Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
2
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.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
3
CD PROJEKT Group – Selected financial data translated into EUR
PLN EUR
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Net sales of products, services, goods for resale and
materials
952 576 888 172 203 182 194 030
Cost of sales of products, services, goods for resale and
materials
243 974 250 234 52 039 54 666
Operating profit/(loss) 377 347 232 903 80 487 50 880
Profit/(loss) before tax 393 185 219 108 83 865 47 866
Net profit/(loss) attributable to owners of
CD PROJEKT S.A.
347 093 208 908 74 034 45 638
Net cash from operating activities 406 031 967 825 86 606 211 431
Net cash from investing activities (335 607) (613 795) (71 584) (134 090)
Net cash used in financing activities (204 183) (505 779) (43 552) (110 492)
Net increase/(decrease) in cash and cash equivalents (133 759) (151 749) (28 530) (33 151)
Number of shares (in thousands) 100 741 100 718 100 741 100 718
Net earnings/(loss) per share (in PLN) 3.45 2.07 0.73 0.45
Diluted earnings/(loss) per share (in PLN/EUR) 3.44 2.07 0.73 0.45
Book value per share (in PLN/EUR) 20.18 18.81 4.30 4.09
Diluted book value per share
(in PLN/EUR)
20.18 18.80 4.30 4.09
Dividend declared or paid per share (in PLN/EUR)
1.00 5.00 0.21 1.09
PLN EUR
31.12.2022 31.12.2021 31.12.2022 31.12.2021
Total assets 2 274 124 2 158 735 484 898 469 351
Liabilities and provisions for liabilities
(excluding accruals)
214 626 226 407 45 763 49 225
Non-current liabilities 36 186 36 112 7 716 7 851
Current liabilities 204 534 228 267 43 612 49 630
Equity 2 033 404 1 894 356 433 571 411 870
Share capital 100 771 100 739 21 487 21 903
The financial data presented above was translated into EUR as follows:
Items of the consolidated income statement and the consolidated cash flow statement were translated at exchange rates
calculated as an arithmetic mean of the exchange rates announced by the National Bank of Poland for the euro applicable as
at the last day of each month in a given reporting period. These rates were, respectively, as follows: from 1 January to
31 December 2022: 4.6883 PLN/EUR and from 1 January to 31 December 2021: 4.5775 PLN/EUR.
Items of assets, liabilities and equity in the consolidated statement of financial position were translated at exchange rates
announced by the National Bank of Poland for the euro applicable on the last day of the reporting period. These rates were,
respectively, as follows: 4.6899 PLN/EUR as at 31 December 2022 and 4.5994 PLN/EUR as at 31 December 2021.
Reference to published estimates
The Group did not publish estimated data relating to the period presented.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
4
Table of contents
Reference to published estimates ....................................................................................................................................................................................... 3
Key financial data of the CD PROJEKT Group ..................................................................................................................................................................... 6
Consolidated income statement .......................................................................................................................................................................................... 7
Consolidated statement of comprehensive income ...................................................................................................................................................... 7
Consolidated statement of financial position ................................................................................................................................................................... 8
Statement of changes in consolidated equity ................................................................................................................................................................ 10
Consolidated statement of cash flows ............................................................................................................................................................................. 12
Notes to the consolidated financial statements ................................................................................................................................................................. 14
General information ................................................................................................................................................................................................................ 15
Consolidation policies ........................................................................................................................................................................................................... 15
CD PROJEKT Group Companies ............................................................................................................................................................................ 15
Subsidiaries ................................................................................................................................................................................................................. 22
Changes in accounting policies ......................................................................................................................................................................................... 22
Going concern assumption ................................................................................................................................................................................................. 22
Compliance with the International Financial Reporting Standards ......................................................................................................................... 22
Amendments to standards or interpretations effective from 1 January 2022 applicable and adopted by the Group ................23
Description of adopted accounting policies ...................................................................................................................................................................24
Revenue and operating expenses ........................................................................................................................................................................24
Finance income and costs ...................................................................................................................................................................................... 25
State subsidies ........................................................................................................................................................................................................... 25
Current and deferred income tax ......................................................................................................................................................................... 25
Value added tax (VAT) ............................................................................................................................................................................................. 25
Property, plant and equipment .............................................................................................................................................................................. 25
Intangible assets – Expenditure on development projects .......................................................................................................................... 26
Intangible assets – Other ........................................................................................................................................................................................ 28
Goodwill ........................................................................................................................................................................................................................ 28
Mergers of business entities under common control ..................................................................................................................................... 28
Impairment of non-financial assets ....................................................................................................................................................................... 28
Investment properties .............................................................................................................................................................................................. 29
Rights to perpetual usufruct of land ..................................................................................................................................................................... 29
Leases ........................................................................................................................................................................................................................... 29
Shares in non-consolidated subordinated entities .......................................................................................................................................... 29
Financial assets .......................................................................................................................................................................................................... 30
Financial liabilities ........................................................................................................................................................................................................ 31
Inventories ..................................................................................................................................................................................................................... 31
Trade and other receivables .................................................................................................................................................................................... 31
Prepayments and accruals ........................................................................................................................................................................................ 31
Cash and cash equivalents ......................................................................................................................................................................................32
Assets held for sale and discontinued operations ...........................................................................................................................................32
Equity ..............................................................................................................................................................................................................................32
Provisions for liabilities ..............................................................................................................................................................................................32
Employee benefits ......................................................................................................................................................................................................32
Loans granted ..............................................................................................................................................................................................................32
Trade and other payables ........................................................................................................................................................................................ 33
Licences ......................................................................................................................................................................................................................... 33
Payment of dividend .................................................................................................................................................................................................. 33
Functional currency and presentation currency ............................................................................................................................................................ 33
Functional currency and presentation currency ............................................................................................................................................... 33
Transactions and balances ...................................................................................................................................................................................... 33
Critical accounting estimates and judgements .............................................................................................................................................................. 34
Professional judgement ............................................................................................................................................................................................ 34
Uncertainty of estimates ........................................................................................................................................................................................... 34
Assumption of comparability of the financial statements, changes in accounting policies and estimates .................................................35
Changes in accounting policies .............................................................................................................................................................................35
Presentation changes ................................................................................................................................................................................................35
Notes – operating segments of the CD PROJEKT Group ............................................................................................................................................. 36
Operating segments .............................................................................................................................................................................................................. 37
Operating segments .................................................................................................................................................................................................. 37
Information on individual operating segments ..................................................................................................................................................38
Notes – other explanatory notes to the consolidated financial statements ............................................................................................................ 45
Note 1. Sales revenue ............................................................................................................................................................................................... 46
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
5
Note 2. Operating expenses ................................................................................................................................................................................... 47
Note 3. Other operating income and expenses ................................................................................................................................................48
Note 4. Finance income and costs ....................................................................................................................................................................... 49
Note 5. Corporate income tax and deferred income tax............................................................................................................................... 49
Note 6. Discontinued operations .......................................................................................................................................................................... 52
Note 7. Earnings per share ..................................................................................................................................................................................... 52
Note 8. Dividend paid (or declared) and received ...........................................................................................................................................53
Note 9. Disclosure of other comprehensive income items and their tax effect ......................................................................................53
Note 10. Property, plant and equipment ..............................................................................................................................................................53
Note 11. Intangible assets and expenditure on development projects ....................................................................................................... 57
Note 12. Goodwill ....................................................................................................................................................................................................... 60
Note 13. Investment properties .............................................................................................................................................................................. 60
Note 14. Shares in non-consolidated subordinated entities .......................................................................................................................... 61
Note 15. Other financial assets .............................................................................................................................................................................. 63
Note 16. Inventories .................................................................................................................................................................................................. 63
Note 17. Trade receivables ..................................................................................................................................................................................... 64
Note 18. Other receivables ...................................................................................................................................................................................... 67
Note 19. Prepayments and deferred costs ......................................................................................................................................................... 69
Note 20. Cash and cash equivalents ................................................................................................................................................................... 69
Note 21. Share capital ................................................................................................................................................................................................ 70
Note 22. Treasury shares .......................................................................................................................................................................................... 71
Note 23. Other reserves ............................................................................................................................................................................................ 71
Note 24. Retained earnings / (Accumulated losses) ........................................................................................................................................ 74
Note 25. Equity attributable to non-controlling shareholders ....................................................................................................................... 74
Note 26. Loans and borrowings ............................................................................................................................................................................. 74
Note 27. Other financial liabilities .......................................................................................................................................................................... 74
Note 28. Other non-current liabilities ................................................................................................................................................................... 75
Note 29. Trade payables .......................................................................................................................................................................................... 75
Note 30. Other current liabilities ............................................................................................................................................................................ 77
Note 31. Social assets and the Company’s Social Fund liabilities ............................................................................................................... 78
Note 32. Contingent liabilities................................................................................................................................................................................. 78
Note 33. Lease and sublease contracts ...............................................................................................................................................................81
Note 34. Deferred income .......................................................................................................................................................................................84
Note 35. Provision for retirement and similar benefits ................................................................................................................................... 85
Note 36. Other provisions ....................................................................................................................................................................................... 86
Note 37. Information on financial instruments ................................................................................................................................................... 87
Note 38. Capital management ............................................................................................................................................................................... 96
Note 39. Employee benefit programmes ........................................................................................................................................................... 96
Note 40. Transactions with related entities ....................................................................................................................................................... 98
Note 41. Mergers and changes in the structure of CD PROJEKT Group ................................................................................................. 100
Note 42. Remuneration of the senior management and the Supervisory Board................................................................................... 101
Note 43. Number of employees ........................................................................................................................................................................... 102
Note 44. Capitalization of borrowing costs ....................................................................................................................................................... 102
Note 45. Revenues generated on a seasonal, cyclical or occasional basis ........................................................................................... 102
Note 46. Tax settlements ....................................................................................................................................................................................... 102
Note 47. Post-balance sheet date events ......................................................................................................................................................... 103
Note 48. Transactions with entities performing the audits of the financial statements ...................................................................... 104
Note 49. Explanations to the statement of cash flows .................................................................................................................................. 105
Note 50. Cash flows and non-monetary changes resulting from changes in liabilities in financing activities ............................ 107
Statement of the Management Board of the Parent Company .............................................................................................................................. 108
Approval of the financial statements............................................................................................................................................................................... 109
Key financial data of the
CD PROJEKT Group
1
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
7
Consolidated income statement
Note
01.01.2021 –
31.12.2021
Sales revenue 952 576 888 172
Sales of products 1 767 499 691 564
Sales of services 1 1 960 5 865
Sales of goods for resale and materials 1 183 117 190 743
Cost of sales of products, services, goods for resale and materials 243 974 250 234
Costs of products and services sold 2 111 562 107 391
Cost of goods for resale and materials sold 2 132 412 142 843
Gross profit/(loss) on sales 708 602 637 938
Selling expenses 2 222 350 299 225
Administrative expenses 2 75 536 71 949
Other operating income 1,3 19 443 17 376
Other operating expenses 3 52 805 51 231
(Impairment)/reversal of impairment
of financial instruments
(7) (6)
Operating profit/(loss) 377 347 232 903
Finance income 1,4 71 501 9 523
Finance costs 4 55 663 23 318
Profit/(loss) before tax 393 185 219 108
Income tax 5 46 092 10 200
Net profit/(loss) 347 093 208 908
Net profit/(loss) attributable to owners of CD PROJEKT S.A. 347 093 208 908
Net earnings/(loss) per share (in PLN)
Basic for the reporting period 7 3.45 2.07
Diluted for the reporting period 7 3.44 2.07
Consolidated statement of comprehensive income
Note
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Net profit/(loss) 347 093 208 908
Other comprehensive income subject to reclassification to gains or losses
after specific conditions have been met:
9 (12 411) 4 842
Exchange differences on measurement of foreign operations 313 500
Measurement of derivative financial instruments – fair value through other
comprehensive income, taking into account the tax effect
(12 724) 4 342
Other comprehensive income not subject to reclassification to gains or
losses
9 - -
Total comprehensive income 334 682 213 750
Total comprehensive income attributable to non-controlling interests - -
Total comprehensive income attributable to owners of CD PROJEKT S.A. 334 682 213 750
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
8
Consolidated statement of financial position
Note 31.12.2022 31.12.2021*
NON-CURRENT ASSETS 1 119 978 905 846
Property, plant and equipment 10 145 252 119 588
Intangible assets 11 69 157 58 393
Expenditure on development projects 11 473 202 350 195
Investment properties 13 42 560 44 634
Goodwill 11,12 56 438 56 438
Shares in non-consolidated subordinated entities 14 41 607 38 520
Prepayments and deferred costs 19 31 074 11 434
Other financial assets 15,37 207 437 178 540
Deferred tax assets 5 52 862 47 418
Other receivables 18,37 389 686
CURRENT ASSETS 1 154 146 1 252 889
Inventories 16 12 701 15 886
Trade receivables 17,37 165 290 125 293
Current income tax receivable 1 458 98
Other receivables 18 57 139 113 498
Prepayments and deferred costs 19 22 886 13 763
Other financial assets 15,37 279 515 307 765
Bank deposits over 3 months 37 337 330 265 000
Cash and cash equivalents 20,37 277 827 411 586
TOTAL ASSETS 2 274 124 2 158 735
* restated data
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
9
Note 31.12.2022 31.12.2021
EQUITY 2 033 404 1 894 356
Equity attributable to owners of CD PROJEKT S.A. 2 033 404 1 894 356
Share capital 21 100 771 100 739
Supplementary capital 23 1 567 325 1 425 647
Share premium 23 116 700 115 909
Treasury shares 23 (99 993) -
Other reserves 23 2 255 47 994
Foreign exchange differences on translation 1 904 1 591
Retained earnings / (Accumulated losses) 24 (2 651) (6 432)
Net profit (loss) for the period 347 093 208 908
Non-controlling interests 25 - -
NON-CURRENT LIABILITIES 36 186 36 112
Other financial liabilities 27,33,37 18 883 21 080
Other liabilities 28 2 620 2 860
Deferred tax provision 5 50 -
Deferred income 34 3 669 6 424
Provision for retirement and similar benefits 35 366 380
Other provisions 36 10 598 5 368
CURRENT LIABILITIES 204 534 228 267
Other financial liabilities 27,33,37 9 578 25 802
Trade payables 29,37 72 119 53 380
Current income tax liabilities 2 116 24 446
Other liabilities 30 10 244 10 042
Deferred income 34 22 425 31 548
Provision for retirement and similar benefits 35 10 7
Other provisions 36 88 042 83 042
TOTAL LIABILITIES AND EQUITY 2 274 124 2 158 735
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
10
Statement of changes in consolidated 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
Equity
attributable
to owners of
CD PROJEKT
S.A.
Non-controlling
interests
Total
equity
01.01.2022 – 31.12.2022
Equity
as at 01.01.2022
100 739 1 425 647 115 909 - 47 994 1 591 202 476 - 1 894 356 - 1 894 356
Costs of the
incentive scheme
- - - - 4 274 - - - 4 274 - 4 274
Share-based
payments
32 1 549 791 - (1 548) - - - 824 - 824
Purchase of treasury
shares for
redemption
- - - (99 993) - - - - (99 993) - (99 993)
Release of reserve
capital from previous
years created for the
purpose of
purchasing treasury
shares
- 35 741 - - (35 741) - - - - - -
Payment of dividend - - - - - - (100 739) - (100 739) - (100 739)
Appropriation of the
net profit/offset of
loss
- 104 388 - - - - (104 388) - - - -
Total comprehensive
income
- - - - (12 724) 313 - 347 093 334 682 - 334 682
Equity
as at 31.12.2022
100 771 1 567 325 116 700 (99 993) 2 255 1 904 (2 651) 347 093 2 033 404 - 2 033 404
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
11
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
Equity
attributable
to owners of
CD PROJEKT
S.A.
Non-controlling
interests
Total
equity
01.01.2021 – 31.12.2021
Equity
as at 01.01.2021
100 655 774 851 113 844 - 45 547 1 091 1 151 368 - 2 187 356 - 2 187 356
Corrections of errors - - - - - - (4 179) - (4 179) - (4 179)
Equity, as adjusted 100 655 774 851 113 844 - 45 547 1 091 1 147 189 - 2 183 177 - 2 183 177
Costs of the
incentive scheme
- - - - (1 026) - - - (1 026) - (1 026)
Share-based
payments
84 869 2 065 - (869) - - - 2 149 - 2 149
Payment of dividend - - - - - - (503 694) - (503 694) - (503 694)
Appropriation of the
net profit/offset of
loss
- 649 927 - - - - (649 927) - - - -
Total comprehensive
income
- - - - 4 342 500 - 208 908 213 750 - 213 750
Equity
as at 31.12.2021
100 739 1 425 647 115 909 - 47 994 1 591 (6 432) 208 908 1 894 356 - 1 894 356
The Group adjusted the calculation of the deferred tax asset as at 31 December 2020 by re-classifying a part of deductible temporary differences from the category of taxed at 19% to taxed at 5%.
As a result of the adjustment, equity decreased by PLN 4 179 thousand.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
12
Consolidated statement of cash flows
Note
01.01.2021 –
31.12.2021
OPERATING ACTIVITIES
Net profit /(loss) 347 093 208 908
Total adjustments: 49 55 878 766 750
Depreciation and amortization of property, plant and equipment, intangible
assets, expenditure on development projects and investment properties
13 828 17 764
Amortization of development projects recognized as cost of goods sold 103 604 86 965
Foreign exchange gains/(losses) 4 561 (15 047)
Interest and participation in profits (42 487) (228)
Gains/(Losses) on investing activities 42 077 55 282
Increase/(Decrease) in provisions (5 700) (311 449)
(Increase)/Decrease in inventories 3 185 (8 929)
(Increase)/Decrease in receivables (44 052) 1 036 886
Increase/(Decrease) in liabilities, excluding loans and borrowings 13 034 (85 023)
Change in other assets and liabilities (40 881) (11 127)
Other adjustments 8 709 1 656
Cash from operating activities 402 971 975 658
Income tax expense 13 817 4 337
Withholding tax paid abroad 32 275 5 863
Income tax (paid)/refunded (43 032) (18 033)
Net cash from operating activities 406 031 967 825
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
13
Note
01.01.2021 –
31.12.2021*
INVESTING ACTIVITIES
Inflows 1 292 199 257 135
Sale of intangible assets and property, plant and equipment 568 241
Repayment of loans granted 12 240 -
Sale of shares in a subsidiary 76 19
Expiry of bank deposits over 3 months 975 860 164 368
Redemption of bonds 268 426 82 715
Interest on bonds 7 879 1 703
Interest received on deposits 26 885 68
Inflows from execution of forward contracts - 7 887
Other inflows from investing activities 265 134
Outflows 1 627 806 870 930
Acquisition of intangible assets and property, plant and equipment 48 274 27 969
Expenditure on development projects 207 831 155 401
Acquisition of investment properties and capitalization of expenditure 214 2 085
Loans granted 4 187 4 340
Acquisition of a subsidiary 6 769 19 306
Contribution to the capital of a subsidiary 28 318 -
Placement of bank deposits over 3 months 1 048 190 265 000
Purchase of private equity interests in the gaming sector 2 556 -
Purchase of bonds and cost of their purchase 253 580 396 829
Outflows from execution of forward contracts 27 887 -
Net cash from investing activities (335 607) (613 795)
FINANCING ACTIVITIES
Inflows 861 2 189
Net proceeds from the sale of shares and issue of shares in the execution
of the incentive scheme
822 2 149
Payment of finance lease liabilities 39 40
Outflows 205 044 507 968
Purchase of treasury shares for redemption 99 993 -
Dividends and other distributions to shareholders 100 739 503 694
Payment of lease liabilities 3 731 3 733
Interest paid 581 541
Net cash used in financing activities (204 183) (505 779)
Net increase/(decrease) in cash and cash equivalents (133 759) (151 749)
Change in cash and cash equivalents in the balance sheet (133 759) (151 749)
Cash and cash equivalents as at the beginning of the period 411 586 563 335
Cash and cash equivalents at the end of the period 277 827 411 586
* restated data
Notes to the consolidated financial
statements
2
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
15
General information
Name of reporting entity:
CD PROJEKT S.A.
(there have been no changes in the name of the reporting entity since the end of
the prior reporting period)
Legal form: a joint stock company (spółka akcyjna)
Registered office: ul. Jagiellońska 74, 03-301 Warsaw
Country of registration: Poland
Core activities:
CD PROJEKT S.A. is the holding company of the CD PROJEKT Group which
operates in the CD PROJEKT RED and GOG.COM segments.
Principal place of business: Warsaw
Registration body:
District Court for the Capital City of Warsaw in Warsaw, 14th Business Department
of the National Court Register
Statistical number REGON: 492707333
Tax identification number NIP: 7342867148
Number in the BDO register (national
waste management database):
000141053
Duration of the Group: Unspecified
Name of parent entity: CD PROJEKT S.A.
Name of the top parent of the group: CD PROJEKT S.A.
Consolidation policies
CD PROJEKT Group Companies
As at 31.12.2022 % share in capital % share of voting rights consolidation method
CD PROJEKT S.A. parent entity - -
GOG sp. z o.o. 100% 100% acquisition accounting
CD PROJEKT Inc. 100% 100% acquisition accounting
Spokko sp. z o.o. 87.6% 87.6% not consolidated
CD PROJEKT RED STORE sp. z o.o. 100% 100% acquisition accounting
CD PROJEKT RED Vancouver Studio Ltd. 100% 100% not consolidated
The Molasses Flood LLC 60% 60% not consolidated
CD PROJEKT SILVER Inc. 100% 100% not consolidated
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
16
Five companies were not consolidated due to the immateriality of data. In accordance with the accounting policy adopted by the
Group, the parent entity does not have to consolidate a subsidiary using the acquisition accounting method, if:
the subsidiary’s share in the parent entity’s total assets does not exceed 2%;
the share in the parent entity’s revenue from sales, other operating income and finance income does not exceed 1%;
where those transactions between the subsidiary and its parent entity which would be eliminated during consolidation are not taken
into account when determining whether the said thresholds have been exceeded.
In total, the financial data of the subsidiaries excluded from consolidation cannot exceed:
5% of the share in the parent entity’s total assets;
2% of the share in the parent entity’s revenue from sales, other operating income and finance income;
where those transactions between the subsidiary and its parent entity which would be eliminated during consolidation are not taken
into account when determining whether the said thresholds have been exceeded.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
17
Total non-consolidated companies
As at 31.12.2022
Total
non-consolidated
companies
Eliminations of
non-consolidated
companies
Parent Company
Consolidation
eliminations
CD PROJEKT S.A.
Total
Percentage
share
Total assets 29 637 (5 325) 2 183 974 (44 133) 2 164 153 1.14%
For the period 01.01.2022 – 31.12.2022
Total revenue 51 369 (47 975) 854 404 (1 395) 856 403 0.40%
Net cash from operating activities (7 598) - 435 369 - 427 771 n/a
Net cash from investing activities (3 767) - (340 989) 15 573 (329 183) n/a
Net cash from financing activities 17 124 (15 640) (203 102) - (201 618) n/a
As at 31.12.2021
Total
non-consolidated
companies
Eliminations of
non-consolidated
companies
Parent Company
Consolidation
eliminations
CD PROJEKT S.A.
Total
Percentage
share
Total assets 27 574 (1 183) 2 061 164 (48 641) 2 038 914 1.31%
For the period 01.01.2021 – 31.12.2021
Total revenue 20 448 (12 134) 715 393 (1 417) 722 290 1.16%
Net cash from operating activities 1 702 - 1 039 282 - 1 040 984 n/a
Net cash from investing activities (4 373) - (611 597) 4 370 (611 600) n/a
Net cash from financing activities 4 488 (4 370) (504 804) - (504 686) n/a
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
18
CD PROJEKT RED Vancouver Studio Ltd.
