THE LEGO GROUP ANNUAL REPORT 2021 ĐIỂM CAO

The LEGO Group

Annual Report 2021

CVR: 54 56 25 19

2 Management’s Review

Content

Management’s Consolidated
Review Financial Statements

04 Letter from the CEO 15 Income Statement
05 2021 Performance Snapshot 15 Statement of Comprehensive Income
06 Strategic Overview 16 Balance Sheet
09 2021 Sustainability Highlights 17 Statement of Changes in Equity
10 2021 Financial Review 18 Statement of Cash Flow
12 Financial Highlights of the LEGO Group 19 Notes
13 Board of Directors and Management
Management’s
Parent Company Statement and
Financial Statements Auditor’s Report

58 Income Statement 71 Management’s Statement
59 Balance Sheet 72 Independent Auditor’s Report
60 Statement of Changes in Equity
61 Notes

3 Management’s Review

Management’s Review
Management’s Review
Management’s Review

Our ambition is to bring the
power of LEGO® play to even
more children around the world.

4 Management’s Review

Letter from the CEO “Our passionate and

As I look back over 2021, I am grateful for LEGO Super Mario™ and LEGO Star Wars™. growth and announced plans to build a committed team of more
what the LEGO Group was able to achieve. We also welcomed adults with a range of new operationally carbon neutral factory in than 24,000 employees
challenging builds which brought families Vietnam. navigated the ongoing
Our passionate and committed team of together and inspired fans of all ages. uncertainty of the
more than 24,000 employees navigated Building a sustainable future brick by brick COVID-19 pandemic and
the ongoing uncertainty of the COVID-19 Our successful Rebuild the World brand Children are increasingly concerned about worked tirelessly to meet
pandemic and worked tirelessly to meet campaign further strengthened love for the the future of the planet. We are committed extraordinary demand for
extraordinary demand for our products. brand, and we announced steps to remove to giving them a voice and taking action to our products.
Their efforts led to our strong financial harmful gender stereotypes from our become a more sustainable company. After
performance and allowed us to reach more marke­ting and products so that all builders three years of research and development, we
children with LEGO® play. everywhere feel included. announced a breakthrough with our proto-
type brick made from recycled PET bottles.
I am also grateful for our fans. During the Innovative retail channels For COP26 (UN Climate Change Conference
year, thousands of children contacted us to We continued to welcome visitors back to of the Parties), we met with children to hear
share their LEGO experiences. It gives such our stores and unveiled a new retail format their ideas and released a set of ten Building
strong purpose to our work when we see designed to create immersive, memorable Instructions for a Better World.
first-hand the pride, skill, and excitement, brand experiences. We continue to see
that comes with creating and sharing a value in physical retail stores and opened I am optimistic the planet will be in safe

LEGO build! 165 LEGO branded stores around the hands with today’s builders of tomorrow.
world in 2021. Long-term investments in They inspire us with their creativity,
Investing in long-term growth e-­commerce continue to pay off, helping resilience, and optimism. And we are
The progress we made in advancing strate­ to drive double-digit growth in online sales grateful to be able to inspire and develop
gic investments will fuel growth now, and across our own and partner channels. them in return.
for generations to come. Investments in
product innovation, retail experiences, Expanding global supply chain It is this purpose that drives us to continue
digitalisation, and sustainability will keep Our long-standing network of factories to invest in our future – and the future of
our brand relevant and create opportunities positioned us well to navigate the supply generations to come.
for more children to benefit from play. challenges that affected all industries.
Our five manufacturing sites on three Niels B. Christiansen
Our 2021 portfolio was the largest and continents make our supply chain short, CEO, the LEGO Group
most diverse ever. We saw strong perfor- flexible, and able to meet shifting demand
mances from our homegrown themes such in our largest markets. We will continue
as LEGO NINJAGO which celebrated its 10th to invest in expanding capacity across our
anniversary, and licensed themes such as manufacturing network to meet long-term

