Good morning, and welcome to Virši Investor Webinar. We will start with a presentation on Virši business update, and continue with live Q&A session. I encourage every one of you to submit your questions through the Q&A window on the bottom of your screen. Questions can be submitted either anonymously or with your name. This session is being recorded and will be available shortly after the call. Let me now introduce you with our hosts, the CEO and the Chairman of the Management Board of Virši, Jānis Vība, and Member of the Board and the CFO, Vita Čirjevska. Jānis Viba, the floor is all yours. Thank you, Ieva. Good morning, everybody. First of all, thanks for joining this webinar for our employees, investors, customers, partners. So today, together with Vita, we will go through our main events, which happened in a six months period, and of course, also we'll take a look at financial results for the first half of this year. So let us begin, as usual, maybe with overall high, high level, let's say, picture, what is happening in the energy markets in the first half of the year. Usually, we divide the this slide in three parts, so one is fuels, and is natural gas, and then is electricity. And if we start with fuel, we see that, actually, there has not been major fluctuations in prices. In fuel, we see that oil prices for Brent is actually fluctuating between $76 up to $90 per barrel in first 6 months, which is not actually big fluctuations compared maybe to some recent years. Still, this was primarily driven, these fluctuations, by some challenges in the Middle East, of course, because as everybody knows, Middle East is quite strategic area, where logistics is done for oil and also oil mining is done. Because of the situation among Iran, Israel, and also things which are happening in Gaza, of course, always when there is some, let's say, more turbulent times in this area, oil prices are fluctuating up, and when there is some, let's say, we cannot say relaxed period, but at least some less tensions, then the oil price is actually going down. Moreover, OPEC is continuing to extend these production restrictions for oil with the aim to stabilize this oil price, and more or less, they are succeeding it because oil price is not like being very low, but also at the same time, it's not very high. And if we speak about what will happen in the next couple of quarters, of course, no, nobody can say, but probably there will be two factors fighting. So one is like global economic development. The stronger it will be, the more demand for oil, bigger the price. And on the other side, of course, we have these tensions in the Middle East, which are affecting supply side of the oil. So the bigger the tensions, the, let's say, bigger the worry about the supply side, which could also drive prices up. So we will see which of those factors wins in the end. On natural gas, actually, the same probably story as for fuel. No major fluctuations. Prices are more or less stable between 30-40 EUR per MWh. And this has, at least in Latvia, contributed to recovery of natural gas consumption, meaning that there are usually two products, which is natural gas and propane, fighting for this demand. But if in the last couple of years, propane was gaining market share because of the pricing for natural gas, and currently we see that natural gas is recovering because pricing is normalizing and customers are going back to natural gas as a product. Also important to note that Balticconnector connection pipeline between Finland and Estonia has been restored in April. So, it took around six months period to get it done, but at least now we are back on, let's say, safe side on the connection side. Also, it's important to note that we see that gas storage facilities in Europe are well filled, meaning that Europe seems to be quite ready for winter. So there should be no like supply shocks in winter months. And if again speaking about what will happen in future months, very hard to say, but most probably geopolitics will determine whether there will be some fluctuations or not. Because of course, we see that when Ukraine, Ukraine entered Russia-... This city of Sudzha, Sudzha, in English, I guess, we see that actually there were some worries that this will disturb this natural gas flow to Europe, because Sudzha obviously is a strategic transit point of natural gas. But currently, these worries have not come true. And initially, there were some price increase in July, August, but now, probably, it is slowly going down again. And on the electricity side, in Latvia, we at least see that there is quite, quite increasing this share of solar electricity and overall electricity production. Meaning that, when sun is shining, wind is blowing, of course, we see that electricity prices are quite low, in the daytime, but it's not the case, of course, when it's not true, and the sun is not shining. But, more importantly, probably, we have to mention this EstLink 2 connection between Baltics and Finland. There are some technical, I would say, challenges or difficulties, because of which this pipeline is not actually working, probably until September. And it means that, Baltics cannot get this electricity, in, let's say, sufficient amount from Finland, and the pricing is very different in Finland and Baltics, because of that. Meaning that, Baltics are much higher priced, especially in summer months. Probably we have to wait for September to get back to normal. Also interesting number on the energy, renewable energy, usage in electricity production. So we see that nearly 80% of electricity in Latvia this year is already produced from renewable energy, which is, I would say, quite a significant number, and obviously it will continue most likely to increase in future months. So that's a broad picture. We now go on to our strategic goals of the company. I would like to remind that we have