As at 31.12.2022
Value for the
non-consolidated
company
Eliminations for the
non-consolidated
company
Parent Company
Consolidation
eliminations
CD PROJEKT S.A.
Total
Percentage
share
Total assets 9 761 (2 746) 2 183 974 (11 681) 2 179 308 0.32%
For the period 01.01.2022 – 31.12.2022
Total revenue 18 366 (16 762) 854 404 (68) 855 940 0.19%
Net cash from operating activities 272 - 435 369 - 435 641 n/a
Net cash from investing activities 2 577 - (340 989) 2 190 (336 222) n/a
Net cash from financing activities 2 190 (2 190) (203 102) - (203 102) n/a
As at 31.12.2021
Value for the
non-consolidated
company
Eliminations for the
non-consolidated
company
Parent Company
Consolidation
eliminations
CD PROJEKT S.A.
Total
Percentage
share
Total assets 2 323 (164) 2 061 164 (8 687) 2 054 636 0.11%
For the period 01.01.2021 – 31.12.2021
Total revenue 3 843 (2 889) 715 393 - 716 347 0.13%
Net cash from operating activities 1 284 - 1 039 282 - 1 040 566 n/a
Net cash from investing activities (168) - (611 597) - (611 765) n/a
Net cash from financing activities - - (504 804) - (504 804) n/a
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
19
The Molasses Flood LLC
As at 31.12.2022
Value for the
non-consolidated
company
Eliminations for the
non-consolidated
company
Parent Company
Consolidation
eliminations
CD PROJEKT S.A.
Total
Percentage
share
Total assets 12 956 (2 579) 2 183 974 (27 153) 2 167 198 0.48%
For the period 01.01.2022 – 31.12.2022
Total revenue 31 328 (31 213) 854 404 (6) 854 513 0.01%
Net cash from operating activities 3 075 - 435 369 - 438 444 n/a
Net cash from investing activities (2 592) - (340 989) (787) (344 368) n/a
Net cash from financing activities (515) 787 (203 102) - (202 830) n/a
As at 31.12.2021
Value for the
non-consolidated
company
Eliminations for the
non-consolidated
company
Parent Company
Consolidation
eliminations
CD PROJEKT S.A.
Total
Percentage
share
Total assets 9 845 (1 019) 2 061 164 (24 360) 2 045 630 0.43%
For the period 01.01.2021 – 31.12.2021
Total revenue 2 878 (2 616) 715 393 - 715 655 0.04%
Net cash from operating activities 460 - 1 039 282 - 1 039 742 n/a
Net cash from investing activities (113) - (611 597) - (611 710) n/a
Net cash from financing activities - - (504 804) - (504 804) n/a
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
20
Spokko sp. z o.o.
As at 31.12.2022
Value for the
non-consolidated
company
Eliminations for the
non-consolidated
company
Parent Company
Consolidation
eliminations
CD PROJEKT S.A.
Total
Percentage
share
Total assets 6 854 - 2 183 974 (5 299) 2 185 529 0.31%
For the period 01.01.2022 – 31.12.2022
Total revenue 1 675 - 854 404 (1 321) 854 758 0.20%
Net cash from operating activities (11 012) - 435 369 - 424 357 n/a
Net cash from investing activities (3 752) - (340 989) 14 170 (330 571) n/a
Net cash from financing activities 15 382 (14 170) (203 102) - (201 890) n/a
As at 31.12.2021
Value for the
non-consolidated
company
Eliminations for the
non-consolidated
company
Parent Company
Consolidation
eliminations
CD PROJEKT S.A.
Total
Percentage
share
Total assets 15 389 - 2 061 164 (15 594) 2 060 959 0.75%
For the period 01.01.2021 – 31.12.2021
Total revenue 6 956 - 715 393 (1 417) 720 932 0.97%
Net cash from operating activities (8) - 1 039 282 - 1 039 274 n/a
Net cash from investing activities (4 111) - (611 597) 4 370 (611 338) n/a
Net cash from financing activities 4 488 (4 370) (504 804) - (504 686) n/a
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
21
CD Projekt Silver Inc.
As at 31.12.2022
Value for the
non-consolidated
company
Eliminations for the
non-consolidated
company
Parent Company
Consolidation
eliminations
CD PROJEKT S.A.
Total
Percentage
share
Total assets 66 - 2 183 974 - 2 184 040 0.00%
For the period 01.01.2022 – 31.12.2022
Total revenue - - 854 404 - 854 404 0.00%
Net cash from operating activities 67 - 435 369 - 435 436 n/a
Net cash from investing activities - - (340 989) - (340 989) n/a
Net cash from financing activities 67 (67) (203 102) - (203 102) n/a
CD PROJEKT Co. Ltd. (liquidated)
As at 31.12.2021
Value for the
non-consolidated
company
Eliminations for the
non-consolidated
company
Parent Company
Consolidation
eliminations
CD PROJEKT S.A.
Total
Percentage
share
Total assets 17 - 2 061 164 - 2 061 181 0.00%
For the period 01.01.2021 – 31.12.2021
Total revenue 6 771 (6 629) 715 393 - 715 535 0.02%
Net cash from operating activities (34) - 1 039 282 - 1 039 248 n/a
Net cash from investing activities 19 - (611 597) - (611 578) n/a
Net cash from financing activities - - (504 804) - (504 804) n/a
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
22
Subsidiaries
Subsidiaries are all and any entities over which the Group has control which manifests itself by, simultaneously:
having power, which consists of having substantive rights that give the Group the current ability to direct the relevant activities,
i.e. those activities which significantly affect the entity’s financial results;
being exposed or having rights to variable returns, which consists of having the potential to change the financial results of the
Group depending on the results of the subsidiary;
having the ability to use the power exercised to affect its returns from the subsidiary by using its power in order to affect the
financial results attributable to the Group resulting from involvement in the subsidiary
Subsidiaries meeting the aforementioned materiality criterion are fully consolidated from the date on which the Group assumed
control over them. They cease to be consolidated from the date that control ceases.
Revenue and costs, receivables and payables and unrealized gains on transactions between Group companies are eliminated for
the purposes of the consolidated financial statements. Unrealized losses are also eliminated, unless the transaction is an impairment
indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the accounting policies adopted by the Group.
Changes in accounting policies
The accounting policies applied in these consolidated financial statements, material judgements made by the Parent Company’s
Management Board with regard to the accounting policies applied by the Group and the main sources of estimating uncertainties
are consistent, in all material respects, with the policy adopted for preparing the annual consolidated financial statements of the
CD PROJEKT Group for 2021, with the exception of changes in accounting policies and presentation changes described in the
section “Assumption of comparability of the financial statements, changes in accounting policies and estimates”
Going concern assumption
These consolidated financial statements have been prepared based on the assumption that the Group and the Parent Company
will continue in operation as a going concern in the foreseeable future, i.e. in a period of at least 12 months after the balance sheet
date.
As at the date of signing these consolidated financial statements, the Management Board of the Parent Company has not identified
any facts or circumstances which would indicate any threats to the Group continuing in operation as a going concern for a period
of 12 months after the end of the reporting period as a result of the intended or forced discontinuation or significant curtailment of
its existing operations.
By the date of preparing the consolidated financial statements for the period from 1 January to 31 December 2022, the Management
Board of the Parent Company did not become aware of any events which should have been but were not recognized in the
accounting records for the reporting period. At the same time, no significant prior year events have been disclosed in these
consolidated financial statements.
Compliance with the International Financial Reporting
Standards
The Group’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(hereinafter “IFRS”), as adopted by the European Union, effective for annual periods beginning on 1 January 2022.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
23
Amendments to standards or interpretations effective from 1 January 2022
applicable and adopted by the Group
In preparing the consolidated financial statements for 2022, the Group applies the same accounting policies as in preparing the
annual financial statements for 2021, with the exception of amendments to standards and new standards and interpretations
endorsed by the European Union, which are effective for reporting periods beginning on 1 January 2022:
Amendments to IFRS 3 Business combinations, IAS 16 Property, Plant and Equipment, IAS 37 Provisions, Contingent Liabilities
and Contingent Assets and Annual Improvements to IFRS 2018-2020 (IFRS 1, IFRS 9, IFRS 16 and IAS 41) – endorsed on
28 June 2021, applicable to periods beginning on or after 1 July 2022.
Amendments to IFRS 3 Business Combinations, concerning references to the Conceptual Framework.
The amendments introduce an exception to the recognition principle under IFRS 3 to avoid the issue of potential “day two”
gains and losses with reference to liabilities and commitments that were within the scope of IAS 37 Provisions, Contingent
Liabilities and Contingent Assets or IFRIC 21 Levies, if they occurred separately. The exception requires the application of the
criteria under IAS 37 or IFRIC 21, as applicable, rather than the requirements under the Conceptual Framework to determine
whether they have occurred at a particular date.
The amendments do not have a material impact on the accounting policies adopted by the Group with regard to the Group’s
operations or its financial results.
Amendments to IAS 16 Property, Plant and Equipment, relating to revenue earned before an item of property, plant and
equipment is commissioned.
The amendments prohibit entities from reducing the cost of purchase or manufacture of property, plant and equipment by the
amount of proceeds from the sale of products made in the course of bringing an asset to the desired location and condition
necessary for it to be able to operate in the manner intended by management. Instead, the entity recognizes the proceeds from
the sale of such products and the costs of their manufacture in the statement of comprehensive income.
The amendments do not have a material impact on the accounting policies adopted by the Group with regard to the Group’s
operations or its financial results.
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, relating to the costs of fulfilling onerous
contracts.
In May 2020, the IASB published amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, the purpose
of which is to specify which costs should be taken into account by an entity when assessing whether a contract is an onerous
contract or brings losses. In making the changes, the “directly related costs” approach was applied. Costs directly attributable
to a contract for the provision of goods or services include both incremental costs (e.g. direct labour costs) and the allocation
of costs directly attributable to contract activities (e.g. depreciation of equipment used to perform the contract or contract
management and supervision costs). General and administrative expenses are excluded as they do not directly relate to
a contract. The exception is when such costs are re-invoiced to the other party of the contract.
The amendments do not have a material impact on the accounting policies adopted by the Group with regard to the Group’s
operations or its financial results.
Standards published and endorsed by the EU which are not yet effective and their impact on the
Group’s financial statements
The Management Board analysed the impact of the application of the new standards on future financial statements. When approving
these financial statements, the Group did not apply the following standards, amendments and interpretations published and
endorsed by the EU, but not yet effective:
IFRS 17, Insurance Contracts – endorsed on 19 November 2021, applicable to reporting periods beginning on or after 1 January
2023;
Amendments to IAS 1 and Practice Statement 2: Disclosure of Accounting Policies (published on 12 February 2021) – endorsed
on 2 March 2022 and applicable to annual periods beginning on or after 1 January 2023;
Amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors – endorsed on 2 March 2022 and
applicable to periods beginning on or after 1 January 2023;
Amendments to IAS 12, Deferred Tax related to Assets and Liabilities arising from a Single Transaction – endorsed on 11 August
2022 and applicable to periods beginning on or after 1 January 2023;
Amendments to IFRS 17, Insurance Contracts concerning Initial Application of IFRS 17 and IFRS 9 – Comparative Information
– endorsed on 8 September 2022 and applicable to periods beginning on or after 1 January 2023.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
24
The Group does not expect the introduction of these amendments to have a material impact on the accounting policies adopted
by the Group with regard to the Group’s operations or its financial results.
Standards and interpretations adopted by the IASB but not yet endorsed by the EU
When approving these financial statements, the Group did not apply the following standards, amendments and interpretations
which have not yet been endorsed by the EU:
Amendment to IAS 1 Presentation of financial statements: Classification of liabilities as current or non-current – applicable to
reporting periods beginning on or after 1 January 2024;
Amendments to IFRS 16, “Leases”: Lease Liability in a Sale and Leaseback – applicable to reporting periods beginning on or
after 1 January 2024.
The Group is analysing the estimated impact of the standards and amendments listed above on the Group’s financial statements.
Description of adopted accounting policies
Revenue and operating expenses
Revenue constitutes inflows of economic benefits, gross, for a given period, arising as a result of ordinary business activities of the
Group, resulting in an increase in equity other than increases due to contributions made by shareholders.
The Group recognizes revenue using the so-called Five-Step Model provided for in IFRS 15. Revenue includes only amounts
received or receivable equal to the transaction prices that accrue to the Group upon fulfilment (or in the process of fulfilment) of the
performance obligation to transfer the promised good or service (i.e. asset) to the customer. Payment from the customer is required
to meet this performance obligation. The transaction price is the amount of consideration that the Group expects to receive in
exchange for the transfer of the promised goods or services, less any applicable value added tax.
In the case of revenue in the form of royalties from the sale of licences for the distribution of games, which is the Group’s main
source of revenue, revenue depends on the volume of sales realized by the distributor at any given time during the reporting period.
Thus, revenue from the sale of a particular product is recognized in the sales period no sooner than after the delivery of the materials
to start the actual distribution of the completed game, based on sales reports successively provided by the distributor. Payment
from the customer is required upon the distributor submitting the sales reports.
The Group recognizes the costs of materials used, goods for resale and products and service costs in the same period as sales of
these items or sales of the services for which the items are used, in accordance with the principle of matching revenues and costs.
As part of its operations, the GOG.COM segment concludes contracts with users in its own name and on its own account, based on
the right to distribute digital content to end users. By owning the files that make up the products it sells, the Group has control over
them and makes them available to users independently as part of the sales process. The Group is obliged to perform the service
of providing certain services and provides technical support and is responsible for the service provided. The Group is liable under
consumer protection legislation and bears the credit risk in respect of the amount owed by the customer. In this line of business,
the Group is a principal and not an intermediary.
The Group receives short-term advances from group customers and avails itself of the simplification permitted by IFRS 15 by
presenting advance payments as deferred income instead of recognizing a financing component, if the entity expects, at contract
inception, that the period between when the entity transfers a promised good or service to a customer and when the customer
pays for that good or service will be one year or less.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
25
Finance income and costs
Finance income consists mainly of interest on deposits of surplus cash on bank accounts, commission and interest on loans granted,
interest on late payment of receivables, release of provisions relating to financing activities, proceeds from the sale of securities,
foreign exchange gains, restoration of the impaired value of financial investments, forgiven loans and advances and gains on
settlement of derivative instruments.
Finance costs mainly comprise interest on loans and advances, interest on late payment of liabilities, provisions recorded against
certain or probable losses on financial operations, the cost of shares and securities sold, commission and handling charges, write-
downs of interest receivables and the value of short-term investments, discounts and net foreign exchange losses on financing
activities and, in the case of leases, other charges except for capital instalments.
State subsidies
State subsidies are not recorded until obtaining reasonable assurance that the Group will comply with the required terms and
conditions and obtain a subsidy. State subsidies, the principal condition of which is the purchase or manufacture of fixed assets by
the company, are recognized in the balance sheet as deferred income and taken to the income statement on a pro rata basis over
the expected economic useful life of the assets.
Current and deferred income tax
The mandatory profit reductions consist of current tax, withholding tax paid abroad and deferred tax. Current income tax is
calculated on the basis of taxable income (tax base) for a given financial year. Taxable profit/(loss) differs from accounting profit/(loss)
before tax due to the different timing of the recognition of income and expenses for tax and accounting purposes, as well as due
to the permanent differences between the tax and accounting treatment of certain income and expense items. Tax expense is
calculated based on the tax rates in effect for the financial year. Current income tax relating to items recognized directly in equity
is recognized in equity rather than in the income statement.
Deferred tax is calculated using the liability method as tax payable or reimbursable in the future in respect of differences between
carrying amounts of assets and liabilities and the corresponding tax amounts used for the calculation of the tax base.
Deferred tax provision is recorded on all taxable temporary differences, and a deferred tax asset is recorded to the extent that the
future tax profits are likely to be reduced by the amount of recognized deductible temporary differences. An asset or liability does
not arise if the temporary difference arises either from goodwill or from the initial recognition of another asset or liability in
a transaction that affects neither the tax nor the accounting profit or loss.
Deferred tax provision is recognized on temporary differences arising from investments in subsidiaries, associates and joint
ventures, unless the Group is able to control the timing of the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The amount of deferred tax asset is analysed at each balance sheet date, and it is written down if the expected future taxable
income is not sufficient to utilize the asset or its portion.
Deferred tax is calculated using the tax rates which will be binding at the moment when a given asset is realized or a liability
becomes due. Deferred tax is recognized in the income statement, apart from the situations when it relates to items recorded
directly in equity. In the latter case, deferred tax is also recognized directly in equity.
Value added tax (VAT)
Revenues, expenses and assets are recognized net of value added tax, except for
where the value added tax paid on the purchase of assets or services is not recoverable from the tax authorities, in which case
it is recognized as part of the cost of acquiring the asset or as an expense, as appropriate,
receivables and payables which are recorded including the amount of value added tax.
The net amount of value added tax recoverable from or payable to the tax authorities is recognized in the balance sheet as part of
receivables or payables.
Property, plant and equipment
Property, plant and equipment items are initially recognized at cost (cost of purchase or manufacture) and reduced in subsequent
periods by depreciation and impairment. Borrowing costs directly related to the purchase or manufacture of assets that require an
extended period of time to adapt them for use or resale are added to the cost of such assets until such assets are commissioned.
Investment income generated from the short-term investment of funds raised and related to the purchase or manufacture of fixed
assets reduces the value of capitalized borrowing costs. Other borrowing costs are recognized in the income statement in the
period in which they were incurred.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
26
Depreciation is calculated for property, plant and equipment items, excluding land and assets under construction, over their
estimated useful lives, using the straight-line method.
The expected useful life for each category of property, plant and equipment is:
Category Useful life
Buildings and structures 5 – 25 years
Plant and machinery 2 – 10 years
Vehicles 5 years
Other fixed assets 2 – 10 years
Fixed assets with a low initial unit cost of not more than PLN 5 thousand are depreciated in a simplified way by making a one-off
write-off.
Gains or losses on disposal / scrapping or decommissioning of fixed assets are determined by comparing proceeds on disposal
with net book amounts of these assets and included in the income statement.
Intangible assets – Expenditure on development projects
The Group classifies expenditure on the development of games under Expenditure on development projects. Game development
costs incurred prior to the commencement of sales or the application of new solutions are recognized as Expenditure on
development projects in progress. This expenditure includes expenses that are directly related to the project in question.
At the time of completion, the Group verifies whether an intangible asset arising from a development project meets the following
conditions:
a) it is technically feasible to complete the intangible asset so that it is suitable for use or sale;
b) there is a demonstrable intention to complete the asset and use or sell it;
c) the intangible asset can be used or sold;
d) the manner, in which the asset will generate probable future economic benefits is known;
e) adequate technical, financial and other resources will be ensured to complete the development project and to use or sell
the intangible asset;
f) there exists a possibility to reliably determine the expenditure incurred during a development project, which is attributable
to the intangible asset.
When these conditions are met, the Group reclassifies the expenditure from Expenditure on development projects in progress to
Expenditure on development projects completed. In the case of projects for which it is possible to determine reliable estimates of
the volume and value of the sales budget, the Group amortizes the value of these projects based on the consumption of economic
benefits related to the number of copies sold. In other cases, the Group amortizes the value of projects using the straight-line
method. Amortization related to Expenditure on development projects is presented under the Cost of products and services sold
in the Income statement.
The Group determines the amortization period and rates after the release of each title in the course of working on the interim
financial statements while being in possession of the preliminary results of release sales and game ratings. The Group then
establishes:
(i) the useful life based on the historical useful lives of previous comparable titles, normally not less than 3 years and not more than
6 years due to the possibility of making reliable estimates in an industry subject to dynamic change;
(ii) sales forecasts are the basis for determining amortization rates over the useful life;
(iii) then, based on professional judgement, the Group estimates what proportion of the benefits will be realized in the quarter of
release and, in subsequent periods, smooths out the input distribution, eliminating the effect of periodic and one-off promotions
and anticipated but uncertain one-off events (such as the release of the series Cyberpunk: Edgerunners on Netflix), in order to
achieve the effect of constant reducing balance or straight-line amortization from quarter to quarter.
In justified cases, the settlement of expenditure incurred may be of a one-off nature (e.g. Anime Cyberpunk: Edgerunners).
In the table below, the Group presents projects for which reliable estimates of sales volumes and budgets can be determined,
together with the useful lives or amortization rates applied:
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
27
Amortization for the period
Title
Release
period
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 Q19 Q20 Q21
The Witcher 3:
Wild Hunt on
Nintendo
Switch
Q4 2019 40% 12% 8% 6% 6% 6% 6% 4% 4% 3% 3% 2% - - - - - - - - -
Cyberpunk
2077
Q4 2020 40% 60% straight line over 5 years (1% per month)
WN GLX2* Q4 2020 15% 0,7% 1,7% 1,8% 2% 0,6% 0,7% 0,4% 0,5% 0,5% 0,7% 0,4% 0,4% 0,5% 0,5% 0,5% 0,5% 0,3% 0,2% 0,2% 0,2%
WN Cross-
Platform SDK
(GAMEINN)
Q2 2019 84,7%
2,2% 2,5% 1,7% 2,1% 1% 1% 1% 1% 0,6% 0,6% 0,6% 0,6% 0,3% 0,1% - - - - - -
* In 2021, GOG.COM updated the assumptions for the WN GLX2 development expenditure and wrote down 71.7% of the total value of this expenditure.
In other cases, the Group amortizes the value of projects using the straight-line method. Amortization related to Expenditure on development projects is presented under the Cost of products and services
sold in the Income statement.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
28
Intangible assets – Other
Intangible assets are presented at historical cost less amortization and impairment losses. Amortization is recognized on a straight
line basis. Costs of research work are not capitalized and are presented in the Income statement as expenses in the period in which
they are incurred.
The expected useful life for each category of intangible assets is as follows:
Category Useful life
Patents and licenses 2 – 15 years
Computer software 2 – 10 years
Assets with a low initial unit cost not exceeding PLN 5 thousand are amortized on a simplified basis by making a one-off write-off.
The Group’s consolidated financial statements show the commodity brand The Witcher and the corporate brand CD PROJEKT.
Brands have been valued using the Relief from Royalty capitalization method representing the income approach, which is one of
the primary methods for valuing brands and other intangible assets for the purpose of accounting for business combinations in
accordance with IFRS 3, Business Combinations. Neither of the brands has a definite useful life. Goodwill of the brands is subject
to an annual impairment test.
Goodwill
Goodwill (gain) is calculated as the balance of two amounts:
the sum of the consideration transferred for control, the non-controlling interests (measured as a proportion of the net assets
acquired) and the fair value of the blocks of interests (shares) held by the acquiree prior to the acquisition date; and
the fair value of the identifiable net assets acquired of the entity.
The excess of the sum calculated as indicated above over the fair value of the identifiable net assets acquired of the entity is
recognized as goodwill on the assets side of the consolidated statement of financial position. Goodwill represents the payment
made by the acquirer in anticipation of future economic benefits from assets that cannot be individually identified or separately
recognized. After initial recognition goodwill is stated at cost, less accumulated impairment losses.
If the aforementioned sum is less than the fair value of the identifiable net assets acquired of the entity, the difference is recognized
directly in profit or loss. The Group recognizes gain on the acquisition under other operating income.
Mergers of business entities under common control
The legal merger of the Parent Company with its subsidiary is recognized using the amounts relating to the subsidiary shown in the
Parent Company’s consolidated financial statements; these amounts include amounts recognized in the Parent Company’s
consolidated financial statements arising from the acquisition of the subsidiary. The subsidiary’s results and statement of financial
position are recognized prospectively from the date of the legal merger.
Impairment of non-financial assets
At each balance sheet date, the companies belonging to the Group review the net book amounts of non-current assets to determine
whether there are indications of their impairment.
If such indications are found the recoverable amount of an asset is estimated to determine the amount of the potential write-down.