5 Management’s Review Financial performance

2021 Performance Revenue Operating Profit Free Cash Flow
Snapshot
55.3 DKK billion 17.0 DKK billion 12.9 DKK billion
We are very pleased with our financial performance in 2021. Revenue,
operating profit, and consumer sales all grew double digits. Our 55.3 17.0 Top themes
performance was driven by strong demand for our portfolio and the LEGO® City
benefits of our multi-year investments in e-commerce, product innovation, 43.7 12.9 LEGO® Technic
and a global supply chain network. 39.0 LEGO® Creator Expert
36.0 LEGO® Harry Potter™
LEGO® Star Wars™
10.9

10.7 Market share growth
in largest markets
2018 2019 2020 2021 2018 2019 2020 2021
Return on Invested Capital
Revenue growth Operating Profit growth
94%
27% 32%

Environmental & social impact Strategic investments

We are making good progress towards our ambition to have a positive impact on
future generations by being a more sustainable company and bringing learning
through play activities to millions of children, families, and local LEGO® communities.

Innovating play Innovating retail

Positive impact Building a 2021 portfolio - largest and most diverse. 832 branded stores globally, 165 opened in 2021.
on future generations sustainable future 9.6 million downloads of digital Building Instructions. 340 branded stores in China, 95 opened in 2021.
7.3 million downloads of LEGO Life app. 70+ branded stores feature new, immersive
25% of the LEGO Group is owned by the 1st prototype brick made
LEGO Foundation which uses profit from recycled material. store design.
dividends to give millions of children
the chance to play and learn.

3.5+ million children reached with 98% increase in solar panel capacity Digitally-enabled brand Global supply chain network
learning through play activities. at LEGO factories.
4 digital hubs in Billund, Copenhagen, 5 factories on 3 continents.
77.5 million parents reached 138,411 kg (305,145 lbs) of LEGO bricks London & Shanghai.
with our digital citizenship donated to the LEGO Replay 1st operationally carbon neutral factory
programme. programme in 2021. in Vietnam in 2024.

Management’s Review 6

Strategic
Overview

The LEGO® Super Mario™ At the LEGO Group, we have a singular our portfolio, expanded and evolved our
theme was expanded vision – to be a global force for learning retail experiences, increased capacity within
with the introduction through play. our global supply chain network, trans-
of the character LEGO formed our approach to digital, and made
Luigi™ and a new This guides the decisions we make and the our business and products more sustainable.
2-player experience. work we do.
We saw the benefits of these investments
We believe that play, and LEGO® play in in our 2021 financial performance and be-
particular, has the power to transform a lieve they will continue to drive sustainable
child’s life. From the earliest age, play de- growth in the long term.
velops cognitive and physical skills critical
to help children reach their full potential. Innovating play
The LEGO System in Play is, by its very
We believe that if we can reach as many nature, innovative. It allows you to build, un-
children as possible, we can give future build and rebuild anything you can imagine.
generations the best opportunity to tackle Each year our designers are inspired by
increasingly complex challenges with the endless possibilities of the LEGO brick
creative solutions. to create hundreds of new products which
inspire and delight builders of all ages and
But play also has short-term benefits. Dur- interests. In 2021, around half of the port-
ing periods of lockdown over the past two folio was made up of new products which
years, families have reported that coming keep it relevant to shifting consumer trends.
together to build and play helps them feel This was also our largest ever portfolio, and
less stressed and more connected. And existing as well as novelty products care-

this is why we are so passionate about our fully balanced to appeal to builders of all
vision. Play is fun and good for you. ages and passions - from sports and super
heroes to animals and the arts.
Investing in our future
Over the past three years, we have made Seven in ten parents told us they would be happi-
strategic investments designed to deliver er to let their child play with digital games if they
growth in the long term. We have innovated also involved physical play.1 This is one reason

1According to the Play Well Study 2020, seven in ten (72%) parents
would prefer their child to play mostly with​non-digital games.

