CD Projekt S.A.

Adam Kiciński - Joint CEO Piotr Nielubowicz - CFO

Hello, ladies and gentlemen. Welcome to our results conference of CD Projekt Group.

We will discuss the first six months of 2018. Thank you very much for coming.

Welcome to all those of you watching us in streaming. I will have the presentation together with Piotr Nielubowicz, who will talk about finance.

Before we do that, first of all, let me focus on H1 and its events. The first event is not a business one.

We are on the WIG20 index now. It's important from a point of view of capital market.

We’re very proud of it because it's yet another step towards development of our company from point of view of capital market. So I'd like to thank the investors for their trust and interest put in our business.

We opened a new branch in Wrocław. This is the third developer studio in Poland, apart from the biggest one in Warsaw and the second one in Krakow.

We opened the Wrocław branch, thanks to taking over Strange New Things studio. People in the industry decided to work with us on cyberpunk.

It's a very apt team that started working right away on our game. So, the most important thing, we started cyberpunk campaign.

We started it on the most important fairs, E3 in LA that took place in June. Shortly before the fairs, during Microsoft conference on Xbox, our trailer was presented for the first time in an incredible way.

It was sort of a crowning of the Microsoft conference and it was really very emotional for us. The trailer was then placed on the Internet and until today, it was viewed more than 25 million times.

It’s an absolute record in terms of our video materials. And during the fairs, we were showing a 50-minute piece of the gameplay.

Every hour, we showed it behind closed doors and we invited representatives of the media influencers and business partners. All in all, the piece of the gameplay was seen by more than 1100 people.

Thanks to this, during E3, the game won more -- won new awards, more than 100 awards during E3. That's twice as many as the Witcher 3 on Analogous [ph] Fair, when we were showing it for the first time in 2013.

We were showing the game to make sure that people write about it and this is what happened. And you can see the first covers of magazines and there was a lot of coverage in the electronic media.

Actually, almost everyone wrote about cyberpunk and the opinions were absolutely positive. Later on, we were showing the game on gamescom in a similar model, and yesterday, we launched the piece of -- this piece of gameplay, you can see it, it's available on YouTube.

It's 48 minutes of the demo that we were showing during the fairs in LA. Today, I'd like to show the first six minutes of the gameplay.

The whole of it is available online and I encourage you to see it after the conference. We keep working on cyberpunk, so you see as not necessarily representative of the final quality of the game.

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Hello, ladies and gentleman. H1 compared or differently than H1 of the previous year did not have any new titles, titles last year.

We issued new beta, which can be seen in the results. GWENT was made available to all players and that's why the revenues increased right away.

Revenues this year were stabled comparable to other periods when nothing exceptional happened like Q4 or the launch of new content. In Q2, the group generated 92 million of sales.

In Q1, 75. That's more or less the same as in Q1 and 3 last year.

Now, looking at the revenues, you need to bear in mind the changes in the macroeconomic environment of the company, in particular, FX changes, FX rate changes, because the zloty has become stronger last year and most of our sales accounts for export, 90% and it’s all in dollar. In the first half last year, from each dollar sold, we were revealing [indiscernible] revenues.

This year, from each dollar, it was 3.5 zloty revenues. That’s 45 grosz less, 45 grosz may not be a lot, but looking at the value of the dollar, it's more than 10% and are talking about gross margin, which is 122 million, well, 10% of that means a lot of money.

Now, as regards costs of the group, cost of sales, well, similar to the previous periods, a little bit lower than in the most active months like launch of beta GWENT or in Q4, slightly bigger in Q2. Mainly, the costs involve Red, but GOG also has its part.

General and administrative expenses, in spite of the scale of the group, recruitment of new employees, these costs are at similar level as in previous quarters. So, all in all, the results of the company in the first half year, PLN52 million, mainly in the first quarter when we generated 30 million net profit.

Now, as regards to the breakdown of the results into segments in which we operate, the first segment, CD Projekt Red. Revenues Q1, Q2, similar, 50 million -- more than 50 million in each quarter.

Only now, 108 million in terms of sales revenue, which meant PLN107 million gross, in terms of sales. Now, in this activity dedicated to Red, cost of sales was comparable in Q1 and in Q2.