If an asset does not generate cash flows that are considerably independent of the cash flows generated by other assets, the analysis
is performed for a group of assets generating cash flows (a cash generating unit) to which the asset belongs.
In the case of intangible assets with an indefinite useful life, impairment tests are carried out annually and additionally when there
are indications of possible impairment.
The recoverable amount is determined as the higher of fair value less costs to sell and value in use. The latter amount corresponds
to the present value of estimated future cash flows discounted using a discount rate that takes into account the current market time
value of money and the risks specific to a given asset.
If the recoverable amount is lower from the net book amount of an asset (or a group of assets) the book value is reduced to
recoverable amount. An impairment loss is recognized as an expense in the period in which it occurs, except when the asset was
recognized in a revalued amount (impairment is then treated as a reversal of previous revaluation).
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
29
If impairment is subsequently reversed, the net book value of an asset (or a group of assets) is increased to the lower of the new
estimated recoverable amount and the net book value of the asset that would have been set had impairment not been recognized
in previous years. Reversals of impairment are recognized in income.
Investment properties
Investment properties include properties held for rental income, appreciation in value or both. Consequently, the cash flows
generated by investment properties are largely independent of other assets held by the Group Company.
Investment properties are valued using the purchase price model.
Rights to perpetual usufruct of land
Land owned by the State Treasury, local government units or their associations may be subject to perpetual usufruct. Perpetual
usufruct is a special type of property right entitling natural or legal persons to use land to the exclusion of others. The perpetual
lessee may also dispose of its right. The right of perpetual usufruct is granted for a period of 99 years or, in exceptional cases –
where the economic purpose of perpetual usufruct does not require the land to be let for such a period – for a shorter period,
however not shorter than 40 years.
The Group has recognized the right of perpetual usufruct of land as a lease in accordance with IFRS 16. The right to use the leased
asset has been presented in accordance with its purpose in the balance sheet either as Investment properties or Property, plant
and equipment.
Leases
The Group as a lessee classifies an agreement as a lease or as containing a lease if it transfers the right to control the use of an
identified asset for a given period in return for a consideration.
Where the Group acts as a lessor, an agreement is treated as a finance lease if substantially all the risks and rewards of ownership
of the underlying asset are transferred. If substantially all the risks and rewards of ownership of the underlying asset are not
transferred, an agreement is treated as an operating lease.
The right to control the use of an asset used under a lease contract primarily means the right to obtain substantially all economic
benefits from the use of the asset and the right to direct the use of the identified asset.
Risks consist of the possibility of losses due to underutilization of capacity, loss of technical usefulness or changes in the level of
return achieved due to changes in economic conditions. Benefits may include the expectation of profitable operation of the asset
over its useful life and the expectation of a profit arising from an increase in its value or the realization of the residual value.
At inception, the Group recognizes the right-of-use asset and the corresponding lease liability. The right of use is initially measured
at cost, consisting of the initial lease liability, initial direct costs, an estimate of the costs expected to be incurred in dismantling the
underlying asset and lease payments made at or before the inception, less lease incentives.
The Group depreciates the right-of-use assets on a straight line basis from the inception to the end of the useful life of the right-of-
use asset or the end of the lease term, whichever is earlier. If there are indications to do so, the rights of use are tested for
impairment in accordance with IAS 36.
At the inception, the Group measures the lease liability at the present value of the lease payments outstanding using the interest
rate on the lease if this can be readily determined. Otherwise, the incremental borrowing rate of the lessee is applied.
Lease payments included in the value of the lease liability consist of fixed lease payments, variable lease payments dependent on
an index or rate, amounts expected to be paid as guaranteed residual value and call option payments if it is reasonably certain that
the option will be exercised. In subsequent periods, the lease liability is reduced by repayments made and increased by accrued
interest. The valuation of the lease liability is updated to reflect changes in the agreement and the reassessment of the lease term,
the exercise of the call option, the guaranteed residual value or index- or rate-dependent lease payments. In principle the
remeasurement of the liability is recognized as an adjustment of the right-of-use asset.
The Group applies the practical expedients permitted by the standard to short-term leases and leases where the underlying asset
is of low value. For such agreements, instead of recognizing right-of-use assets and lease liabilities, lease payments are recognized
in profit or loss on a straight-line basis over the lease term.
Shares in non-consolidated subordinated entities
Shares in non-consolidated subordinated entities are initially measured at cost. As at the balance sheet date, investments in
subordinated entities are stated at cost less impairment losses.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
30
Financial assets
The Group classifies each financial asset upon initial recognition into of one of four categories of financial assets, which are
distinguished based on the Group’s business model for managing the assets and the characteristics of the contractual cash flows:
assets measured at amortized cost after initial recognition;
assets measured at fair value through other comprehensive income after initial recognition;
assets measured at fair value through profit or loss;
hedging financial instruments.
The classification of financial assets is made upon initial recognition and can only be changed if the business model for managing
financial assets changes. The principal models for managing financial assets include the model of holding for receiving contractual
cash flows, the model of holding for receiving contractual cash flows and selling, and the model of holding for purposes other than
those indicated in the two preceding models (in principle, it is a model of holding assets for disposal). The Group adopts the principle
that the sale of a financial asset just before its maturity does not constitute a change in the business model from holding for receiving
contractual cash flows to holding for receiving contractual cash flows and selling or holding for other purposes.
The Group does not apply hedge accounting and therefore the regulations of IFRS 9 in this respect do not apply to it.
The Group assesses the credit risk associated with assets constituting financial instruments based on the expected loss model. The
primary method of determining impairment losses under the expected loss model is the method under which the Group monitors
changes in the level of credit risk associated with a given financial asset in relation to its initial recognition and classifies financial
assets into one of the three stages of impairment loss determination: stage 1 – financial assets serviced on an ongoing basis (applied
to assets if their credit risk has not materially increased since initial recognition); stage 2 – financial assets with deteriorated servicing
(applied if credit risk has increase materially since initial recognition, while there is no objective evidence of impairment); stage 3 –
financial assets not serviced (applied when there is objective evidence of impairment).
The Group assesses the credit risk associated with assets constituting financial instruments based on the expected loss model. The
Group applies the simplification permitted by IFRS 9 (using an allowance matrix, based on historical data adjusted for the impact of
future factors). The matrix is created on the basis of historical data. The Group does not apply the matrix separately to receivables
portfolios as its business is fairly homogeneous. The Group’s customers are mainly large multinational companies that settle their
liabilities on time. The Group uses quarterly ageing for years X-1 and X-2 in relation to the year for which allowances are estimated.
In addition to the allowances calculated according to the matrix, the Group also calculates allowances for receivables on a case-by-
case basis on the basis of an expert analysis of information on receivables considered to be lost or at risk, carried out by the finance
department. These are usually unique events that are not indicative of the Group’s operations and business environment, but only
of a delay in the settlement of a particular customer’s receivables.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
31
Financial liabilities
A financial liability is each liability being:
a contractual obligation to issue cash or another financial asset to another entity or exchange financial assets or liabilities with
another entity on potentially unfavourable terms;
a contract which will be or may be settled in own equity instruments of the entity and is a non-derivative instrument from which
an obligation arises or may arise for the entity to deliver a variable number of its own equity instruments, or a derivative
instrument which will be or may be settled other than through exchanging a fixed amount of cash or another financial asset for
a fixed number of own equity instruments of the entity. For this purpose, pre-emptive rights, options and warrants to purchase
a fixed number of an entity’s own equity instruments in exchange for a fixed amount of cash in any currency are equity
instruments if the entity offers pre-emptive rights, options and warrants pro rata to all current owners of the same class of the
entity’s non-derivative equity instruments.
Group companies classify each component of financial liabilities upon initial recognition as:
financial liabilities measured at fair value through profit or loss;
other financial liabilities measured at amortized cost.
Financial liabilities are initially stated at fair value plus transaction costs, which can be directly attributed to the financial liability, for
financial liabilities not carried at fair value through profit or loss.
Inventories
The initial cost of inventories includes all costs (cost of purchase, production and other) incurred in bringing inventories to their
present location and condition. The purchase price of inventories comprises the purchase price plus import duties and other taxes
(not subsequently recoverable from the tax authorities), transport, loading, unloading and other costs directly related to the
acquisition of the inventories, less discounts, rebates and other similar reductions. Inventories are stated at the lower of the initial
cost (cost of purchase or production) and net realizable value. The net realizable value corresponds to the estimated selling price
less any costs necessary to complete production and the costs of bringing the inventories to market or finding a buyer (i.e. selling,
marketing, etc.). For inventories, cost is determined using the “weighted average” method.
Trade and other receivables
Trade receivables are measured in the books of account at the value corresponding to the transaction prices adjusted for
appropriate impairment allowances under the expected losses model.
The value of receivables corresponding to the revenue from the sale of products, which arose and were recognized during the
reporting period and were reported after the end of the period (in accordance with the contracts concluded), is presented in trade
receivables.
Prepayments and accruals
The Group recognizes deferred income for the purpose of allocating such income to future reporting periods when the income is
realized.
In the CD PROJEKT RED segment, deferred income includes proceeds received or due from royalties on pre-orders for digital
distribution of games, or advances on royalties and advances on goods received from distributors, as well as deferred settlements
of subsidies.
In the GOG.COM segment, deferred income includes revenue from pre-ordered sales of products with release dates in future
periods and deferred settlements with customers of the online shop within the so-called GOG Portfolio.
Accruals are liabilities falling due for goods or services that have been received or provided, invoiced or formally agreed with the
supplier.
Group companies recognize costs that have been incurred in advance but relate in whole or in part to subsequent periods in
prepayments and deferred costs.
In the GOG.COM segment, GOG Company acquires licence rights, which are initially treated as Deferred Costs. This initial
recognition relates to fees for the so-called minimum guarantees – these are contractual amounts paid to the owner of vested rights
after the conclusion of the contract. Minimum guarantees are charged to the cost of goods sold upon commencing the sales. Thus,
the costs associated with minimum guarantees are correlated with sales revenue.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
32
Cash and cash equivalents
Cash consists of cash in hand, demand deposits and bank deposits with a maturity of up to three months. Cash equivalents are
short-term investments with high liquidity easily exchangeable for specific amounts of cash and exposed to insignificant risk of
value fluctuations.
Outstanding overdrafts are presented in cash flows from financing activities under Loans and advances.
Assets held for sale and discontinued operations
Non-current assets (and groups of net assets) classified as held for sale are measured at the lower of their carrying amount and fair
value less costs to sell.
Non-current assets (and groups of net assets) are classified as designated for disposal if it is probable that their carrying value will
be recovered through disposal rather than through their continued use. This condition is considered as met only if the sale
transaction is highly probable and the asset (or a group of net assets designated for disposal, a disposal group) is available in its
current condition for immediate sale. An asset is classified as designated for disposal under the assumption that the Group
Company’s management intends to complete the transaction within one year from the moment of changing the classification.
Equity
Equity is recorded in the accounting books by types of equity components and in accordance with the binding regulations of the
law and the provisions of the Articles of Association of the Group Companies.
Share capital is shown at the nominal value in an amount consistent with the Parent Company’s Articles of Association and the entry
in the court register.
Supplementary capital is created from profits generated.
Share premium is formed out of the surplus of the issue price of shares above the nominal value, less issue costs. Share issue costs
incurred on formation of a joint stock company or increasing share capital reduce supplementary capital to the amount of share
premium.
Other reserves include Costs of the incentive programme, Reserve capital created for share buybacks and Revaluation reserve.
Provisions for liabilities
Provisions for liabilities are recognized when a Group Company has a current obligation (legal or constructive) as a result of past
events and it is probable that the discharge of the obligation will result in an outflow of the resources embodying the Group’s
economic benefits and a reliable estimate of the amount of the obligation can be made. No provisions are recorded against future
operating losses.
A provision for restructuring costs is only recognized when a Group Company has announced a detailed and formal restructuring
plan to all stakeholders.
Employee benefits
Short-term employee benefits other than employment termination benefits and share-based payments are recognized as liabilities,
net of any amounts already paid, and simultaneously as an expense for the period, unless the benefit should be included in the
production cost of an asset. The Group does not offer participation in any post-employment benefit plans to its employees.
On 28 July 2020, a resolution was adopted by the Annual General Meeting of CD PROJEKT S.A. to introduce an incentive scheme
for the years 2020-2025 for selected persons in CD PROJEKT S.A. and its Group companies. Targets have been set for the
realization of which persons selected by the Management and Supervisory Boards of the Parent Company will be granted
subscription warrants entitling to subscribe for shares in the Parent Company as part of a conditional increase in the Parent
Company’s share capital, subject to the fulfilment of the performance and market targets set by the Management Board and the
Supervisory Board of the Parent Company The incentive scheme is accounted for in accordance with the principles of IFRS 2, Share-
based Payment.
Loans granted
Loans granted are measured at amortized cost using the effective interest rate.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
33
Trade and other payables
Trade payables are shown in the balance sheet at amortized cost. Financial liabilities and equity instruments are classified according
to their contractual economic content. An equity instrument is a contract giving the right to a share of the Group’s assets less all
liabilities.
Licences
The value of acquired licence rights is recognized on the basis of invoices received as the balance of Deferred costs. This value is
increased by the amount of the uninvoiced parts of the minimum guarantees under the contracts concluded. The value of acquired
licence rights is charged to expenses on a pro rata basis in relation to sales and, once the balance of Deferred costs is exceeded,
it is credited to Trade payables.
Payment of dividend
Dividends are recorded at the moment of establishing the rights of the Parent Company’s shareholders to their receipt.
Functional currency and presentation currency
Functional currency and presentation currency
The items contained in the financial statements are valued in the currency of the basic economic environment in which the Group
conducts operations (“the functional currency”). The financial statements are presented in Polish zloty (PLN), which is the functional
and presentation currency of the Group and the Company.
Transactions and balances
Transactions expressed in foreign currencies are translated into functional currency based on the exchange rate valid as at the
transaction date. Exchange gains and losses on the settlement of these transactions and on the balance sheet valuation of monetary
assets and liabilities denominated in foreign currencies are recognized in the Income statement.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
34
Critical accounting estimates and judgements
Professional judgement
The Parent Company’s Management Board, based on its assessment performed as at the end of 2021 of the feasibility of achieving
the performance targets set in the 2020–2025 incentive scheme, maintains its assessment, considering it most likely that the
performance targets cannot be achieved over the full duration of the scheme.
As at the end of each reporting period, the Group reviews the expected useful lives of internally generated intangible assets. In the
case of intangible assets for which it is possible to determine reliable estimates of the volume and value of the sales budget, the
Group amortizes the value of these projects based on the consumption of economic benefits related to the number of copies sold.
The premiere-linked nature of the game’s life cycle justifies the use of a reducing balance depreciation method, as the highest sales
volumes are achieved during the premiere period, which decline in subsequent periods. In the remaining cases, the Group
amortizes the value of the projects on a straight-line basis over three years. As the video game market is characterized by
technology rotation cycles, a three-year period is the maximum horizon over which the Group can assess whether and what impact
future technological changes will have on the value of an asset.
Uncertainty of estimates
The following are the key assumptions about the future and other key sources of uncertainties at the balance sheet date that carry
a significant risk of material adjustments to the carrying amounts of assets and liabilities in the next financial year.
Impairment of assets
Impairment tests for assets such as goodwill and brand value require estimating the value in use of a cash-generating unit.
Estimating the value in use means forecasting the future cash flows expected to be generated by a cash-generating units, and
requires determining a discount rate to be used in order to calculate the present value of these cash flows. The last test of the
CD PROJEKT corporate brand, The Witcher product brand and goodwill was performed as at 31 December 2022. No indications of
impairment of the brands or goodwill were identified and no impairment of the assets was recognized on the basis of these
tests. Impairment tests were also performed on the shares in subsidiaries as at 31 December 2022. The tests showed no indications
of impairment and no impairment of the shares was recognized on the basis of these tests. A separate test was performed for
Spokko sp. z o.o. in connection with its planned merger with CD PROJEKT S.A. using a valuation model up to the share of the net
assets of the subsidiary
Assumptions adopted in the valuation of the CD PROJEKT brand, The Witcher trademark and goodwill:
Trademarks Goodwill
Cash flow forecast period 2023-2026 (4 years) 2023-2026 (4 years)
Discount rate (WACC) 13.35% 13.35%
Growth rate (g) for residual value 3% 3%
Valuation of provisions
Provisions for retirement benefits and the share-based incentive scheme were estimated using actuarial methods.
The Group creates provisions for performance-related remuneration and other bonuses. Provisions for performance-related
remuneration are created on an aggregate basis for individual employee groups. As a general rule, provisions are calculated
(depending on the employee group) on the basis of the net profit of the Group, the operating segment or a smaller business segment
economically identified for the purpose of calculating performance-related remuneration. Provisions for performance-related
remuneration are calculated under the principle of recursion – the value of the provisions reduces the underlying results
accordingly.
The Group records provisions for refunds, expected adjustments to licence reports and costs not invoiced by suppliers up to the
balance sheet date.
Deferred income tax asset
The Group companies recognize a deferred tax asset based on the assumption that a tax profit will be generated in the future
enabling its utilization. Deterioration of tax results in the future might result in the assumption becoming unjustified.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
35
Deferred tax provision
The Group recognizes a deferred tax provision based on the assumption that a future tax obligation will arise from taxable temporary
differences, leading to its utilization. In estimating deferred tax, the Group uses an income ratio calculated on the basis of the
following year’s budget to allocate positive and negative temporary differences.
Fair value of financial instruments
The fair value of financial instruments for which no active market exists is determined using appropriate valuation techniques.
The Group companies use professional judgement in selecting appropriate methods and assumptions.
Depreciation and amortization rates
The depreciation and amortization rates are established based on the expected useful lives of property, plant and equipment and
intangible assets. The Group companies verify the adopted useful lives on an annual basis, taking into account the current estimates.
For projects for which reliable estimates of sales volumes and budgets can be determined, the Group determines the amortization
method for the published titles based on historical sales data of previous own titles (no useful predictive sales data of other
publishers’ titles is available) and, to a lesser but significant extent, professional judgement.
Assumption of comparability of the financial statements,
changes in accounting policies and estimates
Changes in accounting policies
The accounting policies applied in these consolidated financial statements, material judgements made by the Management Board
with regard to the accounting policies applied by the Group and the main sources of estimating uncertainties are consistent, in all
material respects, with the policy adopted for preparing the annual consolidated financial statements of the CD PROJEKT Group for
2021, with the exception of changes in accounting policies, changes related to companies covered by consolidation and
presentation changes described below.
Presentation changes
In these consolidated financial statements for the period from 1 January to 31 December 2022 changes were introduced in the
presentation of and adjustments of errors in selected financial data. In order to ensure comparability of the financial data in the
reporting period, presentation of the data as at 31 December 2021 was changed. The data is presented after the following
adjustments:
In the statement of financial position as at 31 December 2021, presentation of some of the land held by the Group changed.
Consequently, the following items changed:
- Property, plant and equipment – an increase of PLN 4 354 thousand
- Investment properties – a decrease of PLN 4 354 thousand
The change did not affect the net profit or loss and equity.
In the cash flow statement for the period from 1 January 2021 to 31 December 2021, presentation of interest received on deposits
was changed. Consequently, the following items changed:
- Other inflows from investing activities – a decrease of PLN 68 thousand
- Interest on deposits – an increase of PLN 68 thousand.
Notes – operating segments of the
CD PROJEKT Group
3
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
37
Operating segments
Presentation of the financial statements taking into account operating segments
The scope of the financial information provided on the Group’s operating segments is consistent with the requirements of IFRS 8.
The segments’ results are determined based on their net profits.
Description of differences in the basis for the determination of segments and the profit or loss of a
segment compared with the last annual consolidated financial statements
The Group did not make any changes in determining segments or in the measurement of the profits or losses of the individual
segments in relation to the financial statements for the year ended 31 December 2021.
There are no differences between the measurement of the assets, liabilities, profits and losses of the Group’s reporting segments.
Operating segments
In 2022, the Group’s operations were carried out in two business segments:
CD PROJEKT RED
GOG.COM
CD PROJEKT RED
The scope and model of operations
The operations of the CD PROJEKT RED studio are executed within the structures of CD PROJEKT S.A. (the domestic holding
company of the CD PROJEKT Group), CD PROJEKT Inc. (USA) and CD PROJEKT RED Vancouver Studio Ltd. (Canada).
These operations are based on the brands owned by the Parent Company: The Witcher and Cyberpunk. These operations consist
in creating and publishing video games, selling licences for their distribution, coordinating sales promotions, and the production,
sales or licensing of the accompanying products which use the brands owned.
Moreover, as part of the publishing operations, the Parent Company is responsible for the design of the campaigns which promote
its own products and independently maintains direct communication with players via electronic media channels and social media
and by participating in industry events.
The segment also comprised the operations of the gear.cdprojektred.com mail order shop which offered products for fans of
CD PROJEKT RED’s games.
GOG.COM
The scope and model of operations
The GOG.COM platform was launched in September 2008. Its original mission was to revitalize the most iconic PC games and offer
them to customers from all over the world, with a particular focus on English-speaking countries, i.e. the United States, Canada, the
United Kingdom and Australia. In 2022, the platform was available in English, French, German, Russian, Chinese and Polish, offering
to customers not only a fully localized website or games, but also dedicated customer service, activity in the local social media in
a given language and popular local payment methods (in thirteen currencies). Games for macOS and Linux operating systems are
also available on the GOG.COM platform.
The operations of the segment consist of digital distribution of the games via own GOG.COM shop and GOG GALAXY application.
