Welcome everyone to the presentation of the first half 2021 results of Purcari Wineries PLC. I'm happy to show some good results today, as I'm sure you've seen in the presentation, the documents that you have received earlier. Let's get into it. As Eugeniu mentioned, today we have a few participants from our side in the call. My name is Eugen Comendant. I'm the Chief Operating Officer. We also have Victor Arapan, who's the Chief Financial Officer at the group, and Eugeniu Baltag, who you've just seen, the Head of Investor Relations. The agenda for today, I'll go very quickly through the overview of the group, our vision, our strategy, and I'll do it quickly, but nonetheless, I do think it's important to keep reiterating what our vision is, what our strategy is, and to keep double-checking that we are within the said vision strategy, and is the formulas working to delivering to what our goal is. This is a good slide that shows the overview of the group. As most of you know, there are four companies and four leading brands. Purcari, the premium brand. We have Crama Ceptura, Bostavan, and Bardar. Purcari, Bostavan, and Bardar are wineries and production platforms in Moldova, and Crama Ceptura is the production platform and winery in Romania. On the top right side of the slide, you see the sales split, based on the countries where we generate our revenue. Romania is still in the lead. More than 50% of our revenue comes from that market. Now, I'm sure many of you may see this as somewhat a risk that half of our eggs are in one basket. Now, as much as we want for other markets to gain up in sales share versus Romania, we're also very happy that Romania keeps this share of sales with its very good results, and of course, this goes out to the fantastic teams in the marketing and sales departments and, of course, the teams that produce these fantastic wines that we sell. Another important addition in this slide is that we've managed to add on the list on the left, we've managed to add another number one. Until now, we were boasting being number one, which is the most awarded winery in Central and Eastern Europe between the years of 2015 and 2021 at Decanter. Decanter, we consider it as being the Olympics in the wine world. Well, already at half-year, we can proudly say that in 2021, Purcari will be the most awarded winery in the world at leading wine competitions, international wine competitions. This is a great achievement, not only further solidifying our status and our presence in the region where we aim to become champions, which is the Central and Eastern Europe, but it also places Purcari as a significant player in the wine business around the world. Now, very quickly, when it comes to what creates the formula for success, we do see that we are operating in a very attractive market, with a continuation of the shift from other drinks such as beer and spirits towards wine. Overall, we see that in our key markets, the wine consumption, especially in the segment where we are very strong in, which is the more, let's say, more premium segments. We see that the consumption in those segments keeps accelerating. Of course, on the other side, we come into the markets with a significant competitive advantage as we see it, both from the cost side, from the fact that we are in the regions We're producing in regions which are abundant in grapes, the raw material for our products, but also with labor, allowing us to have a relatively low cost base. We're producing wines from these regions, from these terroirs, wines of an incredible quality, which comes to be seen on one side, the way the experts judge us, being number one around the world this year, and also the way consumers judge us, as we'll see later on platforms such as Vivino. The core of our business model is affordable luxury, and that's the intersection of modern and cost-competitive wine making, being very agile and differentiated when it comes to marketing and, of course, producing very high quality to price ratio wines. Of course, these together create that sweet spot where the consumers resonate with our wines, both in the way they enjoy our wines, but also the way they associate with our wines, because not only do we produce high-quality wines, but also we want to see them as ethical and inspirational wines. Well, our mission you know, it is to provide consumers with this joy that our products can bring to their life. Our vision is to become the undisputed wine champion in Central and Eastern Europe. Not only through organic growth, but also acting as a consolidator in this industry. That means through M&A. How we're going to do it? Well, we're going to be hungry, we're going to be ethical, thrifty, which means we're going to be careful with our spending. We will be different than others and we'll be better than our competition. Now, I was mentioning becoming the champion in Central and Eastern Europe through consolidation of a fragmented market, and this chart keeps showing that. That in industries such as beer and spirits, if you look at the top three players in specific markets, then those top three players hold a significant consolidated market share in those markets. While in wine, this still keeps being a very fragmented industry, and we do see ourselves as being the company that can create that consolidation. We can do that through the fact that we keep growing, we keep having high margins, we keep retaining earnings, having strong balance sheets, which allows us to have the funds or liquidity on our balance sheets to seize on M&A opportunities, but also the ability to fund through other sources of financing in order to convert an M&A potential deal. Another strong chart, this chart keeps getting stronger and stronger. I was mentioning what the experts think of us. Here it is on the left side, when we were saying Decanter, we were the number one winery when it comes to medals received at Decanter, again, what we call the Olympics in the wine world. We've taken a massive lead, in 2021, now with 103 medals at Decanter between the years of 2015 and 2021. A massive lead when it comes to the region, Central and Eastern Europe. On the right side, it's a very strong chart when you think about the fact that we have managed to keep growing our sales year on year on year. With that, we kept receiving more and more awards at top international wine competitions. Here you see the cumulative per year medals received at top five wine competitions in the world, Mundus Vini, Concours Mondial de Bruxelles, Challenge International du Vin, International Wine & Spirit Competition, and Decanter. In 2021, and only at these five alone, we have amounted 97 medals. This is a great achievement and it just shows again, when I was mentioning about the competitive advantage that we have, keep into consideration that still our wines, even though of an incredible quality, they are still quite affordable to our customers. Now, on the previous slide was what the experts say, here is what the customers say. One thing is to produce fantastic wines, and of course you also have to market those wines. Not only do we produce these fantastic wines, but also we are trendy. We have trendy and interesting brands. The consumers, they associate with our brands. You can see on the left the mentions of Purcari in Romania on Instagram. Purcari is still in the lead by a long shot compared to other competitors. On the right, we like to reference the figures from Vivino, which is this wine rating platform, and now it's also becoming a wine marketplace. We like to mention the performance on this