In Q1, as regards to our marketing, promotional activity, these were mainly cost related to GWENT and in Q2, they were mainly related to preparation for E3 and participation in E3 fairs. We were showing you the demo a moment ago.

And general and administrative expenses, they are on a similar level as before. Net profit of CD Projekt Red, that’s PLN54 million, which corresponds to net profitability in the whole six months, around 50%.

So revenues of Red after deducting taxes and costs give us the profit, which corresponds to half of the sales, which is a very good result. Now as regards of GOG, the first important information, as a result of the change in economic situation, because two companies merged, which historically were presented in this segment.

So GOG Ltd and GOG Spokko were merged. So this data, historical data cannot be compared with the current one.

Historically, this one run by GOG Ltd, it had the most important product, GWENT and it didn't participate in conserved one. So the whole retail sale for PCs was presented in GOG com segment, without the share in the consortium and it was higher.

So after the merge, we have both GOG [indiscernible] as well as the store in the consortium. So all revenues generated by GWENT as well as the margin are divided between consortium members and the majority share belongs to CD Projekt Red.

That's why it had negative impact on revenues of GOG.com segment and positive impact of CD Projekt Red segment, which are still dominated by very good long-term sales of the Witcher with expansion packs. So in red, it's not as visible as it is visible in the case of GOG.

In the -- now coming more specifically to the results, the GOG operations consist of two basic components. First of all, it's selling own products and services with GWENT as the flagship and in Q2, after the announcement of homecoming project, the sales level went down, while we still had to sustain costs, mainly costs of sales, given promotion of GWENT, which translated negatively in to the sales margin generated by GOG and the second component of GOG operations is sales of foreign products as a part of our store and that revenue went up in Q2 compared to Q1 quite substantially.

Still, for the first time ever in our history, we had a new phenomenon, namely that ratio of the value of goods sold vs the volume went up, meaning, the GOG margin went down. Why did it happen?

This is a result of the -- our presentation mainly carried out in foreign currencies, mainly in USD, while sales and costs related to such sales are combined in zloty. Starting now, GOG presents full of its sales operations in zloty, even though the actual sales are performed in a variety of foreign currencies, mainly in USD.

What is this negative impact? We present each day the transaction in our books, in our ledgers, recalculated into zloty, so the monthly averages are compared to our revenues in monthly averages, represented by these horizontal lines on the graph, while once a month, on the last day of the month, we accrue royalties belonging to our suppliers, which are revealed in our ledgers, recalculated per currency rates as of the last day of the month.

So if that FX rate is higher than the monthly average, we pay royalties in foreign currencies, presenting them in our books at higher exchange rates, which boosts this on cost to sales ratio, which is the situation that occurred five out of six times during the last half year with the monthly closing currency exchange rate being higher than the monthly average, which reveals for this first time ever, now as the full books are kept in a zloty. The simple piece of news, a good piece of news related to GOG operations and sales of products from external suppliers is that the revenue from such sale, if recalculated into zloty and regardless of currency exchange rates and regardless of our major events such as the public launch of GWENT beta, it continues to go up and the value of products from external suppliers was about $10.5 million and much higher than Q2 last year and this case is just the same for Q1 this year, being above Q1 last year.

Now coming back to GOG, the margin on sales in the segment went up by 1 million Q2 compared to Q1, which was accompanied by cost -- operating costs going up by 0.5 million, resulting in Q2 result being about 0.5 million higher than for Q1. All in all, GOG generated a negative result, but we believe this is a particularly transient situation, first of all, because the exchange rate situation is fluctuating continuously.

This half year, the PLN vs euro exchange rate was adversary, but it might change and sales of external products in our catalog is going up continuously and this has always been the core of GOG operation and the GOG GWENT, the flagship product main event is planned for the second half of the year. When talking about the group assets, the main difference as to the developmental efforts we’re carrying out and that's PLN54 million for this year and almost 200 million cumulative spend on the development efforts.

As compared to the previous periods, this is the highest value of our expenditures. Regardless of whether we look at half years or quarters, these outlays are a natural result, organic result of the projects, cyberpunk, GWENT and Thronebreaker, why do such expenditures go up.