The platform makes it possible to purchase the game, pay for the game and download it to one’s own computer; in addition, the
GOG GALAXY application enables, among other things, automatic updates, saving the game in the cloud, network play, including
between platforms, and is also responsible for GWENT’s network functionalities, sales support and handling of payments made in
the PC version of the game.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
38
Information on individual operating segments
Continuing operations
Consolidation
eliminations
Total continuing
operations
CD PROJEKT RED GOG.COM
01.01.2022 – 31.12.2022
Sales revenue 780 309 188 579 (16 312) 952 576
from external customers 765 489 187 087 - 952 576
between segments 14 820 1 492 (16 312) -
Amortization and
depreciation
11 890 2 324 (386) 13 828
Interest income 41 950 1 387 - 43 337
Interest expense 874 552 (79) 1 347
Net profit/(loss) of the
segment
342 095 5 248 (250) 347 093
Continuing operations
Consolidation
eliminations
Total continuing
operations
CD PROJEKT RED GOG.COM
01.01.2021 – 31.12.2021
Sales revenue 701 739 199 983 (13 550) 888 172
from external customers 688 485 199 687 - 888 172
between segments 13 254 296 (13 550) -
Amortization and
depreciation
13 731 4 135 (102) 17 764
Interest income 1 550 - - 1 550
Interest expense 1 360 1 537 (98) 2 799
Net profit/(loss) of the
segment
238 678 (29 791) 21 208 908
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
39
Consolidated income statement by segments for the period from 01.01.2022 to 31.12.2022
CD PROJEKT RED GOG.COM Consolidation eliminations Total
Sales revenue 780 309 188 579 (16 312) 952 576
Sales of products 761 518 - 5 981 767 499
Sales of services 3 044 272 (1 356) 1 960
Sales of goods for resale and materials 15 747 188 307 (20 937) 183 117
Cost of sales of products, services, goods for resale and materials 124 808 134 387 (15 221) 243 974
Costs of products and services sold 112 997 50 (1 485) 111 562
Cost of goods for resale and materials sold 11 811 134 337 (13 736) 132 412
Gross profit/(loss) on sales 655 501 54 192 (1 091) 708 602
Selling expenses 180 841 42 168 (659) 222 350
Administrative expenses 69 256 6 489 (209) 75 536
Other operating income 16 772 7 077 (4 406) 19 443
Other operating expenses 52 604 4 457 (4 256) 52 805
(Impairment)/reversal of impairment
of financial instruments
(7) - - (7)
Operating profit/(loss) 369 565 8 155 (373) 377 347
Finance income 64 717 6 784 - 71 501
Finance costs 47 932 7 810 (79) 55 663
Profit/(loss) before tax 386 350 7 129 (294) 393 185
Income tax 44 255 1 881 (44) 46 092
Net profit/(loss) 342 095 5 248 (250) 347 093
Net profit/(loss) attributable to owners of CD PROJEKT S.A. 342 095 5 248 (250) 347 093
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
40
Consolidated income statement by segments for the period from 01.01.2021 to 31.12.2021
CD PROJEKT RED GOG.COM Consolidation eliminations Total
Sales revenue 701 739 199 983 (13 550) 888 172
Sales of products 678 507 8 264 4 793 691 564
Sales of services 8 103 286 (2 524) 5 865
Sales of goods for resale and materials 15 129 191 433 (15 819) 190 743
Cost of sales of products, services, goods for resale and materials 118 547 144 458 (12 771) 250 234
Costs of products and services sold 104 933 4 236 (1 778) 107 391
Cost of goods for resale and materials sold 13 614 140 222 (10 993) 142 843
Gross profit/(loss) on sales 583 192 55 525 (779) 637 938
Selling expenses 239 160 60 382 (317) 299 225
Administrative expenses 65 413 6 735 (199) 71 949
Other operating income 18 999 1 640 (3 263) 17 376
Other operating expenses 34 065 20 609 (3 443) 51 231
(Impairment)/reversal of impairment
of financial instruments
(6) - - (6)
Operating profit/(loss) 263 547 (30 561) (83) 232 903
Finance income 3 831 5 692 - 9 523
Finance costs 15 036 8 380 (98) 23 318
Profit/(loss) before tax 252 342 (33 249) 15 219 108
Income tax 13 664 (3 458) (6) 10 200
Net profit/(loss) 238 678 (29 791) 21 208 908
Net profit/(loss) attributable to owners of CD PROJEKT S.A. 238 678 (29 791) 21 208 908
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
41
Consolidated statement of financial position by segments as at 31.12.2022
CD PROJEKT RED GOG.COM Consolidation eliminations Total
NON-CURRENT ASSETS 1 104 545 32 593 (17 160) 1 119 978
Property, plant and equipment 143 837 3 269 (1 854) 145 252
Intangible assets 69 476 171 (490) 69 157
Expenditure on development projects 471 528 1 439 235 473 202
Investment properties 42 560 - - 42 560
Goodwill 56 438 - - 56 438
Investments in subordinated entities 15 092 - (15 092) -
Shares in non-consolidated subordinated entities 41 607 - - 41 607
Prepayments and deferred costs 5 314 25 760 - 31 074
Other financial assets 207 437 - - 207 437
Deferred tax assets 50 867 1 954 41 52 862
Other receivables 389 - - 389
CURRENT ASSETS 1 095 224 64 332 (5 410) 1 154 146
Inventories 12 701 - - 12 701
Trade receivables 164 079 6 621 (5 410) 165 290
Current income tax receivable 38 1 420 - 1 458
Other receivables 55 340 1 799 - 57 139
Prepayments and deferred costs 6 508 16 378 - 22 886
Other financial assets 279 515 - - 279 515
Bank deposits over 3 months 337 330 - - 337 330
Cash and cash equivalents 239 713 38 114 - 277 827
TOTAL ASSETS 2 199 769 96 925 (22 570) 2 274 124
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
42
CD PROJEKT RED GOG.COM Consolidation eliminations Total
EQUITY 2 009 986 38 715 (15 297) 2 033 404
Equity attributable to owners of CD PROJEKT S.A. 2 009 986 38 715 (15 297) 2 033 404
Share capital 100 771 136 (136) 100 771
Supplementary capital 1 539 839 33 001 (5 515) 1 567 325
Share premium 116 700 - - 116 700
Treasury shares (99 993) - - (99 993)
Other reserves 3 268 391 (1 404) 2 255
Foreign exchange differences on translation 955 (65) 1 014 1 904
Retained earnings / (Accumulated losses) 6 351 4 (9 006) (2 651)
Net profit (loss) for the period 342 095 5 248 (250) 347 093
Non-controlling interests - - - -
NON-CURRENT LIABILITIES 36 156 1 367 (1 337) 36 186
Other financial liabilities 18 883 1 337 (1 337) 18 883
Other liabilities 2 620 - - 2 620
Deferred tax provision 50 - - 50
Deferred income 3 666 3 - 3 669
Provision for retirement and similar benefits 339 27 - 366
Other provisions 10 598 - - 10 598
CURRENT LIABILITIES 153 627 56 843 (5 936) 204 534
Other financial liabilities 8 687 1 417 (526) 9 578
Trade payables 38 787 38 236 (4 904) 72 119
Current income tax liabilities 2 116 - - 2 116
Other liabilities 4 382 5 862 - 10 244
Deferred income 16 379 6 046 - 22 425
Provision for retirement and similar benefits 9 1 - 10
Other provisions 83 267 5 281 (506) 88 042
TOTAL LIABILITIES AND EQUITY 2 199 769 96 925 (22 570) 2 274 124
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
43
Consolidated statement of financial position by segments as at 31.12.2021*
CD PROJEKT RED GOG.COM Consolidation eliminations Total
NON-CURRENT ASSETS 906 304 17 860 (18 318) 905 846
Property, plant and equipment 105 236 5 316 9 036 119 588
Intangible assets 58 382 11 - 58 393
Expenditure on development projects 347 802 2 318 75 350 195
Investment properties 57 082 - (12 448) 44 634
Goodwill 56 438 - - 56 438
Investments in subordinated entities 14 978 - (14 978) -
Shares in non-consolidated subordinated entities 38 520 - - 38 520
Prepayments and deferred costs 4 741 6 693 - 11 434
Other financial assets 178 540 - - 178 540
Deferred tax assets 43 899 3 522 (3) 47 418
Other receivables 686 - - 686
CURRENT ASSETS 1 177 941 78 794 (3 846) 1 252 889
Inventories 15 886 - - 15 886
Trade receivables 123 605 3 875 (2 187) 125 293
Current income tax receivable 98 - - 98
Other receivables 113 724 1 433 (1 659) 113 498
Prepayments and deferred costs 4 154 9 609 - 13 763
Other financial assets 307 765 - - 307 765
Bank deposits over 3 months 265 000 - - 265 000
Cash and cash equivalents 347 709 63 877 - 411 586
TOTAL ASSETS 2 084 245 96 654 (22 164) 2 158 735
* restated data
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
44
CD PROJEKT RED GOG.COM Consolidation eliminations Total
EQUITY 1 875 936 33 352 (14 932) 1 894 356
Equity attributable to owners of CD PROJEKT S.A. 1 875 936 33 352 (14 932) 1 894 356
Share capital 100 739 136 (136) 100 739
Supplementary capital 1 368 366 62 796 (5 515) 1 425 647
Share premium 115 909 - - 115 909
Other reserves 49 007 276 (1 289) 47 994
Foreign exchange differences on translation 642 (65) 1 014 1 591
Retained earnings / (Accumulated losses) 2 595 - (9 027) (6 432)
Net profit (loss) for the period 238 678 (29 791) 21 208 908
Non-controlling interests - - - -
NON-CURRENT LIABILITIES 36 079 2 691 (2 658) 36 112
Other financial liabilities 21 080 2 658 (2 658) 21 080
Other liabilities 2 860 - - 2 860
Deferred income 6 403 21 - 6 424
Provision for retirement and similar benefits 368 12 - 380
Other provisions 5 368 - - 5 368
CURRENT LIABILITIES 172 230 60 611 (4 574) 228 267
Other financial liabilities 25 661 869 (728) 25 802
Trade payables 15 703 39 787 (2 110) 53 380
Current income tax liabilities 24 445 1 - 24 446
Other liabilities 4 134 7 567 (1 659) 10 042
Deferred income 26 072 5 476 - 31 548
Provision for retirement and similar benefits 6 1 - 7
Other provisions 76 209 6 910 (77) 83 042
TOTAL LIABILITIES AND EQUITY 2 084 245 96 654 (22 164) 2 158 735
Notes – other explanatory notes to
the consolidated financial statements
4
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
46
Note 1. Sales revenue
Under IFRS 15 revenue from sales of products, goods, materials and services, net of value added tax, rebates and discounts, is
recognized when the performance obligation to deliver the promised goods or services (i.e. assets) to the customer has been
fulfilled (or is in the process of being fulfilled).
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Sales revenue 952 576 888 172
of which revenue from research and development projects 299 720 281 564
Sales of products 767 499 691 564
Sales of services 1 960 5 865
Sales of goods for resale and materials 183 117 190 743
Other income 90 944 26 899
Other operating income 19 443 17 376
Finance income 71 501 9 523
Total 1 043 520 915 071
Sales revenue – geographical structure*
01.01.2022 – 31.12.2022 01.01.2021 – 31.12.2021
in PLN in % in PLN in %
Domestic sales 28 931 3.04% 21 469 2.42%
Export sales, including: 923 645 96.96% 866 703 97.58%
Europe 167 881 17.62% 140 264 15.79%
North America 677 683 71.14% 650 090 73.19%
South America 3 579 0.38% 2 894 0.33%
Asia 65 681 6.90% 66 090 7.44%
Australia 8 395 0.88% 6 837 0.77%
Africa 426 0.04% 528 0.06%
Total 952 576 100% 888 172 100%
* The data presented relates to the place of residence of the customers of the Group companies: for CD PROJEKT S.A. –
distributors, and for retail sales conducted by GOG sp. z o.o., CD PROJEKT RED STORE sp. z o.o., CD PROJEKT Inc. – end
customers.
Sales revenue – by type of production
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Own production 767 499 691 564
Third party production 183 117 190 743
Other revenue 1 960 5 865
Total 952 576 888 172
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
47
Sales revenue – by distribution channel
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Games – box issues 31 375 87 222
Games – digital issues 850 367 768 202
Other revenue 70 834 32 748
Total 952 576 888 172
Note 2. Operating expenses
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021*
Depreciation and amortization of property, plant and equipment, intangible assets,
expenditure on development projects and investment properties, including:
13 828 17 764
depreciation on leased buildings 1 659 2 094
depreciation of leased vehicles 412 246
Materials and energy used 3 406 3 260
External services, including: 122 751 184 887
costs of short-term leases and low value leases 463 462
Taxes and fees 1 530 1 268
Salaries and wages, social insurance and other benefits 149 989 160 865
Business travel 3 173 570
Cost of using company cars 238 213
Cost of goods for resale and materials sold 132 412 142 843
Costs of products and services sold 111 562 107 391
Other costs 2 971 2 347
Total 541 860 621 408
Selling expenses 222 350 299 225
Total administrative expenses, including: 75 536 71 949
cost of research work 4 593 23 985
Cost of sales 243 974 250 234
Total 541 860 621 408
* restated data
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
48
Note 3. Other operating income and expenses
Other operating income
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Rental income 6 644 6 186
Write-off of past liabilities 3 668 -
Other sales 3 451 515
Subsidies 3 220 7 995
Income from re-invoicing 757 1 309
Settlement of the financial liabilities in respect of leases 602 -
Fixed assets and goods for resale received free of charge 432 284
Gains on disposal of non-current assets 270 61
Release of unused provisions for costs 232 408
Damages received 2 480
Other 165 138
Total other operating income 19 443 17 376
Write-off of past liabilities (totalling approximately PLN 3 292 thousand) includes licence receivables arising from agreements
concluded with game publishers and from agreements concluded with business partners promoting the services offered by
GOG.COM. This item also includes a liability in respect of the minimum guarantee, written off as a result of terminating a contract
the performance of which will not materialize due to the fact that the game covered by the minimum guarantee of approximately
PLN 376 thousand will not be released.
Other operating expenses
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Impairment write-downs of property, plant and equipment, intangible assets and
expenditure on development work
34 286 34 582
Cost of sales on other sales 4 147 34
Cost of rental 3 869 4 002
Cost of destruction of materials and goods for resale 3 172 965
Depreciation of investment properties 1 854 1 788
Donations and charity 1 349 445
Write-down and write-off of minimum guarantee assets 1 126 1 238
Scrapping of property, plant and equipment items and intangible assets 1 045 774
Costs relating to re-invoicing 757 1 311
Costs incurred on redevelopment of the car park 551 -
Provision for the uninsured portion of the US court settlement costs 126 1 502
Costs related to provisions for liabilities to game developers 391 -
Provision recorded for potential tax liability - 4 309
Scrapping of investment properties - 51
Help Me Refund – funds to be returned - 33
Inventory count deficits - 9
Other 132 188
Total other operating expenses 52 805 51 231
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
49
Note 4. Finance income and costs
Finance income
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Interest income 43 337 1 550
on current bank deposits 26 885 68
on bonds 16 230 1 321
on loans 222 161
Other finance income 28 164 7 973
gain on redemption of bonds 22 752 -
forward contracts – Management Board 2 6
settlement and measurement of derivative financial instruments 5 397 7 962
other finance income 13 5
Total finance income 71 501 9 523
Finance costs
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Interest expense 1 347 2 797
on lease contracts 581 535
on bonds 269 787
on liabilities to the State Treasury 30 38
on potential liabilities to the State Treasury 467 1 437
Other finance costs 54 316 20 521
net foreign exchange losses 24 547 17 053
impairment of non-current financial assets 27 271 1 668
settlement and measurement of derivative financial instruments 2 172 -
commission and fees on purchase of bonds 326 364
loss on redemption of bonds - 1 436
Total finance costs 55 663 23 318
Net finance income/expense 15 838 (13 795)
Note 5. Corporate income tax and deferred income tax
The main items of income tax expense for the years ended 31 December 2022 and 31 December 2021 are as follows:
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Current income tax 51 591 46 500
For the financial year 19 165 40 291
Withholding tax paid abroad 32 275 5 864
Adjustments relating to prior years 151 345
Deferred income tax (5 499) (36 300)
Related to temporary differences arising and reversed (5 499) (36 300)
Income tax expense shown in the income statement 46 092 10 200
Effective tax rate 11.72% 4.66%
Deferred tax shown in the income statement is the difference between the balance of deferred tax provisions and assets as at the
end and the beginning of the reporting periods.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
50
Current income tax
01.01.2022 – 31.12.2022 01.01.2021 – 31.12.2021
Income from other
sources of
revenue
Income from
capital gains
Income from other
sources of
revenue
Income from
capital gains
Profit/(loss) before tax 412 072 (18 887) 238 510 (19 402)
Income increasing the tax base 7 868 6 646 9 588 1 606
Income relating to subsequent
periods
(34 296) - 908 111 -
Non-taxable income (11 111) (10 359) (18 357) 5 530
Income from advance payments
disclosed for tax purposes
7 596 - - -
Costs reducing the tax base (110 389) - (14 486) -
Non-deductible costs 155 710 28 822 (76 918) 19 983
Profit/loss made by entities
operating abroad
173 - 812 -
Taxable income 427 623 6 222 1 047 260 7 717
Deductions from income – loss (8 553) (6 180) (226 106) (7 717)
Deductions from income –
donation and charity
(1 169) - - -
Deductions from income –
research and development relief
(39 504) - (31 741) -
Deductions from income –
tax-free income
(453) - (1 405) -
Tax base, including: 377 944 42 788 008 -
tax base at 5% (profit) 378 244 - 805 825 -
tax base at 19% (profit) 1 243 42 - -
tax base at 19% (loss) (1 543) - (17 817) -
tax base abroad - - - -
Income tax calculated in Poland
at 5%
18 912 - 40 291 -
Income tax calculated in Poland
at 19%
237 8 - -
Income tax calculated abroad 8 - - -
Income tax 19 157 8 40 291 -
The current part of the income tax was determined either at the corporate income tax rate of 19% for the tax base corresponding to
income from other sources, and at the rate of 5% for the tax base corresponding to income from qualifying intellectual property
rights (the so-called IP BOX).
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
51
Deductible temporary differences underlying the deferred tax asset
31.12.2021*
Differences affecting
the deferred tax
recognized in the
profit or loss
31.12.2022
Provision for other employee benefits 387 (11) 376
Provision for costs of performance-related and
other remuneration
39 543 10 022 49 565
Tax loss 15 133 (9 666) 5 467
Foreign exchange losses 3 275 4 298 7 573
Difference between the carrying and tax
amount of expenditure on development
projects
24 780 10 056 34 836
Salaries and wages and social security payable
in future periods
61 (14) 47
Deferred income in respect of virtual wallet top-
ups and fringe benefit scheme
3 401 554 3 955
Other provisions 48 839 (14 672) 34 167
Research and development relief 303 891 14 235 318 126
Prepayments recognized as revenue for tax
purposes
1 469 6 054 7 523
Difference between the net carrying amount
and tax amount of property, plant and
equipment and intangible assets
12 - 12
Measurement of forward contracts 142 750 892
Other 83 (57) 26
Total deductible differences, including: 441 016 21 549 462 565
taxed at 5% 60 423 11 234 71 657
taxed at 19% 379 384 10 289 389 673
deferred tax charged abroad 1 209 26 1 235
Deferred income tax asset 75 350 2 622 77 972
* restated data
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
52
Taxable temporary differences underlying the deferred tax provision
31.12.2021
Differences affecting
the deferred tax
recognized in the
profit or loss
31.12.2022
Difference between the net carrying amount
and tax amount of property, plant and
equipment and intangible assets
14 431 3 349 17 780
Current period revenue invoiced in the
subsequent period/accrued income
129 257 3 170 132 427
Foreign exchange gains 14 963 (6 241) 8 722
Difference between the carrying and tax
amount of expenditure on development
projects
272 934 (18 296) 254 638
Other 86 238 324
Total taxable differences, including: 431 671 (17 780) 413 891
taxed at 5% 386 324 (3 413) 382 911
taxed at 19% 45 347 (15 804) 29 543
deferred tax charged abroad - 1 437 1 437
Deferred tax provision 27 932 (2 772) 25 160
The deferred part of the income tax was determined either at the corporate income tax rate of 19% for the tax base corresponding
to income from other sources, or at the rate of 5% for the tax base corresponding to income from qualifying intellectual property
(the so-called IP BOX). When determining the appropriate tax rate for temporary differences, the Group relied on forecasts of which
tax base will give rise to the realization of the temporary differences recognized.
Net deferred tax asset/provision
31.12.2022 31.12.2021
Deferred tax asset 77 972 75 350
Deferred tax provision 25 160 27 932
Note 6. Discontinued operations
The Group did not discontinue any operations in the current nor in the previous year
Note 7. Earnings per share
Basic earnings per share are calculated by dividing the net profit for the period attributable to ordinary shareholders of the Parent
Company by the weighted average number of ordinary shares in issue outstanding during the period. Diluted earnings per share
are calculated by dividing the net profit for the period attributable to ordinary shareholders of the Parent Company (net of interest
on redeemable preference shares convertible to ordinary shares) by the weighted average number of ordinary shares in issue
during the year (adjusted for the inflow of diluting options or warrants and diluting redeemable preference shares convertible into
ordinary shares).
During the 12 months ended 31 December 2022, the diluting instruments comprised subscription warrants allotted under the
incentive schemes, entitling the holder to take up shares in the Parent Company in the future.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
53
Net profit and number of shares underlying the calculation of earnings per share
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Weighted average number of shares for the calculation of basic earnings per share
(no. of units)
100 741 467 100 717 756
Weighted average number of shares for the calculation of diluted earnings per share
(no. of units)
100 764 969 100 763 966
Net profit/(loss) shown for the purpose of calculating diluted earnings per share 347 093 208 908
Basic net earnings/(loss) per share 3.45 2.07
Diluted net earnings/(loss) per share 3.44 2.07
Note 8. Dividend paid (or declared) and received
On 28 June 2022, the Annual General Meeting of Shareholders of CD PROJEKT S.A. made a decision to allocate a part of the profit
earned by the Parent Company in 2021 for distribution among the shareholders in the form of dividend. In accordance with the
resolution, on 12 July 2022 the Parent Company paid out PLN 100 739 thousand, i.e. 1 PLN per share. The number of the Parent
Company’s shares giving right to the dividend was 100,738,800.