platform, because these scores transpose what customers think in the market. You can see that, for example, in Romania, Purcari wines have received 55,000 times a score from a customer, and the average score is 4.1. Statistically speaking, this gives a very good view in the market and on the brand perception and the perception of customers of our products and our brands. Staying a bit on Vivino, we like to forward the figures here. We have a next slide on Vivino too. 11 of the top 25 wines in the premium segment are Purcari. You can see that we basically dominate the premium segment. A good chart or a good visualization, which shows that our wines become more and more accessible and present in wider geographies. One perhaps good takeaway here is that we see other geographies starting to accelerate in the adoption of Purcari and in the way the customers interact with this platform in ranking Purcari wines. That is Ukraine. We do see good dynamics there. Overall, if you look here at the figures, we are still top one ranking in the world. We see, for example here, 21% increase in this year versus last year. Overall, good indicator when looking at this platform. Moving into the results. Here I will say we are very happy to report 25% increase in the 6-month revenues comparing to the same period of last year. EBITDA has increased by 24% year-on-year, and net income has increased by 31%. Of course, these are all extremely good results. We see them as positive results. When comparing just the second quarter, here as you see, we are comparing the six months versus six months. If we were to compare just the second quarter of 2021 versus the second quarter of 2020, we would see that revenues have increased by 47%, EBITDA has increased by 41%, and net profit has increased by 34%. Of course, in this presentation, we prefer that we compare 6 months of this year versus six months of last year, because we know that especially the secondnd quarter of last year was sort of the first quarter that was where the effect of the pandemic was felt. In fact, it was one of the 1st quarter in a very long history of Purcari Group where we saw a decline year-on-year. If you remember, we managed to recover the quarter after that. Overall here, we're focusing on the six months, and we also want to compare not only versus 2020, but also versus the 2019 results. In a way, 2019 to us is still sort of a benchmark year, particularly if we look at some of the markets that need to have that recovery from the pandemic effect, such as China and Moldova. The increases, when we look at 2021 versus 2019, the increase of the revenues will be at 21% for the six months versus 2019. EBITDA is increasing by 17%, 2021 versus 2019. Net profits are increasing by 19% when comparing to 2019. If you look at the bottom, you can see the margins. We are continuing to retain this healthy and strong margins with 33% EBITDA margin and 19% net profit margins, which we see also as sustainable as I am sure perhaps in the question and answer session, you can ask me questions about this, and we can dive into it. Here you see the market data when it comes to market data in Romania, audited by Nielsen with primary focus on modern trade. As you see here on the left, Purcari as a group continues to gain market share close to 11% or at 11% market share in the overall market. What's important here to mention is that these charts do not show the impact of HoReCa. In fact, they do not contain the data from HoReCa. What's important, I want to mention here that even though on the right side, you may see a slight dip from 2026 to 2024, and that of course is because last year we were very strong in using the, as we say, can't let a good crisis go to waste. Even though we were hit in the second quarter, we had a good recovery in the second half of the year, again with great work from the teams in Romania. Here what I also want to mention that what is not present in this chart, because as I said, Nielsen doesn't cover HoReCa, is our very successful launch of Purcari Nocturne. It's a series exclusive for HoReCa. We launched this in Romania late last year. Already in the first half of this year, the sales from this series alone account for 3% of group sales. This is an outstanding success. In fact, with this occasion, I want to thank the teams that have been involved in launching this series. Amazing wines. Thanks go to the staff at the winery, but of course also to the sales and marketing teams in Romania that have made the launch such a success. This is a good chart that shows the strength that we have in the Romanian market, but not only as a player with the market share, but also a player that keeps growing and is still aggressive in the market. On the Y-axis, or let's start with the X-axis. On the X-axis, you see the revenue growth in%. On the Y-axis, you see the profit margin in%. These are figures for 2020, for full year 2020, and these are also figures that we have pulled from public sources. As you can see that Purcari Oh, and I forgot to mention, of course, that the size of the bubble represents the revenues in 2020. As you can see, Purcari is a very strong player with significant size of revenues in Romania, but also second when it comes to its profitability, but number one when it comes to growth. What's worth probably mentioning here is that you see Purcari here slightly smaller than Recaș, and slightly smaller than Jidvei, but here with Recaș what's also counted is their export. It doesn't only cover their Romanian sales, but also exports, when in fact for Purcari, it covers our sales in Romania as a market. I'll go very quickly through this because I'm covering kind of all of these messages later in the presentation. Firstly, accelerating revenue growth. Yes, we are sort of recovering to a sort of back to normal conditions. We are surpassing the 2019 figures. We show, if we compare on a quarter level, as I mentioned earlier, very strong increases. Romania, still very strong, leading the growth. In Romania, Purcari is the growth generator. We also see recovery in Moldova and China. Moldova and China were the ones that were hit in 2019 the most out of all of our markets. For us, the recovery of those sales is important, and we see that happening. Not still yet to the 2019 results, but we see that as an opportunity. In Poland, we're facing some headwinds, particularly from price competition and from price discounts of our direct competitors. Also through some effect from the Tesco restructuring being purchased by Netto. We see some of that effect and that effect, in fact, there's an overspilling effect into the figures in Czech Republic as well. Bardar is showing strong figures and strong growth in Romania and Asia. Good recovery in Moldova with some reduction in sales in Belarus, but that comes with a combination of the political situation in Belarus, but also with the fact that long-term, we're looking to focus more on the high profitability bottled sales of Bardar rather than bulk. Sustaining high margins. Again, I've mentioned the fact that we are confident on the margins that we are producing as a business to sustain them in the future. We had some effect when it comes to the improvement of the mix of sales. The fact that Purcari has been accelerating growth and Bardar has been recovering, these two products are the ones with the high margins, and of course, they have contributed to overall strong margins at group level. Also we have sales in China and Moldova recovering also, markets that generate high, the sales there have higher margins. We keep delivering on quality. As I