Well, first of all, it's organic due to our hiring and the production teams growing, but in the specific period, when talking about cyberpunk, the expenditures went up, as we put in more efforts to prepare demo for the first -- demo piece of which you saw and as to Thronebreaker, it's all because of the upcoming launch and efforts are intensifying on the project. When talking about the remaining part of our fixed assets, the 16 million growth is mainly because of us investing in acquiring the Wrocław based company, which acted as a seed of our new Wrocław branch and we also created fixed assets and intellectual property purchases related to current operations of the group.

When talking about our trading, we have recorded slight drop. This is pretty natural right after Christmas that receivables go down organically and this is mainly relevant to GOG, when talking about other working assets here, we have an uncertain level of PLN9 million that emerged and is a consequence of receivables pursuant to CD Projekt as our income tax.

When talking about cash on hand and bank deposits, the total value went down by some PLN40 million in Q1, which I'm going to discuss more extensively in the next slide related to cash flows. Our equity went up mainly because of withheld profits from the previous periods, while long term liabilities are a result of provisions related to the deferred tax calculations.

When talking about other significant changes to the company balance sheet, we can see a stable level of trade and other liabilities, mainly due to GOG operations and royalties paid each month, or each quarter to our suppliers when talking about the provisions and other major changes, while the provisions changing are mainly due to salaries related -- and remunerations related to group results, these provisions are dependent on last year’s results. So annual bonuses were paid out following the approval of our results for last year, does burdening our cash flow on one hand, but on the other, enabling us to resolve provisions, set up at the end of last year.

When talking about our cash flow, we started this year with cash and deposits balance at 647 million, that is under our operating activities. So, we generated positive cash flow on the level of PLN33.5 million, which obviously includes the payments of annual bonuses and the payment of annual taxes that occurred in Q2.

The annual tax that was higher than the one required on current results. In spite of that, the group has generated a nice positive cash flow on its operating activities.

And at the same time, we invested in producing more titles, cyberpunk, GWENT and Thronebreaker, which totaled close to PLN51 million. As to other investment activity, minus 22 million in negative cash flow.

Almost half of that total is the investment in the acquisition of a company and the opening of a new CD Projekt development office in Wrocław, while the remaining portion is attributable to investing in current fixed assets and intellectual property. We closed off June at a safe level of cash and deposits at 607 million or 608 million.

Thank you so much. This is it from me.

Adam, if you could please take over.

Thank you, Piotr. And just a few words about H2.

It has started already actually. So the first piece of information pertains to an event that has happened already.

About two weeks ago, we announced establishing a new company in the CD Projekt Group under the name of Spokko. The leaders standing behind Spokko are people we've known for years with a great track record in game development that have so far been active in developing casual games.

They approached us with an idea for a non-casual title that fits in perfectly with our strategy and capitalizes on one of our IPs. We have test driven this idea.

We have discussed it excessively and after some time, we decided we wanted to invest in that project. So we established a startup.

That's quite uncharacteristic for us. We've never developed a startup yet and now it's a very startup approach, startup is pretty independent.

It's going to tap into its own creativity and follow its own path. We have not released the project announcement yet.

We are just claiming this is going to be a mobile device game. Still this year, we will see a GWENT launch.

It's been at beta for quite long. We've been gathering feedback.

We've been getting more and more experience in operating service based games and we decided to, utilize all that experience prior to the official launch. In H1, we announced we were going to introduce quite in depth changes prior to the launch.

We called that project homecoming. We wanted GWENT to be released and improve the visual and playback capacities following the launch and we believe the game players will love it, will love the feel, will love the play.

And in parallel, we want to release Thronebreaker, a game. I'm calling it a game, because the project evolved up to quite a large scale, with 30 plus hours of captivating gameplay and amazing story with choices and their consequences.

Obviously, GWENT plays a major role in Thronebreaker, because most of the gameplay actions are resolved by playing cards, but the game itself is a role play and we're going to sell it in a standalone model. You will be able to purchase Thronebreaker without installing GWENT before.

That’s more or less it as to our today's presentations. So should you have any questions, you're welcome to ask them.

If you could please use the microphones to ask your questions, then our streaming, online streaming viewers will be able to hear the questions too.

Hello. I have a question as to yesterday’s gameplay.

