CD Projekt — Audit Report / Information 2021

Apr 25, 2022

Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 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 Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 3 CD PROJEKT Group – selected financial highlights (converted into EUR) PLN EUR 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Revenues from sales of products, services, goods and materials 888 172 2 138 875 194 030 478 046 Cost of products, services, goods and materials sold 250 234 491 364 54 666 109 822 Operating profit (loss) 232 903 1 157 077 50 880 258 611 Profit (loss) before tax 219 108 1 164 949 47 866 260 370 Net profit (loss) attributable to equity holders of parent entity 208 908 1 150 148 45 638 257 062 Net cash flows from operating activities 967 825 711 708 211 431 159 069 Net cash flows from investment activities (613 795) (106 386) (134 090) (23 778) Net cash flows from financial activities (505 779) (91 393) (110 492) (20 426) Total net cash flows (151 749) 513 929 (33 151) 114 865 Stock volume (thousands) 100 718 96 461 100 718 96 461 Net earnings per share (PLN/EUR) 2.07 11.92 0.45 2.66 Diluted net earnings per share (PLN/EUR) 2.07 11.45 0.45 2.56 Book value per share (PLN/EUR) 18.81 22.63 4.09 4.90 Diluted book value per share (PLN/EUR) 18.80 21.73 4.09 4.71 Declared or paid out dividend per share (PLN/EUR) 5.00 - 1.09 - * adjusted PLN EUR 31.12.2021 31.12.2020 31.12.2021 31.12.2020 Total assets 2 158 735 2 890 299 469 351 626 311 Liabilities and provisions for liabilities (less accrued charges) 226 407 658 401 49 225 142 672 Long-term liabilities 36 112 166 153 7 851 36 004 Short-term liabilities 228 267 540 969 49 630 117 225 Equity 1 894 356 2 183 177 411 870 473 082 Share capital 100 739 100 655 21 903 21 811 * adjusted The above financial data has been converted into EUR under the following assumptions:  Elements of the consolidated profit and loss account and consolidated statement of cash flows were converted into EUR by applying the arithmetic average of exchange rates for the final day of each month belonging to the reporting period, as published by the National Bank of Poland. The corresponding exchange rates were: 4.5775 PLN/EUR for the period between 1 January and 31 December 2021, and 4.4742 PLN/EUR for the period between 1 January and 31 December 2020 respectively,  Assets and liabilities listed in the consolidated statement of financial position were converted into EUR by applying the exchange rate for the final day of the reporting period, as published by the National Bank of Poland. These exchange rates were: 4.6329 PLN/EUR on 30 September 2021 and 4.6148 PLN/EUR on 31 December 2020 respectively. Validation of published projections The Group had not published any projections referring to the reporting period. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 4 Table of contents Validation of published projections ............................................................................................................................................................................... 3 Primary financial data of the CD PROJEKT Group .......................................................................................................................................................... 6 Consolidated profit and loss account ........................................................................................................................................................................... 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 Clarifications regarding the consolidated financial statement ................................................................................................................................... 14 General information.......................................................................................................................................................................................................... 15 Consolidation principles ................................................................................................................................................................................................. 15 Entities subject to consolidation ............................................................................................................................................................................ 15 Subsidiaries .................................................................................................................................................................................................................. 16 Changes in accounting practices ................................................................................................................................................................................. 16 Assumption of going concern ....................................................................................................................................................................................... 16 Compliance with International Financial Reporting Standards ............................................................................................................................ 17 Changes in standards or interpretations in force, applied by the Group starting in 2021 .................................................................... 17 Description of applicable accounting practices .......................................................................................................................................................18 Operating revenues and expenses ........................................................................................................................................................................18 Financial revenues and expenses ..........................................................................................................................................................................18 State subsidies ............................................................................................................................................................................................................ 19 Current and deferred income tax .......................................................................................................................................................................... 19 Value added tax .......................................................................................................................................................................................................... 19 Property, plant and equipment ............................................................................................................................................................................... 19 Intangibles - expenditures on development projects ..................................................................................................................................... 20 Other intangibles ....................................................................................................................................................................................................... 20 Goodwill ........................................................................................................................................................................................................................ 20 Business combinations under common control ............................................................................................................................................... 20 Impairment of non-financial assets ........................................................................................................................................................................ 21 Investment properties ............................................................................................................................................................................................... 21 Perpetual usufruct of land ........................................................................................................................................................................................ 21 Lease agreements ...................................................................................................................................................................................................... 21 Shares and investments in subsidiaries excluded from consolidation ..................................................................................................... 22 Financial assets .......................................................................................................................................................................................................... 22 Financial liabilities ...................................................................................................................................................................................................... 22 Inventories ....................................................................................................................................................................................................................23 Trade and other receivables ...................................................................................................................................................................................23 Deferrals and accruals...............................................................................................................................................................................................23 Cash and other monetary assets ...........................................................................................................................................................................23 Assets held for sale and discontinued operations ...........................................................................................................................................23 Equity ..............................................................................................................................................................................................................................24 Provisions for liabilities ..............................................................................................................................................................................................24 Employee benefits ......................................................................................................................................................................................................24 Loans granted ..............................................................................................................................................................................................................24 Trade and other liabilities .........................................................................................................................................................................................24 Licenses .........................................................................................................................................................................................................................24 Dividend payments ....................................................................................................................................................................................................24 Functional currency and presentation currency ..................................................................................................................................................... 25 Functional currency and presentation currency .............................................................................................................................................. 25 Transactions and balances ..................................................................................................................................................................................... 25 Important values based on professional judgment and estimates ................................................................................................................... 25 Professional judgment.............................................................................................................................................................................................. 25 Uncertainty of estimates .......................................................................................................................................................................................... 25 Comparability of financial statements, changes in accounting policies and changes in estimates ....................................................... 26 Changes in accounting policies ............................................................................................................................................................................ 26 Presentation changes ............................................................................................................................................................................................... 26 Supplementary information – CD PROJEKT Group activity segments ................................................................................................................... 27 Activity segments ............................................................................................................................................................................................................. 28 Activity segments ....................................................................................................................................................................................................... 28 Disclosure of activity segments ............................................................................................................................................................................. 29 Supplementary information – additional notes and clarifications regarding the consolidated financial statement ............................... 36 Note 1. Sales revenues .............................................................................................................................................................................................. 37 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 5 Note 2. Operating expenses ...................................................................................................................................................................................38 Note 3. Other operating revenues and expenses ............................................................................................................................................38 Note 4. Financial revenues and expenses ......................................................................................................................................................... 39 Note 5. Current and deferred income tax .......................................................................................................................................................... 40 Note 6. Discontinued operations ........................................................................................................................................................................... 43 Note 7. Earnings per share ...................................................................................................................................................................................... 43 Note 8. Dividends paid out (or declared) and collected ................................................................................................................................. 44 Note 9. Disclosure of other components of the reported comprehensive income ............................................................................... 44 Note 10. Property, plant and equipment .............................................................................................................................................................. 44 Note 11. Intangibles and expenditures on development projects ................................................................................................................48 Note 12. Goodwill ....................................................................................................................................................................................................... 52 Note 13. Investment properties .............................................................................................................................................................................. 52 Note 14. Investments in subsidiaries excluded from consolidation .............................................................................................................53 Note 15. Other financial assets .............................................................................................................................................................................. 54 Note 16. Inventories .................................................................................................................................................................................................. 54 Note 17. Trade receivables ..................................................................................................................................................................................... 54 Note 18. Other receivables ...................................................................................................................................................................................... 57 Note 19. Prepaid expenses ..................................................................................................................................................................................... 59 Note 20. Cash and cash equivalents ................................................................................................................................................................... 59 Note 21. Share capital ............................................................................................................................................................................................... 60 Note 22. Other capital contributions ................................................................................................................................................................... 60 Note 23. Retained earnings .................................................................................................................................................................................... 63 Note 24. Minority interest capital .......................................................................................................................................................................... 63 Note 25. Credits and loans ..................................................................................................................................................................................... 63 Note 26. Other financial liabilities ......................................................................................................................................................................... 63 Note 27. Other long-term liabilities ...................................................................................................................................................................... 64 Note 28. Trade liabilities .......................................................................................................................................................................................... 64 Note 29. Other short-term liabilities ..................................................................................................................................................................... 66 Note 30. Internal Social Benefits Fund (ZFŚS): assets and liabilities .......................................................................................................... 67 Note 31. Contingent liabilities .................................................................................................................................................................................. 67 Note 32. Lease and sublease agreements ........................................................................................................................................................ 69 Note 33. Deferred revenues..................................................................................................................................................................................... 71 Note 34. Provisions for employee benefits and similar liabilities.................................................................................................................. 71 Note 35. Other provisions ........................................................................................................................................................................................ 73 Note 36. Disclosure of financial instruments ...................................................................................................................................................... 74 Note 37. Equity management .................................................................................................................................................................................. 78 Note 38. Employee share programs ..................................................................................................................................................................... 78 Note 39. Transactions with affiliates .................................................................................................................................................................... 80 Note 40. Mergers and changes in the structure of the CD PROJEKT Group .......................................................................................... 82 Note 41. Compensation of top management and Supervisory Board members .................................................................................... 82 Note 42. Employment ............................................................................................................................................................................................... 82 Note 43. Activated borrowing costs......................................................................................................................................................................83 Note 44. Disclosure of seasonal, cyclical or sporadic revenues ..................................................................................................................83 Note 45. Fiscal settlements .....................................................................................................................................................................................83 Note 46. Events following the balance sheet date ..........................................................................................................................................83 Note 47. Disclosure of transactions with entities contracted to perform audits of financial statements ........................................ 