these six strategic goals, where we want to be in 2026 and where we are in 2023. So what we together with Vita will do today, we will go through each of those goals and try to give you some insight to where we are currently with fulfillment of these goals. Let's start with the development of the network. I would say quite, quite busy first six months of the year. Quite busy, not only in terms of workload, but also in terms of investment done. We have opened three new stations. One is in Riga, one in Sigulda, and the third is in Salaspils. Three new stations in three different cities of Latvia. Also important to note that we have opened 1 place in Origo, which is a shopping mall in Latvia, where we are offering shop products without offering fuel. Maybe even more important, as of end of June, there were 6 stations in construction stage. Meaning that we are actually quite aggressively going with expansion of our network and obviously gaining some market share in the future. Then, of course, there are some modernization works done for existing network as usual, and important also to note is that we have, as also publicly communicated already, we have made the next step in our biomethane production project by attracting quite a big amount of financing, but we will talk about it a bit later. But overall, I guess, one specific number here, which I want to emphasize, is that overall investments in first half of the six months of the year are exceeding already EUR 10 million. So these are quite material investments for future long-term growth of our company and also profitability. So that's on the first strategic goal. Let's proceed with employee. Yeah. Well, employee value creation is one of our strategic targets, and this has been actually a period of challenges, but also huge awards that we are happy of. And about the challenges, actually, we have been developing quite fast, and we have been developing our employee offer during 2023. And coming to 2024, we believe we have one of the best offers in the market, actually, in the retail segment for our employees. But at the same time, our network is growing at a high speed, and we are growing in new cities, in new geographies, and also in some places, we are sort of doubling our presence. In this sense, it's quite hard to fight for the new employees and for Virši, as we can say that economics is quite in a slowdown period, but at the same time, our labor market is still very highly employed, and unemployment rate is at 6.9, and especially it's a very tricky periods if we look at the summertime when we see the peaks in seasonal employments. So this has been quite a challenge for our personnel department. At the same time, we look at the existing team, and on regular basis, we are evaluating our employee needs through ENPS surveys. We try to improve our offer as much as we can and on regular basis. On insurance basis, also the offering in the payrolls and also looking at different kind of rewards we can provide to our team. But it has been also rewarding. When we decided to go to IPO, we wanted to get some KPI to be reached and to somehow assess ourselves in respect to market in Latvia. And we selected CV-Online Top, where you have a survey of top-of-mind employer in Latvia. So at that time, we were somewhere in top 50, and still the last year in the survey, we were in place of 38. But this year, we worked hard, and that has been rewarded by us being number fourth in Latvia. We know that this is very, say, very high evaluation for us, and we know that there has been a lot of work done, but at the same time, we still see that there will be hard work to stay in this place and maybe even improve it. As we remember, the strategic goal was for us to be top 10 until 2026. The last one that has been also challenging, and I'd say that has been like a different segment, is discovering new market for Virši, as we have now entered the Lithuanian market. For our employees, it means discovering new market, new employer terms, new regulations, taxations, and understanding how to build a team and how to employ the team to provide our clients in Lithuania the same high values and quality as we do it in Latvia. So that was- it for this period. Yeah. Yep. So the next goal what we want to emphasize is obviously to be number one in alternative fuel offering in Latvian market. And in a way, we're gonna say that we are already number one because we are offering a CNG product to our customers in nine stations. And it's very, let's say, good number, which we see is that close to 50% was the growth in CNG consumption by our customers in first six months. So we like this product. We also like that our customers appreciate it because it's obviously currently cheaper than fossil other fossil fuels and also less harmful to nature. We expect that this will continue to develop, because we see that waste management, logistic companies, and also bus parks are quite satisfied with this product. That's on the truck or heavy truck side. If we speak about light segment of cars, then we see that, of course, the market share of electric cars is continuing to increase, but it is still quite low. It is a bit more than 1% of total market share in Latvia. Which means that there is some progress, but we still need to wait several years for this segment to become more material. At the same time, we are not waiting. We are already launching charging stations. So in the first six months, we launched three new charging points in three cities. In Riga, in the capital city, we actually launched the most powerful charging station in Riga, which is around 320 kW of power. So are quite a good number, I would say. And in total, by end of six months of 2024, we had 17 Virši charging points in place, and we actually have done it in less than two years' time. So I would say it's a very good progress which was delivered by the team. And