Note 9. Disclosure of other comprehensive income items and their tax effect
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Net profit/(loss) 347 093 208 908
Exchange differences on measurement of foreign operations 313 500
Measurement of bonds issued by foreign governments (12 724) 4 238
Tax effect of the measurement of bonds - 104
Total comprehensive income 334 682 213 750
Total comprehensive income attributable to non-controlling interests - -
Total comprehensive income attributable to the parent company 334 682 213 750
Note 10. Property, plant and equipment
Ownership structure of property, plant and equipment
31.12.2022 31.12.2021*
Own assets 124 145 102 879
Used under lease contracts 21 107 16 709
Total 145 252 119 588
* restated data
Property, plant and equipment with restricted legal title
31.12.2022 31.12.2021
Used under lease contracts 21 107 16 709
Total 21 107 16 709
Amounts of contractual commitments to purchase property, plant and equipment in future
31.12.2022 31.12.2021
Leasing of passenger cars 599 429
Total 599 429
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
54
Changes in property, plant and equipment (by category) for the period 01.01.2022 – 31.12.2022*
Land
Buildings and
structures
Civil and marine
engineering
facilities
Plant and
machinery
Vehicles
Other fixed
assets
Assets under
construction
Total
Gross carrying amount
as at 01.01.2022
40 435 75 861 1 876 52 127 3 243 4 930 2 327 180 799
Increase due to: - 7 777 277 9 645 1 356 1 026 27 030 47 111
purchase - 499 - 9 081 - 987 26 910 37 477
lease contracts
concluded
- 6 831 4 - 1 347 - - 8 182
transfer from assets
under construction
- 239 - 37 - 39 - 315
transfer from
investment properties
- 112 273 - - - 120 505
reclassification - - - 81 - - - 81
free of charge
receipt
- - - 431 - - - 431
other - 96 - 15 9 - - 120
Decrease due to: - 1 341 228 2 916 1 348 180 1 268 7 281
sale - - - 374 739 1 - 1 114
scrapping - 816 228 2 308 609 98 24 4 083
transfer from assets
under construction
- - - - - - 315 315
reclassification - - - - - 81 929 1 010
lease contracts
terminated
- 525 - - - - - 525
other - - - 234 - - - 234
Gross carrying amount
as at 31.12.2022
40 435 82 297 1 925 58 856 3 251 5 776 28 089 220 629
Accumulated
depreciation as at
01.01.2022
1 250 19 797 558 35 145 1 792 2 669 - 61 211
Increase due to: 567 6 895 239 10 223 555 933 - 19 412
depreciation charge 567 6 888 210 10 172 555 933 - 19 325
transfer from
investment
properties
- 7 29 - - - - 36
reclassification - - - 51 - - - 51
Decrease due to: - 1 341 80 2 886 810 129 - 5 246
sale - - - 363 739 1 - 1 103
scrapping - 816 80 2 289 71 77 - 3 333
reclassification - - - - - 51 - 51
lease contracts
terminated
- 525 - - - - - 525
other - - - 234 - - - 234
Accumulated
depreciation as at
31.12.2022
1 817 25 351 717 42 482 1 537 3 473 - 75 377
Impairment write-downs
as at 01.01.2022
- - - - - - - -
Impairment write-downs
as at 31.12.2022
- - - - - - - -
Net carrying amount as
at 01.01.2022
39 185 56 064 1 318 16 982 1 451 2 261 2 327 119 588
Net carrying amount as
at 31.12.2022
38 618 56 946 1 208 16 374 1 714 2 303 28 089 145 252
* restated data
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
55
Changes in property, plant and equipment (by category) for the period 01.01.2021 – 31.12.2021*
Land
Buildings and
structures
Civil and marine
engineering
facilities
Plant and
machinery
Vehicles
Other fixed
assets
Assets under
construction
Total
Gross carrying amount
as at 01.01.2021
35 986 67 795 1 834 39 741 2 961 3 145 1 671 153 133
Increase due to: 4 449 8 662 53 13 917 1 263 1 814 9 797 39 955
purchase - 540 53 13 614 17 1 583 9 797 25 604
lease contracts
concluded
- 77 - - 1 236 - - 1 313
transfer from assets
under construction
- 7 955 - 286 - 231 - 8 472
transfer from
investment
properties
4 449 - - - - - - 4 449
other - 90 - 17 10 - - 117
Decrease due to: - 596 11 1 531 981 29 9 141 12 289
sale - - - 400 365 17 - 782
scrapping - 596 11 1 131 616 12 - 2 366
transfer from assets
under construction
- - - - - - 9 141 9 141
Gross carrying amount
as at 31.12.2021
40 435 75 861 1 876 52 127 3 243 4 930 2 327 180 799
Accumulated
depreciation as at
01.01.2021
588 14 311 275 28 876 1 710 2 024 - 47 784
Increase due to: 662 5 926 286 7 621 502 674 - 15 671
depreciation charge 567 5 926 286 7 621 502 674 - 15 576
transfer from
investment
properties
95 - - - - - - 95
Decrease due to: - 440 3 1 352 420 29 - 2 244
sale - - - 340 256 17 - 613
scrapping - 440 3 1 012 164 12 - 1 631
Accumulated
depreciation as at
31.12.2021
1 250 19 797 558 35 145 1 792 2 669 - 61 211
Impairment write-downs
as at 01.01.2021
- - - - - - - -
Impairment write-downs
as at 31.12.2021
- - - - - - - -
Net carrying amount as
at 01.01.2021
35 398 53 484 1 559 10 865 1 251 1 121 1 671 105 349
Net carrying amount as
at 31.12.2021
39 185 56 064 1 318 16 982 1 451 2 261 2 327 119 588
* restated data
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
56
Property, plant and equipment under construction
01.01.2022
Expenditure
incurred in the
financial year
Reclassification
of costs
Settlement of
capital
expenditure
31.12.2022
Redevelopment of the
Jagiellońska 74 property
2 012 1 815 60 228 3 539
Redevelopment of car park - 25 158 862 - 24 296
Other 315 57 7 111 254
Total 2 327 27 030 929 339 28 089
01.01.2021
Expenditure
incurred in the
financial year
Reclassification
of costs
Settlement of
capital
expenditure
31.12.2021
Redevelopment of the
Jagiellońska 74 property
1 614 9 253 - 8 855 2 012
Other 57 544 - 286 315
Total 1 671 9 797 - 9 141 2 327
Right-of-use assets relating to property, plant and equipment
31.12.2022 31.12.2021
Gross
amount
Accumulated
depreciation
Net
amount
Gross
amount
Accumulated
depreciation
Net
amount
Land 14 540 669 13 871 14 540 464 14 076
Real properties 14 332 8 735 5 597 8 037 6 698 1 339
Civil and marine engineering
facilities
99 99 - 94 47 47
Vehicles 2 264 625 1 639 1 504 257 1 247
Total 31 235 10 128 21 107 24 175 7 466 16 709
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
57
Note 11. Intangible assets and expenditure on development projects
Changes in intangible assets and expenditure on development projects for the period
01.01.2022 – 31.12.2022
Expenditure on
development
projects in
progress
Expenditure on
completed
development
projects
Trademarks
Patents and
licenses
Copyright
Computer
software
Goodwill
Intangible assets
under
construction
Total
Gross carrying amount
as at 01.01.2022
95 169
841 986
33 199
2 154
18 331
36 018
56 438
19
1 083 314
Increase due to: 262 236
88 101
-
2 480
138
14 073
-
583
367 611
purchase -
-
-
2 480
30
13 599
-
583
16 692
assets internally
generated
262 236
-
-
-
-
-
-
-
262 236
transfer from
intangible assets
under construction
-
-
-
-
108
-
-
-
108
reclassification from
expenditure on
development projects
in progress
-
88 101
-
-
-
-
-
-
88 101
reclassification -
-
-
-
-
474
-
-
474
Decrease due to: 109 217
-
-
474
-
13
-
430
110 134
scrapping 283
-
-
-
-
13
-
-
296
utilization of
impairment write-
downs
20 806
-
-
-
-
-
-
-
20 806
transfer from
intangible assets
under construction
-
-
-
-
-
-
-
108
108
transfer from
expenditure on
development projects
in progress
88 101
-
-
-
-
-
-
-
88 101
reclassification 27
-
-
474
-
-
-
322
823
Gross carrying amount
as at 31.12.2022
248 188
930 087
33 199
4 160
18 469
50 078
56 438
172
1 340 791
Accumulated
depreciation as at
01.01.2022
-
552 378
-
1 928
173
29 227
-
-
583 706
Increase due to: -
104 633
-
839
128
4 626
-
-
110 226
amortization charge -
104 633
-
839
128
4 626
-
-
110 226
Decrease -
-
-
-
-
-
-
-
-
Accumulated
amortization as at
31.12.2022
-
657 011
-
2 767
301
33 853
-
-
693 932
Impairment write-downs
as at 01.01.2022
20 806
13 776
-
-
-
-
-
-
34 582
Increase due to: 34 286
-
-
-
-
-
-
-
34 286
impairment 34 286
-
-
-
-
-
-
-
34 286
Decrease due to: 20 806
-
-
-
-
-
-
-
20 806
reversal of write-
downs (write-off)
20 806
-
-
-
-
-
-
-
20 806
Impairment write-downs
as at 31.12.2022
34 286
13 776
-
-
-
-
-
-
48 062
Net carrying amount as
at 01.01.2022
74 363
275 832
33 199
226
18 158
6 791
56 438
19
465 026
Net carrying amount as
at 31.12.2022
213 902
259 300
33 199
1 393
18 168
16 225
56 438
172
598 797
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
58
Changes in intangible assets and expenditure on development projects for the period
01.01.2021 – 31.12.2021
Expenditure on
development
projects in
progress
Expenditure on
completed
development
projects
Trademarks
Patents and
licenses
Copyright
Computer
software
Goodwill
Intangible assets
under
construction
Total
Gross carrying amount
as at 01.01.2021
28 887
841 377
33 199
2 154
18 331
32 294
56 438
1 158
1 013 838
Increase due to: 66 891
609
-
157
-
3 860
-
209
71 726
purchase -
-
-
157
-
2 531
-
209
2 897
transfer from
intangible assets
under construction
-
-
-
-
-
1 329
-
-
1 329
reclassification from
expenditure on
development projects
in progress
-
457
-
-
-
-
-
-
457
transfer of
expenditure on
development projects
within the consortium
-
152
-
-
-
-
-
-
152
assets internally
generated
66 891
-
-
-
-
-
-
-
66 891
Decrease due to: 609
-
-
157
-
136
-
1 348
2 250
sale -
-
-
66
-
-
-
19
85
scrapping -
-
-
91
-
136
-
-
227
transfer from
intangible assets
under construction
-
-
-
-
-
-
-
1 329
1 329
transfer from
expenditure on
development projects
in progress
457
-
-
-
-
-
-
-
457
transfer of
expenditure on
development projects
within the consortium
152
-
-
-
-
-
-
-
152
Gross carrying amount
as at 31.12.2021
95 169
841 986
33 199
2 154
18 331
36 018
56 438
19
1 083 314
Accumulated
amortization as at
01.01.2021
-
463 466
-
1 626
48
25 672
-
-
490 812
Increase due to: -
88 912
-
459
125
3 652
-
-
93 148
amortization charge -
88 912
-
459
125
3 652
-
-
93 148
Decrease due to: -
-
-
157
-
97
-
-
254
sale -
-
-
66
-
-
-
-
66
scrapping -
-
-
91
-
97
-
-
188
Accumulated
amortization as at
31.12.2021
-
552 378
-
1 928
173
29 227
-
-
583 706
Impairment write-downs
as at 01.01.2021
-
-
-
-
-
-
-
-
-
Increase due to: 20 806
13 776
-
-
-
-
-
-
34 582
impairment 20 806
13 776
-
-
-
-
-
-
34 582
Impairment write-downs
as at 31.12.2021
20 806
13 776
-
-
-
-
-
-
34 582
Net carrying amount as
at 01.01.2021
28 887
377 911
33 199
528
18 283
6 622
56 438
1 158
523 026
Net carrying amount as
at 31.12.2021
74 363
275 832
33 199
226
18 158
6 791
56 438
19
465 026
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
59
Intangible assets – ownership structure
31.12.2022 31.12.2021
Own assets 68 737 57 830
Used under lease contracts 420 563
Total 69 157 58 393
Intangible assets under construction
01.01.2022
Expenditure
incurred in the
financial year
Reclassification
of costs
Settlement of
capital
expenditure
31.12.2022
Financial analysis system 11 161 - - 172
Document flow system 8 - 8 - -
System for virtualization and
cloud computing
- 314 314 - -
cdprojektred.com website - 108 - 108 -
Total 19 583 322 108 172
01.01.2021
Expenditure
incurred in the
financial year
Reclassification
of costs
Settlement of
capital
expenditure
31.12.2021
Financial analysis system 11 - - - 11
HR management support
system
1 129 201 - 1 330 -
Document flow system - 8 - - 8
Game licences, GOG 18 - - 18 -
Total 1 158 209 - 1 348 19
Amounts of contractual commitments to purchase intangible assets in future
Not applicable.
Intangible assets – restriction on disposal
Not applicable.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
60
Note 12. Goodwill
Goodwill recognized in business combinations and acquisitions
CD Projekt Red
sp. z o.o.
Strange New
Things business
Total
Gross carrying amount as at 01.01.2022 46 417 10 021 56 438
Gross carrying amount as at 31.12.2022 46 417 10 021 56 438
Impairment write-downs as at 01.01.2022 - - -
Impairment write-downs at 31.12.2022 - - -
Net carrying amount as at 01.01.2022 46 417 10 021 56 438
Net carrying amount as at 31.12.2022 46 417 10 021 56 438
Impairment tests of goodwill require estimating the value in use of the cash-generating unit. In estimating the value in use, the
Parent Company prepared forecasts of the future cash flows to be generated by the cash-generating unit and determined the
discount rate to be applied to calculate the present value of these cash flows. The Parent Company performed the most recent
impairment test of goodwill as at 31 December 2022. The Parent Company identified no indications of impairment of goodwill.
Note 13. Investment properties
The Parent Company owns a real estate complex located at ul. Jagiellońska 76 in Warsaw. Given that a part of the properties
purchased is leased out to third parties, including CD PROJEKT Group companies, the Group decided to partly classify these
properties as investment properties. The remaining part of the property is used for own needs of the activities conducted.
The Group measures the properties purchased at cost less accumulated depreciation.
The last appraisal report by the expert surveyor, for the buildings recognized as investment properties, was prepared on the basis
of unit prices for the construction of buildings with the most similar parameters included in the Bistyp Catalogue of Unit Prices for
Works and Investment Facilities 2021. The valuation of the individual assets amounted to PLN 60 692 thousand for the building at
ul. Jagiellońska 74, and PLN 13 212 thousand for the building at ul. Jagiellońska 76.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
61
Movements in investment properties for the period 01.01.2022 – 31.12.2022 and
01.01.2021 – 31.12.2021
31.12.2022 31.12.2021*
Gross carrying amount as at the beginning of the period 48 169 50 650
Increase due to: 282 2 024
capitalized expenditure 282 2 024
Decrease due to: 505 4 505
scrapping - 56
reclassification to other asset categories 505 4 449
Gross carrying amount as at the end of the period 47 946 48 169
Accumulated depreciation as at the beginning of the period 3 535 1 809
Increase due to: 1 887 1 826
depreciation charge 1 887 1 826
Decrease due to: 36 100
scrapping - 5
reclassification to other asset categories 36 95
Accumulated depreciation as at the end of the period 5 386 3 535
Impairment write-downs as at the beginning of the period - -
Increase - -
Decrease - -
Impairment write-downs as at the end of the period - -
Net carrying amount as at the end of the period 42 560 44 634
* restated data
Contractual liabilities on purchase of investment properties
Not applicable.
Note 14. Shares in non-consolidated subordinated entities
Investments in subordinated entities measured at cost
31.12.2022 31.12.2021
Shares in subordinated entities – subsidiaries 41 607 38 520
Total 41 607 38 520
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
62
Movements in investments in subsidiaries
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
As at the beginning of the period 38 520 8 195
Increase due to: 30 434 32 203
acquisition/formation of an entity 67 32 039
equity element of the incentive scheme - 164
payments towards increasing share capital of a subsidiary 28 318 -
foreign exchange differences 2 049 -
Decrease due to: 27 347 1 878
disposal of a subsidiary/shares in a subsidiary 76 19
impairment write-downs recorded 27 271 1 668
equity element of the incentive scheme - 191
As at the end of the period 41 607 38 520
Investments in subsidiaries as at 31.12.2022
Spokko sp. z o.o.
CD PROJEKT RED
Vancouver Studio
Ltd.
The Molasses
Flood LLC
CD PROJEKT
SILVER Inc.
Registered office Warsaw Vancouver Boston
Los Angeles,
Venice
Percent of shares held as at
31.12.2022
87.6% 100% 60% 100%
Percent of votes held as at
31.12.2022
87.6% 100% 60% 100%
Equity investment 5 143 9 987 26 411 66
Investments in subsidiaries as at 31.12.2021
CD PROJEKT Co.,
Ltd.
(liquidated)
Spokko sp. z o.o.
CD PROJEKT RED
Vancouver Studio
Ltd.
The Molasses
Flood LLC
Registered office Shanghai Warsaw Vancouver Boston
Percent of shares held as at
31.12.2021
100% 74% 100% 60%
Percent of votes held as at
31.12.2021
100% 74% 100% 60%
Equity investment - 6 481 7 679 24 360
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
63
Note 15. Other financial assets
31.12.2022 31.12.2021
Loans granted 739 8 890
Bonds 475 848 477 415
Derivative financial instruments 7 809 -
Private equity interests in the gaming sector 2 556 -
Other financial assets, including: 486 952 486 305
short-term 279 515 307 765
long-term 207 437 178 540
In 2022, four tranches were disbursed under the loan agreement of 5 May 2021 granted to Spokko sp. z o.o. by CD PROJEKT S.A.
in the amount of PLN 5 870 thousand: on 25 February in the amount of PLN 500 thousand, on 30 March and 28 April in the amount
of PLN 1,000 thousand each, and on 5 May, in the amount of PLN 500 thousand. The amount of tranches disbursed in 2021 was
PLN 2 800 thousand, while the total amount of funds disbursed under this agreement was PLN 5 800 thousand. The loan was
repaid in full on 27 May 2022. At the same time, on 27 May 2022, the other two loans granted to Spokko sp. z o.o. under the loan
agreements of 25 May 2020 in the amount of PLN 3 000 thousand and 12 November 2020 in the amount of PLN 3 040 thousand
were repaid in full.
Under the loan agreement dated 16 September 2022, a loan of USD 1 150 thousand was granted by CD PROJEKT S.A. to The
Molasses Flood LLC. The agreement provides for the loan to be disbursed in tranches. In 2022, one tranche of USD 166 thousand
was paid out. The payment took place on 2 November 2022. The interest rate on the loan is variable and is subject to quarterly
updates. According to the agreement the loan should be repaid by 31 March 2025.
In March 2022, the Parent Company changed the rules on diversification of investment of current cash surpluses, increasing the
possibility of holding in debt securities up to 80% of the present value of financial resources defined as the sum of the total amount
of: cash and cash equivalents, bank deposits of more than 3 months, bonds of the State Treasury of the Republic of Poland, bonds
secured by a guarantee of the State Treasury of the Republic of Poland, bonds of foreign governments and bonds secured by
a guarantee of foreign governments together with concluded forward hedging transactions. In addition, under the amended
assumptions, the Parent Company may acquire foreign Treasury bonds issued by countries with a rating not lower than Aa3
according to Moody’s rating agency and foreign bonds backed by a guarantee of countries with a rating not lower than Aa3
according to Moody’s rating agency. As a result of these changes, the portfolio of bonds held has expanded to include securities
of issuers from Canada and Finland. For more information on the bond portfolio held, see Financial risk management objectives
and policies – Liquidity and credit risk.
Note 16. Inventories
31.12.2022 31.12.2021
Goods for resale 12 697 15 843
Other materials 4 43
Gross inventories 12 701 15 886
Inventory write-downs - -
Net inventories 12 701 15 886
Other materials include marketing materials.
Changes in inventory write-downs
Not applicable.
Inventories set up as collateral
Not applicable.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
64
Note 17. Trade receivables
31.12.2022 31.12.2021
Trade receivables, gross 165 376 125 372
Write-downs 86 79
Trade receivables 165 290 125 293
from related entities 860 1 231
from other entities 164 430 124 062
Changes in write-downs of trade receivables
01.01.2021 –
31.12.2021
RELATED ENTITIES
Write-downs as at the beginning of the period - -
Increase - -
Decrease - -
Write-downs as at the end of the period - -
OTHER ENTITIES
Write-downs as at the beginning of the period 79 126
Increases, including: 18 12
write-downs recognized for past-due and disputed receivables 18 12
Decreases, including: 11 59
utilization of impairment write-downs - 53
release of write-downs 11 6
Write-downs as at the end of the period 86 79
Total write-downs as at the end of the period
(related and other entities)
86 79
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
65
Current and overdue trade receivables as at 31.12.2022
Total Not overdue
Overdue, in days
1 – 60 61 – 90 91 – 180 181 – 360 >360
RELATED ENTITIES
gross receivables 860 860 - - - - -
default ratio
0% 0% 0% 0% 0% 0%
write-down resulting
from the ratio
- - - - - - -
write-down
determined
individually
- - - - - - -
total expected credit
losses
- - - - - - -
Net receivables 860 860 - - - - -
Total Not overdue
Overdue, in days
1 – 60 61 – 90 91 – 180 181 – 360 >360
OTHER ENTITIES
gross receivables 164 516 164 032 398 - - - 86
default ratio
0% 0% 0% 0% 0% 0%
write-down resulting
from the ratio
- - - - - - -
write-down
determined
individually
86 - - - - - 86
total expected credit
losses
86 - - - - - 86
Net receivables 164 430 164 032 398 - - - -
Total
- - - - - - -
gross receivables 165 376 164 892 398 - - - 86
impairment write-
downs
86 - - - - - 86
Net receivables 165 290 164 892 398 - - - -
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
66
Current and overdue trade receivables as at 31.12.2021
Total Not overdue
Overdue, in days
1 – 60 61 – 90 91 – 180 181 – 360 >360
RELATED ENTITIES
gross receivables 1 231 223 1 008 - - - -
default ratio
0% 0% 0% 0% 0% 0%
write-down resulting
from the ratio
- - - - - - -
write-down
determined
individually
- - - - - - -
total expected credit
losses
- - - - - - -
Net receivables 1 231 223 1 008 - - - -
Total Not overdue
Overdue, in days
1 – 60 61 – 90 91 – 180 181 – 360 >360
OTHER ENTITIES
gross receivables 124 141 123 851 162 - 8 - 120
default ratio
0% 0% 0% 0% 0% 0%
write-down resulting
from the ratio
- - - - - - -
write-down
determined
individually
79 - - - - - 79
total expected credit
losses
79 - - - - - 79
Net receivables 124 062 123 851 162 - 8 - 41
Total
gross receivables 125 372 124 074 1 170 - 8 - 120
impairment write-
downs
79 - - - - - 79
Net receivables 125 293 124 074 1 170 - 8 - 41
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
67
Trade receivables – by currency
31.12.2022 31.12.2021
Value in
foreign
currency
Value in
PLN
Value in
foreign
currency
Value in
PLN
PLN* 131 175 131 175 115 457 115 457
USD 7 075 31 144 449 1 821
EUR 314 1 474 1 317 6 060
BRL 262 218 158 115
GBP 36 190 30 166
CAD 251 816 348 1 109
AUD 34 103 55 163
SEK 116 49 104 47
CHF 9 43 9 41
CNY 47 30 81 52
DKK 43 27 47 29
NOK 46 21 30 14
RUB - - 4 033 219
JPY 7 - - -
Total
165 290
125 293
* Under receivables in PLN, the Group also recognizes amounts receivable in respect of licence reports received for the current
period expressed in foreign currencies and invoiced in subsequent periods and charged to the current period directly in PLN.
Note 18. Other receivables
31.12.2022 31.12.2021*
Other gross receivables, including: 58 260 114 916
tax receivables, other than corporate income tax 43 414 77 067
prepayments for inventories 6 940 5 391
settlements with suppliers of property, plant and equipment items 4 160 -
prepayments for development projects 1 433 30 435
security deposits 1 071 998
provisions for sales revenue – prepayments 137 67
prepayments for property, plant and equipment and intangible assets 135 34
settlements with payment operators 7 -
settlements with members of the Management Boards of the Group companies 2 7
prepayments on investment properties - 79
settlements with employees - 5
other 961 833
Write-downs 732 732
Other receivables, including: 57 528 114 184
short-term 57 139 113 498
long-term 389 686
* restated data
Other tax receivables, other than corporate income tax also include withholding tax in the amount of PLN 33 217 thousand to be
deducted by the Parent Company in its annual CIT return after obtaining certificates from foreign counterparties confirming their
payment of tax abroad.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
68
31.12.2022 31.12.2021
Other gross receivables 58 260 114 916
Write-downs 732 732
Other receivables 57 528 114 184
from related entities 995 7
from other entities 56 533 114 177
Other receivables claimed in court
31.12.2022 31.12.2021
Other receivables in court 732 732
Write-downs of disputed receivables 732 732
Net other receivables claimed in court - -
Other receivables – by currency
31.12.2022 31.12.2021
Value in
foreign
currency
Value in
PLN
Value in
foreign
currency
Value in
PLN
PLN* 49 805 49 805 77 977 77 977
USD 1 474 5 598 4 660 17 680
CAD 303 1 004 - -
EUR 126 591 189 871
GBP 82 428 40 200
CHF 8 39 8 36
JPY 1 109 37 496 092 17 214
BRL 17 14 3 3
CNY 18 11 336 201
NOK 1 - - -
SEK 2 1 4 2
Total
57 528
114 184
* Receivables in PLN comprise, among others, receivables in respect of withholding tax deducted by foreign counterparties in
foreign currencies and remaining to be settled with the local Tax Office in the annual corporate income tax return.
