Good morning, and welcome to MÁDARA Cosmetics Investor Webinar. We will start with company's presentation and continue with a live Q&A session. To join the discussion, please submit your questions through the Q&A window below the presentation. For your convenience, we will be recording this session, and the replay will be available shortly after the call. Let me now introduce you to our hosts, the member of the management board and CEO, Gunta Šulte, and member of the management board and CFO, Tatjana Nagle. The floor is yours. Good morning, everybody, or good day. Welcome to the MÁDARA Investor Webinar, where we are going to discuss first half of 2024 results. The plan for today. I am going to skip the disclaimer slides. You can receive them afterwards. The plan for today is going through highlights and top events of first semester of this year. We will deep dive into key financial indicators and results and other important highlights that happened through the first six months of the company and also sneak peek in what is to come. Then, since we received quite a few of questions upfront to the webinar, we are going to also go into questions and answers session at the end of the presentation. As always, full management report, you can find on our website on the investor relations part. Today, you have a pleasure receiving presentation from myself, I am CEO of the company, Gunta Šulte, and Tatjana Nagle, who is our CFO. Then yeah, I think if to really cover the first half of this year, then I think the most important is that we are happy to report we delivered stable growth of 9%, and that we are happy about. We grew consistently across our focus export markets, France, Germany, the Netherlands, et cetera. That gave extra confidence that we are on the right path and the path of growth. Keeping the growth momentum in mind, I think even more important, the first half of the year has been really about refocusing on our core activity, which is growing MÁDARA brand. And with that happened, two, I would say, very important and for business crucial carve-outs. We sold MOSSA brand, and we sold SELFNAMED, which is print-on-demand platform under the legal name of Cosmetics Nord. I fundamentally believe that both of the transactions will ensure that our team can even more focus, in the future, on growing MÁDARA brand. At the same time, I think this was truly a win-win scenario in both of the cases. First of all, we are going to keep future revenue-generating streams in-house. So with both of the transactions, we secured product development and product supply or production agreements. And what is, I think, same level important that the new owners of both entities, both of MOSSA and SELFNAMED, are highly motivated to drive future growth of the both MOSSA and SELFNAMED. What is important for me, and for the MÁDARA team overall is that both of these entities, like I mentioned, they are not only future revenue-generating streams, but they are accelerated growth, future revenue-generating streams. Like I said, I truly believe this was a win-win. Going back to other highlights of what happened within the business, I'm very happy and proud to report that the innovation of last year, which was Botanic Retinol Serum that we launched in August last year, it has really hit to the top three of our portfolio. Even more so in France, Germany, the Netherlands, this is number 1 sold SKU across our portfolio. And actually, two months ago, we won in the Netherlands Dutch Beauty Award, in the category of green skincare as the best innovation of the year. It has been truly a blast. I'm going to sneak peek what's to come after the success of Botanic Retinol. Also, another testament that we are on the right path and we belong in the industry that we play in, is that we landed our first flagship launch with Marionnaud. For those who might not know, Marionnaud is one of major specialized beauty retail chains in Europe. Just to give a scale, overall, they have more than 1,000 outlets across Europe. The flagship that we entered, it is in France, and not to be confused, this is one store at the, let's say, one of the most prominent ones. Just to say that we are starting to have these conversations with major retailers who fit our strategy and in whose strategy MÁDARA fits, I'm happy about that. Also we landed agreement with Boozt.com, which is an online global retailer. We heavily focused on bringing or investing into brand awareness. This year in April, we launched a global brand campaign. We call it internally SkinTints, but it was all around our expertise in tinted products. Is it foundations? Is it concealers? Tinted serums, or is it tinted moisturizers, or is it pressed powders? That was really where we focused on, in also our focus markets of Germany, France, Latvia, Finland, in the rest of the markets as well. I'm also happy to say that we saw continuous double-digit growth of our tinted category. Last but not least, another proud moment for MÁDARA team. With the help of Norway Grants, we set up a production facility that allows us to enter pressed powder production. We launched first 3 shades of pressed powders. This is a tricky product to do technically, also this is talc-free and titanium dioxide-free. Again, I'm happy to report here that since of launch, which seems like ages ago, but I think it was March, Tatjana, correct me, we have managed to be sold