mentioned, excellent performance of our wines at international wine competitions. Just in the first half alone, 335 medals, versus 158 medals won in 2020. Of course, I have to say that for this year, we've pretty much exhausted the wine competitions that are available. This is pretty much the number of medals that we're looking to end the year with. We're very happy with the results of our sparkling, with Cuvée de Purcari Rosé Brut receiving gold medal at Concours Mondial de Bruxelles, and the Cuvée de Purcari Alb Brut receiving the best of show whites at Mundus Vini Spring Tasting in 2021. We are committed to delivering value to our shareholders. We do this, one, through, of course, we're always looking at the fundamentals of our business. For us, the foremost of importance is to create a business, a long-term business, a sustainable business that can create returns for our customers in the future. That's why as we call the fundamentals, which is developing markets, developing products, increasing sales organically, and growing through M&A, is at the core of our focus. Also we're looking at other things that are important to our investors. For example, the increase of the share capital, the doubling of the share capital earlier this year, was done again with intention to provide value to our investors, particularly the retail investors. We didn't see that as enough compensation for investors. We have also gone with the issuance of a dividend in the value of RON 26 million, which will be paid out on the September 9th. This RON 26 million, divided by the 40,000 issued shares at the moment, would amount to RON 0.65 per share. We started the buyback program, which was required to fulfill our obligations to the management when it comes to the stock option plan and the share grant program that was approved by the AGM. The positive news is that through our divesting of our stake in Glass Container Company, we have received an additional cash amount of close to EUR 1 million, which is part of that sales transaction. The total now cash receipt from that sale of our stake in GCC is over EUR 8 million. Going a bit more in detail in the financials. We've covered the revenue. You see 25% growth 2021 versus 2020, and 21% growth versus 2019. What's positive to see is the dynamics of the gross profit. As I mentioned, this is particularly because of an improved sales mix. When it comes to SG&A here, I can spend a bit more time, and I can also answer questions in the Q&A sessions if you have any for me. The dynamics in the SG&A has multiple components with various effects, so towards either an increase or decrease relative to last year's SG&A figures. On one hand, the lower brand and trade marketing activities in the first half of 2021, they've had, of course, a positive effect on the marketing and selling expenses. That's when comparing to the same period of last year. In fact, last year during the second quarter, we went all out on marketing activities. On one hand, to diminish the potential negative effect of the demand erosion given the pandemic situation. On the other hand, in a way anticipating a slowdown or a more quietness from our competitors and basically, we thought that the approach is to be a bit more active in marketing and gain on visibility and on awareness comparing to our competitors. This year, the SG&A expenses includes the remuneration of the sales teams that relates to achieving their KPIs. As you can imagine, last year, the KPIs or the so-called bonuses or the KPI achieving related remuneration has been pretty much zero because of the low performance in the second quarter of last year. This year, the teams have done a tremendous job in different markets. This is represented in a slight increase in SG&A. Additionally, the long-term management incentive plan with share grants and with stock options, which is approved by the AGM, has been implemented in the second quarter of this year. The registering of this expense in one go has had this a bit more skewed effect or this spike effect on SG&A. Overall, the SG&A is at 24% of revenue. However, if we were to adjust to this, we can call it one-off event of this equity settled share-based payment that has been applied in the second quarter. The adjusted SG&A would show an improvement to being 20% of revenue versus 21% of the revenue of the same period last year. A 1 percentage point decrease, which shows that nonetheless, we are still very much in control of our expenses. Now, if we look from the performance of each market. In Romania, the international key accounts performance has been very strong. We also saw strong recovery in the fragmented trade. Purcari has led the growth. Purcari has had very good sales in the first half, but so had the Crama Ceptura brand and Bardar. As I mentioned, the very successful launch of HoReCa exclusive Purcari Nocturne series has had a strong contribution. Overall, you see here, 29% increase in Romanian sales versus 2020 and 60% versus 2019. Overall share of sales at 53%. We're happy with the rebound of sales in Republic of Moldova. We're still under the 2019 figures, but we are in close contact with our partners, so we keep sort of so to say, the pulse on the market. The feedback is that the sellout, which is the sales from the shelves or at least from our partners to the retail accounts, is showing good dynamics. We're waiting for this lagged effect to reach us. In Poland, as I mentioned, we did face strong price discount activities from our direct competitors that are competing directly with our brands, almost on a copycat scheme. We acknowledge the effect that this had on our sales, but we do see that the long term will be beneficial to us. Sort of similar to what happened last year when in Moldova we decided to not go and be very active in strong discounts because in the long term we do see that this has a brand perception erosion effect, even though you may have some short-term positive effect. We have abstained from very deep discounts in Poland. Nonetheless, we're working with our partners and we do have some activities that are planned both on trade marketing and on brand marketing side. These are planned for the second half of the year. As I mentioned, the Tesco restructuring continues to have a certain effect with the overspill also to the Czech Republic figures. Asia, it shows strong recovery, still under the 2019 figures. We see this still as a potential. We do have large projects that are being rolled out with our trade partners later this year. In fact, some of them are being rolled out. We are being more active in digital marketing with the support of our partners also now that most of the restrictions have been removed in China, there's more and more activity in, so to say, trade shows and presenting our wines to potential large customers. Of course, to mention that China is one of the markets where we have local presence, so we have local staff there. Local meaning also Chinese. We're waiting for more restrictions to be lifted so that our, so to say, internal staff can revert to being present in China as well. When we speak about Czechia and Slovakia, we are managing to hold sales despite the effects of this Tesco restructuring that I keep mentioning. We're yet to ramp up sales through our new distributor, because somewhere towards the second half of last year, we started with a slow in-out process with an additional distributor, and we're still yet to create that ramp-up of sales through that distributor. The positive news, on the other hand, is that we are igniting sales of Purcari through distributors, but