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

Good morning, everybody. Sorry about the small delay. I'd like to welcome all of those to our -- with us online, welcome to the extraordinary general assembly. I'm Michal Nowakowski, joint CEO of CD Projekt. And let me now open the extraordinary general meeting of CD Projekt SA, starting at 10:00. Before we continue, let's hear from the voting management company about the voting procedure.

You all have tablets. In the tab, you can always check the number of votes you have at this general; meeting. The voting procedure is very simple. There are 3 buttons: yes, if you're in favor of the resolution; no; and abstention. After you decide, you'll be redirected to another window to confirm your voting decision. So if the decision is in line with what you want to say, you have to confirm it. You can also return to the previous screen and check the right value of -- the right decision. But after confirmation, that's impossible to change your decision. Do you have any questions? Thank you.

Thank you very much for your instructions. Let's start selection of the Chair of the general meeting. Please state your candidates.

I'd like to suggest that Legal Counsel, Mateusz Bednarz, as a candidate for the Chair.

Any other candidates? I cannot see any. So let's start a secret voting on Resolution #1 on selection of the Chairperson of the general meeting, which will be Mateusz Bednarz. Please vote now. [Voting]

In the secret ballot, 57,627,963 valid votes were cast out of 57,627,963 shares, being 57.68 rounded percent of the equity capital, 57,627,963 votes were cast in favor against, nobody abstained from voting. So the resolution has been adopted. Mateusz, congratulations, and please take over from now on.

Thank you very much. A warm welcome to everybody. Thank you very much for electing me. I'd like to welcome all participants of the Extraordinary General Meeting of CD Projekt SA on the 28th of November 2024. I'm Mateusz Bednarz. I'm a legal counsel, and I agreed to be elected a Chairperson of the General Meeting. Before we start with the agenda, please submit the attendance list of the general meeting to be signed off and available for you throughout the meeting and after the meeting. There is a notary public present in the room to draw up minutes of this meeting. Let me now move on to Item 3 on our agenda, which is confirmation of the validity of the general meeting summoning and the ability to take resolutions. So this general meeting has been summoned in line with the current report, 25-'24 dated the 31st of October 2024. On the same day, the draft resolutions were published by the current report 26-'24. Both reports can be found on the company's website. All materials on this general meeting, the agenda, including both reports mentioned can be available from the website, and they are also available on your tablets. I'm not going to read out the wording of all resolutions. They will be voted according to the sequence suggested by the company. And could I please have a printout according to the attendance status? Thank you. What about the number of shareholders present? Could I please have the number? Thank you. So we've got 432 shareholders present or represented, altogether representing 57,627,963 shares, which corresponds to 57.68% of the equity capital, and the number of votes is the same, 57,627,963. The majority of the shareholders are with us online. So the general meeting of CD Projekt SA has been summoned in the right and firm manner and is fully fit to adopt resolutions. So let us start with the resolutions on the agenda today. We'll process the resolutions in line with the suggestions from the Management Board, unless there are some amendments. So let me start Item 4 on our agenda, which is Resolution #2 regarding approval of the general meeting agenda. Do you have any questions or comments to this resolution? I cannot see any. So let's start the open ballot of the Resolution #2. We need 3/5 of the vote, in line with the company's Articles of Association. Please cast your ballots now. [Voting]

Thank you very much. 57,627,963 votes -- valid votes were cast out of 57,627,903 shares, representing 57.68% of the share capital rounded. In favor, 57,627,962 shares on votes; no votes against; 1 abstention. So the resolution has been adopted. Thank you. Let me continue with Item 5 on our agenda, which is Resolution #3 regarding dismissal of Marcin Piotr Iwinsk from the position of the member of the Supervisory Board. And this is related to the resignation of other members of the Supervisory Board in order for Mr. Iwinski, along with other members start jointly a new term of office as of the 1st of January 2025. Do you have any questions or comments to Resolution #3? I cannot see any. So let's start the ballot, which will be a secret one on Resolution #3. The resolution needs 3/5 of the votes to pass. Please cast your votes now. [Voting]

