decision, the Management Board of CD PROJEKT S.A. decided upon changes
in the internal division of responsibilities entrusted to Members of the Management Board with regard to spe-
cific areas of Company activities. These changes would enter into force on 1 January 2024 and entail changes
in the description of roles and names of positions held by members of the Management Board, to wit:
■ Adam Kiciński holds the position of Chief Strategy Officer (CSO);
■ The position of Chief Executive Officer (CEO) is held jointly by Adam Badowski, who had heretofore held the
position of Chief Creative Officer and been affiliated with the parent Company for 20 years, and Michał Nowa-
kowski, who had heretofore held the position of Chief Commercial Officer and been affiliated with the parent
Company for 18 years. Adam Badowski and Michał Nowakowski shall hereinafter officially introduce themselves
as Joint Chief Executive Officers (Joint CEO).
103
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Tenure of incumbent members of the Management Board as employees at the Group’s member companies
(in years)
Operations and prerogatives of the Management Board
The Management Board manages all Company matters which are not otherwise reserved to the General Meeting
and the Supervisory Board. In particular, the Management Board:
■ works to ensure that Company matters are managed in a clear and effective manner, and in compliance with
the applicable laws;
■ determines the Company’s strategy and its main business objectives, and is responsible for ensuring imple-
mentation thereof;
■ manages Company matters and represents the Company in courts of law and otherwise. The right to represent
the Company appertains to two Management Board members acting in concert, or to a single Management
Board member acting in concert with a commercial proxy;
■
exercises due diligence in the decision-making process, acts within the boundaries of acceptable risk, and
remains loyal to the Company.
A meeting of the Management Board may be called by any of its members. In carrying out its meetings, the
Management Board may use remote electronic communication tools (in particular, videoconferencing tools).
The Management Board may adopt resolutions at meetings or outside of meetings, using remote communication
tools or in writing. Management Board resolutions are adopted by an absolute majority of votes. Management
Board Members who oppose the given resolution are entitled to have their dissent recorded in the minutes.
In discharging its duties the Management Board is also guided by the principles listed in 2021 Code of Best
Practice for WSE Listed Companies.
Paweł Zawodny
Jeremiah Cohn
Piotr Karwowski
Michał Nowakowski
Adam Badowski
Piotr Nielubowicz
Adam Kiciński
30
25
22
19
17
10
6
104
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
SUPERVISORY BOARD OF CD PROJEKT S.A.
Organization of the Supervisory Board and its key prerogatives are described in the Company Articles,
Supervisory Board Regulations and the Act of 15 September 2000 - Code of Commercial Companies
Composition of the Supervisory Board as of the preparation date of this report
Two members of the Supervisory Board meet independence criteria specified in the Act of 11 May 2017 on
statutory auditors, audit firms and public supervision, and have no actual and material links to any shareholder
who controls at least 5% of the total number of votes at the Company.
Changes in the composition of the Supervisory Board in 2023 and up until the preparation date of this report
In Resolution 3 of 20 December 2022 the Extraordinary General Meeting appointed Mr. Marcin Iwiński, heretofore
performing the duties of Vice President of the Management Board for international affairs, to the Supervisory
Board as its Member for the current term of the Supervisory Board, effective on 1 January 2023. Concurrently,
in Resolution 1 of 20 December 2022 the Supervisory Board appointed Mr. Marcin Iwiński as Chairperson of
the Supervisory Board of the Company, effective on 1 January 2023, and appointed Ms. Katarzyna Szwarc as
Deputy Chairperson of the Supervisory Board, effective on 1 January 2023 (see Current Report no. 59/2022).
No changes in the composition of the Supervisory Board occurred in the reporting period and up until the
preparation date of this repo.
Operations and prerogatives of the Supervisory Board
The Supervisory Board exercises ongoing supervision over the Company’s activities. It consists of five members,
appointed and dismissed by the General Meeting.
The Supervisory Board holds meetings as needed, however at least three meetings must be convened during
each financial year. In order to hold a meeting of the Supervisory Board, all of its members must be invited.
Supervisory Board meetings are chaired by the Chairperson of the Supervisory Board, or – when the Chair-
person is not present – by the Deputy Chairperson. Supervisory Board resolutions are adopted by an absolute
majority of votes, or by a 4/5 supermajority of votes in matters specified in § 19 of the Company Articles. The
Supervisory Board may adopt meetings during meetings or outside of meetings – in writing or using remote
electronic communication tools.
In discharging its duties the Supervisory Board is also guided by the principles listed in 2021 Code of Best
Practice for WSE Listed Companies.
Marcin
Iwiński
CHAIRPERSON
OF THE SUPERVISORY
BOARD
Katarzyna
Szwarc
DEPUTY CHAIRPERSON
OF THE SUPERVISORY
BOARD
Maciej
Nielubowicz
SECRETARY
OF THE SUPERVISORY
BOARD
Michał
Bień
MEMBER
OF THE SUPERVISORY
BOARD
INDEPENDENT MEMBER
Jan Łukasz
Wejchert
MEMBER
OF THE SUPERVISORY
BOARD
INDEPENDENT MEMBER
105
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
AUDIT COMMITTEE OF CD PROJEKT S.A.
