Interim report
Page 1
MARUPE, 2026 MANAGEMENT REPORT OF MADARA COSMETICS AS ON THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR 6 MONTHS OF 2026 REPORTING PERIOD
Page 2
TABLE OF CONTENTS GENERAL INFORMATION ABOUT THE GROUP 5 MESSAGE FROM THE CEO 6-7 THE MOST SIGNIFICANT EVENTS 8-11 SALES 12-13 E-COMMERCE INDICATORS 14-15 FINANCIAL INDICATORS 16-17 UNAUDITED CONSOLIDATED FINANCIAL REPORT Consolidated income statement 19 Consolidated balance sheet 20-21 Consolidated cash flow statement 22 Consolidated statement of changes in equity 23 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 24-31
Page 3
5 GENERAL INFORMATION ABOUT THE GROUP Name of the Group MADARA Cosmetics AS Parent Company MADARA Cosmetics AS Parent Company’s registration number No 40003844254 Registration place and date Riga, 28 July 2006 Parent Company’s legal address Zeltinu Street 131, Marupe, LV-2167, Latvia Shareholders (above 5%) Uldis Iltners – owns 23.83% of shares Lote Tisenkopfa - Iltnere – owns 23.67% of shares Oy Transmeri Group Ab – owns 22.84% of shares Liene Drāzniece – owns 6.75% of shares Zane Tamane – owns 6.18% of shares Type of operation and NACE code Manufacture of perfumes and toilet preparations 20.42 Wholesale of perfume and cosmetics 46.45 Retail sale of cosmetic and toilet articles 47.75 Retail sale via mail order houses or via Internet 47.91 The board members of the Parent Company Lote Tisenkopfa - Iltnere – Chairman of the Board Uldis Iltners – Member of the Board Tatjana Nagle – Member of the Board Gunta Šulte – Member of the Board. Council of the Parent Company Anna Ramata-Stunda – Chairman of the Council Edgars Pētersons – Deputy Chairman of the Council Jenni Juhola – Member of the Council from 19.06.2026 Reporting period 01.01.2026 until 30.06.2026 Previous reporting period 01.01.2025 until 30.06.2025 Subsidiaries of the Group Madara Retail SIA, reg. No 40103212103 – 100%, Latvia MADARA Cosmetics Inc., reg. No 37-2087771 – 100%, the USA Madara Cosmetics LTD, reg. No 15967488 – 100%, the UK Madara Cosmetics GmbH, reg. No HRB 177689 – 100%, Germany Brand Lab Cosmetics SIA, reg. No 40203612673 – 100%, Latvia
Page 4
76 NODAĻA NODAĻA GUNTA ŠULTE, CEO OF MADARA COSMETICS AS DEAR SHAREHOLDERS, THE FIRST HALF OF 2026 SHOWED WHAT FOCUS AND CONSISTENCY CAN DELIVER. GROUP REVENUE GREW BY MORE THAN 17%, AND WE EFFECTIVELY DOUBLED OUR EBITDA COMPARED TO THE SAME PERIOD LAST YEAR. E-COMMERCE REMAINS THE CORNERSTONE OF OUR STRATEGY FOR FUTURE GROWTH. THE CHANNEL NOW REPRESENTS 40% OF REVENUE, WITH AMAZON, TIKTOK AND ZALANDO COMBINED MORE THAN DOUBLING YEAR-ON-YEAR. THIS IS WHERE WE SEE THE CLEAREST PATH TO SCALE, AND WHERE WE CONTINUE TO INVEST FIRST. FOLLOWING THE SUCCESSFUL TRANSITION TO SHOPIFY IN THE SECOND HALF OF LAST YEAR, WE ARE NOW EFFECTIVELY LEVERAGING THE PLATFORM TO SUPPORT OUR E-COMMERCE GROWTH AND FURTHER ENHANCE THE CUSTOMER EXPERIENCE. ONE PRODUCT TOLD MUCH OF OUR STORY THIS HALF: MICRO-KERATIN SILK HAIR MIST. WHAT STARTED AS AN EARLY DEMAND SIGNAL IN THE UK BECAME OUR BEST-SELLING PRODUCT BY VOLUME, WITH TURNOVER UP NINE TIMES, UPLIFTING THE ENTIRE HAIR CARE CATEGORY WITH POSITIVE SPILLOVER ACROSS ALL CHANNELS AND MULTIPLE MARKETS. WE ALSO CONTINUED TO WIDEN OUR B2B FOOTPRINT – FROM BLEU LIBELLULE AND MONOPRIX IN FRANCE TO K-CITYMARKET IN FINLAND, BENU PHARMACIES IN THE NETHERLANDS, AND ALZA IN CZECHIA – ALONGSIDE FURTHER EXPANSION WITH AL-DAWAA IN SAUDI ARABIA AND OUR FIRST STEPS INTO SINGAPORE. CONTRACT MANUFACTURING GREW BY 50% AND NOW MAKES UP 18% OF OUR PORTFOLIO, DRIVEN BY SUCCESSFUL PERFORMANCE OF MOSSA AND SELFNAMED, CONTINUING STRONG CONTRACT MANUFACTURING PARTNERSHIPS WITH BOTH ENTITIES AFTER DIVESTING IN 2024. WE REMAIN CONFIDENT IN OUR FULL-YEAR TARGET OF AT LEAST EUR 25.54 MILLION IN REVENUE AND A DOUBLE-DIGIT EBITDA MARGIN.