out for three times already. It really exceeded our expectations, and again, it just proves that the traction is there for clean, COSMOS-certified products and demand is there. That's on the high notes. If focusing in terms of what innovations were launched, I touched upon some already. Continuing the success of retinal, alternative retinal, and I think here we prove that we can be on the same arena with conventional brands and with conventional ingredients. Sorry, not brands, but conventional ingredients like retinal, those big names of the industry. We launched another success in March, that's alternative to niacinamide, botanic niacinamide. That's a serum. We didn't invest into this product as much as we did in retinal, that's more to come, but already we saw a really nice pickup from the first days of the launch. Like I mentioned, the first half of the year has been focused on tinted products. We added 12 new shades to our SKINONYM semi-matte foundation, altogether now having 18 shade range, which again gives us right to play in the global arena of foundations. More tactical launches, we had a portfolio cleanup actions, we joined two omega products into one concentrate of omega power, it houses 3, 6, 9. I'm not going to repeat on soft mineral powder, that we launched in three shades. I think another fun route that we took with products, just testing our agility, also seeing if and how fast we can adopt industry trends. We introduced under our portfolio management, the so-called limited products or limited line for the sole purpose of seeing if there is a trend or a quick idea that we want to put on the market and test without massive launch or resources. Put it in the market, see if it works. If it doesn't, we pull it out after six months. If it works, we keep it. Under this concept, literally within two, three months of time, we launched two products. One was After Sun Lotion, and that is very much seasonal product. You see it on the top right corner. The other product, which I truly believe is here to stay, is Scalp Peel Serum. Again, it picked up really nicely, we saw a traction for specialized scalp treatment products. We also continued improving our set offering, which is allowing to play us around the Christmas or gifting momentum. We added two sets to our current range. That's on the highlights, going swiftly through, I'm going to give floor to Tatjana, who is going to cover more in detail of our financial performance. Thank you, Gunta. Hello, dear shareholders. Yes, speaking of financial results, what is important is to take into account MOSSA and SELFNAMED deals, what Gunta has told you about. We need to understand these are one-time deals, and here we are showing our EBITDA profit, excluding these deals as I said, they are just one time. If we start from the top, our revenue was EUR 11.21 million, which is +9% versus first half of the year last year. Here, if we compare apples to apples and how the very growth would look like if the same business model was present. Last year, in the first half, meaning if MOSSA was at the same price level as it was this year, actually our revenue growth will be over 10%. It was more than 11%. This is just to understand that the deal affected, in short term, also our revenue growth as we switched to contract manufacturing model, and 2 months we worked with lower prices. Regarding profitability, again, here, our margins, what you see the margins adjusted. In the first half of the year, we incurred the costs both for MOSSA and SELFNAMED sale, and also we received profit from MOSSA sale. In the amount of EUR 4 million, or for those who have seen financial statements, these EUR 4 million are included in our P&L. The SELFNAMED deal took place on the 1st of July. Wherever you're from, this sale is not included in the first half results. We will see them in half two results. Taking this into account, our EBITDA was EUR 1.27 million. Our EBITDA margin was 11%, meaning it was 6 percentage points lower when it was a year ago. Our pre-tax profit was EUR 740,000, which is less by 43%. To understand, first of all, SELFNAMED was a part of the group in the first half of the year, and as the company is actively investing in people, in marketing, et cetera, these results, of course, diluted the overall group results. If we look purely on MÁDARA Cosmetics, we took a deliberate step during budgeting process, because what is important for us is to maintain growth. There are 2 activities which we did, and where we spent more money. We can go to the next slide. Actually, why EBITDA margin is higher, is that we invested purposefully in 2 key drivers for revenue growth. First one is investing in brand awareness activities. It was over half million EUR, and it included SkinTints brand from May, what Monté already mentioned. Here, what we need to understand that brand awareness activity is to attract new customers and drive growth in the midterm and long term. We did not expect immediate effect, although, as Monté mentioned, we saw in SkinTints category already during the campaign that the revenue was up for the segment 15%, which I think is a very positive side effect. Again, the purpose of brand activity was to increase awareness and to reach out to new potential customers who would eventually convert in the next periods. Second part, which is also a very important and strategic decision, which was