Thank you very much. 57,627,963 valid votes were cast out of 57,627,963 shares, representing 57.68% of the share capital. 56,579,284 votes were cast in favor; 1,043,482 against; 5,197 abstentions. So the resolution has been passed, which leads me to Item 6 on our agenda, which is Resolution #6 on the appointment of Marcin Piotr Iwinski as a member of the Supervisory Board of the company for a new term. The biography and all statements of the candidates are attached to the materials for this general meeting. Do you have any questions or comments related to Resolution #4? I cannot see any, so let's start voting on Resolution #4, which will be a secret one, and it takes 3/5 of the shares for the resolution to pass. Thank you. Please cast your votes now. [Voting]

Thank you very much for voting. 57,627,963 valid votes were cast out of 57,627,963 shares, representing 57.68% of the share capital. 57,145,062 votes were cast in favor; 481,575 votes against; 1,326 abstained. So the resolution has been adopted. Thank you. Which leads me to Item 7 on our agenda, which is Resolution #5 on the appointment of Beata Cichocka-Tylman as member of the Supervisory Board of the company for a new term. The bio of the candidate and all the statements are attached to the materials for the general meeting. Do you have any questions or comments to Resolution #5? I cannot see any, so let us start a secret ballot on Resolution #5. It takes 3/5 of votes for the Resolution to pass according to Articles of Association. Please vote now. [Voting]

Thank you very much for your votes. 57,627,963 valid votes were cast out of 57,627,963 shares, representing 57.68% of the share capital. In favor, 57,625,671; abstentions, 1,326 votes. So the resolution has been adopted. Thank you very much. Now moving on to point 8 on the agenda, Resolution #6 regarding the appointment of David Gardner as member of the Supervisory Board of the company for a new term. His bio and all statements regarding the candidacy will be available -- or are available in your materials and online. Do you have any questions or interventions regarding Resolution #6? I see no interventions. We will have now a secret ballot. Majority of votes necessary is 3/5 according to the Articles of Association, and please cast your votes now. [Voting]

Thank you very much for all votes cast. 57,627,963 valid votes were cast from 57,627,963 shares, representing 57.68% of the share capital. 57,625,671 votes were cast in favor; 966 against; 1,326 abstentions. The resolution has been adopted. Moving on to point 9 of the agenda, Resolution #7 regarding appointment of Adam Michal Kicinski as member of the Supervisory Board of the company for a new term. His bio and all statements regarding this candidacy are available in the materials for this event. Do you have any remarks regarding Resolution #7? In that case, we will be voting on Resolution #7. This is a secret ballot. Majority of votes needed to adopt the resolution is 3/5 according to the Articles of Association. Please cast your votes now. [Voting]

Thank you very much, 57,627,963 valid votes were cast from 57,627,963 shares, representing 57.68% of the share capital. 57,423,521 votes were cast in favor; 203,116 against; 1,326 abstention. The resolution has thus been adopted. Moving on to point 10 on the agenda, Resolution #8 regarding appointment of Agnieszka Slomka-Golebiowska as member the Supervisory Board of the company for the new term. Her bio and all statements are available in the materials of the general assembly. Do you have any questions, interventions regarding Resolution #8? There aren't any, so we will be voting on Resolution #8. This is a secret ballot. The majority necessary to adopt is 3/5 according to the Articles of Association. Please cast your votes now. [Voting]

Thank you very much for the votes cast. 57,627,963 valid votes were cast from 57,627,963 shares, representing in total 57.68% of the share capital. 57,094,082 votes were cast in favor; 268,269 votes against; 265,612 abstentions. The resolution has been adopted. Thank you very much. Moving on to point 11 on the agenda, Resolution #9, concerning amendments to Paragraph 12 of the Articles of Association of the company. The propose to change in Paragraph 12 involves deleting of a certain term, which is only ordinal and does not have impact on the calculations used so far. Do you have any remarks concerning this Resolution? So we will be voting now. This is an open ballot, and the majority of votes necessary is 3/4, according to the Commercial Companies Code. Please cast your vote now. [Voting]