Page 5
98 THE MOST SIGNIFICANT EVENTS THE MOST SIGNIFICANT EVENTS PRODUCT INNOVATIONS In the first half of this year, the brand continued its product innovation process, offering new product formulas for both the MÁDARA brand and the contract manufacturing portfolios. Ten new MÁDARA products were launched in the first half of 2026, including a rejuvenating serum with exosomes and peptides, an innovative DEWY moisturising serum stick with caffeine, and a tone- correcting CC GO stick with ceramides in six shades. Particularly noteworthy is the DEWY moisturising serum stick, which melts into a light serum when applied to the skin. The newly launched products generated revenue of approximately EUR 600 thousand in the first half of 2026. OUR PRODUCTS ARE RECOGNISED In the first half of 2026, MÁDARA received significant international recognition when Dutch supermodel Doutzen Kroes featured the brand’s Skin Equal Soft Glow Foundation SPF20 in her beauty routine for Vogue France. Presented to Vogue’s multimillion-strong audience without any paid partnership, the endorsement demonstrated the product’s strong reputation among globally recognised fashion and beauty professionals. The recognition further strengthened MÁDARA’s international visibility and reflected the company’s ability to develop high-performing skincare and make-up hybrid products that combine natural-looking results, sun protection and long-term skincare benefits. Another notable recognition in the first half of the year came from ELLE, which featured Glycolic Glow Toner among the new beauty products to watch. Age Pro Hydra Firm Hyaluron Jelly and 5% Peel AHA Brightening Peel Mask were named winners of the prestigious Victoire de la Beauté Responsable, one of France’s leading beauty awards, following extensive blind consumer testing. The recognition highlights both products’ proven effectiveness and strong environmental and ethical credentials, reinforcing MÁDARA’s positioning as a high-performance, sustainability-driven skincare brand. In the first half of the year, MÁDARA also received multiple awards in Estonia. Age Pro Intense Wrinkle Serum was named one of the beauty favourites by Anne & Stiil, Estonia’s leading women’s fashion magazine. Retinol Alternative Serum and HIS Face Cream each received the “Buduaar Favourite” award. HAIR, HAIR, HAIR… The Micro-Keratin hair mist attracted considerable attention in the first half of 2026. After early demand signals were identified in the United Kingdom in late 2025, the team rapidly expanded the product’s presence beyond the TikTok Shop and rolled out sales campaigns in other markets. This targeted scaling turned the initial interest into sustained demand. The product’s revenue grew ninefold, making it the best-selling product by unit volume in the first half of 2026. Overall, revenue in the hair care category across MÁDARA’s online channels increased significantly – roughly 2.5 times in the brand’s own online store and 3 times on other online marketplaces. A positive effect was also observed in physical retail channels. MARKETS In the first half of 2026, MÁDARA continued to expand its presence across various sales channels. In Latvia, the full 25-product assortment was made available in 86 Drogas stores, while the most popular products were made available in all 101 stores. In Finland, a partnership with K-Citymarket was launched. In France, the 15 most in-demand skincare products reached 245 Bleu Libellule stores – one of the country’s leading professional cosmetics chains. The full make-up range became available in more than 30 stores of the premium retail chain Monoprix, while the partnership with the MyOrigines platform will make it possible to reach an audience of more than one million potential customers. Products also became available in BENU pharmacies in the Netherlands, in Alnatura, Dennree and Müller stores in Central Europe, and on the Alza platform in the Czech Republic. Outside Europe, the brand expanded its presence in Al-Dawaa pharmacies in Saudi Arabia, and entered the Singapore market. THE MOST SIGNIFICANT EVENTS
Page 6
1110 THE MOST SIGNIFICANT EVENTS NEW PRODUCTS IN FIRST HALF OF 2026 — Rejuvenating serum with exosomes and peptides — DEEP MOISTURE day cream (improved formula and packaging) — DEEP MOISTURE night cream (improved formula and packaging) — DEWY moisturising serum stick with caffeine — Tone-correcting CC GO stick with ceramides in 6 shades MÁDARA ENABLES LATVIAN BUSINESSES TO SELL VIA TIKTOK SHOP ACROSS THE EU During the first half of the year, the team also dedicated resources to planning and preparing for the launch of TikTok Shop in European Union markets, scheduled for the second half of 2026. Previously, this was not possible for companies based in Latvia, but thanks to direct collaboration between MÁDARA and TikTok, Latvian e-commerce businesses will soon be able to sell through TikTok Shop across the EU.
