CD Projekt S.A. (CDR) Earnings Call Transcript & Summary

Good morning, everybody. Welcome to the Ordinary General Meeting of Shareholders of CD Projekt Group. Before we start, let us have the instructions on the voting procedure and how the system works. And then we'll start a meeting. So you have all received tablets, you have a button called your data [indiscernible]. You can see whom you represent and how many votes you have. Whenever we announce to vote, you will see the title of the vote and 3 buttons every single time. You have to choose 1 of the 3 buttons and then the tablet will take you to another window. And you will see the decision that you have taken and you just need to confirm with the button, you confirm your decision. If you have made a mistake in the first step, you can always go back by using the button [indiscernible] back and then choosing the right decision, but once you confirm your decision, you cannot change your mind. So please make sure that you select the right buttons. Should you have any questions, we are here. We're always available during votes. Thank you.

Thank you very much. I hereby open the ordinary general meeting of shareholders of the CD Projekt. I would like to introduce everybody because we have some changes at the table. My name is Adam Kicinski. We have the Vice President of the Supervisory Board, Katarzyna Szwarc, and [indiscernible]. Piotr is on holiday. And [ Eric ] is the Vice President for Finance, and he will tell us a few words about the financial issues. So first, we need to choose the chairperson. Are there any candidates? If not, I suggest Katarzyna Szwarc as the Chairperson. Yes, I agree. Let us vote. This is a secret ballot. [Voting]

I close the vote. We have 55,381,979 votes in favor. No votes against and no abstentions either.

Thank you very much for selecting me as the Chairperson. Let us check whether the meeting has been correctly convened. It was convened by report 19/2023 of the 10th of May 2023. And on the same day, it was announced on the website of the company. The company has also published the draft resolutions in the report 20/2023. Today, we have -- how many shareholders do we have? The number of shareholders, please? So we have 55,381,979 shares represented and the same number of votes, which is 54.95% of the share capital, which means that the meeting can take valid resolutions. We have 379 shareholders represented. Some of them participate online. May I have the attendance list, please? I will sign it. You will be able to access the list during our meeting and after the meeting. Any shareholder who would like to receive the list will be able to request it from the company. Let us move on to the resolutions in our draft agenda. As usual, I will not be reading the entire resolution. They have been published in report 20/2023 unless you have any motions for modifications, then we will be making the new proposals and voting in the order that I will suggest. So let us move on to Resolution number 2 that is the approval of the general meeting agenda. This is an open ballot. We can't hear the vote from the roof. We need to update the attendance list. So we have 380 shareholders represented. They represent 55,391,980 shares and the same number of votes and is the same share of the share capital 54.95% of the total share capital. Can we move on to the vote on Resolution number 2, the approval of the general meeting agenda? [Voting]

Thank you very much. We have 55,391,980 votes in favor, no votes against, no abstentions. The resolution has been adopted. Let us move on to the managerial reports, including the company's financial statement and the consolidated financial statement for 2022.

Good morning. Yes, some figures, the consolidated revenue in 2022 amounted to PLN 952.5 million, the net income was PLN 347 million. So we have a positive flow of PLN 406 million. That was a good year for the companies of our Capital Group. Mainly thanks to our new launches, Cyberpunk, the new generation, as well as the launch of Edgerunners on Netflix series. We have financed dividends for shareholders amounting to PLN 100 million. We purchased our own shares and that amounted to PLN 100 million as well. At the end of December 2022, the total value of cash and investments was PLN 1.91 billion. At the end of the year, most of our development teams were working on new projects. and especially [indiscernible] Cyberpunk and the new game from the Witcher universe, Polaris. You will find more details on our website and the materials from the conference at the 30th of March. You will find information on the financial statements there. If you have additional questions, feel free to ask them now. Are there any questions at this stage? If there are none, let us move on to the resolution number 3 on the approval of the company's financial statement for 2022. This will be an open ballot. Yes, okay. We need a short technical break because if I understand correctly, we have one of the shareholders who is voting and he represents several share packages. So we need to make some modifications, right? [Break]