And your -- the reactions of players you got. As you mentioned, in free and in gamescom, the gameplay was only available to a limited group of people, mainly media representatives, but the feedback from players and the broad spectrum of users must also be very interesting.

Did your marketing specialists already manage to process that feedback?

Well, I haven't read through any summary whatsoever, but I have read through the feedback and the general tone of feedback is very positive. We are more than interested in what the players are thinking.

We’re quite self-conscious because the game like we said in a presentation is not in its final stage and I don't mention imperfections, I also mean some solutions that are still subject to change. But following these two trade events, we decided we owed that to the players that we should show them what we've got.

[indiscernible] reception by our environment, by the media that saw the demo in free and in gamescom was very positive. So what we can see, what we can read through the feedback, what I managed to read tonight, that was more than positive.

But read through the feedback yourself. I guess, this is the best method for you to assess the feedback we're getting.

I wanted to ask, but I'm not sure if you've got the answer, because this was H1 presentation, but in Q2, we have witnessed CapEx on games going up a lot as compared to Q1 that was close to 50% increase. Are you able to tell us what share of that went to cyberpunk vs the rest?

Well, we've not been discussing it, but cyberpunk is by far the largest project, more than three times larger in terms of team involvement and a lot has been happening in Q2 related to cyberpunk and it was mainly due to the trade events. This is not a permanent trend in terms of our quarterly CapEx level.

Well, it's always so that the closer it is to the launch, the more we're spending on the launch. Here, that peak was related specifically to the development of material for E3 and gamescom, but we are also hiring more and more people in the team.

So just like you saw in that slide, quarter by quarter, our outlays -- our expenditures are growing steadily and that's good, because the closer we’re to the launch, the more ready the game is and the more the fixed costs go up, as GWENT and Thronebreaker too. So, we are getting into that cycle of heading towards the launch.

And the second question, you said Thronebreaker was going to be a separate standalone game. Could you tell us which platforms it will be released to?

The same platforms as GWENT. Exactly, the same.

It's going to be launched in parallel with GWENT.

What is the forecasted price for Thronebreaker?

We haven't announced yet.

And question about Spokko?

Well, it's too early to talk about Spokko. It’s just the beginning.

The team is very small. So, you need to give them a lot of time for them to do something that we could talk about.

Okay. A question for Piotr, because you have a less cost of general and administration than last year in Q2.

Do you forecast increase of cost in other quarters, because you've been saying that you keep employing new people? The team is growing bigger.

Well, we managed to limit the costs and keep them on a stable level, but the costs include provisions for bonuses of the team presented in general and administration costs, so not developer's theme, and not directly related to sales. And last year, the costs were slightly higher and most probably, it's resulting from the fact that profits last year, thanks to GWENT, were higher.

So, there was -- that's why there was a bigger provision for bonuses.

A question about cyberpunk. On the one hand, we've heard that cyberpunk is a game play, which you can play from the very start to the very end, but you keep saying that you have been developing the game.

So what will be developed? Are we polishing the world -- are you polishing the world or as the plot constantly developed, are you adding new elements or are you just polishing the product?

Well, you saw today and what is available on YouTube, the 47 minute is the polished piece, but not the whole game. The rest of the game, well, there's no good word in Polish.

We say that it's a framework. You can go through it till the very end, but you don't want to see this.

We can’t show it at this level. But from a production point of view, this is the way it should be, this is how you develop games, but still there is a lot of work ahead of us.

An extra question about CapEx, because you showed us the breakdown into productions, CD Projekt Red and CapEx GOG, Thronebreaker. Where is it in terms of CapEx?

Well, absolute majority in Red. The CapEx, GOG CapEx are in the part that is related to multiplayer, GOG multiplayer.

Also when it comes to GWENT, but it also includes GOG CapEx related to technology of the store. And these are long term projects.

Thank you.

[indiscernible] I think it's working. Yes, it's working.

Well, I have the following question. Regarding gameplay cyberpunk, on the one hand, you're saying that this is the polished version, not the whole game looks like this.

On the other hand, well, you're still working on it. So the question is this, have you completed like 80% of the game more or less?

We don't give an answer to this question, because we haven't announced the deadline of the launch. So we don't want to make any suggestions whatsoever in this regard.