it's also important to note that in coming years, there are some legislative changes, locally and also in Europe, which will most probably increase this cost burden for fossil fuels. Locally, there are some specific regulation, but this which is coming from Europe in 2027 is called ETS2, which is Emissions Trading System, which will clearly state that each fuel trader will have to buy CO2 quotas for each CO2 which has been released in environment. Which will, in turn, most likely, increase this cost of fossil fuels. And that's why we are already working quite hard to offer our customers some alternative fu-... types of fuels, so that they are already, perhaps, today, making some decision to buy alternative fuel cars rather than fossil fuel cars. And, also important point on biomethane, so we have... It's a quite big, complex project, but currently we have attracted around EUR 12 million funding from European Fund, which is developing such green projects. And, we are currently also in final stages on this project approval in local institutions. So if we are, let's say, following our plan, it's very likely that in next few months' time, we will start already construction works for this plant, and we will finish them in by end of 2025 and start producing biomethane. We like this project because it is firstly financially looking very strong. So we are planning to export biomethane to Europe, European countries, where we have specific options of buyers. Secondly, we are also seeing that this project is very well going in line with our business model diversification actions. And this as a green project, obviously, is highly valued also by our financial partners. And we also see that in long term, we can offer also biomethane to our customers in Latvia because obviously in future, the greener you will be in all your fuel consumption, the better you will become in terms of competition in Latvia among competitors. So that's on this side. Yeah, next one, again, just to show how we are doing with business diversification. What we understand was that we understand that this gross profit share of other than fuel products should increase over time. And as you can see in this graph, overall gross profit obviously is increasing each year. But it is also good to see is that the share of convenience stores in this gross profit is also increasing from 39% in 2022, up to already 48% in 2024. So this is something we like especially because it's not like fossil fuel segment is decreasing, it's also increasing, but this convenience store is increasing even more. So financials. Yeah. So EBITDA targets. Well, to describe EBITDA performance in this particular period, I would split it in two parts. The first one is stable and significant growth of our two major business segments. It's fuel gross profits that has gone up by 10%, and convenience store gross profit that has risen by 16% compared to the same period last year. If we look at the energy segment, we can see a drop in the... compared to the last year, but it's still profitable at its nature. If we look at the price fluctuations and the dynamics in the market in the past years, we can say that in the last half of 2022 and 2023, it was a good time to have a good short-term project and profitable and high-margin project in this period that we have been actually implementing in our profits as well. But at this period of time, the market and the energy prices sort of have gone back to the normal or back to the prices that we had before 2022, and also the margins in that sense. At this period of time, the profits are still there, but it has normalized. We see that our total gross profits has gone up by 6.6% or EUR 1.2 million. At the same time, we have actually doubled the CapEx investments in this period, and we have new projects arriving all the time in our portfolio during 2024, and this takes along also the costs. Here specifically, we have a rise in the cost of sales personnel, so it's payroll, and also an administration expenses, so there are new people onboarded and new consultations needed to expand the new projects. In these two segments, we see that we need to onboard the team, train the team ahead of the new project starting, and that rises the costs. I'd say it's a short term effect, 'cause the new fuel stations and new projects are opening one by one. And also, if you look now in August, compared to June, we have new stations on our portfolio, and we see that... Well, in general, the EBITDA performance in the first six months, it has been rather development stage, and we see that there will be a good base for growth in next periods. So compared to 2023, EBITDA has been dropping by EUR 1.3 million and by 16.9%. But on the other hand, as I said, it's a base for the future growth. ... And if we look at the net profits, so the main effect on the net profits performance is still the same: investment, development, and EBITDA performance. And we see that, EBITDA effect is almost EUR 1.3 million, and depreciation is EUR 600,000. So this has been from the newly established project performance, and we see that, these cost increases will be mitigated by future profits in the next periods. We also see that there is a sort of slight negative impact also from the interest expenses, but, we can say that this increase is due to the dynamics in EURIBOR. If we remember year 2022, June, the EURIBOR was still at the zero. Then, a year passed, in the middle of 2023, it was already 3.6%, and in the very beginning of 2024, it was almost 4%. Now it's coming back to shifting down, but we are still far from 2022, and obviously there is increase in the borrowing expenses. But at the same time, we try to expand our station network as much as possible from the operating cash flows, and we try to be quite conservative in our lending amounts and try to control the expenses. Well, in the previous periods, if