We can move on to the vote. Resolution number 3. Please cast your votes. [Voting]

We have 55,391,980 shares represented and so many votes in favor, no votes against, no abstentions. The resolution has been adopted. Thank you very much. Let us move on to resolution number 4 that is the approval of the consolidated financial statement of the capital group. So the Projekt for 2022. Please cast your votes. [Voting]

Thank you very much. We have 55,381,980 votes in favor, no votes against, no abstentions. So the vote has been -- the resolution has been adopted. Let's move on to the approval of the Management Board report on the CD Projekt Capital Group and CD Projekt S.A. in 2022. Please cast your votes. [Voting]

Thank you. We had 55,352,326 votes in favor, no voting against, 29,654 abstentions. The resolution has been adopted. The next resolution is about the allocation of company profit for 2022. Let me remind you that under the recommendation of the management Board, the net profit for 2022 financial year, PLN 341,72,820.59 will be divided -- allocated as follows: PLN 99,110,510 is to be divided among shareholders by issuing a dividend at PLN 1 per each of the shares without the own shares of the company, which will not be divided and the remaining portion of the profit that is PLN 241,162,310.59 is to be allocated to the company's reserve capital and the dividend date will be the 13th of June 2023, ending the payment date, the 10th of June 2023. Are there any comments to the resolution? I can see none. So please cast your votes. This is an open ballot. [Voting]

Thank you very much. We have 55,381,979 in favor and 1 vote abstained. The resolution has been adopted now. We have a package of resolutions concerning granting discharge to members of the Management Board. The first one is about the Mr. Adam Kicinski and concerns granting him discharge on account of the performance of his duties as President of the Management Board of the company between January 1 and December 31, 2022. Adam will not be voting for himself, but he is going to be voting as a proxy. He's representing other shareholders. Let's vote. We are voting now. It is going to be a secret ballot. Thank you. [Voting]

Have all those who wanted to vote voted? Were you able to vote? We have one shareholder who logged out during the vote. We do not know if this is a technical problem or not, let us wait, give us -- give a moment to the shareholder to come back to log-in back. Otherwise, we will have to redo the vote. This person didn't vote, okay. In this case, we will simply have less votes participating in the vote. [Voting]

I'm closing the vote. This shareholder is not logging in again. So we are closing the vote. And of course, we will be updating the list of attendance accordingly. We have closed the votes. So the updated list of attendance will be read out later. 51,260,861 votes, no one against and 75,217 abstained. In total, they were 51,336,078 valid votes. Thank you very much. We have to wait a second because a new shareholder has arrived. We will have to update the attendance list and the list of those who are entitled to participate in the votes. We have one more shareholder who has entered the room, and we have to ask you for a moment of patience to add this shareholder. So we have now taken into account the shareholder who logged out, and we have 2 new shareholders who arrived. Currently, we have 55,383,944 shares. Why do we have a difference in the number of votes and the same amount of votes. Please correct this on the screen. Okay. It is correct now. In the meantime, please correct the data, and we are now voting on resolution on granting this chart to [indiscernible] the performance of his duties as Vice President of the Management Board of the company between January 1 -- I'm sorry, we are voting on a resolution on granting discharge to Mr. Marcin Iwinski on account of the performance of his duties as Vice President of the Management Board of the company between January 1 and December 31, 2022. This is going to be a secret ballot. Please cast your votes. Here Marcin Iwinski will not be voting his its own shares. [Voting]

Thank you very much. [ 42,196,066 ] votes in favor, against 38,521, 75,297 abstained. The resolution has been adopted. Thank you very much. The next vote concerns discharge to Mr. [indiscernible] on account of the performance of his duties as Vice President of the Management Board of the company between January 1 and December 31, 2022. Please cast your votes. [Voting]

Could we please switch on this -- I'm sorry, I think you have muted the system. This is the problem. Thank you. In favor, 48,450,130 votes, against 40, abstaining votes 75,257, the resolution has been adopted. Thank you very much. Next vote granting discharge to Mr. Adam Badowski on the account of the performance of his duties as member of the Management Board of the company for the year 2022. Please cast your votes. [Voting]