85 Note 48. Clarifications regarding the cash flow statement ........................................................................................................................... 86 Note 49. Cash flows and other changes resulting from financial activities ............................................................................................. 88 Statement of the Management Board of the parent entity ................................................................................................................................. 89 Approval of financial statement ................................................................................................................................................................................... 90 Primary financial data of the CD PROJEKT Group 1 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 7 Consolidated profit and loss account Note 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Sales revenues 888 172 2 138 875 Revenues from sales of products 1 691 564 1 839 932 Revenues from sales of services 1 5 865 2 242 Revenues from sales of goods and materials 1 190 743 296 701 Cost of products, services, goods and materials sold 250 234 491 364 Cost of products and services sold 2 107 391 256 105 Cost of goods and materials sold 2 142 843 235 259 Gross profit (loss) from sales 637 938 1 647 511 Selling costs 2 299 225 408 016 General and administrative costs 2 71 949 66 435 Other operating revenues 1,3 17 376 8 535 Other operating expenses 3 51 231 24 421 (Impairment)/reversal of impairment of financial instruments (6) (97) Operating profit (loss) 232 903 1 157 077 Financial revenues 1,4 9 523 17 081 Financial expenses 4 23 318 9 209 Profit (loss) before tax 219 108 1 164 949 Income tax 5 10 200 14 801 Net profit (loss) 208 908 1 150 148 Net profit (loss) attributable to equity holders of parent entity 208 908 1 150 148 Net earnings per share (in PLN) - - Basic for the reporting period 7 2.07 11.92 Diluted for the reporting period 7 2.07 11.45 * adjusted Consolidated statement of comprehensive income Note 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Net profit/(loss) 208 908 1 150 148 Other comprehensive income which will be entered as profit (loss) following fulfillment of specific criteria 9 4 842 635 Exchange rate differences from valuation of foreign entities 500 193 Estimation of financial instruments at fair value through other comprehensive income, adjusted for tax effects 4 342 442 Other comprehensive income which will not be entered as profit (loss) 9 - - Total comprehensive income 213 750 1 150 783 Total comprehensive income attributable to minority interests - - Total comprehensive income attributable to equity holders of CD PROJEKT S.A. 213 750 1 150 783 * adjusted Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 8 Consolidated statement of financial position Note 31.12.2021 31.12.2020 FIXED ASSETS 905 846 759 999 Property, plant and equipment 10 115 234 105 349 Intangibles 11 58 393 59 790 Expenditures on development projects 11 350 195 406 798 Investment properties 13 48 988 48 841 Goodwill 11,12 56 438 56 438 Shares in subsidiaries excluded from consolidation 14 38 520 8 195 Deferrals 19 11 434 11 676 Other financial assets 15,36 178 540 51 588 Deferred income tax assets 5 47 418 11 003 Other receivables 18,36 686 321 WORKING ASSETS 1 252 889 2 130 300 Inventories 16 15 886 6 957 Trade receivables 17,36 125 293 1 205 603 Current income tax receivables 98 - Other receivables 18 113 498 70 210 Deferrals 19 13 763 13 383 Other financial assets 15,36 307 765 106 444 Bank deposits (maturity beyond 3 months) 36 265 000 164 368 Cash and cash equivalents 20,36 411 586 563 335 TOTAL ASSETS 2 158 735 2 890 299 * adjusted Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 9 Note 31.12.2021 31.12.2020 EQUITY 1 894 356 2 183 177 Parent entity shareholders’ equity 1 894 356 2 183 177 Share capital 21 100 739 100 655 Supplementary capital 22 1 425 647 774 851 Supplementary capital from sale of shares above nominal value 22 115 909 113 844 Other reserve capital 22 47 994 45 547 Exchange rate differences 1 591 1 091 Retained earnings 23 (6 432) (2 959) Net profit (loss) for the reporting period 208 908 1 150 148 Minority interest equity 24 - - LONG-TERM LIABILITIES 36 112 166 153 Other financial liabilities 26,32,36 21 080 16 006 Other liabilities 27 2 860 3 173 Deferred revenues 33 6 424 963 Provisions for employee benefits and similar liabilities 34 380 398 Other provisions 35 5 368 145 613 SHORT-TERM LIABILITIES 228 267 540 969 Other financial liabilities 26,32,36 25 802 2 933 Trade liabilities 28,36 53 380 115 444 Current income tax liabilities 24 446 1 742 Other liabilities 29 10 042 33 134 Deferred revenues 33 31 548 47 758 Provisions for employee benefits and similar liabilities 34 7 4 Other provisions 35 83 042 339 954 TOTAL EQUITY AND LIABILITIES 2 158 735 2 890 299 * adjusted Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 10 Statement of changes in consolidated equity Share capital Supplementary capital Supplementary capital from sale of shares above nominal value Own shares Other reserve capital Exchange rate differences Retained earnings Net profit (loss) for the reporting period Parent entity shareholders’ equity Total equity 01.01.2021 – 31.12.2021 Equity as of 01.01.2021 100 655 774 851 113 844 - 45 547 1 091 1 151 368 - 2 187 356 2 187 356 Rectification of errors - - - - - - (4 179) - (4 179) (4 179) Adjusted equity 100 655 774 851 113 844 - 45 547 1 091 1 147 189 - 2 183 177 2 183 177 Cost of incentive program - - - - (1 026) - - - (1 026) (1 026) Payment in own shares 84 869 2 065 - (869) - - - 2 149 2 149 Dividend payment - - - - - - (503 694) - (503 694) (503 694) Allocation of net profit/ coverage of losses - 649 927 - - - - (649 927) - - - Total comprehensive income - - - - 4 342 500 - 208 908 213 750 213 750 Equity as of 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 has rectified its calculation of deferred tax assets for 31 December 2020, reclassifying some of the negative temporary differences from the 19% tax rate category to the 5% tax rate category. This resulted in a decrease in Equity by 4 179 thousand PLN. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 11 Share capital Supplementary capital Supplementary capital from sale of shares above nominal value Own shares Other reserve capital Exchange rate differences Retained earnings Net profit (loss) for the reporting period Parent entity shareholders’ equity Total equity 01.01.2020 – 31.12.2020 Equity as of 01.01.2020 96 120 777 090 3 861 - 54 657 898 173 025 - 1 105 651 1 105 651 Cost of incentive program - - - - 14 877 - - - 14 877 14 877 Dissolution of reserve capital from past years created to finance purchase of own shares - 549 - - (549) - - - - - Creation of reserve capital to finance purchase of own shares - (250 000) - - 250 000 - - - - - Purchase of own shares in the implementation of the incentive program - 214 259 - (214 259) (214 259) - - - (214 259) (214 259) Payment in own shares 4 535 (143 031) 109 983 214 259 (59 621) - - - 126 125 126 125 Allocation of net profit/ coverage of losses - 175 984 - - - - (175 984) - - - Total comprehensive income - - - - 442 193 - 1 150 148 1 150 783 1 150 783 Equity as of 31.12.2020 100 655 774 851 113 844 - 45 547 1 091 (2 959) 1 150 148 2 183 177 2 183 177 * adjusted The Group adjusted the presentation of the effect of the vesting of its incentive program for 2012-2015. As a result of this change, the “Other reserve capital” line item was adjusted downward by 3 861 thousand PLN, while the “Supplementary capital from sale of shares above nominal value” was adjusted upward by the same amount. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 12 Consolidated statement of cash flows Note 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 OPERATING ACTIVITIES Net profit (loss) 208 908 1 150 148 Total adjustments: 48 766 750 (460 131) Depreciation of PP&E, intangibles, expenditures on development projects and investment properties 17 764 13 559 Depreciation of expenditures on development projects recognized as cost of products and services sold 86 965 254 105 Profit (loss) from exchange rate differences (15 047) 2 220 Interest and profit sharing (228) (7 188) Profit (loss) from investment activities 55 282 (5 440) Change in provisions (311 449) 366 499 Change in inventories (8 929) 5 905 Change in receivables 1 036 886 (1 083 890) Change in liabilities excluding credits and loans (85 023) 77 319 Change in other assets and liabilities (11 127) (100 033) Other adjustments 1 656 16 813 Cash flows from operating activities 975 658 690 017 Income tax on pre-tax profit (loss) 4 337 1 039 Withholding tax paid abroad 5 863 13 762 Income tax (paid)/reimbursed (18 033) 6 890 Net cash flows from operating activities 967 825 711 708 INVESTMENT ACTIVITIES Inflows 257 135 823 545 Sales of PP&E and intangibles 241 22 Sales of shares in subsidiary 19 - Closing bank deposits (maturity beyond 3 months) 164 368 754 581 Maturation of bonds 82 715 59 426 Interest on bonds received 1 703 115 Inflows from settlement of forward contracts 7 887 1 801 Other inflows from investment activities 202 7 600 Outflows 870 930 929 931 Purchases of intangibles and PP&E 27 969 18 516 Expenditures on development projects 155 401 203 076 Purchase of investment properties and activation of costs 2 085 8 336 Loans granted 4 340 4 500 Acquisition of subsidiary 19 306 - Purchase of bonds and the associated purchase fees 396 829 209 441 Opening bank deposits (maturity beyond 3 months) 265 000 486 054 Other outflows from investment activities - 8 Net cash flows from investment activities (613 795) (106 386) * adjusted Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 13 Note 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 FINANCIAL ACTIVITIES Inflows 2 189 126 124 Net inflows from sale and issue of shares in the exercise of rights assigned under the incentive program 2 149 126 124 Collection of receivables arising from financial lease agreements 40 - Outflows 507 968 217 517 Purchase of own shares in the exercise of entitlements assigned under the incentive program - 214 259 Dividends and other payments to equity holders 503 694 - Payment of liabilities arising from lease agreements 3 733 2 857 Interest payments 541 401 Net cash flows from financial activities (505 779) (91 393) Total net cash flows (151 749) 513 929 Balance of changes in cash and cash equivalents (151 749) 513 929 Cash and cash equivalents at beginning of period 563 335 49 406 Cash and cash equivalents at end of period 411 586 563 335 Clarifications regarding the consolidated financial statement 2 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 15 General information Name of reporting entity: CD PROJEKT S.A. (no changes in the name of the reporting entity occurred since the close of the previous reporting period) Legal status: Joint-stock company Headquarters: Jagiellońska 74, 03-301 Warsaw Country of registration: Poland Principal scope of activity: CD PROJEKT S.A. is the holding company of the CD PROJEKT Group which conducts its operations in two activity segments: CD PROJEKT RED and GOG.COM Keeper of records: District Court for the City of Warsaw in Warsaw – Poland; 14th Commercial Department of the National Court Register (Sąd Rejonowy dla m.st. Warszawy w Warszawie, XIV Wydział Gospodarczy Krajowego Rejestru Sądowego) Statistical identification number (REGON): 492707333 Tax identification number (NIP): 7342867148 Waste disposal database (BDO) number: 000141053 Duration of the Group: Indefinite Name of parent entity: CD PROJEKT S.A. Name of ultimate parent entity of the Group CD PROJEKT S.A. Consolidation principles Entities subject to consolidation capital share voting share consolidation method CD PROJEKT S.A. parent entity - - GOG sp. z o.o. 100% 100% full CD PROJEKT Inc. 100% 100% full CD PROJEKT Co., Ltd. (in liquidation) 100% 100% excluded from consolidation Spokko sp. z o.o. 74% 74% excluded from consolidation CD PROJEKT RED STORE sp. z o.o. 100% 100% full CD PROJEKT RED Vancouver Studio Ltd. 100% 100% excluded from consolidation The Molasses Flood LLC 60% 60% excluded from consolidation Four companies were excluded from consolidation since they failed to meet the materiality criterion. In accordance with the accounting policies in force within the Group, the parent entity may elect to exclude certain subsidiaries from consolidation as long as each of these subsidiaries:  contributes not more than 2% to the parent entity’s profit and loss balance,  contributes not more than 1% to the parent entity’s aggregate sales and financial revenues. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 16 Note that the above values are exclusive of any transactions between the subsidiary and the parent company which would have otherwise been subject to consolidation eliminations. In addition to the above, all subsidiaries excluded from consolidation must jointly:  contribute not more than 5% to the parent entity’s profit and loss balance,  contribute not more than 2% to the parent entity’s aggregate sales and financial revenues. The above values are also exclusive of any transactions between each subsidiary and the parent company which would have otherwise been subject to consolidation eliminations. Subsidiaries Subsidiaries are defined as all entities which fall under the Group’s control. An entity is considered to fall under the Group’s control if all of the following criteria are met:  executive control, i.e. possession of the required legal title to direct the entity’s significant operations (operations, which significantly affect the entity’s financial standing),  exposure to variation in the entity’s financial results, or possession of the required legal title to adjust the Group’s financial results in relation to the entity’s own financial results,  possession of the required administrative apparatus to affect the Group’s own financial results by exercising the right to affect financial results attributable to the Group by leveraging the Group’s involvement in the entity. Subsidiaries which meet materiality criteria are subject to full consolidation from the date of acquisition of control by the Group and cease to be reported as such on the day control is lost. Any revenues, expenses, settlements and unrealized gains on transactions between companies belonging to the Group are eliminated in full. Unrealized losses are also eliminated unless the nature of the transaction indicates impairment of any of the transferred assets. Accounting practices in use at subsidiary companies are adjusted whenever necessary to ensure compliance with accounting practices adopted by the Group. Changes in accounting practices The accounting practices applied in preparing this consolidated financial statement, the Management Board’s professional judgment concerning the Group’s accounting practices as well as the main sources of uncertainty in estimations are in all material aspects consistent with the practices applied in preparing the Consolidated Financial Statement of the CD PROJEKT Group for 2020, except for changes in accounting policies and presentation-related adjustments described in the section titled “Comparability of financial statements, changes in accounting policies and changes in estimates”. Assumption of going concern This consolidated financial statement is prepared under the assumption that the parent Company and its Group intend to continue as a going concern in the foreseeable future, i.e. at least throughout the 12-month period following the balance sheet date. As of the date of signing this statement, the Management Board of the parent Company is not aware of any facts or circumstances which would jeopardize the assumption of going concern within said 12-month period by way of intended or forced cessation or significant reduction of continuing operations. As of the day of preparation of this consolidated financial statement covering the period between 1 January and 31 December 2021 the Management Board of the parent Company is not aware of any events which should have been reflected in the accounts for that period but have not been reflected therein. Additionally, no important events related to the preceding years were included in this statement. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 17 Compliance with International Financial Reporting Standards The Group’s consolidated financial statement has been prepared in accordance with the International Financial Reporting Standards (hereinafter referred to as “IFRS”) approved by the EU and applicable to annual reporting periods beginning on 1 January 2021. Changes in standards or interpretations in force, applied by the Group starting in 2021 In preparing its consolidated financial statement for 2021 the Group applied the same accounting standards as in its consolidated financial statement for 2020 with exception of the following new and amended standards and interpretations approved by the European Union and applicable to reporting periods beginning on or after 1 January 2021:  Amendments to MSSF 4 Insurance contracts – postpones application of IFRS 9 Financial instruments until 1 January 2021, i.e. until IFRS 17 Insurance contracts comes into force.  Amendments to IFRS 16 Leases – in force since 1 April 2021 and applicable to reporting periods beginning or on after 1 January 2021. The change introduces a practical expedient which permits the entity to forgo assessing whether changes in future flows resulting from rent concessions granted by lessors and meeting certain criteria expressed in the standard constitute a “lease modification” under IFRS 16. The following conditions must be met in order for a concession to be eligible for this status:  the total revised consideration for the lease following the concession must be substantially the same or lower than prior to granting the concession,  the concession must apply to payments which were due on or before 30 June 2021 (although subsequent increases may fall beyond that date),  there is no substantive change to other terms and conditions of the lease.  Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, IFRS 16 – applicable to reporting periods beginning on or after 1 January 2021  In the case of estimation at amortized cost, changes in estimated flows resulting directly from the IBOR reform are treated in the same way as changes in variable interest rates, i.e. without affecting the P&L statement,  There is no need to discontinue hedge accounting if the only change results from the IBOR reforms and all other hedge accounting criteria are met; the change concerns the recognition of alternative benchmark rates in hedge accounting;  The issuer is obligated to disclose any risks arising due to the reform, along with details of its process of transitioning to alternative benchmark rates. These amendments have no significant impact on the Group’s accounting practices as relates to the Group’s activities or its financial result. Standards published and approved by the UE which have not yet entered into force, and their effect on the Group’s financial statement The Management Board has carried out an analysis of the effect of new standards upon future financial statements. In approving this financial statement the Group did not apply the following standards, amendments and interpretations which have been published and approved by the UE but have not yet entered into force:  Amendments to IAS 1 and Practice Statement 2: Disclosure of accounting policies (published on 12 February 2021) – approved on 3 March 2022 and applicable to reporting periods beginning on or after 1 January 2023,  Amendments to IAS 8 Accounting policies, changes in accounting estimates and errors – approved on 3 March 2022 and applicable to reporting periods beginning on or after 1 January 2023,  MSSF 17 Insurance contracts – approved on 23 November 2021 and applicable to reporting periods beginning on or after 1 January 2023,  Amendments to IFRS 3 Business combinations, IAS 16 Property, plant and equipment, IAS 37 Provisions, contingent liabilities and contingent assets, and amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 introduced in the annual IFRS improvement cycle (2018-2020) – approved on 31 August 2021 and applicable to reporting periods beginning on or after 1 January 2022. The Group does not anticipate a significant effect of these changes upon the Group’s accounting practices as relates to the Group’s activities or its financial result. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 18 Standards and interpretations approved by the IASB but not yet approved by the EU In approving this financial statement the Group did not apply the following standards, amendments and interpretations which have not yet been approved for use in the EU:  Amendments 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 2023,  Amendments to IAS 12 Income taxes: deferred tax related to assets and liabilities arising from a single transaction - applicable to reporting periods beginning on or after 1 January 2023,  IFRS 14 Regulatory deferral accounts – published on 30 January 2014 and applicable to annual reporting periods beginning on or after 1 January 2016. The European Commission has decided to withhold approval of this temporary standard for use in the UE until the final version of the standard is published. The standard had not been approved by the UE by the date of publication of this financial statement.  MSSF 17 Insurance contracts – initial application of IFRS 17 and IFRS 9 - applicable to reporting periods beginning on or after 1 January 2023,  Amendments to IFRS 10 and IAS 28 Sale or contribution of assets between an investor and its associate or joint venture (published on 11 September 2014) – the EU has suspended work on approving these amendments indefinitely, and their date of entry into force has been postponed indefinitely by the International Accounting Standards Board, The Group is performing an assessment of the effect these new standards and amendments to standards upon the Group’s financial statement. Description of applicable accounting practices Operating revenues and expenses Revenues are defined as the gross receipts on any economic benefits from the reported period resulting from (ordinary) economic activities of the Group and leading to an increase in its equity other than from capital increases obtained through shareholder contributions. The Group recognizes revenues by applying the so-called Five Step Model described in IFRS 15. Revenues only cover amounts received or receivable by the Group, equivalent to the transaction prices payable to the Group following (or during) discharge of its liability to transfer the contractually pledged goods or services (i.e. asset) to the client. The transaction price is defined as the remuneration which the Group expects to receive in return for transfer of the pledged goods or services, less the applicable value added tax. With regard to licensing royalties associated with distribution of videogames, which constitute the Group’s main source of revenues, these depend on the volume of sales carried out by each distributor throughout the reporting period. Consequently, for each product, the corresponding sales revenues can be recognized only after the Group has supplied all necessary materials enabling the finished game to be distributed, and the reported figures depend on sales reports periodically submitted by distributors. In accordance with the principle of matching revenues and expenses, expenses associated with consumption of materials, goods and finished products, along with costs of services, are reported in the same period as their corresponding sales revenues or revenues from services which these assets are part of. Financial revenues and expenses Financial revenues consist mainly of interest on bank deposits of monetary assets, commissions and interest on loans granted, penalty interest on overdue receivables, liabilities, dissolved provisions associated with financial activities, revenues from sales of securities, gains from exchange rate differences, reversal of impairment of financial investments, credit/loan write-offs and gains from revaluation of derivatives. Financial expenses consist mainly of interest on outstanding credits and loans, penalty interest on overdue liabilities, provisions set aside to cover certain or probable losses from financial operations, purchase value of any securities sold, commissions and handling charges, impairment allowances on interest owed, short-term investment valuations, discounts and exchange rate differences related to financial activities (balance), and, in the case of lease agreements, any other payments except capital payments. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 19 State subsidies Subsidies are not recognized until there is a reasonable certainty that the Group will fulfill the necessary criteria and receive the subsidy. State subsidies predicated on the condition that the recipient purchases or produces certain PP&E assets are recognized in the statement of financial position in the deferred revenues line item and charged to the financial result systematically throughout the anticipate economic life of such assets. Current and deferred income tax The reported revenue is subject to compulsory taxation, whether current or deferred. Current tax is calculated on the basis of taxable income (tax base) for a given financial year. Tax gain (or loss) differs from net accounting gain (or loss) due to temporal differences in recognition of revenues and expenses for fiscal and accounting purposes, as well as due to permanent differences in handling certain revenues and expenses with regard to their fiscal and accounting effects, as appropriate. Tax burden is calculated on the basis of tax rates valid for a given financial year. Current tax on items included directly in the equity capital is reported in the equity statement, as opposed to the profit and loss account. Deferred tax is calculated using the balance sheet method as the amount payable or receivable as a result of the difference between the carrying amount of assets and liabilities and their corresponding tax base amounts. Deferred income tax liabilities are recognized in correspondence with taxable positive temporary differences. Deferred tax assets are recognized up to the amount of probable reduction in future tax gains by any recognized negative temporary differences. A tax asset or liability is not recognized if the underlying temporary difference is due to goodwill or original recognition of another asset or liability in a transaction which does not affect the Group’s taxable or accounting revenues. Deferred income tax liabilities are applied to temporary tax differences resulting from investments in associates and joint ventures unless the Group is capable of controlling the moment of reversal of the temporary difference and the temporary difference is unlikely to reverse in the foreseeable future. The value of the asset associated with deferred tax is subject to analysis for each balance sheet date. If the expected future tax gains are insufficient to cover the asset or part thereof, a write-down is recognized on the asset. Deferred tax is calculated by applying rates which will be in force on the date the corresponding gain is realized or the liability becomes due. Deferred tax is reported in the profit and loss account unless it applies to assets included directly in the equity capital in which case it is also reported in the equity capital. Value added tax All revenues, expenses and assets are recorded following deduction of the applicable value added tax, except for:  cases where the value added tax paid when purchasing assets or services cannot be recovered from tax authorities, in which case it is reported as part of the purchase cost of a given asset or as an expense,  receivables and liabilities reported as inclusive of value added tax. The net amount of value added tax recoverable from or payable to tax authorities is reported in the statement as part of the Group’s receivables or liabilities. Property, plant and equipment PP&E assets are recognized on the basis of their cost (purchase price or production cost) following deduction of depreciation and impairment for each reporting period. Borrowing costs associated directly with the purchase or construction of assets which require a long time to become usable or resalable are added to the cost of construction of such assets up until the beginning of their useful economic life. Revenues from short-term investment of borrowings related to construction of PP&E assets are deducted from the borrowing costs following capitalization. Other borrowing costs are reported as expenses in the period during which they were incurred. Depreciation is calculated for all fixed assets except land holdings and PP&E assets under construction, throughout their expected useful economic life, using the straight-line method. The expected useful life for individual categories of PP&E assets is as follows: Category Useful life Buildings and structures 5 – 25 years Machinery and equipment 2 – 10 years Vehicles 5 years Other PP&E 2 – 10 years Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 20 Low-value PP&E assets, i.e. assets whose initial unit value does not exceed 5 000 PLN, are depreciated in a simplified manner by way of a one-time write-down. Profits or losses on sales/disposal or cessation of use of PP&E assets are defined as the difference between their sales revenues and net value, and are reported in the profit and loss account. Intangibles - expenditures on development projects The Group reports expenses associated with development of videogames as expenditures on development projects. Videogame development expenses incurred prior to the commencement of sales or application of new solutions are recognized as development projects in progress. Once development has completed and the relevant costs are recognized, said expenses are transferred to the Development projects completed line item. In the case of projects for which a reliable estimate of sales volume and budget can be provided, the Group recognizes depreciation on the basis of economic benefits associated with the expected sales volume. In all other cases, the straight-line method is applied instead. Depreciation of development expenditures is presented in the profit and loss account as the cost of products and services sold. Other intangibles Intangibles are recognized according to their historical cost of purchase or production, following deduction of depreciation and impairment costs. Depreciation is calculated using the straight-line method. Costs of research and development activities are not subject to activation and are reported in the profit and loss account for the period when they were incurred. The expected useful life for individual classes of intangible assets is as follows: Category Useful life Patents and licenses 2 – 15 years Computer software 2 – 10 years Intangibles with a low opening value, not exceeding 5 000 PLN, are depreciated in a simplified way through a one-time deduction. In its consolidated financial statement, the Group regards The Witcher trademark and the CD PROJEKT brand name as its intangible assets. The value of trademarks is calculated using the Relief from Royalty method, which is one of the basic valuation methods for trademarks and other intangible assets in the context of business combinations, in line with IFRS 3 Business combinations. The useful economic life of both assets is regarded as indefinite. Trademark valuation is subject to yearly impairment tests. Goodwill Goodwill is computed by calculating the difference between the following two values:  total payment remitted in exchange for control, noncontrolling interests (estimated in proportion to net assets taken over) and fair value of shares of the acquired entity held prior to the date of its acquisition,  fair value of identifiable net assets acquired. The surplus between the total calculated according to the above formula and the fair value of identifiable net assets acquired is recognized in the consolidated statement of financial position as a distinct asset, i.e. goodwill. Goodwill represents the payment made by the acquirer in exchange for future economic benefits yielded by the acquired assets which cannot be individually identified or estimated. Following initial recognition, goodwill is estimated at purchase price less any impairment write-downs. Any negative difference between the aforementioned figure and the net value of identifiable assets acquired is directly represented on the balance sheet. The Group aggregates profit from business combinations with its Other operating revenues. Business combinations under common control Legal mergers between the parent Company and a subsidiary thereof are recognized on the basis of the subsidiary’s financial data disclosed in the parent Company’s consolidated financial statement; these figures include changes which occur at the parent Company as a result of merging with the subsidiary. The reported financial result and financial position of the subsidiary are determined prospectively from the merger date. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 21 Impairment of non-financial assets For each balance sheet date Group member companies perform an inventory of the net value of all of their PP&E assets in order to determine whether impairment of assets may have occurred. If asset impairment is suspected, the recoverable amount of each asset is calculated to determine the potential write-down. If a given asset does not produce a cash flow that is substantially separate from cash flows produced by other assets, analysis is performed for the whole group of cash producing assets to which the given asset belongs. For intangible assets with an indefinite useful economic life this impairment test is performed on a yearly basis and, additionally, whenever impairment is suspected. Recoverable amount is defined as the greater of the following two values: fair value of the asset less the cost of sale, and the asset’s value in use. The latter value is defined as the balance of expected future cash flows produced by the asset, discounted using discount rates which acknowledge the market value of the relevant currency and a risk factor specific to the given asset. If the recoverable amount of a given asset is lower than its net book value, the book value is lowered to match the recoverable amount. The loss resulting from this operation is accounted as cost in the period during which it was incurred, unless the asset had previously been carried at a revalued amount in which case the impairment is reflected by adjusting the revalued amount. At the moment of reversal of asset impairment, the net value of the asset (or group of assets) is increased to match the newly estimated recoverable amount; it cannot, however, exceed the net value of the asset which would have been reported had the impairment not been recognized during previous fiscal years. Reversal of asset impairment is recognized as revenues. Investment properties Investment properties are defined as all properties held for the expected revenues from rent, increase in value, or both. As such, cash flows produced by investment properties are largely independent from those produced by other assets belonging to any member company of the Group. Investment properties are estimated using the purchase cost method. Perpetual usufruct of land Perpetual usufruct may apply to land owned by the State Treasury, local authorities, or combinations thereof. Perpetual usufruct is a special type of property law which entitles physical or legal entities to use a given plot of land on an exclusive basis. Perpetual usufruct is fully transferable and usually granted for a period of 99 years, although in exceptional cases shorter grants (of at least 40 years) are permitted when the economic rationale for establishing the usufruct does not justify a longer grant. Perpetual usufruct of land is reported as a lease, in line with IFRS 16. The Group represents the usufruct of such leases, in accordance with its nature, as either Investment properties or Property, Plant and Equipment. Lease agreements The Group, when acting as the lessee, regards a contract as a lease agreement or an agreement which includes a lease if it essentially transfers the totality of risks and benefits associated with a given base asset for a given period, in exchange for remuneration. When acting as the lessor, the Group regards a contracts as a financial lease agreement if it essentially transfers the totality of risks and benefits associated with a given asset. When such risks and benefits are not transferred in their totality, the contract is instead regarded as an operating lease agreement. The usufruct of an asset held under a lease agreement entails mainly the right to acquire all economic benefits associated with its use, as well as the right to control the manner in which it is used. Risks associated with leases comprise losses incurred due to the non-use of production capabilities, loss of technical suitability or reduction in returns resulting from changes in economic conditions. Benefits may include the expected profitable operation of a given asset throughout its useful economic life or the expected profit resulting from increases in the asset’s value or recovery of its final value. On the date of initial recognition the Group recognizes an asset representing the usufruct of the lease, and a corresponding lease liability. Usufruct is initially estimated at purchase price, which consists of the initial value of the lease liability, initial direct costs, estimated costs related to disposal of the base asset, and lease payments remitted on or before the initial date, less lease incentives (if any). The Group depreciates usufruct using the straight-line method between the initial date and the end of the usufruct or the end of the lease period, whichever comes first. When deemed justifiable, usufruct of leased assets is subjected to impairment tests, pursuant to IAS 36. On the initial date the Group recognizes a lease liability which is equivalent to the lease payments outstanding, adjusted for the lease interest rate, if easily determinable. If not, the lessee’s marginal interest rate is applied instead. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 22 Lease payments which affect the corresponding lease liability consist of fixed lease payments, variable lease payments (dependent on the applicable indexation or interest rate), expected payments corresponding to the asset’s guaranteed residual value, and expected payments related to buyout of leased assets, when such buyout can reasonably be regarded as certain. In each successive reporting period the lease liability is lowered by the amount paid, and increased to account for accrued interest. Estimation of lease liabilities is updated to reflect contractual changes and reassessments related to lease periods, buyout options, guaranteed residual value or lease payments dependent on the applicable indexation or interest rate. As a rule, revaluation of lease liabilities is recognized as an update of the line item which represents the usufruct of the leased asset. The Group applies the practical expedient allowed by the standard to account for short-term leases and leases of low-value assets. In relation such assets, instead of recognizing usufruct and a corresponding lease liability, lease payments are aggregated with the financial result using the straight-line method throughout the lease period. Shares and investments in subsidiaries excluded from consolidation Shares and investments in subsidiaries excluded from consolidation are accounted on their effective date and at cost. Assessment of such investments for a given balance sheet date is performed on the basis of initial cost less write-downs associated with impairment of assets, if any. Financial assets On initial recognition the Group assigns each of its financial assets into one of four categories, depending on the Group’s business model related to management of financial assets and the specific nature of contractual cash flows associated therewith:  assets classified at amortized cost,  assets classified at fair value reported in other comprehensive income (FVOCI),  assets classified at fair value through profit and loss,  financial hedges. Each financial asset is assigned to one of the above categories on initial recognition. This assignment may change only if the associated business model changes. Essential classes of business models are as follows: assets held to collect contractual cash flows; assets held to collect contractual cash flows and potentially sell the asset; assets held for reasons other than those listed previously (as a rule, this is construed as holding assets for trading). The Group has adopted a rule stating that the sale of a financial asset prior to its maturity does not, in itself, cause the underlying business model to shift from holding assets to collect contractual cash flows to holding assets to collect contractual cash flows and potentially sell the assets or to holding assets for other purposes. As the Group does not engage in hedge accounting, the corresponding IFRS 9 provisions do not apply to the Group’s activities. Credit risk associated with assets which constitute financial instruments is estimated by the Group on the basis of the expected credit loss (ECL) model. The basic method for determining loss allowances in the ECL model is a procedure under which the Group monitors changes in credit risk associated with each financial asset since its initial recognition, and assigns each financial asset to one of three stages: stage 1 – performing (used in relation to assets whose credit risk has not increased substantially since initial recognition); stage 2 – under-performing (used in relation to assets whose credit risk has increased substantially since initial recognition, but for which there is no objective reason to suspect impairment); stage 3 – impaired (used in relation to assets for which there is objective reason to suspect impairment). Financial liabilities A financial liability is defined as any liability which:  is associated with a contractual obligation to transfer monetary or other financial assets to another entity, or exchange financial assets or liabilities with another entity on potentially disadvantageous terms;  is associated with a contract that will or may be settled in the entity’s own equity instruments and is a non-derivative for which the entity is or may be obliged to deliver a variable number of the entity’s own equity instruments; or a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments. For this purpose, rights, options or warrants to acquire a fixed number of the entity’s own equity instruments for a fixed amount of any currency are considered equity instruments if the entity offers the rights, options or pro rata warrants to all existing owners of the same class of its own non-derivative equity instruments. On initial recognition Group member companies classify each of their financial liabilities as:  financial liabilities designated at fair value through financial result,  other financial liabilities designated at amortized cost. On initial recognition a financial liability is estimated at fair value, which is increased – if the given liability is not qualified for estimation at fair value through financial result – by the cost of transactions directly related to said liability. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 23 Inventories The initial value (cost) of an inventory is the sum of all costs (related to purchase, production etc.) incurred in bringing the inventory to its current level and location. The cost of inventories is defined as the original purchase price increased by import duties and other taxes (which cannot be recovered from tax authorities), transport, loading and unloading costs, and any other costs associated with construction of inventories, and reduced by any discounts, rebates and similar deductions. Inventories are valued at initial cost (purchase price or production cost) or at their achievable net sale price, whichever is lower. The achievable net sale price is defined as the estimated sale price reduced by any costs involved in finalizing production, facilitating the sale and finding a buyer (this includes sales and marketing expenses, etc.) In relation to inventories, cost is always determined by applying the “weighted average” method. Trade and other receivables Receivables associated with delivery of products and services are entered in the accounts at their transaction prices, adjusted for impairment allowances under the expected credit loss model. Claims related to sale of products which have been produced and accounted for in the reporting period but reported following the end of this period (in accordance with contractual obligations) are reported as trade receivables. Deferrals and accruals The Group recognizes as deferred revenues those revenues which corresponds to future reporting periods, at the moment these revenues are realized. In the CD PROJEKT RED segment future period sales represent mainly royalties obtained or obtainable in association with customer preorders of digital editions of PC games scheduled for release in future reporting periods, prepayments related to royalties, advance payments for goods received from suppliers, and settlements carried out over time in relation to subsidies. In the GOG.COM segment future period sales represent the value of customer preorders of games scheduled for release in future reporting periods as well as deferrals involving customers of the online store in the framework of the so-called GOG Wallet. Accrued expenses represent liabilities related to goods and services which have been received or rendered, invoiced or formally agreed upon with suppliers. Group member companies recognize as prepaid expenses costs borne upfront, associated – in whole or in part – with future reporting periods. In the GOG.COM segment GOG sp. z o.o. purchases distribution licenses, which are initially regarded as prepaid expenses. This initial recognition applies to the so-called minimum guarantees: payments contractually remitted to copyright holders upon conclusion of a contract. Minimum guarantees are aggregated with cost of goods sold following commencement of sales; thus, costs related to minimum guarantees correlate with sales revenues. Cash and other monetary assets Cash assets are defined as cash on hand, deposits payable on demand and bank deposits with maturity periods of up to 3 months. Other monetary assets represent highly liquid short-term investments easily exchangeable for a known quantity of cash and subject to low depreciation risk. Overdraft on any current bank account is aggregated with credits and loans and reported as cash flows from financial activities. Assets held for sale and discontinued operations Fixed assets held for sale (as well as net disposal groups) are estimated at either their carrying amount or their fair value less the cost of sale, whichever is lower. Fixed assets and disposal groups are classified as held for sale if their carrying amount is expected to be retrieved by way of sale rather than continued use. This condition is only considered fulfilled if the sale transaction is highly likely to occur and the given asset (or disposal group) is available for immediate sale in its present form. Designating a given asset as held for sale conveys the Group member company management’s intent to conclude the sale transaction within one year of such a designation being made. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 24 Equity Equity is treated in accounting practice with distinction to its type and in accordance with the applicable legal constraints, as well as any statutory requirements and conditions expressed in the contracts to which the given Group member company is a party. Share capital is reported at nominal value, in the amount consistent with the parent Company’s articles and its record in the court register. Supplementary capital is derived from profit earned. Supplementary capital from sale of shares above nominal value is derived from the positive difference between the issue price of shares and their corresponding nominal value less the cost of issuance. Said costs, incurred while establishing a joint-stock company or increasing its share capital, limit the capital to the excess of issue price over the nominal value of shares. The reported Other capital contributions aggregate costs related to its incentive program, supplementary capital created to finance the buy-back of own shares, and revaluation capital. Provisions for liabilities Provisions are created whenever the Group member company faces a liability (whether legal or customary) resulting from past events, it is likely that discharging said liability will reduce the Group’s economic advantage and the liability can be reliably estimated. No provisions are made for future operating losses. Restructuring cost allowances are made only when the given Group member company has revealed a detailed and formalized restructuring plan to all interested parties. Employee benefits The costs of short-term employee benefits other than those stemming from termination of employment and equity compensation are recognized as liabilities following adjustment for any payments already made and, at the same time, as expenses during the period, unless a given benefit is includable in the cost of construction of an asset. The Group does not provide any employee benefit programs following termination of employment. On 28 July 2020 the General Meeting of Shareholders of CD PROJEKT S.A. voted to institute an incentive program for 2020-2025 for the benefit of selected individuals at CD PROJEKT S.A. and other member companies of the Group. A set of targets was established and the Management Board and Supervisory Board of the parent Company selected a number of persons who, assuming these profit and marketing goals are met, are rewarded with subscription warrants entitling them to acquire parent Company shares by way of a conditional increase in the parent Company’s share capital. The incentive program complies with IFRS 2 Share-based payment rules. Loans granted Loans granted are estimated at their amortized cost adjusted by applying the effective interest rate. Trade and other liabilities Liabilities pertaining to supplies and services are reported in their amortized cost. Financial liabilities and equity instruments are classified according to their commercial substance which depends on contractual obligations. Equity instruments are defined as contracts granting a share in the Group’s equity less any applicable liabilities. Licenses The value of licenses purchased by the Group is recognized as prepaid expenses on the basis of invoices, and increased by the uninvoiced portion of minimum guarantees arising under the relevant contracts. These expenses are then recognized as costs in proportion to realized sales, with any amount exceeding the previously reported prepaid expenses reclassified as trade liabilities. Dividend payments Dividends are recognized at the moment the parent Company’s shareholders become entitled to receive them. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 25 Functional currency and presentation currency Functional currency and presentation currency Figures reported in this financial statement are denominated in the currency of the primary economic environment in which the Group carries outs its activities (functional currency). The functional currency and the presentation currency of the Group and its parent Company is the Polish Zloty (PLN). Transactions and balances Transactions denominated in foreign currencies are converted to the functional currency according to the exchange rate on the date of the transaction. Exchange rate losses and gains on settlement of transactions and on valuation of assets and liabilities denominated in foreign currencies are reported in the profit and loss statement. Important values based on professional judgment and estimates Professional judgment The Management Board of the parent Company has performed an analysis of the feasibility of attaining the result goal as defined for the entire duration of the 2020-2025 incentive program, and has consequently revised its projections, declaring that the most likely outcome is that the result goal for the duration of the program cannot be attained. Uncertainty of estimates This section lists key assumptions regarding future conditions and other fundamental sources of uncertainty, as of the balance sheet date, which may pose a serious risk of significant adjustments in asset and liability valuation during the coming financial year. Asset impairment Impairment tests which concern goodwill, trademarks and similar assets require an assessment of the value in use of each cash generating unit. This assessment is based on a projection of future cash flows generated by individual cash generating units and requires an estimate of the discount rate applied when conducting pending assessment of the value of said flows. The latest test of the CD PROJEKT brand name, The Witcher trademark and of goodwill was conducted on 31 December 2021. No impairment of any of the aforementioned assets or goodwill was identified. Asset impairment tests at individual subsidiaries were last conducted on 31 December 2021. No circumstances were identified which would suggest impairment of these assets. Assumptions made in the assessment of the CD PROJEKT brand name, The Witcher trademark and goodwill: Trademarks Goodwill Cash flow projection period 2022-2025 (4 years) 2022-2025 (4 years) Weighted Average Cost of Capital (WACC) 11.92% 8.52% Residual value growth rate (g) 4% 3% Estimation of provisions Provisions for employee pensions and incentive program benefits settled in own shares were estimated on the basis of actuarial gains and losses. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 26 The Group recognizes provisions for compensation dependent on its financial result, and other bonuses. Provisions for compensation dependent on financial result are recognized jointly for each group of employees. As a rule, provisions are computed (depending on the specific group of employees) on the basis of net earnings reported by the Group, by a specific activity segment or by a smaller set of operations disaggregated for the purpose of calculating such provisions. Provisions for compensation dependent on the Group’s financial result are computed using the recursion principle – the value of provisions decreases the result upon which such provisions are computed. The Group also recognizes provisions for returns, expected adjustments of licensing reports or expenses which have not been invoiced by suppliers as of the balance sheet date. Deferred income tax assets Group member companies recognize deferred income tax assets by anticipating future taxable revenues which may require recognition of such assets. A decrease in future economic performance might render such assumptions invalid. Deferred income tax liabilities Group member companies recognize deferred income tax liabilities by anticipating future tax liabilities arising from positive temporary differences, enabling the given provision to be consumed. Fair value of financial instruments Financial instruments for which there is no active market are estimated using the appropriate valuation methods. In selecting the suitable methods and assumptions Group member companies apply their professional judgment. Depreciation rates Depreciation rates are determined on the basis of the expected useful economic life of tangible equity assets and intangible assets. Group member companies perform annual validation of the assumed useful economic life of its assets, based on current estimates. Comparability of financial statements, changes in accounting policies and changes in estimates Changes in accounting policies The accounting practices applied in preparing this separate financial statement, the Management Board’s professional judgment concerning the Group’s accounting practices as well as the main sources of uncertainty in estimations are in all material aspects consistent with the practices applied in preparing the Consolidated Financial Statement of the CD PROJEKT Group for 2020, except for changes in accounting policies and presentation-related adjustments described below. Presentation changes This consolidated financial statement for the period between 1 January and 31 December 2021 includes changes in the presentation of certain financial data and rectification of errors. In order to ensure comparability of financial data, adjustments were also introduced with respect to reference data for 31 December 2020. The following adjustments were made:  The Group rectified its calculation of deferred income tax assets as of 31 December 2020 by reassigning some of the negative temporary differences from the 19% tax rate category to the 5% tax rate category. This resulted in the following changes: - Deferred income tax assets – adjusted by (4 179) thousand PLN - Financial result for the current period – adjusted by (4 179) thousand PLN. This change resulted in a reduction in equity by 4 179 thousand PLN. Supplementary information – CD PROJEKT Group activity segments 3 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 28 Activity segments Presentation of results by activity segment The scope of financial disclosures in relation to each of the Group’s activity segments is regulated by IFRS 8. For each segment the result is based on net profit. Description of changes in the differentiation of activity segments, or of the assessment of per- segment profit or loss compared to the most recent annual consolidated financial statement No changes in the differentiation of activity segments or in the assessment of per-segment profit or loss occurred in comparison with the Group’s financial statement for the year ending on 31 December 2020. There are no differences in the assessment of assets, liabilities, profits and losses for each segment separately and for the Group as a whole. Activity segments In 2021 the Group carried out its activities in two activity segments:  CD PROJEKT RED,  GOG.COM. CD PROJEKT RED Target and scope of business activity The CD PROJEKT RED Studio carries out its activities in the framework of CD PROJEKT S.A. (domestic holding company of the CD PROJEKT Group), CD PROJEKT Inc. (USA), CD PROJEKT RED Vancouver Studio Ltd. (Canada) and CD PROJEKT RED STORE sp. z o.o. (online merch store). This activity bases upon brands held by the Company: The Witcher and Cyberpunk. It entails development and publishing videogames, licensing the associated distribution rights, coordinating promotional activities and manufacturing, distributing or licensing tie-in products which exploit the appeal of the Company’s brands. In the scope of its publishing activities the Company also assumes responsibility for promotional and advertising campaigns related to its products, and maintains direct relations with the player base via electronic and social media channels as well as through regular participation in trade fairs. Since 2019 the Group also operates an online merch store for fans of CD PROJEKT RED videogames, available at gear.cdprojektred.com . GOG.COM Target and scope of business activity The GOG.COM platform was launched in August 2008. Its initial mission was to revitalize major PC cult classics and offer them for sale to international customers with particular focus on English-speaking countries, i.e. United States, Canada, United Kingdom and Australia. In 2021 the platform was offered in English, French, German, Russian, Chinese and Polish – this includes full game localizations as well as dedicated customer support and integration with locally popular payment channels, accepting payments in thirteen currencies. GOG.COM also carries releases for the macOS and Linux operating systems. GOG.COM activities focus on digital distribution of videogames via the Company’s proprietary GOG.COM distribution platform and the GOG GALAXY application. The platform enables customers to purchase games, remit payment and download game files to their personal devices, while the GOG GALAXY application provides – among others – automatic updates, cloud saves, online and cross-play features. It is also responsible for the online features of GWENT, as well as for processing in-game sales and payments within the PC edition of the game. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 29 Disclosure of activity segments Continuing operations Consolidation eliminations Total (continuing operations) CD PROJEKT RED GOG.COM 01.01.2021 – 31.12.2021 Sales revenues 701 739 199 983 (13 550) 888 172 sales to external clients 688 485 199 687 - 888 172 sales between segments 13 254 296 (13 550) - Segment net profit (loss) 238 678 (29 791) 21 208 908 Continuing operations Consolidation eliminations Total (continuing operations) CD PROJEKT RED GOG.COM 01.01.2020 – 31.12.2020 Sales revenues 1 895 913 343 748 (100 786) 2 138 875 sales to external clients 1 795 313 343 562 - 2 138 875 sales between segments 100 600 186 (100 786) - Segment net profit (loss) 1 129 450 20 655 43 1 150 148 * adjusted Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 30 Segmented consolidated profit and loss account for the period between 01.01.2021 and 31.12.2021 CD PROJEKT RED GOG.COM Consolidation eliminations Total Sales revenues 701 739 199 983 (13 550) 888 172 Revenues from sales of products 678 507 8 264 4 793 691 564 Revenues from sales of services 8 103 286 (2 524) 5 865 Revenues from sales of goods and materials 15 129 191 433 (15 819) 190 743 Cost of products, services, goods and materials sold 118 547 144 458 (12 771) 250 234 Cost of products and services sold 104 933 4 236 (1 778) 107 391 Cost of goods and materials sold 13 614 140 222 (10 993) 142 843 Gross profit (loss) from sales 583 192 55 525 (779) 637 938 Selling costs 239 160 60 382 (317) 299 225 General and administrative costs 65 413 6 735 (199) 71 949 Other operating revenues 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 Financial revenues 3 831 5 692 - 9 523 Financial expenses 15 036 8 380 (98) 23 318 Profit (loss) before taxation 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 equity holders of parent entity 238 678 (29 791) 21 208 908 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 31 Segmented consolidated profit and loss account for the period between 01.01.2020 and 31.12.2020 CD PROJEKT RED GOG.COM Consolidation eliminations Total Sales revenues 1 895 913 343 748 (100 786) 2 138 875 Revenues from sales of products 1 786 145 12 937 40 850 1 839 932 Revenues from sales of services 5 251 132 (3 141) 2 242 Revenues from sales of goods and materials 104 517 330 679 (138 495) 296 701 Cost of products, services, goods and materials sold 347 436 243 653 (99 725) 491 364 Cost of products and services sold 252 340 5 963 (2 198) 256 105 Cost of goods and materials sold 95 096 237 690 (97 527) 235 259 Gross profit (loss) from sales 1 548 477 100 095 (1 061) 1 647 511 Selling costs 341 633 67 344 (961) 408 016 General and administrative costs 59 426 7 195 (186) 66 435 Other operating revenues 8 835 1 469 (1 769) 8 535 Other operating expenses 25 243 813 (1 635) 24 421 (Impairment)/reversal of impairment of financial instruments (97) - - (97) Operating profit (loss) 1 130 913 26 212 (48) 1 157 077 Financial revenues 15 912 1 169 - 17 081 Financial expenses 6 278 3 032 (101) 9 209 Profit (loss) before taxation 1 140 547 24 349 53 1 164 949 Income tax 11 097 3 694 10 14 801 Net profit (loss) 1 129 450 20 655 43 1 150 148 Net profit (loss) attributable to equity holders of parent entity 1 129 450 20 655 43 1 150 148 * adjusted Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 32 Segmented consolidated statement of financial position as of 31.12.2021 CD PROJEKT RED GOG.COM Consolidation eliminations Total FIXED ASSETS 906 304 17 860 (18 318) 905 846 Property, plant and equipment 100 882 5 316 9 036 115 234 Intangibles 58 382 11 - 58 393 Expenditures on development projects 347 802 2 318 75 350 195 Investment properties 61 436 - (12 448) 48 988 Goodwill 56 438 - - 56 438 Investments in subsidiaries 14 978 - (14 978) - Shares in subsidiaries excluded from consolidation 38 520 - - 38 520 Deferrals 4 741 6 693 - 11 434 Other financial assets 178 540 - - 178 540 Deferred income tax assets 43 899 3 522 (3) 47 418 Other receivables 686 - - 686 WORKING 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 receivables 98 - - 98 Other receivables 113 724 1 433 (1 659) 113 498 Deferrals 4 154 9 609 - 13 763 Other financial assets 307 765 - - 307 765 Bank deposits (maturity beyond 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 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 33 CD PROJEKT RED GOG.COM Consolidation eliminations Total EQUITY 1 875 936 33 352 (14 932) 1 894 356 Equity attributable to shareholders of the parent entity 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 Supplementary capital from sale of shares above nominal value 115 909 - - 115 909 Other reserve capital 49 007 276 (1 289) 47 994 Exchange rate differences 642 (65) 1 014 1 591 Retained earnings 2 595 - (9 027) (6 432) Net profit (loss) for the reporting period 238 678 (29 791) 21 208 908 Noncontrolling interest equity - - - - LONG-TERM 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 revenues 6 403 21 - 6 424 Provisions for employee benefits and similar liabilities 368 12 - 380 Other provisions 5 368 - - 5 368 SHORT-TERM LIABILITIES 172 230 60 611 (4 574) 228 267 Other financial liabilities 25 661 869 (728) 25 802 Trade liabilities 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 revenues 26 072 5 476 - 31 548 Provisions for retirement benefits and similar liabilities 6 1 - 7 Other provisions 76 209 6 910 (77) 83 042 TOTAL EQUITY AND LIABILITIES 2 084 245 96 654 (22 164) 2 158 735 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 34 Segmented consolidated statement of financial position as of 31.12.2020 CD PROJEKT RED GOG.COM Consolidation eliminations Total FIXED ASSETS 744 444 32 750 (17 195) 759 999 Property, plant and equipment 102 971 4 185 (1 807) 105 349 Intangibles 59 576 214 - 59 790 Expenditures on development projects 384 601 22 210 (13) 406 798 Investment properties 48 841 - - 48 841 Goodwill 56 438 - - 56 438 Investments in subsidiaries 15 079 - (15 079) - Shares in subsidiaries excluded from consolidation 8 195 - - 8 195 Deferred income tax assets 11 299 - (296) 11 003 Deferrals 5 535 6 141 - 11 676 Other financial assets 51 588 - - 51 588 Other receivables 321 - - 321 WORKING ASSETS 2 012 477 179 990 (62 167) 2 130 300 Inventories 6 957 - - 6 957 Trade receivables 1 255 595 10 102 (60 094) 1 205 603 Other receivables 50 135 22 148 (2 073) 70 210 Deferrals 3 478 9 905 - 13 383 Other financial assets 106 365 79 - 106 444 Bank deposits (maturity beyond 3 months) 164 368 - - 164 368 Cash and cash equivalents 425 579 137 756 - 563 335 TOTAL ASSETS 2 756 921 212 740 (79 362) 2 890 299 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 35 CD PROJEKT RED GOG.COM Consolidation eliminations Total EQUITY 2 134 987 63 245 (15 055) 2 183 177 Equity attributable to shareholders of the parent entity 2 134 987 63 245 (15 055) 2 183 177 Share capital 100 655 136 (136) 100 655 Supplementary capital 738 225 42 141 (5 515) 774 851 Supplementary capital from sale of shares above nominal value 113 844 - - 113 844 Other reserve capital 46 560 378 (1 391) 45 547 Exchange rate differences 142 (65) 1 014 1 091 Retained earnings 6 111 - (9 070) (2 959) Net profit (loss) for the reporting period 1 129 450 20 655 43 1 150 148 Noncontrolling interest equity - - - - LONG-TERM LIABILITIES 166 079 1 764 (1 690) 166 153 Other financial liabilities 16 006 1 403 (1 403) 16 006 Other liabilities 3 173 - - 3 173 Deferred income tax liabilities - 287 (287) - Deferred revenues 910 53 - 963 Provisions for employee benefits and similar liabilities 377 21 - 398 Other provisions 145 613 - - 145 613 SHORT-TERM LIABILITIES 455 855 147 731 (62 617) 540 969 Other financial liabilities 2 875 508 (450) 2 933 Trade liabilities 73 633 101 888 (60 077) 115 444 Current income tax liabilities 1 384 358 - 1 742 Other liabilities 4 980 30 227 (2 073) 33 134 Deferred revenues 43 611 4 147 - 47 758 Provisions for retirement benefits and similar liabilities 3 1 - 4 Other provisions 329 369 10 602 (17) 339 954 TOTAL EQUITY AND LIABILITIES 2 756 921 212 740 (79 362) 2 890 299 * adjusted Supplementary information – additional notes and clarifications regarding the consolidated financial statement 4 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 37 Note 1. Sales revenues Pursuant to IFRS 15 revenues from sales of products, goods and services, less the applicable value added tax and any discounts or rebates, are recognized following (or during) discharge of the Group’s contractual duty to transfer the pledged goods or services (assets) to the client. 