Directors' Report on the Operations of PCF Group S.A. and Its Group in 2020

The 2020 Directors' Report for PCF Group S.A. details a period of significant financial expansion and strategic organizational restructuring for the Poland-based video game developer. The company’s primary business model centers on contract development for global publishers, specifically focusing on AAA shooter and RPG titles such as Outriders, Project Gemini, and Project Dagger. During this period, the Group successfully executed a merger with its subsidiary, People Can Fly Sp. z o.o., and completed a public offering that raised over PLN 100 million to fund studio expansion, talent acquisition, and the development of proprietary intellectual property.

Financially, the Group demonstrated robust growth, reporting a 24% increase in revenue to PLN 103.8 million and a substantial rise in net profit. This performance was bolstered by the application of preferential IP Box tax relief and the successful navigation of operational challenges posed by the COVID-19 pandemic, including the transition to remote work and the utilization of government-backed relief programs. Despite this success, the company faces notable revenue concentration risk, with over 80% of its earnings derived from a single publisher, Square Enix Limited.

Corporate governance within the Group is characterized by a centralized structure, with significant voting power and board appointment rights held by a group of qualifying shareholders, most notably Sebastian Wojciechowski. While the company maintains an Audit Committee and adheres to standard regulatory requirements, it has acknowledged partial non-compliance with certain voluntary corporate governance standards, such as diversity policies and the separation of internal audit functions. Looking forward, the Group’s stability remains contingent upon its ability to retain specialized development talent in a competitive labor market, manage the inherent unpredictability of large-scale game production, and successfully transition toward a future model that includes self-publishing capabilities.