Page 7
1312 SALESSALES SALES Sales distribution of MÁDARA products by categories (2026 H1) Sales distribution by segment (2026 H1) The MÁDARA brand’s share of the Group’s portfolio in the first half of 2026 was 82%, which is 4 percentage points lower than in the corresponding period last year, while the contract manufacturing segment accounted for 18%, its share increasing by 4 percentage points. Following the divestment of Mossa and Selfnamed in 2024, we continue to maintain successful partnerships with both companies. The increase in the contract manufacturing segment’s share was driven by a 50% increase in turnover, while MÁDARA brand turnover grew by 13%. The MÁDARA brand’s largest market by turnover is Latvia, where turnover remained stable. The brand’s largest markets outside Latvia are Germany, France, Finland, the Czech Republic, Slovakia and Spain. Together, these markets account for 45% of brand turnover and delivered 20% growth. Germany closed the half-year at the level of the first half of 2025. The country’s B2B channel turnover grew by 10%, while direct e-commerce continued to operate under fierce competition and growth could not be achieved in this channel. However, as a result of a successful partnership, MÁDARA’s presence in the Müller chain was expanded beyond Germany – to Austria, Switzerland and Slovakia. The French market achieved 21% growth. In cooperation with Bleu Libellule, the 15 most popular brand products were introduced in 245 stores. Bleu Libellule is one of France’s leading professional beauty retail chains. The brand also expanded its presence in the Monoprix retail chain, offering the full range of make-up products in more than 30 stores. Spain, where products are available in both B2B and direct e-commerce channels, continued an active growth phase, and turnover grew by 51% compared with the corresponding period last year. The Czech and Slovak markets, served by a single distributor, delivered 68% growth. In the Czech Republic, a successful partnership was launched with Alza – one of the largest online retailers in the country. At the end of 2025, the Group agreed on a change to the cooperation model with its Finnish distribution partner Transmeri. As the Group took over management of the direct e-commerce platform, this channel was actively developed during the half-year, achieving 28% turnover growth on a comparable basis. In addition, in Finland the brand entered the K-Citymarket retail chain. Overall, the Finnish market achieved 20% growth, largely driven by the direct e-commerce segment. In international markets, the brand continues to expand its presence in the Al-Dawaa pharmacy chain in Saudi Arabia, and a partnership with a distributor in Singapore has also been established. In the first half of 2026, the Group’s consolidated turnover grew by 17.5% compared with the corresponding period last year, reaching EUR 13.36 million. Growth was driven mainly by the double-digit growth of the MÁDARA brand in e-commerce channels, as well as a significant increase in turnover in the contract manufacturing segment. The geographical breakdown of turnover in the first half of 2026 remained similar to the corresponding period of 2025. Latvia accounted for 30% of total turnover, other European Union countries for 64%, and markets outside the European Union generated 6% of turnover. Overall, European Union countries, including Latvia, retained their dominant role, accounting for 94% of the Group’s turnover. The breakdown of MÁDARA brand product sales by category in the first half of 2026 shows changes compared with the corresponding period of the previous year. The face care, anti-age and make-up categories together still accounted for the largest share of the brand portfolio – 78%, while fluctuations in the share of individual segments are also explained by the assignment of new products to the respective categories. The 5 percentage point decrease in the combined share of these three segments is mainly explained by significant growth in the hair care category in the first half of the year. The largest changes were seen in the hair care category, whose share increased by 6 percentage points to 16%. The increase in the hair care category’s share was mainly driven by the previously mentioned success of the Micro-Keratin SILK Hair Mist. Revenue of the other hair care products, excluding the Micro-Keratin SILK Hair Mist, grew by 24% compared with the corresponding period last year. Sales distribution by region (2026 H1) EU Latvia Outside EU 6% 30% 64% Contract manufacturing MÁDARA 47% 6% 19% 12% 16% Sales distribution by region (2025 H1) EU Latvia Outside EU Sales distribution by segment (2025 H1) Contract manufacturing MÁDARA Facial Anti-age Body Hair Makeup Facial Anti-age Body Hair Makeup Sales distribution of MÁDARA products by categories (2025 H1) 5% 29% 66% 14% 86% 18% 82% 51% 7% 17% 15% 10%
Page 8
1514 E-COMMERCE INDICATORS E-COMMERCE INDICATORS Direct e-commerce share (2026 H1) Revenue split by customer type (2026 H1) Direct e-commerce Other sales channels Repeat customers New customers 60% 43% 40% 57% The share of direct e-commerce in total turnover (including the Amazon, Zalando and TikTok channels) was 40% in the first half of 2026, which is 2 percentage points more than in the corresponding period last year. The segment’s turnover grew by 24% compared with the corresponding period last year. The hair care category, led by the Micro-Keratin SILK Hair Mist, was the main driver of online sales growth. The product became the best-selling product across all direct e-commerce channels, while also boosting sales volumes in physical retail channels. The combined turnover of the Amazon, TikTok Shop and Zalando marketplaces exceeded EUR 800 thousand, doubling compared with the first half of 2025. The TikTok Shop delivered approximately EUR 200 thousand, or half of the total turnover growth, while Amazon turnover grew by 