Thank you very much, and good morning, everybody, on this rainy day. As usual, we are very happy to welcome you on the investors' update on how MADARA Cosmetics has been proceeding in the first half of the year.

Without further ado, then I will move on to some legal disclaimers. Today's agenda: as usual, you see myself, I'm CEO of the company, Gunta Šulte, and also member of the management board, and here with me, as usual, is Tatjana Nagle, who is Chief Financial Officer of the company and also member of the management board.

Today, we are happy to share maybe in more details how the first half of the year has been for MADARA Cosmetics, going through key highlights, key numbers, and then also a sneak peek of what's to be expected in the second half of the year. As usual, you will have also link to the full unaudited report of financial statements for the first half of the year in the active link in the presentation.

Without further ado, then I'm happy to share that first half of the year has been really, I would call it, a trajectory changing and success for MADARA, and I'm really, really proud of what the team in combined effort has achieved, and I think this is a testament of all the previous years' commitment to doubling down on e-commerce. We are happy to report double-digit growth, both in our revenue or turnover and then also growth in our efficiency, which has been a relentless work in the background.

I have been already on previous webinars explained and told why company's shifting to e-commerce-first approach, and by this, I don't mean only the e-commerce as MADARA Cosmetics store standalone. By e-commerce all the ecosystem that is surrounding it, meaning MADARA Cosmetics store, meaning marketplaces, meaning third-party or B2B pure players.

We see this is as a fastest evolving segment or channel in the industry where the decision-making is taking place and where the shopping is taking place. I'm very, very happy to announce that we really grew double-digit in e-commerce, and that was the driving force for growth for MADARA in first 6 months.

We saw really tremendous growth in one of our categories, which is haircare. To much extent, it was also driven by one single product that went viral, which is Keratin Silk Mist Spray, and you see it on the bottom right corner of the slides.

This particular product grew multiple times, and this was not an accident, this was basically a relentless work of team finding the angles and products that we can really boost and grow online, and this trend started in TikTok, but it really grew in the only positive way as a, let's say, this positive virus that took over also the other ecosystem of e-commerce, meaning we saw the first positive spillovers on our direct e-commerce store, on marketplaces like Amazon, like TikTok, and then we also saw fantastic spillover for our physical retail, both for MADARA retail stores that we have here in Latvia, but also other physical players across the Europe. It's really the way to go, and with that, I'm also very pleased to inform that we are further continuing commitment of diversifying online channels, and we started already last year of opening the first TikTok shop in United Kingdom.

This is a resource-heavy process and heavy channel, I'm not going to lie, it's not victory from day one. You really have to invest to unlock the channel.

We can't make too many at the same time, given the also tasks that we want to be efficient in how we operate. This is resource and finance heavy.

With that, we have also taken commitment this year to enter another TikTok shop in Germany, but what I'm even more proud to present today is that because of MADARA's Cosmetics team work with TikTok Shop Europe, cuz it's a different than TikTok UK, we have really unlocked for the entire Latvian businesses to sell on TikTok European shops. It's not only Germany, there's TikTok Shop France, there's TikTok Shop Spain, etc., to sell their goods from Latvia.

It was not possible before. You had to open your warehouse or ship goods from that particular country.

Because of team's discussions and work with TikTok EU team, this obstacle is now removed, and ourselves, we are starting operations literally now in September. I think it's, again, a very positive spillover that we are able to contribute to wider e-commerce community in the region.

Another highlight has been really in successful innovations, and here we doubled down on stick format. We launched stick format of our bestselling product, CC Cream.

That product is called CC GO, also having SPF 30, six shades, and we launched it in April, and it has been by far the bestselling innovation of year-to-date. Then also another innovative format in stick format packaging, it's a DEWY STICK, which is caffeine-infused, gel-based serum in the stick formats, again, having a very positive takeoff in our B2B and also e-commerce channels.