also through 8wines, which is the e-commerce wine retailer in which Purcari Wineries Group has acquired a minority stake earlier this year. In Ukraine, even though the numbers here may show only 6% increase overall, we have a very positive outlook on Ukraine. This more than 6% increase is actually a combination of a strong double-digit increase in Purcari sales and a slight slowdown in Bostavan sales. Overall, if you were to think from a margin contribution, yes, here you'll see maybe 6% increase in overall sales, but from a margin contribution, we are looking at double digits increase. Overall, in Ukraine, we are working on a, let's say, a more aggressive approach to our activity in Ukraine. We have opened a trading company in Ukraine, and we now have local staff there. We have, so to say, a country manager, and then we have staff dedicated for trade activities, for brand marketing activities, and for working with the channels. This is the beginning of developing the formula, as we internally would call the Romania formula. The Romania formula has worked extremely well, as you can see, until today, and we want to extend this approach in Ukraine, and that requires local presence. This local presence also has some benefits on the cost side, too, and also on the control in the market, because then this trading company will perform importing activities of our wines and also would, so to say, capitalize all the investment in listing fees and similar costs in the market with the retailers. Changing a bit the direction of perspective now, if we look at the brands versus the countries. First, Purcari. Purcari is showing fantastic results across all important markets. We see growth in all markets versus 2020, but still behind versus 2019 in Moldova and China, the markets that were mostly hit in 2020. We see promising results in Poland, the sales keep increasing. We have a planned acceleration for Purcari in Ukraine, where we have already engaged with strong local marketing agencies, and we have a marketing campaign ready to be rolled out as we speak. Here, I guess what's also good to mention is that with Purcari, we see this strong growth in the different markets where we are already having this strong presence. Also the fact that we started our cooperation through also being an investor in the company, Eight Wines. This opens up the geographies for us where the Purcari wines are pretty much available in all European markets, but even beyond. I can tell you that Purcari has also been shipped to Australia. Bostavan. What we see with Bostavan is that the focus needs to remain, and it still remains on the long term or medium term premiumization of this brand. We have a good, strong pipeline of products that were planned to launch in key markets such as Moldova, Romania, and Ukraine. What we see are products that already have received a positive review from customers and focus groups. We do want to create this premiumization effect in the future, entering more and more premium segments, thus solidifying our position of Bostavan sales. You can imagine, Bostavan is accounting for nearly half of the wine production of the group when we speak in volumes. You can imagine that the ability to create premiumization, an increase in price or increase in the average price of the sales mix at this winery can have significant impact on the group's gross margins and beyond. When we look at Crama Ceptura. Crama Ceptura is showing healthy growth, 17% versus 2020 and 31% versus 2019. We see good dynamics in Romania, but also what's good to see is that the exports in China, the U.K., and Germany and markets such as these are picking up. With Bardar, we see a recovery in Moldova, strong sales in China already above 2019, very much above 2019 and also very much above 2020. Very good dynamics in China. We are accelerating in Romania. We have this slowdown of sales in Belarus, but again, this is due to that political instability that we see in Belarus and also with our focus being more in selling bottled wine rather than bulk. I thought I'd rub this in a bit with the fact that Purcari is the world's most awarded winery in 2021. Again, this is a message for the customers, but also a message for our potential partners in markets such as the U.S., such as China, such as Japan. A message such as this, where it really places Purcari as a strong, significant player around the world globally, it's a message that will help us in developing markets and developing our sales across markets with high potential, such as what I mentioned, U.S., Japan, and other perhaps markets in Asia, but of course also in Europe. Now I'm focusing a lot on Purcari and on the quality that Purcari shows over the years and how it competes against other leading brands across the world. I also want to mention, I spoke a bit about Bostavan, and here I want to mention that in fact, the quality of Bostavan has had a significant gain in quality through some recent investment in our production equipment. In fact, the quality of the wines, the recent increase in quality of the wines is already appreciated by experts including at international contests, but also by customers. Again, the theme here is premiumization of Bostavan is ongoing, and this is a strategic direction for creating that growth and maintaining our margins. Just a bit on the fact that on the marketing side, we've stayed relevant. Of course, we made ourselves heard a bit with the fact that Purcari is the world's most awarded winery. We like to be involved on the CSR side and on different sponsorships, particularly in this one where we sponsored the Moldovan team. We've been the general sponsor of the Moldovan Olympic team. Purcari has been one of the companies that has facilitated the presence of our athletes in Japan. There's a great picture, you've probably seen it somewhere on social media or maybe on LinkedIn, with the medal winner celebrating with 1 three-liter Purcari sparkling. We had some viral campaigns earlier this year, receiving millions of views in social and digital mediums. Of course, we want to revive one of our traditions, which is the Purcari Wine Run. It didn't happen last year, but this year it will happen, and we're looking forward to that success. Another very positive thing, more of a macroeconomic or political, is the recent stream of wins of pro-democratic and pro-European party, which is PAS. Firstly, Maia Sandu has become the president last November, the president of Moldova. Following that, on July 11th, this party has had a landslide victory in parliamentary elections, now having 63 seats out of the 101 parliament seats. The appointment of Natalia Gavrilita, the new prime minister of Moldova, another technocrat and very pro-Western and modern-viewed politician. Of course, also Igor Grosu, the head of parliament. All of these people with these pro-Western views, with the focus on the rule of law and the judicial system being functional in this country and in this area. Of course, their close alliance to the Western world also means that we are looking at potentially some improved trade relationships with some markets. Also potentially the attraction of certain EU funds for the development of the country, including for the wine industry, through which we may be eligible to benefit from this as well. Covering a bit the outlook for 2021. We mentioned in the last call that after the first half, we'll consider whether to review the 2021 guidance. Of course, you're seeing here that we have beaten the guidance for the organic revenue growth. We mentioned it 12%-14%, we are 25% now. Also