already included in the budget, was to strengthen our sales and marketing team who are in charge of driving growth of the company. Just to name a few positions and talents whom we attracted. There is a number of sales representatives, locals in Germany and France. Secondly, there is very good professional in marketplaces. One of the marketplaces this person is working with is Amazon, where we see huge market potential. Also, we added to our team, Chief Marketing Officer with a very good background in digital marketing. I think we have really boosted our team competence with these people. Of course, there are some other positions, both in digital marketing, in sales, in sales support, just to understand. Yes, again, from my side, I think that these results are good. They resemble our budgeted margin and budgeted EBITDA as such, and these are important shorter, larger investments to drive growth in the future. We can go to the next slide. Some key statistics from me regarding markets. If we look at the split, what we see is the share of wetware market has decreased by four percentage points, sales in European Union have increased by the share, only the share, not the revenue itself, by three percentage points. Also share of revenue outside European Union has also increased. It is a result of our strategy to focus on export markets. What I'm really proud of is that at the moment, our two largest markets, with a big confidence, is Germany and France. They both grew in B2B segment double digit. It's +11% and +15%. Also we have taken over distribution function in Estonia, and we also implemented some brand awareness activities already in the first half of the year. We saw very positive traction in the medium. If we look at Product categories, here is also one quite a big shift, I would say, and it is in our anti-age category. The share of anti-age has increased by five percentage points, and it is also in line with the company's strategy to focus on face care products and on tinting products. Here we have to say a big thank you to our Retinol Alternative Serum. It is a part of the success, and it has contributed to several of these percentage points. Second segment is makeup. As Gunta already mentioned, that tinting products are important for us. We are adding new shades. We are adding new products into makeup category. Here also, we saw that makeup was growing very rapidly, and given its lower share in the portfolio, of course, it can now not outgrow other segments as fast. Overall, we see that it is constantly growing, and in the first half of this year, it increased by one percentage point. The last segment, how we look at sales as B2B versus direct e-commerce. When we think from diversification perspective, it is very important for us to have different sales channels. What we experienced in the first half of the year was that other sales channels were growing faster than direct e-commerce. The share of direct e-commerce revenue decreased by four percentage points. Nonetheless, what we see and what we are constantly working on is attracting new customers. A good thing is that we attracted new customers, and the share of new customers increased by five percentage points compared to the same period last year, which will help us to drive our growth in the next periods as well. Now I give the floor back to Gunta. Thank you, Tatjana. Here is the promised sneak peek on what's to come soon. I know. I'm very confident about the innovation pipeline that is ahead of us. Actually, as we speak, we are hitting shelves with, I think, few really strong product launches. First one being, or first, probably to say first men skincare line. It's under label HIS, and you see it on the top left corner. These are three products, facial moisturizer, eye cream, and aftershave lotion. We already saw first sold out all the products being taken by our B2B, and it's hitting e-commerce as well. We really are looking forward to how the product and potentially more products under this line develop. Another important innovation following, like I mentioned, the success of retinol. I think here it's the larger point to make that MÁDARA has the muscle and ability to really deliver products, formulas that are competing with conventional synthetic products, and it's appreciated by industry. I think here under the product launch, we are building so much more. It's reassurance of company's R&D potential. We're launching another three products under alternative retinol. Those will be day and night moisturizers or creams, and eye serum. Yeah, these are again hitting shelves as we speak. We are also expanding our pressed powder offering. The first trio that we launched were powders, setting powders. Now we are entering into blushes. That's very exciting pipeline, but it's actually just a few of launches that I mentioned. There are actually more under. They're more tactical. These are strategic ones. Another important point is that at this point, I can't disclose, but I think Marionnaud flagship was one of the testaments that we are starting conversations with future expansion plans across Europe. We are under negotiations with a few of major retailers in all of the strategic markets. I'm looking forward to delivering some great news soon. Due to the aforementioned deals of MOSSA and SELFNAMED carve-out that happened in the first half of the year, just to be fair to