Thank you very much. In favor 54,616,007, no one against, abstaining votes 75,297. The next vote concerns the discharge to Mr. Michal Nowakowski on account of his duties as member of the Management Board of the company for the year 2022. Please cast your votes. Of course, in every case, we are excluding the votes related to the shares of the person who was concerned by the discharge. [Voting]

Have all the shareholders voted, it looks like not everyone. Yes. Okay. Everyone has voted. Thank you very much. In favor, 54,178,357. Against 53 votes. Abstained 75,244. The next resolution is about granting discharge to Mr. Piotr Karwowski for the performance of his duties as a member of the Management Board between January 1 and December 31, 2022, Please cast your votes. [Voting]

Thank you very much. 55 199,999 for, no one against, 75,217 votes abstained. Thank you very much. The next vote concerns granting discharge to Pawel Zawodny for the performance of his duties starting from the 1st of February to the end of December 2022. Please cast your votes now. [Voting]

Thank you very much. 55,290,022 votes in favor, 1 against, 75,296 votes abstained. Thank you very much. The next resolution on granting discharge to Mr. Jeremiah Cohn on account of the performance of his duties as member of the Management Board of the company between the 1st of February, and the 31st of December 2022. Please cast your votes. [Voting]

Thank you. 55,308,647 votes in favor, 80 votes against, 75,217 abstentions. The resolution has been adopted. Thank you very much. Now moving on to the discharge to the members of the Supervisory Board. The first resolution is about granting discharge to Mrs. Katarzyna Szwarc on account of the performance of her duties as Chair President of Supervisory Board of the company between the 1st of January and 31st of December 2022. Please cast your votes. [Voting]

Thank you. 53,821,906 votes were casted in favor of the resolution. 1,484,936 votes against. 77,102 abstentions. Thank you very much. The resolution has been adopted. We are now moving on to the next resolution on granting discharge to Mr. [indiscernible] on account of the performance of his duties as Deputy Chairperson of the Supervisory Board of the company between the 1st January and the 31st of December 2022. Please cast your votes. [Voting]

55,193,930 votes in favor, 124,717 votes against, 75,297 abstentions. The resolution has been adopted. The next vote concerns the granting of discharge to Mr. Michal Bien on account of the performance of duties as a member of the Supervisory Board of the company between the 1st of January to 31st of December 2022. Please cast your votes. [Voting]

Thank you very much. 55,183,930 votes in favor, 124,719 votes against, 75,295 abstentions. Resolution has been adopted. The next vote on granting discharge to Mr. [ Maciej Nielubowicz ] on account of the performance of duties as a member of the Supervisory Board in 2022. Please cast your votes. [Voting]

Thank you. 54,795,580 votes in favor, 511,262 votes against, 77,102 abstentions. The resolution has been adopted. Thank you very much. And the last vote on this charge is [ Jan Lukasz Wejchert ] again, a member of the Supervisory Board during the financial year 2022. Please catch your votes. [Voting]

Thank you. 55,183,930 votes were cast in favor, 124,717 votes against, 75,297 abstentions. The resolution has been adopted. Thank you very much. And the next point on agenda is expressing an opinion with regard to the CD Projekt Supervisory Board report concerning the remuneration of members of the Management Board and Supervisory Board in 2022. If there are no comments or questions, we will move on to the vote. This will be an open ballot. Please cast your votes. [Voting]

Thank you. 43,197,500 votes were cast in favor of the resolution, 12,184,559 votes against 1,885 votes abstaining. The resolution has been adopted. Thank you very much. And let's move on to the next resolution. The approval of the annual report of the company's Supervisory Board for 2022. Please cast your vote. This is an open ballot. [Voting]