on the EBITDA margin, we mentioned a guidance of 28%-30% for the year, and we are at 33%. The first question would be, would we consider revisiting these guidelines and this guidance? At the moment, we're looking to maintain this guidance. Now, not that we do not believe that we can maintain these results for the rest of the year, but we still want to remain prudent. Even though now we are now comparing to a relatively slower first half of 2020. When we look at the second half of 2020, if you remember, we made some significant recovery following the second quarter dip in 2020. That significant recovery means very strong sales figures. We have a high hill to climb and to beat the figures of last year, and we are planning to do that. Nonetheless, we do not want to overpromise something, and we prefer to stay on the side of underpromise and overdeliver. From the revenue growth side, as I mentioned, we'll be comparing to a very strong second half of last year. On the EBITDA margin, we do anticipate a potential impact of the fact that last year, the harvest was relatively poor. In fact, it was one of the poorest harvests in recent years. Of course, that poor harvest has translated into, or will translate into higher cost of sales, as the wines that have been produced with harvest of last year will start to get sold. That's why we prefer to stay prudent when it comes to these figures and this guidance. I guess this is the presentation of the results. I want to thank you for your attention, and I'm happy to open the floor for questions. Ladies and gentlemen, we may start the questions now. We can do either to write down your question in the chat or you can unmute yourself and address your question directly. Of course, the fact that before this, we were doing the calls just through the phone. Now it's very nice we can potentially see each other. Feel free also to put the camera on so that we can see each other as well. As you want, no pressure. Hi. Maybe I'll start. This is Chris. Although it says Andre on screen. Yeah. First of all, congratulations on good results. You mentioned that this harvest in 2020 was poor. I think now climate change also is impacting the industry, right? Do you see warming climate as a threat or rather an opportunity to you? That's a very good question, Chris, and thank you for this question. In fact, we do see this as an opportunity. We see it as a threat. We must not overlook this, we also see this as an opportunity. In one of the slides in other presentations, we do show the wine belts. We show that, in fact, with the warming of the climate, in fact, these wine belts are moving more and more towards the poles. Now, the good thing is that the parallel at which we are, we are more on the upper side of this wine belt. In fact, risks such as freezing in early spring are becoming less, so we have a benefit from that. Now the drought, of course, may become an issue for us in the future, and this has been the issue last year. On one hand, we have a decrease in risks such as frost, but on the other hand, we have an increase in risks such as drought. For that, the mitigation for such risks are implementing irrigation systems. This is something that we've planned to do. In fact, for Bostavan 21, the initial plan was to make it happen this year, given certain, on one side, priorities on CapEx, on capital allocation, but on the other hand, also the fact that this year it was clear from the start there was no need for an irrigation system just this year alone. For us, the deployment and the implementation of such an irrigation system will take around three months. We know that if we start such a deployment of such a project somewhere the end of the year or early next year, we'll be in time to mitigate against, I don't know, some risk of drought in 2022. Thank you. Thank you. Thank you, Chris. If there are no questions, maybe I'll find a subject that is not covered in the presentation. Yeah. We have few questions in the chat. Sure. Let me just read them. Sorry about that. Let me just have a look. All right. What is the difference in price as% of the same wine sold in different countries? In fact, one element of our success, this is a question, by the way, from Vasile Tofan. Something that perhaps doesn't transcend through all the figures and our results is the fact that one element of the success, not only in a certain market, but also in the region, is the fact that we have a relatively robust pricing policy. The only places where you would see perhaps an increase or the price being slightly higher than what we call in our home markets would be when, for example, when products are being sold either through online due to shipping costs or in markets where the route to market absorbs more cost, such as, for example, the U.K. Overall, we have a relatively strong and stable pricing policy in order to not create disbalance among, on one hand, different channels in one market, but also different distributors, large distributors for different regions. Overall, the difference in price is minimum. Moving on. I think I've answered. You said that harvest of 2020 was low, that only means high quality of wine. Exactly. Yes. On one hand, yes, it means a higher average cost for the wine produced from grapes of the 2020 harvest. We're looking at an amazing vintage, and we're already seeing some amazing wines being produced from that year. What about the harvest of 2021? Do you see better volumes for this year? By all means. This year, the harvest is looking significantly better. We're looking to approach somewhere the 2019 harvest figures. This year is looking much better. What is your view on the inflation rebound in Romania and in other markets as regards your ability to pass on the cost increase to the customers, particularly in terms of sales and margins? Thank you. What we see when it comes to inflation is that, of course, as inflation penetrates into different product category, it will also penetrate into our category. When we are looking particularly on the exchange rate between hard currencies such as Euro and dollar versus other currencies such as Moldovan leu or Romanian leu, we have sort of a hedging on the fact that, though a majority or a good portion of our revenue is in local currencies, so-called Romanian ron and Moldovan leu, a very good portion of sales are also in euro. That, of course, gives us this mitigation against, on one hand, exchange rate, but also inflation in some of these markets. What is the expected CapEx spend in 2021 and 2022? The expectation for the CapEx this year would be somewhere around RON 4.5 million-RON 5 million. That would mean EUR 4.5 million-EUR 5 million, if I said it wrongly. EUR 4.5 million-EUR 5 million, which equates to, say, give or take RON 20 million-RON 25 million. Hi. I have a question on Bostavan. You mentioned you had a large investment in the bottling plant there. Now you talked a bit about the premiumization of the brand. When do you think that you will be ready with operational efforts and start the sales and marketing efforts for Bostavan? I'm referring to the fact that now there is a bit of stagnation in the brand sales, and I was wondering when should we expect to see the same double-digit beautiful numbers in growth just as for Purcari? The efforts, answering the first portion of your question, when are we planning to exert the efforts into promoting these products? It is imminent. It is happening pretty much as we speak and in the next month. We are looking at launching a few new products from the Bostavan Winery, and let's say the full attention is