7 Management’s Review

we have seen strong success with LEGO experiences we offer our shoppers and our Part of this investment is our new retail A new retail store format
Super Mario™ which embeds technology into retail partners. platform. The new concept is designed was introduced to create
the brick characters. In 2021, we expanded to make visitors feel they have walked an immersive brand
this successful theme, adding LEGO Luigi™ to Investments in our e-commerce capabili- into a magical world of bricks filled with experience for shoppers
the universe which for the first time enabled ties helped drive our performance in 2021. awe-inspiring builds. Launched in a new of all ages.
brand new 2-player adventures. Over proportional e-commerce sales in flagship store in New York City, the concept
our own and our partner sites compared was introduced to more than 70 branded
We also expanded our digital LEGO Building to con­sumer sales growth, indicates that stores in 2021. In 2022, we expect to open
Instructions that provide a range of building the shift to online sales is set to continue. over 150 new branded stores.
suggestions based on elements available in Our technology platforms seamlessly
a given box. More than 7 million people also supported over a quarter of a billion visits Global supply chain network
downloaded the play app LEGO Life, which to LEGO.com during the year. We will Our global network of five factories in three
encourages young builders to share their accelerate investments in e-commerce continents proved its value in 2021. When
creations in a safe digital environment. and digital marketing to reach even much of the world’s supply was disrupt-
more shoppers & fans and ensure people ed due to the pressures of the COVID-19
Making play more inclusive everywhere have a great digital brand pandemic and a capacity shortage, we
We are investing to make our building and experience. continued to meet demand due to our

brand experiences more inclusive for all. We factories being in close proximity to our
want children to be able to see themselves The LEGO System in Play is major markets. This offers the flexibility
represented in what we do and help them by its very nature innovative. to respond to local demand, shortens the
learn about the diverse world around them It allows you to build, unbuild supply chain, and reduces the time and
through play. and rebuild anything you environmental impact of shipping products
can imagine. long distances.
One step towards this is a more inclusive
marketing approach. In 2021, we began We will also accelerate investments in our In 2021, we announced a further expan-
working with the Geena Davis Institute on brick and mortar stores. In 2021, together sion of this network with a new factory
Gender in Media and UNICEF to ensure with our partners, we opened 165 LEGO in Vietnam. Located near Ho Chi Minh
that LEGO products and marketing are branded stores around the world, taking City, the site will be our first operationally
accessible to all and free of gender bias and our global total to 832. This global network carbon neutral factory, constructed to
harmful stereotypes. allows us to reach new builders and to support long-term growth in the region.
inspire them with great instore brand and Construction will commence in 2022 with
This approach also includes our adult fans building experiences. This is especially production due to start in 2024.
and in 2021, we launched the LEGO Every- important in China, where we now have
one is Awesome set designed to celebrate 340 branded stores and are able to directly We are also investing to expand capacity
the diversity of our global LEGO community. connect with the first generation of chil- at existing sites to meet immediate and
dren to enjoy the benefits of LEGO play. long-term demand in line with growth
Creating memorable retail experiences expectations.
For the past three years, we have invested
to expand, innovate, and transform the

A prototype brick made Management’s Review 8
from recycled PET
bottles is an important
step towards using more
sustainable materials for
our products.