The Audit Committee acts on the basis of Art. 128 section 1 of the Act on statutory auditors, audit firms
and public supervision of 11 May 2017 (the Act), and the Audit Committee Regulations.
Composition of the Audit Committee as of the preparation date of this report
Michał Bień – Chairperson of the Audit Committee
a) meeting independence criteria specified in Art. 129 section 3 of the Act,
b) meeting the criteria specified in Art. 129 section 5 of the Act, i.e. possessing knowledge and skills related
to the Company’s main business segment, gained during his tenure as Member of the Supervisory Board
of the Company.
Maciej Nielubowicz – Member of the Audit Committee
a)
meeting the criterion specified in Art. 129 section 1 of the Act, i.e. possessing knowledge and skills in the area
of accounting or auditing financial statements, gained in the course of higher education and professional
experience at other entities,
b) meeting the criteria specified in Art. 129 section 5 of the Act, i.e. possessing knowledge and skills related
to the Company’s main business segment, gained during his tenure as Member of the Supervisory Board
of the Company.
Jan Łukasz Wejchert – Member of the Audit Committee
a) meeting independence criteria specified in Art. 129 section 3 of the Act,
b)
meeting the criterion specified in Art. 129 section 1 of the Act, i.e. possessing knowledge and skills in the area
of accounting or auditing financial statements, gained in the course of higher education and professional
experience at other entities,
c) meeting the criteria specified in Art. 129 section 5 of the Act, i.e. possessing knowledge and skills related
to the Company’s main business segment, gained during his tenure as Member of the Supervisory Board
of the Company.
Michał
Bień
CHAIRPERSON
OF THE AUDIT
COMMITTEE
Maciej
Nielubowicz
MEMBER
OF THE AUDIT
COMMITTEE
Jan Łukasz
Wejchert
MEMBER
OF THE AUDIT
COMMITTEE
106
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
In 2023 the composition of the Audit Committee was consistent with provisions of the Act.
Criterion specified in the Act
Fulfillment of criterion
at CD PROJEKT
The majority of Audit Committee members, including its chairperson, fulfill independence
criteria
At least one member of the Audit Committee possesses knowledge and skills in the scope
of accounting or auditing financial statements
At least one member of the Audit Committee possesses knowledge and skills related to the
Company’s main business segment
The Supervisory Board verifies fulfillment of the above criteria on the basis of declarations or additional infor-
mation supplied by the Management Board. The Supervisory Board may, at any time, alter the composition of
the Audit Committee, or dismiss a member of the Audit Committee.
Changes in the composition of the Audit Committee in 2023 and up until the preparation date of this report
Given the changes in the composition of the Supervisory Board for the current term of office, on 20 December
2022 the Supervisory Board adopted a resolution which specifies that effective on 1 January 2023 Ms. Katarzyna
Szwarc would not hold membership of the Audit Committee for the current term of office of the Supervisory
Board (see Current Report no. 59/2022) and that, consequently, the Audit Committee would consist of three
members, as shown above.
No changes in the composition of the Audit Committee occurred in 2023 and up until the preparation date of
this report.
Operations of the Audit Committee
The Audit Committee is a standing committee and consists of three members, one of whom is named Chairperson
of the Audit Committee. Members of the Audit Committee are appointed in an open ballot by the Supervisory
Board from among its members. The term of office of the Audit Committee is equivalent to the term of office
of the Supervisory Board.
The Audit Committee may:
■ solicit information from the Company or the Group in matters related to financial reporting, financial audits,
control, internal audits and risk management, insofar as is required for the Audit Committee to perform its duties;
■ invite to its meetings individuals who possess knowledge and information required to analyze threats consid-
ered by the Audit Committee;
■ apply to the Management Board to prepare analyses and opinions in support of Audit Committee operations.
The Audit Committee submits reports on its activities to the Supervisory Board, describing its composition
and number of meetings held by the Audit Committee during each financial year. In discharging their duties,
members of the Audit Committee are also guided by the principles listed in 2021 Code of Best Practice for
WSE Listed Companies.
107
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Meetings of the Audit Committee
The Audit Committee is a collegial body and is required to hold meetings prior to publication of financial
statements, as scheduled by its Chairperson. Meetings of the Audit Committee may be held in person or using
remote electronic communication tools. The Audit Committee works by issuing decisions, opinions, petitions,
recommendations and reports, which are submitted to other governing bodies of the Company.
Five meetings of the Audit Committee took place in 2023.
PODMIOT UPRAWNIONY DO BADANIA SPRAWOZDAŃ FINANSOWYCH
Rules related to selection and rotation of entities authorized to perform audits of financial statements
are specified in the Policy of choosing and rotating an audit firm entitled to audit financial statements
and provide permitted non-audit services in the CD PROJEKT Group (the Policy).