given to creating new brands and sort of dissociating ourselves with Bostavan because changing customer perception, even though you have now these very high quality wines, the customer perception to be changed is not that easy. We are launching these products as we speak in key markets, which is Romania, Moldova and Ukraine. In the next month or maybe two months, you should see them already promoted and potentially on shelves. In order to see those double digit growth that you're mentioning, now we still intend to keep pushing double digits growth on, let's say, let's call it the core Bostavan product portfolio. Of course, for the new portfolio, if I were to call it the new portfolio, for it to have a significant share in the overall sales of Bostavan, and to have that effect, even though it may grow on very high double digits or maybe at the beginning will be not double, it will triple digits growth. For it to start becoming significant in the total portfolio of the wines that are being sold from this winery, this may take some time. This effect and this premiumization road is That's more of a medium term, so to say. This will take a few years when this effect is really felt. We have to start it now, so that in three years we look back and we know that we started it when we were supposed to start it, and we start reaping the effects then. Thank you. An additional question on Purcari, seeing the high growth, will you need significant more investments to accommodate that growth? Are you comfortable that you can manage to have capacity to replicate that growth in the following years? That's a good question. Thank you for this question. The capacity and the potential bottlenecks have a few stages. The first one, of course, is sourcing the grapes, the high-quality grapes for Purcari. Until recent, Purcari was 100% exclusive own grapes. Recently, though, we started to look at purchasing also third-party grapes from the Purcari area and from the Stefan Voda wine region. This of course, purchasing third-party grapes is done with partners that we have a very close relationship. We subsidize them through the years, and we ensure the very high quality of grapes. That's how we're mitigating the capacity needs on sourcing the grapes. On the processing, storage, and bottling, we have no bottlenecks because somewhere last year, around mid of the year, we have opened a new production section at Purcari. Now we've increased both our processing, storage, and bottling capacity to 10 million bottles. Until 10 million bottles, we have room to grow without any hindrance. Even beyond that, you probably don't know, but before this new bottling line being opened mid last year, the teams at the Purcari Winery, sometimes were working three shifts. They're working overnights. Work in three shifts, but eight hours, in order to keep with demand. This is of course not the case. When I mentioned 10 million bottles, is 10 million bottles without any additional pressure on the workforce. Should we cross 10 million bottles, we're still able to supply for such demands. Sounds great. Thank you. Thank you. Sir. Hello. Hi. Hello. Can you hear me? Yes. Hi. Good. In continuation for the previous question, there must be somewhere a limiting factor in the growth of this extremely successful brand, Purcari. You can only have that much grapes harvested in that region. Isn't like that? You said you have already a lot, but there's no problem with the processing and the rest. Yes. No. When it comes to sourcing grapes, again, as I mentioned, for a very long time, Purcari was own grape only. Yeah. With the approach of allowing to source from very close parties, third parties, that work with regard to now to supply additional grapes, this is not a limitation. Let's say we don't see a limitation or any risks in the near to medium future. You can have grapes from anywhere, you mean in Moldova and? Not anywhere in Moldova, but in that wine region. In that wine region. There are three wine regions in Moldova. Yes. Which is Codru, Purcari, Valul lui Traian and Stefan Voda. Within Stefan Voda, we now allow ourselves to source these grapes. At the same time, every year we're planting more and more of our own vineyards. We've planted some vineyards last year. We planted some more vineyards this year. Of course, it takes four years to be able to get the first harvest from a new plantation. In four years' time, we'll see that the vineyards that are in our operations that create harvest will increase. We're planning to keep doing this year over year. Can you tell us which is going to be the brand you'll use for Bostavan, or it's still a secret? I prefer that maybe in the next call, we will do a presentation on this, because I'd like to see some initial sales. Okay. Why? Because, we know that some of the audience for these calls are also our competitors that want to gain. What about Dor? Are you keeping that brand, Dor? Yes. Dor, we are keeping. We've recently rebranded this wine completely, and it's being launched as we speak. We've done a full rebranding, a full repositioning. Basically, we are reinventing this brand altogether, and we are launching it as we speak in Moldova. I don't want to monopolize, but I'd like to stay a little bit on this side of the branding story, because I guess, even yourself or many people have been surprised by the extraordinary success that Purcari has, and that's conquered the Romanian market. I guess, how do you see that? Was it the name? The formula for success? What made Purcari successful? Yeah. It's evidently that it's very hard to replicate that, as much as you will try, but it's going to be hard. Well, let me start with the fact that the history of Purcari started in 1827. Purcari has this great legacy and heritage of how we became the modern winery that it is. 1827, the year of its foundation. In 1878, Purcari already won its first Negru de Purcari, which is the flagship wine from our portfolio. In 1878, it already has won the gold medal at Bordeaux wine contest. Already in 1878, it has placed itself on this world map of top wines. There are different sources that Purcari was even the preferred wine of Queen Mary, so before Elizabeth. It's also the wine that's present in the private collection of Prince Charles. I'm sure they played a role. I'm getting there. I'm sure not every Romanian that bought a Purcari knew all those little things. Of course. I just took some opportunity to go a bit through the history. Yeah. At the end of the day, wine is not just, you don't sell the product, you don't sell a product that just gives you an olfactory sensation, but it's also a product that comes with a history and a story behind it. Yeah. In 2004, Mr. Victor Bostan, who's the founder of the modern Purcari Winery and Purcari Group, he's sort of the legend and the head figure in Moldova and Romania. It's a pity we don't see him too often on the conference calls and things like that. Continue, please. Well, Mr. Bostan, perhaps English is not appropriate. Of course. -go into deep discussions, he's very much at the helm of this group. His most important contribution is to the production of wine, to the quality of wines that are being produced. With his direction, Purcari has grown to what it is today, and at the core of this is extremely high-quality wines delivered to customers for an affordable price. Of course, I can go a bit more in the history how Purcari was the leading exporter to Russia, then the embargoes, then the focus on the Russian market. Yeah. Well, I finish with that. The proximity with Ukraine, which is opening up so much