54% and Zalando by 40%. The largest direct e-commerce channel – the MÁDARA official online store – grew turnover by 16%. The largest markets by turnover in the first half of 2026 were Latvia, Germany, Spain, Finland, Estonia and France. Among the most significant markets, Spain showed rapid growth, with turnover increasing by 53%. At the beginning of the year, MÁDARA took over direct management and logistics of its official online stores in Finland and Italy. Together, the two stores generated revenue of approximately EUR 500 thousand. The Finnish online store’s turnover grew by 28%, while Italy’s grew by 170%. New customer purchases in the brand’s online store accounted for 43%, a significant 7 percentage point increase compared with the corresponding period last year. The increase was driven by targeted sales campaigns for the Micro-Keratin hair mist, which attracted many new customers, as also mentioned in more detail in the previous sections. Direct e-commerce share (2025 H1) Direct e-commerce Other sales channels Revenue split by customer type (2025 H1) Repeat customers New customers 62% 38% 36% 64%
Page 9
1716 FINANCIAL INDICATORS * EBITDA = Operating profit + depreciation expense + amortisation expense + leasehold improvements write-off expense 1. Gross profit/Net turnover*100 2. Operating profit/Net turnover*100 3. EBITDA/Net turnover*100 4. Net profit/Net turnover*100 5. Trailing 12 Months (TTM) Net Profit/Total equity (average)*100 6. TTM Operating profit/Total assets (average)*100 7. Current assets/Current liabilities 8. (Current assets-Inventories)/Current liabilities 9. Current assets-Current liabilities 10. Loans from financial institutions/Total equity 11. Total debt/Total equity 12. Total financial debt-Cash 13. (Total financial debt-Cash)/Total equity*100 Key ratios and indicators 2026 H1 (unaudited) EUR 2025 H1 (unaudited) EUR EBITDA (TEUR) 1 509 759 Profitability and sustainability ratios 1. Gross Margin (%) 68 67 2. Operating Margin (%) 8 2 3. EBITDA Margin (%) 11 7 4. Net Margin (%) 5 2 5. TTM ROE (%) - 11 6. TTM ROA (%) 7 8 Liquidity ratios 7. Current ratio (x) 3 3 8. Quick ratio (x) 2 2 9. Working capital (TEUR) 9 543 10 476 Leverage ratios 10. Financial debt to equity (x) 0.013 - 11. Debt to equity (x) 0.36 0.45 12. Net financial debt (TEUR) (5 304) (8 954) 13. Net gearing (%) (42) (63) FINANCIAL INDICATORSFINANCIAL INDICATORS Key ratios and indicators 2026 H1 (unaudited) EUR 2025 H1 (unaudited) EUR Net turnover 13 358 471 11 37 2 640 Cost of goods sold (4 219 179) (3 725 432) Gross profit 9 139 292 7 647 208 Depreciation, amortisation and write-downs 349 521 501 586 Leasehold improvements write-off expense 70 422 61 132 Operating profit 1 089 313 196 087 Interest income 8 70 6 94 080 Interest expense (1 856) (6 059) Profit before taxes 1 096 163 284 108 Net profit for the period 709 7 94 281 961 In the first half of 2026, the Group’s consolidated turnover grew by 17.5% compared with the corresponding period last year, reaching EUR 13.36 million. Gross profit increased by 19% to EUR 9.14 million, while the gross profit margin rose by 1 percentage point to 68%. At the same time, the Group’s operating efficiency improved. The percentage increase in selling costs was slower than the percentage increase in turnover, while administrative costs decreased compared with the costs of the first half of 2025. As a result, operating profit reached EUR 1.09 million, compared with EUR 196 thousand in the corresponding period last year and the operating profit margin rose from 2% to 8%. EBITDA in the first half of 2026 reached EUR 1.51 million, almost doubling compared with EUR 759 thousand in the first half of 2025. The EBITDA margin increased by 4 percentage points to 11%. The improvement in profitability was driven by both the increase in turnover and consistent, disciplined cost management. Profit before tax reached EUR 1.10 million, compared with EUR 284 thousand in the corresponding period last year. Depreciation costs decreased by 30%, or EUR 152 thousand, which is explained by the write-off in 2025 of the previous direct e-commerce platform. Shopify, the new platform, is more efficient in terms of costs as well as maintenance and functionality development. The Group has made an advance payment for a new production filling machine, in which a total of EUR 664 thousand is planned to be invested. The machine will enable the filling of stick-type products. The innovative melting-texture DEWY moisturising serum stick is one of the products that will be filled on the new production line. The machine will be purchased with support from an ALTUM (Latvian state-owned development finance institution) loan, with the company receiving a 22.5% capital rebate after successful implementation of the production machine. Management maintains its 2026 target to achieve turnover of at least EUR 25.54 million, corresponding to at least 10% growth, as well as a double-digit EBITDA margin.
Page 10
1918 Note 1.01.2026 -30.06.2026 EUR (unaudited) 1.01.2025 -30.06.2025 EUR (unaudited) Revenue 2 13 358 471 11 372 640 Cost of goods sold 3 (4 219 179 ) (3 725 432) Gross profit 9 139 292 7 647 208 Selling expenses 4 (6 967 450) (6 288 582) Administration expenses 5 (1 279 348) (1 293 200) Other operating income 6 318 568 25 2 738 Other operating expenses 7 (121 749) (122 077) Interest and similar income 8 8 706 94 080 Interest and similar expenses 9 (1 856) (6 059) Profit before corporate income tax 1 096 163 284 108 Corporate income tax for the reporting year (386 369) (2 147) Profit for the reporting period 709 794 281 961 The accompanying notes on pages 24 to 31 are an integral part of these consolidated financial statements. CONSOLIDATED FINANCIAL REPORT CONSOLIDATED FINANCIAL REPORT The financial statements have been prepared in accordance with Republic of Latvia accountancy Standards. CONSOLIDATED INCOME STATEMENT Classified by function of expense.