Changes in the contents of the Policy
In 2023 the Audit Committee updated the Policy.
Selection of entity authorized to perform audits
In selecting the statutory auditor, the Audit Committee acknowledges decisions and conclusions expressed in
the annual report of the Audit Supervision Committee, as specified in Art. 90 section 5 of the Act.
When the need arises to contract a new entity to perform audits of financial statements, the Audit Committee
performs an official procedure which involves a tender offer. Offers are submitted to at least four distinct audit firms.
Initial audit contracts with a new audit firm are signed for at least two years, with a prolongation option con-
cerning further periods, each of which must be at least two years long.
Audit Committee recommendations
The Audit Committee presents the Supervisory Board with its recommendations concerning selection, appoint-
ment, reappointment and dismissal of a statutory auditor, and rules and conditions for entering into agreements
with statutory auditors. Pursuant to Art. 130 section 2 of the Act, the Audit Committee, in its recommendation:
■ indicates an audit firm which it proposes to contract in order to perform statutory audits,
■ declares that the recommendation is free of third party influence,
■
declares that the Company has not entered into agreements which contain provisions specified in
Art. 66 section 5a of the Accounting Act of 29 September 1994.
In cases where the Audit Committee recommendation concerns prolongation of an audit contract, the Audit
Committee may forgo collection of offers from entities other than the entity with regard to which it recommends
prolongation of the audit contract.
108
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
The Audit Committee recommendation concerning prolongation of the Company’s contract with an audit firm
fulfills the above criteria. In Decision no. 1 of 24 February 2022 the Audit Committee submitted to the Supervisory
Board its recommendation to prolong the existing contract with Grant Thornton Polska sp. z o.o. sp. k. (currently
operating under the name Grant Thornton Polska PSA) with a registered seat in Poznań, concerning audits and
reviews of separate and consolidated financial statements of the Company for 2022-2023, including verification
of their compliance with ESEF standards, as well as statutory audits of remuneration reports for 2022-2023.
Selection of entity authorized to perform audits
Selection of the statutory auditor is performed by the Supervisory Board in the form of a resolution.
If the Supervisory Board resolution deviates from the Audit Committee recommendation, the Supervisory Board
justifies its reason for deviating from the recommendation, and submits this justification to the General Meeting.
In Resolution 1 of 9 March 2022 concerning selection of an auditor authorized to perform audits of financial
statements the Supervisory Board selected Grant Thornton Polska sp. z o.o. sp. k. (currently operating under
the name Grant Thornton Polska PSA), as recommended by the Audit Committee.
Rules concerning rotation of statutory auditor
The statutory auditor may be contracted to perform financial audit services for a period not exceeding
5 years. The maximum duration of an unbroken period whereby the same audit firm performs statutory audits is
10 years. Following the end of this period, the given audit firm may not perform statutory audits for the Company
over four subsequent years.
If the Company is notified of circumstances indicating that the statutory auditor cannot fulfill requirements
arising from legal regulations, professional ethics guidelines, independence principles or the national code
of professional conduct, the Company, in collaboration with the Audit Committee, shall analyze whether the
existing contract with that audit firm may be dissolved.
Permissible services other than audits of financial statements
The entity authorized to perform audits of financial statements may provide to member companies of the
CD PROJEKT Group services other than audits or reviews of financial statements, as long as:
■ such services are not prohibited under Art. 5 section 1 paragraph 2 of Regulation no. 537/2014;
■ such services are listed in the catalogue of permitted services pursuant to Art 136 section 2 of the Act;
■ the extent of such services does not involve the tax policy of the Group member companies;
■ the Audit Committee has performed an analysis of threats and safeguards related to the independence of the
audit firm and the key statutory auditor, and has consented to procurement of such services.
In 2023, in accordance with the corresponding Audit Committee decision, the audit firm contracted to per-
form audits of financial services provided other permissible services to the Company, namely a review of the
CD PROJEKT S.A. Supervisory Board report on remuneration of Management Board and Supervisory Board
members in 2022. The Audit Committee did not identify any threats to the independence of the entity autho-
rized to perform audits of financial statements.
109
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Diversity policy
Diversity, equality and respect for human rights are among our core values enshrined in Rules of the Game:
Business and Ethics Standards at the CD PROJEKT Group. We pledge to guarantee equal treatment for every-
one, regardless of gender, disability, race, religion, social background, age, skin color or sexual orientation. In
2019 we adopted a Diversity Policy which includes a general non-discrimination principle with regard to all
employees, members of the Supervisory Board, members of the Management Board and key managers. Our
employment-related decisions are based mainly on professional experience, knowledge and education. We are
also signatories to the Diversity Charter which forbids discrimination at the workplace, and mandates action
to encourage and promote diversity.