Investing in a digital future begin phasing in the new packaging in Motivated and engaged colleagues
During the past year, we have stepped up 2022, keeping us on track to make all pack- We have a team of more than 24,000
significant long-term investments in digital aging more sustainable by 2025. employees working across 39 countries.
infrastructure, engineering capabilities, Each year we track levels of engagement to
and digital product experiences while By encouraging the donation and reuse ensure we are providing a great workplace
expand­ing our digital teams in London of LEGO bricks through the LEGO Replay experience. We are pleased to report that
(UK), Shanghai (China), and Billund & programmes in the US and Canada, we despite the continued disruption, levels
­Copenhagen ­(Denmark). extended the creative life of approximately of motivation and satisfaction were out-
62 million bricks through 138,411 kg standing as our colleagues feel valued and
We will accelerate this effort across our (305,145 lbs) of LEGO bricks donated to believe they have opportunities to develop.
entire business in 2022 so that children, more than 67,000 children in North America
shoppers, partners, and colleagues have in 2021. Since its launch in 2019 in the US, We continued to introduce Parental Leave
a fantastic digital experience when they and in 2020 in Canada, this brings the globally, which guarantees at least 26 weeks
engage with the LEGO brand. total number of bricks donated to the of fully paid leave to the primary caregiver
programme to 296,072 kg (652,727 lbs), and 8 weeks’ paid leave to the secondary
Positive impact on the planet & society a milestone exceeding 100,000 children caregiver. Our commitment to developing
Our sustainability efforts are driven by our reached in North America. future generations begins with our employ-
Planet Promise which is to have a positive ees’ children, which is why we believe the
impact on the planet and society our Reaching children opportunity to be present during the earli-
children will inherit. Despite the continued COVID-19 pandemic, est stages of development is so important.
we reached more than 3.5 million children
In 2021, we revealed a prototype brick via learning through play initiatives. We Finally, in recognition of colleagues’ out-
made from recycled plastic bottles, the cul- also supported children spending more standing efforts to bring play to more
mination of three years’ work by more than time online and at home, through an ex- children around the world, meet the strong
150 experts who tested over 250 vari­ations panded suite of activities to help families demand characterising 2021 and the
of PET materials. We have also worked talk about digital child safety. company’s extraordinary strong financial
to expand the range of bio-based LEGO performance, the owner family provided
elements made from bio-polyethylene Through our Build the Change programme, additional days off during the holiday peri-
(bio-PE), a soft, durable, and flexible plastic we challenged children to voice their hopes od for colleagues to spend with family and
derived from sugarcane. There are current- and dreams for the future which resulted in friends at the end of a busy and extraordi-

ly around 150 elements made from bio-PE ten Building Instructions for a Better World nary year. In addition, an extra performance
and nearly half of our sets are designed to handed to leaders at COP26 in Glasgow. bonus will be paid out in April 2022 via the
contain at least one of these elements. existing Performance Management Plan.
You can read more about our sustainability
During the past year, we completed a efforts in our 2021 Sustainability Progress We are extremely grateful for our colleagues
successful trial to replace plastic with Report or visit: LEGO.com/AboutUs/Sus- who continue to work so incredibly hard to
paper­-based bags in our boxes. We will tainability. inspire millions of children around the world.

9 Management’s Review Environment

OUR AMBITIONS & PROGRESS Science- Sustainable Sustainable Keep LEGO
based target materials packaging bricks in play
2021 Sustainability
Highlights Reduce absolute carbon Make products from more Make packaging more sustainable Give consumers an easy and
emissions by 37% by 2032 sustainable sources by 2030. by 2025. safe way to pass along LEGO
We have set ourselves ambitious environmental and social compared to 2019 baseline. Single-use plastic removed from bricks they are not using.
targets to create a better world for future generations. 1st prototype LEGO brick made LEGO.com orders in Europe.
We are proud of the progress we made in 2021. 100% balanced by renewable from recycled material. 138,411 kg (305,145 lbs) of
energy. Introduced paper-based Pick-a-Brick LEGO bricks donated via the
Visit LEGO.com/Sustainability/Reporting, Almost 50% of products de- cups in LEGO Brand Retail stores. LEGO Replay programme.
to find out more about our sustainability journey. 98% increase in solar panel signed to contain elements of
capacity at LEGO® factories bio-PE. Paper-based bags in LEGO boxes will 67,000+ children in the US and
­compared to 2020. be phased in from mid-2022. Canada benefited from dona-
tions.
70% reduction of landfilled waste
compared to 2020.

Achieved an ‘A’ leadership status in
2021 CDP climate change rating.