Page 11
2120 Assets Note 30.06.2026 EUR (unaudited) 31.12.2025 EUR (audited) Non-current assets Intangible assets Concessions, patents, licenses,trademarks and similar rights 353 825 392 513 Other intangible assets 5 738 8 868 Prepayments for intangible assets 97 817 30 369 Total intangible assets 10 457 380 431 750 Property, plant and equipment Land 468 722 468 722 Leasehold improvements 263 884 300 356 Technological equipment and machinery 1 344 821 1 509 506 Other fixed assets 440 286 471 322 Construction in progress 82 461 38 739 Prepayments for property, plant and equipment 341 177 - Total property, plant and equipment 11 2 9 41 351 2 788 645 Non-current financial investments Other non-current receivables 12 102 723 102 172 Other securities and investments 691 691 Total non-current financial investments 103 414 102 863 Total non-current assets 3 502 145 3 323 258 Current assets Inventories Raw materials, materials and consumables 13 3 07 7 589 2 87 5 629 Unfinished goods 6 283 4 421 Finished goods and goods for sale 14 1 914 529 1 287 916 Prepayments for inventories 668 632 410 130 Total inventories 5 667 033 4 578 096 Receivables Trade receivables 15 2 146 883 2 692 203 Other receivables 16 20 735 43 430 Accrued revenue 153 849 178 577 Deferred expenses 273 523 90 985 Total receivables 2 594 990 3 005 195 Short term financial investments 2 500 4 500 Cash and cash equivalents 17 5 465 175 5 660 455 Total current assets 13 729 698 13 248 246 Total assets 17 231 843 16 571 504 Equity and liabilities Note 30.06.2026 EUR (unaudited) 31.12.2025 EUR (audited) Equity Share capital 18 37 8 553 378 298 Share premium 4 023 455 4 023 455 Foreign currency revaluation reserve 1 118 3 034 Retained earnings: a) prior year retained earnings 7 562 251 9 465 641 b) profit/(loss) for the year 709 794 (388 921) Total equity 12 675 171 13 481 507 Liabilities Non-current liabilities Other loans (Altum) 19 160 676 - Deferred revenue 209 590 23 7 220 Total non-current liabilities 370 266 237 220 Current liabilities Advances from customers 1 552 14 813 Trade payables 855 345 851 859 Taxes and mandatory state social insurance contributions 20 1 106 148 690 452 Other liabilities 21 328 047 309 723 Deferred revenue 157 985 133 826 Unpaid dividends 1 000 000 - Accrued liabilities 22 73 7 329 852 104 Total current liabilities 4 186 406 2 85 2 777 Total liabilities 4 556 672 3 089 997 Total equity and liabilities 17 231 843 16 571 504 CONSOLIDATED FINANCIAL REPORTCONSOLIDATED FINANCIAL REPORT CONSOLIDATED BALANCE SHEET CONSOLIDATED BALANCE SHEET The accompanying notes on pages 24 to 31 are an integral part of these consolidated financial statements. The accompanying notes on pages 24 to 31 are an integral part of these consolidated financial statements.
Page 12
2322 Note 1.01.2026 -30.06.2026 EUR (unaudited) 1.01.2025 -30.06.2025 EUR (unaudited) Cash flow from operating activities Profit before corporate income tax 1 096 1 6 3 284 108 Adjustments for: Depreciation of property, plant and equipment 11 254 348 286 332 Amortisation of intangible assets 10 49 984 276 386 Impairment of fixed assets 115 611 - Government and the EU institutions co-financing (204 208) (156 283 ) Foreign currency revaluation reserve (1 916) 4 254 Net (loss)/gain on disposal of property, plant and equipment (9 308) (17 355) Other interest and similar income 8 (8 782) (91 999) Profit before adjustments for current assets and current liabilities 1 29 1 892 585 443 Adjustments for: (Increase) / decrease in receivables 430 483 (854 217) Increase/ (decrease) in inventories (1 088 937 ) 236 770 Increase in payables and other payables (64 794 ) (24 313) Increase in payables and other payables 568 644 (56 317) Corporate income tax paid (12 105 ) (2 147) Net cash flow from operating activities 556 539 (58 464) Cash flow from / (used in) investment activities Payments for property, plant and equipment and intangible assets (598 279) (500 250) Proceeds from sale of the property, plant and equipment 9 308 17 355 Loans repaid 2 000 690 000 Interest received 8 782 91 019 Net cash flow from / (used in) investing activities (578 189) 298 124 Cash flows used in financing activities Proceeds from government and the EU institution co-financing 179 908 113 087 Loan received 160 676 - Dividends paid (51 4 214) - Net cash flows used in financing activities (173 630) 113 087 Net increase / (decrease) in cash and cash equivalents (195 280) 352 747 Cash and cash equivalents at the beginning of the reporting year 17 5 660 455 8 601 020 Cash and cash equivalents at the end of the reporting year 17 5 465 175 8 953 767 Share capital (EUR) Share premium (EUR) Retained earnings (EUR) Foreign currency revaluation reserve (EUR) Total equity (EUR) Balance as of 31.12.2024 378 044 4 023 455 12 94 6 242 205 17 347 946 Distribution of dividends - - (3 480 347) - (3 480 347) Increase in share capital 254 - (254) - - Profit for the reporting year - - (388 921) - (388 921) Foreign currency revaluation reserve - - - 2 829 2 829 Balance as of 31.12.2025 378 298 4 023 455 9 076 720 3 034 13 481 507 Distribution of dividends - - (1 51 4 214) - (1 51 4 214) Increase in share capital 255 - (255) - - Profit for the reporting year - - 709 794 - 709 794 Foreign currency revaluation reserve - - - (1 916) (1 916) Balance as of 30.06.2026 (unaudited) 378 55 3 4 023 455 8 272 045 1 118 12 675 171 CONSOLIDATED FINANCIAL REPORT CONSOLIDATED FINANCIAL REPORT CONSOLIDATED CASH FLOW STATEMENT (Indirect method) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY The accompanying notes on pages 24 to 31 are an integral part of these consolidated financial statements. The accompanying notes on pages 24 to 31 are an integral part of these consolidated financial statements.