the team and numbers, we are adjusting because we are now not having these entities in consolidated reports as of second half. We are adjusting the yearly target to EUR 21.4 million. Tatjana, do you want to comment anything on that? I think, yes, here what is important to understand that, of course, taking out some part of the business has a short-term effect, although as Gunta already explained that we really see a lot of benefits- Here, just not to lie to us, to shareholders, to employees, we adjusted the baseline so that, again, we compare apples to apples. Here, our promise still remains to deliver 10% revenue growth, at least for this year. This is the goal we are striving to achieve. Thank you. That's it. Thank you very much for listening. We are ready to tackle the questions. Yes, let's continue with the Q&A. Participants, to join the discussion, use the Q&A window that you see below the video. We have received quite a few questions prior to the call. We have arranged them in blocks according to the topics, and we'll be covering each block separately. The first question, what are the revenue and profit forecasts for the upcoming years? I'm going to tackle the first block of the questions, which will be more around the growth. I can't, and we have never, in the course of MÁDARA, laid out complete percentage growth, and profit targets. What I will say is that definitely ambition and plan for the team, and the budgeting process for this, and also next years to come, is that we have to grow faster than the industry. While doing that, we also have to deliver a sustainable, profitable growth, meaning that the growth that is attractive to our shareholders, but potential investors. If I look at any of those indicators, then, of course, growth is the most important one for me, and it's to grow ahead of the industry, and I think we have every potential to do that. Just to benchmark for those maybe who are not that into the industry numbers, it very much differs by reports than the ones of McKinsey, for example, forecasted that industry is going to grow 6%-8% level range, definitely we want to beat that. Thank you. What innovative products are planned for release in the near future? I hope I tackled this with my last slide. Like I mentioned, we are continuing innovations in putting alternatives to conventional products, further innovations into pressed powders, skincare products like HIS Line, also tactical ones that I didn't show in the presentation. We are also launching eye and eyebrow pencils, which is going to be new one and actually the first whole man products. Thank you. Talking about the global expansion, what is the company's strategy for expanding its market share internationally in Lithuania, Poland, and other markets? Yeah. If you look at the market's expansion, we work by the model of addressing two buckets, I would say. One we call it strategic markets, where we are in most of them except Finland, where we have historically very strong cooperation with Transmeri. Overall, in all of these strategic markets, we do have our direct teams, and hence, as Tanya mentioned, we are also investing into those markets in 360 model, meaning in terms of brand building, in terms of team, if needed, local team presence, and in France and Germany, that's exactly the case, where we actually need local team presence. Yeah. Those are strategic markets, which we will continue investing and growing. Like I mentioned, Germany, France. We have another bucket which we call seeding, and here we do every year, a scanning of our current results in those seeding markets, industry growth, competition, et cetera. We pick and select strategically, of course, which are those seeding markets where we are not big enough, but where we want to be big enough in the future. Here, it's different strategy market by market. Some of it could be very much only e-com focused, or direct e-com focused. Some of them could be business to business or basically retail-focused. Some of it could be holistic approached. Just to name a few, it's Sweden, Estonia, like Tanya just mentioned previously. We took over Estonia's distribution, and we see really high double-digit growth this year. It's the Netherlands, where we see there is a big potential in terms of our direct e-commerce. That's also U.S., where we are doing our first explorations. It's not only markets. It's also, if you talk about global expansion, that's also channel-wise, which are globally important. For example, marketplaces like TikTok and Amazon. Again, here we took a deliberate strategic move to hire a person with extensive experience in setting up successfully businesses in direct marketplaces. TikTok is again on the seeding buckets where we are working. How does the company assess its key competitors, and what is being done to enhance competitiveness? Competition is tricky bit. I think especially in industry where we are at. Just to give maybe a step back. My previous experience was in the industry where basically you could name your competition on one hand, fingers, count on one hand. We are in the industry with MÁDARA, where basically competition is endless. Everywhere you look, there is new brands coming up, there are new products coming up. I think my approach to competition, working with our team and working with MÁDARA brand is, competition is a good benchmarking when you have to make certain