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
05
CORPORATE GOVERNANCE
SUPPLEMENTARY INFORMATION
111
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Entity contracted to audit financial statements
On 9 March 2022 the Supervisory Board of CD PROJEKT S.A., acting on advice of the Audit Committee of the
Company’s Supervisory Board recommending extension of the Company’s contract with its licensed auditor,
decided to select Grant Thornton Polska sp. z o.o. sp. k. (currently operating as Grant Thornton Polska PSA)
with a registered office in Poznań as the entity contracted to conduct an audit and review of the separate
and consolidated financial statements of the Company for 2022 and 2023. The agreement in this regard was
concluded on 8 July 2022.
Information concerning the remuneration of the auditor is included in Note 47 of the Financial Statement of
CD PROJEKT S.A. for 2023 and Note 48 of the Consolidated Financial Statement of the CD PROJEKT Group
for 2023.
Grant Thornton Polska PSA has also been contracted to audit the financial statement of GOG sp. z o.o., and had
been contracted to audit the financial statements of entities taken over by the Company during the financial
year, i.e. CD PROJEKT RED STORE sp. z o.o. and Spokko sp. z o. o.
Agreements which may result in changes in the proportions
of shares held by shareholders and bondholders
INCENTIVE PROGRAMS FOR 20232027
On 18 April 2023 the General Meeting of the Company voted to institute two new incentive programs for the
financial years 2023-2027 replacing the 2020-2025 incentive program: Incentive Program A and Incentive
Program B respectively.
Incentive Program A
Incentive Program A is aimed at persons who are not members of the Company’s Management Board. According
to the adopted provisions, entitlements will be assigned under this program in each financial year belonging to
the 2023-2027 period (i.e. in five stages). The total number of entitlements assigned under Incentive Program
A may not exceed 1,500,000. Entitlements shall vest either by:
I) extending an offer to participants to claim subscription warrants which incorporate the right to take up the
equivalent number of shares issued in the framework of a conditional increase in the Company share capital, or
II) extending an offer to participants to purchase from the Company a certain number of own shares which
the Company will have previously acquired in the framework of a buy-back program instituted specifically
for this purpose.
112
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
The take-up and exercise of subscription warrants or purchase of own shares from the Company, as appropriate, will
require participants to fulfill the loyalty condition, which is defined as the existence of a legal relationship between
the participant of Incentive Program A and the Company or an affiliate thereof. The share take-up or purchase
price in the exercise of entitlements assigned under Incentive Program A will be equivalent to the nominal price
of Company shares. The vesting period is 3 years.
As of the publication date of this report:
■ 100 444 entitlements have been assigned at the first stage of Incentive Program A (in 2023), 94 051 of
which remain outstanding,
■
183 189 entitlements have been assigned at the second stage of Incentive Program A (in 2024), all of which
remain outstanding.
Incentive Program B
Incentive Program B is aimed at members of the Company’s Management Board as well as persons who do
not hold membership of the Management Board. According to the adopted provisions, entitlements will be
assigned under this program in each financial year belonging to the 2023-2027 period (i.e. in five stages). The
total number of entitlements assigned under Incentive Program B may not exceed 3,500,000. Entitlements
shall vest either by:
I) extending an offer to participants to claim subscription warrants which incorporate the right to take up the
equivalent number of shares issued in the framework of a conditional increase in the Company share capital, or
II) extending an offer to participants to purchase from the Company a certain number of own shares which
the Company will have previously acquired in the framework of a buy-back program instituted specifically
for this purpose.
The take-up and exercise of subscription warrants or purchase of own shares from the Company, as appropriate,
will depend on confirmation by the Company of the fulfillment of the earnings condition (for 70% of entitlements),
the market condition (for 30% of entitlements), certain individual conditions applied on a case-by-case basis, as
well as – in all cases – the loyalty condition, which is defined as the existence of a legal relationship between the
participant of Incentive Program B and the Company or an affiliate thereof. The base share take-up or purchase
price in the exercise of entitlements assigned under Incentive Program B will be equivalent to the closing price
of Company stock on the last trading day preceding the adoption of a resolution enrolling the given participant
in the program. The program provides for a potential reduction in the take-up or purchase price coupled with
a proportional reduction in the number of entitlements exercisable by the given participant. The base vesting
period is equivalent to four consecutive financial years beginning with the year during which the given stage
of the program began (with an option to shorten the vesting period to 3 years for entitlements linked to the
earnings condition, should the four-year earnings target be met within the corresponding three-year period).
As of the publication date of this report:
■ 662 000 entitlements have been assigned at the first stage of Incentive Program B (in 2023), 656 000 of
which remain outstanding,
■ 723 500 entitlements have been assigned at the second stage of Incentive Program B (in 2024), all of
which remain outstanding.
113
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Earnings condition – applicable to 70% of entitlements assigned during each stage of Incentive Program B
The earnings condition is considered fulfilled if, during the given vesting period, the CD PROJEKT Group posts
sufficient earnings, which are defined as the consolidated net profit from continuing activities aggregated with
the costs of estimating entitlements assigned during the given stage of Incentive Program B as entered in the
accounting records of CD PROJEKT Group member entities.