Thank you very much. 57,627,963 valid votes were cast from 57,627,963 shares, representing 57.68% of the share capital. 57,627,962 votes were cast in favor; no votes against; 1 abstaining vote. Thank you very much. The resolution has been adopted. Moving on to point #12 on the agenda, Resolution #10, concerning amendments to Paragraph 18, 19, 20 and 22 of the Articles of the Association of the company. The proposed changes are aimed at introducing a model where the Supervisory Board can elect as Chair 2 people. In this case, each of these persons will be a co-Chair as well as they bring order into the rules for adopting resolutions and participating in meetings as well as -- and applies until the end of the term of the Supervisory Board. Do you have any remarks concerning Resolution #10? There are none, so we will be voting. This is an open ballot. Majority of votes necessary is 3/4 according to the Commercial Companies Code. Please cast your votes now. [Voting]

Thank you very much for your votes. 57,627,963 valid votes were passed from 57,627,963 shares, representing 57.68% of the share capital. 53,939,178 votes were in favor; 23,933 were against; 3,664,851 votes abstained. The resolution has been adopted. Thank you. Moving on to point 13 in the agenda, Resolution #11, concerning amendments to Paragraph 21 of the Articles of Association of the company. The proposed changes concern revision of particular duties of the Supervisory Board, may need to adapt the Articles of Association to the draft law and the needs of the company. Do you have any questions and motions regarding Resolution #11? I see none and so we will be voting now on Resolution #11. This is an open ballot. The majority of votes necessary is 3/4 according to the Commercial Companies Code. Please cast your votes now. [Voting]

Thank you very much for your votes. 57,627,963 valid votes were cast from 57,627,963 shares, representing 57.68% of the share capital. 37,765,828 votes in favor; 16,197,284 votes were against; 3,664,851 abstentions. The resolution has not been adopted. Moving on to point 14 on the agenda, Resolution #12, concerning changes in the Paragraph 28 of Articles of Association. The proposed changes are aimed at including in Paragraph 28 of the Articles the decision that the amounts from profit can be allocated to payment on -- of dividends, pursuant to Commercial Companies Code. Do you have any questions, remarks or motions regarding Resolution #12? And please use the mic.

Thank you very much for the possibility of taking the floor. [indiscernible]. I have a question to the management board. What is the justification? What are the intentions behind the change of the articles? Could you elaborate and give us more details? Because this is a far-reaching provision, and I would like to ask you for more information about this. Mateusz, would you help us?

And what raises the biggest doubt? Because the provision is quite standard. So far, we didn't have a direct provision saying that the reserve capital can be used. So the profit from reserve capital can be allocated towards payment of dividends, and now we are saying it directly. So the doctrine and practice has some doubts about it. But as a rule, it is generally accepted that this is not a problem. And we simply wanted to have a direct provision of the -- from the perspective of the company. And this is how I understand the justification of the Management Board.

Thank you very much, Attorney. But I'm more interested in the intention behind the attempt at changing the Articles of Association. Could you please elaborate on that?

Well, it's hard to speak on behalf of the originators of the amendment. But if any decisions are taken, the company will inform me about them.

Well, the change pertains to the dividend payment. So we would like to have full clarity that we are proceeding in line with the Articles of Association and the Code of Commercial Companies.

Thank you very much. Are there any other questions to this resolution? I cannot see any. So let us start voting on the Resolution #12. It will be an open ballot. It takes 3/4 of votes for the resolution to pass according to the Code of Commercial Companies. Please vote now. [Voting]

Thank you very much for voting. 57,627,963 valid votes were cast out of 57,627,963 shares, representing 57.68% of the share capital. 57,627,962 votes we cast in favor; no votes against; 1 abstention. Thank you. The resolution has been adopted, which leads me to item 15 on our agenda, which is the resolution on changes in the remuneration of members of the Supervisory Board. The suggested changes are aimed at the update of the remuneration of members of the Supervisory Board. You can find all the details in the materials. Do you have any questions or comments to Resolution #13? I cannot see any, so let's start voting on Resolution #13. It will be an open ballot. It takes 3/5 for the resolution to pass according to the Articles of Association. Please vote now. [Voting]

