CD Projekt — Interim / Quarterly Report 2022

May 26, 2022

1 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (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. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (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 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Revenues from sales of products, services, goods and materials 216 146 197 632 46 511 43 226 Cost of products, services, goods and materials sold 47 627 62 272 10 249 13 620 Operating profit (loss) 85 321 43 198 18 360 9 448 Profit (loss) before tax 91 893 37 051 19 774 8 104 Net profit (loss) attributable to equity holders of parent entity 68 918 32 487 14 830 7 105 Net cash flows from operating activities 142 122 1 068 300 30 582 233 656 Net cash flows from investment activities 195 861 (81 915) 42 146 (17 916) Net cash flows from financial activities (984) 1 442 (211) 315 Total net cash flows 336 999 987 827 72 517 216 055 Stock volume (thousands) 100 739 100 655 100 739 100 655 Net earnings per share (PLN/EUR) 0.68 0.32 0.15 0.07 Diluted net earnings per share (PLN/EUR) 0.68 0.32 0.15 0.07 Book value per share (PLN/EUR) 19.46 22.13 4.18 4.75 Diluted book value per share (PLN/EUR) 19.45 22.11 4.18 4.74 Declared or paid out dividend per share (PLN/EUR) 1.00 5.00 0.22 1.09 PLN EUR 31.03.2022 31.12.2021 31.03.2022 31.12.2021 Total assets 2 252 549 2 158 735 484 159 469 351 Liabilities and provisions for liabilities (less accrued charges) 263 599 226 407 56 657 49 225 Long-term liabilities 37 825 36 112 8 130 7 851 Short-term liabilities 254 795 228 267 54 765 49 630 Equity 1 959 929 1 894 356 421 264 411 870 Share capital 100 739 100 739 21 653 21 903 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: 4.6472 PLN/EUR for the period between 1 January and 31 March 2022, and 4.5721 PLN/EUR for the period between 1 January and 31 March 2021 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: 4.6525 PLN/EUR on 31 March 2022 and 4.5994 PLN/EUR on 31 December 2021 respectively. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 4 Table of contents Primary financial data of the CD PROJEKT Group .......................................................................................................................................................... 6 Condensed interim consolidated profit and loss account...................................................................................................................................... 7 Condensed interim consolidated statement of comprehensive income ........................................................................................................... 9 Condensed interim consolidated statement of financial position...................................................................................................................... 10 Condensed interim statement of changes in consolidated equity .................................................................................................................... 13 Condensed interim consolidated statement of cash flows .................................................................................................................................. 16 Clarifications regarding the condensed interim consolidated financial statement ............................................................................................. 19 General information......................................................................................................................................................................................................... 20 Structure of the Group .................................................................................................................................................................................................... 20 Consolidation principles ................................................................................................................................................................................................. 21 Entities subject to consolidation ............................................................................................................................................................................ 21 Subsidiaries .................................................................................................................................................................................................................. 21 Basis for the preparation of the condensed interim consolidated financial statement .............................................................................. 22 Assumption of going concern ...................................................................................................................................................................................... 22 Compliance with International Financial Reporting Standards .......................................................................................................................... 22 Changes in standards or interpretations in force and applied by the Group, which entered into force since 1 January 2022 ........................................................................................................................................................................................................... 22 Functional currency and presentation currency ..................................................................................................................................................... 23 Functional currency and presentation currency ...............................................................................................................................................23 Transactions and balances ......................................................................................................................................................................................23 Comparability of financial statements and changes in accounting policies .................................................................................................. 23 Changes in accounting policies .............................................................................................................................................................................24 Presentation changes ................................................................................................................................................................................................24 Financial audit ................................................................................................................................................................................................................... 24 Supplementary information – CD PROJEKT Group activity segments ................................................................................................................... 25 Activity segments ............................................................................................................................................................................................................. 26 Disclosure of activity segments .............................................................................................................................................................................. 27 Segmented consolidated profit and loss account for the period between 01.01.2022 and 31.03.2022 ....................................... 28 Segmented consolidated profit and loss account for the period between 01.01.2021 and 31.03.2021 .......................................... 29 Segmented consolidated statement of financial position as of 31.03.2022 ........................................................................................... 30 Segmented consolidated statement of financial position as of 31.12.2021 .............................................................................................32 Segmented consolidated statement of financial position as of 31.03.2021 ............................................................................................ 34 Activity segments ....................................................................................................................................................................................................... 36 Disclosure of the issuer’s significant accomplishments and shortcomings in each activity segment in the first quarter of 2022 ........................................................................................................................................................................................................... 37 Disclosure of factors which may affect the Group’s future results ..............................................................................................................38 Effect of the political and economic situation in Ukraine on sales in the reporting period ................................................................ 39 Disclosure of seasonal or cyclical activities ....................................................................................................................................................... 40 Disclosure of key clients ............................................................................................................................................................................................ 41 Supplementary information – additional notes and clarifications regarding the condensed interim consolidated financial statement .................................................................................................................................................................................................................. 42 Note 1. Disclosure of circumstances affecting assets, liabilities, equity, net financial result and cash flows which are unusual due to their type, size or effect ....................................................................................................................................................... 43 Note 2. Property, plant and equipment................................................................................................................................................................ 44 Nota 3. Intangibles and expenditures on development projects ................................................................................................................ 46 Note 4. Goodwill ......................................................................................................................................................................................................... 46 Note 5. Investment properties ............................................................................................................................................................................... 46 Note 6. Inventories .....................................................................................................................................................................................................48 Note 7. Trade and other receivables ....................................................................................................................................................................48 Note 8. Other financial assets ................................................................................................................................................................................ 50 Note 9. Deferrals ......................................................................................................................................................................................................... 51 Note 10. Deferred income tax ................................................................................................................................................................................ 52 Note 11. Provisions for employee benefits and similar liabilities ................................................................................................................. 54 Note 12. Other provisions ........................................................................................................................................................................................ 54 Note 13. Other liabilities ........................................................................................................................................................................................... 55 Note 14. Deferred revenues.................................................................................................................................................................................... 55 Note 15. Disclosure of financial instruments ...................................................................................................................................................... 56 Note 16. Sales revenues .......................................................................................................................................................................................... 58 Note 17. Operating expenses ................................................................................................................................................................................. 59 Note 18. Other operating revenues and expenses ......................................................................................................................................... 60 Note 19. Financial revenues and expenses ........................................................................................................................................................ 61 Note 20. Short-term lease agreements and lease of low-value assets ..................................................................................................... 61 Note 21. Issue, buyback and redemption of debt and capital securities .................................................................................................. 62 Note 22. Dividends declared or paid out and collected................................................................................................................................ 62 Note 23. Transactions with affiliates .................................................................................................................................................................... 62 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 5 Note 24. Bad loans and credits, and breaches of loan and credit agreements not subject to remedial proceedings as of the balance sheet date .................................................................................................................................................................................. 65 Note 25. Changes in conditional liabilities and assets since the close of the most recent financial year ..................................... 66 Note 26. Changes in the structure of the Group and its member entities occurring during the reporting period ...................... 68 Note 27. Agreements which may, in the future, result in changes in the proportion of shares held by shareholders and bondholders ........................................................................................................................................................................................................ 68 Note 28. Fiscal settlements .................................................................................................................................................................................... 68 Note 29. Clarifications regarding the condensed interim consolidated cash flow statement ........................................................... 69 Note 30. Cash flows and other changes resulting from financial activities ............................................................................................... 71 Note 31. Events following the balance sheet date ............................................................................................................................................ 72 Supplementary information .................................................................................................................................................................................................. 73 Legal proceedings ...................................................................................................................................................................................................... 74 Shareholding structure ....................................................................................................................................................................................................74 Parent Company shares held by members of the Management Board and Supervisory Board ....................................................... 75 Validation of published projections ............................................................................................................................................................................ 75 Condensed interim separate financial statement of CD PROJEKT S.A. ................................................................................................................. 76 Condensed interim separate profit and loss account............................................................................................................................................ 77 Condensed interim separate statement of comprehensive income ................................................................................................................ 78 Condensed interim separate statement of financial position ............................................................................................................................ 78 Condensed interim statement of changes in separate equity ........................................................................................................................... 80 Condensed interim separate statement of cash flows ......................................................................................................................................... 83 Comparability of financial statements and changes in accounting policies .................................................................................................. 84 Changes in accounting policies .............................................................................................................................................................................84 Presentation adjustments ........................................................................................................................................................................................ 