For entitlements assigned during the first stage of Incentive Program B (in the financial year 2023) the earnings
condition for the years 2023-2026 is 2 billion PLN, while for entitlement assigned during the second stage of
Incentive Program B (in the financial year 2024) the earnings condition for the years 2024-2027 is 3 billion PLN.
For each subsequent stage of Incentive Program B, associated with the financial years 2025, 2026 and
2027 respectively, the corresponding four-year earnings condition will, in each case, be determined by the
General Meeting in the form of a resolution (on the Management Board’s request).
Market condition – applicable to 30% of entitlements assigned during each stage of Incentive Program B
The market condition is defined as a as a change in the price of Company stock on the Warsaw Stock Exchange
in such a way that the percentage difference between the closing price of Company stock on the final trading
session of the final year subject to verification in the context of the above-mentioned earnings condition com-
pared to the closing price of Company stock on the final trading session of the year preceding the year covered
by the given stage of Incentive Program B is equal to or greater than the corresponding percentage change in
the value of the WIG index increased by 10 percentage points over the same period.
Information regarding the control system of employee share programs
The share-based incentive programs in force as of the publication date of this report, i.e. Incentive Program
A and Incentive Program B for the years 2023-2027 were introduced by the General Meeting of the Company
on 18 April 2023. Detailed regulations applicable to these programs were adopted by the Management Board
of the Company on 21 May 2023 and subsequently approved by the Supervisory Board on 23 May 2023.
The full wording of these regulations is available on the Company’s corporate website.
Implementation of both programs is overseen by the Supervisory Board and the Management Board of
CD PROJEKT S.A.
114
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Disclosure of the purchase and redemption of own shares
PURCHASE OF OWN SHARES
The Company did not purchase any own shares during the reporting period.
REDEMPTION OF OWN SHARES
On 18 April 2023 the Extraordinary General Meeting of Shareholders voted to lower the Company’s share
capital through voluntary redemption of 860 290 own shares with a nominal value of 1 PLN per share. On that
date these shares constituted 0.85% of the Company’s share capital, i.e. the entirety of the stock package
purchased by the Company for the purpose of redemption in the course of the buy-back program carried out
on 5-24 October 2022. The Company had allocated 99 943 000 PLN towards this purchase.
On 26 June 2023, as a result of the aforementioned resolutions, the District Court for the City of Warsaw regis-
tered the lowering of the Company’s share capital by 860 290 PLN and redemption of 860 290 shares of the
Company in the register of entrepreneurs.
115
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Company shares held by members of the Management
Board and the Supervisory Board
Table 12 Shares held by members of the Management Board and Supervisory Board of the Company
*
Name Position as of 28.03.2024 as of 31.12.2023 as of 01.01.2023
Adam Kiciński
Chief Strategy Officer,
Member of the Board
Piotr Nielubowicz
Chief Financial Officer,
Member of the Board
Adam Badowski
Joint Chief Executive Officer,
Member of the Board
Michał Nowakowski
Joint Chief Executive Officer,
Member of the Board
Piotr Karwowski
Joint Chief Operating Officer,
Member of the Board
Paweł Zawodny
Joint Chief Operating Officer,
Member of the Board
Marcin Iwiński
Chairperson
of the Supervisory Board
Katarzyna Szwarc
Deputy Chairperson
of the Supervisory Board
Maciej Nielubowicz Supervisory Board Member
* based on declarations and notifications filed with the Company
Persons discharging managerial and executive responsibilities at CD PROJEKT S.A. do not directly hold any
shares of entities affiliated with CD PROJEKT S.A.
Gross remuneration of members of the
Management Board of CD PROJEKT S.A.
A remuneration policy is in force at the Group, adopted on 27 August 2020 by the Supervisory Board as autho-
rized by the General Meeting of 28 July 2020.
The policy specifies, among others, the composition 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.
116
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Adam Kiciński, Management Board Member
Mr. Kiciński’s fixed remuneration paid by CD PROJEKT S.A. in 2022 was 600 thousand PLN. In 2023 this fixed
remuneration remained unchanged at 600 thousand PLN. Variable remuneration paid out to Mr. Kiciński in 2023
on the basis of the Group’s consolidated net earnings in 2022, was 5 033 thousand PLN. Variable remuneration
payable to Mr. Kiciński on the basis of the Group’s consolidated net earnings in 2023 is 6 976 thousand PLN
and had not been disbursed as of the balance sheet date.