you remember, there was also effects from the financial instrument valuation and related to electricity agreements contracted in 2021. So in this period of time, and also if you remember electricity price schedule in the previous slides, the prices has gone more to the stable phase. So this means there is not that big valuation adjustments to our balance sheet. It's rather usage of the instrument itself or the amount we already take in in our business. So these effects have been less. The costs are just EUR 0.5 million, and then previously in 2023, at this period of time, it was EUR 1.3 million in costs. And we have arrived to EUR 2 million net profits for this period, first six months of 2024. But as I said, this has been quite a base for development and looking ahead for good results in the future, yeah, even better. Yeah, and next, we will go through each of the business segments just to show maybe what are key points which we would like to emphasize. So let's start with fuel. On fuel side, it's an interesting point that still in last years the consumption of fuel in retail trade is still below the level of 2019 in Latvia. So what it means? It means that number of amount of fuel is being consumed less, which in turn of course makes this competition even more intensive. And we see quite aggressive discounts, promotions, and some activities on various sales channels, how to attract the liters by each of the players in the market. Overall, we see that we are doing quite well because we managed to increase in 6 months our fuel sales by 6.3%. Market was actually quite stagnant around close to zero. So which means that we also managed to increase our market share. And then also it's important to note that in Latvia, we are still quite expensive in terms of our fuel compared to Lithuania, especially Lithuania. The main, main reason is that the fact that we have this state fuel reserve levy, if we call it correctly. So which means that from this factor alone, close to EUR 0.10 per liter, our fuel in Latvia is more expensive than in our neighboring countries. And on top of that, we are also having the highest excise tax in the Baltics for diesel fuel, which again makes maybe our market not so attractive for transit customers. Which, of course, is something to think about when thinking about it in future policy development. Overall, I guess it's also important to note that we are seeing very good growth in our mobile app user amount. Each almost week or month, we see that number of users are going down, which means that our customers seem to love our mobile app, which are, of course, giving opportunity to pay for fuel, not by not going into the shop, but also outside, near this fuel pump. But also, if you go into the shop, you can receive discounts and offers by using this app also in the shop. So we are quite happy that more users are for this app usage. ... Yes, so let's go with next one. So convenience stores have been also under some challenging period of time. If we see some more compared to the labor or employee value slide, the same effect of also affect the convenience store segment, as this is the most employee-intensive segment for us. Also, this segment has been mostly affected by this economic slowdown or private person purchase power slowdown and slow recovery during 2024. We see that there has been quite a competition in the market. At the same time, we are changing our products and trying to offer the best offer for our clients. We are always trying to do our best to get the freshest and the highest quality of foods. At the same time, over the past years, when the inflation was peaking, that is right now, I'd say, slowing down and in a sort of normal stage, these increases in the prices, they have affected the market, and they have a long-term impact also on our offers. And then this period, when we see the prices and the demand side, I'd say slow down, and also the high prices in the purchases for our goods, we are really struggling to keep up with the margins. We are doing quite well, and also, we are doing quite well in the market. If you see the market dynamics, so the turnover in the market has gone up by 7.2%. At the same time, Virši has grown by 17.4. We are also working a lot to improve our gross profits. And, as I already said previously, the convenience store gross profits has gone up by 16%, and we are doing it continuously year by year. Also, the labor market challenges, I already described you the labor market challenges to attract new clients. But at the same time, new employees. But at the same time, when you get the new employees in the, in the team, you need to onboard them, train them. And, especially, it has been quite a challenge in the Lithuanian market, when you find the right person to understand how to implement our values, implement our assortment and the key products, the Virši coffee, that is, our, I'd say, queen of our stores, how to implement it in a Lithuanian shop, and, also how to, also, set up all the supply chain, chains, to have all the products in the best value, in the best, shape, for our clients in Lithuania, almost at Poland border. So that's for the convenience stores. Yeah, and we conclude the business segments by energy segment. So, again, mixed feelings, because from a profit side, there are some, let's say, decrease in comparison to previous years, while on the sales side, there is quite significant increase. So actually, first half of 2024 was record in terms of electricity purchased and sold for our group. What we are happy about? We are happy about that we are having a strong relationship with more than 100 independent electricity producers in Latvia. Around 70% of them are solar power plants. We see that there is interesting numbers that out of all amount of electricity which is produced in Latvia and which is connected to this main electricity grid, Virši Group