People

Children Building sustainable
businesses together

Learning Partner Digital safety Play Amplify Working with our suppliers to reduce
through play for play and wellbeing for all children’s voices the carbon footprint in our supply chain.
80 suppliers committed to the CDP
Reach 8 million children a Give children in rural Help families build online Make products and marketing ac- Help children learn about our carbon disclosure system.
year with learning through China an opportunity child safety & wellbeing skills cessible to all and free of gender planet through play and provide
play programmes & activities to learn through play. and empower children to bias and harmful stereotypes. a platform so they can partici- Caring for colleagues
by 2022. become good digital citizens. Partnered with the Geena Davies pate in the climate debate.
3.5+ million children reached Partnerships with the LEGO Institute on Gender in Media who Protect the rights and wellbeing of every-
in 2021 despite COVID-19 Foundation and UNICEF 77.5 million parents reached audits and consults on select LEGO At COP26, launched ten Building one involved in making LEGO products.
pandemic-related limitations. announced in 2021 expected with LEGO digital citizenship product and marketing assets. Instructions for a Better World, ’Top in class’ motivation and satisfaction
to directly benefit 20,000 programme. which reflected input from 6,000 among employees in the LEGO Group
1.5 million LEGO sets children aged 0 to 6 years Worked with UNICEF to launch an children around the world. People Pulse against external benchmark.1
donated through Build and around 40,000 care­givers Expanded our range of tools internal LEGO D&I Playbook to in- All suppliers must sign our Responsible
to Give programme. through access to family and activities for families, form communication and product Almost 170,000 children reached Business Principles which legally requires
support services and play such as Build & Talk, to help development going forward. through Build the Change ac- them to provide a safe, fair, and healthy
materials. address online safety and tivities designed to inspire and workplace for all employees.
cyberbullying issues. educate children on sustainability.
1 Ennova Employee Engagement Survey 2021

10 Management’s Review

2021 Financial Review

Summary Expenses, Tax & Profit Cash flow and equity
Overall, 2021 was a very satisfactory In 2021, the LEGO Group made significant The LEGO Group’s assets increased to DKK

year for the LEGO Group. The company investments in initiatives designed to 48.0 billion in 2021 compared to DKK 37.2
achieved double-digit revenue, consumer deliver long-term growth. This included billion in 2020. Cash flow from operating
sales, and profit growth while making portfolio innovation, investing in brand activities was DKK 16.0 billion, against DKK
investments in strategic initiatives designed awareness, expanding the number of LEGO 13.4 billion in 2020. After recognition of the
to drive long-term growth. branded stores globally, upgrading the profit and distribution of dividends, the
LEGO.com e-commerce platform, increas- LEGO Group’s equity was DKK 29.1 billion
The LEGO Group’s main activity is the ing capacity in its global supply chain up from DKK 23.5 billion in 2020. Return on
development, production, marketing, and network, and building presence in newer equity for the LEGO Group was 50.4% in
sale of play materials. It operates in the markets such as China. 2021 against 43.4% in 2020.
traditional toy market, which grew 9% in
2021.1 Consumer sales grew 22% which out- Operating profit grew 32% to DKK 17.0 billion Investments
paced the industry’s growth and was driven in 2021 compared to DKK 12.9 billion in 2020. In 2021, the LEGO Group increased invest-
by a strong and diverse portfolio, resilient The operating margin was 30.8% in 2021 ments in property, plant, and equipment to
global supply chain network, strong retailer against 29.6% in 2020. Net financials created DKK 3.1 billion up from DKK 1.8 billion prior
partnerships both online and instore, and a an expense of DKK 39 million compared to year. This included increasing processing ca-
robust e-commerce platform. DKK 412 million in 2020. This resulted in a pacity in factories in Nyíregyháza (Hungary),
profit before income tax of DKK 17.0 billion Monterrey (Mexico), and Jiaxing (China).
Revenue against DKK 12.5 billion the prior year.
Revenue for the full year increased by 27% to 1The NPD Group / Retail Tracking Service / G13 – YTD Dec 2021
DKK 55.3 billion compared to DKK 43.7 billion Income tax expense amounted to DKK 3.7
in 2020. Excluding the impact of foreign billion compared to DKK 2.6 billion in the
currency exchange rates, revenue for the full prior year and the effective tax rate was
year increased by 28% against 2020. Con- 21.9% against 20.7% in 2020 which is in line
sumer sales grew double digits in all market with expectations.
groups, ahead of 2021 plans which antici-
pated single-digit growth. Revenue grew as Net profit was DKK 13.3 billion in 2021
a result of extraordinarily strong consumer against DKK 9.9 billion in 2020. This was
demand for the company’s portfolio which above expectations and driven by the same
appealed to builders of all ages and interests. reasons as mentioned under “Revenue”.