What we are saying is, I think, it's all coherent, because we picked a piece of the game, when we went further in terms of development, we polished a lot of elements, but we know that some of the solutions at this level, these are not final solutions, some elements may change, not because they're bad, but because we may have even better ideas. There are certain imperfections, what you can see to the naked eye, but the rest of the game does not look like this.

The rest of the game looks differently, but like I said, we have the general framework and the development work has been progressing according to the time schedule and we have an avid proof for that. The presentations during gamescom and E3 were planned exactly like that.

This was an outcome of a long term plan and we did deliver with a lot of efforts, but we did. So we've been following the plan.

So this gameplay, it stayed as of June. Well, this gameplay, it stayed as of between June and today.

At gamescom, when I was walking around in these t-shirts that you've got now, more than ten people approached me asking where I could buy them. So another question, are you considering selling those t-shirts because the demand is quite substantial?

We are considering selling first types of merchandise related to our games and we are doing that. But when talking about cyberpunk, this is only going to go up, but in our business, you must remember that selling physical merchandise, be it t-shirts or figures or other stuff does not cost you a major part, but this is something we're going to invest in.

We want our fans to have an opportunity to get in touch with our brands physically, tangibly rather than just holding their pads and playing the game.

I have this question. Obviously, you're not discussing a release that not even indicated one, but you are discussing merchandise t-shirts.

And we also are awaiting GWENT and Thronebreaker. So if your marketing strategy is planned out perfectly indeed, how much time do you think you'll need to have no cannibalization between GWENT, Thronebreaker and new cyberpunk or do you believe these two groups are totally divergent, they will buy either or rather than and or there is -- is there any delay you’re assuming for marketing purposes to receive how GWENT develops, how Thronebreaker develops and only then release this major accent with the game in a future setting?

Well, we already showed something, but the development of GWENT and cyberpunk are fully divergent for the first time ever. We have two fully independent teams and the release dates are determined by the product pace.

We’re only fitting in the marketing, retrofitted marketing campaigns to suit with that and we're conducting these campaigns in parallel. Obviously, we would probably avoid a situation of two simultaneous releases on a single day.

But apart from these obvious situations, these are two distinct production processes and campaigns. So, you believe you don't need much delay between one and the other for the players to cool down.

No, we're not even deliberating on that, because these are two independent things. And apart from these very drastic cases, we are promoting GWENT and Thronebreaker independently from promoting cyberpunk.

I have this question on GWENT. I wanted to know this.

Well, Q4 was mentioned and I wanted to learn, because I understand that this current version is going to change substantially? Yes.

And soft launch of the new version, are you carrying it out on some internal test groups or external test groups? I'm discussing the monetization of this game because I believe you have to be sure that the new version will monetize at least better than the current one?

Well, we need to be sure that the game is better. Monetization is secondary to that, but the game usually monetizes better, but when talking about monetization systems, they're not subject to any revolution whatsoever.

GWENT is relatively simple in that area. We are definitely focusing on the game itself.

We are inviting journalists to the first preview sessions that are going to be scheduled in quite some time and only after we show that to journalists, we will see the first press releases, the promotional campaign and we will start talking more about the new version of GWENT?

And when talking about this mobile version to be launched, well, it's got to be launched. We are also discussing that.

So it's got to be there, because this is not something you can sidestep. So the question is, where you are going to test it?

Do you have several markets you have selected? You may answer this or not, it's up to you, but probably a few markets, right?

So, what is the priority to you, iPhone, because of better revenue or Android because of higher volume, well PCs and consoles?

You know us. We are not discussing, we are not getting into topics that we have offered no official announcements on yet, so we are not going to comment.

And the last question about GWENT. When talking about your promotional campaign for these two products, GWENT and Thronebreaker.

Should we expect, even in case of unsatisfactory KPIs, at the moment of the shift from the current to this ultimate homecoming version, should we expect you investing quite a lot in marketing [indiscernible] spending a lot of money to buy those uses, even though KPIs should be lower or rather not?

Well, we try to be rational here. We try to be pragmatic about spending money and so we might be perceiving GWENT differently than Thronebreaker after the launch.

GWENT is something we know already. This is a game that will be sought in the so-called premium model, you will download it, you will own it.

