10th June 2022
MADARA Cosmetics AS
Company Overview MADARA was established in 2006, aiming to create effective and innovative organic skincare products, which are sustainable, safe and completely natural, and draw on examples of the best practices. With this ambition, the Company has managed to develop a competitive brand within the organic skincare niche that is distributed through both conventional and speciality channels. The ‘MADARA’ brand became a local pioneer in the field of natural cosmetics. The Company has extensive vertical integration with each product being exclusively developed and manufactured in MADARA’s own laboratories and production facilities, enabling it to take roughly 100% control over all processes. Also, the in-house marketing and design team enables MADARA to have a unique brand identity. Organic ECOCERT certification, GMP and ISO standards, in vitro and in vivo research emphasise MADARA’s passion for quality and perfection in every detail. The Company exports its own brand products worldwide as well as offers contract manufacturing services. Recently the Company has launched a print-on-demand platform – Selfnamed which offers personalisation of MADARA manufactured certified natural and organic cosmetic products.
MADARA Cosmetics Group The MADARA Cosmetics group is made up of several companies. AS MADARA Cosmetics is the parent company responsible for the development, manufacturing, and sale of organic cosmetic products under two brands: ‘MADARA’ and ‘MOSSA’. MADARA Cosmetics has three fully owned subsidiaries: MADARA Retail SIA, Cosmetics NORD SIA, and MADARA Cosmetics GmbH. MADARA Retail SIA manages four MADARA brand stores in Riga, which are important sales channels in the Latvian market, located in shopping centres – “Galerija Centrs”, “Spice”, “Alfa”, and “Akropole”. The newest store in “Akropole” was launched in April 2019. In FY 2020, the revenues of MADARA Retail SIA dropped 8.5% y-o-y to EUR 0.86m (accounting c.a. 20% of the Company’s total sales in Latvia), due to temporary store closures in Latvia because of the COVID-19 related restrictions imposed by the local government. In FY 2021, although sales from the Company’s brand stores declined to EUR 0.46m (-46% y-o-y) due to the COVID-19 related restrictions, net profit reached EUR 0.15m (FY 2020: EUR 0.01m) due to the government support. As restrictions have been loosened in Q1 2022, retail stores have seen increased activity. MADARA Cosmetics GmbH provides cosmetics marketing services in Germany and organises the distribution of MADARA products in that market. Cosmetics NORD SIA is focused on rendering contract manufacturing services using the production infrastructure and capacity of MADARA, with sales amounting to EUR 1.1m in FY 2021, up by 282% y-o-y and 88% compared to FY 2019. 2020 results were down due to difficult circumstances related to the COVID-19 restrictions in the operation of several partners. However, contract manufacturing sales grew rapidly in H2 2021 contributing 9% to total sales, while the contribution in FY 2021 was 6%. Such growth is attributed to the post-pandemic momentum and new contract manufacturing strategy that replaces individual adjustments in formulas with a ready-to-choose catalogue, which substantially increases efficiency and does not impact partner satisfaction. Generally, contract manufacturing is a thin margin business and for MADARA the gross margin in contract manufacturing has been around 18%, compared to the gross margin of c.a. 50% in Latvia’s own retail shop business and c.a. 60% for all operations taken together (largely driven by direct e-commerce). Besides improving efficiency in contract manufacturing processes, the new strategy also has a second leg which focuses on a new start-up project launched by MADARA, i.e. ‘Selfnamed’. SIA Cosmetics Nord’s subsidiary Selfnamed SIA is a new start-up in the print-on-demand industry. The print-on-demand
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INSTITUTIONAL EQUITIES
platform Selfnamed (link: https://selfnamed.com) is providing an opportunity for clients to start their own natural and/or organic certified cosmetics line with their own brand logo and personalised design. SIA Cosmetics Nord produces distinct products compared to “MADARA” and “MOSSA” branded products. Also, there is a 19% minority shareholding in SIA Farmācijas, biomedicīnas un medicīnas tehnoloģiju kompetences centrs. Both facilities have been formed within the framework of the state aid programme ‘Competence Centres’, being implemented with the help of the European Regional Development Fund. The main aim of the programme is to bring together companies and scientific institutions working in the same field as well as to encourage cooperation between the industry and academia to foster new methods and technologies.
Management The operational management of the Company is structured as a usual two-tier system, comprising a management board and a supervisory board. The management board is responsible for the dayto-day management of the Company’s operations and is authorised to represent the Company based on the applicable laws and the Articles of Association. The supervisory board of the Company is the supervisory body representing the interests of the shareholders in general meetings and exercising oversight over the activities of the management board. Supervisory Board According to the Articles of Association, the supervisory board consists of five members who are appointed by the General Meeting for five years. Currently, the composition of the supervisory board is as follows:
Anna Ramata-Stunda – Chairman of the supervisory board. Born in 1984. She graduated from the University of Latvia in 2008 with a master’s degree in life sciences and biology. Since 2010, she has worked as a researcher and lecturer at the University of Latvia, where she has participated in research projects for the Company. She is also a board member and co-founder of SIA InCell, which provides biotechnology and research services. Ms Ramata-Stunda is the co-author of many scientific publications, as well as holds several patents. Liene Drāzniece – Deputy Chairman of the supervisory board. Born in 1979. She graduated from the Latvian Academy of Art in 2003 with a bachelor’s degree in visual communication, specialising in the field of graphic design. In 2007, Ms Drāzniece graduated from the Istituto Marangoni Milano, Master Design Direction programme, where she studied brand strategy. Before co-founding MADARA, she worked in the international advertising agencies McCann, Leo Burnett, and Lowe as an Art Director for major Latvian brands, and she is the author of several brand identities for consumer goods and niche products. Since 2009, she has been the Art Director of the Company. In 2017, she also became a lecturer at the Riga School of Design and Art in the Department of Advertising Design. Edgars Pētersons – Member of the supervisory board. Born in 1981. He graduated from the Stockholm School of Economics in Riga in 2007 with a bachelor’s degree in economics and business administration. He is a founder and strategic planner of WKND, an advertising and strategic agency. He is also a founder and senior consultant of the company Pattern Consulting, a business consulting agency. Mr Pētersons has gained strong experience in strategic planning, branding, and marketing consulting areas. Sari Hannele Rosin – Member of the supervisory board. Born in 1972. She graduated from the South Carelian Business School in
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