Management’s Review 11

Research and development (R&D) Sustainability Progress Report (COP report) The LEGO Group’s global Tax Strategy is de-
Innovation is critical to the company’s describes how it is working to adhere to the fined by the Board of Directors and reviewed
success and in 2021, new products make Compact. Pursuant to sections 99a and 99b on an annual basis to ensure it remains
up around 50% of the portfolio. The LEGO of the Danish Financial Statements Act, the compliant. More information about the tax
Group invests in innovating core play 2021 Sustainability Progress Report consti- strategy and the total tax contribution can
themes as well as exploring new play tutes the statutory statement of corporate be found in the 2021 Sustainability Progress
patterns. Digitalisation is influencing how social responsibility. This also includes Report and at LEGO.com/AboutUs.
children play and the LEGO Group has information about the required quantitative
stepped up investments to understand the targets for the under-represented gender The LEGO Group is committed to handling
intersection between digital and physical on the Board of Directors. The 2021 Sustain- data responsibly. In 2021, the company have
play and create new products to meet ability Progress Report is available at: LEGO. worked with data ethics around four key prin-
these changing needs. R&D activities com/AboutUs/Sustainability/Reporting. ciples which are that data must be used within
include developing new technologies the company in a positive, fair, clear, and
to enable learning through play; trend Risks and governance responsible way. This has resulted in a written
spotting; anthropological studies; and The LEGO Group has no significant trade set of data ethic principles. The next steps will
collaborating with educational institutions receivables risk concentrated in specific be to make these principles operational and
to deepen our understanding of children’s countries but has some single significant applicable to the organisation. A dedicated
development. trade debtors in the Americas. The LEGO team will collaborate with relevant internal
Group has fixed procedures for determining stakeholders to develop a simple and useful
Intellectual capital resources the granting of credit. The LEGO Group’s framework that can be applied across projects.
The number of employees at the end of risk relating to trade receivables is consid-
2021 was 24,484 compared to 20,468 at the ered to be moderate. For more information, The LEGO Group’s principles regarding data
end of 2020. Employees participate in the see note 3.4. ethics can be found at LEGO.com/AboutUs/
LEGO Group’s Performance Management Policies-and-reporting/Policies.
Programme. The programme is designed to Innovation is critical to the
ensure all colleagues work towards achiev- success of the LEGO Group Events after the reporting date
ing the LEGO Group’s short and long-term and each year new products No events have occurred after the balance
ambitions. Employees have targets that make up around 50% of sheet date that would influence the evalua-

are aligned to the Group’s overall targets the portfolio. tion of the Annual Report.
and are awarded a bonus based on perfor-
mance versus target. The majority of the LEGO Group’s sales are Outlook
in foreign currency, and the risks relating to The LEGO Group expects single-digit growth
Responsible business conduct currency are described in note 4.6. in 2022, ahead of the global toy market. This
The LEGO Group aims to have a positive is expected to be achieved through contin-
impact on its stakeholders and its local The LEGO Group is committed to comply- ued focus on product innovation and appeal
communities. In 2003, the LEGO Group ing with all applicable laws and regulations and growth in established and newer mar-
signed the United Nations Global Compact in the countries in which it operates. kets. The LEGO Group will continue to invest
to demonstrate its support of human rights, in areas such as digitalisation, sustainability,
labour standards, anti-corruption, and retail channels, and innovation which will
the environment. The LEGO Group’s 2021 drive long-term sustainable growth.