Page 13
2524 ( 2 ) Net turnover Net revenue is the revenue generated during the year from the main operating activities – the sale of goods and rendering services less value added tax and discounts granted. Revenue is generated from the production and sale of cosmetics, as well as from the provision of services and the sale of makeup stands. 1.01.2026 -30.06.2026 EUR (unaudited) 1.01.2025 -30.06.2025 EUR (unaudited) Distribution net turnover by geographical markets: Revenue from the sale of goods in the European Union 8 488 515 7 480 453 Revenue from the sale of goods in Latvia 4 043 842 3 235 339 Revenue from the sale of goods in other markets 823 164 607 322 Revenue from the provision of services 1 046 45 297 Other revenue from operating activities 1 904 4 229 Total 13 358 471 11 372 640 ( 3 ) Cost of goods sold Material costs 2 280 107 2 012 357 Remuneration for work 517 060 466 543 Social security contributions 121 209 192 843 Depreciation of fixed assets and amortisation of intangible assets (Note 13) 22 5 212 199 214 Costs of production services 89 303 47 460 Research and development costs for new products 498 453 47 7 882 Premises rental and management costs 86 819 85 065 Current assets consumed 210 481 59 315 Resource costs 55 665 61 211 Leasehold improvements write-off 51 525 46 747 Maintenance costs of the ECOCERT quality certificate 18 417 14 880 Car maintenance and fuel costs 11 684 4 741 Employee health insurance 20 693 13 645 Business trip costs 18 303 16 329 Other production and production maintenance costs 14 248 27 200 Total 4 219 179 3 725 432 ( 4 ) Selling expenses Advertising costs 2 97 6 756 2 406 629 Remuneration for work 1 29 6 736 1 263 596 Delivery costs 734 727 59 8 161 Sample production costs 244 627 39 5 651 Mandatory state social insurance contributions 306 760 29 7 211 Depreciation of property, plant and equipment and amortisation of intangible assets 55 101 275 565 Costs of intermediation services 194 681 252 163 Cost of maintenance services for trading platforms 87 672 84 344 1.01.2026 -30.06.2026 EUR (unaudited) 1.01.2025 -30.06.2025 EUR (unaudited) Costs of promotion of trade events 90 988 56 948 Employee health insurance 24 087 10 163 Premises maintenance costs and rent 86 735 83 685 Business trips and exhibitions costs 122 607 68 227 Royalties 7 873 7 273 WEB shop maintenance costs and other IT costs 50 496 28 724 Car maintenance and fuel costs 14 033 7 416 Warehousing service costs 102 177 55 455 Employee training and store visit costs 31 856 6 250 Sales activity risk insurance 13 683 9 812 Depreciation of fixed investments in property, plant and equipment 18 897 14 385 Provisions for doubtful debts 67 826 13 175 Cash turnover incidental expenses 124 375 48 714 Other costs of sales 314 757 305 035 Total 6 967 450 6 288 582 ( 5 ) Administration expenses Remuneration for work 517 712 526 280 Office costs 118 797 170 950 Mandatory state social insurance contributions 121 749 123 712 Cash turnover incidental expenses 11 212 54 589 Premises rental and management costs 135 195 134 294 Employee health insurance 11 001 14 762 Depreciation of property, plant and equipment and amortisation of intangible assets 69 207 26 807 Personnel sustainability costs 42 386 33 107 Research, consultancy and conference costs 66 474 21 007 Employee meal costs 42 264 45 649 Securities circulation costs 8 643 9 474 Legal and other professional fees 18 807 17 611 Car maintenance and fuel costs 15 391 13 242 Travel expenses 3 073 667 Communication costs 10 474 10 366 Employee training costs 10 409 11 181 Audit costs 9 930 - Other management and administration costs 66 624 79 502 Total 1 279 348 1 29 3 200 ( 6 ) Other operating income Income from ERAF projects co-financing 204 208 156 283 Income from the sale of current assets 3 808 22 736 Net gain on disposal of property, plant and equipment 9 864 - Other income 100 688 73 719 Total 318 568 252 738 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
Page 14