is already consuming close to 20% of this electricity, which is, of course, later sold in a wholesale market to other our partners or customers. Important also to note that we are continuing to grow our business customers by more than 70%. Number of business customers has increased in first six months. Maybe also important to note that in less than one year, because we launched a household product for electricity back in September last year. So in less than one year, we have already become fourth biggest electricity provider for households in Latvia. So I would say it's quite a good progress given the short time of period where we are operating in this segment. Okay, then, let's continue with financials. This is summary of the financials. I already discussed the net profits and EBITDA dynamics, and I'd say this is a period, this first six months of 2024, where we established the base for the future returns to increase. At this stage, our return on equity is 5.7, adjusted return on equity is 7.7. There has been adjustments from the net profits and mostly from EBITDA side, as described before. But at the same time, we see that our balance sheet is still strong, and we have created the base and value for the future growth. We see that there is a slight increase in net debt EBITDA performance indicator. At the same time, this also has been a short-term effect from one contract and one specific delivery in the end of June. At the same time, in this particular period, it's already normalized and stable at this period of time. So in general, we see that our balance sheet is strong, as we have been used to, and ready for new challenges and next period of investments and results. Yeah. Yeah, that's from our side, and we are ready for questions. Questions, yeah. Thank you. To submit your question and to join the discussion, please use the Q&A box. So, let's start with the first question that we have received. What are Virši plans for network expansion in other countries? Yeah, so, as I already mentioned, we worked quite hard in the first six months to prepare ground for opening our first station in Lithuania. We opened station in July, so only a few weeks ago. I would say that key strategic, let's say, task currently is to focus on Lithuania, because we have built all the infrastructure, IT, finance, legal, everything is done. But of course, we only currently have one station, so we are... I guess it's a question of scale, how quickly we can scale it up. Regards to other countries, I would say no specific plans currently. All the focus will go to Lithuania, at least in the next several quarters, for sure. What is the reason of energy sales decrease 2023 versus 2024, and what is the outlook for the future? Yep. Okay. Okay, I will take it. Okay. Oh, I mean, next one. Okay, so the energy sales actually has not decreased. If you look at the turnover, it is actually up. But if you look at the market and the margins, this is, as we already discussed, before, this is a situation where, these one-offs, that have been there in 2023 and 2024 too, they are just... they are just done, and, we're back to normal. And, we see that we are actually, in going through several directions in our energy segment, and we are trying to grow it up, but, this has been period of lucky one-offs. Have you considered attracting financing through another share or bond issue instead of bank financing? Yeah, of course, we have considered it, but current, let's say, plan is not to do any new equity issue or any bond attraction, and simply because very simple reason. The cheapest way for us to attract funding is currently from banks. We have a strong balance sheet. The last funding which we attracted from banks was EURIBOR plus 1.3. Yeah. I would say you will probably never get such a cheap funding from bonds. That's for sure. And on equity, equity side, we currently also don't see any new issue. Will there be some benefits besides dividends for shareholders? The participant suggests it, as it's a very popular thing abroad. Yeah. We believe that our, let's say, shareholders program is one of the best right now in here and locally in the market. And, to get more information, please just come up to our website and check out the offer. Talking about the Lithuanian market, in what time period do you plan to open more stations there? Yeah, as I mentioned, we have built and put quite heavy work to build this infrastructure, so we need to scale it up. And to scale it up, we are looking at three scenarios. One is to build station, one is to buy station, and the third one is to rent station. Buy, buy or rent is obviously quicker option, build is much longer option. I would simply say that all of those scenarios are currently in place. We are looking at opportunities which currently are in the market, and we... if we see financially good option, we will do it, but I cannot unfortunately tell more than that. Will there be more shops without fuel sales also in other parts of Riga? I'd say each shop and each fuel station is a investment project, and we assess each and every place, existing ones and the new potentials in our business cases. Right now, we will not disclose any further plans, but yeah, assessing opportunities is what we do. And the last question that we have received: My company gives to employees an allowance into Mobilly each month. Many used this to buy petrol at Virši stations, but Virši policy now is to only allow this money to be used for non-fuel goods. Why is that? And the guess is that this results in less use of Virši by these employees. Interesting point. Let us take a look at that, and we will get back in probably few days' time. Thank you. We have addressed all the questions. With this, we're ready to close the call. I'll just remind that the recording of the webinar will soon be available online. Thank you for joining us today. Thank you. Thank you.