now, I ask myself why you could not replicate in any way the success you had in Romania, or even on some further away markets on this Ukrainian They don't like wines? I see they have a great winery a little bit further east, but I don't know how their tastes are. Anyway, it's a big market, it seems to me. Well, look, if we speak about Purcari alone has grown 26% in Ukraine these six months versus last year. I would say for sure more than 50%, I would say close to 100% growth, Purcari alone in Ukraine versus 2019. Your conclusion that the success there is not as is Romania right now, because we're happy to see Romania keep growing at 25% or 29% year-over-year pace. Ukraine, in fact, is showing very good adoption of Purcari wines. Is becoming really a trendy product. In fact, what we're doing now, we want to support this pool effect that we see in the market, and the way we want to support it is with local presence to replicate the Romanian formula. It hasn't been done until now, we're doing it now. In fact, we're not looking at doing that only in Ukraine. We're looking to do that in the Baltics, and we're looking to do that in Poland. We know that maybe for some years, the reliance has been on growing these few key markets, such as Moldova, Romania, Poland, though Purcari was not present there, and Czech Republic, though Purcari was not present there, Baltics, though Purcari was not present there. Now, if you look at Purcari's presence in those markets that I mentioned that they're not present, in fact, the sales are accelerating for Purcari in the Baltics, for example. Purcari has already I don't want to mislead, but it already has surpassed some other markets that were fairly significant for Purcari, and we see success there. For Ukraine, we do see a strong opportunity, and we are continuing the growth of Purcari there. The opportunity in Ukraine is through the fact that, unfortunately for Ukraine, Russia has done this aggressive move of removing, or let's say annexing Crimea. However, 50% of the vineyards of Ukraine were in Crimea. Players like Inkerman and such, the total surface of technical vineyards for wine making in Ukraine is 60,000 hectares. Now, 30,000 were in Crimea. Now with this depletion of supply, we see a further opportunity there. One opportunity is for us to push our products from Moldova, but now also from Romania. We're looking at exporting from Crame de Cotnari as well. The second one is on the non-organic, so the M&A side. Of course, we are careful. We're assessing the risk, the political risk, because we have opportunity costs where we could invest in other areas, in other regions, but there's also an opportunity to actually do an M&A and create a local champion. Here I mention another side route of our M&A strategy because, on one hand, we're looking at, let's say if we look geographically, the spectrum of our M&A focus incorporates also countries such as Georgia, such as Croatia, such as Czech Republic. Some of them are with the focus of perhaps export rather than local consumption. Georgia would be an example. Then we're looking at regions such as Bulgaria and such as Ukraine for an M&A or for different formulas of entering those markets to create a local champion. With our expertise, for example, if we were to look at Bulgaria and we've done a full analysis of the full wine shelf, and we basically plotted the whole wine shelf in Bulgaria. We do see that when we look at quality versus price, we see that with the quality to price ratio that we have, we can become the local champion. Of course, Bulgaria being a wine producer, the strategy is not to export from Moldova in Bulgaria, but actually to produce local wine there and basically create a local champion. That similar can be done in Ukraine. Thank you. Sorry. Good luck. I've gone a bit in the. No, that's it. It's important. In more of details. We will try to rely not on luck, but on our expertise. Thank you. Thank you. Thank you. Hi, this is Juliana from Modern Company. I already included some questions in the chat. I just want to make sure that I get the time to ask them. The discussion on Ukraine was indeed interesting. Should I just go through them? Yeah, please. Juliana, we always appreciate your questions. First, a very short one. You're mentioning that you received another EUR 1 million from the Glass Container Company. Will that be included in the P&L in the third quarter? I'm not sure if we have Mr. Victor Arapan, the CFO here. Perhaps he can elaborate more on the way the transaction is reflected, here it's a bit of a combination on the fact that we have created some provisions. We have retained the recording of some, let's say, beneficial effects of the transactions, and they're reflected in different periods. Perhaps, Victor, you can elaborate on this, pleas. Yeah. Thank you, Juliana, for the question. The transaction occurred on July 30, so it is not yet reflected in the P&L of the company. It will be recorded in the third quarter. What does that mean? Will you see the full RON 1 million reflected in the P&L? [audio distortion]] Yeah. [audio distortion]] Okay, great. Thank you. You were mentioning in the presentation as well that the 2021 harvest was good, not like the one in 2020. Should we see an impact on margins from that? Can you estimate what potential impact on margins could be? Well, from the 2021 harvest, we're looking to revert to the usual margins that we are used to. In the areas of 50% gross margin, then the 30s for EBITDA and the 24 for net profit. There is a negative impact in margins from the 2020 harvest and yes, we're expecting some negative effect, as the wines that have absorbed higher cost per liter from the harvest of 2020 will start being sold in 2021 for the whites and roses and 2022 for the reds. Okay. Please go ahead. I wanted to say, I think you asked about an estimation of the effect. Of course, it's a more advanced modeling to be a bit more precise on the margin, the negative effects on the margins from this harvest, because of course it's an amalgamation of different harvests, especially for the reds. Also because of the fact that we continue to push prices up where this can be done. Even though there may be some cost pressure from the cost base, we will look to relieve this through applying increases to our pricing policies. Okay. From your answer, I understand that it doesn't necessarily have to have an impact on the margins. We do not foresee a heavy impact on the margins, no. Mm-hmm. Okay. Anyway, in the first half of this year, the gross margin was very close to 50% anyway. Yes. You're guiding at RON 50 in a good harvest year as well. Yeah. Regarding the stock option plan, the impact of the stock option plan, RON 5 million in the second quarter, do you expect to see, should we see an impact in the second half of the year as well? That is not really a one-off, because I see there is another budget program approved. When do we see the impact on that, and how does it work? I will answer, but again, I'll let Mr. Arapan correct me in case I said it wrong. Basically 75% of what had to be allocated through the share grants and the stock options has been allocated. That's why a hit has been received in the first half of this year. There's another, some portions that we'll see being allocated in the first half of next year, and then some of them in the first half of the year after that. This, let's say, spike will not be there anymore. Worth to mention here, though, that when we speak about this long-term management incentive plans, their reflection on our books and in our financials depends