Last but not least, even despite I'm saying e-commerce first, B2B is and will be a very important pillar for MADARA, and I think it's also making brand alive in physical retail, and not only physical, cuz by B2B, we also mean online B2B partners, which is not only almost half contributing to our turnover, but also a big-part profit contributor as well. I'm very happy to share that we also grew in most of our markets.

Particularly, I'm very happy to share that Finland is finally back to growth, and we changed beginning of the year operating model in this particular market, which is one of, let's say, most saturated markets for MADARA, the other one is Latvia, and in this high-saturation markets, to be honest, it's very difficult to change the trajectory, cuz it's quite saturated already in terms of our presence. However, despite the fact that we had been declining for multiple years in the market, MADARA Cosmetics team took over e-commerce of that market, of Finnish market, and Transmeri is continuing to operate in physical retail, and we see finally brand being back to growth.

We see multiple times increase in new user acquisition, which, again, will bring positive spillover to physical retail. With that, jumping also on the next subpoint on B2B footprint is that also Transmeri has had major success of adding another major retail chain to MADARA's B2B client list, K-Citymarket.

Not only that, we had two major wins in France. We started cooperation with a major player in professional haircare or specializing in haircare products.

The chain is called Bleu Libellule, but with really extensive physical retail of more than 400 physical outlets in France, and we start with them as one of the few skincare brands that they are introduced within their retail channels. Another partner I'm very proud of is starting cooperation with Monoprix, which is upper-premium retail chain, and we started first half of the year with 30 stores and literally now are adding another 30 stores with MADARA makeup products.

Last but not least, cuz the list is actually longer, here just a few biggest names, we also started an extended cooperation with BENU Pharmacies in this particular case in Netherlands cuz we already have successful partnership in Latvia. With that, I'm giving floor now to Tatjana to tell more about numbers.

Thank you, Gunta. Hello, dear shareholders.

Key numbers from my side, and I'm really happy to share such numbers with you. If we look at the revenue, then we achieved growth of more than 17%, which is €13.36 million, and as you remember, the guidance for the year was plus 10% in revenue, I'm super happy that in the first half of the year we managed to over exceed.

Then if we look at profitability numbers, then there is also a major improvement. If we look at the EBITDA, then it almost doubled in compared to the same period last year, it was €1.51 million.

Also, if we look at pretax profit, then here is also a growth of roughly 300%. Also here is a major improvement in comparison to the first half of the last year, and the EBITDA margin is also improving.

Last year in the first half it was 7%, year was about 10%, then what we see in the first half of this year, then it is 11%, and here I have to stress that it wasn't just a luck. It was really disciplined work to achieve these improvements, and of course, one part is revenue growth, another part is cost discipline.

If you look at the P&L statement, then what you can see is administration costs have decreased. If you look at sales costs, then the growth of sales costs is much lower than the revenue growth.

Yes, overall, a number of transformations were done within the company to improve efficiency. If we look at the markets and maybe a bit more about revenue stream, then overall, the proportions between these big segments—sales in Latvia, sales in the European Union, and outside the European Union—have not changed dramatically.

Latvian market still is the largest market, although we have candidates to become number-one markets as well outside Latvia. Here, one revenue stream and profit stream is MADARA brand.

MADARA grew by 13% combined, and then contract manufacturing segment grew by 50%. Here, we have Selfnamed, MOSSA as the main drivers for growth.

Then if we focus more on MADARA brand, which is and will remain the core of the business, then here what we see is that in Latvia, which is the biggest market, revenue remained stable, and here we have to admit and understand that in Latvia, we are quite mature brand, it's very hard to report big increases. Rather, for Latvia, it's important to remain stable and not to drop.

Here I'm happy that we remain stable and that there are no big negative changes. Then if we look at the markets outside Latvia, then what we saw is that our top markets reported in total plus 20% growth, and these markets account for 45% of our brand turnover.

The markets are Germany, France, Czech Republic, Spain, Finland. Here Gunta already mentioned that we had very nice results in Finland.