2726 1.01.2026 -30.06.2026 EUR (unaudited) 1.01.2025 -30.06.2025 EUR (unaudited) ( 7 ) Other operating expenses Employees recruitment and training costs 20 686 34 864 Nature protection costs 53 302 26 258 Labour protection costs 9 591 14 209 Net loss on disposal of property, plant and equipment 556 - Proceeds from the sale of property, plant and equipment 27 273 - Residual carrying amount of property, plant and equipment 27 829 - Donations 5 200 - Representation costs 5 980 4 684 Other expenses 26 434 42 062 Total 121 749 122 077 ( 8 ) Interest and similar income Interest income from short-term deposits 6 400 94 080 Net gainon foreign currency exchange rate fluctuations 2 306 - Total 6 400 94 080 ( 9 ) Interest and similar expenses Net loss on foreign currency exchange rate fluctuations - 5 821 Other interest payments 1 856 238 Total 1 856 6 059 Concessions, patents, licenses, trademarks, and similar rights (EUR) Other intangible assets (EUR) Prepayments for intangible assets (EUR) Advance payments for intangible assets (EUR) Total intangible assets (EUR) Cost as of 31.12.2025 768 392 31 226 30 369 - 829 987 Additions - - 81 440 4 537 85 97 7 Disposals (10 363) - - - (10 363) Transfers 18 529 - (18 529) - - Cost as of 30.06.2026 776 558 31 226 93 280 4 537 905 601 Accumulated depreciation 31.12.2025 375 879 22 358 - - 398 237 Depreciation charged 56 238 3 130 - - 59 368 Disposals (9 384) - - - (9 384) Accumulated depreciation 30.06.2026 422 733 25 488 - - 448 221 Net carrying amounts 31.12.2025 392 513 8 868 30 369 - 431 750 Net carrying amounts 30.06.2026 353 825 5 738 93 280 4 537 457 380 ( 10 ) INTANGIBLE ASSETS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Page 15
2928 Land (EUR) Leasehold improve ments (EUR) Techno logical equipment and machinery (EUR) Other fixed assets and equipment (EUR) Assets under construc tion (EUR) Prepay ments for property, plant and equip ment (EUR) Total property, plant and equipment (EUR) Cost as of 31.12.2025 468 722 1 17 7 701 4 829 839 1 27 6 964 38 739 7 791 965 Additions - - - - 165 424 346 878 512 302 Disposals - - (12 460) (92 788) - - (105 248) Transfers - 33 950 8 160 85 293 (121 702) (5 701) Cost as of 30.06.2026 468 722 1 211 6 51 4 825 539 1 269 469 82 461 341 177 8 199 019 Accumulated depreciation 31.12.2025 87 7 345 3 320 333 805 642 5 003 320 Depreciation charged - 70 422 172 845 86 763 - - 330 030 Disposals - - (12 460) (63 222) - - (75 682) Accumulated depreciation 30.06.2026 947 767 3 480 718 829 183 5 25 7 668 Net carrying amounts 31.12.2025 468 722 300 356 1 509 506 47 1 322 38 739 2 788 645 Net carrying amounts 30.06.2026 468 722 263 884 1 344 821 440 286 82 461 341 177 2 94 1 351 30.06.2026 EUR (unaudited) 31.12.2025 EUR (unaudited) ( 12 ) Other noncurrent receivables Rent security deposits 102 723 102 172 Total 102 723 102 172 ( 13 ) Raw materials, materials and consumables Raw materials and materials, gross value 3 07 7 589 2 875 629 Goods in transit - - Total 3 07 7 589 2 87 5 629 ( 14 ) Finished goods and goods for sale Cosmetic products at gross value 1 784 731 1 112 166 Advertising materials 133 298 147 243 Goods in transit - 32 007 Allowance for obsolete and slow-moving inventories (3 500) (3 500) Total 1 914 529 1 287 916 ( 15 ) Trade receivables Trade receivables, gross value 2 191 032 2 710 972 Allowance for doubtful trade receivables (44 149) (18 769) Total 2 146 883 2 692 203 ( 16 ) Other receivables VAT overpayment (Latvia, United Kingdom) - 31 564 Security deposits - - Other receivables 20 735 11 866 Total 20 735 43 430 ( 17 ) Cash and cash equivalents Cash in bank accounts 2 15 9 839 917 430 Short-term deposits in a commercial bank 3 305 336 4 743 025 Total 5 465 175 5 660 455 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ( 11 ) PROPERTY , PLANT AND EQUIPMENT ( 18 ) Share capital As of 30 June 2026, the issued and fully paid share capital of the Group’s Parent Company is EUR 378 298.40, consisting of 3 782 984 shares; the nominal value of one share is EUR 0.10. Since 2017, MADARA Cosmetics AS has implemented an employee option programme as an additional tool for employee motivation and engagement. Employee options can be granted to the Company’s employees, heads of departments, and board members who have made a significant contribution to the Company. The allocation of employee options is carried out by the Board in accordance with the procedures and the volume of options determined by the shareholders’ meeting. The Company does not apply the fair value model to the option program, and in accordance with the stated procedures, the exercise of the options is carried out at nominal value, charged against retained earnings.