85 Supplementary information concerning the separate financial statement of CD PROJEKT S.A. ............................................................ 86 A. Deferred income tax ....................................................................................................................................................................................... 86 B. Other provisions ................................................................................................................................................................................................ 87 C. Goodwill .............................................................................................................................................................................................................. 88 D. Business combinations .................................................................................................................................................................................. 88 E. Dividends paid out (or declared) and collected ...................................................................................................................................... 88 F. Trade and other receivables......................................................................................................................................................................... 88 G. Disclosure of financial instruments ............................................................................................................................................................ 90 H. Transactions with affiliates ........................................................................................................................................................................... 92 Statement of the Management Board of the parent entity ................................................................................................................................. 94 Approval of financial statement ................................................................................................................................................................................... 95 Primary financial data of the CD PROJEKT Group 1 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 7 Condensed interim consolidated profit and loss account Note 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Sales revenues 216 146 197 632 Revenues from sales of products 16 173 787 145 868 Revenues from sales of services 16 635 387 Revenues from sales of goods and materials 16 41 724 51 377 Cost of products, services, goods and materials sold 47 627 62 272 Cost of products and services sold 17 18 372 23 657 Cost of goods and materials sold 17 29 255 38 615 Gross profit (loss) from sales 168 519 135 360 Selling costs 17 60 606 62 077 General and administrative costs 17 20 017 30 112 Other operating revenues 18 2 590 1 789 Other operating expenses 18 5 163 1 756 (Impairment)/reversal of impairment of financial instruments (2) (6) Operating profit (loss) 85 321 43 198 Financial revenues 19 16 791 10 062 Financial expenses 19 10 219 16 209 Profit (loss) before tax 91 893 37 051 Income tax 10 22 975 4 564 Net profit (loss) 68 918 32 487 Net profit (loss) attributable to equity holders of parent entity 68 918 32 487 Net earnings per share (in PLN) - - Basic for the reporting period 0.68 0.32 Diluted for the reporting period 0.68 0.32 The aggregate value of the Group’s Sales revenues in the first quarter of 2022 was slightly higher than the record-breaking first quarter of the previous year. This was accompanied by notable structural changes: an increase was noted in the share of revenues from sale of own products (which generally carry higher profit margins compared to sales of goods obtained from external suppliers). The main contribution to the CD PROJEKT Group’s revenues in this period came from Revenues from sales of products; primarily the following: a) licensing royalties associated with distribution of Cyberpunk 2077, whose next-gen release targeting Xbox Series X|S and PlayStation 5 appeared in February 2022; b) licensing royalties associated with continuing sales of The Witcher 3: Wild Hunt, along with its expansions – Hearts of Stone and Blood and Wine; c) revenues generated by GWENT: The Witcher Card Game; d) licensing royalties associated with The Witcher 2: Assassins of Kings, The Witcher and Thronebreaker: The Witcher Tales, along with CD PROJEKT RED’s franchises. An important contribution came from Revenues from sales of goods and materials; mainly the following: a) revenues from digital distribution of videogames licensed from external suppliers to final customers, carried out on the GOG.COM platform; b) CD PROJEKT S.A. revenues from sales of physical components of box editions of the Studio’s own games to distributors (carrier media, packaging, etc.); c) revenues from sales of tie-in products and merchandise related to CD PROJEKT RED’s games and brands, carried out by the CD PROJEKT RED GEAR online storefront (https://gear.cdprojektred.com ). Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 8 The reported decrease in this category of revenues is mainly due to lower sales in the GOG.COM segment compared to the reference period, i.e. the first quarter following the release of Cyberpunk 2077. The Cost of products and services sold encompasses mainly depreciation of development expenses related to CD PROJEKT RED’s games. The reported decrease compared to the reference period is mainly due to full depreciation of past GWENT development expenses. In line with the accounting policies in force at the Group expenditures on development projects for which a reliable estimate of the quantity and volume of sales budgets can be provided, are depreciated in proportion to the projected consumption of economic benefits, which depends on the number of copies sold. For other projects, the Group recognizes depreciation using the straight- line method. For projects whose development costs were subject to depreciation in the first quarter of 2022 the following rules apply:  40% of Cyberpunk 2077 development expenditures was recognized as costs in 2020, in the release quarter, while the remaining 60% will be depreciated throughout a five-year economic use period, at 3% per quarter;  Development expenditures related to the next-gen update of Cyberpunk 2077 for Xbox Series X|S and PlayStation 5 are depreciated using the straight-line method between the release date and the end of depreciation of development expenditures related to the base game;  Development expenditures related to Thronebreaker: The Witcher Tales (released in October 2018), along with its releases for other platforms, will be depreciated until the end of September 2022 based on the expected breakdown of future revenues, projected on the basis of sales data for past projects;  Development expenditures related to The Witcher 3: Wild Hunt for Nintendo Switch (released in October 2019) are depreciated over a three-year period following the end of development and the game’s release, based on the expected breakdown of future revenues, projected on the basis of sales data for past projects. The Cost of goods and materials sold corresponds mainly to the cost of goods distributed via the GOG.COM platform, own cost of sales carried out on GOG.COM, cost of physical components of games sold, and – to a lesser degree – costs related to sales of goods to final customers carried out by the CD PROJEKT RED GEAR merch store. In the first quarter of 2022 the main contribution to Selling costs came from publishing, marketing and promotional activities related to the Group’s own products, carried out in the CD PROJEKT RED segment, including remuneration (both fixed and dependent on the Group’s earnings) of internal publishing teams, earnings-dependent remuneration of board members at the Group’s member companies, and expenses related to bought-in sales support services. Promotional expenses increased in comparison with the reference period due to the release of Cyberpunk 2077 for next-gen consoles – Xbox Series X|S and PlayStation 5. Another major contribution to selling costs came from maintenance of support of past releases. In the reporting period this concerned mainly support for Cyberpunk 2077, along with maintenance and further development of GWENT: The Witcher Card Game. Maintenance costs decreased significantly comparted to the first quarter of 2021, mainly due to lower expenditures on Cyberpunk 2077 patches and updates. Furthermore, this category aggregates selling costs generated by marketing activities related to the GOG.COM platform (in the GOG.COM segment), and work on further development and support for sales carried out on this platform. General and administrative expenses at the CD PROJEKT Group comprise mainly: a) fixed and result-dependent remuneration of administrative teams and external support costs which qualify for this category – these continue to increase in step with the Group’s overall expansion; b) costs related to future videogame projects during their early (exploratory) phase, before actual development begins (at which point further costs are capitalized as Expenditures on development projects in the Fixed assets category); c) fixed remuneration of board members at the Group’s member companies; d) estimation of entitlements assigned under the 2020-2025 incentive program – due to a negative outlook regarding the Company’s ability to meet its stated earnings goals throughout the full duration of the program, as declared by the Management Board at the end of 2021, this estimation was lower than during the reference period. Regarding Other operating revenues and expenses, during the reporting period CD PROJEKT obtained revenues from subleasing of office space at Jagiellońska 74 and 76 in Warsaw (along with the offsetting maintenance costs). Several one-time cost items were also reported: this includes disposal of inventories (2 301 thousand PLN) and donations (1 097 thousand PLN, including mainly support for the Polish Humanitarian Action in light of the events in Ukraine). For the period between 1 January and 31 March 2022 the Group reported a surplus of Financial revenues over Financial expenses, mainly due to increased revenues from interest due to the global increase in interest rates. The Income tax reported in the P&L statement for Q1 2022, along with the effective tax rate, increased substantially compared to Q1 2021. This was caused by aggregation with this line item of certain taxes levied in other jurisdictions on licensing royalties remitted to the Group (withholding tax). Following collection of documents confirming the amount of withholding tax, and confirmation that it has been paid, the Group recognized a write-down on the amount of its income tax to which the IP Box preference applies, and aggregates the surplus with its profit and loss account. The Group’s consolidated Net profit for the first quarter of 2022 was 68 918 thousand PLN – 112.1% higher than in the reference period in 2021. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 9 Condensed interim consolidated statement of comprehensive income 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Net profit/(loss) 68 918 32 487 Other comprehensive income which will be entered as profit (loss) following fulfillment of specific criteria (4 493) 282 Exchange rate differences from valuation of foreign entities 437 98 Estimation of financial instruments at fair value through other comprehensive income, adjusted for tax effects (4 930) 184 Other comprehensive income which will not be entered as profit (loss) - - Total comprehensive income 64 425 32 769 Total comprehensive income attributable to minority interests - - Total comprehensive income attributable to equity holders of CD PROJEKT S.A. 64 425 32 769 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 10 Condensed interim consolidated statement of financial position Note 31.03.2022 31.12.2021 31.03.2021 FIXED ASSETS 940 816 905 846 904 556 Property, plant and equipment 2 124 261 119 588 113 088 Intangibles 3 68 222 58 393 59 126 Expenditures on development projects 3 367 005 350 195 388 833 Investment properties 5 44 318 44 634 45 248 Goodwill 3,4 56 438 56 438 56 438 Shares in subsidiaries excluded from consolidation 39 240 38 520 8 234 Deferrals 9 14 319 11 434 11 860 Other financial assets 8,15 176 456 178 540 150 554 Deferred income tax assets 10 50 179 47 418 70 836 Other receivables 7,15 378 686 339 WORKING ASSETS 1 311 733 1 252 889 1 982 501 Inventories 6 14 970 15 886 15 902 Trade receivables 7,15 68 422 125 293 52 175 Current income tax receivables 401 98 - Other receivables 7 113 206 113 498 132 272 Deferrals 9 18 931 13 763 10 827 Other financial assets 8,15 261 828 307 765 220 090 Bank deposits (maturity beyond 3 months) 15 85 390 265 000 73 Cash and cash equivalents 15 748 585 411 586 1 551 162 TOTAL ASSETS 2 252 549 2 158 735 2 887 057 * adjusted The main contribution to the Group’s fixed assets as of the end of Q1 2022, as well as the main contribution to the reported increase, was from Expenditures on development projects, which correspond to development of new games and technologies, subject to progressive depreciation. The reported increase over the reference period is due to a surplus of development expenses related to CD PROJEKT RED’s future releases over the depreciation of development expenses related to finished products. The Group also reported an increase in the value of Intangibles due to its investments in new game development technologies in the CD PROJEKT RED segment, as well as an increase in the balance of Property, plant and equipment due to ongoing expenditures on construction work at the CD PROJEKT campus in Warsaw (PP&E under construction), along with an extension of the lease contract concerning one of its branch offices. At the end of the reporting period, the increased value of short- and long-term Deferrals was mostly due to conclusion of new distribution contracts in the GOG.COM segment and recognition of the corresponding minimum guarantees, i.e. prepayments and advances payable by GOG.COM to its suppliers in association with licensing royalties for games distributed on the GOG.COM platform. The Group’s Other receivables at the end of March 2022 concerned mainly tax receivables and advance payments remitted by CD PROJEKT RED in relation to development projects along with procurement of goods and services. The reported increase in the balance of Working assets at the Group’s member companies is mainly due to an increase in Cash and cash equivalents resulting in large part from a reduction in Trade receivables (collection of licensing royalties in the CD PROJEKT RED segment), Bank deposits (maturity beyond 3 months) and Other financial assets which comprise mainly T- bonds purchased by CD PROJEKT S.A. in the framework of diversifying its credit risk related to monetary assets. As of 31 March 2022, the aggregate value of Cash and cash equivalents, Bank deposits (maturity beyond 3 months) and other liquid financial assets. i.e. treasury bonds (recognized as short- and long-term Other financial assets) was 1 261 582 thousand PLN, i.e. 107 581 thousand PLN more than at the end of 2021 (9.3% increase). Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 11 Note 31.03.2022 31.12.2021 31.03.2021 EQUITY 1 959 929 1 894 356 2 227 530 Parent entity shareholders’ equity 1 959 929 1 894 356 2 227 530 Share capital 21 100 739 100 739 100 739 Supplementary capital 1 425 647 1 425 647 775 720 Supplementary capital from sale of shares above nominal value 115 909 115 909 115 909 Other reserve capital 44 212 47 994 54 297 Exchange rate differences 2 028 1 591 1 189 Retained earnings 202 476 (6 432) 1 147 189 Net profit (loss) for the reporting period 68 918 208 908 32 487 Minority interest equity - - - LONG-TERM LIABILITIES 37 825 36 112 19 893 Other financial liabilities 15 23 309 21 080 15 422 Other liabilities 13 2 800 2 860 3 113 Deferred revenues 14 5 968 6 424 960 Provisions for employee benefits and similar liabilities 11 380 380 398 Other provisions 12 5 368 5 368 - SHORT-TERM LIABILITIES 254 795 228 267 639 634 Other financial liabilities 15 33 327 25 802 7 988 Trade liabilities 15 71 272 53 380 133 560 Current income tax liabilities 31 589 24 446 67 750 Other liabilities 13 9 132 10 042 8 486 Deferred revenues 14 23 053 31 548 41 477 Provisions for employee benefits and similar liabilities 11 7 7 4 Other provisions 12 86 415 83 042 380 369 TOTAL EQUITY AND LIABILITIES 2 252 549 2 158 735 2 887 057 At the end of the first quarter of 2022 the CD PROJEKT Group’s Equity amounted to 1 959 929 thousand PLN, having increased by 65 573 thousand PLN compared to the 2021 yearend figure, mainly due to Net profit for the reporting period. The reported increase in Long-term liabilities was primarily due to recognition (as Other financial liabilities) of lease liabilities resulting from extension of the lease contract concerning one of the Group’s branch offices. The Group’s consolidated Other financial liabilities increased in the first quarter of 2022, mostly due to updated estimation of exchange rate hedges related to:  ownership of foreign treasury bonds denominated in foreign currencies (in the CD PROJEKT RED segment),  current liabilities in the GOG.COM segment. The reported increase in the Group’s Trade liabilities is associated with activities carried out in the CD PROJEKT RED segment. In addition, this line item also aggregates licensing royalties payable in the GOG.COM segment in relation to sales carried out in the first quarter of 2022. Other liabilities for the reporting period comprise mainly tax liabilities (VAT, PIT, withholding tax) and social security payments. The balance of Deferred revenues at the end of March 2022 comprise mainly the following:  CD PROJEKT RED – future period sales, i.e. minimum guarantees – licensing royalties remitted or receivable by the Company from its publishers and distribution partners in relation to future period sales;  CD PROJEKT RED and GOG.COM – deferrals related to subsidies;  GOG.COM – deferrals related to settlements with the Company’s clients (including store credit and Wallet contributions);  GOG.COM – future period sales – preorders of games scheduled for release in future reporting periods. The reported reduction during Q1 2022 was mainly due to settlement of minimum guarantees related to Cyberpunk 2077 (in the CD PROJEKT RED segment). Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 12 Changes in Other provisions held by the CD PROJEKT Group in the first quarter of 2022 concerned mainly CD PROJEKT RED and involved the following:  creation of provisions for remuneration dependent on current-period earnings, which increased the balance of Other provisions;  surplus of consumed provisions for other costs over newly created provisions, which reduced the balance of Other provisions. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 13 Condensed interim statement of changes in consolidated equity Share capital Supplementary capital Supplementary capital from sale of shares above nominal value Other reserve capital Exchange rate differences Retained earnings Net profit (loss) for the reporting period Parent entity shareholders’ equity Total equity 01.01.2022 – 31.03.2022 Equity as of 01.01.2022 100 739 1 425 647 115 909 47 994 1 591 202 476 - 1 894 356 1 894 356 Cost of incentive program - - - 1 148 - - - 1 148 1 148 Total comprehensive income - - - (4 930) 437 - 68 918 64 425 64 425 Equity as of 31.03.2022 100 739 1 425 647 115 909 44 212 2 028 202 476 68 918 1 959 929 1 959 929 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 14 Share capital Supplementary capital Supplementary capital from sale of shares above nominal value 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 rectified its calculation of deferred tax assets on 31 December 2020 by reclassifying some negative temporary differences from the 19% tax rate category to the 5% tax rate category. As a result, the Group’s Equity decreased by 4 179 thousand PLN. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 15 Share capital Supplementary capital Supplementary capital from sale of shares above nominal value Other reserve capital Exchange rate differences Retained earnings Net profit (loss) for the reporting period Parent entity shareholders’ equity Total equity 01.01.2021 – 31.03.2021 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 - - - 9 435 - - - 9 435 9 435 Payment in own shares 84 869 2 065 (869) - - - 2 149 2 149 Total comprehensive income - - - 184 98 - 32 487 32 769 32 769 Equity as of 31.03.2021 100 739 775 720 115 909 54 297 1 189 1 147 189 32 487 2 227 530 2 227 530 The Group rectified its calculation of deferred tax assets on 31 December 2020 by reclassifying some negative temporary differences from the 19% tax rate category to the 5% tax rate category. As a result, the Group’s Equity decreased by 4 179 thousand PLN. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 16 Condensed interim consolidated statement of cash flows Note 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 OPERATING ACTIVITIES Net profit (loss) 68 918 32 487 Total adjustments: 29 53 442 1 029 681 Depreciation of PP&E, intangibles, expenditures on development projects and investment properties 3 894 4 490 Depreciation of expenditures on development projects recognized as cost of products and services sold 18 020 23 319 Profit (loss) from exchange rate differences (1 359) (8 975) Interest and profit sharing (7 427) 32 Profit (loss) from investment activities (434) 12 215 Change in provisions (4 176) (81 400) Change in inventories 916 (8 945) Change in receivables 43 740 1 091 367 Change in liabilities excluding credits and loans 15 515 (7 824) Change in other assets and liabilities (17 064) (3 968) Other adjustments 1 817 9 370 Cash flows from operating activities 122 360 1 062 168 Income tax on pre-tax profit (loss) 7 302 4 561 Withholding tax paid abroad 15 673 3 Income tax (paid)/reimbursed (3 213) 1 568 Net cash flows from operating activities 142 122 1 068 300 INVESTMENT ACTIVITIES Inflows 325 840 197 525 Sales of PP&E and intangibles 7 - Closing bank deposits (maturity beyond 3 months) 265 000 164 368 Maturation of bonds 58 132 33 097 Interest from bonds 291 - Interest from bank deposits 2 364 40 Other inflows from investment activities 46 20 Outflows 129 979 279 440 Purchases of intangibles and PP&E 15 212 7 218 Expenditures on development projects 27 697 29 126 Purchase of investment properties and activation of costs 89 41 Loans granted 1 500 1 540 Purchase of bonds and the associated purchase fees 91 241 442 Opening bank deposits (maturity beyond 3 months) 85 390 73 Net cash flows from investment activities 195 861 (81 915) * adjusted Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 17 Note 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 FINANCIAL ACTIVITIES Inflows 10 2 159 Net inflows from sale and issue of shares in the exercise of rights assigned under the incentive program - 2 149 Collection of receivables arising from financial lease agreements 10 10 Outflows 994 717 Payment of liabilities arising from lease agreements 863 673 Interest payments 131 44 Net cash flows from financial activities (984) 1 442 Total net cash flows 336 999 987 827 Balance of changes in cash and cash equivalents 336 999 987 827 Cash and cash equivalents at beginning of period 411 586 563 335 Cash and cash equivalents at end of period 748 585 1 551 162 * adjusted In the first quarter of 2022 the CD PROJEKT Group reported 142 122 thousand PLN in positive Net cash flows from operating activities, which is 926 178 thousand PLN less than in the reference period. It should, however, be noted that the reference period was unusual in that it coincided with collection of record-breaking receivables payable to CD PROJEKT S.A. in the aftermath of the release of Cyberpunk 2077. The consolidated base net earnings were subject to the following adjustments: a) Non-cash items (aggregate increase):  Depreciation,  Depreciation of development projects recognized as cost of products and services sold, mainly depreciation of development costs related to Cyberpunk 2077, together with its next-gen release for Xbox Series X|S and PlayStation 5, Thronebreaker: The Witcher Tales and The Witcher 3: Wild Hunt - Complete Edition for Nintendo Switch,  Profit (loss) from exchange rate differences – reduction resulting from deduction of exchange rate differences recognized in the P&L account from estimation of foreign treasury bonds held by the CD PROJEKT RED segment,  Change in provisions – reduction caused by surplus of newly created provisions for remuneration dependent on earnings, aggregated with expenditures on development projects, over the change in the balance of provisions for other liabilities,  Other adjustments – increase caused mainly by elimination of settlements related to the incentive program. b) Items related to changes in working assets and short-term liabilities (aggregate increase):  Change in inventories – increased balance of cash flows resulting from reduction in inventories,  Change in receivables – increased balance of cash flows resulting primarily from a reduction in the balance of receivables at the end of Q1 2022 as a result of collection of licensing royalties previously reported in Q4 2021, along with settlement of withholding tax paid abroad by CD PROJEKT RED clients,  Change in liabilities excluding credits and loans – increased balance of cash flows resulting from an increase in the balance of the Group’s liabilities,  Change in other assets and liabilities – reduction in the balance of cash flows mainly due to settlement of minimum guarantees previously collected in the CD PROJEKT RED segment, along with recognition of new minimum guarantees contractually agreed upon with suppliers in the GOG.COM segment. c) Two line items recognized elsewhere in the cash flow statement: Interest and profit sharing, which caused a reduction in cash flows from operating activities, and Profit (loss) from investment activities – reduction resulting from transactions involving bonds and derivative financial instruments. d) Difference between the value of income tax reported in the profit and loss account and income tax actually paid in the first quarter of 2022, including withholding tax settlements. The main contribution to Net cash flows from investment activities in the first quarter of 2022 came from inflows resulting from a decrease in the balance of bank deposits with maturity periods longer than 3 months, along with sale of some treasury bonds held by the CD PROJEKT RED segment, which outweighed investments in new assets (Expenditures on development projects and Purchases of intangibles and PP&E). Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 18 The CD PROJEKT Group did not generate appreciable Net cash flows from financial activities in the first quarter of 2022. The aggregate balance of Net cash flows for the first quarter of 2022 was 336 999 thousand PLN. Clarifications regarding the condensed interim consolidated financial statement 2 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 20 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 Principal place of business: Warsaw 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. Structure of the Group Affiliates CD PROJEKT S.A. GOG sp. z o.o. CD PROJEKT Inc. The Molasses Flood LLC CD PROJEKT Co., Ltd. (undergoing liquidation) Spokko sp. z o.o. CD PROJEKT RED STORE sp. z o.o. CD PROJEKT RED Vancouver Studio Ltd. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 21 Consolidation principles Entities subject to consolidation capital share voting share consolidation method CD PROJEKT S.A. parent company - - GOG sp. z o.o. 100% 100% full CD PROJEKT Inc. 100% 100% full CD PROJEKT Co., Ltd. (undergoing 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 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 balance sheet total,  contributes not more than 1% to the parent entity’s aggregate sales and financial revenues. 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 balance sheet total,  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. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 22 Basis for the preparation of the condensed interim consolidated financial statement This condensed interim consolidated financial statement is prepared in compliance with International Accounting Standard 34 (IAS 34) Interim financial reporting, approved for use within the EU. The condensed interim consolidated financial statement does not contain all the information and disclosures which would otherwise be required in an annual financial statement. Accordingly, this statement should be read in conjunction with the Consolidated Financial Statement of the CD PROJEKT Group for the year ending 31 December 2021, approved for publication on 14 April 2022. Assumption of going concern This condensed interim consolidated financial statement is prepared under the assumption that the Group and its parent entity 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 financial statement the Management Board of the parent entity 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 March 2022 the Management Board 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. Compliance with International Financial Reporting Standards This condensed interim consolidated financial statement conforms to International Accounting Standard (IAS) 34, Interim Financial Reporting, as well as to International Financial Reporting Standards (IFRS) applicable to interim financial reporting, endorsed by the International Accounting Standard Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC), valid for 31 March 2022. The Group intends to apply amendments to IFRS which have been published but have not yet entered into force on the publication date of this condensed interim consolidated financial statement, depending on their date of entry into force. Information regarding standards and interpretations applied for the first time, early application of new standards, standards which have entered into force on or after 1 January 2022 and the effect of changes in IFRS upon the Group’s future financial statements is provided in Section 2 of the Group’s Consolidated Financial Statement for 2021. Changes in standards or interpretations in force and applied by the Group, which entered into force since 1 January 2022  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. 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 EU, which have not yet entered into force, and their effect on the Group’s financial statement The Management Board performed an assessment of the effect of application of new standards upon future financial statements. In approving this financial statement, the Group did not apply the following standards, amendments to existing standards and interpretations which had been published and approved for use in the EU but which had not yet entered into force: Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 23  MSSF 17 Insurance contracts – approved on 23 November 2021 and applicable to reporting periods beginning on or after 1 January 2023,  Amendments to IAS 1 and Practice Statement 2: Disclosure of accounting policies (published on 12 February 2021) – 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, 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. Standards and interpretations adopted by the IASB which have not yet been 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,  MSSF 17 Insurance contracts – initial application of IFRS 17 and IFRS 9 - applicable to reporting periods beginning on or after 1 January 2023, The Group is performing an assessment of the effect these new standards and amendments to standards upon the Group’s financial statement. 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). All presented data are reported in thousand 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, unless deferred in Equity capital when they constitute cash flow hedges or hedges of shares in net assets. Comparability of financial statements and changes in accounting policies The accounting practices applied in preparing this condensed interim 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 2021, except for changes in accounting policies and presentation-related adjustments described below. This condensed interim consolidated financial statement should be read in conjunction with the consolidated financial statement for the period ending 31 December 2021. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 24 Changes in accounting policies The accounting practices applied in preparing this condensed interim 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 2021, except for changes in accounting policies, changes related to companies which are subject to consolidation, and presentation-related adjustments described below. Presentation changes This condensed interim consolidated financial statement for the period between 1 January and 31 March 2022 includes changes in the presentation of certain financial data. In order to ensure comparability of financial data, adjustments were also introduced with respect to reference data for 31 March 2021 and 31 December 2021. The following adjustments were made:  In the statement of cash flows for the period between 1 January and 31 March 2021, the presentation of interest from bank deposits was adjusted as follows: - Other inflows from investment activities – adjusted by (40) thousand PLN - Interest from bank deposits – adjusted by 40 thousand PLN  In the statement of financial position for 31 December 2021 and 31 March 2021 the presentation of some of the land holdings belonging to the Group was adjusted as follows: - Property, plant and equipment – adjusted by 4 354 thousand PLN - Investment properties – adjusted by (4 354) thousand PLN These changes had no effect on the Group’s financial result or equity. Financial audit This condensed interim consolidated financial statement with selected elements of the condensed interim separate financial statement has not been subjected to a formal audit or review by an independent licensed auditor. Supplementary information – CD PROJEKT Group activity segments 3 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 26 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 this statement as compared to the Group’s financial statement for the year ending on 31 December 2021. There are no differences in the scope of assessment of assets, liabilities, profits and losses within each activity segment of the Group. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 27 Disclosure of activity segments Continuing operations Consolidation eliminations Total (continuing operations) CD PROJEKT RED GOG.COM 01.01.2022 – 31.03.2022 Sales revenues 179 349 40 387 (3 590) 216 146 sales to external clients 175 827 40 319 - 216 146 sales between segments 3 522 68 (3 590) - Segment net profit (loss) 68 849 152 (83) 68 918 Continuing operations Consolidation eliminations Total (continuing operations) CD PROJEKT RED GOG.COM 01.01.2021 – 31.03.2021 Sales revenues 148 523 53 835 (4 726) 197 632 sales to external clients 143 865 53 767 - 197 632 sales between segments 4 658 68 (4 726) - Segment net profit (loss) 34 363 (1 883) 7 32 487 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 28 Segmented consolidated profit and loss account for the period between 01.01.2022 and 31.03.2022 CD PROJEKT RED GOG.COM Consolidation eliminations Total Sales revenues 179 349 40 387 (3 590) 216 146 Revenues from sales of products 172 416 - 1 371 173 787 Revenues from sales of services 1 017 68 (450) 635 Revenues from sales of goods and materials 5 916 40 319 (4 511) 41 724 Cost of products, services, goods and materials sold 22 063 28 768 (3 204) 47 627 Cost of products and services sold 18 416 21 (65) 18 372 Cost of goods and materials sold 3 647 28 747 (3 139) 29 255 Gross profit (loss) from sales 157 286 11 619 (386) 168 519 Selling costs 50 429 10 308 (131) 60 606 General and administrative costs 18 527 1 538 (48) 20 017 Other operating revenues 2 694 1 030 (1 134) 2 590 Other operating expenses 5 603 794 (1 234) 5 163 (Impairment)/reversal of impairment of financial instruments (2) - - (2) Operating profit (loss) 85 419 9 (107) 85 321 Financial revenues 14 597 2 194 - 16 791 Financial expenses 8 203 2 042 (26) 10 219 Profit (loss) before taxation 91 813 161 (81) 91 893 Income tax 22 964 9 2 22 975 Net profit (loss) 68 849 152 (83) 68 918 Net profit (loss) attributable to equity holders of parent entity 68 849 152 (83) 68 918 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 29 Segmented consolidated profit and loss account for the period between 01.01.2021 and 31.03.2021 CD PROJEKT RED GOG.COM Consolidation eliminations Total Sales revenues 148 523 53 835 (4 726) 197 632 Revenues from sales of products 142 067 2 044 1 757 145 868 Revenues from sales of services 992 68 (673) 387 Revenues from sales of goods and materials 5 464 51 723 (5 810) 51 377 Cost of products, services, goods and materials sold 27 888 38 889 (4 505) 62 272 Cost of products and services sold 22 670 1 439 (452) 23 657 Cost of goods and materials sold 5 218 37 450 (4 053) 38 615 Gross profit (loss) from sales 120 635 14 946 (221) 135 360 Selling costs 47 709 14 526 (158) 62 077 General and administrative costs 28 063 2 122 (73) 30 112 Other operating revenues 2 098 269 (578) 1 789 Other operating expenses 2 058 252 (554) 1 756 (Impairment)/reversal of impairment of financial instruments (6) - - (6) Operating profit (loss) 44 897 (1 685) (14) 43 198 Financial revenues 7 478 2 584 - 10 