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Sales revenues 888 172 2 138 875 Revenues from sales of products 691 564 1 839 932 Revenues from sales of services 5 865 2 242 Revenues from sales of goods and materials 190 743 296 701 Other revenues 26 899 25 616 Other operating revenues 17 376 8 535 Financial revenues 9 523 17 081 Total 915 071 2 164 491 Sales revenues by territory ** 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 PLN % PLN % Domestic sales 21 469 2.42% 79 528 3.72% Exports, including: 866 703 97.58% 2 059 347 96.28% Europe 140 264 15.79% 374 300 17.50% North America 650 090 73.19% 1 500 985 70.18% South America 2 894 0.33% 7 028 0.33% Asia 66 090 7.44% 137 826 6.44% Australia 6 837 0.77% 35 965 1.68% Africa 528 0.06% 3 243 0.15% Total 888 172 100% 2 138 875 100% * adjusted Revenues from exports reported for Europe include the Russian market which, in previous financial statements, had been aggregated with the figure reported for Asia. ** The presented data reflects the territories of residence of the immediate clients of Group member companies. For CD PROJEKT S.A. this means distributors, while in the scope of retail distribution carried out by GOG.COM sp. z o.o., CD PROJEKT RED STORE sp. z o.o. and CD PROJEKT Inc. – final customers. Sales revenues by product type 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Own products 691 564 1 839 932 External products 190 743 296 701 Other revenues 5 865 2 242 Total 888 172 2 138 875 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 38 Sales revenues by distribution channel 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Videogames – box editions 87 222 163 645 Videogames – digital editions 768 202 1 943 240 Other revenues 32 748 31 990 Total 888 172 2 138 875 Note 2. Operating expenses 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Depreciation of PP&E, intangibles, expenditures on development projects and investment properties, including: 17 764 13 559 depreciation of leased buildings 2 094 1 297 depreciation of leased vehicles 246 268 Consumption of materials and energy 3 260 3 443 Bought-in services, including: 184 887 213 558 short-term leases and leases of low-value assets 719 667 Taxes and fees 1 268 1 391 Employee compensation, social security and other benefits 160 865 240 666 Business travel 570 424 Use of company cars 213 176 Cost of goods and materials sold 142 843 235 259 Cost of products and services sold 107 391 256 105 Other expenses 2 347 1 234 Total 621 408 965 815 Selling costs 299 225 408 016 General and administrative costs 71 949 66 435 Cost of products, services, goods and materials sold 250 234 491 364 Total 621 408 965 815 Note 3. Other operating revenues and expenses Other operating revenues 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Subsidies 7 995 816 Revenues from lease contracts 6 186 5 688 Reinvoicing revenues 1 309 992 Other sales 515 270 Compensation for damages received 480 169 Dissolution of unused provisions for expenses 408 18 PP&E and goods received free of charge 284 505 Profit from sale of PP&E 61 19 Other miscellaneous operating revenues 138 58 Total other operating revenues 17 376 8 535 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 39 Other operating expenses 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Impairment allowances PP&E, intangibles and expenditures on development projects 35 820 - Provisions for potential tax liabilities 4 309 - Own cost of leases 4 002 3 429 Depreciation of investment properties 1 788 1 462 Provisions for uninsured portion of costs related to the legal settlement in the USA 1 502 - Reinvoicing expenses 1 311 991 Disposal of materials and goods 965 6 068 Disposal of PP&E and intangibles 774 52 Donations 445 2 300 Liquidation of investment properties 51 1 630 Other selling costs 34 - Help Me Refund campaign – refunds 33 8 238 Settlement of stocktaking shortages 9 24 Other miscellaneous operating expenses 188 227 Total other operating expenses 51 231 24 421 Following the decision to change the underlying technology and conclusion of a licensing and partnership agreement with Epic Games International S.à r.l. CD PROJEKT S.A. gained access to multiplayer solutions available in Unreal Engine 4 and 5. Consequently, the Company abandoned further development work on adding multiplayer elements to REDEngine and reassigned the corresponding to-date expenditures (20 806 thousand PLN) from Fixed assets to Other operating expenses. GOG.COM revised its earlier projections due to a change in expectations which do not constitute rectification of an error, concerning depreciation of existing client-centric technologies and features, which have been deemed to not support sales, recognizing 13 775 thousand PLN in Other operating expenses. Note 4. Financial revenues and expenses Financial revenues 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Revenues from interest 1 550 7 812 on bonds 1 321 193 on loans 161 37 on short-term bank deposits 68 7 582 Other financial revenues 7 973 9 269 settlement and assessment of derivative financial instruments 7 962 9 265 management Board forward contracts 6 - other miscellaneous financial revenues 5 4 Total financial revenues 9 523 17 081 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 40 Financial expenses 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Interest payments 2 797 659 on potential budget commitments 1 437 - on bonds 787 224 on lease agreements 535 400 on budget commitments 38 35 Other financial expenses 20 521 8 550 surplus negative exchange rate differences 17 053 7 339 impairment allowances on long-term financial assets 1 668 - losses from maturation of bonds 1 436 1 081 bond purchase fees 364 128 other miscellaneous financial expenses - 2 Total financial expenses 23 318 9 209 Net balance of financial activities (13 795) 7 872 Note 5. Current and deferred income tax The main components of the tax burden for the years ending on 31 December 2021 and 31 December 2020 respectively are as follows: 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Current income tax 46 500 28 842 For the fiscal year 40 291 15 088 Withholding tax paid abroad 5 864 13 762 Adjustments from preceding years 345 (8) Deferred income tax (36 300) (14 041) Due to creation and reversal of temporary differences (36 300) (14 041) Tax burden reported in profit and loss account 10 200 14 801 Deferred tax reported in the profit and loss account represents the difference between the deferred tax provisions and assets at the beginning and end of each reporting period. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 41 Current income tax 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Income from other sources Income from capital investments Income from other sources Income from capital investments Pre-tax income 238 510 (19 402) 1 157 658 7 291 Revenues increasing the tax base 9 588 1 606 13 249 11 722 Revenues applicable to future reporting periods 908 111 - (972 621) - Tax-exempt revenues (18 357) 5 530 (2 776) (7 024) Expenses reducing the tax base (14 486) - (518 259) (214 259) Non-deductible expenses (76 918) 19 983 467 969 580 Profit (loss) reported by foreign entities 812 - (785) - Income taxable in Poland 1 047 260 7 717 144 435 (201 690) Deductions from income – losses (226 106) (7 717) (1 674) - Deductions from income – donations - - (2 200) - Deductions from income – R&D fiscal relief (31 741) - (91 048) - Deductions from income – tax- exempt income (1 405) - (1 707) - Tax base, including: 788 008 - 47 806 (201 690) Subject to 5% tax rate (profit) 805 825 - 265 536 - Subject to 5% tax rate (loss) - - (226 106) - Subject to 19% tax rate (profit) - - 8 376 282 Subject to 19% tax rate (loss) (17 817) - - (201 972) Tax base abroad - - - - Income tax due in Poland (rate: 5%) 40 291 - 13 277 - Income tax due in Poland (rate: 19%) - - 1 591 54 Income tax due abroad - - 166 - Income tax 40 291 - 15 034 54 Effective tax rate 4.28% - 1.28% 0.74% * adjusted Current income tax is estimated by applying a rate of 19% to the reported tax base from revenues from other sources, and a rate of 5% to the reported tax base from eligible IP-related revenues as specified in the IP BOX tax relief regulation. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 42 Negative temporary differences requiring recognition of deferred tax assets 31.12.2020 Differences affecting deferred tax aggregated with financial result Differences affecting deferred tax aggregated with other comprehensive income 31.12.2021 Provisions for other employee benefits 402 (17) - 385 Provisions for compensation dependent on financial result and other compensation 199 817 (160 274) - 39 543 Tax loss 227 028 (211 895) - 15 133 Negative exchange rate differences 24 259 (20 984) - 3 275 Difference between balance sheet value and tax value of expenditures on development projects 3 045 21 735 - 24 780 Employee compensation and social security expenses payable in future reporting periods 25 36 - 61 Deferred revenues associated with adding funds to virtual wallets and participation in the additional benefits programs 2 820 581 - 3 401 Other provisions 221 280 (172 439) - 48 841 R&D tax relief 309 826 (5 935) - 303 891 Advances recognized as taxable income 4 036 (2 567) - 1 469 Difference between net balance sheet value and net tax value of PP&E and intangibles - 12 - 12 Valuation of forward contracts - 142 - 142 Other sources - 83 - 83 Total negative temporary differences 992 538 (551 522) - 441 016 subject to 5% tax rate 647 194 (586 771) - 60 423 subject to 19% tax rate 345 344 35 249 - 380 593 withholding tax levied abroad - 1 209 - 1 209 Deferred tax assets 97 976 (22 626) - 75 350 * adjusted Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 43 Positive temporary differences requiring recognition of deferred tax liabilities 31.12.2020 Differences affecting deferred tax aggregated with financial result Differences affecting deferred tax aggregated with other comprehensive income 31.12.2021 Difference between net balance sheet value and net tax value of PP&E and intangibles 13 314 1 117 - 14 431 Income in the current period invoiced in the following period / accrued income 1 200 377 (1 071 120) - 129 257 Positive exchange rate differences 22 117 (7 154) - 14 963 Estimation of bonds 610 (65) (545) - Estimation of forward contracts 6 914 (6 914) - - Difference between net balance sheet value and net tax value of expenditures on development projects 305 339 (32 405) - 272 934 Other sources 136 (50) - 86 Total positive temporary differences 1 548 807 (1 116 591) (545) 431 671 subject to 5% tax rate 1 480 720 (1 094 396) - 386 324 subject to 19% tax rate 68 087 (22 195) (545) 45 347 Deferred tax liabilities 86 973 (58 937) (104) 27 932 * adjusted Deferred income tax was estimated in part by applying the standard corporate income tax rate of 19% (applicable to revenues from other sources) and in part by applying the preferential rate of 5% (applicable to eligible IP-related revenues under the IP BOX tax relief regulation). In determining the correct rate to apply to temporary differences, the Group relied on projections regarding the tax base to which each temporary difference is likely to apply. Net balance of deferred tax assets/liabilities 31.12.2021 31.12.2020 Deferred tax assets 75 350 97 976 Deferred tax liabilities 27 932 86 973 Net deferred tax assets/(liabilities) 47 418 11 003 * adjusted Note 6. Discontinued operations No operations were discontinued by the Group in either the current or the preceding financial year. Note 7. Earnings per share Base earnings per share are calculated by dividing the net profit for the reporting period attributable to ordinary equity holders of the parent Company by a weighted average of the number of ordinary shares issued valid during the reporting period. Diluted earnings per share are calculated by dividing the net profit for the reporting period attributable to ordinary equity holders of the parent Company (following deduction of interest on redeemable privileged shares converted into ordinary shares) by a weighted average of the number of ordinary shares issued valid during the reporting period (adjusted for the effect of dilutive options and dilutive redeemable preference shares convertible into ordinary shares). During the 12-month period ending on 31 December 2021 dilutive instruments comprised entitlements and subscription warrants assigned under the incentive programs and permitting certain parties to claim, in the future, shares of the parent Company. Information regarding the quantity of entitlements assigned is provided in Note 38. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 44 Net profit and number of shares for the purpose of calculating earnings per share 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Average weighted number of shares for the purpose of calculating base earnings per share (units) 100 717 756 96 461 316 Average weighted number of shares for the purpose of calculating diluted earnings per share (units) 100 763 966 100 465 283 Net profit/ (loss) for the purpose of calculating diluted earnings per share 208 908 1 150 148 Base net earnings per share (PLN) 2.07 11.92 Diluted net earnings per share (PLN) 2.07 11.45 * adjusted Note 8. Dividends paid out (or declared) and collected On 25 May 2021 the Ordinary General Meeting of CD PROJEKT S.A. voted to allocate part of the parent Company’s profit obtained in 2020 to a dividend payable to shareholders. In line with the corresponding resolution, on 8 June 2021 the parent Company paid out a dividend in the amount of 503 694 thousand PLN, i.e. 5 PLN per share. The dividend applied to 100 738 800 shares of the parent Company. Note 9. Disclosure of other components of the reported comprehensive income 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Net profit (loss) 208 908 1 150 148 Exchange rate differences on estimation of foreign entities 500 193 Estimation of foreign treasury bonds 4 238 545 Tax effect of bond estimation 104 (103) Total comprehensive income 213 750 1 150 783 Total comprehensive income attributable to noncontrolling interests - - Total comprehensive income attributable to parent entity 213 750 1 150 783 * adjusted Note 10. Property, plant and equipment Ownership structure of property, plant and equipment 31.12.2021 31.12.2020 Wholly owned 98 525 86 487 Held under a lease contracts 16 709 18 862 Total 115 234 105 349 PP&E whose title is restricted 31.12.2021 31.12.2020 Held under a financial lease contract 16 709 18 862 Total 16 709 18 862 Contractual commitments for future acquisition of PP&E 31.12.2021 31.12.2020 Leasing of passenger cars 429 195 Total 429 195 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 45 Changes in PP&E (by category) between 01.01.2020 and 31.12.2021 Land holdings Buildings and structures Civil engineering objects Machinery and equipment Vehicles Other fixed assets Fixed assets under construction Total Gross carrying amount as of 01.01.2021 35 986 67 795 1 834 39 741 2 961 3 145 1 671 153 133 Increases from: - 8 662 53 13 917 1 263 1 814 9 797 35 506 purchase - 540 53 13 614 17 1 583 9 797 25 604 lease agreements concluded - 77 - - 1 236 - - 1 313 reassignment from PP&E under construction - 7 955 - 286 - 231 - 8 472 other - 90 - 17 10 - - 117 Reductions from: - 596 11 1 531 981 29 9 141 12 289 sale - - - 400 365 17 - 782 disposal - 596 11 1 131 616 12 - 2 366 reassignment from PP&E under construction - - - - - - 9 141 9 141 Gross carrying amount as of 31.12.2021 35 986 75 861 1 876 52 127 3 243 4 930 2 327 176 350 Depreciation as of 01.01.2021 588 14 311 275 28 876 1 710 2 024 - 47 784 Increases from: 567 5 926 286 7 621 502 674 - 15 576 depreciation 567 5 926 286 7 621 502 674 - 15 576 Reductions from: - 440 3 1 352 420 29 - 2 244 sale - - - 340 256 17 - 613 disposal - 440 3 1 012 164 12 - 1 631 Depreciation as of 31.12.2021 1 155 19 797 558 35 145 1 792 2 669 - 61 116 Impairment allowances as of 01.01.2021 - - - - - - - - Impairment allowances as of 31.12.2021 - - - - - - - - Net carrying amount as of 01.01.2021 35 398 53 484 1 559 10 865 1 251 1 121 1 671 105 349 Net carrying amount as of 31.12.2021 34 831 56 064 1 318 16 982 1 451 2 261 2 327 115 234 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 46 Changes in PP&E (by category) between 01.01.2020 and 31.12.2020 Land holdings Buildings and structures Civil engineering objects Machinery and equipment Vehicles Other fixed assets Fixed assets under construction Total Gross carrying amount as of 01.01.2020 35 986 65 937 1 587 31 043 2 234 2 623 151 139 561 Increases from: - 2 401 251 8 836 874 532 2 103 14 997 purchase - 323 27 8 726 - 279 2 103 11 458 lease agreements concluded - 927 94 - 874 - - 1 895 reassignment from PP&E under construction - - 130 48 - 253 - 431 reassignment from investment properties - 1 151 - - - - - 1 151 receipt free of charge - - - 62 - - - 62 Reductions from: - 543 4 138 147 10 583 1 425 sale - - - 129 137 - - 266 disposal - 503 4 6 - 10 41 564 reassignment from PP&E under construction - - - - - - 542 542 other - 40 - 3 10 - - 53 Gross carrying amount as of 31.12.2020 35 986 67 795 1 834 39 741 2 961 3 145 1 671 153 133 Depreciation as of 01.01.2020 84 9 322 53 21 945 1 327 1 563 - 34 294 Increases from: 504 5 538 223 7 061 523 466 - 14 315 depreciation 504 5 513 223 7 061 523 466 - 14 290 reassignment from investment properties - 25 - - - - - 25 Reductions from: - 549 1 130 140 5 - 825 sale - - - 127 137 - - 264 disposal - 503 1 - - 5 - 509 other - 46 - 3 3 - - 52 Depreciation as of 31.12.2020 588 14 311 275 28 876 1 710 2 024 - 47 784 Impairment allowances as of 01.01.2020 - - - - - - - - Impairment allowances as of 31.12.2020 - - - - - - - - Net carrying amount as of 01.01.2020 35 902 56 615 1 534 9 098 907 1 060 151 105 267 Net carrying amount as of 31.12.2020 35 398 53 484 1 559 10 865 1 251 1 121 1 671 105 349 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 47 PP&E under construction 01.01.2021 Expenditures in fiscal year Expenditure settlements 31.12.2021 Redevelopment of property at Jagiellońska 74 1 614 9 253 8 855 2 012 Other 57 544 286 315 Total 1 671 9 797 9 141 2 327 01.01.2020 Expenditures in fiscal year Expenditure settlements 31.12.2020 Redevelopment of property at Jagiellońska 74 54 2 054 494 1 614 Other 97 49 89 57 Total 151 2 103 583 1 671 Usufruct of PP&E held under lease agreements 31.12.2021 31.12.2020 Gross value Depreciation Net value Gross value Depreciation Net value Land holdings 14 540 464 14 076 14 540 260 14 280 Immovable properties 8 037 6 698 1 339 7 635 3 962 3 673 Civil engineering objects 94 47 47 94 - 94 Vehicles 1 504 257 1 247 1 029 214 815 Total 24 175 7 466 16 709 23 298 4 436 18 862 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 48 Note 11. Intangibles and expenditures on development projects Changes in intangibles and expenditures on development projects between 01.01.2021 and 31.12.2021 Development projects in progress Development projects completed Trademarks Patents and licenses Copyrights Computer software Goodwill Intangible assets under construction Others Total Gross carrying amount as of 01.01.2021 28 887 841 377 33 199 2 154 18 331 32 294 56 438 1 158 - 1 013 838 Increases from: 66 891 609 - 157 - 3 860 - 209 - 71 726 purchases - - - 157 - 2 531 - 209 - 2 897 reassignment from intangible assets under construction - - - - - 1 329 - - - 1 329 reassignment from development projects in progress - 457 - - - - - - - 457 reassignment of expenditures on development projects under a consortium agreement - 152 - - - - - - - 152 own creation 66 891 - - - - - - - - 66 891 Reductions from: 609 - - 157 - 136 - 1 348 - 2 250 sale - - - 66 - - - 19 - 85 disposal - - - 91 - 136 - - - 227 reassignment from intangible assets under construction - - - - - - - 1 329 - 1 329 reassignment from development projects in progress 457 - - - - - - - - 457 reassignment of expenditures on development projects under a consortium agreement 152 - - - - - - - - 152 Gross carrying amount as of 31.12.2021 95 169 841 986 33 199 2 154 18 331 36 018 56 438 19 - 1 083 314 Depreciation as of 01.01.2021 - 463 466 - 1 626 48 25 672 - - - 490 812 Increases from: - 88 912 - 459 125 3 652 - - - 93 148 depreciation - 88 912 - 459 125 3 652 - - - 93 148 Reductions from: - - - 157 - 97 - - - 254 sale - - - 66 - - - - - 66 disposal - - - 91 - 97 - - - 188 Depreciation as of 31.12.2021 - 552 378 - 1 928 173 29 227 - - - 583 706 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 49 Impairment allowances as of 01.01.2021 - - - - - - - - - - Increases from: 20 806 13 776 - - - - - - - 34 582 impairment 20 806 13 776 - - - - - - - 34 582 Impairment allowances as of 31.12.2021 20 806 13 776 - - - - - - - 34 582 Net carrying amount as of 01.01.2021 28 887 377 911 33 199 528 18 283 6 622 56 438 1 158 - 523 026 Net carrying amount as of 31.12.2021 74 363 275 832 33 199 226 18 158 6 791 56 438 19 - 465 026 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 50 Changes in intangibles and expenditures on development projects between 01.01.2020 and 31.12.2020 Development projects in progress Development projects completed Trademarks Patents and licenses Copyrights Computer software Goodwill Intangible assets under construction Others Total Gross carrying amount as of 01.01.2020 337 578 252 238 33 199 3 293 17 718 30 299 56 438 1 228 1 731 992 Increases from: 280 448 589 139 - 2 086 613 5 347 - 1 330 - 878 963 purchases - - - 1 803 613 4 229 - 1 330 - 7 975 reassignment from intangible assets under construction - - - 283 - 1 118 - - - 1 401 reassignment from development projects in progress - 589 139 - - - - - - - 589 139 own creation 280 448 - - - - - - - - 280 448 Reductions from: 589 139 - - 3 225 - 3 352 - 1 400 1 597 117 disposal - - - 3 225 - 3 352 - - 1 6 578 reassignment from intangible assets under construction - - - - - - - 1 400 - 1 400 reassignment from development projects in progress 589 139 - - - - - - - - 589 139 Gross carrying amount as of 31.12.2020 28 887 841 377 33 199 2 154 18 331 32 294 56 438 1 158 - 1 013 838 Depreciation as of 01.01.2020 - 203 968 - 1 610 - 24 364 - - 1 229 943 Increases from: - 259 498 - 3 241 48 4 657 - - - 267 444 depreciation - 259 498 - 3 241 48 4 657 - - - 267 444 Reductions from: - - - 3 225 - 3 349 - - 1 6 575 disposal - - - 3 225 - 3 349 - - 1 6 575 Depreciation as of 31.12.2020 - 463 466 - 1 626 48 25 672 - - - 490 812 Impairment allowances as of 01.01.2020 - - - - - - - - - - Impairment allowances as of 31.12.2020 - - - - - - - - - - Net carrying amount as of 01.01.2020 337 578 48 270 33 199 1 683 17 718 5 935 56 438 1 228 - 502 049 Net carrying amount as of 31.12.2020 28 887 377 911 33 199 528 18 283 6 622 56 438 1 158 - 523 026 * adjusted Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 51 Ownership structure of intangible assets 31.12.2021 31.12.2020 Wholly owned 57 830 59 072 Held under lease contracts 563 718 Total 58 393 59 790 Intangible assets under construction 01.01.2021 Expenditures incurred in financial year Expenditure settlements 31.12.2021 Financial analytics system 11 - - 11 HR support system 1 129 201 1 330 - Document flow system - 8 - 8 Game licenses, GOG 18 - 18 - Total 1 158 209 1 348 19 01.01.2020 Expenditures incurred in financial year Expenditure settlements 31.12.2020 Financial analytics system 61 29 79 11 HR support system 655 474 - 1 129 Musical score 77 126 203 - Document flow system 323 76 399 - Game licenses, GOG 18 - - 18 E-commerce platform 94 625 719 - Total 1 228 1 330 1 400 1 158 Contractual commitments for future acquisition of intangible assets None reported. Intangible assets whose title is restricted None reported. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 52 Note 12. Goodwill Goodwill acquired in business combinations and acquisition of enterprises CD Projekt Red sp. z o.o. Strange New Things (enterprise) Total Gross goodwill as of 01.01.2021 46 417 10 021 56 438 Gross goodwill as of 31.12.2021 46 417 10 021 56 438 Impairment allowances as of 01.01.2021 - - - Impairment allowances as of 31.12.2021 - - - Net goodwill as of 01.01.2021 46 417 10 021 56 438 Net goodwill as of 31.12.2021 46 417 10 021 56 438 Goodwill impairment tests require an assessment of the value in use of each cash generating unit. In performing this assessment the parent Company developed projections of future cash flows generated by individual cash generating units and estimated the discount rate applied when conducting pending assessment of the value of said flows. The latest test of goodwill was conducted by the parent Company on 31 December 2021. No impairment of goodwill was identified. Note 13. Investment properties The parent Company owns the property complex at Jagiellońska 74 and Jagiellońska 76 in Warsaw. Since part of this complex is being leased to other entities, including other member companies of the CD PROJEKT Group, the Group has decided to report it in part as an investment property. The remaining part of both properties is used by the Group for its own purposes. Properties purchased by the Group are estimated at purchase cost less depreciation. Changes in the value of investment properties between 01.01.2021 and 31.12.2021, and between 01.01.2020 and 31.12.2020 31.12.2021 31.12.2020 Gross balance sheet value at beginning of period 50 650 45 296 Increases from: 2 024 8 179 activation of costs 2 024 8 179 Reductions from: 56 2 825 disposal 56 1 674 reassignment to other asset categories - 1 151 Gross balance sheet value at end of period 52 618 50 650 Depreciation at beginning of period 1 809 336 Increases from: 1 826 1 541 depreciation 1 826 1 541 Reductions from: 5 68 disposal 5 43 reassignment to other asset categories - 25 Depreciation at end of period 3 630 1 809 Impairment allowances at beginning of period - - Increases - - Reductions - - Impairment allowances at end of period - - Net balance sheet value at end of period 48 988 48 841 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 53 Contractual commitments for acquisition of investment properties None reported. Note 14. Investments in subsidiaries excluded from consolidation Investments in subsidiaries held at purchase price 31.12.2021 31.12.2020 Shares in subsidiaries 38 520 8 195 Total 38 520 8 195 Changes in investments in subsidiaries 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 At beginning of period 8 195 8 025 Increases from: 32 203 170 acquisition/incorporation of subsidiary 32 039 - capital contributions mandated by the incentive program 164 170 Reductions from: 1 878 - sale of subsidiary or shares therein 19 - creation of impairment allowances 1 668 - capital contributions mandated by the incentive program 191 - At end of period 38 520 8 195 Investments in subsidiaries as of 31.12.2021 CD PROJEKT Co., Ltd. (in liquidation) Spokko sp. z o.o. CD PROJEKT RED Vancouver Studio Ltd. The Molasses Flood LLC Registered office Shanghai Warsaw Vancouver Boston Percentage of shares held as of 31.12.2021 100% 74% 100% 60% Percentage of votes controlled as of 31.12.2021 100% 74% 100% 60% Capital investment - 6 481 7 679 24 360 Investments in subsidiaries as of 31.12.2020 CD PROJEKT Co., Ltd. Spokko sp. z o.o. Registered office Shanghai Warsaw Percentage of shares held as of 31.12.2020 100% 75% Percentage of votes controlled as of 31.12.2020 100% 75% Capital investment 1 695 6 500 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 54 Note 15. Other financial assets 31.12.2021 31.12.2020 Loans granted 8 890 4 520 Bonds 477 415 146 985 Derivative financial instruments - 6 527 Other financial assets, including: 486 305 158 032 short-term assets 307 765 106 444 long-term assets 178 540 51 588 In 2021, under the loan agreement concluded on 12 November 2020, two batches of the corresponding loan (out of a total of three) were transferred to Spokko Sp. z o.o. on 25 February and 30 March 2021 respectively (the first batch having been disbursed on 27 November 2020). The repayment period was extended in accordance with an annex signed on 18 October 2021. Consequently, the loan is now repayable by 30 June 2022. The repayment period for the loan granted under the agreement of 25 May 2020 was also extended – an annex was signed on 21 December 2021, providing for an extension until 30 June 2022. In 2021 Spokko sp. z o.o. was also granted another loan by CD PROJEKT S.A. in accordance with an agreement concluded on 5 May 2021, with five of a total of seven batches being disbursed on 28 May 2021, 29 June 2021, 29 July 2021, 25 February 2022 and 30 March 2022 respectively. This loan is repayable by 30 June 2022. All of the aforementioned loans are subject to variable interest rates which are updated on a quarterly basis. Note 16. Inventories 31.12.2021 31.12.2020 Goods 15 843 6 875 Other materials 43 82 Gross inventories 15 886 6 957 Inventory impairment allowances - - Net inventories 15 886 6 957 The “Other materials” line item represents marketing materials. Changes in inventory impairment allowances None reported. Inventories pledged as collateral for liabilities Not applicable. Note 17. Trade receivables 31.12.2021 31.12.2020 Gross trade receivables 125 372 1 205 729 Impairment allowances 79 126 Trade receivables 125 293 1 205 603 from affiliates 1 231 81 from external entities 124 062 1 205 522 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 55 Changes in impairment allowances on trade receivables 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 FROM AFFILIATES Impairment allowances at beginning of period - - Increases - - Reductions - - Impairment allowances at end of period - - FROM OTHER ENTITIES Impairment allowances at beginning of period 126 29 Increases, including: 12 107 recognition of impairment allowances on past-due and contested receivables 12 107 Reductions, including: 59 10 consumption of impairment allowances 53 - elimination of impairment allowances due to collection of receivables - 2 dissolution of impairment allowances 6 8 Impairment allowances at end of period 79 126 Aggregate impairment allowances at end of period (affiliates and other entities) 79 126 Current and overdue trade receivables as of 31.12.2021 Total Not overdue Days overdue 1 – 60 61 – 90 91 – 180 181 – 360 >360 AFFILIATES gross receivables 1 231 223 1 008 - - - - non-fulfillment ratio - 0% 0% 0% 0% 0% 0% impairment allowances as determined by non- fulfillment ratio - - - - - - - impairment allowances as individually assessed - - - - - - - total expected credit loss - - - - - - - Net receivables 1 231 223 1 008 - - - - Total Not overdue Days overdue 1 – 60 61 – 90 91 – 180 181 – 360 >360 OTHER ENTITIES gross receivables 124 141 123 851 162 - 8 - 120 non-fulfillment ratio - 0% 0% 0% 0% 0% 0% impairment allowances as determined by non- fulfillment ratio - - - - - - - impairment allowances as individually assessed 79 - - - - - 79 total expected credit loss 79 - - - - - 79 Net receivables 124 062 123 851 162 - 8 - 41 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 56 Total - - - - - - - gross receivables 125 372 124 074 1 170 - 8 - 120 impairment allowances 79 - - - - - 79 Net receivables 125 293 124 074 1 170 - 8 - 41 Current and overdue trade receivables as of 31.12.2020 Total Not overdue Days overdue 1 – 60 61 – 90 91 – 180 181 – 360 >360 AFFILIATES gross receivables 81 81 - - - - - non-fulfillment ratio - 0% 0% 0% 0% 0% 0% impairment allowances as determined by non- fulfillment ratio - - - - - - - impairment allowances as individually assessed - - - - - - - total expected credit loss - - - - - - - Net receivables 81 81 - - - - - Total Not overdue Days overdue 1 – 60 61 – 90 91 – 180 181 – 360 >360 OTHER ENTITIES gross receivables 1 205 648 1 205 333 144 2 36 1 132 non-fulfillment ratio - 0% 0% 0% 0% 0% 0% impairment allowances as determined by non- fulfillment ratio - - - - - - - impairment allowances as individually assessed 126 - - - - - 126 total expected credit loss 126 - - - - - 126 Net receivables 1 205 522 1 205 333 144 2 36 1 6 Total gross receivables 1 205 729 1 205 414 144 2 36 1 132 impairment allowances 126 - - - - - 126 Net receivables 1 205 603 1 205 414 144 2 36 1 6 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 57 Trade receivables by currency 31.12.2021 31.12.2020 currency units PLN equivalent currency units PLN equivalent PLN 115 457 115 457 1 144 283 1 144 283 EUR 1 317 6 060 3 621 16 708 USD 449 1 821 11 115 41 775 CAD 348 1 109 129 382 RUB 4 033 219 13 550 679 GBP 30 166 91 465 AUD 55 163 92 266 BRL 158 115 670 485 CNY 81 52 132 76 SEK 104 47 411 189 CHF 9 41 29 125 DKK 47 29 169 105 NOK 30 14 148 65 Total 0 125 293 0 1 205 603 * This field also aggregates receivables obtained in association with foreign licensing reports during the current period but invoiced in future reporting periods. For the purposes of this financial statement, such receivables are denominated directly in PLN. Note 18. Other receivables 31.12.2021 31.12.2020 Other gross receivables, including: 114 916 71 263 tax returns except corporate income tax 77 067 36 342 advance payments associated with expenditures on development projects 30 435 24 353 advance payments for supplies 5 391 4 643 deposits 998 619 provisions for sales revenues - advances 79 70 prepayments associated with purchases of PP&E and intangibles 34 38 provisions for sales revenues - advances 67 119 settlements with board members at the Group’s member companies 7 7 employee compensation settlements 5 26 settlements with operators of payment processing platforms - 4 173 prepayments associated with licensing royalties - 86 others 101 55 Impairment allowances 732 732 Total other gross receivables 114 184 70 531 short-term 113 498 70 210 long-term 686 321 The “tax returns except corporate income tax” line item also aggregates withholding tax levied at source, in the amount of 70 887 thousand PLN, subject to deduction in the Company’s annual CIT declaration following receipt of certificates stating that this tax has been paid abroad by the Company’s foreign partners Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 58 31.12.2021 31.12.2020 Other gross receivables 114 916 71 263 Impairment allowances 732 732 Other receivables, including 114 184 70 531 from affiliates 7 7 from external entities 114 177 70 524 Other receivables subject to court proceedings 31.12.2021 31.12.2020 Other receivables subject to court proceedings 732 732 Impairment allowances on contested receivables 732 732 Net other receivables subject to court proceedings - - Other receivables by currency 31.12.2021 31.12.2020 currency units PLN equivalent currency units PLN equivalent PLN 77 977 77 977 37 363 37 363 USD 4 660 17 680 4 093 15 344 JPY 496 092 17 214 496 092 17 215 EUR 189 871 104 464 CNY 336 201 3 2 GBP 40 200 22 110 CHF 8 36 7 32 BRL 3 3 - - SEK 4 2 - - DKK - - 2 1 Total 0 114 184 0 70 531 * This field also aggregates withholding tax deducted at source by the Group’s foreign partners and reportable in the Company’s annual CIT forms filed with domestic tax authorities. Trade and other receivables from affiliates 31.12.2021 31.12.2020 Gross receivables from affiliates 1 238 88 trade receivables 1 231 81 other receivables 7 7 Impairment allowances - - Net receivables from affiliates 1 238 88 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 59 Note 19. Prepaid expenses 31.12.2021 31.12.2020 Minimum guarantees and advance payments at GOG 15 230 14 630 Software, licenses 3 905 4 183 Expenses associated with future marketing activities 1 734 1 861 Repairs and renovations 1 470 1 651 Fees associated with right of first refusal 1 378 1 484 Non-life insurance 525 289 IT security 421 653 Business travel (airfare, accommodation, insurance) 64 7 Participation in trade fairs 7 - Marketing campaigns 19 54 Other prepaid expenses 444 247 Total prepaid expenses 25 197 25 059 short-term 13 763 13 383 long-term 11 434 11 676 Note 20. Cash and cash equivalents 31.12.2021 31.12.2020 Cash on hand and bank deposits: 74 372 543 249 current bank accounts 74 372 543 249 Other monetary assets: 337 214 20 086 cash in transit 70 12 051 overnight deposits 36 142 2 071 short-term bank deposits (maturity up to 3 months) 262 980 940 monetary assets in investment accounts 38 022 5 024 Total 411 586 563 335 Restricted cash Not applicable. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 60 Note 21. Share capital Share capital structure as of 31.12.2021 Series Shares outstanding Nominal value of series/issue Capital paid up in A 500 000 500 000 Cash B 2 000 000 2 000 000 Cash C 6 884 108 6 884 108 Cash C1 18 768 216 18 768 216 Cash D 35 000 000 35 000 000 Non-cash assets E 6 847 676 6 847 676 Cash F 3 500 000 3 500 000 Cash G 887 200 887 200 Cash H 3 450 000 3 450 000 Cash I 7 112 800 7 112 800 Cash J 5 000 000 5 000 000 Cash K 5 000 000 5 000 000 Cash L 1 170 000 1 170 000 Cash M 4 618 800 4 618 800 Cash Total 100 738 800 100 738 800 - In March 2021, in the exercise of 84 176 Series B subscription warrants issued under the 2016-2019 incentive program, the entitled parties claimed Series M shares, issued in the framework of a conditional increase in the parent Company share capital. These shares were admitted to organized trading on 31 March 2021, as a result of which the parent Company share capital was increased by 84 176 thousand PLN. Following this increase, the parent Company share capital amounts to 100 738 000 PLN and is divided into 100 738 000 shares with a nominal value of 1 PLN per share. As of 31 December 2021 the total number of votes afforded by all parent Company shares is 100 738 000. No changes in the parent Company share capital occurred after the balance sheet date. As of 31 December 2021 there remain 32 000 unexercised Series B subscription warrants, entitling their holders to claim an equivalent number of Series M shares. These warrants will expire on 31 October 2022. No changes in the status of these warrants occurred after the balance sheet date. Changes in share capital 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Share capital at beginning of period 100 655 96 120 Increases from: 84 4 535 issue of shares paid up in cash – incentive program 84 4 535 Reductions - - Share capital at end of period 100 739 100 655 Note 22. Other capital contributions 31.12.2021 31.12.2020 Supplementary capital 1 425 647 774 851 Supplementary capital from sale of shares above nominal value 115 909 113 844 Revaluation capital 4 783 442 Other reserve capital 35 741 35 741 Other reserve capital – incentive program 7 470 9 364 Total 1 589 550 934 242 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 61 Change in other capital contributions Supplementary capital Supplementary capital from sale of shares above nominal value Revaluation capital Reserve capital Own shares Other reserve capital – incentive program Total As of 01.01.2021 774 851 113 844 442 35 741 - 9 364 934 242 Increases from: 650 796 2 065 4 341 - - 41 249 698 451 payment in own shares 869 2 065 - - - - 2 934 allocation of net profit / coverage of losses 649 927 - - - - - 649 927 capital contributions mandated by the incentive program - - - - - 41 249 41 249 total comprehensive income - - 4 341 - - - 4 341 Reductions from: - - - - - 43 143 43 143 payment in own shares - - - - - 869 869 capital contributions mandated by the incentive program - - - - - 42 274 42 274 As of 31.12.2021 1 425 647 115 909 4 783 35 741 - 7 470 1 589 550 * adjusted Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 62 Supplementary capital Supplementary capital from sale of shares above nominal value Revaluation capital Reserve capital Own shares Other reserve capital – incentive program Total As of 01.01.2020 777 090 3 861 - 549 - 54 108 835 608 Increases from: 392 314 109 983 442 250 000 214 259 14 936 981 934 creation of reserve capital to finance purchase of own shares - - - 250 000 - - 250 000 allocation of net profit / coverage of losses 175 984 - - - - - 175 984 dissolution of reserve capital created to finance purchase of own shares in past years 549 - - - - - 549 payment in own shares 1 522 109 983 - - 214 259 - 325 764 capital contributions mandated by the incentive program - - - - - 14 936 14 936 purchase of own shares in the course of implementing the incentive program 214 259 - - - - - 214 259 total comprehensive income - - 442 - - - 442 Reductions from: 394 553 - - 214 808 214 259 59 680 883 300 creation of reserve capital to finance purchase of own shares 250 000 - - - - - 250 000 dissolution of reserve capital created to finance purchase of own shares in past years - - - 549 - - 549 payment in own shares 144 553 - - - - 59 621 204 174 capital contributions mandated by the incentive program - - - - - 59 59 purchase of own shares in the course of implementing the incentive program - - - 214 259 214 259 - 428 518 As of 31.12.2020 774 851 113 844 442 35 741 - 9 364 934 242 * adjusted Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 63 Note 23. Retained earnings 31.12.2021 31.12.2020 Retained earnings from preceding years (6 432) (2 959) Total (6 432) (2 959) Changes in retained earnings 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 At beginning of period (2 959) (2 290) Rectification of errors (4 179) - Adjusted retained earnings (7 138) (2 290) Increases from: 1 153 508 175 315 allocation of profit from preceding years 1 153 508 175 315 Reductions from: 1 152 802 175 984 dividend payments 503 694 - reclassification as reserve capital 649 196 175 984 allocation of financial result from preceding years (88) - At end of period (6 432) (2 959) Note 24. Minority interest capital None reported. Note 25. Credits and loans None reported. Note 26. Other financial liabilities 31.12.2021 31.12.2020 Lease liabilities 16 654 18 939 Liabilities estimated at fair value through financial result 142 - Cash flow hedges 17 906 - Liabilities related to deferred portion of payment for acquisition of shares in subsidiary 12 180 - Total financial liabilities 46 882 18 939 Short-term liabilities 25 802 2 933 Long-term liabilities, including: 21 080 16 006 between 1 and 5 years 7 261 2 081 beyond 5 years 13 819 13 925 As a lessee the Group may potentially incur cash outflows which are not currently included in its valuation of lease liabilities, including:  With regard to lease agreements reported in Note 32, concerning perpetual usufruct of land comprising the properties at Jagiellońska 74 and 76 – changes in lease fees may result from revaluation of annual payments related to perpetual usufruct of land by adjusting them to reflect the current value of the property or by modifying the base rate upon which fees are calculated. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 64  With regard to the agreement reported in Note 32, concerning office space in Kraków, which effectively constitutes a lease agreement – changes in lease fees may result from indexation accounting for increases in the retail price index, to which the lessor is contractually entitled.  With regard to the lease agreement reported in Note 32, concerning office space in Wrocław, which effectively constitutes a lease agreement – changes in lease fees may result from indexation accounting for increases in the retail price index, to which the lessor is contractually entitled. Note 27. Other long-term liabilities 31.12.2021 31.12.2020 Other long-term liabilities, including: 2 860 3 173 liabilities related to marketing expenses 1 589 1 722 liabilities related to right of first refusal 1 271 1 378 deposits received - 73 Other long-term liabilities by due date 31.12.2021 31.12.2020 Other long-term liabilities, including: 2 860 3 173 due between 1 and 3 years 720 553 due between 3 and 5 years 480 480 due later than in 5 years 1 660 2 140 Other long-term liabilities by currency 31.12.2021 31.12.2020 currency units PLN equivalent currency units PLN equivalent PLN 2 860 2 860 3 173 3 173 Total 0 2 860 0 3 173 Note 28. Trade liabilities 31.12.2021 31.12.2020 Trade liabilities: 53 380 115 444 payable to affiliates 1 183 557 payable to external entities 52 197 114 887 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 65 Current and overdue trade liabilities Total Not overdue Days overdue 1 – 60 61 – 90 91 – 180 181 – 360 >360 As of 31.12.2021 53 380 48 958 1 572 556 59 2 172 63 payable to affiliates 1 183 1 135 48 - - - - payable to external entities 52 197 47 823 1 524 556 59 2 172 63 Total Not overdue Days overdue 1 – 60 61 – 90 91 – 180 181 – 360 >360 As of 31.12.2020 115 444 111 982 3 075 114 153 27 93 payable to affiliates 557 557 - - - - - payable to external entities 114 887 111 425 3 075 114 153 27 93 Trade liabilities by currency 31.12.2021 31.12.2020 currency units PLN equivalent currency units PLN equivalent USD 10 523 42 748 15 699 59 005 PLN 7 967 7 967 16 843 16 843 EUR 380 1 746 7 583 34 993 CNY 1 015 648 3 847 2 209 CAD 51 164 59 172 JPY 1 804 65 4 043 148 GBP 7 39 22 111 RUB 52 3 32 902 1 648 SEK - - 546 251 AUD - - 12 35 BRL - - 40 29 Total 0 53 380 0 115 444 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 66 Note 29. Other short-term liabilities 31.12.2021 31.12.2020 Liabilities from other taxes, duties, social security payments and others, except corporation tax 9 536 32 789 VAT 5 515 27 790 Flat-rate withholding tax 905 982 Personal income tax 1 835 2 370 Social security (ZUS) payments 1 164 1 557 National Disabled Persons Rehabilitation Fund (PFRON) payments 56 45 PIT-8A settlements 61 45 Other liabilities 506 345 Deposits - 149 Other employee-related liabilities 125 15 Other liabilities payable to board members of the Group’s member companies 36 1 Prepayments received from foreign clients 13 - Other miscellaneous liabilities 332 180 Total other short-term liabilities 10 042 33 134 * adjusted Current and overdue other short-term liabilities Total Not overdue Days overdue 1 – 60 61 – 90 91 – 180 1 – 60 >360 As of 31.12.2021 10 042 9 918 123 - 1 - - payable to affiliates 533 409 123 - 1 - - payable to external entities 9 509 9 509 - - - - - Total Not overdue Days overdue 1 – 60 61 – 90 91 – 180 1 – 60 >360 As of 31.12.2020 33 134 33 122 12 - - - - payable to affiliates 1 - 1 - - - - payable to external entities 33 133 33 122 11 - - - - Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 67 Other short-term liabilities by currency 31.12.2021 31.12.2020 currency units PLN equivalent currency units PLN equivalent PLN 4 804 4 804 19 779 19 779 EUR 663 3 068 1 890 8 480 USD 165 663 367 1 377 GBP 104 567 303 1 506 RUB 5 915 330 1 932 97 AUD 65 190 201 551 SEK 347 158 1 141 499 DKK 161 100 524 316 NOK 165 76 598 251 CAD 15 47 47 135 CHF 9 39 34 141 BRL - - 1 2 Total - 10 042 - 33 134 Note 30. Internal Social Benefits Fund (ZFŚS): assets and liabilities 31.12.2021 31.12.2020 Cash assets 23 23 Liabilities associated with the Internal Social Benefits Fund (ZFŚS) 23 23 Balance - - Internal Social Benefits Fund (ZFŚS) deductions in the financial year - - Note 31. Contingent liabilities Promissory note liabilities from loans received Not applicable. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 68 Contingent liabilities from guarantees, sureties and collateral pledged Type of agreement Currency 31.12.2021 31.12.2020 mBank S.A. Declaration of submission to enforcement Collateral for debit card agreement PLN 920 920 Promissory note agreement Collateral for framework concerning financial market transactions PLN 50 000 50 000 Promissory note agreement Collateral for lease agreement PLN 667 667 Ingenico Group S.A. (formerly Global Collect Services BV) Contract of guarantee Guarantee of discharge of liabilities by GOG sp. z o.o. EUR 155 155 Mazovian Unit for Implementation of EU Programs (Mazowiecka Jednostka Wdrażania Programów Unijnych) Contractual pledge Pledge to cover maintenance and renovation expenses related to leased space PLN 58 115 National Center for Research and Development (Narodowe Centrum Badań i Rozwoju) Promissory note agreement Co-financing agreement no. POIR.01.02.00-00-0105/16 PLN 7 711 7 934 Promissory note agreement Co-financing agreement no. POIR.01.02.00-00-0110/16 PLN 3 846 5 114 Promissory note agreement Co-financing agreement no. POIR.01.02.00-00-0112/16 PLN 3 692 3 857 Promissory note agreement Co-financing agreement no. POIR.01.02.00-00-0118/16 PLN 5 324 5 324 Promissory note agreement Co-financing agreement no. POIR.01.02.00-00-0120/16 PLN 1 204 1 204 Pekao Leasing Sp. z o.o. Promissory note agreement Lease agreement no. 37/1991/21 PLN 442 - Santander Bank Polska S.A. (formerly BZ WBK S.A.) Promissory note agreement Framework agreement concerning financial market transactions PLN 23 500 13 000 Bank Polska Kasa Opieki S.A. Promissory note agreement Framework agreement concerning financial market transactions PLN 35 000 20 000 BNP Paribas Bank Polska S.A. Promissory note agreement Framework agreement concerning financial market transactions PLN 26 600 75 000 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 69 Note 32. Lease and sublease agreements Information concerning depreciation of leased assets is included in Note 2. Interest on lease agreements is presented in Note 4. Information concerning disclosure of assets related to usufruct and the balance sheet value of such assets at the close of the reporting period, divided into base asset categories, is presented in Note 10. Note 49 contains information regarding the total cash outflows related to lease agreements. Liabilities from lease agreements Payments outstanding 31.12.2021 31.12.2020 Due within 1 year 1 664 2 933 Due between 1 and 5 years 1 171 2 081 Due later than in 5 years 13 819 13 925 Total lease payments outstanding, including: 16 654 18 939 short-term liabilities 1 664 2 933 long-term liabilities 14 990 16 006 Gross liabilities from lease agreements (prior to deduction of financial costs) 31.12.2021 31.12.2020 Due within 1 year 1 901 3 375 Due between 1 and 5 years 3 125 3 266 Due later than in 5 years 24 388 24 770 Total, including: 29 414 31 411 short-term liabilities 1 901 3 375 long-term liabilities 27 513 28 036 Income from subleasing of leased assets (usufruct) 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Revenues 40 - Expenses 40 - Income - - Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 70 Lease and sublease agreements in force as of 31.12.2021 Subject Financier Contract no. Base value Base value in currency units Currency Contract expiration date Payments outstanding at end of reporting period Prolongation conditions and buyout options Lease agreements Passenger car Pekao Leasing Sp. z o.o 37/1991/21 614 614 PLN 14.12.2023 377 Lessee is entitled to buy out the leased asset – the contractual net buyout charge is 135 thousand PLN Passenger car BMW Financial Services Polska Sp. z.o.o. LO/40953/0421 377 377 PLN 08.04.2023 201 Lessee is entitled to buy out the leased asset – the contractual net buyout charge is 135 thousand PLN Passenger car Carefleet S.A. UG20002163 118 118 PLN 06.08.2023 123 Lessee is entitled to buy out the leased asset – the contractual net buyout charge is 80 thousand PLN Passenger car Tesla Financial RN111270740-1581877310 490 121 USD 18.02.2023 86 Lessee is entitled to buy out the leased asset – the contractual net buyout charge is 71 thousand USD Jagiellońska 74 – plots no. 12 and 13 State Treasury Deed issued on 31.10.2019 8 623 8 623 PLN 05.12.2089 8 499 Lessee is not entitled to buy out the leased asset Jagiellońska 74 – plot no. 14 Municipality of Warsaw Deed issued on 31.10.2019 1 468 1 468 PLN 12.04.2100 1 452 Lessee is not entitled to buy out the leased asset Jagiellońska 76 State Treasury Deed issued on 31.12.2018 4 449 4 449 PLN 05.12.2089 4 376 Lessee is not entitled to buy out the leased asset Kraków office Prestige Property Group Sp. z o.o Lease agreement concluded on 20.07.2016 3 715 864 EUR 31.03.2022 351 Lessee is not entitled to buy out the leased asset Wrocław office Wisher Enterprise Sp. z o.o. Lease agreement concluded on 24.10.2019 806 180 EUR 31.01.2022 45 Lessee is not entitled to buy out the leased asset Los Angeles office 1011 OFW Owner LLC Lease agreement concluded on 01.04.2018 3 319 817 USD 31.03.2023 1 097 Lessee is not entitled to buy out the leased asset Parking lot at Jagiellońska 78 Sokołowo Sp. z o.o. Lease agreement concluded on 01.01.2020 174 174 PLN 31.12.2022 87 Lessee is not entitled to buy out the leased asset Sublease agreements Parking lot at Jagiellońska 78 CD Projekt S.A. Lease agreement WPA 469/17 concluded on 31.07.2017 79 79 PLN 31.12.2022 40 Lessee is not entitled to buy out the leased asset Total 0 0 24 074 0 0 0 16 654 0 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 71 Short-term lease agreements and lease of low-value assets The Group has entered into agreements concerning leasing of office equipment (multipurpose photocopiers, kitchen equipment) as well as apartments which potentially meet the criteria of lease agreements under IFRS 16. However, the Group regards these agreements as either short-term or concerning low-value assets and, consequently, does not apply the new standard to these agreements in line with the practical expedient specified in Art. 5 of the new standard. In such cases lease payments are reported as costs during the period in which they are incurred, using either the straight-line method or another method which best reflects the breakdown of payments throughout the duration of the agreement (information regarding costs related to such agreements, incurred between 1 January and 31 December 2021, can be found in Note 2). As of 31 December 2021 and 31 December 2020 future payments associated with irrevocable short-term lease agreements and lease agreements concerning low-value assets are as follows: 31.12.2021 31.12.2020 Due within 1 year 121 179 Due between 1 and 5 years 149 170 Due later than in 5 years - - Total 270 349 Note 33. Deferred revenues 31.12.2021 31.12.2020 Subsidies 8 277 14 867 Cross Platform SDK (GameINN) 53 118 Animation Excellence (GameINN) 1 846 3 730 City Creation (GameINN) 3 701 6 977 Seamless Multiplayer (GameINN) 905 905 Cinematic Feel (GameINN) 1 772 3 137 Future period revenues 29 695 33 854 Future period sales 25 715 30 985 GOG Wallet 3 947 2 847 Official phone rental 33 22 Total, including: 37 972 48 721 short-term deferrals 31 548 47 758 long-term deferrals 6 424 963 In the CD PROJEKT RED segment future period sales represent mainly royalties obtained or obtainable in association with customer preorders of digital editions of PC games scheduled for release in future reporting periods, prepayments related to royalties collected from publishers and distribution partners, as well as advance payments for goods received from suppliers. In the GOG.COM segment future period sales represent the value of customer preorders of games scheduled for release in future reporting periods. Note 34. Provisions for employee benefits and similar liabilities 31.12.2021 31.12.2020 Provisions for retirement benefits and pensions 387 402 Total, including: 387 402 short-term provisions 7 4 long-term provisions 380 398 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 72 The following assumptions were made by the actuary when calculating provisions as of the balance sheet date: 31.12.2021 31.12.2020 Discount rate (%) 3.41 1.59 Projected inflation rate (%) 3.41 1.59 Employee turnover rate (%) – average age (CD PROJEKT S.A.) 11.6% - 34 years 9.2% - 33 years Employee turnover rate (%) – average age (GOG sp. z o.o.) 16.8% - 33 years 14.7% - 32 years Projected annual rate of salary growth (%) (CD PROJEKT S.A.) 10% in 2022 - 2023; 6% in later years 8% in 2021 - 2022; 5% in later years Projected annual rate of salary growth (%) (GOG sp. z o.o.) 0% in 2022 – 2023 2.5% in later years 8.1% in 2021 – 2022 5% in later years Mortality rates published by the Central Statistical Office (year of estimation) 2020 2019 Likelihood of disability during the fiscal year 0.1% 0.1% Statistical methods were employed by an actuary to construct and calibrate a mobility model for Group member company employees, based on the Multiple Decrement paradigm. The model was calibrated using historical data supplied by Group member companies. Based on publicly available statistical data and the actuary’s own analysis, the mobility coefficient was assumed to decrease with age. The valuation model is highly sensitive to changes in mobility coefficients and should therefore be subject to frequent verifications and updates. Changes in provisions for employee benefits and similar liabilities Provisions for retirement benefits and pensions Total As of 01.01.2021 402 402 Provisions dissolved 15 15 As of 31.12.2021, including: 387 387 short-term provisions 7 7 long-term provisions 380 380 Provisions for retirement benefits and pensions Total As of 01.01.2020 257 257 Provisions created 145 145 As of 31.12.2020, including: 402 402 short-term provisions 4 4 long-term provisions 398 398 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 73 Note 35. Other provisions 31.12.2021 31.12.2020 Provisions for returns - 194 537 Provisions for liabilities, including: 88 410 291 030 provisions for compensation contingent upon the Group’s financial result, and other compensation 44 856 256 130 provisions for financial statement audit and review expenses 160 73 provisions for bought-in services 1 042 740 provisions for other expenses 42 352 34 087 Total, including: 88 410 485 567 short-term provisions 83 042 339 954 long-term provisions 5 368 145 613 Changes in other provisions Provisions for returns Provisions for compensation contingent upon the Group’s financial result and other compensation Other provisions Total As of 01.01.2021 194 537 256 130 34 900 485 567 Provisions created during the financial year 42 635 47 021 104 586 194 242 Provisions consumed 136 236 256 726 78 020 470 982 Provisions dissolved 100 936 1 569 17 912 120 417 As of 31.12.2021, including: - 44 856 43 554 88 410 short-term provisions - 44 856 38 186 83 042 long-term provisions - - 5 368 5 368 Provisions for returns Provisions for compensation contingent upon the Group’s financial result and other compensation Other provisions Total As of 01.01.2020 - 36 038 3 148 39 186 Provisions created during the financial year 194 537 255 923 37 977 488 437 Provisions consumed - 35 526 6 225 41 751 Provisions dissolved - 305 - 305 As of 31.12.2020, including: 194 537 256 130 34 900 485 567 short-term provisions 48 924 256 130 34 900 339 954 long-term provisions 145 613 - - 145 613 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 74 Note 36. Disclosure of financial instruments Fair value of financial instruments per class Following an analysis of each class of financial instruments the Management Board of the parent Company has reached the conclusion that their carrying amounts in all cases reflect their corresponding fair value, both as of 31 December 2021 and as of 31 December 2020 respectively. 31.12.2021 31.12.2020 LEVEL 1 Assets estimated at fair value Financial assets estimated at fair value through other comprehensive income 228 661 97 397 foreign government bonds – CHF - 32 023 foreign government bonds – EUR 24 517 20 829 foreign government bonds – USD 204 144 44 545 LEVEL 2 Assets estimated at fair value through financial result Derivative instruments: - 6 527 forward currency contracts – CHF - 1 231 forward currency contracts – EUR - (202) forward currency contracts – USD - 5 498 Liabilities estimated at fair value through financial result Derivative instruments: (18 047) - forward currency contracts – EUR (486) - forward currency contracts – USD (17 561) - Financial instruments estimated at fair value are classified according to a three-tier fair value hierarchy: Level 1 – quoted prices in active markets for identical assets or liabilities Level 2 – fair value estimated on the basis of observable market inputs Level 3 – fair value estimated on the basis of unobservable market inputs Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 75 Financial assets – classification and estimation 31.12.2021 31.12.2020 Financial assets estimated at amortized cost 1 060 209 1 987 735 Other long-term receivables 686 321 Trade receivables 125 293 1 205 603 Cash and cash equivalents 411 586 563 335 Bank deposits (maturity beyond 3 months) 265 000 164 368 State Treasury bonds and bonds guaranteed by the State Treasury 248 754 49 588 Loans granted 8 890 4 520 Financial assets estimated at fair value through other comprehensive income 228 661 97 397 Foreign government bonds 228 661 97 397 Financial assets estimated at fair value through financial result - 6 527 Derivative financial instruments - 6 527 Total financial assets 1 288 870 2 091 659 Financial liabilities – classification and estimation 31.12.2021 31.12.2020 Financial liabilities held at amortized cost 100 120 134 383 Trade liabilities 53 380 115 444 Other financial liabilities 46 740 18 939 Financial liabilities held at fair value through financial result 142 - Derivative financial instruments 142 - Total financial liabilities 100 262 134 383 In line with the requirements of IFRS 9 Financial Instruments the parent Company has carried out an analysis of the business model concerning management of financial assets and of the characteristics of contractual cash flows for each component of the bond portfolio. This led the parent Company to conclude the following:  The purpose of the conducted investments in domestic and foreign treasury bonds is to hold to maturity and collect the associated contractual cash flows;  The investment mandates granted to Credit Suisse also permits sale of bonds prior to the expiration of their respective redemption periods in the framework of the adopted portfolio management strategy;  All purchased bonds pass the SPPI test. As a result of the presented analysis, the purchased bonds were assigned to two distinct financial asset management models identified by the entity which manages the bond portfolio. Polish State Treasury bonds and bonds guaranteed by the Polish State Treasury – given the intent to hold them to maturity and collect the associated contractual cash flows – were estimated at amortized cost. Foreign treasury bonds – given the investment mandate which permits management of portfolio by the Asset Manager – were estimated at fair value through other comprehensive income. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 76 Profits and losses from financial assets and liabilities 01.01.2021 – 31.12.2021 Financial assets estimated at amortized cost Financial assets estimated at fair value through financial result Financial liabilities estimated at amortized cost Total Trade receivables Bonds issued or guaranteed by the State Treasury and bonds issued by foreign governments Loans granted Cash, cash equivalents and bank deposits with maturity periods beyond 3 months Derivative financial instruments Other financial liabilities Revenues/(expenses) from interest - 534 161 68 - (535) 228 Creation of impairment allowances (12) - - - - - (12) Dissolution of impairment allowances 6 - - - - - 6 Profit (loss) from sale of debt instruments - (1 436) - - - - (1 436) Fees and commission on purchases of debt instruments - (364) - - - - (364) Forward contract estimation - - - - 7 962 - 7 962 Total profit / (loss) (6) (1 266) 161 68 7 962 (535) 6 384 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 77 01.01.2020 – 31.12.2020 Financial assets estimated at amortized cost Financial assets estimated at fair value through financial result Financial liabilities estimated at amortized cost Total Trade receivables Bonds issued or guaranteed by the State Treasury and bonds issued by foreign governments Loans granted Cash, cash equivalents and bank deposits with maturity periods beyond 3 months Derivative financial instruments Other financial liabilities Revenues/(expenses) from interest - (31) 37 7 582 - (400) 7 188 Creation of impairment allowances (107) - - - - - (107) Dissolution of impairment allowances 10 - - - - - 10 Profit (loss) from sale of debt instruments - (1 081) - - - - (1 081) Fees and commission on purchases of debt instruments - (128) - - - - (128) Forward contract estimation - - - - 9 265 - 9 265 Total profit / (loss) (97) (1 240) 37 7 582 9 265 (400) 15 147 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 78 Note 37. Equity management The main goal of equity management at the Group is to retain a good credit rating and safe capital indicators, facilitating operations, enabling implementation of future development and publishing plans, and increasing shareholder value. The Group actively manages its equity structure, resulting in changes which reflect changing economic conditions. In order to retain or adjust said structure, the parent entity may pay out dividends to shareholders, return capital to shareholders or issue new shares. The Group monitors its capital status by applying a leverage ratio which is calculated as the ratio of net borrowing versus total equity increased by net borrowing. As of 31 December 2021 the value of cash assets held by the Group is in excess of its sum of trade liabilities and other liabilities. Consequently, the Group reports a positive cash balance. Note 38. Employee share programs 2016-2019 incentive program On 24 May 2016 the General Meeting of Shareholders of the parent Company voted to institute an incentive program covering the years 2016-2021, for the benefit of individuals deemed to have a key influence on the Group’s activities. Following attainment of the program’s goals for the years 2016-2019, as officially confirmed in 2020, a total of 5 167 500 exercisable entitlements were held by participants. In the course of implementing the program, in 2020 the parent Company sold to entitled parties a total of 516 700 shares of its own stock, previously bought back on the open market. The remaining entitlements vested by way of issuing 4 650 800 subscription warrants, of which 4 534 624 were exercised by 31 December 2020. In March 2021, another 84 176 warrants were exercised, as a result of which the entitled parties claimed Series M shares, newly issued in the framework of a conditional increase in the parent Company share capital. These shares were admitted to organized trading on 31 March 2021, as a result of which the share capital of the parent Company was increased by 84 176 PLN. As of the publication date of this financial statement there remain 32 000 unexercised Series B subscription warrants, entitling holders to claim the equivalent number of shares of the parent Company. These warrants will expire on 31 October 2022. Incentive program estimation – assumed indicators Grant date CDR volatility index WIG volatility index WIG/CDR correlation coefficient Risk-free rate Entitlements granted on 29.06.2020 41% 19% 51% 0.2% Entitlements granted on 17.06.2019 38% 14% 41% 1.8% Entitlements granted on 08.01.2019 38% 15% 41% 2.1% Entitlements granted on 11.06.2018 34% 14% 38% 2.3% Entitlements granted on 04.12.2017 32% 14% 37% 2.6% Entitlements granted on 06.09.2017 32% 14% 37% 2.5% Entitlements granted on 29.08.2017 32% 14% 37% 2.6% Entitlements granted on 18.05.2017 32% 15% 38% 2.8% Entitlements granted on 05.01.2017 32% 16% 37% 3.0% Entitlements granted on 17.11.2016 32% 16% 37% 2.4% Entitlements granted on 05.07.2016 32% 16% 39% 2.5% Grant date Throughout the duration of the program the parent Company issued grants of eligibility in 11 batches. The fair value of assigned entitlements was, in each case, calculated on the corresponding grant date using modern financial engineering methods and numerical algorithms (an extension of the so-called Black-Scholes-Morton model) by a licensed actuary entered in the register of actuaries maintained by the Financial Supervision Authority (cf. above table). Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 79 Classification of estimation conditions The condition associated with changes in the parent Company stock price vs. changes in the value of the WIG index and the condition specifying that on the day of exercise the market price must be above the acquisition price are considered market conditions. Conditions related to increases in net profits are considered non-market conditions. Formal terms (i.a. correct and timely filing of the relevant documentation), loyalty criteria and any other terms not related to share price are also treated as non-market conditions, as is the requirement of survival until the exercise date and other similar stipulations. Changes in entitlements assigned under the incentive program in force between 2016 and 2019 01.01.2020 – 31.12.2020 Entitlements granted Exercise price (PLN) Unexercised at beginning of period 6 000 000 25.7 or 22.35 Granted but unexercised at beginning of period 5 535 000 25.7 or 22.35 Granted 500 25.7 or 22.35 Forfeited 368 000 25.7 or 22.35 Exercised 5 167 500 25.7 or 22.35 Unexercised at end of period - - Granted but unexercised at end of period - - 2020-2025 incentive program As mandated by the General Meetings of the parent Company held on 28 July 2020 and 22 September 2020, the Group instituted another (third) edition of its incentive program, covering the years 2020-2025. In line with the adopted stipulations, a total of 4 000 000 entitlements may be granted under the program, each entitling its holder to conditionally claim subscription warrants which incorporate the right to acquire parent Company shares issued in the framework of a conditional increase in the Company share capital, or, alternatively, purchase the parent Company’s own shares on preferential terms. Acquisition and exercise of subscription warrants or the purchase of the parent Company’s own shares by the entitled parties, as appropriate, is predicated upon attaining certain goals and criteria defined under the program. These include earnings goals (80% of entitlements), market goals (20% of entitlements), additional individual goals (in selected cases) as well as – in all circumstances – fulfillment of a loyalty criterion up until the day the attainment of the program’s goals and criteria is declared. As of the publication date of this financial statement, 2 275 000 entitlements have been granted under the 2020-2025 incentive program. Incentive program estimation – assumed indicators Grant date CDR volatility index WIG volatility index WIG/CDR correlation coefficient 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% Grant date In 2020 the parent Company issued grants of eligibility in two batches. In 2021 additional entitlements were assigned on one occasion (pursuant to Management Board resolution of 10 August 2021). In each case the fair value of assigned entitlements was calculated on the corresponding grant date using modern financial engineering methods and numerical algorithms (an extension of the so-called Black-Scholes-Morton model) by a licensed actuary entered in the register of actuaries maintained by the Financial Supervision Authority (cf. above table). Classification of estimation conditions The condition associated with changes in the parent Company stock price vs. changes in the value of the WIG index and the condition specifying that on the day of exercise the market price must be above the acquisition price are considered market conditions. Conditions related to increases in net profits are considered non-market conditions. Formal terms (e.g. correct and timely filing of the relevant documentation), loyalty criteria and any other terms not related to share price are also treated as non-market conditions, as is the requirement of survival until the exercise date and other similar stipulations. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 80 Shares outstanding on grant date On each grant date in 2020 the parent Company had 96 120 000 shares outstanding. On the additional grant date in 2021 the parent Company had 100 738 800 shares outstanding. Status of the program Based on the Group’s 2020 and 2021 earnings, as well as assumptions concerning further years covered by the incentive program, the Management Board has performed an analysis of the feasibility of attaining the result goal as defined for the entire duration of the program, and has consequently revised its projections, declaring that the most likely outcome is that the result goal for the duration of the program cannot be attained. Changes in entitlements granted under the 2020-2025 incentive program 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Entitlements granted Exercise price (PLN) Entitlements granted Exercise price (PLN) Unexercised at beginning of period 4 000 000 390.59 or 371.06 - - Granted but unexercised at beginning of period 2 592 000 390.59 or 371.06 - - Granted 30 000 390.59 or 371.06 2 617 000 390.59 or 371.06 Forfeited 347 000 390.59 or 371.06 25 000 390.59 or 371.06 Unexercised at end of period 4 000 000 390.59 or 371.06 4 000 000 390.59 or 371.06 Granted but unexercised at end of period 2 275 000 390.59 or 371.06 2 592 000 390.59 or 371.06 Note 39. Transactions with affiliates Conditions governing transactions with affiliates Intragroup transactions are conducted at market prices on the basis of the so-called arm’s length principle. The principle stipulates that transactions between affiliated entities should be carried out under conditions similar to those which would otherwise apply to transactions carried out by unaffiliated entities. The prices of goods and services exchanged in controlled transactions are estimated by CD PROJEKT Group member companies in accordance with OECD guidelines and national legislation, including the so-called safe harbor regulations. Transfer method selection is preceded by a thorough analysis of each transaction, which includes, among others, the assignment of responsibilities to each party, the assets involved and the corresponding allocation of risks and costs. In each case, the method regarded as most appropriate for the given transaction type is applied so that transactions between member companies of the CD PROJEKT Group are carried out under conditions approximating those which unaffiliated entities could be expected to agree upon. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 81 Transactions with affiliates following consolidation eliminations Sales to affiliates Purchases from affiliates Receivables from affiliates Liabilities due to affiliates 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 31.12.2021 31.12.2020 31.12.2021 31.12.2020 SUBSIDIARIES CD PROJEKT Co., Ltd. (in liquidation) - - 6 629 3 707 - - - 557 Spokko sp. z o.o. 1 460 495 - - 9 113 4 601 - - CD PROJEKT RED Vancouver Studio Ltd. - - 2 889 - 1 008 - 164 - The Molasses Flood LLC - - 2 616 - - - 1 019 - MANAGEMENT BOARD MEMBERS AT GROUP MEMBER COMPANIES Marcin Iwiński 18 10 - - - 5 19 - Adam Kiciński 4 4 - - - - 5 - Piotr Nielubowicz 7 10 - - - 2 - - Michał Nowakowski 24 11 - - - - 7 1 Adam Badowski 9 4 - - 7 - 5 - Piotr Karwowski 4 - - - - - - - Oleg Klapovskiy - 2 - - - - - - Urszula Jach - Jaki 1 4 - - - - - - Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 82 Note 40. Mergers and changes in the structure of the CD PROJEKT Group Mergers between subsidiaries None reported. Incorporation of new subsidiaries On 8 July 2021 the parent Company purchased 100% of shares in the Canadian studio named Digital Scapes (later rebranded as CD PROJEKT RED Vancouver Studio Ltd.) This is a full-fledged gamedev studio which will support the Company in its future game development projects. On 22 October 2021 CD PROJEKT Inc. purchased 60% of shares in The Molasses Flood LLC. The Molasses Flood closely collaborates with the parent Company while retaining full autonomy. It is working on a separate project based upon one of CD PROJEKT’s IPs. On 2 July 2021 the parent Company sold four shares in Spokko sp. z o.o., as a result of which the percentage share of Spokko sp. z o.o. held by the parent Company decreased by 1%, to 74%. Note 41. Compensation of top management and Supervisory Board members Benefits paid out to Management Board members at Group member companies 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Base salaries 79 86 Compensation for duties performed 2 586 2 826 Bonuses and compensation contingent upon the Group’s financial result for the previous year 112 479 17 374 Total 115 144 20 286 Benefits paid out to other top executives at the Group 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Base salaries 29 406 15 490 Compensation for duties performed 733 353 Bonuses and compensation contingent upon the Group’s financial result for the previous year 39 752 5299 Total 69 891 21 142 Benefits paid out to Supervisory Board members 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Compensation for duties performed 481 408 Total 481 408 Note 42. Employment Average employment 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Average employment 493 406 Total 493 406 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 83 Employment turnover 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Employees hired 146 165 Employees dismissed 108 41 Total 38 124 Note 43. Activated borrowing costs Not applicable. Note 44. Disclosure of seasonal, cyclical or sporadic revenues Not applicable. Note 45. Fiscal settlements Fiscal settlements and other areas of activity governed by fiscal regulations may be subject to audits by administrative bodies authorized to impose high penalties and sanctions. The lack of entrenched legal regulations in Poland leads to numerous ambiguities and inconsistencies in this regard. Interpretation of existing tax law frequently varies from state organ to state organ as well as between state organs and business entities, giving rise to areas of uncertainty and conflict. These conditions elevate tax risks in Poland beyond the level encountered in states with more developed fiscal systems. As a rule, fiscal settlements may be subject to state audits within five years following the end of the calendar year in which tax payment was due. R&D tax relief and R&D center status; IP Box preference Given that the parent Company meets the requirements expressed in Art. 19 of the Act of 30 May 2008 on certain forms of supporting innovative activity (JL 2021 item 706), on 11 August 2021, the Minister for Entrepreneurship and Technology issued decision no. DNP-V.4241.11.2021, upholding the previous decision no. 4/CBR/18 of 19 June 2018 which bestowed upon the parent Company the status of an R&D center. This status entitles the parent Company to apply broader R&D tax relief options specified in the Corporate Income Tax Act of 15 February 1992 (JL 2021, item 1800). On 1 January 2019, the Corporate Income Tax Act was amended with regulations which enable taxpayers to apply a preferential tax rate of 5% to eligible income derived from intellectual property rights. Having fulfilled the conditions and formal stipulations expressed in the aforementioned legislation, the parent Company is able to apply the preferential rate to certain sources of its income. Note 46. Events following the balance sheet date  Appointment of new Management Board members, as disclosed in Current Report no. 4/2022 On 26 January 2022 the parent Company announced that its Supervisory Board had appointed Mr. Jeremiah Cohn and Mr. Paweł Zawodny to the Management Board of the Company, effective on 1 February 2022.  Update on court proceedings in the USA – conclusion of a formal settlement agreement, as disclosed in Current Report no. 5/2022 In Current Report no. 5/2022 of 28 January 2022 the parent Company provided an update on litigation pending before the US District Court of the Central District of California, by announcing that on 27 January 2022 it had received from the law firm representing the parent Company in matters related to this class action lawsuit information concerning conclusion of a formal Stipulation and Agreement of Settlement, along with the required annexes. The provisions of this settlement agreement elaborate upon and are materially consistent with the previously concluded Settlement Term Sheet which had been announced by the parent Company in Current Report no. 45/2021 of 16 December 2021. An additional agreement was also concluded, as is standard practice in such cases, listing the circumstances under which the parent Company retains the right to withdraw from the settlement agreement. This document (as well as in the previously concluded Settlement Term Sheet) includes a statement whereby the parent Company and other defendants named in the case expressly deny any wrongdoing. The formal settlement agreement was filed in the Court on 27 January 2022 along with a motion requesting its approval. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 84  Suspension of distribution of the parent Company’s Group’s products and games distributed by the GOG.COM platform on the territories of Russia and Belarus, as disclosed in Current Report no. 6/2022 On 3 March 2022 the parent Company announced that it had decided to suspend sales of its Group’s products and distribution of games on the GOG.COM platform on the territories of Russia and Belarus. The parent Company estimates that over the past 12 months the aggregate share of Russia and Belarus in revenues from sales of products in the CD PROJEKT RED segment and in GOG.COM sales revenues amounted to 5.4% and 3.7% respectively.  Disclosure of inside information concerning initiation of negotiations and conclusion of an agreement with Epic Games International S.à r.l., as disclosed in Current Report no. 7/2022 On 21 March 2022 the parent Company publicly disclosed inside information which arose on 20 December 2021 and was subject to delayed disclosure under Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC, to wit: “On 20 December 2021 the Management Board of CD PROJEKT S.A. undertook the decision to enter into negotiations with Epic Games.” The parent Company further announced that following the conclusion of negotiations, on 21 March 2022 it had signed a licensing and partnership agreement with Epic Games International S.à r.l. The agreement specifies the conditions under which the parent Company is permitted to use the Unreal Engine, and establishes a framework of cooperation between the parties in the scope of developing and improving the engine to adapt it to the requirements of open-world games, such as those developed by the parent Company. The agreement is regarded as strategically important for both parties. Under the agreement the parent Company gains the right to develop and publish games powered by Unreal Engine 4, 5 and subsequent versions. The agreement was concluded for a period of 15 years with a prolongation option. It places no restriction on the number of games created with the use of Unreal Engine. Epic Games will also provide dedicated technical support for games published by the parent Company.  Updated decision concerning diversification of surplus cash assets, as disclosed in Current Report no. 8/2022 On 25 March 2022 the parent Company announced that it had changed its existing surplus cash asset diversification policy. The updated policy specifies that debt instruments held by the parent Company may account for not more than 80% of the Company’s current financial assets, which are defined as the sum of the following: cash and near-cash, bank deposits with maturity periods longer than 3 months, Polish State Treasury bonds, other bonds guaranteed by the Polish State Treasury and bonds issued by foreign governments, estimated at the price specified in the corresponding forward contract hedges. Cash assets may be invested in the following types of bonds: a) domestic bonds issued by the Polish State Treasury, b) domestic bonds guaranteed by the Polish State Treasury, c) foreign treasury bonds issued by countries with a credit rating of at least Aa3 according to Moody’s, d) foreign bonds guaranteed by countries with a credit rating of at least Aa3 according to Moody’s. The updated policy also upholds the parent Company’s decision to hedge the interest rate risks associated with holding bonds denominated in foreign currencies through offsetting purchases of derivative financial instruments, particularly forward contracts, with an added stipulation that up to 15% of cash assets may be allocated to unhedged securities denominated in USD or EUR.  Effect of the political and economic situation in Ukraine on the activities of the CD PROJEKT Group Effect on sales In response to the Russian armed invasion of Ukraine, on 3 March 2022 the Management Board of CD PROJEKT decided to suspend sales of CD PROJEKT Group products as well as games distributed on the GOG.COM platform on the territory of Russia and Belarus. The parent Company estimates that throughout the 12-month period between March 2021 and February 2022 the aggregate share of Russia and Belarus in revenues from sales of products in the CD PROJEKT RED segment and in GOG.COM sales revenues amounted to 5.4% and 3.7% respectively. At an early stage of hostilities the Polish currency (in which most expenses borne by the Group are denominated) weakened substantially against USD and EUR, i.e. the main currencies in which the Group obtains sales revenues. Given that most of the Group’s sales are exports, this strengthening of foreign currencies against the domestic currency should be viewed as a favorable circumstance. Risks associated with the current political and economic situation in Ukraine The parent Company continually monitors the effects of the current political and economic situation in Ukraine, Russia and Belarus upon the activities of the CD PROJEKT Group. The parent Company has terminated, or is in the process of terminating collaboration with Russian suppliers. At the present time the parent Company does not intend to initiate any further collaboration with Russian or Belorussian entities. As of the publication date of this financial statement the Group’s operating activities proceed unhindered, and the effect of the Russian armed invasion of Ukraine do not have a significant negative impact on the Group’s operations. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 85 In the Management Board’s opinion the current political and economic situation in Ukraine does not affect the quantitative data contained in this financial statement, does not provide a reason to suspect impairment of assets, should not have a significant negative effect on the Group’s earnings in 2022, and does not jeopardize continuation of the parent Company’s activities within 12 months of the conclusion of the reporting period. Given the unprecedented character of current events and significant uncertainty associated therewith – particularly the lack of reliable knowledge concerning the duration of the Russian invasion – as of the publication date of this report it is impossible to accurately predict the long-term effects of the invasion upon the condition and earnings of the parent Company and its Group. Any assessments and forecasts in this regard are fraught with uncertainty, and will be subject to further monitoring and analysis by the Group. Insofar as possible, the above assessment reflects the parent Company’s knowledge as of the publication date of this financial statement. Further information on events which occurred after the balance sheet date can be found in the Management Board report on CD PROJEKT Group and CD PROJEKT S.A. activities in 2021. Note 47. Disclosure of transactions with entities contracted to perform audits of financial statements Compensation paid out or payable during the fiscal year 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 for auditing the annual financial statement and the consolidated financial statement 165 148 for other attestation services, including reviewing financial statements and the consolidated financial statement 60 60 Total 225 208 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 86 Note 48. Clarifications regarding the cash flow statement 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Cash and cash equivalents reported in cash flow statement 411 586 563 335 Cash on balance sheet 411 586 563 335 Depreciation: 17 764 13 559 Depreciation of intangibles 3 063 1 963 Depreciation of expenditures on development projects 2 084 5 418 Depreciation of PP&E 12 578 6 099 Depreciation of investment properties 39 79 Profit (loss) from exchange rate differences (15 047) 2 220 Exchange rate differences on valuation of bonds (15 047) 2 220 Interest and share in profits consist of: (228) (7 188) Interest on bank deposits (68) (7 582) Interest on bonds (534) 31 Interest charged on loans granted (161) (37) Interest on lease agreements collected 535 400 Profit (loss) from investment activities results from: 55 282 (5 440) Revenues from sales of PP&E (249) (21) Net value of PP&E sold 169 2 Net value of intangibles sold 19 - Net value of PP&E liquidated 735 49 Net value of intangibles liquidated 39 3 Net value of investment properties liquidated 51 1 630 Impairment allowances on PP&E, intangibles and expenditures on development projects 34 582 - Impairment allowances on shares in subsidiaries 1 668 - Fixed assets received free of charge - (62) Settlement and estimation of derivative instruments 16 468 (8 250) Bond purchase fees 364 128 Revenues from maturation of bonds (82 718) (59 429) Value of bonds held to maturity 84 154 60 510 Changes in provisions result from: (311 449) 366 499 Balance of changes in provisions for liabilities (397 157) 446 381 Balance of changes in provisions for employee benefits (15) 145 Provisions for compensation contingent upon the Group’s financial result aggregated with expenses on development projects 85 723 (80 027) Changes in inventory status result from: (8 929) 5 905 Balance of changes in inventory status (8 929) 5 905 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 87 01.01.2021 – 31.12.2021 01.01.2020 – 31.12.2020 Changes in receivables result from: 1 036 886 (1 083 890) Balance of changes in short-term receivables 1 036 924 (1 065 813) Balance of changes in long-term receivables (365) 37 Balance of changes in advance payments for investment properties 9 70 Income tax set against withholding tax 8 196 3 878 Withholding tax paid abroad (5 858) (13 762) Current income tax adjustments (8 098) (24 227) Changes in advance payments related to expenditures on development projects 6 082 16 266 Changes in advance payments related to purchase of PP&E and intangibles (4) (339) Changes in short-term liabilities except financial liabilities result from: (85 023) 77 319 Balance of changes in short-term liabilities (39 583) 80 074 Current income tax adjustments (22 704) (1 624) Changes in financial liabilities (22 869) (779) Adjustments for changes in liabilities due to purchase of PP&E 77 (1 137) Adjustments for changes in liabilities due to purchase of intangibles 139 678 Adjustments for changes in liabilities related to purchase of investment properties (10) 87 Adjustment for liabilities booked on the other side as deferrals (73) 20 Changes in other assets and liabilities result from: (11 127) (100 033) Balance of changes in prepaid expenses (138) 13 227 Balance of changes in deferred revenues (10 749) (113 007) Adjustment for prepaid expenses booked on the other side as liabilities (240) (260) Adjustment for depreciation aggregated with deferrals - 7 Other adjustments include: 1 656 16 813 Cost of incentive program (999) 14 707 Estimation of financial derivative instruments 220 (79) Depreciation aggregated with cost of products, services, goods and materials sold, consortium settlements and other operating expenses 2 529 1 991 Exchange rate differences (76) 194 Miscellaneous adjustments (18) - Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 88 Note 49. Cash flows and other changes resulting from financial activities 01.01.2021 Cash flows Non-cash changes 31.12.2021 Acquisition of PP&E under lease agreements Dissolution of lease agreements Exchange rate differences Accrued interest Assignment of own shares Resolution concerning purchase of own shares Resolution concerning dividend payment Lease liabilities 18 939 (4 234) 1 236 (18) 196 535 - - - 16 654 Liabilities due to shareholders in association with dividend payment - (503 694) - - - - - - 503 694 - Receivables from entitled parties under the incentive program - 2 149 - - - - (2 149) - - - Total 18 939 (505 779) 1 236 (18) 196 535 (2 149) - 503 694 16 654 01.01.2020 Cash flows Non-cash changes 31.12.2020 Acquisition of PP&E under lease agreements Dissolution of lease agreements Exchange rate differences Accrued interest Assignment of own shares Resolution concerning purchase of own shares Resolution concerning dividend payment Lease liabilities 19 905 (3 258) 1 775 - 116 401 - - - 18 939 Liabilities associated with purchase of own shares - (214 259) - - - - - 214 259 - - Receivables from entitled parties under the incentive program - 126 124 - - - - (126 124) - - - Total 19 905 (91 393) 1 775 - 116 401 (126 124) 214 259 - 18 939 Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 89 Statement of the Management Board of the parent entity With regard to the correctness of the consolidated financial statement Pursuant to the directive of the Finance Minister of 29 March 2018 regarding the publication of periodic and current reports by issuers of securities and the conditions for regarding as equivalent the information required under the laws of a non-member state, the Management Board of the parent entity hereby states that, to the best of its knowledge, this consolidated financial statement and comparative data contained herein have been prepared in accordance with all accounting regulations applicable to the CD PROJEKT Group and that they constitute a true, unbiased and clear description of the finances and assets of the Group as well as its current profit and loss balance. This consolidated financial statement conforms to International Financial Reporting Standards (IFRS) approved by the European Union and in force as of 31 December 2021. Where the above mentioned standards are not applicable the statement conforms to the Accounting Act of 29 September 1994 and to any secondary legislation based on said Act, as well as to the directive of the Finance Minister of 29 March 2018 regarding the publication of periodic and current reports by issuers of securities and the conditions for regarding as equivalent the information required under the laws of a non-member state. With regard to the entity contracted to audit the consolidated financial statement On 14 May 2020 the Supervisory Board of the parent Company concurred with the Audit Committee recommendation and selected Grant Thornton Polska sp. z o.o. sp. k. with a registered office in Poznań as the entity contracted to review the semiannual financial statements and to perform an audit of the annual financial statements of the Company and its Group for 2020 and 2021. Grant Thornton Polska sp. z o.o. sp. k. is authorized to conduct audits of financial statements by the National Chamber of Licensed Auditors (license no. 4055). As declared by the Supervisory Board of the Company: - Grant Thornton Polska sp. z o.o. sp. k. with a registered office in Poznań, along with members of the audit team, fulfill the necessary criteria to ensure preparation of an unbiased and independent audit of the annual separate financial statement of CD PROJEKT S.A. and the consolidated statement of the CD PROJEKT Group for the fiscal year ending on 31 December 2021, as defined under the relevant legislation, standards of professional conduct and professional ethics guidelines, - The CD PROJEKT Group observes existing regulations governing rotation of auditing companies and head auditors, as well as mandatory grace periods, - CD PROJEKT S.A. has instituted a policy regulating selection of auditing companies and procurement by CD PROJEKT S.A. from auditing companies, their affiliates or members of their business networks, of additional services not directly related to financial audits, including services which auditing companies are conditionally authorized to perform. Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 December 2021 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 90 Approval of financial statement This consolidated financial statement of the CD PROJEKT Group was signed and approved for publication by the Management Board of CD PROJEKT S.A. on 14 April 2022 and is duly submitted to the General Meeting of CD PROJEKT S.A. for approval. Warsaw, 14 April 2022 Adam Kiciński Marcin Iwiński Piotr Nielubowicz President of the Board Vice President of the Board Vice President of the Board Adam Badowski Michał Nowakowski Piotr Karwowski Board Member Board Member Board Member Paweł Zawodny Jeremiah Cohn Krystyna Cybulska Board Member Board Member Chief Accountant 91 92