Trade and other receivables from related entities
31.12.2022 31.12.2021
Receivables from related entities, gross 1 855 1 238
trade 860 1 231
other 995 7
Write-downs - -
Receivables from related entities, net 1 855 1 238
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
69
Note 19. Prepayments and deferred costs
31.12.2022 31.12.2021*
Minimum guarantees and prepayments GOG.COM 41 457 15 230
Software, licenses 6 186 3 905
Costs of future marketing services 1 597 1 734
Costs of repairs and maintenance 1 142 1 470
Fees for pre-emptive rights 1 271 1 378
Property and personal insurance 785 525
Costs of IT security resources 380 421
Costs in connection with redevelopment of the car park 260 -
Domains, servers 235 56
Business travel (tickets, hotels, insurance) 85 64
Participation in fairs - 7
Marketing campaigns - 19
Other prepayments and deferred costs 562 388
Prepayments and deferred costs, including: 53 960 25 197
short-term 22 886 13 763
long-term 31 074 11 434
* restated data
Note 20. Cash and cash equivalents
31.12.2022 31.12.2021
Cash in hand and at bank: 12 559 74 372
cash in local currency 1 -
current bank accounts 12 558 74 372
Cash equivalents: 265 268 337 214
cash in transit 105 70
overnight deposits 7 512 36 142
short-term deposits maturing up to 3 months 257 320 262 980
cash on investment accounts 331 38 022
Total 277 827 411 586
Restricted cash and cash equivalents
Not applicable.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
70
Note 21. Share capital
The structure of share capital as at 31.12.2022
Series Number of shares in pcs. Series/issue at par value
Method of covering share
capital
A 500 000 500 000 Monetary contribution
B 2 000 000 2 000 000 Monetary contribution
C 6 884 108 6 884 108 Monetary contribution
C1 18 768 216 18 768 216 Monetary contribution
D 35 000 000 35 000 000 In-kind contribution
E 6 847 676 6 847 676 Monetary contribution
F 3 500 000 3 500 000 Monetary contribution
G 887 200 887 200 Monetary contribution
H 3 450 000 3 450 000 Monetary contribution
I 7 112 800 7 112 800 Monetary contribution
J 5 000 000 5 000 000 Monetary contribution
K 5 000 000 5 000 000 Monetary contribution
L 1 170 000 1 170 000 Monetary contribution
M 4 650 800 4 650 800 Monetary contribution
Total 100 770 800 100 770 800 -
On 9 December 2022, as a result of registering in the securities depository maintained by the Polish Central Securities Depository
(KDPW) of 32 000 M-series ordinary bearer shares of the Parent Company with a nominal value of PLN 1.00 each, issued in
connection with the implementation of the incentive scheme operating in the years 2016-2019, the shares were recorded in the
securities account of an authorized participant in the aforementioned scheme, who took them up upon exercising the rights from
subscription warrants, and thus, share capital of the Parent Company was increased from PLN 100 738 800 to PLN 100 770 800.
The aforementioned shares were listed on the GPW Main Market after the balance sheet date – as of 28 February 2023.
The total number of votes arising from all the shares of the Parent Company as at 31 December 2022 was 100 770 800 (subject to
860 290 shares in the Parent Company remaining in its possession as a result of the share buyback carried out on 5-24 October
2022).
There were no changes in the Parent Company’s share capital after the balance sheet date.
Changes in share capital
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Share capital as at the beginning of the period 100 739 100 655
Increase due to: 32 84
issue of shares paid up in cash – incentive scheme 32 84
Decrease - -
As at the end of the period 100 771 100 739
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
71
Note 22. Treasury shares
On 4 October 2022, the Management Board of the Parent Company informed that based on resolution no. 4 of the Extraordinary
General Shareholders’ Meeting of 29 November 2016, the Management Board decided on the conditions of and procedure for
conducting a buyback of the Parent Company’s treasury shares with a view to their voluntary redemption.
As a result of the buyback conducted based on that decision, between 5 October 2022 and 24 October 2022, the Parent Company
purchased 860 290 of its treasury shares with a nominal value of PLN 1 each, representing 0.85% of its share capital, for the total
amount of PLN 99 943 thousand. The treasury shares were purchased on the official stock exchange market operated by the
Warsaw Stock Exchange. The Management Board of the Parent Company provided detailed information on the commencement
and the course of the buyback in current reports no. 40/2022, 40/2022K, 42/2022, 44/2022 and 45/2022
. As at the date of
publication of these financial statements, the aforementioned treasury shares have not yet been redeemed and remain held by the
Parent Company.
Note 23. Other reserves
31.12.2022 31.12.2021
Supplementary capital 1 567 325 1 425 647
Share premium 116 700 115 909
Revaluation reserve (7 941) 4 783
Treasury shares (99 993) -
Other reserve capital - 35 741
Other reserves – incentive scheme 10 196 7 470
Total 1 586 287 1 589 550
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
72
Change in other reserves
Supplementary
capital
Share premium Treasury shares
Revaluation
reserve
Reserve capital
Other reserves –
incentive scheme
Total
As at 01.01.2022 1 425 647 115 909 - 4 783 35 741 7 470 1 589 550
Increase due to: 172 485 791 - - - 4 938 178 214
share-based payments 1 549 791 - - - - 2 340
appropriation of the net profit/offset
of loss
135 195 - - - - - 135 195
release of reserve capital from
previous years created for share
buybacks
35 741 - - - - - 35 741
the equity element of the incentive
scheme
- - - - - 4 938 4 938
Decrease due to: 30 807 - 99 993 12 724 35 741 2 212 181 477
purchase of treasury shares for
redemption
- - 99 993 - - - 99 993
appropriation of the net profit/offset
of loss
30 807 - - - - - 30 807
release of reserve capital from
previous years created for share
buybacks
- - - - 35 741 - 35 741
share-based payments - - - - - 1 548 1 548
the equity element of the incentive
scheme
- - - - - 664 664
total comprehensive income - - - 12 724 - - 12 724
As at 31.12.2022 1 567 325 116 700 (99 993) (7 941) - 10 196 1 586 287
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
73
Supplementary
capital
Share premium Treasury shares
Revaluation
reserve
Reserve capital
Other reserves –
incentive scheme
Total
As at 01.01.2021 774 851 113 844 - 442 35 741 9 364 934 242
Increase due to: 650 796 2 065 - 4 341 - 41 249 698 451
share-based payments 869 2 065 - - - - 2 934
appropriation of the net profit/offset
of loss
649 927 - - - - - 649 927
the equity element of the incentive
scheme
- - - - - 41 249 41 249
total comprehensive income - - - 4 341 - - 4 341
Decrease due to: - - - - - 43 143 43 143
share-based payments - - - - - 869 869
the equity element of the incentive
scheme
- - - - - 42 274 42 274
As at 31.12.2021 1 425 647 115 909 - 4 783 35 741 7 470 1 589 550
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
74
Note 24. Retained earnings / (Accumulated losses)
31.12.2022 31.12.2021
Retained earnings / (accumulated losses) (2 651) (6 432)
Total (2 651) (6 432)
Change in retained earnings / (accumulated losses)
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021*
As at the beginning of the period (6 432) (2 959)
Corrections of errors - (4 179)
Retained earnings / (accumulated losses), as adjusted (6 432) (7 138)
Increase due to: 208 908 1 154 327
appropriation of profit / (loss) from previous years 208 908 1 154 327
Decrease due to: 205 127 1 153 621
payment of dividend 100 739 503 694
transfer to supplementary capital 104 388 649 927
As at the end of the period (2 651) (6 432)
* restated data
Note 25. Equity attributable to non-controlling shareholders
Not applicable.
Note 26. Loans and borrowings
Not applicable.
Note 27. Other financial liabilities
31.12.2022 31.12.2021*
Lease liabilities 20 967 16 654
Liabilities measured at fair value through profit or loss 891 142
Cash flow hedges - 17 906
Deferred payment liabilities related to purchase of shares in a subsidiary 6 603 12 180
Total financial liabilities 28 461 46 882
Short-term, including: 9 578 25 802
up to one month 188 18 042
from one to three months 977 471
from three months to one year 8 413 7 289
Long-term, including: 18 883 21 080
from 1 to 5 years 5 171 7 261
more than 5 years 13 712 13 819
* restated data
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
75
As a lessee, the Group is potentially exposed to future cash outflows that are not included in the measurement of lease liabilities,
comprising:
with regard to the contracts indicated in Note 33, the subject matter of which are plots of land located at ul. Jagiellońska 74 and
76, constituting in essence rights of perpetual usufruct of land – variable lease payments resulting from updating the annual
fee for perpetual usufruct of land, meaning a change to the existing fee amount in order to adjust it to the current value of the
property or in order to determine the appropriate rate at which the fee is calculated;
with regard to the contract indicated in Note 33, the subject matter of which is office space in a building in Kraków, which is in
fact a rental contract – variable lease payments resulting from the building owner’s right to index the amount of fees for the use
of the premises based on the consumer price index;
with regard to the contract indicated in Note 33, the subject matter of which is office space in a building in Wrocław, which is in
fact a rental contract – variable lease payments resulting from the building owner’s right to index the amount of fees for the use
of the premises based on the consumer price index.
Note 28. Other non-current liabilities
31.12.2022 31.12.2021
Other non-current liabilities, including: 2 620 2 860
liabilities in respect of marketing costs 1 456 1 589
liabilities in respect of pre-emptive rights 1 164 1 271
Other non-current liabilities – maturity structure
31.12.2022 31.12.2021
Other non-current liabilities, including: 2 620 2 860
payable after one to three years 720 720
payable after three to five years 480 480
payable after five years 1 420 1 660
Other non-current liabilities (by currency)
31.12.2022 31.12.2021
Value in
foreign
currency
Value in
PLN
Value in
foreign
currency
Value in
PLN
PLN 2 620 2 620 2 860 2 860
Total
2 620
2 860
Note 29. Trade payables
31.12.2022 31.12.2021
Trade payables, including: 72 119 53 380
to related entities 2 575 1 183
to other entities 69 544 52 197
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
76
Trade payables – ageing analysis
Total Not overdue
Overdue, in days
1 – 60 61 – 90 91 – 180 181 – 360 >360
As at 31.12.2022 72 119 68 092 1 220 95 128 270 2 314
to related entities 2 575 2 575 - - - - -
to other entities 69 544 65 517 1 220 95 128 270 2 314
Total Not overdue
Overdue, in days
1 – 60 61 – 90 91 – 180 181 – 360 >360
As at 31.12.2021 53 380 48 958 1 572 556 59 2 172 63
to related entities 1 183 1 135 48 - - - -
to other entities 52 197 47 823 1 524 556 59 2 172 63
Trade payables – by currency
31.12.2022 31.12.2021
Value in
foreign
currency
Value in
PLN
Value in
foreign
currency
Value in
PLN
USD 10 698 47 089 10 523 42 748
PLN 20 295 20 295 7 967 7 967
EUR 752 3 528 380 1 746
CNY 1 088 691 1 015 648
JPY 9 921 330 1 804 65
GBP 25 133 7 39
RUB 854 53 52 3
KZT 7 - - -
CAD - - 51 164
Total
72 119
53 380
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
77
Note 30. Other current liabilities
31.12.2022 31.12.2021
Taxes (other than corporate income tax), customs duty, social security and other
payables
9 547 9 536
VAT 5 302 5 515
Withholding tax 32 905
Personal income tax 1 944 1 835
Social security contributions 2 043 1 164
State Disabled Persons Fund (PFRON) 75 56
PIT-8AR (personal income tax) settlements 134 61
Other 17 -
Other liabilities 697 506
Other settlements with employees 241 125
Other settlements with members of the Management Boards 32 36
Prepayments received from foreign customers 8 13
Other liabilities 416 332
Total other current liabilities 10 244 10 042
Other current liabilities – ageing analysis
Total Not overdue
Overdue, in days
1 – 60 61 – 90 91 – 180 181 – 360 >360
As at 31.12.2022 10 244 9 782 258 1 - 203 -
to related entities 120 88 32 - - - -
to other entities 10 124 9 694 226 1 - 203 -
Total Not overdue
Overdue, in days
1 – 60 61 – 90 91 – 180 181 – 360 >360
As at 31.12.2021 10 042 9 918 123 - 1 - -
to related entities 533 409 123 - 1 - -
to other entities 9 509 9 509 - - - - -
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
78
Other current liabilities – by currency
31.12.2022 31.12.2021
Value in
foreign
currency
Value in
PLN
Value in
foreign
currency
Value in
PLN
PLN 4 870 4 870 4 804 4 804
EUR 709 3 350 663 3 068
USD 142 637 165 663
GBP 76 411 104 567
CAD 68 231 15 47
AUD 64 194 65 190
RUB 3 104 163 5 915 330
SEK 361 156 347 158
DKK 160 102 161 100
NOK 180 82 165 76
JPY 156 5 - -
CHF 9 43 9 39
Total
10 244
10 042
Note 31. Social assets and the Company’s Social Fund liabilities
31.12.2022
31.12.2021
Cash and cash equivalents - 23
Liabilities related to the Company Social Fund (ZFSŚ) - 23
Net balance - -
Contributions to the ZFŚS in the financial period - -
Note 32. Contingent liabilities
Bills of exchange payable in respect of loans received
Not applicable.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
79
Contingent liabilities in respect of granted guarantees, sureties and collateral
Specification Currency 31.12.2022 31.12.2021
mBank S.A.
Voluntary submission to execution Agreement for payment cards PLN - 920
Bill of exchange agreement Framework agreement on financial market transactions PLN 50 000 50,000
Bill of exchange agreement Bank guarantee securing a rental contract PLN - 667
Bill of exchange agreement Bank guarantee securing a rental contract PLN 427 -
Ingenico Group S.A. (previously: Global Collect Services BV)
Contractual surety Surety against liabilities of GOG sp. z o.o. EUR - 155
Mazowiecka Jednostka Wdrażania Programów Unijnych
Contractual commitment
Commitment to incur operating and renovation expenditures on
leased space
PLN 20 58
Narodowe Centrum Badań i Rozwoju
Bill of exchange agreement Subsidy agreement POIR.01.02.00-00-0105/16 PLN 7 711 7 711
Bill of exchange agreement Subsidy agreement POIR.01.02.00-00-0110/16 PLN 3 846 3 846
Bill of exchange agreement Subsidy agreement POIR.01.02.00-00-0112/16 PLN 3 692 3 692
Bill of exchange agreement Subsidy agreement POIR.01.02.00-00-0118/16 PLN 1 358 5 324
Bill of exchange agreement Subsidy agreement POIR.01.02.00-00-0120/16 PLN 1 204 1 204
Pekao Leasing Sp. z o.o.
Bill of exchange agreement Lease contract 37/1991/21 PLN 314 442
Santander Bank Polska S.A. (previously: BZ WBK S.A.)
Bill of exchange agreement Framework agreement on financial market transactions PLN 23 500 23 500
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
80
Bank Polska Kasa Opieki Spółka Akcyjna
Bill of exchange agreement Framework agreement on financial market transactions PLN 50 000 35 000
BNP Paribas Bank Polska S.A.
Bill of exchange agreement Framework agreement on financial market transactions PLN 26 600 26 600
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
81
Note 33. Lease and sublease contracts
Information on the depreciation of leased assets is presented in Note 2. Interest expense on lease contracts is presented in Note
4. Information on additions to right-of-use assets and the carrying value of right-of-use assets as at the end of the reporting period
by category of an underlying asset is presented in Note 10. Note 50 provides information on the total cash outflows from leases.
Lease liabilities
Present value of payments 31.12.2022 31.12.2021*
Within one month 187 134
From one to three months 623 331
From three months to one year 1 274 1 199
From one to five years 5 171 1 171
More than five years 13 712 13 819
Present value of lease payments, including: 20 967 16 654
short-term 2 084 1 664
long-term 18 883 14 990
* restated data
Gross lease commitments (before deduction of finance costs)
31.12.2022 31.12.2021*
Within one month 276 298
From one to three months 893 560
From three months to one year 1 688 1 182
From one to five years 6 977 2 305
More than five years 24 006 24 388
Total 33 840 28 733
short-term 2 857 2 041
long-term 30 983 26 692
* restated data
Income received through subleasing of right-of-use assets
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Revenue 39 40
Costs 39 40
Income - -
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
82
Lease and sublease contracts as at 31.12.2022
Leased assets Lessor Contract no. Cost
Opening
balance
(currency)
Currency
Agreement
expiry date
Liabilities as
at the balance
sheet date
Terms of extension or possibility of
purchase
Lease contracts
Passenger car Pekao Leasing Sp. z o.o. 37/1991/21 614 614 PLN 2023-12-14 267
The lessee has the right to purchase the
subject matter of the lease – according
to the contract, the net residual value is
PLN 135 thousand.
Passenger car
BMW Financial Services
Polska Sp. z o.o.
LO/40953/0421 377 377 PLN 2023-04-08 161
The lessee has the right to purchase the
subject matter of the lease – according
to the contract, the net residual value is
PLN 135 thousand.
Passenger car Carefleet S.A. UG20002163 118 118 PLN 2023-08-06 105
The lessee has the right to purchase the
subject matter of the lease – according
to the contract, the net residual value is
PLN 85 thousand.
Passenger car
Sobiesław Zasada
Automotive Sp. z o.o.
Spółka jawna
L4 10439 622 622 PLN 2024-11-15 374
The lessee has the right to purchase the
subject matter of the lease – according
to the contract, the net residual value is
PLN 134 thousand.
Passenger car Tesla Financial
RN111270740-
1581877310
532 121 USD 2023-08-18 50
The lessee has the right to purchase the
subject matter of the lease – according
to the contract, the buyback value is
USD 71 thousand.
Jagiellońska 74 –
plots 12 and 13
State Treasury
Notarial Deed of
31.10.2019
8 623 8 623 PLN 2089-12-05 8 440
The lessee does not have the right to
buy back the subject matter of the lease
Jagiellońska 74 –
plot 14
Capital City of Warsaw
Notarial Deed of
31.10.2019
1 468 1 468 PLN 2100-04-12 1 444
The lessee does not have the right to
buy back the subject matter of the lease
Jagiellońska 76 State Treasury
Notarial Deed of
31.12.2018
4 449 4 449 PLN 2089-12-05 4 345
The lessee does not have the right to
buy back the subject matter of the lease
Kraków Office
Prestige Property Group
Sp. z o.o.
Rental contract
dated 20.07.2016
with subsequent
annexes
3 715 864 EUR 2025-05-31 2 798
The lessee does not have the right to
buy back the subject matter of the lease
Wrocław Office
Cavatina SPV 12
Sp. z o.o.
Rental contract
dated 04.11.2022
2 702 576 EUR 2027-10-31 2 737
The lessee does not have the right to
buy back the subject matter of the lease
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
83
Los Angeles office 1011 OFW Owner LLC
Rental contract
dated 01.04.2018
3 598 817 USD 2023-03-31 246
The lessee does not have the right to
buy back the subject matter of the lease
Parking at ul.
Jagiellońska 78
Sokołowo Sp. z o.o.
D20001730 with
subsequent annexes
174 174 PLN 2023-04-30 27
The lessee does not have the right to
buy back the subject matter of the lease
Sub-lease contracts
Parking at ul.
Jagiellońska 78
CD PROJEKT S.A.
Contract No. WPA
469/17 dated
31.07.2017, with
subsequent annexes
79 79 PLN 2023-04-30 27
The lessee does not have the right to
buy back the subject matter of the lease
Total
26 913
20 967
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
84
Leases of low-value assets and short-term leases
The Group concluded lease contracts for office equipment (multifunctional photocopiers, kitchen appliances) and residential
premises which potentially meet recognition criteria for leases under the new IFRS 16. However, the Group considered these
contracts to be short-term leases and leases of low-value assets and decided not to apply the new requirements for leases to these
assets, as permitted by paragraph 5 of the standards. In such cases, lease payments are charged to costs of the period to which
they relate, either on a straight-line basis or in some other systematic way that reflects the distribution of costs over the life of the
contract (information on the cost of these leases incurred in the period from 1 January to 31 December 2022 is included in Note 2).
As at 31 December 2022 and 31 December 2021, future minimum payments in respect of irrevocable short-term leases and leases
of low-value assets were as follows:
31.12.2022 31.12.2021
Up to 1 year 467 121
From 1 to 5 years 334 149
More than 5 years - -
Total 801 270
Note 34. Deferred income
31.12.2022 31.12.2021
Subsidies 5 511 8 277
Cross Platform SDK (GameINN) 21 53
Animation Excellence (GameINN) 1 385 1 846
City Creation (GameINN) 2 776 3 701
Seamless Multiplayer (GameINN) - 905
Cinematic Feel (GameINN) 1 329 1 772
Deferred income 20 583 29 695
Sales relating to future periods 16 088 25 715
GOG portfolio 4 460 3 947
Rental of company phones 35 33
Total deferred income, including: 26 094 37 972
short-term 22 425 31 548
long-term 3 669 6 424
In the CD PROJEKT RED segment, sales related to future periods include royalty income received or receivable from pre-orders
completed by players as part of the digital distribution of PC games with a release date in future periods, royalty advances received
or receivable from publishers and distribution partners, and advances on goods received from customers.
In the GOG.COM segment, sales related to future periods include the value of pre-orders placed by customers for games with
release dates in future periods.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
85
Note 35. Provision for retirement and similar benefits
31.12.2022 31.12.2021
Provision for retirement and disability bonuses 376 387
Total, including: 376 387
short-term 10 7
long-term 366 380
The main assumptions adopted by the actuary as at the reporting date for the calculation of the provision are as follows:
31.12.2022 31.12.2021
Discount rate (%) 6.87 3.41
Expected inflation rate (%) 6.87 3.41
Employee turnover rate (%) – Age average
(CD PROJEKT S.A.)
12% – 34 years 11.6% – 34 years
Employee turnover rate (%) – Age average
(GOG sp. z o.o.)
19.3% – 33 years 16.8% – 33 years
Expected rate of salary increase (%) (CD PROJEKT S.A.)
45% – 2023;
6% – subsequent years
10% – years 2022 –
2023; 6% – subsequent
years
Expected rate of salary increase (%) (GOG Sp. z o.o.)
10% – 2023
and subsequent years
0% – years 2022 –
2023; 2.5% –
subsequent years
CSO mortality tables from the year 2021 2020
Probability of disability during the year 0.1% 0.1%
Using statistical methods, the actuary built and calibrated a Multiple Decrement model of employee mobility for the Group
companies. Historical data provided by the Group companies was used to calibrate the model. Based on publicly available statistical
data and actuarial studies, the mobility rate was assumed to decrease with age. The valuation model shows significant sensitivity
to changes in mobility parameters and should therefore be continuously reviewed and updated for subsequent estimates.
Change in provisions for retirement and disability benefits
retirement and
disability
Total
As at 01.01.2022 387 387
Provision recorded 15 15
Provision released 26 26
As at 31.12.2022, including: 376 376
short-term 10 10
long-term 366 366
retirement and
disability
bonuses
Total
As at 01.01.2021 402 402
Provision released 15 15
As at 31.12.2021, including: 387 387
short-term 7 7
long-term 380 380
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
86
Note 36. Other provisions
31.12.2022 31.12.2021
Provision for liabilities, including: 98 640 88 410
provision for costs of performance-related and other remuneration 67 966 44 856
provision for costs of the audit and review of the financial statements 167 160
provision for costs of external services 850 1 042
provision for other costs 29 657 42 352
Total, including: 98 640 88 410
short-term 88 042 83 042
long-term 10 598 5 368
Change in other provisions
Provision for
returns
Provision for
costs of
performance-
related and
other
remuneration
Other provisions Total
As at 01.01.2022 - 44 856 43 554 88 410
Provisions recorded during the year - 67 971 60 358 128 329
Provisions utilized/released - 44 861 73 238 118 099
As at 31.12.2022, including: - 67 966 30 674 98 640
short-term - 67 966 20 076 88 042
long-term - - 10 598 10 598
Provision for
returns
Provision for
costs of
performance-
related and
other
remuneration
Other
provisions*
Total
As at 01.01.2021 194 537 256 130 34 900 485 567
Provisions recorded during the year 42 635 47 021 104 586 194 242
Provisions utilized/released 237 172 258 295 95 932 591 399
As at 31.12.2021, including: - 44 856 43 554 88 410
short-term - 44 856 38 186 83 042
long-term - - 5 368 5 368
* restated data
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
87
Note 37. Information on financial instruments
Fair values of specific classes of financial instruments
The Management Boards of the Parent Company analysed specific classes of financial instruments. Based on the analysis, it was
concluded that the carrying amounts of the instruments does not materially differ from their fair values, as at both 31 December
2022 and 31 December 2021.
31.12.2022 31.12.2021*
LEVEL 1
Assets measured at fair value
Assets measured at fair value through
other comprehensive income
243 091 228 661
bonds issued by foreign governments – EUR 25 111 24 517
bonds issued by foreign governments – USD 217 980 204 144
LEVEL 2
Assets measured at fair value through profit or loss
Derivatives 7 809 -
currency forwards – EUR 1 249 -
currency forwards – USD 6 560 -
Private equity interests in the gaming sector 2 556 -
private equity interests in the gaming sector – SEK 1 085 -
private equity interests in the gaming sector – USD 1 471 -
Liabilities measured at fair value through profit or loss
Derivatives (891) (18 047)
currency forwards – EUR (72) (486)
currency forwards – USD (819) (17 561)
* restated data
Financial Instruments measured at fair value are classified to 3-stage fair value hierarchy:
Level 1 – quoted prices in active markets for identical assets or liabilities.