also on the price of the stock, because, of course, when we speak, for example, on the options, some options, they are in the money at different strike prices. We have options that are in the money at a strike price of RON 10, and options that are in the money strike price of RON 15, and others at strike price of RON 20. We are now at RON 115. Only, let's say the first, the one-third, only the stock options that are with a strike price of RON 10 are in the money. Nonetheless, just remember that when this plan was devised, it was approved initially through the prospect and was approved by the AGM. The share price, if we were to convert into today's price following the increase of the share capital, was at around RON nine. Even the first portion was not in the money. It just again shows that these kind of plans, they work. It creates alignment with management, and it creates that incentive that we are the top management, including some of the members of the teams that have a direct impact on the success of our company. Do not only look at short-term effects and perhaps reaching certain personal KPIs, but also looking at contributing to the overall well-being of the company in the medium to long term, so that they can benefit from the value of the company increasing. Victor Arapan, not sure if you want to mention or to correct me regarding the impact of the allocation of these management incentives. Okay. I can just add that we can estimate an impact in the second half of the year, around 15%, in addition will be recognized in the P&L. 15% of RON 5 million, or 15%. What we saw, right, the RON 5 million were 85%, and it is 15% left. It's about RON 15 million out of all share-based payments recognized in the first half of 2021. Meaning from 6, exactly RON 6.6 million. Okay. RON 6.6 million would be the total impact, and we already saw RON 5 million. Okay? Yeah. We will recognize additional 15%, around 15%. This is only due to the time frame we will recognize it. We will make an accrual. If the price of the share will continue to increase, of course, this will have its impact separately. So, uh- Yeah. It does depend slightly on the share price as well. Just to make it clear, it's RON 6.6 should be kind of an estimate for the total impact. RON 5 million already reflected. I don't understand the 15%, what that refers to be honest. Victor, maybe you can- We are going to see an impact in the first half of 2022 and 2023. That's separate to this. Yes? Yes. This is separate to this round recognized in the first half. Okay. We expect to complete around RON 1 million additional unsettled share-based payment. In the second half? Yeah. Not 1.6 or one, just one. Without taking into consideration the possible increase in the price of the share, which will have an additional impact. Actually that means that anyway in the second half, the impact will become quite small from this. In principle, we should see margins improving in the second half. I'm just wondering about the guidance, because if your sales are exactly the same in the second half as they were last year, full year sales are still up by 11%, and your guidance is 12%-14%. I'm just wondering, why are you so cautious? Same with margins. At the moment, margins are somewhat in line with guidance, but taking off, assuming of course, a much lower impact in the second half, margins should improve. Is that not right? We do, Juliana, we do still expect some pressure on the cost side from more expensive wines or more costly wines produced from the 2020 harvest, and in general in 2020. We would see some pressure on the cost side. Also we're prudent when it comes to the sales mix, because, for example, in the first half of this year, yes, Purcari has been growing, and we do expect Purcari to keep growing. We also do expect some bounce back of sales from Bostavan in Poland and Czech Republic, and in Moldova. Again, overall, we do see that if we look at this guidance and also considering that 2020 second half was a strong six months, then the way we see it is that this is a more prudent approach to setting the guidance. Doesn't mean that we will not push to overachieve it, but at the same time, we don't want to lead into optimism that may not convert. I'm looking that in the second quarter, you already sold in Romania about RON 30 million. That's already what you sold in the third quarter of last year. Of course, in the fourth quarter, we see the fourth quarter effect. That's why I'm just wondering why you might be a bit cautious. Are you seeing restrictions in Moldova? Are you expecting further restrictions in Moldova, maybe? Yes, there's also the situation with the pandemic. We do not necessarily expect strong restrictions, given that the uncertainty is still there. For example, Czech Republic was a market with restrictions for a good portion of 2021. Even though their figures when it comes to the COVID infections was very low, they maintained those restrictions. Similar to a certain extent in Poland. We're yet to see how the situation with this pandemic will evolve. Overall, for example, if we speak about Romania, we've had an extremely strong last year, 2nd half of last year, especially the fourth quarter. Okay. I'm looking forward to stand here in three months and then in six months, saying that, Yep, Juliana, we should have been a bit more bold. Thank you. Thank you. Gen, we have a few more questions via chat. Okay. Let me find them. Meantime, I will show to Ionut Sadan, is the next question, the guy at Divin. I will show what we are going to do with our cognac. Our Divin is at 20 years old, and now we're launching 25 years old. Of course, it's a great product, as I said, Ionut Sadan. We have a lot of plans with this brand, especially we are more active in Romania and penetrating other markets. Good things are still to come. Actually, it was the brand which has been mostly affected by the pandemic, but now it's recovering. In fact, it's good that the subject was diverted a bit to what's not very, but went a bit towards Bardar because we speak a lot about Purcari and the fact that Purcari is the most awarded winery in the world this year. Also worth to mention that Bardar, our brandy, Bardar 25 years, has taken the Taste Master and Brandy Master at Brandy Taste Masters worldwide. This is, let's say, the number 1 brandy competition worldwide, and Bardar 25 years has taken the number 1 spot. Also worth to know that. Again, it shows the fantastic abilities of creating this really amazing product. Am I missing any questions? Okay. I think I've covered all the questions. Eugeniu, do you see any other questions that I haven't covered? No, you have covered all questions. All right. If there are no further questions, I want to thank you for your presence. Let's see how the situation with the pandemic and with the restriction goes. We do look forward to some more opening up of borders and opening up of abilities to travel. Once that is happening and we see that the moment is more opportune, we're looking forward to host an investor event, where we would see each other face-to-face. For those that have participated in some of our wine battles, Purcari versus Parker. Two of them, those were live, and both of them, we won. You can imagine, Purcari has won against 95 points, Robert Parker, which is the number one wine critic in the world. We're looking perhaps to host another one of these bouts. Over there, again, to see each other face-to-face and for you to again taste the competitive advantage of our wines. Thank you again for your attendance. I wish you everyone a great day. Thank you.