decisions, but it shouldn't be your driving force for deciding on strategy. It's more whether you're reactive or proactive towards competition. I think we choose the last one. We are proactive, basically we go and do innovations or entry where we believe it makes sense for MÁDARA. Of course, we would benchmark. Okay, what's the competition there? Believe me, competition is very much different if it's country from country or even channel by channel. France pharmacies, you would have brands like Delai or Biott, or then we move to, I don't know, same exploring the Sweden or for same story, like for example, U.S., you have brands like ILIA Beauty or Paula's Choice or Drunk Elephant. It's very different. It's very different by the segment you are playing. We do benchmark, but it's not a driving force in our decision-making. I will frame it like that. Thank you. What strategies are being used to increase brand awareness for MÁDARA in key markets? We fundamentally believe that brand is our strongest asset, alongside with formulas. I think these are two fundamental elements why MÁDARA is successful. Continuing investment into the brand, which is expensive investment. It's not short-term, quick payback investment, but I believe it's essential for MÁDARA to be a brand that stays not only for 18 years, as it has, but to continue for another 18 or 36 or we can continue counting. Brand investment is fundamental. When we do brand investment activities, we really are conscious about how deep we can go and in which markets we can do, because, like I mentioned, it is an expensive investment and we have to be mindful that we can't go blast everywhere. This year, we consciously were chosen onto brand-building activities in Estonia, Germany, France, and Latvia. For sure these strategic markets are going to remain in the future. Like I mentioned, there's the other bucket of seeding markets and Estonia is one example of the seeding bucket where we said, "Okay, we are going into this market, 360 approach." We drive our own direct e-commerce. We go in with new B2B customers, we also do brand-building activities. Are there any plans to intensify collaborations with influencers or other brands? Short answer, yes. A bit longer answer is that we actually, two weeks ago, a person started who will exactly do that. We will have more structured way and approach towards relationship building with our fan base community on social media through collaborations and through influencers, through key opinion leaders, through journalists. That will be I wouldn't say that it hasn't been structured, it has been so far, but I think taking it a step further, introducing those contacts into CRM, doing more regular follow-ups and community building. Yes. What is the consumer sentiment on your major markets? Are discounts at average level or you should make more discounts? First of all, I would say that we see a solid growth in our strategic markets, export markets, and across most of the markets. I would say, there is a positive sentiment as I see from our innovation take-off, I believe we are on the right path and we are doing the right thing. I'm having confidence in the growth numbers that we see, I'm having confidence in the innovations that we launch that they are responding well to. Going to the second part of the question about the discounts, it has been ping-pong here a bit, what I've seen over the course of my year being now with the company is that discounts or price promotion, it's a must-have tool if you want to play in the industry. Here again it comes more towards what specific strategy you have for the market or for the channel. Here I think we are taking more deliberate steps into addressing very specific strategy for each of the markets. For example, if France, we see there is a much better traction of B2B or retail growth, retail discounts is something we can't really impact. That's the solely decision of the third party. We discussed with the team, okay, we are not going to intervene much with our direct e-commerce. We see markets like, for example, the Netherlands, where there's very good potential on our direct e-commerce. Here the name of the game is that you have to be on some kind of an offering. Offering must look very different. It can be a discount, it can be a voucher, it can be an email form with a private offer. It's very different. Yeah. Thank you. The next question consists of two sub-questions. How does the company plan to improve the liquidity of its shares on the stock market? What are your steps to become more attractive to shareholders? I think that here the key word is growth, and what we can do and are doing as a company are striving to achieve growth. Nothing speaks better to shareholders than the results. What we were discussing a lot during today's webinar is how we are structuring the team to achieve growth, what are the markets where we see potential or growth. Yes, that's the answer. Thank you. The next block of questions is on the liquidity topic, and I'll read all three of them together. Are there any plans to increase the public float or conduct a secondary offering to enhance trading activity? What steps are being taken to attract more institutional investors and broaden the shareholder base? Does the company consider a possibility of listing in additional stock exchanges to improve liquidity? Yes. At the moment, there