Thank you for voting, 57,627,963 valid votes were cast out of 57,627,963 shares, representing 57.68% of the share capital. 57,627,363 votes were cast in favor; 599 against; 1 abstention. So the resolution has been adopted. Thank you. Which leads me to Item 16 on our agenda, and Resolution #14 on amendments to the general meeting regulations of the company. The suggested changes are aimed at adjusting the wording of the regulations to the changes in the Articles of Association erasing out-of-date provisions like reference to the Chairman of the Board and adjusting to good practice of commercial companies as well as adjusting the wording to the current needs of the company. Do you have any questions or comments to Resolution #14? I cannot see any, so let us start voting on Resolution #14, an open ballot. 3/5 of the votes are necessary for the Resolution to pass according to the Articles of Association. Please vote now. [Voting]

Thank you for voting. 57,627,963 valid votes were cast, out of 57,627,963 shares, representing 57.68% of the share capital. 57,627,963 votes were cast in favor, no votes against and no abstentions. Thank you. Which leads me to Item 17 on our agenda, which is Resolution #15 regarding determination of the earnings condition for years 2025, 2028 and the incentive program B, where the suggested amount suggested by the Management Board is PLN 4 billion. Do you have any questions or comments to Resolution #15?

Thank you. As a shareholder, my question is what is the basis for the amount of PLN 4 billion for the incentive program? Because we've just had the quarterly results. And well, they are as they are. So my question to the Management Board members is what is your basis for stating this amount? Because it is quite impressive, I must say. Thank you.

Thank you very much for your question. Thank you very much for your assessment of the objective of the incentive program. While it has to be motivating, thus ambitious, and we do believe it is so, but every time we calculate the amount, we are based on the forecast on what we believe the company can generate. Well, you refer to Q3 results. Well, as per usual, this has been the weakest quarter in the year. So nothing extraordinary here. In this time window by 2025, we plan some considerable events, which we believe will have a bearing on the realization of the objective and the company's results.

Thank you very much. And just to supplement the information you've just given, when can the shareholders get familiar with the events planned for the time window, which are the basis for such an optimistic take on an incentive program? Because to our shareholders, it matters a lot, I must say. Thank you.

As a matter of it all, we like saying that we are part of the entertainment industry. It's show business. So speaking of launches and premieres, they are not usually announced during investor calls or general meetings. We want to give them the right background and fund support. So much as I would love to, I cannot tell you anything because, otherwise, I would spoil all the surprises and events. So please bear with us. The time will come and you know, and everything will be clear.

I'm sorry. My questions are -- because I'd like to make sure that the PLN 4 billion is not just taken off the top of someone's head. But I just wanted to make sure that there is a solid basis for that. And do you believe in this amount?

Well, rest assured that it is not taken off the top of our heads. It is like Marcin mentioned on the company's plans and our P&Ls, and we firmly believe it will become a reality.

Thank you very much. Any other questions? I cannot see any. So let's start the open ballots on Resolution #15. That takes 3/5 of the votes according to the Articles of Association for the resolution to pass. Please vote now. [Voting]

Thank you very much for voting. 57,627,963 votes were cast out of 57,627,963 shares, representing 57.68% of the share capital. 57,090,083 votes were cast in favor; 537,880 against; no abstentions. So the resolution has been adopted. Thank you, which leads me to Item 18 of our agenda, which is Resolution #16, regarding the costs related to the convocation of organization of the general meeting. It is related to the motion to cancel the general meeting by a shareholder having 1/20 of the share capital of the company. Do you have any questions or comments to Resolution #16? I cannot see any, so let's start an open ballot on Resolution #16. It takes 3/5 of the votes for the resolution to pass. Please vote now. [Voting]

Thank you very much. 57,627,963 valid votes were cast out of 57,627,903 shares, representing 57.68% of the share capital. 57,627,364 votes in favor; 599 votes against; no abstentions. So the resolution has been adopted. Thank you. We've satisfied all the items on our agenda today. Thank you very much for your contribution and for participation. Let me close the meeting. Have a nice day, everybody. Thank you. Thank you very much.