Management’s Review 12

Financial (mDKK) 2021 2020 2019 2018 2017
Highlights of
the LEGO Group Income Statement 55,294 43,656 38,544 36,391 34,995
Revenue (38,250) (30,744) (27,707) (25,617) (24,636)
The Financial Highlights for 2021, 2020 and 2019 are Expenses
affected by the implementation of IFRS 16 Leases Operating profit 17,044 12,912 10,837 10,774 10,359
as from 1 January 2019. Comparison figures for 2018 Financial income and expenses (39) (412) (85) (264) (158)
and 2017 have not been restated due to the use of Profit before income tax 10,510
the modified retrospective approach. Net profit for the year 17,005 12,500 10,752 8,076 10,201
13,285 9,916 8,306 7,806
The comparison figures for the financial ratio, Re- Balance Sheet 31,485
turn on invested capital (ROIC), have been restated Total assets 47,991 37,202 34,946 21,753 29,911
in 2020 and 2019 to reflect a classification change Equity 29,138 23,547 22,183 9,732 20,714
in the balance sheet, see note 1.1, as well as includ- Liabilities 18,853 13,655 12,763
ing goodwill in the calculation. 9,847 9,197

Statement of Cash Flow 16,048 13,382 9,557 (1,502)
Financial ratios are calculated in accor­dance with Cash flow from operating activities (3,159) (1,891) (2,173) 10,691
the guidelines from the Danish Society of Financial Purchase of property, plant, equipment and intangible assets 12,892 11,498 8,355 (1,529)
Analysts. Definitions are disclosed in note 1.1. Free cash flow 7,395
20,198 17,431 15,050 9,168
Parentheses denote negative figures. Employees 24,484 20,468 16,112 17,385
Average number (full-time) 18,800 16,480
Headcount end of year 28 16 7 17,534
4
Other financials (in %) 69.6 69.7 67.8 (7)
Revenue growth in constant currency 30.8 29.6 68.4 29.6
24.0 22.7 28.1 22.2 67.1
Financial ratios (in %) 50.4 43.4 21.5 38.0 29.6
Gross margin 94.0 74.1 37.8 78.9 22.3
Operating margin 60.7 63.3 68.4 69.1 38.3
Net profit margin 63.5 72.3
Return on equity (ROE) 69.3
Return on invested capital (ROIC)
Equity ratio

13 Management’s Review

Board of Directors Executive
and Management Leadership Team

Chairman Vice Chairman Eva Fiona Niels B. Christiansen
Berneke Dawson
Thomas Kirk Søren Thorup President and Chief Executive Officer
Kristiansen Sørensen Eva Berneke has been a member of Fiona Dawson has been a member
the Board since 2011 and is currently a of the Board since August 2020. She Jesper Andersen

Thomas Kirk Kristiansen represents Søren Thorup Sørensen has been a member of the Audit Committee. Eva is worked for family-owned Mars, In-
the fourth generation of the owner member of the Board since 2010 and the Chief Executive Officer of Eutelsat, corporated for over thirty years and Chief Financial Officer
family and became the Chairman of currently serves as Deputy Chairman one of the world’s leading satellite retired in July 2021 to focus on her
the Board in February 2020. He was and Chairman of the Audit Committee. operators. She is also a member of the Board Portfolio. Fiona joined the Board Atul Bhardwaj
previously Deputy Chairman from May He is the Chief Executive Officer of Board of Directors of Vestas and École of Marks and Spencer in May 2021 and
2016 to February 2020 and joined the KIRKBI A/S. Søren is also a member Polytechnique Paris. Kerry Foods in January 2022 and sits on Chief Digital & Technology Officer
Board in 2007. Thomas is also Deputy of the Board of Directors of Merlin a number of advisory Boards including
Chairman of LEGO Brand Group, mem- Entertainments Limited (where he also Anne as member of the Board of the Trinity Colette Burke
ber of the Board of KIRKBI A/S and one is Chairman of the audit committee), Sweeney Business School in Dublin and The
fully owned subsidiary, Chairman of Landis + Gyr AG, ISS World Services A/S, Social Mobility Foundation. Chief Commercial Officer
the Board of LEGO Foundation and a Ole Kirk’s Fond, Koldingvej 2 Billund A/S, Anne Sweeney has been a member of
member of the Executive Management Boston Holding A/S (where he is Chair- the Board since April 2020. She is also Julia Goldin
team of Kirk & Kirk Holding ApS with man of the Board of Directors) and six a member of the Board of Directors
management roles in four subsidiaries. fully owned subsidiaries of KIRKBI A/S. of Netflix, the Board of Trustees of the Chief Product & Marketing Officer
Mayo Clinic, Board of Trustees of J. Paul
Jørgen Vig Jan Thorsgaard Getty Trust, and a Deans Distinguished Carsten Rasmussen
Knudstorp Nielsen Fellow at the Harvard University
Graduate School of Education. Anne Chief Operations Officer
Jørgen Vig Knudstorp has been a Jan Thorsgaard Nielsen has been previously served as co-chair of Disney
member of the Board since 2017 and a member of the Board since 2013 Media, President of the Disney/ABC Loren I. Shuster
has previously served as Chairman and is currently member of the Audit Television Group, which includes The
from May 2017 to February 2020. Committee. He is the Chief Investment Walt Disney Company’s global enter- Chief People Officer & Head of Corporate Affairs
Jørgen is the Executive Chairman of Officer of A.P. Møller Holding. Jan also tainment and news television proper-
LEGO Brand Group. He also holds holds positions as Chairman of the ties, owned television stations group.
positions as member of the Board of Board of KK Wind Solutions A/S and
Starbucks and member of the Board of Nissens Cooling Solutions, Deputy
Merlin Entertainments Limited. Jørgen Chairman of the Board of Danske Bank
joined the LEGO Group in 2001, where A/S and Faerch A/S and member of
he served as President and CEO from the Board of APMH Invest A/S.
2004 to 2016.