062 Financial expenses 13 167 3 064 (22) 16 209 Profit (loss) before taxation 39 208 (2 165) 8 37 051 Income tax 4 845 (282) 1 4 564 Net profit (loss) 34 363 (1 883) 7 32 487 Net profit (loss) attributable to equity holders of parent entity 34 363 (1 883) 7 32 487 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 30 Segmented consolidated statement of financial position as of 31.03.2022 CD PROJEKT RED GOG.COM Consolidation eliminations Total FIXED ASSETS 939 507 19 752 (18 443) 940 816 Property, plant and equipment 110 102 5 235 8 924 124 261 Intangibles 68 212 10 - 68 222 Expenditures on development projects 364 998 2 020 (13) 367 005 Investment properties 56 630 - (12 312) 44 318 Goodwill 56 438 - - 56 438 Investments in subsidiaries 15 036 - (15 036) - Shares in subsidiaries excluded from consolidation 39 240 - - 39 240 Deferrals 5 346 8 973 - 14 319 Other financial assets 176 456 - - 176 456 Deferred income tax assets 46 671 3 514 (6) 50 179 Other receivables 378 - - 378 WORKING ASSETS 1 241 251 74 236 (3 754) 1 311 733 Inventories 14 970 - - 14 970 Trade receivables 68 869 3 307 (3 754) 68 422 Current income tax receivables 101 300 - 401 Other receivables 111 556 1 650 - 113 206 Deferrals 5 436 13 495 - 18 931 Other financial assets 261 591 237 - 261 828 Bank deposits (maturity beyond 3 months) 85 390 - - 85 390 Cash and cash equivalents 693 338 55 247 - 748 585 TOTAL ASSETS 2 180 758 93 988 (22 197) 2 252 549 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 31 CD PROJEKT RED GOG.COM Consolidation eliminations Total EQUITY 1 941 440 33 563 (15 074) 1 959 929 Equity attributable to shareholders of the parent entity 1 941 440 33 563 (15 074) 1 959 929 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 45 225 335 (1 348) 44 212 Exchange rate differences 1 079 (65) 1 014 2 028 Retained earnings 241 273 (29 791) (9 006) 202 476 Net profit (loss) for the reporting period 68 849 152 (83) 68 918 Noncontrolling interest equity - - - - LONG-TERM LIABILITIES 37 797 2 626 (2 598) 37 825 Other financial liabilities 23 309 2 598 (2 598) 23 309 Other liabilities 2 800 - - 2 800 Deferred revenues 5 952 16 - 5 968 Provisions for employee benefits and similar liabilities 368 12 - 380 Other provisions 5 368 - - 5 368 SHORT-TERM LIABILITIES 201 521 57 799 (4 525) 254 795 Other financial liabilities 33 327 771 (771) 33 327 Trade liabilities 33 650 40 575 (2 953) 71 272 Current income tax liabilities 31 589 - - 31 589 Other liabilities 4 912 4 220 - 9 132 Deferred revenues 17 536 5 517 - 23 053 Provisions for retirement benefits and similar liabilities 6 1 - 7 Other provisions 80 501 6 715 (801) 86 415 TOTAL EQUITY AND LIABILITIES 2 180 758 93 988 (22 197) 2 252 549 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (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 105 236 5 316 9 036 119 588 Intangibles 58 382 11 - 58 393 Expenditures on development projects 347 802 2 318 75 350 195 Investment properties 57 082 - (12 448) 44 634 Goodwill 56 438 - - 56 438 Investments in 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 * adjusted Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (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 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (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 31.03.2021 CD PROJEKT RED GOG.COM Consolidation eliminations Total FIXED ASSETS 890 580 31 320 (17 344) 904 556 Property, plant and equipment 110 646 4 131 (1 689) 113 088 Intangibles 58 952 174 - 59 126 Expenditures on development projects 368 431 20 413 (11) 388 833 Investment properties 45 248 - - 45 248 Goodwill 56 438 - - 56 438 Investments in subsidiaries 15 628 - (15 628) - Shares in subsidiaries excluded from consolidation 8 234 - - 8 234 Deferrals 5 258 6 602 - 11 860 Other financial assets 150 554 - - 150 554 Deferred income tax assets 70 852 - (16) 70 836 Other receivables 339 - - 339 WORKING ASSETS 1 894 283 91 678 (3 460) 1 982 501 Inventories 15 902 - - 15 902 Trade receivables 50 874 3 432 (2 131) 52 175 Other receivables 116 652 16 949 (1 329) 132 272 Deferrals 4 309 6 518 - 10 827 Other financial assets 219 286 804 - 220 090 Bank deposits (maturity beyond 3 months) 73 - - 73 Cash and cash equivalents 1 487 187 63 975 - 1 551 162 TOTAL ASSETS 2 784 863 122 998 (20 804) 2 887 057 * adjusted Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (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 2 181 216 61 910 (15 596) 2 227 530 Equity attributable to shareholders of the parent entity 2 181 216 61 910 (15 596) 2 227 530 Share capital 100 739 136 (136) 100 739 Supplementary capital 739 094 42 141 (5 515) 775 720 Supplementary capital from sale of shares above nominal value 115 909 - - 115 909 Other reserve capital 55 310 926 (1 939) 54 297 Exchange rate differences 240 (65) 1 014 1 189 Retained earnings 1 135 561 20 655 (9 027) 1 147 189 Net profit (loss) for the reporting period 34 363 (1 883) 7 32 487 Noncontrolling interest equity - - - - LONG-TERM LIABILITIES 19 827 1 358 (1 292) 19 893 Other financial liabilities 15 422 1 287 (1 287) 15 422 Other liabilities 3 113 - - 3 113 Deferred income tax liabilities - 5 (5) - Deferred revenues 915 45 - 960 Provisions for employee benefits and similar liabilities 377 21 - 398 SHORT-TERM LIABILITIES 583 820 59 730 (3 916) 639 634 Other financial liabilities 7 939 505 (456) 7 988 Trade liabilities 97 883 37 533 (1 856) 133 560 Current income tax liabilities 67 494 256 - 67 750 Other liabilities 3 122 6 693 (1 329) 8 486 Deferred revenues 36 559 4 918 - 41 477 Provisions for retirement benefits and similar liabilities 3 1 - 4 Other provisions 370 820 9 824 (275) 380 369 TOTAL EQUITY AND LIABILITIES 2 784 863 122 998 (20 804) 2 887 057 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 36 Activity segments In the first quarter of 2022 the Group engaged in business activities in two segments:  CD PROJEKT RED,  GOG.COM. CD PROJEKT RED Target and scope of business activity The activity of the CD PROJEKT RED segment is carried out in the framework of CD PROJEKT S.A. (domestic holding company of the CD PROJEKT Group), CD PROJEKT Inc. (USA) and CD PROJEKT RED STORE sp. z o.o. (online merch store). The segment’s activities cover creation and publication of videogames, licensing the associated distribution rights, coordinating promotional activities as well as manufacturing, distributing or licensing tie-in products and merchandise which exploits the commercial appeal of brands held by the Company. Developing and publishing videogames represents the main area of activity of the CD PROJEKT RED studio. It bases upon brands owned by the Company – The Witcher and Cyberpunk. The Studio is globally recognized for Cyberpunk 2077 and for its series of The Witcher games – all of which are its flagship brands. It also develops GWENT: The Witcher Card game, an online card game with built-in microtransaction support. In the scope of its publishing activities the Company also assumes responsibility for its promotional and advertising campaigns, and maintains direct relations with the player base via electronic and social media channels as well as through regular participation in trade fairs. The segment also covers the activities of the online merch store at gear.cdprojektred.com which markets products directly to fans of CD PROJEKT RED games. Key products As of the publication date of this report, key releases in the Company’s portfolio include The Witcher, The Witcher 2: Assassins of Kings, The Witcher 3: Wild Hunt, two expansion packs for the latter (Hearts of Stone and Blood and Wine) as well as Cyberpunk 2077 – the Studio’s first game set in the Cyberpunk universe, launched on 10 December 2020. On 15 February 2022 CD PROJEKT RED released a dedicated next-gen console version of Cyberpunk 2077. Since 2018 CD PROJEKT RED has been developing GWENT: The Witcher Card Game (PC, macOS, iOS, Android) and Thronebreaker: The Witcher Tales, based upon similar gameplay mechanics (PC, iOS, Nintendo Switch, Xbox One, PlayStation 4, Android). GOG.COM Target and scope of business activity GOG.COM currently ranks among the world’s most popular independent digital game distribution platform. It is distinguished by offering digital products free of cumbersome DRM 1 measures. The platform is offered in English, French, German, 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. In addition to Windows PC releases, 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 GOG GALAXY facilitates automatic updates, cloud saves and online gameplay (including cross- platform gameplay), while also handling the online elements of GWENT, sales support and processing in-game transactions in the game’s PC release. Key products As of the publication date of this report, the GOG.COM digital distribution platform offers over 6400 products from more than 1000 partners. This includes both timeless classics and fresh releases from such well-known brands as Bethesda, Disney, Electronic Arts, Ubisoft, Konami and Warner Bros. Games are also distributed using the proprietary GOG GALAXY application, which is designed to maximize customer comfort and experience related to purchasing, playing and updating games from the GOG.COM catalogue. GOG GALAXY also facilitates online and cross-platform gameplay. 1 DRM (Digital Rights Management) – a broad term which refers to technologies which limit access to digital content (games, music, movies, books) to specific persons or timeslots. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 37 The Group uses GOG.COM to market its own products directly to end users – this includes The Witcher, The Witcher 2: Assassins of Kings, The Witcher 3: Wild Hunt (along with its expansion packs – Hearts of Stone and Blood and Wine, also offered as the Game of the Year Edition), Thronebreaker: The Witcher Tales and Cyberpunk 2077. Owing to GOG GALAXY in-game purchases placed by users of the PC edition of GWENT take advantage of GOG’s sales and payment services. Disclosure of the issuer’s significant accomplishments and shortcomings in each activity segment in the first quarter of 2022 CD PROJEKT RED Cyberpunk 2077 On 15 February 2022 Patch 1.5 for Cyberpunk 2077 – the game’s next-gen update – was released to gamers, incorporating a range of improvements for next-gen consoles (PlayStation 5 and Xbox Series X|S). Following its release, the next-gen update may be downloaded free of charge by anyone who had purchased PlayStation 4 or Xbox One versions of the game. Patch 1.5 also includes new content, including the ability to modify the player’s in-game physical appearance, new apartments and new quests. Developers have also improved NPC AI, along with certain aspects of the in-game environment, and introduced a range of bugfixes. The next- gen release of the game also received a fresh marketing identity. The launch of the game’s next-gen edition (on 15 February 2022) was also accompanied by a reinvigorated global marketing and advertising campaign, titled “Love it, or burn it”, which subversively encouraged gamers to return to Night City and see for themselves how Cyberpunk 2077 had changed since its original release in December 2020. Gamers wishing to encounter Night City on PlayStation 5 and Xbox Series X|S were provided with a free trial version of the game, offering five hours of next-gen gameplay. In the first quarter of 2022 Cyberpunk 2077 received additional awards and accolades. The game was recognized in Steam Awards 2021, topping the “Outstanding Story-Rich Game” category. In a reader survey carried out by the benchmark.pl service, Cyberpunk 2077 was named the best PC game of 2021, and in March 2022 it received a prestigious Excellence Award at the 25th edition of Japan Media Arts Festival. GWENT: The Witcher Card Game In January 2022 CD PROJEKT RED confirmed it was working on a new project extending the gameplay mechanics of GWENT: The Witcher Card Game. This entirely new single-player card game, based upon GWENT, with a working title of “Project Golden Nekker”, is scheduled for release by the end of the current year. On 8 February 2022 the 8th GWENT Journey season began, offering over 100 new unlockable levels and 80 awards. On 11 February GWENT players were invited to participate in the annual Love Event. Those who accepted special quests during this time were rewarded with unique items and other prizes, along with a unique skin for the Northern Kingdoms commander – Queen Calanthe. Events related to The Witcher videogame series On 21 March 2022 CD PROJEKT RED announced that it was working on a new saga within The Witcher videogame series. The corresponding social media announcement teased a new medallion. Within one day of publication, the tweet (posted on the official The Witcher profile) attracted over 300 thousand likes and was shared more than 70 thousand times, making it the most popular tweet ever posted by CD PROJEKT RED (a near fivefold increase in likes and shares over the previous record holder – i.e. the beep tweet teasing Cyberpunk 2077, posted in 2018). The Studio also announced that the next big game set in The Witcher universe would be based on Unreal Engine 5. On 25 March 2022 CD PROJEKT RED, in collaboration with Dark Horse Comics, announced a digital edition of the medieval Witcher- themed manga – The Witcher: Ronin – to be released in the fall of the current year. The comic may already be preordered. On 31 March 2022 the Studio unveiled the first official Witcher Cookbook, developed together with popular culinary bloggers from Nerds’ Kitchen. The cookbook will contain 80 recipes inspired by the rich (not only in terms of cuisine) world of The Witcher games. It is set to appear in the fall of 2022 and may already be preordered. GOG.COM The GOG.COM platform As of the publication date of this statement, the list of products available on GOG.COM numbers over 6 400 items. In the first quarter of 2022 the platform’s catalogue was expanded, among others, with XCOM: Chimera Squad, Cloudpunk, Partisans 1941, Martha is Dead, ELEX II, Shadow Warrior 3, Hero’s Hour, Siberia: The World Before, TUNIC, Beholder 3, Strange Horticulture and Expeditions: ROME. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 38 Sales support Videogame sales support activities comprise mainly adding new, attractive items to the GOG.COM catalogue and organizing seasonal sale campaigns. For GOG.COM, the first quarter of the year is marked by the platform’s traditional recurring sale campaigns. The year kicked off with the Winter Sale, followed by the New Year Sale in late January, with over 2500 games offered at bargain prices. In February, the platform celebrated Valentine’s Day with its “We Love Games” event, while in March the spring edition of the GOG Games Festival teased new games which would be offered on the platform in the coming months, and cut prices on over 3 000 existing games. In mid-April, following the close of the reporting season, GOG organized two additional campaigns – Indie Spring Sale and Good Old Games Week, focusing on classic games available on the platform. Other corporate events On 26 January 2022 the Supervisory Board of the Company adopted a resolution appointing Mr. Paweł Zawodny and Mr. Jeremiah Cohn to the Management Board of CD PROJEKT S.A. effective on 1 February 2022. As Management Board Member, Mr. Paweł Zawodny is responsible for the technological and organizational transformation of CD PROJEKT RED, while Mr. Jeremiah Cohn coordinates the activities of the Group’s marketing and communication departments, and supervises franchise development. On 3 March 2022 the Management Board of the Company announced that it had suspended sales of CD PROJEKT Group products and distribution of games on the GOG.COM platform in Russia and Belarus. On 21 March 2022 the Company announced that it had concluded negotiations and signed a licensing and partnership agreement with Epic Games Epic Games International S.à r.l. The agreement concerns use of Unreal Engine by the Company as well as cooperation between the parties in the scope of enhancing and improving the engine. Under the agreement the Company gains the right to develop and publish games powered by Unreal Engine 4, 5 and subsequent versions. Epic Games will also provide dedicated technical support for games published by the Company. The agreement was concluded for a period of 15 years with a prolongation option. It places no restriction on the number of games created with the use of Unreal Engine. On 25 March 2022 the Management Board of the Company announced its current policy concerning diversification of surplus current cash. The updated policy specifies that debt instruments held by the Company may account for not more than 80% (up from 50%) of the Company’s current financial assets, which are defined as the sum of the following: cash and near-cash, bank deposits with maturity periods longer than 3 months, Polish State Treasury bonds, other bonds guaranteed by the Polish State Treasury and bonds issued by foreign governments, estimated at the price specified in the corresponding forward contract hedges. The updated policy also includes rating criteria for foreign bonds, and allows for up to 15% of total financial assets to be allocated to unhedged securities denominated in USD or EUR. Disclosure of factors which may affect the Group’s future results Future growth of CD PROJEKT S.A. and the CD PROJEKT Group is critically dependent on the ability to retain world-class creative professionals and experts, and to attract a growing number of specialists, both domestic and foreign, to work on the Group’s future releases. Strategic directions related to talent acquisition, team development and support are presented in the CD PROJEKT Group Strategy Update (including the attached video commentary) and in the CD PROJEKT Group Report on Sustainable Development for 2021. Ongoing expansion of the team, shifting to a hybrid work mode, and upscaling of development work calls for effective management of production and publishing activities at the Company HQ in Warsaw and at its branch offices in Kraków, Wrocław, Vancouver, Los Angeles, Boston, Seoul and Tokyo. The market performance of each new release is an important aspect of the Studio’s reputation as a developer of top-quality, highly sought-after entertainment products. It also underpins the value and recognition of brands such as The Witcher, Cyberpunk and CD PROJEKT RED, upon which the long-term development strategy of the Company and its Group is founded. Moreover, the activities of CD PROJEKT Group member companies are affected by external factors such as the macroeconomic outlook, legal reforms and changes in taxation. In this sense, CD PROJEKT is in a similar position to many other companies conducting business on domestic and international markets. Key internal and external factors which, in the Board’s opinion, may prove detrimental to the Group’s activities and growth prospects, along with the risk management system in force at the Group, are listed in the risk assessment section of the Management Board report on CD PROJEKT Group activities in 2021. With regard to further quarterly periods in 2022 the CD PROJEKT Group intends to develop its activities in an organic manner. Additionally, while introducing the Group’s strategy update the Management Board also announced increased openness to mergers and acquisitions in order to assist the growth of CD PROJEKT RED and support implementation of the Group’s strategy. CD PROJEKT RED Key factors which determine the growth of the CD PROJEKT RED segment include ongoing projects, the scale of development work associated with those projects and their perceived popularity among gamers. In this context, the most significant factors shaping the current results of the CD PROJEKT Group include the popularity of previously published games set in The Witcher and Cyberpunk universe, as well as – in future periods – events surrounding the development and market reception of further development projects. In the coming quarters CD PROJEKT RED will focus on releasing the next-gen edition of The Witcher 3: Wild Hunt, releasing a large expansion for Cyberpunk 2077 and launching the CYBERPUNK: EDGERUNNERS anime series, which will enrich the Studio’s franchise with a new format and improve its global recognition. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 39 Another important milestone for CD PROJEKT RED, scheduled for the coming quarters, involves integration of the Studio’s development processes with a new game engine – specifically, Unreal Engine 5 – on the basis of the licensing and partnership agreement concluded with Epic Games in March 2022. Use of this engine should significantly streamline the game development process. The Company’s strategic partnership with Epic Games involves further work on UE5 in the scope of support for open- world games, and adaptation and optimization of its elements to match the conceptual framework of future projects. In addition, Epic Games has also committed itself to providing dedicated technical support for CD PROJEKT RED games. Working with UE5 also significantly broadens the Studio’s recruitment opportunities given that Unreal Engine is familiar to many game developers. Maintaining the observed growth dynamics and expansion of the CD PROJEKT RED segment will depend on further enhancement of its world-class videogame development skillset and on the capacity for effective communication with the global gaming community. Both aspects are crucial for Studio’s ongoing transformation – labeled RED 2.0 – which aims, among others, to apply a more agile approach to the videogame development process, thereby improving quality, shortening future marketing campaigns and ensuring that such campaigns are based on more polished content. In project management terms, maintaining two separate major franchises (The Witcher and Cyberpunk), along with several independent development teams, will enable the Company to conduct parallel work on several projects, beginning in 2022, and will smoothen its long-term release schedule. This migration towards a dual franchise model supported by several independent product lines also permits optimization of manufacturing and financial activities, mitigates important risk factors and makes it easier for Company employees to seek professional fulfillment. GOG.COM In the GOG.COM segment, maintaining the current high sales volume should be supported by the customers’ increasing tendency to turn to online channels for purchases, as observed during the recent years. GOG.COM growth also depends on seeking additional brand-new products. Accordingly, GOG sp. z o.o. actively communicates with leading global developers and publishers of videogames, continually expanding its list of business partners and products offered. Each new release on GOG.COM contributes to the platform’s popularity and drives up sales. In addition to adding new products GOG sp. z o.o. also seeks to expand its user base by attracting new players – those who have not yet set up a GOG.COM account. The Company has been successful in this regard, owing to its intensive PR activities and synergies resulting from cooperation with CD PROJEKT S.A. The GOG.COM customer pool continues to grow at a steady pace. Further growth of activities in the GOG.COM segment, including the potential to acquire unique know-how and experience, and to fully leverage the Company’s technological expertise, will, in the coming quarters of 2022, be influenced by development of features which support sales on the platform, including better integration of GOG GALAXY monetization mechanisms with the GOG.COM storefront, as well as increased focus on expanding the GOG.COM catalogue with classic games. Other factors The growth of the CD PROJEKT Group will also be affected by development work and other activities carried out by its subsidiaries – Spokko and The Molasses Flood. Spokko intends to continue developing The Witcher: Monster Hunter, thus naturally contributing to the Group’s know-how and ensuring its presence on the mobile game market, which is currently the fastest growing market segment. As for The Molasses Flood, it is developing a new game based on one of CD PROJEKT IPs, with a view towards establishing a new product line for the Group. Effect of the political and economic situation in Ukraine on sales in the reporting period 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 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 against USD and EUR, i.e. the main currencies in which the Group obtains sales revenues. Given that most of the Group’s sales are exports, this strengthening of foreign currencies against the domestic currency should be viewed as a favorable circumstance. Risks associated with the current political and economic situation in Ukraine The Company continually monitors the effects of the current political and economic situation in Ukraine, Russia and Belarus upon the activities of the CD PROJEKT Group. The Company has terminated, or is in the process of terminating collaboration with Russian suppliers. At the present time the Company does not intend to initiate any further collaboration with Russian or Belorussian entities. As of the publication date of this report the Group’s operating activities proceed unhindered, and the effect of the Russian armed invasion of Ukraine do not have a significant negative impact on the Group’s operations. In the Management Board’s opinion the current political and economic situation in Ukraine does not affect the quantitative data contained in the financial statement, does not provide a reason to suspect impairment of assets, should not have a significant negative effect on the Group’s earnings in further quarters of 2022, and does not jeopardize continuation of the Company’s activities within 12 months of the conclusion of the reporting period. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 40 Given the unprecedented character of ongoing events and significant uncertainty associated therewith – particularly the lack of reliable knowledge concerning the duration of the Russian invasion – as of the publication date of this report it is impossible to accurately predict the long-term effects of the invasion upon the condition and earnings of the Company and its Group. Any assessments and forecasts in this regard are fraught with uncertainty, and will be subject to further monitoring and analysis by the Group. Insofar as possible, the above assessment reflects the Company’s knowledge as of the publication date of this financial statement. Disclosure of seasonal or cyclical activities CD PROJEKT RED The revenues and financial result of the CD PROJEKT RED segment are strongly affected by the videogame release schedule. CD PROJEKT RED usually takes between 2 and 5 years to produce a game. Initial development work occurs before the previous game in the series is complete and ready to be released. CD PROJEKT RED also engages in smaller-scale projects – such as add-ons for its own games or adapting existing products to work on new gaming platforms. Such projects may be carried out directly by the Company or by its external partners, and their implementation usually takes several months (up to about a dozen). With regard to games which have already been released, their yearly sales breakdown is dependent on the schedule of periodic sale campaigns. In most cases, strong sales are reported in the second and fourth quarter, while the first and the third quarter (the latter of which overlaps with the summer vacation season) see weaker sales. For GWENT: The Witcher Card Game, operated in the game-as-a-service model, the revenue stream depends on the overall popularity of the service and on the appeal of new in-game content released to gamers. In addition to pure development activities, the Company also actively manages its franchises in other fields, working to continually expand its target audience, and exploring new media types and platforms. Chart 1 Effect of new releases on the quarterly revenues from sales of products, goods and materials by CD PROJEKT RED in 2011- 2022 (PLN thousands) 0 200000 400000 600000 800000 1000000 1200000 1400000 1600000 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 41 GOG.COM The digital videogame distribution market, which is the main area of activity of GOG.COM, is characterized by seasonal fluctuations in revenues. On an annual basis, the highest revenues are typically obtained in the fourth quarter while the lowest revenues correspond to the third quarter. Sales in Q2 and Q4 are boosted by promotional activities organized in these periods. The sales volume is also strongly dependent on the timing of new releases in each reporting period. Chart 2 Quarterly sales of goods and materials in the GOG.COM segment in 2018-2022 (PLN thousands) Disclosure of key clients The CD PROJEKT Group collaborates with external clients whose share in revenues exceeds 10% of the consolidated sales revenues of the Group. Within the CD PROJEKT RED segment the activities of CD PROJEKT S.A. carried out in collaboration with three external clients throughout Q1 2022 generated revenues which exceeded 10% of the consolidated sales revenues of the CD PROJEKT Group for this period (calculated incrementally):  client I: 55 735 thousand PLN, i.e. 25.8% of the Group’s consolidated sales revenues,  client II: 44 639 thousand PLN, i.e. 20.7% of the Group’s consolidated sales revenues,  client III: 28 680 thousand PLN, i.e. 13.3% of the Group’s consolidated sales revenues. The abovementioned clients are not affiliated with CD PROJEKT S.A. or any of its subsidiaries. In other activity segments no external client accounted for more than 10% of the Group’s consolidated sales revenues. 0 40000 80000 120000 160000 200000 Q1 Q2 Q3 Q4 2018 2019 2020 2021 2022 Supplementary information – additional notes and clarifications regarding the condensed interim consolidated financial statement 4 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 43 Note 1. Disclosure of circumstances affecting assets, liabilities, equity, net financial result and cash flows which are unusual due to their type, size or effect In this condensed interim consolidated financial statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 no circumstances affecting assets, liabilities, equity, net financial result and cash flows have been identified which could be regarded as unusual due to their type, size or effect. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 44 Note 2. Property, plant and equipment Changes in PP&E (by category) between 01.01.2022 and 31.03.2022 Land holdings Buildings and structures Civil engineering objects Machinery and equipment Vehicles Other PP&E PP&E under construction Total Gross carrying amount as of 01.01.2022 40 435 75 861 1 876 52 127 3 243 4 930 2 327 180 799 Increases from: - 4 292 - 1 221 - 36 4 331 9 880 purchase - 103 - 1 189 - 11 4 331 5 634 lease agreements concluded - 3 956 - - - - - 3 956 reassignment from PP&E under construction - 233 - 17 - 25 - 275 reclassification - - - 15 - - - 15 Reductions from: - 816 212 1 939 - 104 356 3 427 sale - - - 84 - - - 84 disposal - 816 212 1 854 - 89 - 2 971 reassignment from PP&E under construction - - - - - - 275 275 reclassification - - - - - 15 81 96 other - - - 1 - - - 1 Gross carrying amount as of 31.03.2022 40 435 79 337 1 664 51 409 3 243 4 862 6 302 187 252 Depreciation as of 01.01.2022 1 250 19 797 558 35 145 1 792 2 669 - 61 211 Increases from: 142 1 673 53 2 476 128 239 - 4 711 depreciation 142 1 673 53 2 462 128 239 - 4 697 reclassification - - - 14 - - - 14 Reductions from: - 845 76 1 925 3 82 - 2 931 sale - - - 80 - - - 80 disposal - 816 76 1 842 - 67 - 2 801 reclassification - - - - - 15 - 15 other - 29 - 3 3 - - 35 Depreciation as of 31.03.2022 1 392 20 625 535 35 696 1 917 2 826 - 62 991 Impairment allowances as of 01.01.2022 - - - - - - - - Impairment allowances as of 31.03.2022 - - - - - - - - Net carrying amount as of 01.01.2022 39 185 56 064 1 318 16 982 1 451 2 261 2 327 119 588 Net carrying amount as of 31.03.2022 39 043 58 712 1 129 15 713 1 326 2 036 6 302 124 261 * adjusted Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 45 Contractual commitments for future acquisition of PP&E 31.03.2022 31.12.2021 31.03.2021 Leasing of passenger cars 429 429 195 Total 429 429 195 Usufruct of PP&E held under lease agreements 31.03.2022 Gross value Depreciation Net value Land holdings 14 540 515 14 025 Immovable properties 11 276 6 577 4 699 Civil engineering objects 94 59 35 Vehicles 1 512 347 1 165 Total 27 422 7 498 19 924 31.12.2021 Gross value Depreciation Net value Land holdings 14 540 464 14 076 Immovable properties 8 037 6 698 1 339 Civil engineering objects 94 47 47 Vehicles 1 504 257 1 247 Total 24 175 7 466 16 709 31.03.2021 Gross value Depreciation Net value Land holdings 14 540 311 14 229 Immovable properties 7 861 4 671 3 190 Civil engineering objects 94 12 82 Vehicles 1 042 279 763 Total 23 537 5 273 18 264 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 46 Nota 3. Intangibles and expenditures on development projects Changes in intangibles and expenditures on development projects between 01.01.2022 and 31.03.2022 Development projects in progress Development projects completed Trademarks Patents and licenses Copyrights Computer software Goodwill Intangible assets under construction Others Gross carrying amount as of 01.01.2022 95 169 841 986 33 199 2 154 18 331 36 018 56 438 19 1 083 314 Increases from: 35 129 12 059 - 26 - 10 962 - - 58 176 purchases - - - 26 - 10 962 - - 10 988 own creation 35 129 - - - - - - - 35 129 reassignment from development projects in progress - 12 059 - - - - - - 12 059 Reductions from: 12 059 - - - - - - - 12 059 reassignment from development projects in progress 12 059 - - - - - - - 12 059 Gross carrying amount as of 31.03.2022 118 239 854 045 33 199 2 180 18 331 46 980 56 438 19 1 129 431 Depreciation as of 01.01.2022 - 552 378 - 1 928 173 29 227 - - 583 706 Increases from: - 18 319 - 63 31 1 065 - - 19 478 depreciation - 18 319 - 63 31 1 065 - - 19 478 Reductions - - - - - - - - - Depreciation as of 31.03.2022 - 570 697 - 1 991 204 30 292 - - 603 184 Impairment allowances as of 01.01.2022 20 806 13 776 - - - - - - 34 582 Impairment allowances as of 31.03.2022 20 806 13 776 - - - - - - 34 582 Net carrying amount as of 01.01.2022 74 363 275 832 33 199 226 18 158 6 791 56 438 19 465 026 Net carrying amount as of 31.03.2022 97 433 269 572 33 199 189 18 127 16 688 56 438 19 491 665 Contractual commitments for future acquisition of intangible assets None reported. Note 4. Goodwill No changes in goodwill occurred between 1 January and 31 March 2022. Note 5. 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. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 47 Changes in the value of investment properties between 01.01.2022 and 31.03.2022 Gross balance sheet value as of 01.01.2022 48 170 Increases from: 157 activation of costs 157 Reductions - Gross balance sheet value as of 31.03.2022 48 327 Depreciation as of 01.01.2022 3 536 Increases from: 473 depreciation 473 Reductions - Depreciation as of 31.03.2022 4 009 Impairment allowances as of 01.01.2022 - Increases - Reductions - Impairment allowances as of 31.03.2022 - Net balance sheet value as of 31.03.2022 44 318 * adjusted Contractual commitments for acquisition of investment properties None reported. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 48 Note 6. Inventories 31.03.2022 31.12.2021 31.03.2021 Goods 14 909 15 843 15 803 Other materials 61 43 99 Gross inventories 14 970 15 886 15 902 Inventory impairment allowances - - - Net inventories 14 970 15 886 15 902 Changes in inventory impairment allowances None reported. Note 7. Trade and other receivables 31.03.2022 31.12.2021 31.03.2021 Gross trade and other receivables 182 819 240 288 185 650 Impairment allowances 813 811 864 Trade and other receivables 182 006 239 477 184 786 from affiliates 1 356 1 238 126 from external entities 180 650 238 239 184 660 Changes in impairment allowances on receivables Trade receivables Other receivables Total OTHER ENTITIES Impairment allowances as of 01.01.2022 79 732 811 Increases from: 2 - 2 creation of allowances for past-due and contested receivables 2 - 2 Reductions - - - Impairment allowances as of 31.03.2022 81 732 813 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 49 Current and overdue trade receivables as of 31.03.2022 Total Not overdue Days overdue 1 – 60 61 – 90 91 – 180 181 – 360 >360 AFFILIATES gross receivables 1 348 294 - - 1 054 - - 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 1 348 294 - - 1 054 - - Total Not overdue Days overdue 1 – 60 61 – 90 91 – 180 181 – 360 >360 OTHER ENTITIES gross receivables 67 155 66 758 271 2 - - 124 non-fulfillment ratio - 0% 0% 0% 0% 0% 0% impairment allowances as determined by non- fulfillment ratio - - - - - - - impairment allowances as individually assessed 81 - - - - - 81 total expected credit loss 81 - - - - - 81 Net receivables 67 074 66 758 271 2 - - 43 Total gross receivables 68 503 67 052 271 2 1 054 - 124 impairment allowances 81 - - - - - 81 Net receivables 68 422 67 052 271 2 1 054 - 43 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 50 Other receivables 31.03.2022 31.12.2021 31.03.2021 Other gross receivables, including: 114 316 114 916 133 343 tax returns except corporate income tax 69 462 77 067 96 519 advance payments associated with expenditures on development projects 32 480 30 435 24 303 advance payments for supplies 10 346 5 391 10 415 deposits 1 014 998 636 provisions for sales revenues - advances 75 67 352 employee compensation settlements 31 5 33 prepayments associated with purchases of PP&E and intangibles 10 34 120 settlements with board members at the Group’s member companies 8 7 8 prepayments associated with licensing royalties - - 86 prepayments associated with purchases of investment properties - 79 60 other 158 101 79 Impairment allowances 732 732 732 Total other gross receivables 113 584 114 184 132 611 short-term 113 206 113 498 132 272 long-term 378 686 339 Note 8. Other financial assets 31.03.2022 31.12.2021 31.03.2021 Loans granted 10 441 8 890 6 067 Bonds 427 607 477 415 363 774 Derivative financial instruments 236 - 803 Other financial assets, including: 438 284 486 305 370 644 short-term assets 261 828 307 765 220 090 long-term assets 176 456 178 540 150 554 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 51 Note 9. Deferrals 31.03.2022 31.12.2021 31.03.2021 Minimum guarantees and advance payments at GOG.COM 21 496 15 230 11 889 Software, licenses 5 815 3 905 4 739 Expenses associated with future marketing activities 1 715 1 734 1 840 Repairs and refurbishment 1 387 1 470 1 611 Fees associated with right of first refusal 1 351 1 378 1 458 IT security 432 421 525 Non-life insurance 332 525 207 Payments related to perpetual usufruct of land 213 - - Business travel (airfare, accommodation, insurance) 48 64 3 Marketing campaigns 3 19 1 Participation in trade fairs - 7 - Other prepaid expenses 458 444 414 Total prepaid expenses, including: 33 250 25 197 22 687 short-term 18 931 13 763 10 827 long-term 14 319 11 434 11 860 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 52 Note 10. Deferred income tax Negative temporary differences requiring recognition of deferred tax assets 31.12.2021 Differences affecting deferred tax aggregated with financial result 31.03.2022 Provisions for other employee benefits 385 - 385 Provisions for compensation dependent on financial result and other compensation 39 543 10 124 49 667 Tax loss 15 133 (314) 14 819 Negative exchange rate differences 3 275 10 702 13 977 Difference between balance sheet value and tax value of expenditures on development projects 24 780 9 24 789 Employee compensation and social security expenses payable in future reporting periods 61 10 71 Deferred revenues associated with adding funds to virtual wallets and participation in the additional benefits programs 3 401 314 3 715 Other provisions 48 841 (19 275) 29 566 R&D tax relief 303 891 - 303 891 Advances recognized as taxable income 1 469 348 1 817 Difference between net balance sheet value and tax value of PP&E and intangibles 12 - 12 Estimation of forward contracts 142 (142) - Other sources 83 29 112 Total negative temporary differences 441 016 1 805 442 821 subject to 5% tax rate 60 423 3 877 64 300 subject to 19% tax rate 380 593 (2 072) 378 521 withholding tax levied abroad 1 209 40 1 249 Deferred tax assets 75 350 (200) 75 150 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 53 Positive temporary differences requiring recognition of deferred tax liabilities 31.12.2021 Differences affecting deferred tax aggregated with financial result 31.03.2022 Difference between balance sheet value and tax value of PP&E and intangibles 14 431 (65) 14 366 Income in the current period invoiced in the following period / accrued income 129 257 (62 994) 66 263 Positive exchange rate differences 14 963 9 411 24 374 Estimation of forward contracts - 237 237 Difference between balance sheet value and tax value of expenditures on development projects 272 934 (9 684) 263 250 Other sources 86 241 327 Total positive temporary differences 431 671 (62 854) 368 817 subject to 5% tax rate 386 324 (64 149) 322 175 subject to 19% tax rate 45 347 1 295 46 642 Deferred tax liabilities 27 932 (2 961) 24 971 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 31.03.2022 31.12.2021 31.03.2021 Deferred tax assets 75 150 75 350 96 402 Deferred tax liabilities 24 971 27 932 25 566 Net deferred tax assets/(liabilities) 50 179 47 418 70 836 Income tax reported in profit/loss account 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Current income tax, including: 25 729 64 440 withholding tax paid abroad 15 673 3 Changes in deferred income tax (2 754) (59 876) Income tax reported in profit/loss account 22 975 4 564 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 54 Note 11. Provisions for employee benefits and similar liabilities 31.03.2022 31.12.2021 31.03.2021 Provisions for retirement benefits and pensions 387 387 402 Total, including: 387 387 402 short-term provisions 7 7 4 long-term provisions 380 380 398 No changes in provisions for employee benefits and similar liabilities occurred between 1 January and 31 March 2022. Note 12. Other provisions 31.03.2022 31.12.2021 31.03.2021 Provisions for returns - - 130 508 Provisions for liabilities, including: 91 783 88 410 249 861 provisions for financial statement audit and review expenses 184 160 28 provisions for bought-in services 1 085 1 042 788 provisions for compensation contingent upon the Group’s financial result, and other compensation 58 105 44 856 238 589 provisions for other expenses 32 409 42 352 10 456 Total, including: 91 783 88 410 380 369 short-term provisions 86 415 83 042 380 369 long-term provisions 5 368 5 368 - Changes in other provisions Provisions for compensation contingent upon the Group’s financial result, and other compensation Other provisions Total As of 01.01.2022 44 856 43 554 88 410 Provisions created during the financial year 13 380 13 211 26 591 Provisions consumed 56 23 012 23 068 Provisions dissolved 75 75 150 As of 31.03.2022, including: 58 105 33 678 91 783 short-term provisions 58 105 28 310 86 415 long-term provisions - 5 368 5 368 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 55 Note 13. Other liabilities 31.03.2022 31.12.2021 31.03.2021 Liabilities from other taxes, duties, social security payments and others, except corporation tax 8 679 9 536 7 867 VAT 3 841 5 515 4 952 Flat-rate withholding tax 888 905 38 Personal income tax 1 112 1 835 922 Social security (ZUS) payments 2 723 1 164 1 889 National Disabled Persons Rehabilitation Fund (PFRON) payments 62 56 47 PIT-8AR settlements 53 61 19 Other liabilities 3 253 3 366 3 732 Liabilities associated with right of first refusal and future marketing costs 2 800 2 860 3 040 Other employee-related liabilities 105 125 38 Other liabilities payable to management board members at Group member companies 22 36 2 Liabilities due to shareholders in association with capital contributions - - 2 Advance payments received from foreign clients - 13 - Other liabilities 326 332 650 Total, including: 11 932 12 902 11 599 short-term liabilities 9 132 10 042 8 486 long-term liabilities 2 800 2 860 3 113 Note 14. Deferred revenues 31.03.2022 31.12.2021 31.03.2021 Subsidies 7 812 8 277 14 851 Future period revenues 17 105 25 715 24 126 GOG Wallet 4 058 3 947 3 425 Official phone rental and other services 46 33 35 Total, including: 29 021 37 972 42 437 short-term deferrals 23 053 31 548 41 477 long-term deferrals 5 968 6 424 960 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 56 Note 15. Disclosure of financial instruments Fair value of financial instruments per class Following an analysis of each class of financial instruments held by the Group, the Management Boards has determined that their carrying amounts in all cases reflect their corresponding fair value as of 31 March 2022, 31 December 2021 and 31 March 2021 respectively. 31.03.2022 31.12.2021 31.03.2021 LEVEL 1 Assets estimated at fair value Financial assets estimated at fair value through other comprehensive income 177 736 228 661 213 220 foreign government bonds - CHF - - 16 644 foreign government bonds - EUR 24 731 24 517 25 311 foreign government bonds - USD 153 005 204 144 171 265 LEVEL 2 Assets estimated at fair value through financial result Derivative instruments 236 - 803 forward currency contracts - EUR 6 - 66 forward currency contracts - USD 230 - 737 Liabilities estimated at fair value through financial result Derivative instruments 24 303 18 047 4 980 forward currency contracts - CHF - - (1 758) forward currency contracts - EUR 598 486 624 forward currency contracts - USD 23 705 17 561 6 114 * adjusted Financial assets 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. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 57 Financial assets – classification and estimation 31.03.2022 31.12.2021 31.03.2021 Financial assets estimated at amortized cost 1 163 087 1 060 209 1 760 370 Other long-term receivables 378 686 339 Trade receivables 68 422 125 293 52 175 Cash and cash equivalents 748 585 411 586 1 551 162 Bank deposits (maturity beyond 3 months) 85 390 265 000 73 State Treasury bonds and bonds guaranteed by the State Treasury 249 871 248 754 150 554 Loans granted 10 441 8 890 6 067 Financial assets estimated at fair value through other comprehensive income 177 736 228 661 213 220 Foreign government bonds 177 736 228 661 213 220 Financial assets estimated at fair value through financial result 236 - 803 Derivative financial instruments 236 - 803 Total financial assets 1 341 059 1 288 870 1 974 393 Zobowiązania finansowe – klasyfikacja i wycena 31.03.2022 31.12.2021 31.03.2021 Financial liabilities estimated at amortized cost 103 605 82 215 151 990 Trade liabilities 71 272 53 380 133 560 Other financial liabilities 32 333 28 835 18 430 Financial liabilities estimated at fair value through financial result 24 303 18 047 4 980 Derivative financial instruments 24 303 18 047 4 980 Total financial liabilities 127 908 100 262 156 970 * adjusted 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 covering the foreign bond portfolio also permit 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. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 58 Note 16. Sales revenues Sales revenues by territory 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 PLN % PLN % Domestic sales 7 855 3.63% 6 826 3.45% Exports, including: 208 291 96.37% 190 806 96.55% Europe 44 678 20.67% 34 726 17.57% North America 141 329 65.40% 135 803 68.71% South America 634 0.29% 648 0.33% Asia 19 929 9.22% 17 687 8.95% Australia 1 673 0.77% 1 811 0.92% Africa 48 0.02% 131 0.07% Total 216 146 100% 197 632 100% Revenues from exports reported for Europe include the Russian market. * 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 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Own products 173 787 145 868 External products 41 724 51 377 Other revenues 635 387 Total 216 146 197 632 Sales revenues by distribution channel 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Videogames – box editions 10 712 10 112 Videogames – digital editions 197 926 181 728 Other revenues 7 508 5 792 Total 216 146 197 632 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 59 Note 17. Operating expenses 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Depreciation of PP&E, intangibles, expenditures on development projects and investment properties, including: 3 894 4 490 depreciation of leased buildings 421 609 depreciation of leased vehicles 81 60 Consumption of materials and energy 634 1 016 Bought-in services, including: 37 829 37 112 short-term leases and leases of low-value assets 121 207 Taxes and fees 265 245 Employee compensation, social security and other benefits 37 350 48 768 Business travel 81 20 Use of company cars 59 44 Cost of goods and materials sold 29 255 38 615 Cost of products and services sold 18 372 23 657 Other expenses 511 494 Total 128 250 154 461 Selling costs 60 606 62 077 General and administrative costs, including: 20 017 30 112 research costs 4 977 9 519 Cost of products, services, goods and materials sold 47 627 62 272 Total 128 250 154 461 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 60 Note 18. Other operating revenues and expenses Other operating revenues 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Revenues from lease contracts 1 660 1 487 Subsidies 465 17 Reinvoicing revenues 226 267 Dissolution of unused cost provisions 206 - Other sales 11 10 Profit from sales of PP&E 3 - Other miscellaneous operating revenues 19 8 Total other operating revenues 2 590 1 789 Other operating expenses 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Disposal (destruction) of materials and goods 2 301 33 Donations 1 097 - Own cost of leases 894 892 Depreciation of investment properties 463 435 Reinvoicing expenses 226 271 Disposal of PP&E and intangibles 170 23 Disposal of investment properties - 51 Help Me Refund – refunds - 36 Loss from sales of PP&E - 8 Nonculpable shortfalls in working assets - 7 Other miscellaneous expenses 12 - Total other operating expenses 5 163 1 756 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 61 Note 19. Financial revenues and expenses Financial revenues 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Revenues from interest 7 663 168 on short-term bank deposits 2 364 40 on bonds 5 198 101 on loans granted 101 27 Other financial revenues 9 128 9 894 settlement and estimation of derivative financial instruments 2 037 9 894 profit from maturation of bonds 7 089 - forward contracts – Management Board members 2 - Total financial revenues 16 791 10 062 Financial expenses 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Interest payments 243 203 on bonds 101 156 on lease agreements 135 44 on budget commitments 7 3 Other financial expenses 9 976 16 006 surplus negative exchange rate differences 3 488 15 302 settlement and estimation of derivative financial instruments 6 397 - losses from maturation of bonds - 628 bond purchase fees 91 76 Total financial expenses 10 219 16 209 Net balance of financial activities 6 572 (6 147) Note 20. 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 March 2022, can be found in Note 17). As of 31 March 2022, 31 December 2021 and 31 March 2021 future payments associated with irrevocable short-term lease agreements and lease agreements concerning low-value assets are as follows: 31.03.2022 31.12.2021 31.03.2021 Due within 1 year 338 121 327 Due between 1 and 5 years 131 149 151 Total 469 270 478 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 62 Note 21. Issue, buyback and redemption of debt and capital securities Issue of debt securities Not applicable. Issue of capital securities 31.03.2022 31.12.2021 31.03.2021 Stock volume (thousands) 100 739 100 739 100 739 Nominal value per share (PLN) 1 1 1 Share capital 100 739 100 739 100 739 Note 22. Dividends declared or paid out and collected The Group’s member companies did not pay out or collect any dividends between 1 January and 31 March 2022. On 25 May 2022 the Management Board of CD PROJEKT S.A. recommended to Annual General Meeting the amount of 100 739 thousand PLN to be divided among the shareholders in the form of the dividend in the amount of 1 PLN per one share. Note 23. 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. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 63 Transactions with affiliates following consolidation eliminations Sales to affiliates Purchases from affiliates 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 SUBSIDIARIES CD PROJEKT Co., Ltd. (undergoing liquidation) - - - 939 Spokko sp. z o.o. 343 141 - - CD PROJEKT RED Vancouver Studio Ltd. 22 - 3 226 - The Molasses Flood LLC - - 3 962 - MANAGEMENT BOARD MEMBERS AT GROUP MEMBER COMPANIES Marcin Iwiński 1 10 - - Adam Kiciński - 1 - - Piotr Nielubowicz 1 2 - - Michał Nowakowski 3 6 - - Adam Badowski 6 - - - Piotr Karwowski 2 - - - Paweł Zawodny 1 - - - Jeremiah Cohn 1 - - - Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 64 Receivables from affiliates Liabilities due to affiliates 31.03.2022 31.12.2021 31.03.2021 31.03.2022 31.12.2021 31.03.2021 SUBSIDIARIES CD PROJEKT Co., Ltd. (undergoing liquidation) - - - - - 311 Spokko sp. z o.o. 10 713 9 113 6 185 - - - CD PROJEKT RED Vancouver Studio Ltd. 1 076 1 008 - 874 164 - The Molasses Flood LLC - - - 1 792 1 019 - MANAGEMENT BOARD MEMBERS AT GROUP MEMBER COMPANIES Marcin Iwiński - - 5 - 19 1 Adam Kiciński - - - - 5 - Michał Nowakowski 2 - 3 - 7 1 Adam Badowski 6 7 - - 5 - Urszula Jach - Jaki - - - 15 - - Paweł Zawodny - - - 7 - - Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 65 Note 24. Bad loans and credits, and breaches of loan and credit agreements not subject to remedial proceedings as of the balance sheet date Not applicable. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 66 Note 25. Changes in conditional liabilities and assets since the close of the most recent financial year Conditional liabilities from sureties and collateral pledged Type of agreement Currency 31.03.2022 31.12.2021 31.03.2021 mBank S.A. Declaration of submission to enforcement Collateral for debit card agreement PLN 920 920 920 Promissory note agreement Collateral for framework concerning financial market transactions PLN 50 000 50 000 50 000 Promissory note agreement Collateral for lease agreement PLN - 667 667 Promissory note agreement Collateral for lease agreement PLN 427 - - 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 40 58 113 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 7 711 7 934 Promissory note agreement Co-financing agreement no. POIR.01.02.00-00-0110/16 PLN 3 846 3 846 5 114 Promissory note agreement Co-financing agreement no. POIR.01.02.00-00-0112/16 PLN 3 692 3 692 3 857 Promissory note agreement Co-financing agreement no. POIR.01.02.00-00-0118/16 PLN 5 324 5 324 5 324 Promissory note agreement Co-financing agreement no. POIR.01.02.00-00-0120/16 PLN 1 204 1 204 1 204 Pekao Leasing Sp. z o.o. Promissory note agreement Lease agreement no. 37/1991/21 PLN 418 442 - Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 67 Santander Bank Polska S.A. (formerly BZ WBK S.A.) Promissory note agreement Framework agreement concerning financial market transactions PLN 23 500 23 500 13 000 Bank Polska Kasa Opieki S.A. Promissory note agreement Framework agreement concerning financial market transactions PLN 35 000 35 000 20 000 BNP Paribas Bank Polska S.A. Promissory note agreement Framework agreement concerning financial market transactions PLN 26 600 26 600 75 000 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 68 Note 26. Changes in the structure of the Group and its member entities occurring during the reporting period No changes in the structure of the Group and its member entities occurred during the reporting period. Note 27. Agreements which may, in the future, result in changes in the proportion of shares held by shareholders and bondholders On 24 May 2016 the General Meeting of Shareholders of the parent Company voted to institute an incentive program which remained in force between 2016 and 2019. Following positive verification of the attainment of the program’s goals, which took place in 2020, 5 167 500 exercisable entitlements existed. In the course of exercising these entitlements the Company sold to entitled parties a total of 516 700 shares which had previously been bought back on the open market. The remaining entitlements vested by issuing to entitled parties a total of 4 650 800 subscription warrants. The entitled parties subsequently exercised 4 618 800 from the 4 650 800 subscription warrants assigned thereto, each entitling its holder to claim a single share of the Company issued in the framework of a conditional increase of the Company share capital. As of the publication date of this statement, there remain 32 000 outstanding Series B subscription warrants, entitling holders to claim the corresponding number of Series M shares. These warrants will expire on 31 October 2022. Based on the resolutions adopted by the General Meetings on 28 July 2020 and 22 September 2020, the Company introduced another (third) edition of its incentive program, covering the years 2020-2025. As stipulated by the relevant resolutions, a total of 4 000 000 entitlements may be conditionally assigned under the program. The program may vest either by issue and assignment of subscription warrants enabling entitled parties to claim shares of the parent Company (issued separately as a conditional increase of the Company share capital) or by presenting the entitled parties with an offer to purchase shares which the Company will have previously bought back on the open market under a dedicated buy-back program. In either case, assignment and exercise of subscription warrants or purchase from the Company of its own shares will be conditioned upon meeting the goals and criteria of the incentive program. The program provides result goals (80% of entitlements), market goals (20% of entitlements), along with certain individual goals (in selected cases) as well as – in all cases – a loyalty criterion which must be met up until attainment of goals and vesting of the program is confirmed. As of the publication date of this financial statement a total of 2 243 000 entitlements have been granted under the 2020-2025 incentive program. Based on the Group’s earnings in 2020 and 2021, and projections regarding further years covered by the program, 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. Note 28. Fiscal settlements Fiscal settlements and other areas of activity governed by legal regulations (such as import duties or currency exchange) 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. Given that the 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 Company the status of an R&D center. This status entitles the 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 Company is able to apply the preferential rate to certain sources of its income. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 69 Note 29. Clarifications regarding the condensed interim consolidated cash flow statement 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Cash and cash equivalents reported in cash flow statement 748 585 1 551 162 Cash on balance sheet 748 585 1 551 162 Depreciation 3 894 4 490 Depreciation of intangibles 590 825 Depreciation of expenditures on development projects 299 414 Depreciation of PP&E 2 995 3 241 Depreciation of investment properties 10 10 Profit (loss) from exchange rate differences results from: (1 359) (8 975) Exchange rate differences on estimation of bonds (1 359) (8 975) Interest and share in profits consist of: (7 427) 32 Interest on bank deposits (2 364) (40) Interest on bonds (5 097) 55 Interest accrued on loans granted (101) (27) Interest on lease agreements 135 44 Profit (loss) from investment activities results from: (434) 12 215 Revenues from sale of PP&E (7) - Net value of PP&E sold 4 8 Net value of PP&E liquidated 170 19 Net value of intangibles liquidated - 4 Net value of investment properties liquidated - 51 Settlement and estimation of derivative instruments 6 397 11 429 Bond purchase fees 91 76 Revenues from maturation of bonds (61 449) (33 098) Value of bonds held to maturity 54 360 33 726 Changes in provisions result from: (4 176) (81 400) Balance of changes in provisions for liabilities 3 373 (105 198) Provisions for compensation contingent upon the Group’s financial result aggregated with expenses on development projects (7 549) 23 798 Changes in inventory status result from: 916 (8 945) Balance of changes in inventory status 916 (8 945) Changes in receivables result from: 43 740 1 091 367 Balance of changes in short-term receivables 56 860 1 091 366 Balance of changes in long-term receivables 308 (18) Balance of changes in advance payments for investment properties (79) (10) Withholding tax paid abroad (15 673) (3) Current income tax adjustments 303 - Changes in advance payments related to expenditures on development projects 2 045 (50) Changes in advance payments related to purchase of PP&E, intangibles and investment properties (24) 82 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 70 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Changes in short-term liabilities except financial liabilities result from: 15 515 (7 824) Balance of changes in short-term liabilities 31 650 64 531 Current income tax adjustments (7 143) (66 008) Changes in financial liabilities (7 525) (5 055) Adjustments for changes in liabilities due to purchase of PP&E 10 (17) Adjustments for changes in liabilities due to purchase of intangibles (201) (69) Adjustment for liabilities related to purchase of investment properties (1 276) (1 206) Changes in other assets and liabilities result from: (17 064) (3 968) Balance of changes in prepaid expenses (8 053) 2 372 Balance of changes in deferred revenues (8 951) (6 284) Adjustment for prepaid expenses booked on the other side as liabilities (60) (60) Adjustment for depreciation aggregated with deferrals - 4 Other adjustments include: 1 817 9 370 Cost of incentive program 1 148 9 395 Estimation of derivative financial instruments (378) (726) Depreciation aggregated with cost of products, services, goods and materials sold, consortium settlements and other operating expenses 806 601 Exchange rate differences 72 100 Miscellaneous adjustments 169 - Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 71 Note 30. Cash flows and other changes resulting from financial activities 01.01.2022 Cash flows Non-cash changes 31.03.2022 Acquisition of PP&E under lease agreements Exchange rate differences Accrued interest Assignment of own shares Lease liabilities 16 655 (984) 3 962 2 135 - 19 770 Total 16 655 (984) 3 962 2 135 - 19 770 01.01.2021 Cash flows Non-cash changes 31.03.2021 Acquisition of PP&E under lease agreements Exchange rate differences Accrued interest Assignment of own shares Lease liabilities 18 939 (707) - 154 44 - 18 430 Receivables from entitled parties in the framework of the incentive program - 2 149 - - - (2 149) - Total 18 939 1 442 - 154 44 (2 149) 18 430 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 72 Note 31. Events following the balance sheet date In Current Report no. 10/2022 of 13 April 2022 the Management Board of the Company announced that it had updated its release plan concerning The Witcher 3: Wild Hunt for next-gen consoles. Based upon recommendations submitted by persons in charge of development, the Management Board decided that further development of the next-gen version of The Witcher 3: Wild Hunt would be handled by an internal team, and decided to postpone the game’s release, previously scheduled for the second quarter of 2022. In Current Report no. 16/2022 of 19 May 2022 the Management Board of CD PROJEKT S.A. announced that, based on recommendations from persons in charge of production, the release of The Witcher 3: Wild Hunt for next-gen consoles is scheduled for the fourth quarter of 2022. On 9 May 2022 the Extraordinary General Meeting of CD PROJEKT RED STORE sp. z o.o. voted to increase the company’s share capital by issuing 380 new shares with a nominal value of 50 PLN each. All of these shares were taken up by CD PROJEKT S.A. – the company’s sole shareholder. The newly issued shares were fully paid up in cash, in the amount of 1 900 PLN, with the surplus over the shares’ nominal value transferred to the company’s reserve capital. The reported increase in share capital was entered in the register of entrepreneurs of the National Court Registry on 18 May 2022. This increase in share capital enabled the company to repay the loan previously granted to it by CD PROJEKT S.A. On 9 May 2022, as a result of decisions undertaken by the Board of Directors of CD PROJEKT Inc. and the Management Board of CD PROJEKT S.A. – the company’s sole shareholder – the share capital of CD PROJEKT Inc. was increased from 3 050 thousand USD to 3 500 thousand USD, i.e. by 450 thousand USD, by way of increasing the nominal value of each of the 10 000 outstanding shares of CD PROJEKT Inc. by 45 USD. The increased value of these shares was fully paid up in cash by CD PROJEKT S.A., for a total of 450 thousand USD. This increase in share capital enabled the company to repay the loan previously granted to it by CD PROJEKT S.A. On 24 May 2022 the Extraordinary General Meeting of Spokko sp. z o.o. voted to increase the company’s share capital by issuing 589 new shares with a nominal value of 50.00 PLN each. 584 of these newly issued shares are being taken up by CD PROJEKT S.A. in exchange for a cash payment in the amount of 26 010 thousand PLN, with the surplus over the nominal value of these shares transferred to the company’s reserve capital. Furthermore, 5 newly issued shares are being taken up under analogous conditions, i.e. in exchange for a cash payment in the amount of 223 thousand PLN, by one of the company’s existing shareholders – Mr. Maciej Weiss. The increase in the company’s share capital will become effective on the day it is registered in the registry of entrepreneurs. As a result of these transactions, CD PROJEKT S.A.’s share in voting rights and share capital of Spokko sp. z o.o. will increase from 74.0% to 87.6%. This increase in share capital will enable the company to repay the loan previously granted to it by CD PROJEKT S.A. On 25 May 2022 the Management Board of CD PROJEKT S.A. adopted a resolution concerning submission to the Ordinary General Meeting of the Company of a recommendation concerning allocation of the Company’s net profit for 2021. The Management Board recommends that 100 739 thousand PLN be allocated to a dividend of 1 PLN per share, and that the remaining portion of the unallocated profit, at 135 195 thousand PLN, be allocated to the Company’s reserve capital. The Board also clarified that, in line with information disclosed by the Company in its periodic reports throughout 2021, the Company’s allocable net profit for 2021, reported as 240 113 thousand PLN, had been adjusted by deducting the negative retained earnings for the 2020 financial year, at 4 179 thousand PLN (resulting from adjustment of the calculation of the Company’s deferred tax assets for 31 December 2020), yielding a figure of 235 934 thousand PLN, which represents the aggregate allocable net earnings for the 2021 financial year. In conjunction with the above, the Management Board recommended that (i) the dividend record date be set to 5 July 2022, and (ii) the dividend payment date be set to 12 July 2022. This recommendation was submitted to the Supervisory Board for endorsement. The final decision regarding allocation of profit and payment of a dividend rests with the Ordinary General Meeting. Śródroczne skrócone skonsolidowane sprawozdanie finansowe Grupy Kapitałowej CD PROJEKT za okres od 1 stycznia do 31 marca (wszystkie kwoty podane są w tys. złotych o ile nie podano inaczej) Załączone informacje stanowią integralną część niniejszego sprawozdania finansowego 73 Supplementary information 5 Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 74 Legal proceedings No significant court, arbitration or administrative proceedings involving the parent Company or its subsidiaries were initiated during the reporting period. With regard to other ongoing legal proceedings disclosed in the Management Board report on CD PROJEKT Group activities in 2021, no significant changes occurred. Shareholding structure Shareholders who control, directly or through subsidiaries, at least 5% of the total number of votes at the General Meeting of Shareholders of the parent entity as of the publication date of this quarterly statement The share capital of the parent Company amounts to 100 738 800 PLN and is divided into 100 738 800 shares with a nominal value of 1 PLN each. The shareholding structure, including the percentage share of the overall share capital and votes controlled at the General Meeting of the parent Company is determined on the basis of formal notifications filed with the parent Company by shareholders who control at least 5% of the total number of votes at the General Meeting. Qty. of shares % share in share capital Qty. of votes at the GM % share in total number of votes at the GM Marcin Iwiński 12 873 520 12.78% 12 873 520 12.78% Michał Kiciński 10 433 719 10.36% 10 433 719 10.36% Piotr Nielubowicz 6 858 717 6.81% 6 858 717 6.81% The Goldman Sachs Group, Inc. 1 583 898 1.57% 6 345 034 6.30% other shareholders 68 988 946 68.48% 64 227 810 63.76% * According to Current Report no. 15/2022 of 11 May 2022 the total percentage share of votes controlled by The Goldman Sachs Group on 6 May 2022 on the basis of shares (1.57%) and other financial instruments (4.73%) was 6.30%. According to the relevant notification received by the Company, The Goldman Sachs Group, Inc. indirectly controls 1 583 898 votes from shares, 1 945 322 votes which may be gained as a result of exercise or conversion of financial instruments comprising securities on loan, and 2 815 814 votes from other types of financial instruments. Changes in shareholding structure of the parent entity According to notifications received by the parent Company, the only changes in the shareholding structure with regard to shareholders who control at least 5% of the total number of votes at General Meetings of the parent Company which have occurred throughout the reporting period and by the publication date of this financial statement involved the percentage share of votes controlled by The Goldman Sachs Group, Inc. The above section presents the most recent data available to the parent Company in this regard. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 75 Parent Company shares held by members of the Management Board and Supervisory Board Changes in number of shares held by members of the Management Board and the Supervisory Board * Name Position As of 01.01.2022 As of 31.03.2022 As of 26.05.2022 Adam Kiciński President of the Board 4 046 001 4 046 001 4 046 001 Marcin Iwiński Vice President of the Board 12 873 520 12 873 520 12 873 520 Piotr Nielubowicz Vice President of the Board 6 858 717 6 858 717 6 858 717 Adam Badowski Board Member 692 640 692 640 692 640 Michał Nowakowski Board Member 580 290 580 290 580 290 Piotr Karwowski Board Member 108 728 108 728 108 728 Paweł Zawodny Board Member n/a 18 508 18 508 Katarzyna Szwarc Chairwoman of the Supervisory Board 10 10 10 Maciej Nielubowicz Supervisory Board Member 51 51 51 * According to declarations and notifications filed with the Company. Validation of published projections The Group had not published any projections referring to the reporting period. Condensed interim separate financial statement of CD PROJEKT S.A. 6 Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 77 Condensed interim separate profit and loss account Note 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Sales revenues 177 820 146 298 Revenues from sales of products 172 413 142 067 Revenues from sales of services 669 342 Revenues from sales of goods and materials 4 738 3 889 Cost of products, services, goods and materials sold 21 118 25 804 Cost of products and services sold 18 280 22 169 Cost of goods and materials sold 2 838 3 635 Gross profit (loss) from sales 156 702 120 494 Selling costs 50 735 48 167 General and administrative costs 16 878 26 893 Other operating revenues 2 825 2 149 Other operating expenses 5 711 2 098 (Impairment)/reversal of impairment of financial instruments (2) (6) Operating profit (loss) 86 201 45 479 Financial revenues 14 602 7 491 Financial expenses 8 190 13 146 Profit (loss) before tax 92 613 39 824 Income tax A 23 098 4 896 Net profit (loss) 69 515 34 928 Net earnings per share (in PLN) - - Basic for the reporting period 0.69 0.35 Diluted for the reporting period 0.69 0.35 Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 78 Condensed interim separate statement of comprehensive income 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Net profit/(loss) 69 515 34 928 Other comprehensive income which will be entered as profit (loss) following fulfillment of specific criteria (4 930) 184 Estimation of financial instruments at fair value through other comprehensive income, adjusted for tax effects (4 930) 184 Other comprehensive income which will not be entered as profit (loss) - - Total comprehensive income 64 585 35 112 Condensed interim separate statement of financial position Note 31.03.2022 31.12.2021 31.03.2021 FIXED ASSETS 920 571 887 663 883 475 Property, plant and equipment 109 055 103 986 108 816 Intangibles 68 952 59 086 59 548 Expenditures on development projects 365 011 347 822 368 454 Investment properties 56 630 57 082 45 248 Goodwill C 49 168 49 168 49 168 Shares in subsidiaries excluded from consolidation 43 531 43 447 25 334 Deferrals 5 346 4 741 5 258 Other financial assets G 176 456 178 540 150 850 Deferred income tax assets A 46 044 43 418 70 765 Other receivables F,G 378 373 34 WORKING ASSETS 1 235 567 1 173 501 1 891 289 Inventories 11 263 13 539 13 411 Trade receivables F,G 69 546 123 821 51 381 Other receivables F 110 021 113 163 115 659 Deferrals 5 256 4 015 4 160 Other financial assets G 262 507 308 168 220 779 Bank deposits (maturity beyond 3 months) G 85 390 265 000 73 Cash and cash equivalents G 691 584 345 795 1 485 826 TOTAL ASSETS 2 156 138 2 061 164 2 774 764 * adjusted Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 79 Note 31.03.2022 31.12.2021 31.03.2021 EQUITY 1 934 781 1 869 049 2 173 861 Share capital 21 100 739 100 739 100 739 Supplementary capital 1 366 952 1 366 952 738 411 Supplementary capital from sale of shares above nominal value 115 909 115 909 115 909 Other reserve capital 45 732 49 515 55 818 Retained earnings 235 934 (4 179) 1 128 056 Net profit (loss) for the reporting period 69 515 240 113 34 928 LONG-TERM LIABILITIES 31 526 29 756 18 894 Other financial liabilities G 17 039 14 757 14 488 Other liabilities 2 800 2 860 3 113 Deferred revenues 5 951 6 403 916 Provisions for employee benefits and similar liabilities 368 368 377 Other provisions B 5 368 5 368 - SHORT-TERM LIABILITIES 189 831 162 359 582 009 Other financial liabilities G 26 073 18 620 7 060 Trade liabilities G 33 302 16 028 98 297 Current income tax liabilities 31 589 24 445 67 450 Other liabilities 4 837 4 059 3 076 Deferred revenues 13 572 23 042 35 463 Provisions for employee benefits and similar liabilities 5 5 3 Other provisions B 80 453 76 160 370 660 TOTAL EQUITY AND LIABILITIES 2 156 138 2 061 164 2 774 764 * Detailed information concerning these items can be found in explanatory notes accompanying the condensed interim consolidated financial statement. Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 80 Condensed interim statement of changes in separate equity Share capital Supplementary capital Supplementary capital from sale of shares above nominal value Other reserve capital Retained earnings Net profit (loss) for the reporting period Total equity 01.01.2022 – 31.03.2022 Equity as of 01.01.2022 100 739 1 366 952 115 909 49 515 235 934 - 1 869 049 Cost of incentive program - - - 1 147 - - 1 147 Total comprehensive income - - - (4 930) - 69 515 64 585 Equity as of 31.03.2022 100 739 1 366 952 115 909 45 732 235 934 69 515 1 934 781 Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 81 Share capital Supplementary capital Supplementary capital from sale of shares above nominal value Other reserve capital Retained earnings Net profit (loss) for the reporting period Total equity 01.01.2021 – 31.12.2021 Equity as of 01.01.2021 100 655 737 542 113 844 47 068 1 132 235 - 2 131 344 Rectification of errors - - - - (4 179) - (4 179) Adjusted equity 100 655 737 542 113 844 47 068 1 128 056 - 2 127 165 Cost of incentive program - - - (1 025) - - (1 025) Payment in own shares 84 869 2 065 (869) - - 2 149 Dividend payment - - - - (503 694) - (503 694) Allocation of net profit/ coverage of losses - 628 541 - - (628 541) - - Total comprehensive income - - - 4 341 - 240 113 244 454 Equity as of 31.12.2021 100 739 1 366 952 115 909 49 515 (4 179) 240 113 1 869 049 The Company 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. Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 82 Share capital Supplementary capital Supplementary capital from sale of shares above nominal value Other reserve capital Retained earnings Net profit (loss) for the reporting period Total equity 01.01.2021 – 31.03.2021 Equity as of 01.01.2021 100 655 737 542 113 844 47 068 1 132 235 - 2 131 344 Rectification of errors - - - - (4 179) - (4 179) Adjusted equity 100 655 737 542 113 844 47 068 1 128 056 - 2 127 165 Cost of incentive program - - - 9 435 - - 9 435 Payment in own shares 84 869 2 065 (869) - - 2 149 Total comprehensive income - - - 184 - 34 928 35 112 Equity as of 31.03.2021 100 739 738 411 115 909 55 818 1 128 056 34 928 2 173 861 The Company has rectified its calculation of deferred tax assets for 31 December 2020 by reassigning some 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. Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 83 Condensed interim separate statement of cash flows 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 OPERATING ACTIVITIES Net profit (loss) 69 515 34 928 Total adjustments: 61 277 1 100 221 Depreciation of PP&E, intangibles, expenditures on development projects and investment properties 2 987 3 401 Depreciation of expenditures on development projects recognized as cost of products and services sold 17 941 21 883 Profit (loss) from exchange rate differences (1 362) (9 046) Interest and profit sharing (7 288) (1) Profit (loss) from investment activities (430) 12 203 Change in provisions (3 257) (80 487) Change in inventories 2 276 (9 584) Change in receivables 43 683 1 137 766 Change in liabilities excluding credits and loans 16 586 22 122 Change in other assets and liabilities (11 829) (7 394) Other adjustments 1 970 9 358 Cash flows from operating activities 130 792 1 135 149 Income tax on pre-tax profit (loss) 7 426 4 894 Withholding tax paid abroad 15 672 3 Income tax (paid)/reimbursed (2 908) 1 737 Net cash flows from operating activities 150 982 1 141 783 INVESTMENT ACTIVITIES Inflows 325 775 198 457 Repayment of loans granted 94 919 Closing bank deposits (maturity beyond 3 months) 265 000 164 368 Maturation of bonds 58 132 33 097 Interest on bonds 291 - Interest on bank deposits 2 206 40 Other inflows from investment activities 52 33 Outflows 130 226 278 998 Purchases of intangibles and PP&E 14 859 6 833 Expenditures on development projects 27 697 29 069 Purchase of investment properties and activation of costs 89 41 Loans granted 2 100 1 540 Purchase of bonds and the associated purchase fees 91 241 442 Opening bank deposits (maturity beyond 3 months) 85 390 73 Net cash flows from investment activities 195 549 (80 541) * adjusted Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 84 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 FINANCIAL ACTIVITIES Inflows 10 2 159 Net inflows from sale and issue of shares in the exercise of rights assigned under the incentive program - 2 149 Collection of receivables arising from financial lease agreements 10 10 Outflows 752 489 Payment of liabilities arising from lease agreements 629 466 Interest payments 123 23 Net cash flows from financial activities (742) 1 670 Total net cash flows 345 789 1 062 912 Balance of changes in cash and cash equivalents 345 789 1 062 912 Cash and cash equivalents at beginning of period 345 795 422 914 Cash and cash equivalents at end of period 691 584 1 485 826 * adjusted Clarifications regarding the separate statement of cash flows 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 The “other adjustments” line item comprises: 1 970 9 358 Cost of incentive program 1 064 8 668 Depreciation aggregated with selling costs, consortium settlements and other operating expenses 906 690 Comparability of financial statements and changes in accounting policies The accounting practices applied in preparing this condensed interim separate financial statement, the Management Board’s professional judgment concerning the Company’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 Separate Financial Statement of CD PROJEKT S.A. for 2021, except for changes in practices and presentation-related adjustments described below. This condensed interim separate financial statement should be read in conjunction with the Company’s separate financial statement for the year ending 31 December 2021. Changes in accounting policies Changes in accounting practices applicable to the Company are in all matters analogous to those described in the section titled “Assumption of comparability of financial statements and changes in accounting policies” of the consolidated financial statement for the period between 1 January and 31 March 2022. Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 85 Presentation adjustments This condensed interim separate financial statement for the period between 1 January and 31 March 2022 includes changes in the presentation of certain financial data. In order to ensure comparability of financial data, adjustments were also introduced with respect to reference data for 31 March 2021 and 31 December 2021. The following adjustments were made:  In the statement of cash flows for the period between 1 January and 31 March 2021 the presentation of interest from bank deposits was adjusted as follows: - Other inflows from investment activities – adjusted by (40) thousand PLN - Interest from bank deposits – adjusted by 40 thousand PLN  In the statement of financial position for 31 December 2021 and 31 March 2021 the presentation of some of the land holdings belonging to the Company was adjusted as follows: - Property, plant and equipment – adjusted by 4 354 thousand PLN - Investment properties – adjusted by (4 354) thousand PLN These changes had no effect on the Company’s financial result or equity. Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 86 Supplementary information concerning the separate financial statement of CD PROJEKT S.A. A. Deferred income tax Negative temporary differences requiring recognition of deferred tax assets 31.12.2021 Differences affecting deferred tax aggregated with financial result 31.03.2022 Provisions for other employee benefits 372 - 372 Provisions for compensation dependent on financial result, and other compensation 39 400 10 255 49 655 Negative exchange rate differences 2 286 10 341 12 627 Difference between balance sheet value and tax value of expenditures on development projects 24 792 9 24 801 Compensation and social security payable in future reporting periods 61 11 72 Other provisions 47 501 (19 441) 28 060 R&D tax relief 301 954 - 301 954 Advance payments recognized as taxable income 1 469 348 1 817 Total negative temporary differences 417 835 1 523 419 358 subject to 5% tax rate 60 417 3 877 64 294 subject to 19% tax rate 357 418 (2 354) 355 064 Deferred tax assets 70 931 (253) 70 678 Positive temporary differences requiring creation of deferred tax liabilities 31.12.2021 Differences affecting deferred tax aggregated with financial result 31.03.2022 Difference between net balance sheet value and net tax value of PP&E and intangibles 14 129 (133) 13 996 Revenues obtained in the current period but invoiced in future periods 128 789 (62 528) 66 261 Positive exchange rate differences 14 786 9 532 24 318 Difference between balance sheet value and tax value of expenditures on development projects 271 672 (9 504) 262 168 Other sources 91 209 300 Total positive temporary differences 429 467 (62 424) 367 043 subject to 5% tax rate 386 323 (64 150) 322 173 subject to 19% tax rate 43 144 1 726 44 870 Deferred tax liabilities 27 513 (2 879) 24 634 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 Company relied on projections regarding the tax base to which each temporary difference is likely to apply. Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 87 Net balance of deferred tax assets/liabilities 31.03.2022 31.12.2021 31.03.2021 Deferred tax assets 70 678 70 931 92 853 Deferred tax liabilities 24 634 27 513 22 088 Net deferred tax – assets/(liabilities) 46 044 43 418 70 765 Income tax reported in profit and loss account 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 Current income tax, including: 25 724 64 418 withholding tax paid abroad 15 672 3 Change in deferred income tax (2 626) (59 522) Income tax reported in profit and loss account 23 098 4 896 B. Other provisions 31.03.2022 31.12.2021 31.03.2021 Provisions for returns - - 130 508 Provisions for liabilities, including: 85 821 81 528 240 152 provisions for audits and reviews of financial statements 130 102 13 provisions for compensation dependent on financial result, and other compensation 58 094 44 714 229 533 provisions for other expenses 27 597 36 712 10 606 Total, including: 85 821 81 528 370 660 short-term provisions 80 453 76 160 370 660 long-term provisions 5 368 5 368 - Changes in other provisions Provisions for compensation dependent on financial result, and other compensation Other provisions Total As of 01.01.2022 44 714 36 814 81 528 Provisions created during financial year 13 380 13 399 26 779 Provisions consumed - 22 414 22 414 Provisions dissolved - 72 72 As of 31.03.2022, including: 58 094 27 727 85 821 short-term provisions 58 094 22 359 80 453 long-term provisions - 5 368 5 368 Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 88 C. Goodwill Goodwill acquired in business combinations and acquisition of enterprises 31.03.2022 31.12.2021 31.03.2021 CD Projekt Red sp. z o.o. 39 147 39 147 39 147 Strange New Things (enterprise) 10 021 10 021 10 021 Total 49 168 49 168 49 168 Changes in goodwill No changes in goodwill occurred between 1 January and 31 March 2022. D. Business combinations The Company did not merge with any other entity between 1 January and 31 March 2022. E. Dividends paid out (or declared) and collected The Company did not collect or pay out any dividends between 1 January and 31 March 2022. On 25 May 2022 the Management Board of CD PROJEKT S.A. recommended to Annual General Meeting the amount of 100 739 thousand PLN to be divided among the shareholders in the form of the dividend in the amount of 1 PLN per one share. F. Trade and other receivables 31.03.2022 31.12.2021 31.03.2021 Gross trade and other receivables 180 758 238 168 167 938 Impairment allowances 813 811 864 Trade and other receivables 179 945 237 357 167 074 from affiliates 4 953 5 179 3 882 from external entities 174 992 232 178 163 192 Changes in impairment allowances on receivables Trade receivables Other receivables Total OTHER ENTITIES Impairment allowances as of 01.01.2022 79 732 811 Increases, including: 2 - 2 creation of allowances on past-due and contested receivables 2 - 2 Reductions - - - Impairment allowances as of 31.03.2022 81 732 813 Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 89 Current and overdue trade receivables as of 31.03.2022 Total Not overdue Days overdue 1 – 60 61 – 90 91 – 180 181 – 360 >360 AFFILIATES gross receivables 4 939 3 429 456 - 1 054 - - 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 4 939 3 429 456 - 1 054 - - Total Not overdue Days overdue 1 – 60 61 – 90 91 – 180 181 – 360 >360 OTHER ENTITIES gross receivables 64 688 64 332 231 2 - - 123 non-fulfillment ratio - 0% 0% 0% 0% 0% 0% impairment allowances as determined by non- fulfillment ratio - - - - - - - impairment allowances as individually assessed 81 - - - - - 81 total expected credit loss 81 - - - - - 81 Net receivables 64 607 64 332 231 2 - - 42 Total gross receivables 69 627 67 761 687 2 1 054 - 123 impairment allowances 81 - - - - - 81 Net receivables 69 546 67 761 687 2 1 054 - 42 Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 90 Other receivables 31.03.2022 31.12.2021 31.03.2021 Other gross receivables, including: 111 131 114 268 116 425 tax returns except corporate income tax 67 633 75 562 80 478 advance payments associated with expenditures on development projects 32 480 30 435 24 303 advance payments for supplies 9 545 5 076 9 072 deposits 649 650 297 employee settlements 28 3 13 advance payments for PP&E and intangibles 10 34 120 settlements with management board members 8 7 8 consortium settlements - 1 659 1 329 advance payments for investment properties - 79 60 other 46 31 13 Impairment allowances 732 732 732 Other receivables, including: 110 399 113 536 115 693 short-term receivables 110 021 113 163 115 659 long-term receivables 378 373 34 G. Disclosure of financial instruments Fair value of financial instruments per class The Management Board of the Company has assessed each class of financial instruments held by the Company and reached the conclusion that their carrying amount does not significantly differ from their corresponding fair value as of 31 March 2022, 31 December 2021 and 31 March 2021 respectively. 31.03.2022 31.12.2021 31.03.2021 LEVEL 1 Assets estimated at fair value Financial assets estimated at fair value through other comprehensive income 177 736 228 661 213 219 foreign government bonds – CHF - - 16 644 foreign government bonds – EUR 24 731 24 517 25 311 foreign government bonds – USD 153 005 204 144 171 264 LEVEL 2 Liabilities estimated at fair value through financial result Derivative instruments: 24 303 17 906 4 980 forward currency contracts – CHF - - (1 758) forward currency contracts – EUR 598 455 624 forward currency contracts – USD 23 705 17 451 6 114 * adjusted 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. Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 91 Financial assets – classification and estimation 31.03.2022 31.12.2021 31.03.2021 Financial assets estimated at amortized cost 1 108 125 993 036 1 695 723 Other long-term receivables 378 373 34 Trade receivables 69 546 123 821 51 381 Cash and cash equivalents 691 584 345 795 1 485 826 Bank deposits (maturity beyond 3 months) 85 390 265 000 73 State Treasury bonds and bonds guaranteed by the State Treasury 249 871 248 755 150 554 Loans granted 11 356 9 292 7 855 Financial assets estimated at fair value through other comprehensive income 177 736 228 661 213 219 Foreign government bonds 177 736 228 661 213 219 Total financial assets 1 285 861 1 221 697 1 908 942 Financial liabilities – classification and estimation 31.03.2022 31.12.2021 31.03.2021 Financial liabilities held at amortized cost 52 111 31 499 114 865 Trade liabilities 33 302 16 028 98 297 Other financial liabilities 18 809 15 471 16 568 Financial liabilities held at fair value through financial result 24 303 17 906 4 980 Derivative financial instruments 24 303 17 906 4 980 Total financial liabilities 76 414 49 405 119 845 * adjusted In line with the requirements of IFRS 9 Financial Instruments the 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 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 covering the foreign bond portfolio also permit 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. Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 92 H. Transactions with affiliates Sales to affiliates Purchases from affiliates 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 01.01.2022 – 31.03.2022 01.01.2021 – 31.03.2021 SUBSIDIARIES GOG sp. z o.o. 3 647 4 647 690 133 CD PROJEKT Inc. 63 117 3 072 1 482 CD PROJEKT Co., Ltd. (undergoing liquidation) - - - 939 Spokko sp. z o.o. 343 141 - - CD PROJEKT RED STORE sp. z o.o. 339 312 9 74 CD PROJEKT RED Vancouver Studio Ltd. 22 - 3 226 - The Molasses Flood LLC - - 3 962 - MANAGEMENT BOARD MEMBERS Marcin Iwiński 1 10 - - Adam Kiciński - 1 - - Piotr Nielubowicz - 2 - - Michał Nowakowski 1 6 - - Adam Badowski 6 - - - Paweł Zawodny 1 - - - Jeremiah Cohn 1 - - - Condensed Interim Separate Financial Statement of CD PROJEKT S.A. for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 93 Receivables from affiliates Liabilities due to affiliates 31.03.2022 31.12.2021 31.03.2021 31.03.2022 31.12.2021 31.03.2021 SUBSIDIARIES GOG sp. z o.o. 2 731 3 411 2 998 740 232 336 CD PROJEKT Inc. 486 511 1 121 984 948 542 CD PROJEKT Co., Ltd. (undergoing liquidation) - - - - - 311 Spokko sp. z o.o. 10 713 9 113 6 185 - - - CD PROJEKT RED STORE sp. z o.o. 1 295 421 1 425 2 158 64 CD PROJEKT RED Vancouver Studio Ltd. 1 076 1 008 - 874 164 - The Molasses Flood LLC - - - 1 792 1 018 - MANAGEMENT BOARD MEMBERS Marcin Iwiński - - 5 - 20 1 Adam Kiciński - - - - 5 - Michał Nowakowski 2 - 3 - 7 1 Adam Badowski 6 7 - - 5 - Paweł Zawodny - - - 7 - - Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 94 Statement of the Management Board of the parent entity With regard to the correctness of the condensed interim 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 condensed interim 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 condensed interim consolidated financial statement conforms to International Financial Reporting Standards (IFRS) approved by the European Union and in force as of 1 January 2022. 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. Condensed Interim Consolidated Financial Statement of the CD PROJEKT Group for the period between 1 January and 31 March 2022 (all figures quoted in PLN thousands unless indicated otherwise) The appended information constitutes an integral part of this financial statement. 95 Approval of financial statement This financial statement covering the period between 1 January and 31 March 2022 was signed and approved for publication by the Management Board of CD PROJEKT S.A. on 26 May 2022. Warsaw, 26 May 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 96