Piotr Nielubowicz, Management Board Member
Mr. Nielubowicz’s fixed remuneration paid by CD PROJEKT S.A. in 2022 was 600 thousand PLN. In 2023 this
fixed remuneration remained unchanged at 600 thousand PLN. Variable remuneration paid out to Mr. Nielubowicz
in 2023 on the basis of the Group’s consolidated net earnings in 2022, was 5 033 thousand PLN. Variable
remuneration payable to Mr. Nielubowicz on the basis of the Group’s consolidated net earnings in 2023
is 6 976 thousand PLN and had not been disbursed as of the balance sheet date.
Adam Badowski, Management Board Member
Mr. Badowski’s fixed remuneration paid by CD PROJEKT S.A. in 2022 was 600 thousand PLN. In 2023
this fixed remuneration remained unchanged at 600 thousand PLN. Variable remuneration paid out to
Mr. Badowski in 2023 on the basis of the Group’s consolidated net earnings in 2022, was 5 033 thousand PLN.
Variable remuneration payable to Mr. Badowski on the basis of the Group’s consolidated net earnings in 2023
is 6 976 thousand PLN and had not been disbursed as of the balance sheet date.
Michał Nowakowski, Management Board Member
Mr. Nowakowski’s fixed remuneration paid by CD PROJEKT S.A. in 2022 was 600 thousand PLN. In 2023 this
fixed remuneration remained unchanged at 600 thousand PLN. Variable remuneration paid out to Mr. Nowakowski
in 2023 on the basis of the Group’s consolidated net earnings in 2022, was 5 033 thousand PLN. Variable
remuneration payable to Mr. Nowakowski on the basis of the Group’s consolidated net earnings in 2023 is
6 976 thousand PLN and had not been disbursed as of the balance sheet date.
Piotr Karwowski, Management Board Member
Mr. Karwowski’s fixed remuneration paid by CD PROJEKT S.A. in 2022 was 540 thousand PLN. In 2023 this
fixed remuneration remained unchanged at 540 thousand PLN. Variable remuneration paid out to Mr. Karwowski
in 2023 on the basis of the Group’s consolidated net earnings in 2022, was 5 033 thousand PLN. Variable
remuneration payable to Mr. Karwowski on the basis of the Group’s consolidated net earnings in 2023 is 6 976
thousand PLN and had not been disbursed as of the balance sheet date.
Paweł Zawodny, Management Board Member
Mr. Zawodny’s fixed remuneration paid by CD PROJEKT S.A. in 2022 was 550 thousand PLN. In 2023 this fixed
remuneration was increased to 600 thousand PLN. Variable remuneration paid out to Mr. Zawodny in 2023 on
the basis of the Group’s consolidated net earnings in 2022, was 2 516 thousand PLN. Variable remuneration
payable to Mr. Zawodny on the basis of the Group’s consolidated net earnings in 2023 is 3 488 thousand PLN
and had not been disbursed as of the balance sheet date.
117
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Jeremiah Cohn, Management Board Member
Mr. Cohn’s fixed remuneration paid by CD PROJEKT S.A. in 2022 was 110 thousand USD. In 2023 this fixed
remuneration was increased to 120 thousand USD. Variable remuneration paid out to Mr. Cohn in 2023 on
the basis of the Group’s consolidated net earnings in 2022, was 2 516 thousand PLN. Variable remuneration
payable to Mr. Cohn on the basis of the Group’s consolidated net earnings in 2023 is 3 488 thousand PLN and
had not been disbursed as of the balance sheet date.
Table 13 Remuneration paid to members of the Management Board of CD PROJEKT S.A. during their ten-
ure as members of the Company’s managerial bodies, and paid by the Company’s subsidiaries in
association with discharging managerial duties at these subsidiaries
01.01.2023-31.12.2023 01.01.2022-31.12.2022
Piotr Karwowski thousand PLN thousand PLN
Jeremiah Cohn thousand USD thousand USD
ASSIGMENT OF BONUSES TO MEMBERS
OF THE MANAGEMENT BOARD
The variable portion of Management Board Members’ remuneration is settled in annual cycles based on the
Group’s longstanding incentive scheme, and is tied to the Group’s net earnings.
COMPENSATION PAID OUT IN THE FRAMEWORK
OF SHAREBASED INCENTIVE SCHEMES
Incentive program for 2020-2025
An incentive program covering the years 2020-2025, instituted on the basis of General Meeting resolutions
adopted on 28 July 2020 and 22 September 2020, was in force during the reporting period (until 18 April 2023).
Further information about rules governing this program can be found, among others, in the Management Board
report on CD PROJEKT Group activities in 2021.
118
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Based on the earnings posted while the program was in force, along with projections covering subsequent
years covered by the program, the Management Board performed an analysis of the likelihood of meeting
earnings goals defined for the full duration of the program, and thereafter revised its assessment, declaring
that the goals of the program were unlikely to be fulfilled in the corresponding period. In light of the foregoing,
given that the program no longer promoted incentivization and retention of staff, on 20 December 2022 the
General Meeting of the Company adopted resolution no. 5, canceling the implementation of the 2020-2025
incentive program. Given, however, that the entry into force of that resolution was dependent on adoption of
other resolutions instituting a new incentive program, the resolution concerning cancelation of the 2020-2025
incentive program ultimately entered into force on 18 April 2023, with the effect of fully canceling the program.