is no plan for attracting more capital because the company itself has enough financial resource to ensure profitable growth. I want to stress the word profitable. It is important for us to deliver profit each year, and at the moment, we see that the amount of money we have on our bank accounts is enough for us to work profitable and to go into opportunities which we see and what we believe in. At the moment, we don't see the need to attract more capital. Thank you. How does the company measure and assess shareholder satisfaction? This is a really good question. There is no specific measure or KPI at the moment. What we look at is, of course, share price, liquidity, and also we are very open to communication. We have our email published, I think, everywhere on Nasdaq and on our investors webpage. We are really happy to receive feedback, to receive questions. If you have any ideas or suggestions how you see we should tackle this question, please reach out to us. All right. Thank you. Continuing on the same topic, shareholder engagement. Again, three sub-questions that I'll read in this block. What are the current strategies to improve communication and transparency with shareholders? How does the company ensure that the interests of minority shareholders are taken into account in strategic decisions? Are there any plans to introduce or improve shareholder engagement initiatives, such as regular meetings or investor days? Yes. What we do at the moment is, of course, we do publish regularly our financial reports with the management comments. We have unaudited two times a year. We have audited financial statement, which is, by the way, audited by Big 4 company audit. We have these two webinars a year where we talk about results, where we answer questions. As I mentioned before, we are open to suggestions. Drop us an email at ir@madaracosmetics.com. You can find this email on Nasdaq platform and also on our investor webpage. Regarding interest of minority shareholders, here perhaps a bit of comment on company structure. We have management board, and then we have supervisory board, and we have independent supervisory board who are representing shareholders. We have policy in place. There are decisions what should be brought to shareholder meetings to decide. There are questions what we go to supervisory board, and they accept, they take decisions. There is a policy in place how decisions are made in the company, of course, major ones are always consulted with our supervisory board. Then the biggest ones are brought to shareholder meetings. Of course, each shareholder, again, can comment and, yes, give an opinion on the matter. Thank you. Three questions on the shareholders' value and dividends. What is the company's approach to balancing shareholder returns, such as dividends or buybacks, with reinvestment into the business for growth? Are there plans to pay dividends in the coming years? If not, what projects require profit reinvestment? The third question: What criteria are used when deciding between dividend payments or reinvesting profits? Yes. Here, going back to profitable growth, what we see so far is that we had enough capital for our investment activities. We do pay regular dividends. Also, if you look over the years, the dividend per share has increased. Yes, so far, paying out dividends has not impeded the needed investment in company's development. So far, there was no situation where we needed to decide whether to pay out dividends or invest in the company's long-term growth. We always did both. I don't like giving promises, but I think we see here a stable trend, which we would like to continue, but of course, as it's always a very important decision of the company, whether to pay out dividends or to reinvest the money. I think it's about the balance, it's about finding the best attribution of the money, whether to invest in the company or if there are no opportunities or there is spare money to distribute it in the form of dividends. Of course, it is important for us as a management team to have some safety net. The company still has quite a good reserve of cash, which means if we see a very good opportunity, then we don't have to look for the money. We can act quite rapidly, and it is not a problem for us. I hope I answered. Thank you. We have one question left. Participants, if you have any more questions in mind, this is the right moment to type them in the Q&A. Meanwhile, let's continue with the last question that we have received. What measures are being taken to ensure transparency and accountability of management to shareholders? Yes. Here, first of all, we have our financial reports, which are audited by, as I mentioned, Big 4 company, Deloitte. Each year they do full audit. There are some notes they publish on its annual financial audit reports. Of course, all significant information is disclosed. Second of all decisions that by law should be decided by the shareholders are discussed and voted for during shareholder meeting. This is an important part, of course, as I already mentioned, we have independent supervisory board, and we have policy in place which decisions should be taken by the supervisory board and what are the capabilities of the management board. Thank you. All questions have been answered. Thank you for tuning in today. It was a pleasure to be with you. Thank you. Thank you. Have a great day.