Level 2 – fair value based on observable market data.
Level 3 – fair value based on market data that is not observable in the market.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
88
Financial assets – classification and measurement
31.12.2022 31.12.2021
Financial assets measured at amortized cost 1 014 332 1 060 209
Other non-current receivables 389 686
Trade receivables 165 290 125 293
Cash and cash equivalents 277 827 411 586
Bank deposits over 3 months 337 330 265 000
Treasury bonds and bonds guaranteed by the State Treasury 232 757 248 754
Loans granted 739 8 890
Financial assets measured at cost 41 607 38 520
Shares in subordinated entities not covered by consolidation 41 607 38 520
Assets measured at fair value through
other comprehensive income
243 091 228 661
Bonds issued by foreign governments 243 091 228 661
Financial assets measured at fair value through profit or loss: 10 365 -
Derivative financial instruments 7 809 -
Private equity interests in the gaming sector 2 556 -
Total financial assets 1 309 395 1 327 390
Financial liabilities – classification and measurement
31.12.2022 31.12.2021*
Financial liabilities measured at amortized cost 99 689 82 215
Trade payables 72 119 53 380
Other financial liabilities in respect of leases 27 570 28 835
Financial liabilities at fair value
through profit or loss
891 18 047
Derivative financial instruments 891 18 047
Total financial liabilities 100 580 100 262
* restated data
In accordance with the requirements of IFRS 9 Financial Instruments, the Company analysed the business model for managing
financial assets and examined the characteristics of contractual cash flows for each component of the bond portfolio, and concluded
that:
the purpose of investments in domestic and foreign Treasury bonds and domestic bonds guaranteed by the Polish State
Treasury is to hold them to maturity and to collect contractual cash flows;
investment mandates for managing the foreign bonds portfolio allow selling bonds before maturity as part of the adopted
strategy;
all bonds purchased meet the SPPI test.
As a result of the analysis conducted, purchased bonds were classified into two financial asset management model which differ in
terms of the entity managing the bond portfolio. Polish Treasury bonds and bonds guaranteed by the Polish State Treasury are
measured at amortized cost, because they are held to collect contractual cash flows. Foreign Treasury bonds are measured at fair
value through other comprehensive income, because of the investment mandate which allows the possibility of the portfolio being
managed by an Asset Manager.
In accordance with the requirements of IFRS 13 Fair Value Measurement, the Group analysed the valuation of financial instruments
measured at amortized cost in the consolidated statement of financial position to determine their fair value and their classification
in the fair value hierarchy.
Listed debt securities were classified as Level 1. These are State Treasury Bonds and bonds secured with a guarantee by the State
Treasury, the fair value of which was determined on the basis of the market valuation provided by the brokerage firm under the
applicable brokerage services agreement.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
89
31.12.2022 31.12.2021
LEVEL 1
Fair value of bonds measured at amortized cost 219 713 240 753
Treasury bonds and bonds guaranteed by the State Treasury
219 713 240 753
Other financial assets and liabilities have been classified as Level 3.
With reference to equity shares in other entities, the Group estimates the fair value of the shares held using the method of
forecasting the future cash flows to be generated by a cash-generating unit, and requires determining a discount rate to be used
in order to calculate the present value of these cash flows. Where appropriate, the Group adopts historical cost as an acceptable
approximation of fair value.
The Group did not measure the fair value of trade receivables and payables, cash and cash equivalents, bank deposits over
3 months and loans granted at variable interest rates as their carrying amount is considered by the Group to be a reasonable
approximation of fair value.
There were no movements between the Levels in the fair value hierarchy in the Group during the reporting period and the
comparative period.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
90
Gains and losses on financial assets and liabilities
01.01.2022 – 31.12.2022
Financial assets measured at amortized cost
Financial assets
measured at cost
Financial assets and
liabilities measured
at fair value through
profit or loss
Financial assets
measured at fair
value through
other
comprehensive
income
Financial liabilities
measured at
amortized cost
Total
Trade
receivables
Treasury bonds
and bonds
secured with
a guarantee by
the State
Treasury
Loans
granted
Cash and
cash
equivalents
and bank
deposits over
3 months
Shares in non-
consolidated
subordinated
entities
Derivative financial
instruments
Foreign bonds
Other financial
liabilities
Interest
income/(expense)
- 7 778 222 26 885 - - 8 184 (581) 42 488
Write-downs
recorded
(18) - - - - - - - (18)
Write-downs
released
11 - - - - - - - 11
Gains /(losses) on
disposal of debt
instruments
- - - - - - 22 752 - 22 752
Commission and
fees on purchase of
debt instruments
- - - - - - (326) - (326)
Measurement of
forward contract
- - - - - 3 225 - - 3 225
Measurement of
shares in related
entities
- - - - (27 271) - - - (27 271)
Measurement of
foreign bonds
- - - - - - (12 724) - (12 724)
Total gains/(losses) (7) 7 778 222 26 885 (27 271) 3 225 17 886 (581) 28 137
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
91
01.01.2021 – 31.12.2021*
Financial assets measured at amortized cost
Financial assets
measured at cost
Financial assets and
liabilities measured
at fair value through
profit or loss
Financial assets
measured at fair
value through
other
comprehensive
income
Financial liabilities
measured at
amortized cost
Total
Trade
receivables
Treasury bonds
and bonds
secured with
a guarantee by
the State
Treasury
Loans
granted
Cash and
cash
equivalents
and bank
deposits over
3 months
Shares in non-
consolidated
subordinated
entities
Derivative financial
instruments
Foreign bonds
Other financial
liabilities
Interest
income/(expense)
- 1 084 161 68 - - (550) (535) 228
Write-downs
recorded
(12) - - - - - - - (12)
Write-downs
released
6 - - - - - - - 6
Gains /(losses) on
disposal of debt
instruments
- - - - - - (1 436) - (1 436)
Commission and
fees on purchase of
debt instruments
- - - - - - (364) - (364)
Measurement of
forward contract
- - - - - 7 962 - - 7 962
Measurement of
shares in related
entities
- - - - (1 668) - - - (1 668)
Measurement of
foreign bonds
- - - - - - 4 342 - 4 342
Total gains/(losses) (6) 1 084 161 68 (1 668) 7 962 1 992 (535) 9 058
* restated data
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
92
Financial risk management objectives and policies
Credit risk
Risk description: The Group is exposed to credit risk in connection with sales with deferred payment, royalty income customarily
reported and settled after the end of the period for which the royalties are due, advance payments and also in connection with
cooperation with banks or government bond issuers. There are instances where the concentration of sales to the largest customers
exceeds 10% of the Group’s total sales revenue.
Actions taken: In order to reduce the credit risk related to buyers, the Company is constantly monitoring the settlement of
receivables and collection of difficult cases is outsourced to external specialized entities. As part of its efforts to mitigate the credit
risk of financial institutions, the Company works with several banks, diversifying the allocations of its cash and bank deposits, both
by entity and geography. In addition, the Parent Company, which holds the majority of the Group’s funds, may invest part of its
reserves in the following types of bonds in accordance with the policy adopted in March 2022:
domestic Treasury bonds of the Republic of Poland;
domestic bonds secured with a guarantee of the State Treasury of the Republic of Poland;
foreign Treasury bonds issued by countries with the rating not lower than Aa3 according to Moody’s rating agency;
foreign bonds secured with a guarantee of countries with the rating not lower than Aa3 according to Moody’s rating
agency.
These bonds are highly liquid securities, which allows the Company to sell them at any time before maturity.
Liquidity risk
Risk description: Inadequate capital and liquidity risk management may generate liquidity risk resulting in delays or the inability to
settle liabilities.
Actions taken – managing liquidity risk: Capital and liquidity risk management at the CD PROJECT Group is aimed at ensuring the
financing of its activities, including the long-term investment projects implemented by the group.
Day-to-day liquidity management is carried out at the level of the individual companies, while the coordination and supervision of
long-term plans is carried out at the level of the Parent Company.
The pillars of liquidity risk management are as follows:
constantly maintained and updated short-term and long-term cash flow forecasts;
periodic verification, based on cash flow forecasts, of the achievement of liquidity risk management targets in the medium
term, for example, one year after the release of the Parent Company’s next major production;
maintaining its own financial reserves – the Group has no external interest-bearing debt from loans, borrowings or bonds;
the Parent Company may provide financing to subsidiaries through capital increases or loans;
the management of financial reserves (held in the form of cash, bank deposits, domestic and foreign Treasury bonds) in
the Company is carried out taking into account the maturity dates of the individual instruments, the ratings of the banks
or issuers of the Treasury bonds purchased, the interest rates or yields of the investments concerned and always
respecting the principle of diversification in the allocation of the accumulated financial reserves (both by entity and
geography).
As at 31 December 2022, the Parent Company held bank deposits with a carrying amount of PLN 602 162 thousand.
Maturity of the deposit
Carrying amount
Quarter 1 of 2023 365 732
Quarter 2 of 2023 229 070
Quarter 3 of 2023 7 360
Total carrying amount 602 162
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
93
As at 31 December 2022, the Parent Company held Treasury bonds with a carrying value of PLN 475 848 thousand.
Bonds by country of issuer at 31.12.2022 S&P Fitch Moody’s Carrying amount
Poland A- A- A2 232 757
USA AA+ AAA Aaa 186 439
Germany AAA AAA Aaa 35 316
Canada AAA AA+ Aaa 10 695
Finland AA+ AA+ Aa1 10 641
Total carrying amount 475 848
Bond portfolio as at 31.12.2022 by instrument maturity
Redemption date of purchased bonds as at 31.12.2022
Carrying amount
2023 87 433
2024 106 844
2025 94 053
2026 159 857
2027 27 661
Total carrying amount 475 848
Currency risk
Risk description: Due to the global nature of the CD PROJEKT Group’s business, where the majority of revenue is generated in
foreign currencies, it is exposed to the risk of sudden changes in exchange rates, including in particular the risk of the strengthening
of the Polish zloty.
The majority of publishing and distribution contracts to which the Parent Company is a party as the game developer are based on
settlement in foreign currencies – mainly in USD and EUR. Therefore, a weakening of the USD or EUR exchange rate in relation to
PLN is an undesirable scenario for the Group, resulting in a reduction of sales revenue. The revenues of GOG sp. z o.o. are
generated in 13 currencies, the highest in USD and smaller in EUR, PLN, GBP, CAD, AUD and others, while costs are mainly incurred
in USD and PLN. Therefore, as a rule, a weakening of the exchange rate of the currencies in which GOG.COM earns its sales
revenue in relation to the USD or PLN is an undesirable scenario for the CD PROJECT Group, causing a drop in revenues and results
of operations realized by GOG sp. z o.o.
The Group companies also purchase goods and services in transactions settled in foreign currencies – in such cases, a weakening
of the PLN exchange rate against the relevant currency of the transaction may result in exchange rate group differences
unfavourable to the Group companies’ results.
Actions taken: The Group companies seek to minimize currency exposure in its operations, but nevertheless it is not possible to
completely eliminate the currency risk that is incumbent on the Group. In the case of the risk associated with Parent Company’s
investment in foreign Treasury bonds denominated in the issuer’s currency, exposure to exchange rate fluctuations is mitigated by
entering into forward sales of the relevant currency symmetrical to each currency feed to the investment account. The value of
forward contracts concluded as at 31.12.2022 is presented in the table below.
Forward contract
currency
Value of forward contracts in
foreign currency
Value of forward contracts in
PLN at
forward exchange rates
Fair value measurement of
forward contracts as at
31.12.2022 in PLN
EUR 5 550 27 895 1 249
USD 49 740 228 686 6 560
Total 256 581 7 809
At the same time, in accordance with the policy adopted in March 2022 to diversify the investment of current cash surpluses, the
Parent Company may hold up to 15% of total funds in unhedged positions in USD and EUR. As at 31 December 2022, the Parent
Company had an unhedged position in foreign currencies amounting to USD 20 463 thousand. and EUR 40 thousand respectively.
GOG Sp. z o.o. hedges the cash flows associated with concluded or future foreign currency trade transactions by entering into
currency forward transactions. Hedging transactions are, in principle, concluded at the gross value of GOG’s currency exposure,
i.e. at the full amount of the respective future cash flows.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
94
Interest rate and inflation risk
Risk description: The condition of the global economy, including the effects of global political, economic or military crises or the
development of pandemics, may affect the CD PROJEKT Group’s business, financial position and results. A negative situation
related to the impact of a pandemic, either macroeconomic or political, may result in difficulties in access to finance, changes in the
prices of goods, services and products, conservative consumer attitudes or the emergence of restrictions on sales opportunities as
a consequence of economic sanctions or local regulations introduced.
The monetary policy pursued by the National Bank of Poland in shaping the level of interest rates and consequently influencing the
level of inflation in Poland may affect the financial income achieved by the Group. As surplus cash is invested in, among other things,
bank deposits and Treasury bonds, a drop in interest rates may have a negative impact on the Group’s financial income. Moreover,
financial income generated from bank deposits or investments in Treasury bonds in relation to the Group’s cash reserves may not
compensate for losses caused by inflation.
A change in the level of interest rates affects the carrying value of foreign Treasury bonds and bonds secured with their guarantee,
which are measured at fair value through other comprehensive income. An increase in interest rates may also reduce the valuation
of the Group’s assets (e.g. shares in related entities, brands) carried out as part of impairment tests, potentially leading to the need
to restate their value in the books of account.
Actions taken: The Group companies endeavour to monitor the impact of the global situation on the markets in which they operate
and, as far as possible, to adapt their operations as much as possible to the changes observed. The Parent Company mitigates
some of the risk associated with interest rate volatility and market inflation expectations by investing a portion of its cash surpluses
in deposits, Polish Treasury bonds, bonds secured by the State Treasury guarantee and foreign Treasury bonds of issuers with
credit ratings not lower than Aa3 according to Moody’s, while diversifying the maturities of the aforementioned instruments. In
addition, some of the Treasury bonds are floating rate securities.
In the current macroeconomic situation, while maintaining the safety of accumulated funds, it is in practice not possible to fully
protect the value of financial reserves held against the negative effects of inflation.
Sensitivity analysis
In accordance with the requirements of IFRS 7, Financial Instruments: Disclosures, the Group performed an analysis for the identified
market risks showing the impact changes in the relevant risk factors would have on the results of operations and equity.
Due to the linear nature of the impact of a change in a factor on the value of the Group’s profit or loss and equity, 5 pps were
adopted for the analysis of the impact of changes in exchange rates and 1 pp for the analysis of the impact of changes in interest
rates and fair value.
The tables below show the sensitivity of profit before tax and equity to the risks identified by the Group over the horizon to the date
of the next financial statements, assuming other risk factors remain constant.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
95
Currency risk concerning the net value of foreign currency assets and liabilities as at the end of 2022
Impact on net profit/loss
Impact on equity
EUR USD Other currencies Total EUR USD Total
Exchange rate fluctuations 5% 5% 5% 5% 5%
As at 31.12.2022
Exchange rate growth (734) (1 974) (170) (2 878) 1 256 11 137 12 393
Exchange rate decline 734 1 974 170 2 878 (1 256) (11 137) (12 393)
As at 31.12.2021
Exchange rate growth (362) (6 304) 752 (5 914) 1 226 10 367 11 593
Exchange rate decline 362 6 304 (752) 5 914 (1 226) (10 367) (11 593)
Exposure to currency risk changes during the year depending on the volume of transactions concluded in the currency. Nevertheless, the above sensitivity analysis can be considered representative of
the Group’s exposure to currency risk as at the balance sheet date.
Interest rate risk relating to interest income on cash held in bank accounts and Polish floating-rate bonds
31.12.2022 31.12.2021
Interest rate fluctuations Impact on net profit/loss Interest rate fluctuations Impact on net profit/loss
Interest rate growth 1 p.p. 7 159 1 p.p. 7 859
Interest rate decline 1 p.p. (7 159) 1 p.p. (7 859)
Fair value change risk relating to the valuation of foreign bonds carried at fair value, which depends on the volatility of market prices
31.12.2022 31.12.2021
Fluctuation
amount
Impact on equity
Impact on net
profit/loss
Fluctuation
amount
Impact on equity
Impact on net
profit/loss
Fair value growth 1 p.p. 2 431 332 1 p.p. 2 287 50
Fair value decline 1 p.p. (2 431) (332) 1 p.p. (2 287) (50)
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
96
Note 38. Capital management
The principal objective of the capital management within the Group is to maintain a sound credit rating and safe capital ratios to
support the Group’s operating activities and to increase shareholder value.
The Group manages the capital structure and introduces changes to it based on changes in economic circumstances. In order to
maintain or adjust the capital structure, the Parent Company may pay a dividend to the shareholders, return capital to the
shareholders or issue new shares. The Group monitors its capital balances using the leverage ratio, which is calculated as the ratio
of net debt to total equity plus net debt. As at 31 December 2022, the Group’s balance of cash and cash equivalents was greater
than its trade and other payables, thus the Group had a positive net cash balance.
Note 39. Employee benefit programmes
Incentive scheme for the years 2016–2019
On 24 May 2016, the General Shareholders’ Meeting of the Parent Company passed a resolution introducing an incentive scheme
for the years 2016-2021 for key personnel of the Group. A total of 5 167 500 entitlements were exercisable for eligible persons as
a result of the positive result of the verification performed in 2020, of the achievement of the scheme’s objectives for the period
2016-2019.
As part of the settlement of the scheme, in 2020 the Parent Company disposed of 516 700 treasury shares purchased from the
market for this purpose for the benefit of the eligible persons. The remaining part of entitlements was realized in the form of issuing
4 650 800 subscription warrants. By 31 December 2021, a total of 4 618 800 warrants issued had been exercised. In December
2022, as a result of the exercise of the last 32 000 subscription warrants issued under the programme by an eligible person, 32 000
M-series ordinary bearer shares of the Parent Company with a nominal value of PLN 1.00 each were registered in the securities
depository maintained by the Polish Central Securities Depository; the shares were registered in the securities account of the
aforementioned eligible scheme participant, and thus also the share capital of the Parent Company was increased from PLN
100 738 800 to PLN 100 770 800. These shares were introduced to stock exchange trading on the GPW Main Market after the
balance sheet date – as of 28 February 2023. Thus, as at the date of publication of this report, all shares which the eligible persons
were entitled to take up based on the subscription warrants granted under the incentive scheme in operation in 2016-2019 had
been introduced to trading on the main market.
As the 2016-2019 incentive scheme is considered to be completed, the details of the minimum vesting rights awarded under the
scheme in previous financial years and their valuation are available in the previous interim financial statements of the Parent
Company and the Group.
Incentive scheme for the years 2020–2025
Based on the resolutions of the Parent Company’s General Shareholders’ Meeting of 28 July 2020 and 22 September 2020,
another, third edition of the incentive scheme was introduced for 2020-2025. In accordance with the adopted assumptions,
a maximum of 4 000 000 entitlements, understood as a conditional right to take up subscription warrants, entitling to take up shares
in the Parent Company issued separately as part of a conditional share capital increase, or alternatively to purchase, on preferential
terms, the Parent Company’s treasury shares may be granted as part of the implementation of the scheme. The taking up and
exercising of rights from the subscription warrants or, as the case may be, purchasing the Parent Company’s shares by eligible
persons will be conditional upon the Parent Company’s determination that the objectives and criteria of the scheme have been met.
The scheme includes performance-related objectives (80% of entitlements), market related objectives (20% of entitlements),
individual objectives in selected cases and, in each case, the loyalty criterion which applies until the date of determining that the
scheme objectives and criteria have been met.
As at the date of publication of these financial statements, 2 177 000 of the entitlements granted remained in the incentive scheme
for 2020-2050.
Assumptions adopted to value the incentive scheme
Date of granting the entitlements
CDR volatility
index
WIG volatility
index
Correlation with
WIG index
Risk-free rate;
Entitlements granted on 30.10.2020 38% 17% 44% 0.7%
Entitlements granted on 10.11.2020 38% 17% 44% 0.7%
Entitlements granted on 12.08.2021 42% 17% 42% 1.3%
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
97
Valuation Date
During 2020, the Parent Company granted entitlements to participate in the scheme in two tranches. In 2021, additional entitlements
were granted once, as set out in the resolution of the Management Board of 10 August 2021. No new entitlements were granted in
2022.
The fair value of the entitlements was in each case valued as at the grant date using financial engineering methods and modern
numerical methods (which are a development of the so-called Black-Scholes-Merton model) by a licensed actuary registered in the
register of actuaries maintained by the Polish Financial Supervision Authority in accordance with the information in the table above.
Classification of measurement conditions
The condition relating to the change in the price of the Parent Company’s shares in relation to the change in the WIG index and the
condition that the market price on the exercise date will be above the exercise price have been treated as market conditions. The
conditions relating to net profit growth were treated as non-market. The conditions related to completing paperwork (including the
correct filing of documents within a certain time limit), loyalty conditions and other conditions unrelated to the share price were
treated as non-market conditions. The condition of living to the date of exercising the entitlement rights and other similar conditions
were treated likewise.
Number of shares at the grant date
As at the grant dates in 2020, the Parent Company had 96 120 000 shares in issue.
As at the date of granting additional rights in 2021, the parent company had 100 738 800 shares in issue.
No new entitlements were granted in 2022.
Execution of the programme
Based on the results achieved in 2020 and 2021 and the assumptions for the subsequent years of the scheme, the Management
Board of the Parent Company assessed the possibility of achieving the performance targets set in the scheme over the entire period
of the scheme’s duration and revised the estimates, considering it most likely that the performance targets would not be achieved
over that period. The above assessment remains valid as at the date of publication of these financial statements.
On 20 December 2022, the Extraordinary General Meeting of the Parent Company passed the resolution no. 5 concerning the
discontinuation of the incentive scheme for the financial years 2020-2025, but as its entry into force was subject to the General
Meeting of the Parent Company adopting certain resolutions on introducing a new incentive scheme, which had not taken place by
the date of publication of this report, the resolution no. 5 had not yet entered into force. Although the resolution on the introduction
of the incentive scheme for the financial years 2023-2027 was formally adopted, the required majority was not achieved with
respect to the resolution necessary for the implementation of this scheme, i.e. the resolution on the issue of subscription warrants
and conditional increase in the share capital of the Parent Company. Thus, as at the date of publication of this report, the Parent
Company has no actual possibility to implement the incentive scheme for the financial years 2023-2027.
Changes in the entitlements granted under the 2020-2025 incentive scheme
Specification
01.01.2022 – 31.12.2022 01.01.2021 – 31.12.2021
entitlements
(not in
Exercise price
in PLN
entitlements
(not in
Exercise price
in PLN
Unrealized as at the beginning of the
period
4 000 000 390.59 or 371.06 4 000 000 390.59 or 371.06
Granted but not realized as at the
beginning of the period
2 275 000 390.59 or 371.06 2 592 000 390.59 or 371.06
Granted during the year - 390.59 or 371.06 30 000 390.59 or 371.06
Lost during the year 162 000 390.59 or 371.06 347 000 390.59 or 371.06
Not realized as at the end of the period 4 000 000 390.59 or 371.06 4 000 000 390.59 or 371.06
Granted but not realized as at the end of
the period
2 113 000 390.59 or 371.06 2 275 000 390.59 or 371.06
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
98
Note 40. Transactions with related entities
Terms and conditions of transactions with related entities
The terms and conditions of intra-group transactions were determined on the arm’s length basis. The essence of this principle is
based on the premise that the terms and conditions agreed in transactions between related parties should not differ from those
that would be agreed between independent parties in a comparable situation. Controlled transactions entered into by related
parties belonging to the CD PROJEKT Group are verified to determine whether the agreed terms of the transactions are similar to
the market terms, based on the recommendations and methods provided for in the OECD Guidelines as well as in national
legislation.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
99
Transactions with related parties after consolidation eliminations
Sales to
related parties
Purchases from related parties
Receivables
from related parties
Liabilities to
related parties
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
31.12.2022 31.12.2021 31.12.2022 31.12.2021
SUBSIDIARIES
CD PROJEKT Co., Ltd.