No new entitlements under the 2020-2025 Incentive Program were assigned during the reporting period.
In line with the Terms and Conditions, cancelation of the program also entails cancelation of all entitlements
assigned to entitled parties.
Information concerning entitlements assigned to members of the Management Board under the 2020-2025
Incentive Program, including their estimation and cost recognized in the Company’s accounts for 2022 can be
found in the Management Board report on CD PROJEKT Group activities in 2022.
Incentive Program B for 2023–2027
On 18 April 2023 the General Meeting adopted resolutions introducing Incentive Program B for the years
2023-2027, which (along with the accompanying Incentive Program A) superseded the above-mentioned
Incentive Program for 2020-2025. Entitlements corresponding to the first stage of Incentive Program B were
assigned to members of the Company’s Management Board on 26 May 2023.
Table 14 Number of entitlements and value of potential benefits (in PLN thousands) assigned to members
of the Management Board at the first stage of Incentive Program B for 2023-2027
Name Position Entitlements assigned
Value of potential benefits
26.05.2023-31.12.2023
Adam Kiciński
Chief Strategy Officer,
Member of the Board
thousand
Piotr Nielubowicz
Chief Financial Officer,
Member of the Board
thousand
Adam Badowski
Joint Chief Executive Officer,
Member of the Board
thousand
Michał Nowakowski
Joint Chief Executive Officer,
Member of the Board
thousand
Piotr Karwowski
Joint Chief Operating Officer,
Member of the Board
thousand
Paweł Zawodny
Joint Chief Operating Officer,
Member of the Board
thousand
Jeremiah Cohn
Chief Marketing Officer,
Member of the Board
thousand
119
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
The potential benefits listed in the above table for entitlements assigned at the first stage of the share-based
Incentive Program B to members of the Management Board reflect the fair value of the corresponding entitle-
ments, based on an actuarial assessment valid on the date of assignment. Information concerning assumptions
made by the actuary in preparing the assessment of entitlements can be found in the Consolidated Financial
Statement of the CD PROJEKT Group for 2023. The listed value corresponds to costs recognized in 2023 in
association with estimation of entitlements assigned under Incentive Program B and does not include costs
associated with estimation of expired entitlements assigned under the preceding program.
The difference between the market price of CD PROJEKT shares on any given date and the corresponding
take-up or purchase price for shares acquired in the framework of Incentive Program B may differ significantly
from the assessment provided by the actuary on the date of assignment of entitlements and recognized in the
Group’s statement of costs. Moreover, future benefits which may potentially be obtained by participants of the
program depend on fulfilling a range of goals and conditions applicable to the program, and also on the future
price of shares at the moment such shares are taken up or purchased by the entitled parties. With regard to
entitlements assigned at the first stage of Incentive Program B, the base purchase or take-up price of shares
acquired by entitled parties (given fulfillment of the program goals and criteria) is 118.05 PLN.
Members of the Company’s Supervisory Board do not participate in Incentive Programs A and B for 2023-2027.
Remuneration of Supervisory Board members
Table 15 Gross remuneration (including for participation in the Audit Committee) paid out to members of the
Supervisory Board of CD PROJEKT S.A. in 2022 and 2023 (PLN thousands)
Name 01.01.2022–31.12.2022 01.01.2023–31.12.2023
Marcin Iwiński – Chairperson of the Supervisory Board n/a
Katarzyna Szwarc – Deputy Chairperson of the Supervisory Board
Maciej Nielubowicz – Secretary of the Supervisory Board;
Member of the Audit Committee
Michał Bień – Supervisory Board Member;
Chairperson of the Audit Committee
Łukasz Wejchert – Supervisory Board Member; Audit Committee
Member
Piotr Pągowski – Supervisory Board Member until .. n/a
During the financial year and up until the publication date of this report members of the Supervisory Board did
not hold any executive positions at Group member companies.
120
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
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 2023 the Company had no such liabilities.
Agreements between the Issuer and members of its managing
bodies concerning compensation in the event of their resignation
or dismissal, including dismissal or recall as a result of a merger
As of 31 December 2023 and as of the preparation date of this report there were no provisions in force regu-
lating compensation in the event of resignation or dismissal of members of the Company’s Management Board,
including when their dismissal or recall is due to a merger involving the Company.
Transactions between the Issuer and members of its managing
and supervisory bodies not otherwise reported
In 2023 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 offered to the rest of the team.
121
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Changes in basic management practices
at the Company and its Group
No significant changes in basic management policies affecting the Company and its Group occurred in 2023.
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):
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.)
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. An appeal against the full judgement was also filed by the
defendants’ attorneys. On 26 October 2017 the Appellate Court vacated the judgment of the court of first instance
and remanded the case to be retried in full. The District Court for the City of Warsaw subsequently filed the
case under no. XVIII K 316/17. The parent company continues to act in the capacity of an auxiliary prosecutor.