Page 16
3130 KONSOLIDĒTĀ FINANŠU PĀRSKATA PIELIKUMSKONSOLIDĒTĀ FINANŠU PĀRSKATA PIELIKUMS 30.06.2026 EUR (unaudited) 31.12.2025 EUR (unaudited) ( 19 ) Other Loans ALTUM loan* 160 676 - Total 160 676 - 30.06.2026 EUR (unaudited) 31.12.2025 EUR (unaudited) ( 20 ) Taxes and mandatory state social insurance contributions Value added tax (incl. OSS) 411 145 414 536 Mandatory state social insurance contributions 156 411 145 026 Personal income tax 71 632 69 763 Corporate income tax 374 296 11 356 Other taxes and duties (Italy, United Kingdom, France) 92 664 49 771 Total 1 106 148 690 452 ( 21 ) Other liabilities Salaries 304 950 285 656 Balance of gift cards 13 801 22 754 Other liabilities 9 296 1 313 Total 328 047 309 723 ( 22 ) Accrued liabilities Accrued liabilities for unused vacations 350 018 294 114 Accrued liabilities for services received 345 431 26 458 Accrued liabilities for employee remuneration 41 880 403 888 Accrued liabilities for goods received - 127 644 Total 737 329 852 104 30.06.2026 EUR (unaudited) 31.12.2025 EUR (unaudited) ( 24 ) Number of employees in the Group Average number of employees per reporting period, including: 208 216 Members of the Board in the Parent Company 4 4 Members of the Council in the Parent Company 2 3 ( 23 ) Group transactions with related parties Related party Purchases of goods and services during the reporting period Purchases of goods and services during the previous period Goods sale and provision of services during the reporting period Goods sale and provision of services during the previous period Cosmetics NORD SIA 2 180 75 1 815 124 930 082 MC PROPERTIES SIA 133 971 131 292 480 480 KALVI SIA 17 951 17 951 0 0 Transmeri Group Ab Oy 24 592 84 296 833 927 1 069 883 Total 178 694 233 614 2 649 531 2 000 445 ( 26 ) Off-balance sheet liabilities and contingent liabilities (a) Operating lease agreements On 17 March 2015, the Parent Company entered into a premises rent agreement with MC PROPERTIES SIA, Reg. No 40103872324, for leasing production and office premises in Marupe, 131 Zeltinu Street. The agreement matures in 2030. The Parent Company of the Group has concluded an agreement on lease of office premises with Kalvi SIA at 20A Balozu Street, the term of the agreement is 2026. The Group has concluded lease agreements for rent of premises in four shopping centres in Riga: ”Galerija Rīga”, “Galerija Centrs”, ”Spice” and ”AKROPOLE Alfa”. The long-term lease agreement for warehouse and office space at 6 Kauguru Street, Riga, has been terminated, and the Parent Company has concluded a new long-term lease agreement for warehouse and office space at Lielmani, Marupe. The maturity of these agreements is up to the years 2028–2030 with a possibility to prolong. (b) Issued guarantees On 17 March 2015, a mortgage agreement was signed between SWEDBANK A/S and Group’s Parent Company’s lessor MC PROPERTIES SIA on pledged item – real estate on 131 Zeltinu Street, Marupe. Real estate is pledged in favour of SWEDBANK A/S and the Group’s Parent Company is the guarantor for the MC PROPERTIES SIA obtained borrowings; the amount of the guarantee, in accordance with the terms of the contract, is the amount of the outstanding liabilities. As of 30 June 2026, the outstanding amount of MC PROPERTIES SIA loan to SWEDBANK A/S was 420 463 EUR (31 December 2025: 480 522 EUR). ( 27 ) Received ERAF financing In 2026, the Group continues to participate an receive funding from the European Union support programs. ( 28 ) Financial risk management The Group’s and the Company’s activities are exposed to a variety of financial risks: foreign currency risk, interest rate risk, credit risk and liquidity risk. Foreign currency risk Foreign currency risk is the risk of financial losses incurred by the Group due to adverse fluctuations in foreign currency exchange rates. This risk arises when financial assets denominated in a foreign currency do no match financial liabilities in that currency, which results in open currency positions. The Group companies do not hold any material balances of financial assets and liabilities denominated in other currencies. Therefore, during the reporting year, the Group’s exposure to foreign currency risk was not significant. The Group does not undertake measures to mitigate the risk. Credit risk Credit risk is the risk that the Group will incur a financial loss as a result of the counterparty being unable to meet its obligations to the Group’s entities. Credit risk arises principally from cash at banks, trade receivables and/or long-term and short-term borrowings. In order to reduce this risk, the Group monitors trade receivables on a regular basis and, if necessary, takes additional debt recovery measures. The Group has no significant concentration of credit risk with respect to any single counterparty or group of similar counterparties Certain trade receivables of the Parent Company are insured. ( 29 ) Events after the reporting date During the period from the last day of the reporting year until the date of the signing of this financial statement, there have been no events that should result in adjustments or be reflected in this financial statement. On 19 February 2026, the Parent Company of the Group, MADARA Cosmetics AS, entered into a loan agreement with the joint stock company “Attīstības finanšu institūcija ALTUM” (Reg. No 50103744891) for a loan (principal) amount of 498 303 EUR. As at 30 June 2026, 160 675.50 EUR of the loan had been disbursed. The final repayment date of the ALTUM loan is 20 January 2031. As security for the loan obligations, the Group has established a commercial pledge over production equipment for a secured claim amount of 498 303 EUR. The loan agreement provides for the possibility of receiving a capital rebate of 22.5%, provided that the Group fulfils the project implementation and post-monitoring conditions set out in the agreement. 1.01.2026-30.06.2026 EUR (unaudited) 1.01.2025-30.06.2025 EUR (unaudited) ( 25 ) Information on the remuneration of members of the Council and the Board Board members remuneration for the work at the Board 208 731 201 213 Council members remuneration for the work at the Council 2 601 3 139 Total 211 332 204 352
Page 18
WWW.MADARACOSMETICS.COM