Thank you. 55,354,210 votes in favor, no votes against, 29,734 votes abstaining. We're moving on to the next resolution on the amendments to the Paragraph 11, 12 and 19 of the company articles. The amendment concerns the function of the President of the Management Board, which will not be an obligatory function in the Management Board. And we're also putting some order into the functioning of the term of office of the Management Board. So following the general meeting approving the statements for 2016. The term of office last 4 years, starting from the approval of financial statements for 2016. So please cast your vote, and the ballot is obviously an open one. [Voting]

Thank you. 55,383,944 votes were cast in favor, that is 100% of the votes, which means that the resolution has been adopted. And the following resolution also concerns the amendment of the company articles in the following way the management board may remit to shareholders an advanced dividend. So far, we had no such possibility. So please cast your votes now. [Voting]

Thank you, 55,377,944 votes were cast in favor, no votes against, 6,000 abstentions. The resolution has been adopted. Thank you very much. And we're moving on to the resolution concerning the merger between CD Projekt and its subsidiary, Spokko. According to the merger plan on the 20th of April 2023, which was published in the report 14/2023. Please cast your votes now. [Voting]

Thank you. 55,381,961 votes were cast in favor, 80 votes against, 1,903 abstentions. The resolution has been adopted. Thank you very much. And we're moving on to the resolution authorizing the Management Board of the company to carry out buyback of company shares for redemption. Let me remind you that the total amount that may be allocated by the company shall not exceed PLN 500 million. Please cast your votes. [Voting]

Thank you very much. In favor, 51,926,872, against 3,445,515, abstaining 11,560. The resolution was adopted. Resolution 26 concerning scrutineer approval of the financial statement of CD Projekt Red Store company acquired by the company on the 28th of February 2023 by the CD Projekt Spokko. Therefore, we have to approve the financial statement of this company in the current meeting. Please cast your votes. [Voting]

Thank you very much, 55,354,250 in favor, no votes against, 29,694 abstaining. The resolution is adopted. Resolution number #27, concerning scrutineer approval of the report of activities of the CD Projekt Red Store. This is about same company. please cast your votes now. [Voting]

Thank you very much. In favor, 55,354,290, no one abstained -- no one against and abstaining votes, 29,564. The next resolution shall concern the coverage of losses incurred by CD Projekt Red Store in 2022. It is PLN 1,594,453.23 and the proposal is for it to be covered by profits obtained by the company in future years. Okay, we can now vote. This is an open ballot. Cast your votes now. [Voting]

Thank you very much. In favor, 55,383,864. I'm sorry, 80 votes against, no one abstained. The resolution has been adopted. And we still have 2 resolutions concerning granting discharge on the performance of duties as a member of the Management Board of CD Projekt Red Stores, [ Spokko ]. Here, this is going to be a secret ballot in both cases, but before we start the vote, are we still experiencing some technical problems with the tablets or is it solved? I will open the vote in a second, but we are still exchanging one device. Okay. So I can open the vote. I'm opening the vote. Michal Nowakowski will not be voting on granting himself at discharge. Please cast your votes on Resolution 29. [Voting]

Sorry, but it seems that we have a mass failure of our voting tablets. I can't see the vote on my tablet, that I understand the vote has not been opened yet. Okay. Everyone has been logged out. I'm very sorry. Since we have a problem with the network in the room. Everyone voted, yes. We have in favor of 54,778,357. No one against, abstaining votes 75,297. Before I open the next vote, I see we keep experiencing problems with the tablets available in the room. This is going to be the last vote. I think that we will finish by the end of hour unless some additional technical problems occur. This is last vote about granting discharge to Alexandra [indiscernible], for the performance of her duties as member of the Management Board of CD Projekt Red Store, Spokko, between the 1st of January and the 5th of May 2022. If the system is ready. I'm hereby opening the vote. [Voting]

Thank you very much. In favor, 55,308,647, no one against, 75,217 votes obtained. The resolution has been adopted and hereby, although we had some technical problems, we have now finished the agenda and I am hereby closing the general meeting. Thank you very much for your presence. Thank you for being with us in the room. And I would like also to thank all the shareholders who participated online or through proxy. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]