It's a simple model. We have some quantitative assumptions in place and we are fitting our expenditures with that.

Obviously, there is a risk, because we have our assumptions and we have first to assume some sales of those and then spend the money on marketing. But GWENT as a service type of game, it's on one hand, more difficult, but on the other hand, it's a little bit simpler, because we can take spending decisions as they go.

And these days, sometimes, the time laps between decision and the actual spending is so short that you can take these decisions following the game performance.

And one more question about Thronebreaker. How many hours of gameplay are you expecting?

30 plus.

Good morning. I have a question as to what you're showing in your presentation now.

Is this is one-off concept or is it more, do you believe that's what your CD is going to look like, are these buildings going to be interactive, will you be able to enter each and every of them and each and every floor levels?

This is one of the concept, it’s developed for the fair. But I believe, it is representative and so far, as everything that we are showing today is representative, with this big reservation that this game is still subject to change.

When talking about design details, we don't want to go any deeper than that. What we showed you in the demo and the comments, this is all we want to tell you about the game as of today.

So I'd like to avoid answering this question, because I don't feel, well, this is not when we would like to discuss the game design, because the game design is included in that 48 hours of gameplay, please watch it, listen to the comments and this is all we have to say on this topic today.

And one last question, probably, you're not going to respond, but I have to ask. How about next IP?

According to the strategy, you were supposed to be working on another AAA game. So do we know what kind of IP is going to be?

Can we learn anything about that? And if not today, then when?

Well, for now, we're focusing on cyberpunk. We have started cyberpunk promotion.

And GWENT, obviously, it's a separate subject, but we're going to continue talking about cyberpunk 2077 only in our communication. It's an obvious and a conscious choice.

We want this to be the only topic we are discussing. What comes next, we will discuss next, not necessarily after the launch, but definitely not at this point.

But this is not anything you're working on. It's not GWENT, it's not cyberpunk.

This next AAA game, no. No, not GWENT, not Thronebreaker.

Thank you.

And one more question if I may about GWENT. Having seen your results for 2017 or 2018, are you going to show separate KPIs for this game?

Well, we haven't taken decisions on what we're going to do in another half a year so far. So it's difficult to be clear about that, but in our communications so far, we have not been going that deeply into communicating individual products.

Industry wide, speaking, nobody publicizes details of such projects. Even though these details are around, but they're usually a result of external analysis.

But as you're going to have two games, if this Spokko project delivers, you're going to have a group of games, of these two games. Well, let's wait, but that's the context I was asking.

We have no plans, we have no decision so far as to what we are going to show in our annual conference.

And another question that emerged in the meantime, when talking about you hiring and your employment growing, it's quite substantial quarter-by-quarter. And for comparable employee bases, do you believe your rotation levels are high, average, low?

We have low rotation levels, lower than the average, but it depends on the period too. Obviously, the most rotating -- the levels are post launch, post release, but here in the middle of the project, we are pretty pleased with our levels.

Thank you.

I'd like to ask a question about Q4 and the launch of the two products. Gentleman, if you could tell us please what would be the marketing expenses in Q4, because that's what give us an indication of how important these launches are for you.

Like last year, we had the release of a beta version of GWENT and marketing expenses jumped in Q2. Another reference point, are expenses in the quarter, when the Witcher 3 was released.

How would you place the expenses, marketing expenses in Q4?

The Witcher 3 is basically incomparable, because a vast part of marketing expenses related to its release was incurred by the distributor, so you can’t see this in our P&L. It was a huge amount, more or less, together with our expenses was 150 million.

So surely, we are not achieving this level here, but in GWENT’s lifecycle, definitely, the release of full version and the release of Thronebreaker will be the most intensive period in terms of marketing expenses.

One of those questions without the answer, probably and between the release of the first gameplay of the Witcher 3 and the actual release, some two years past. What will it look like for cyberpunk?

Maybe due to more people working on cyberpunk, the progress of work should be bigger or considering the complexity of the project.

Well, the period of work is comparable as in the case of the Witcher 3. Yes, you're right, we can’t answer this question.

Well, yes, the project is more complex and the speed is faster. Yes.

More people are involved in cyberpunk than Witcher, but the game is more ambitious, clearly more ambitious.