122
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
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 received
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 plaintiffs call for the court to adju-
dicate 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 plaintiff. Following consolidation, all four lawsuits were merged into a single case.
On 29 June 2021 the Company received a transcript of a lawsuit filed against the Company and members of
its Management Board by a law firm representing the lead plaintiff and other eligible holders of US securities
traded under the ticker symbols “OTGLY” and “OTGLF”. The lawsuit was not materially different from earlier
lawsuits filed in this matter, and likewise, did 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 plaintiffs 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.
On 7 December 2021 the Company entered into settlement negotiations with the plaintiffs, as a result of which
on 16 December 2021 a Settlement Term Sheet was signed whereupon the Company agreed to pay a settle-
ment in the amount of 1 850 thousand USD in exchange for which the plaintiffs would relinquish any claims
against the Company. This settlement was subsequently endorsed by the Company’s insurer, i.e. Colonnade
Insurance S.A. (Polish division).
On 27 January 2022 the Company concluded a formal Stipulation Agreement which confirmed the provisions
of the Settlement Term Sheet. Similarly to the Settlement Term Sheet, the Stipulation Agreement expressly
rules out any admission of wrongdoing on the part of the Company or other defendants named in the case.
On 4 January 2023 the Company was notified that the US District Court for the Central District of California
had issued an order concerning preliminary approval of the class action settlement. The order approves the
conditions of the settlement, including full relinquishing of any claims against the Company and members
of its Management Board on the part of the plaintiffs, and the remittance of a settlement in the amount of
1 850 thousand USD to the plaintiff class by the Company and its insurer, Colonnade Insurance S.A. (Polish division).
On 28 November 2023 the Company was notified that the US District Court for the Central District of California
issued an order concerning the motion for final approval of the class action settlement. The motion for final
approval of the settlement was granted, which concluded the legal proceedings associated with the class action
lawsuit brought in the USA against the Company and certain other defendants.
123
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
LITIGATION INVOLVING THE COMPANY’S SUBSIDIARIES
Case brought by GOG sp. z o.o. before the District Administrative Court in Kraków
On 19 August 2022 the Head of the Małopolska Customs and Tax Office in Kraków issued a decision with regard
to corporate tax liabilities incurred by GOG sp. z o.o., a subsidiary of the Company, in 2016. The Management
Board of GOG sp. z o.o. discharged the liability arising under the aforementioned decision, which, as of the
payment date, amounted to 2 638 thousand PLN. Nevertheless, given its disagreement with the assessment
presented by the tax authority, it appealed the decision on 5 September 2022.
On 22 May 2023 the Head of the Małopolska Customs and Tax Office in Kraków, who also performs the func-
tion of the appeal body in this case, issued a decision upholding the contested decision. This decision was
delivered to GOG sp z o.o. on 5 June 2023.
On 4 July 2023, given its continuing disagreement with the position expressed by the tax authority, the Manage-
ment Board of GOG sp z o.o. filed a complaint against the aforementioned decision in the District Administrative
Court in Kraków. A trial was held before the District Administrative Court in Kraków on 3 October 2023, as
a result of which the Court issued an injunction repealing the decisions of the Head of the Małopolska Customs
and Tax Office in Kraków of 19 August 2022 and 22 May 2023. As of the publication date of this report this
injunction is regarded as final and the case is again at the evidence taking stage.
124
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CORPORATE GOVERNANCEFINANCIAL RESULTSBUSINESS ACTIVITYCD PROJEKT GROUP
Statement concerning non-financial disclosures
Pursuant to Art. 49b section 9 and Art. 55 section 2c of the Accounting Act of 29 September 1994 we wish to
note that the Company provides a separate non-financial report – the CD PROJEKT Group Sustainability Report
for 2023 – which is published alongside other documents comprising the annual report in the ESPI system and
on the Company’s corporate website under the Result Center tab.
Michał Nowakowski
Joint Chief Executive Officer,
Member of the Board
Adam Kiciński
Chief Strategy Officer,
Member of the Board
Adam Badowski
Joint Chief Executive Officer,
Member of the Board
Piotr Nielubowicz
Chief Financial Officer,
Member of the Board
Piotr Karwowski
Joint Chief Operating Officer,
Member of the Board
Jeremiah Cohn
Chief Marketing Officer,
Member of the Board
Paweł Zawodny
Joint Chief Operating Officer,
Member of the Board
Management Board report on the activities of the CD PROJEKT Group and CD PROJEKT S.A.
between 1 January and 31 December 2023 (all figures quoted in PLN thousands unless indicated otherwise)
CD PROJEKT GROUP BUSINESS ACTIVITY FINANCIAL RESULTS CORPORATE GOVERNANCE
CONTACT FOR INVESTORS: IR@CDPROJEKT.COM
WWW.CDPROJEKT.COM