Also, the operating model has changed with MADARA team taking over direct e-commerce, we are happy to report that we had plus 20% growth in Finland. Also, there are some outperforming markets.

It is Czech Republic and Slovakia together, as they are operated by one distributor. Also, we are continuing growth pattern in Spain.

Spain grew by 51%. Also, in France we are doing 21% growth.

In Germany, growth this half of the year was weaker, where mainly e-commerce struggled to achieve high growth, the growth is much milder. Also, if we look at global arena, here we are happy to continue our expansion in Saudi Arabia, and also we made market entry in Singapore market.

If we look more closer at channels, and here maybe more about e-commerce, then what we see is that our direct e-commerce share is increasing, there is two percentage point increase in compared to the same period last year. Now e-commerce share is 40% of the revenue, and revenue growth of this segment was 24%.

Here, one channel is our own online store, which grew by 16%, and then another sales channel internally we call them marketplaces, but basically what we have here: Amazon, TikTok Shop, Zalando. All of these combined reported plus 100% growth in turnover.

Again, coming back to Gunta's point, what we see is that we can achieve much faster growth in e-commerce, and it's very important to continue develop these segments. If we look at our own online store and how we did there, and there is of course more metrics compared to other channels, basically, there are some markets which are continuing to outperform, I'm super happy to see that we continue growth trend in Spain.

Also what is important to note and where we see a bigger shift is in our online market, the proportion of new customers and repeated customers. There is seven percentage point increase of new customers, and again, referring back to Gunta's point on e-com strategy and working on new client acquisition and finding new angles and unlocking the correct ways to approach new customers, where this season it happened to be our Keratin Silk Mist, it really helped to achieve increase in new customer growth, super happy for that.

Yes, we can go to products.

Thank you. Then I will take over from here, more explaining in detail what happened with our product categories.

Overall, alongside with the innovations I already mentioned, we launched in total 10 new products in MADARA portfolio in the first half of the year, which contributed to more than half a million in turnover. Jumping on the picture to the right, I think we have had some really more visible shifts in product category split than if compared to previous reports.

We really see two categories accelerating, and this is also visible in how they're, let's say, taking bigger share within our portfolio, which I am very pleased about, because the more we diversify in terms of internal portfolio performance, the better it is for the company. We see really substantial growth in share for haircare products by 6 percentage points.

Again, this is going back to the starting from one product which gave positive spillover for the entire haircare category. Another category which continued acceleration was makeup, and this is a lot thanks to CC GO launch in stick format.

Respectively, cuz the pie is 100%, then other categories which grew less, then obviously their share decreased, which is logical. What I want to emphasize is that we see really market trend and also growing demand in stick format products, both skincare, makeup, sun care, and this is why company has made prepayment and is bringing in in-house our own stick or more advanced stick-filling machine.

We already have one, but it is rather, let's say, specific and limited in terms of output. We are upgrading ourselves and bringing higher pace and higher versatility filling machine from Germany, which is arriving second half of the year, and team is really excited that we can really then increase the playground in stick formats.

Like I mentioned, it's not only, let's say, the visible products that were showed, but really the opportunities are much wider, and we can also increase the production output for our mascaras, concealers with this filling machine. What I'm also very honored to see and humbled to see is really a global-level unpaid, unasked recognition from really a global stage.

We have had these mentions already in the past, and I was also very honored to see our team's efforts recognized by one of highest-paid supermodels in the world, and she was mentioning MADARA Skin Glow Foundation, and we were presented in multiple Vogue channels, Vogue France channels, which is one of the most prominent Vogues in the globe. Again, this came as a very positive surprise for the team, cuz it was not aimed, or it was not targeted, it came entirely organic, and really, I think, re-emphasized that product comes first, product quality comes first, and product functionality comes first.