Also a question about Thronebreaker. You haven't announced the date for Thronebreaker.

Last year, you just said that to postpone and is Q4 certain, briefly speaking, should we stick to that or are you still considering or sticking to it as closely as possible?

With regard to the date of game release, we have big will to release Thronebreaker this year. There is a huge, huge will.

Looking at the progress of production, if we were uncertain as much as you can be certain of a game release, we wouldn’t mention it during this presentation.

[indiscernible]. The Ministry of Culture is considering an exemption for manufacturers, developers of patriotic games.

Do you intend to participate on the project?

Well, I know about the project. This is not an exemption for producers, the developers of patriotic games.

As a representation of the topic, because exemptions like that function in southern countries. In the EU, it's hard to support companies or industries.

However, the EU allows for such support in the case where culture of a given country or European culture is promoted. So the exemption functions like that in UK, in France and in other countries it's going to be implemented as well.

Let's remember that reference to culture in games is not only related to what the games are all about. For example, Star Wars are a piece of American culture, even though they not applied to the United States of America or [indiscernible] as an element of Polish culture.

But [indiscernible] doesn't mention of a lot about Poland. So, culture is also related to art and big games, the games that we do is art or our art and that supports culture, but of course, the elements related to Poland or Europe will probably be significant.

No details have been announced. So, we don't know them yet, but definitely, I’d like to clarify this thinking.

It's not about patriotic games. At least, I hope it's not about patriotic games, because that's not about that.

I think it's about developing good games in Poland where people want, which people want to play all over the world and which have a certain value that they're innovative and that contributes something to this entertainment industry. And at the same time, promote us as a region.

This wouldn't be too bad.

One more question about Thronebreaker. Have you decided whether it will be possible to use coins from GWENT to buy Thronebreaker or will it be totally separate and unrelated to GWENT payments?

It's too early to release the details, but we said that Thronebreaker would be a standalone product. In other words, you will buy it for money.

Okay. So the pressure on GWENT promotion will be rather through the story rather than a combination or relation to Thronebreaker?

Well, both. But Thronebreaker, in simple words, is addressed to two groups of players.

On the one hand, GWENT players, but also fans of the Witcher stories who haven't been playing GWENT yet, but they may play Thronebreaker, because Thronebreaker tells other Witcher stories. So in terms of the story, it’s the same level as the Witcher 3.

It's a different type of the game, but in terms of the story, it's a really top quality.

I'd like to ask about gameplay in Thronebreaker. Will there be any survival mode exploring finding between each other.

I can't say this yet. We will be releasing new elements of Thronebreaker, once we've shown that to the journalists and well, please wait a moment and we’ll start talking about Thronebreaker.

It's going to be a short campaign, but we will release all the details then.

Is it possible to combine the existing account in GWENT with the game, with Thronebreaker?

Yes, by all means. It's not that it's a standalone game and unrelated.

Yes, by all means, but it's about not limiting your potential group of players. So if you don't have GWENT, no problem.

You click a nearby Thronebreaker and you have it, but people who have GWENT, sure, it can be the same account that's related.

So perhaps two words. On the development of GWENT in China, if you could tell us something more.

And the word on GWENT home coming, are you going to have more the playback modes than in the old GWENT?

Well, the same number of gameplay modes as in old GWENT for now, generally speaking. Only afterwards are we going to develop it further.

Homecoming is a major project, changing many components. When talking about China, China has its own pace, its own schedule.

We are aiming at going as parallel as possible in China vs the rest of the world, but we cannot guarantee that this will all happen on the same day, but let me respond to a question that was not asked, but we expected it. On the potential approval process, because a lot has been said recently about it getting more and more difficult to secure approvals in China.

We've been in the process with GWENT for long now and these most recent stories about queuing for approvals for new games, these do not affect us. We have our own process.

GWENT has the certificate and is approved for sales in China. And the new updates go through an update approval process, which is distinct from the new game approval process.

Is it possible to open up the game, the more in China in parallel to the homecoming launch?

It is possible. But I would not like to make any hard and fast statements on that now.

If that’s it, thank you so much for your attendance. I would also like to thank all the streaming viewers and see you in our annual conference in another six --.