2018

Annual report of

LUG S.A. Capital Group

LUG in 2018

LED market forecasts

62MLD US$

World

11,5MLD US$

Europe

9%

CAGR

112MLD US$

World

30MLD US$

Europe

Industry development factors

According to international forecasts, in 2018-2023, the value of the global LED lighting market will gradually increase to reach USD 112 billion in 2023, with a CAGR value of 9%.

IoT

Smart lighting is the most powerful instrument for the development of IoT towards the technology of the future that puts human needs at the center - its safety, comfort of life - and at the same time it neutralizes its impact on the environment. Innovations of LUG from the IoT area are implemented by the technology company of the Capital Group - BIOT Sp. z o.o.

Global IoT Market Share by Sub-Sector

Source: GrowthEnabler Analysis

Global Iot Market Size (in Billions US $)
and Growth Rate YoY

Source: GrowthEnabler Analysis/MarketsandMarkets

Strategic Directions of Development

Strategic development areas:

Innovation

We create light, not solutions

Internationalization

We create emotions, not feelings

Organizational culture

We are a LUG Family, not just a team

MISSION

We create an innovative light for life with passion.

VISION

International leader of innovative lighting solutions.

Our values

Strategic objectives

Main objective

Achieving growth rate of the LUG S.A. Capital Group in relations to 10% CAGR sales revenue in the next 5 years

Supporting objectives

Increase

To increase the share of completed projects, valued at more that 1 milion Euro, to 10% of sales revenue by the end of 2021

Globalization

Increase in the share of export revenues to 75% of the revenues of the capital group by the end of 2021

Margins

To increase gross margin on sales to exceed 40% over the next few year and sustain it at that level

LUG in the market

In 2018, the company sold its products to:

70 countries

Incomes structure (PLN mln)

Participation of LED

Participation of LED luminaires in LUG’s sales of lighting luminaires

Products

Get inspired by the LUG Architecture product portfolio

Architecture

Get inspired with the LUG Urban portfolio

Urban

Completions of the LUG brand

Non-financial report of the LUG S.A. Capital Group

We would like to provide you with the first LUG non-financial report. It is a source of a summary of information from the most important areas, such as social, employment, environment, human rights and anti-corruption issues.

These matters define the environment of LUG development. We made detailed identification of the impact we exert on specific areas and how they affect us. We have identified significant non-financial risks and described how we manage them."

Ryszard Wtorkowski

President of the LUG S.A. Management Board

Corporate governance

The LUG S.A. Capital Group ensures that relations with investors are built on the basis of partnership and pays great attention to granting free access to information about the Issuer to all shareholders and to respecting their rights, regardless of the size of their block of shares.

The corporate governance relating to the broadly understood management of the company accompanies the operations of the LUG S.A. Capital Group over the years. In 2018, LUG S.A. continued to apply principles of “Good Prac-tices of Companies Listed on the NewConnect”, applied to companies listed in an Alternative Trading System of Giełda Papierów Wartościowych w Warszawie S.A. (Warsaw Stock Exchange) and adapted to the applicable regulations in accordance with the highest standards.

Risks related to the environment

  • Risk

    related to macroeconomic and industry situation

  • Risk

    of volatility in the legal environment

  • Risk

    risk of variability of tax regulations and their interpretation

  • Risk

    of incorrect assessment of the macroeconomic situation and trends in the lighting industry

  • Risk

    related to financing with foreign capital and changes in interest rates

Risks related to the business activity

  • Risk

    related to the seasonality of sales

  • Risk

    of random events

  • Risk

    related to liability for damage to persons and property in connection with the use of products offered by the Issuer

  • Risk

    related to the withdrawal of production batches from the market

  • Risk

    of losing key employees and key management members and the inability to employ a sufficient number of qualified employees

  • Risk

    related to court proceedings, arbitration proceedings and proceedings before administrative bodies

  • Risk

    related to environmental protection

  • Risk

    related to the temporary suspension of production as a result of failure, destruction or loss of property

  • Risk

    related to the implementation of the contract with the Government of the Misiones Province and the development of activities in Argentina

  • Risk

    related to the supply chainrelated to the supply chain

  • Risk

    risk of achieving strategic goals

  • Risk

    of deterioration of reputation and loss of customer confidence

  • Risk

    exchange rate

  • Risk

    related to penalties for non-performance or untimely performance of orders

  • Risk

    of rising prices of raw materials and components

  • Risk

    related to competition

  • Risk

    related to the repayment of receivables by contractors

  • Risk

    related to the increase in operating costs