Then as a, let's say, positive additional point that we bring is that we are clean and certified, but really that a product performance has to be there ultimately, and this is what I think we see both in positive numbers, in growth of revenue, new customer acquisition, but we also see this in more, let's say, soft organic mentions that we get from world-class mentions. Then maybe just to show what were other innovations or renovations that we did in the first half of the year: so another major trend in skincare is exosomes, we launched Exosome & Peptide Rejuvenating Serum.

Then a massive project for the team was actually rebrand for one of the first products that brand had launched, which is Deep Moisture line. Deep Moisture line got even better formula, more relevant formula for nowadays consumer, better packaging, more recyclable packaging, the entire line was relaunched.

Already mentioned innovations in stick formats: so six shades of CC GO, and then also DEWY STICK, and, yeah, the last two were definitely the stars of this first half of the year. Then just a quick sneak peek of what's to be expected for the upcoming second half of the year: then we are not changing the course, it's further acceleration of our e-commerce channels.

I emphasize in multiple form that it's really like I mentioned, it's both working on new user acquisition for our direct e-commerce shop, but it's also diversifying marketplaces. We are starting operations in Germany in TikTok Shop, literally now in September.

With that, we are also starting different platforms for affiliate marketing that should and will bring new user acquisition for our direct e-commerce. Then we are further bringing in new products.

For the second half of the year, the focus will be on lip care, eyelash treatment, and another core line relaunch, which will be SOS skincare line. Then what is happening in the background or behind the curtains that maybe is not visible to the outside world, but which is fundamentally important that we maintain or even further improve our operational efficiency is process automations.

This is happening on multiple frontiers. Mainly e-commerce, planning, and manufacturing is covered this year.

Really working on full-scale automation in terms of how the process and data flows, and also bringing AI layers where relevant. With that, we are maintaining our commitment of growing at least 10% for this year, equaling to at least €25.5 million and delivering efficient growth and sustainably efficient growth, maintaining double-digit EBITDA margin, which we believe is a good prerequisite for further future growth.

With that, thank you very much. This is the end of the presentation.

So:

Thank you. Here, I have to be very, very careful not to give any external commitments and numbers, but I think definitely this course that we have started of, first of all, becoming dominant e-com player, and I think this is very important for brand as such, cuz this is where consumers are leaning towards, it's further growing and doubling down on e-commerce channels, is it our own or is it third party, will be very important.

It's also very important that we continue finding markets that deliver growth, like Tatjana mentioned, outside this saturated markets. I really expect that in couple of years' times, we already reach saturation in some other key European markets and then discover new ones.

Having said that, I think ultimately for us, it's important that we deliver excellent product, and this is where team will continue to invest in the back office. It's really product excellence that we deliver functionally amazing formulations and products, and on top we do it in a clean or more sustainable way.

E-commerce growth, further geographical diversification, and excellent product.

I can take that as well. We already historically had had some marginal cases where we had tried it with contract manufacturing.

One was for—Tatjana, correct me if I'm wrong, but I think it was for eye patches, the mask format that you put under your eyes. Now we are actually co-manufacturing with Faber-Castell our eyebrow and eye pencils.

This is the only product that is manufactured with third party. Having said that, going through these discussions and experiences with third-party manufacturers, we really at this point don't see much of added value, speed, or cost benefit to go outside, and we really believe our R&D capabilities are really world class in what we do.

I can't be that arrogant to say never in the future, but I don't see it as a strategic shift in the nearest years.

Plenty. To be honest, I'm really, really proud that Latvia has had such a success case in cosmetics industry, cuz to be honest, it's not easy to achieve.

What and how we are treating, when discussing about Prime Prometics and team, it's really a exception that we all look up to. We really have to understand it's completely different business operating model.

It's almost mono-market, it's purely e-commerce, it's fully outsourced manufacturing, and it's really unfair to compare apples to apples. However, what we can take and I think it's fantastic lesson from Prime Prometics is really how they do and treat their content and how they can scale their content.

I think this is one of the learning lessons that they have mastered it beyond any other player here in Latvia, how to really scale in content and user acquisition. So...

Thank you.