The year 2013 was a very busy period for our business, requiring skilful stimulation of foreign expansion processes and consideration of difficult macroeconomic conditions at the same time. It was also a year of strengthening our position in the lighting market and launching an extremely important investment programme with a positive effect, that we can watch in 2014.
Dear Sirs,
We have reached the end of another year of our operation, a year of intense growth and new challenges. Let me briefly present our last year’s achievements.
The year 2013 was a very busy period for our business, requiring skilful stimulation of foreign expansion processes and consideration of difficult macroeconomic conditions at the same time. It was also a period of strengthening our position in the lighting market and launching an extremely important investment programme with a positive effect, that we can watch in 2014.
Mentioned investment based on the development of our company and start-up of a new production line for assembly of electronics in the middle of the year, which allows us to respond flexibly to the needs of the market and customers. I am convinced that this investment will strengthen the position of LUG S.A. Capital Group in the lighting industry and positively influence both the competitiveness of our products and the Group’s financial results. Production development is of key importance for the future of all our companies.
At the same time, along with the expansion of the production infrastructure in Poland, we continued our activities in foreign markets. The Brazilian subsidiary incorporated in 2012 began an active image-building and marketing campaign aiming to win the Latin American market. LUG products showcased at this year’sSão Paulo Design Weekend met with interest from the industry and gained us the first business contacts. At the end of the year we incorporated another subsidiary in London. Strengthening our position in the British market is a huge step in the development of our export structures. We have high hopes for both companies, as they are a crucial element of the approved expansion plan.
In 2013, the Capital Group recorded a 2,5 per cent increase in profit on sales which corresponds to the significant increase in sales revenues from foreign markets. Unfortunately failed the Polish market, where we have completed worse results than the year before. Analysing the results of major geographical segments, we can see a significant growth in sales revenues from European and Asian country, mainly due to the policy of expansion and strengthening the position of the LUG and Flash DQ brands in the markets of developed countries. In the future, we can expect considerable stabilisation of the situation of the company and progressive independence from commercial or economic fluctuations in single local markets.
Unfortunately, due to the implementation of the recommendations of the auditor on the accounting changes and pass some of the revenue within the group for subsequent periods and also because of changes in the scope of consolidation of subsidiaries, financial forecasts for 2013 must be adjusting at the level of EBIT. However, these changes will also reflected in future financial reports, ensuring transparency of the Group.
In 2013, our company presented its products at domestic and international fairs of the lighting industry. Our products could be seen in 5 countries on 3 continents at such specialist fairs as Interlight Moscow, LUX LIVE London, NT Expo Brazil in São Paulo, Smart Lighting & Energy Summit in Abu Dhabi, Light 2013 and Retail Show in Warsaw. The meaning of this participation and new business contacts made cannot be overestimated.
It is also my great pleasure to inform you that LUG S.A. was honoured with several awards this year, both product-related and concerning investor relations. A Flash DQ fixture received first prize in the Best Fixture category at the International Fair of Lighting Equipment “Light 2013”. We were also recognised in the Golden Website competition for the best Investor Relations website among other companies from the NewConnect market. A particular distinction is the award for the Annual Report 2012 and mention for the Management Report on operations for 2012, since it was the first time that the competition organisers appreciated the companies from the NewConnect market. The awards serve us as a confirmation that our communications policy is valued on the capital market and our products suit the tastes of the most demanding customers.
The year 2014 will be a time of equally intense development, both in commercial and in organisational terms. In the middle of the year, we begin the construction of the second factory in Zielona Góra to launch the production in 2015 and manage even bigger contracts. Already at this moment LUG Light Factory Sp. z o.o., our largest subsidiary, is carrying out a prestigious order to supply lighting for the second metro line in Warsaw. I hope that soon we will be able to inform you of even more new contracts. We can only wish for our shareholders to have many reasons to be happy about investing in LUG S.A. also in 2014, when the 25th anniversary of our company will be celebrated.
At the same time, I would like to use this opportunity to thank the whole team of our company for their commitment, which allows me now to share our success with you, which I am particularly proud of.
Yours faithfully,
Ryszard Wtorkowski,
President of LUG S.A. Management Board
Executive Summary:
- In 2013, LUG S.A. Capital Group increased the share of exports in its revenues from sales to 55,7 percent for another year in a row, generating sales in foreign markets at a level of PLN 58 million.
- The extension of the factory with a new production hall resulted in the launch of a new line for manufacturing electronic components using LED technology.
- In 2013, the company LUG do Brazil Ltda. conducted an intense marketing and advertising campaign aiming to win contracts in the markets of Latin America.
- In order to boost LUG’s share in the British and Irish markets, a new subsidiary, LUG Lighting UK Ltd., was incorporated in the second half of 2013.
- The most important challenges in 2014 include the commencement of the construction of the second factory of LUG in Zielona Góra, to open in 2015.