(liquidated)
- - - 6 629 - - - -
Spokko sp. z o.o. 1 321 1 460 - - 156 9 113 - -
CD PROJEKT RED Vancouver
Studio Ltd.
68 - 16 762 2 889 1 694 1 008 2 746 164
The Molasses Flood LLC 6 - 31 213 2 616 742 - 2 579 1 019
MEMBERS OF THE MANAGEMENT BOARDS OF GROUP COMPANIES
Marcin Iwiński 1 18 - - - - 7 19
Adam Kiciński - 4 - - - - 13 5
Piotr Nielubowicz 4 7 - - 2 - 13 -
Michał Nowakowski 5 24 - - - - 4 7
Adam Badowski 6 9 - - - 7 6 5
Piotr Karwowski 7 4 - - - - 2 -
Paweł Zawodny 7 - - - - - - -
Jeremiah Cohn 1 - - - - - - -
Maciej Gołębiewski 1 - - - - - - -
Urszula Jach – Jaki 2 1 - - - - - -
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
100
Note 41. Mergers and changes in the structure of CD PROJEKT Group
Merger between subsidiaries
Did not occur during the reporting period.
Establishment of a new subsidiary
On 16 June 2022, CD PROJEKT Inc. acquired 100% of shares in CD PROJEKT SILVER Inc. for USD 15 thousand. CD PROJEKT SILVER
Inc. is to participate in the development of entertainment products associated with CD PROJEKT brands in the United States.
Other changes in the structure of the CD PROJEKT Group made during the reporting period
Parent Company
buyback of treasury shares
On 4 October 2022, the Management Board of the Parent Company informed that based on resolution no. 4 of the Extraordinary
General Shareholders’ Meeting of 29 November 2016, the Management Board decided on the conditions of and procedure for
conducting a buyback of the Parent Company’s treasury shares with a view to their voluntary redemption. As a result of the buyback
carried out based on this decision, in the period from 5 to 24 October 2022 the Parent Company purchased a total of 860 290
treasury shares with a nominal value of PLN 1 each, representing 0.85% of its share capital, for the total price of PLN 99 943 thousand
for this purpose. The treasury shares were purchased on the official stock exchange market operated by the Warsaw Stock
Exchange. The Management Board of the Parent Company provided detailed information on the commencement and course of the
buyback in current reports no. 40/2022, 40/2022K, 42/2022, 44/2022 and 45/2022
. As at the date of publication of this report, the
aforementioned treasury shares have not yet been cancelled and remain held by the Parent Company.
increasing share capital as a result of the exercise of the entitlements under the incentive scheme in operation from 2016 to
2019
On 9 December 2022, as a result of registering in the securities depository maintained by the Polish Central Securities Depository
(KDPW) of 32 000 M-series ordinary bearer shares of the Parent Company with a nominal value of PLN 1.00 each, issued in
connection with the implementation of the incentive scheme operating in the years 2016-2019, the shares were recorded in the
securities account of an authorized participant in the aforementioned scheme, who took them up upon exercising the rights from
subscription warrants, and thus, share capital of the Parent Company was increased from PLN 100 738 800 to PLN 100 770 800.
The shares described were listed on the GPW Main Market after the balance sheet date – as of 28 February 2023. The Parent
Company reported on the process in detail in current reports 43/2022, 53/2022, 55/2022, 5/2023 and 6/2023
.
Spokko sp. z o.o.
On 28 April 2022, minority shareholders of Spokko sp. z o.o. concluded a share sale agreement. As a result, the capital structure
of Spokko sp. z o.o. became as follows: CD PROJEKT S.A. – 370 shares, Maciej Weiss – 61 shares, Maciej Rosiński – 21 shares,
Kacper Bąk – 16 shares, Marta Gutowska – 16 shares, Mateusz Janczewski – 16 shares.
On 20 July 2022, an increase in the share capital of Spokko sp. z o.o. was entered in the Register of Businesses of the National
Court Register. The increase was a result of the Extraordinary Shareholders’ Meeting of that company adopting on 24 May 2022
a resolution on an increase in the share capital. The share capital of Spokko sp. z o.o. was increased by creating 589 new shares
of PLN 50.00 par value each, to PLN 54 450.00 The 584 newly created shares in the increased share capital were taken up by
CD PROJEKT S.A., and the remaining 5 shares, by one of the Company’s shareholders, Maciej Weiss. As a result of the said
transactions, the share of the Parent Company in the voting rights and the capital of Spokko sp. z o.o. increased from 74.0% to
87.6%.
CD PROJEKT RED STORE sp. z o.o.
On 9 May 2022, the Extraordinary Shareholders Meeting of CD PROJEKT RED STORE sp. z o.o. adopted a resolution on increasing
the company’s share capital to PLN 24,000 by creating 380 new shares with a par value of PLN 50.00 each. All the shares were
taken up by the Parent Company – the sole shareholder. The increase in the share capital was registered in the Register of
Businesses of the National Court Register on 18 May 2022.
On 8 August 2022, the Extraordinary Shareholders’ Meeting of CD PROJEKT RED STORE sp. z o.o. adopted a resolution on
increasing the company’s share capital to PLN 29 000 by creating 100 new shares with a par value of PLN 50.00 each. All the
shares were taken up by the Parent Company – the sole shareholder. The increase in the share capital was registered in the
Register of Businesses of the National Court Register on 17 August 2022.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
101
On 17 November 2022, in current report no. 47/2022, the Management Board of the Parent Company informed that a merger plan
between the Parent Company as the surviving company, and its subsidiary CD PROJEKT RED STORE sp. z o.o. as the target
company was agreed and signed in the form of merger through acquisition. The merger was carried out in accordance with the
announced plan and entered in the Register of Businesses of the National Court Register after the balance sheet date, i.e. on
28 February 2023. Additional information in this regard is presented in the Note on events after the balance sheet date.
CD PROJEKT Inc.
On 9 May 2022, as a result of decisions adopted by the Board of Directors of CD PROJEKT Inc. and the Management Board of its
sole shareholder CD PROJEKT S.A., the share capital of CD PROJEKT Inc. was increased to USD 3,500 thousand by increasing the
value of the existing 10 thousand shares by USD 45 each. The increased value of the existing shares was paid up in full by a cash
contribution of USD 450 thousand made by the Parent Company.
On 18 October 2022, as a result of decisions adopted by the Board of Directors of CD PROJEKT Inc. and the Management Board
of its sole shareholder CD PROJEKT S.A., the share capital of CD PROJEKT Inc. was increased to USD 5 million, i.e. by USD 1,500
thousand, by increasing the value of the existing 10 thousand shares by USD 150 each. The increased value of the existing shares
was paid up in full by a cash contribution of USD 1 500 thousand made by the Parent Company. The capital increase was intended
to enable finalizing the first stage of the process of acquisition of shares in The Molasses Flood LLC (payment of the second tranche
relating to the acquisition of 60% of shares in that company).
CD PROJEKT Co., Ltd.
On 17 September 2022, the Parent Company received confirmation of completing the process of liquidation of its subsidiary
CD PROJEKT Co., Ltd. 7 June 2022 was indicated as the date of the effective completion of the liquidation of that company.
CD PROJEKT RED Vancouver Studio Ltd.
On 26 September 2022, the share capital of CD PROJEKT RED Vancouver Studio Ltd. was increased. As part of the increase,
640 000 new shares in that company were created. All newly created shares were taken up by CD PROJEKT S.A., the sole
shareholder. The newly created shares were fully paid up by a cash contribution of CAD 640 thousand.
Note 42. Remuneration of the senior management and the Supervisory
Board
Benefits paid to members of the Management Boards of Group companies
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Basic remuneration from the employment relationship 2 252 79
Remuneration for the functions performed 4 328 2 586
Bonuses and remuneration linked to the previous year's result 19 031 112 479
Total 25 611 115 144
Benefits paid to other members of the Group’s key management personnel
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Basic remuneration from the employment relationship 24 855 29 406
Remuneration for the functions performed 698 733
Bonuses and remuneration linked to the previous year's result 7 058 39 752
Total 32 611 69 891
Benefits paid to members of the Supervisory Board
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Remuneration for the functions performed 602 481
Total 602 481
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
102
Note 43. Number of employees
Average number of employees
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Average number of employees 544 493
Total 544 493
Employee turnover
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Number of new employees 190 146
Number of dismissed employees 92 108
Total 98 38
Note 44. Capitalization of borrowing costs
Not applicable.
Note 45. Revenues generated on a seasonal, cyclical or occasional basis
Not applicable.
Note 46. Tax settlements
Tax settlements and other activities regulated by the tax law may be subject to inspections by administrative bodies which are
entitled to impose high penalties or sanctions. The lack of reference to established legal regulations in Poland results in ambiguities
and inconsistencies in the binding regulations. Frequent differences of opinion as to the legal interpretation of tax regulations, both
internally within the state bodies and between the state bodies and enterprises, result in uncertainty and conflict arising. Due to
these factors, the tax risk in Poland is considerably higher than that usually existing in countries with better developed tax systems.
In accordance with the general rule, tax settlements may be subject to inspections within five years from the end of the calendar
year in which tax was paid.
Following the fulfilment of the criteria set out in Article 19 of the Act of 30 May 2008 on certain forms of innovation support
(consolidated text, Journal of Laws of 2022, item 2474), the Minister of Development and Technology, by decision No. DNP-
V.4241.16.2022 of 11 August 2022, maintained the status of a research and development centre granted to the Parent Company by
decision 4/CBR/18 of 19 June 2018. The status allows the Parent Company to use more broadly the research and development relief
provided for in the Act of 15 February 1992 on corporate income tax (consolidated text, Journal of Laws of 2022, item 2587, as
amended).
With effect from 1 January 2019, provisions were introduced into the Act on corporate income tax granting preferential taxation at
the 5% tax rate for qualified income earned by a taxpayer from qualified intellectual property rights. Having met the prerequisites
and formal conditions contained in the said legislation, the Parent Company accounts for income (in respect of selected sources of
income) taking this tax relief into account.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
103
Note 47. Post-balance sheet date events
Issuance of the decision on preliminary approval of a class action settlement in the USA, as reported by the Parent Company
in current report no. 1/2023
On 5 January 2023, the Parent Company announced that it has been advised by the law firm representing the Parent Company in
the US class action that the US District Court for the District of Central California has issued an order granting preliminary approval
of the settlement. The order approves the terms of the settlement relating specifically to the plaintiffs’ complete withdrawal of any
claims against the Parent Company and its Management Board members and the payment to the plaintiffs of USD 1 850 000 by the
Parent Company and its insurer, Colonnade Insurance S.A.
Acquisition of the remaining shares in the subsidiary Spokko sp. z o.o.
On 31 January 2023, as a result of the Parent Company concluding agreements for the sale of shares with the other shareholders
of the subsidiary Spokko sp. z o.o., the Parent Company acquired from those shareholders a total of 135 shares in Spokko sp. z o.o.
with a nominal value of PLN 50.00 each, as a result of which the Parent Company became the owner of 100% (i.e. 1089) of shares
in that subsidiary.
Introducing 32 000 of the Company’s M-series shares to trading on the main market operated by the Warsaw Stock Exchange
and their assimilation with other shares of the Parent Company on the main market, of which the Parent Company informed in
current reports no. 5/2023 and 6/2023
On 21 February 2023, the Management Board of the Warsaw Stock Exchange adopted a resolution on admitting and introducing
to trading on the GPW Main Market of 32 000 M-series ordinary bearer shares of the Parent Company, pursuant to which these
shares (designated with the ISIN code: PLOPTTC00060) were admitted to trading on the main market operated by the WSE.
Pursuant to the aforementioned resolution, as well as a statement issued on 23 February 2023 by Krajowy Depozyt Papierów
Wartościowych S.A. (the Polish Central Securities Depository), as of 28 February 2023 these shares were listed and assimilated
with the other shares of the Parent Company traded on the stock exchange with the ISIN code: PLOPTTC00011. The said shares
were issued in connection with the Parent Company’s incentive scheme operating in 2016-2019 and were subscribed for as a result
of a participant in the aforementioned scheme exercising his rights under 32 000 subscription warrants.
Registration of the merger between the Parent Company and its subsidiary – CD PROJEKT RED STORE sp. z o.o., about which
the Parent Company informed by current report no. 7/2023
On 28 February 2023, the District Court for the Capital City of Warsaw in Warsaw entered in the Register of Businesses the merger
through acquisition of the Parent Company, as the surviving company, with its subsidiary CD PROJEKT RED STORE sp. z o.o. with
its registered office in Warsaw, as the target company. The merger was carried out in accordance with the merger plan announced
on 17 November 2022, i.e. by transferring all the assets of CD PROJEKT RED STORE sp. z o.o. to the Parent Company, without
increasing the share capital of the Parent Company and without exchanging shares of the target company for shares of the Parent
Company due to the fact that the Parent Company holds 100% of the shares in the target company. The merger was intended to
simplify the Group’s structure in view of the plans to continue the existing activities of the target company in cooperation with
a specialized external entity.
The decision to create a write-down relating to the Sirius Project, which the Parent Company announced in current report no.
8/2023
On 20 March 2023, the Parent Company’s Management Board has announced that it has decided to recognize an impairment
charge in its books of account in relation to the expenditure incurred to date on Project Sirius developed by The Molasses Flood
studio. The decision was based on the results of evaluation of the scope and commercial potential of the Sirius Project in its original
format and the ongoing work performed to define a new framework for this project. Expenditure on development projects related
to Project Sirius incurred until the end of 2022 amounted to PLN 33.4 million. It is charged to profit or loss of the Parent Company
and the CD PROJEKT Group for 2022. Expenditure recognized as at the date of publication of the aforementioned report in the
books of account in January and February 2023 amounted to PLN 9.5 million and will be charged to profit or loss for Q1 2023.
Convening the Extraordinary General Meeting of the Company to which the Parent Company’s current reports no. 9/2023 and
10/2023 relate.
On 22 March 2023, the Parent Company’s Management Board convened an Extraordinary General Meeting of the Parent Company
for 18 April 2023. The most important items on the agenda of the Meeting will include the adoption of resolutions on the introduction
of new incentive schemes in the Parent Company for the years 2023–2027 and the redemption of Treasury shares purchased by
the Parent Company as part of the buyback carried out in October 2022, as well as the related reduction of the Parent Company’s
share capital. The full content of the draft resolutions was published in current report no. 10/2023.
Other information on events after the balance sheet date is included in the Directors’ Report on the operations of the CD PROJEKT
Group and CD PROJEKT S.A. for 2022.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
104
Note 48. Transactions with entities performing the audits of the financial
statements
Fees paid or payable for the financial year
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
for the audit of the annual financial statements and the consolidated financial
statements
167 165
for other assurance services, including a review of the financial statements and
consolidated financial statements
85 60
Total 252 225
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
105
Note 49. Explanations to the statement of cash flows
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Cash and cash equivalents reported in the statement of cash flows 277 827 411 586
Cash and cash equivalents in the balance sheet 277 827 411 586
Depreciation and amortization 13 828 17 764
Amortization of intangible assets 2 122 3 063
Amortization of expenditure on development projects 1 029 2 084
Depreciation of property, plant and equipment 10 644 12 578
Depreciation of investment properties 33 39
Foreign exchange gains/(losses) arise on the following items: 4 561 (15 047)
Foreign exchange gains/(losses) on measurement of bonds 4 506 (15 047)
Foreign exchange gains/(losses) on measurement of loans granted as at the balance
sheet date
55 -
Interest and shares in profits comprise: (42 487) (228)
Interest on bank deposits (26 885) (68)
Interest on bonds (15 961) (534)
Interest accrued on loans granted (222) (161)
Interest on lease contracts 581 535
(Gains)/losses on investing activities arise on the following items: 42 077 55 282
Proceeds from sale of property, plant and equipment (275) (249)
Net carrying amount of property, plant and equipment 5 169
Net carrying amount of intangible assets sold - 19
Net carrying amount of non-current assets scrapped 750 735
Net carrying amount of intangible assets scrapped 295 39
Net carrying amount of investment properties scrapped - 51
Impairment write-downs of property, plant and equipment, intangible assets and
expenditure on development work
34 286 34 582
Write-downs of shares in subsidiaries 27 271 1 668
Settlement and measurement of derivative financial instruments 2 172 16 468
Commission and fees on purchase of bonds 326 364
Proceeds from redemption of bonds (202 849) (82 718)
Value of bonds purchased 180 096 84 154
Change in provisions results from the following items: (5 700) (311 449)
Increase/(Decrease) in provisions for liabilities 10 230 (397 157)
Change in provisions for employee benefits (11) (15)
Change in provision for costs of performance-related and other remuneration
recognized under expenditure on development projects
(15 919) 85 723
Change in inventories results from the following items: 3 185 (8 929)
(Increase)/Decrease in inventories 3 185 (8 929)
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
106
01.01.2022 –
31.12.2022
01.01.2021 –
31.12.2021
Change in receivables results from the following items: (44 052) 1 036 886
Change in current receivables in the balance sheet 15 002 1 036 924
Change in non-current receivables in the balance sheet 297 (365)
Change in prepayments for investment properties (79) 9
Income tax settled against withholding tax 36 260 8 196
Withholding tax paid abroad (32 270) (5 858)
Adjusted for current income tax (34 840) (8 098)
Change in prepayments for development projects (29 002) 6 082
Change in receivables in respect of property, plant and equipment and intangible
assets
480 -
Change in prepayments for property, plant and equipment and intangible assets 100 (4)
Change in current liabilities, excluding financial liabilities, results from the following
items:
13 034 (85 023)
Change in current receivables in the balance sheet (19 613) (39 583)
Adjusted for current income tax 22 330 (22 704)
Change in financial liabilities 16 224 (22 869)
Change in liabilities resulting from purchase of property, plant and equipment (5 323) 77
Change in liabilities resulting from purchase of intangible assets (594) 139
Change in liabilities resulting from purchase of investment properties 10 (10)
Adjustment for liabilities with the double entry shown under prepayments and
deferred costs
- (73)
Change in other assets and liabilities results from the following items: (40 881) (11 127)
Change in prepayments and accruals in the balance sheet (28 763) (138)
Change in deferred income in the balance sheet (11 878) (10 749)
Adjusted for prepayments and deferred costs with the double entry in liabilities (240) (240)
“Other adjustments” comprise: 8 709 1 656
Costs of the incentive scheme 4 276 (999)
Measurement of derivative financial instruments 750 220
Amortization and depreciation written off, reported under cost of sales, consortium
settlements and other operating expenses
1 300 -
Amortization and depreciation reported under cost of sales and other operating
expenses
3 222 2 529
Foreign exchange differences on translation (546) (76)
Other adjustments (293) (18)
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
107
Note 50. Cash flows and non-monetary changes resulting from changes in liabilities in financing activities
01.01.2022 Cash flows
Non-monetary changes
31.12.2022
Takeover of
leased fixed
assets
Termination
of a lease
contract
Foreign
exchange
differences
Interest
accrued
Transfer of
own shares
Adopting
a resolution
on purchase
of treasury
shares
Adopting
a resolution
on
the payment
of dividend
Lease liabilities 16 654 (4 273) 8 276 (293) 22 581 - - - 20 967
Liabilities to shareholders
in respect of dividend
payment
- (100 739) - - - - - - 100 739 -
Receivables from eligible
persons in the incentive
scheme
- 822 - - - - (822) - - -
Liabilities in respect of
purchase of treasury
shares
- (99 993) - - - - - 99 993 - -
Total 16 654 (204 183) 8 276 (293) 22 581 (822) 99 993 100 739 20 967
01.01.2021 Cash flows
Non-monetary changes
31.12.2021
Takeover of
leased fixed
assets
Termination
of a lease
contract
Foreign
exchange
differences
Interest
accrued
Transfer of
own shares
Adopting
a resolution
on purchase
of treasury
shares
Adopting
a resolution
on
the payment
of dividend
Lease liabilities 18 939 (4 234) 1 236 (18) 196 535 - - - 16 654
Liabilities to shareholders
in respect of dividend
payment
- (503 694) - - - - - - 503 694 -
Receivables from eligible
persons in the incentive
scheme
- 2 149 - - - - (2 149) - - -
Total 18 939 (505 779) 1 236 (18) 196 535 (2 149) - 503 694 16 654
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
108
Statement of the Management Board of the Parent
Company
on the fairness of the preparation of the consolidated financial statements
In accordance with the requirements of the Regulation of the Minister of Finance of 29 March 2018 on current and periodical
information submitted by issuers of securities and conditions for considering as equivalent the information required under the
legislation of a non-Member State, the Management Board of the Parent Company declares that, to the best of its knowledge, these
consolidated financial statements and comparative data have been prepared in accordance with the accounting policies applicable
in the CD PROJEKT Group and that they reflect in a true, fair and clear manner the Group’s financial position and its results of
operations.
These consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards
(IFRS) endorsed by the European Union published and effective as at 31 December 2022, and to the extent not governed by the
said standards, in accordance with the Accounting Act of 29 September 1994 and the implementing legislation issued on the basis
thereof and to the extent required by Regulation of the Minister of Finance of 29 March 2018 on current and periodical information
submitted by issuers of securities and conditions for considering as equivalent the information required under the legislation of
a non-Member State.
On the entity authorized to audit the fairness of preparation of the annual consolidated financial
statements
On 9 March 2022, the Supervisory Board of the Parent Company selected Grant Thornton Polska Prosta spółka akcyjna with its
registered office in Poznań, as recommended by the Audit Committee, as auditor to carry out the review of the semi-annual and the
audit of the annual financial statements of the Company and its Group for 2022 and 2023. Grant Thornton Polska Prosta spółka
akcyjna has been entered on the list of entities authorized to audit financial statements by the Polish Chamber of Statutory Auditors
with the number 4055.
As stated by the Company’s Supervisory Board:
- The audit firm Grant Thornton Polska Prosta spółka akcyjna with its registered office in Poznań and the members of the
audit team fulfilled the conditions for the preparation of an impartial and independent report on the audit of the annual
separate financial statements of CD PROJEKT S.A. and the consolidated financial statements of the CD PROJEKT S.A.
Group for the financial year ending on 31 December 2022, in accordance with the applicable regulations, professional
standards and principles of professional ethics;
- The CD PROJECT Group complies with the applicable regulations relating to the rotation of the audit firm and the key
auditor, as well as mandatory grace periods;
- CD PROJEKT S.A. has a policy on the selection of the audit firm and the provision of additional non-audit services, including
prohibited services conditionally exempted, to CD PROJEKT S.A. by the audit firm, an affiliate of the audit firm or a member
of its network.
Consolidated financial statements of the CD PROJEKT Group for the period from 1 January to 31 December 2022
(all amounts in PLN thousand, unless stated otherwise)
The attached notes are an integral part of these financial statements
109
Approval of the financial statements
These consolidated financial statements of the CD PROJEKT Group were approved for publication by the Management Board of
CD PROJEKT S.A. on 30 March 2023 and signed on 30 March 2023 pursuant to Art. 63c(3) and Art. 52(2b) of the Accounting Act
of 29 September 1994 (consolidated text, Journal of Laws of 2023, item 120, as amended). The consolidated financial statements
be subject to approval by the General Meeting of CD PROJEKT S.A.
Warsaw, 30 March 2023
Piotr Nielubowicz Krystyna Cybulska
Vice-President of the Management Board Chief Accountant
110