14 Consolidated Financial Statements

Consolidated
Financial Statements
Financial Statements
Financial Statements

15 Consolidated Financial Statements Note 2021 2020 Statement of 2021 2020
2.1 Comprehensive Income 13,285 9,916
Income Statement 2.2 55,294 43,656
(16,783) (13,244) 1 January – 31 December (524) 246
1 January – 31 December 2.2 30,412
2.2 38,511 (mDKK) 235 (96)
(mDKK) 2.2 (13,540) (14) (9)
Revenue (16,446) (3,023) Profit for the year (31)
Production costs 4.1 (4,005) 67
Gross profit 4.1 (1,016) (937) Items to be reclassified to the income statement, when specific 532 (653)
Sales and distribution expenses 17,044 12,912 conditions are met:
Administrative and IT expenses 2.6 Change in market value of cash flow hedges 14 (11)
Other operating expenses 108 7 (4) 2
Operating profit (147) (419) Reclassification of cash flow hedges from equity 13,591
Financial income 17,005 12,500 to be recognised as part of: 9,364
Financial expenses Revenue in the income statement
Profit before income tax (3,720) (2,584) Production costs in the income statement
Income tax expense
Net profit for the year 13,285 9,916 Tax on cash flow hedges
Currency translation differences

Items not to be reclassified to the income statement:

Remeasurements of defined benefit plans
Tax on remeasurements of defined benefit plans

Total comprehensive income for the year

16 Consolidated Financial Statements Note 2021 2020 (mDKK) Note 2021 2020
3.1 4.2
Balance Sheet 3.2 406 443 Share capital 20 20
4.4 14,191 12,099 Reserve for hedge accounting 4.3, 4.5 (161) 75
at 31 December 4.5 4,679 3,067 Reserve for currency translation 4.4, 4.5 (538) (1,070)
2.6 Retained earnings 29,817 24,522
(mDKK) 70 63 Total equity 2.6 29,138 23,547
Intangible assets 3.3 999 789 3.5
Property, plant and equipment 3.4, 4.5 20,345 16,461 Borrowings 3.6 127 137
Right-of-use assets Lease liabilities 3.7 4,038 2,519
Other receivables 4.5 3,509 2,948 Deferred tax liabilities 3.8, 4.5
Deferred tax assets 8,409 6,590 Employee benefit obligations 29 111
Total non-current assets 4.5, 5.5 1,345 Provisions 4.3, 4.5 146 223
Inventories 4.5 891 Deferred revenue 4.4, 4.5 153
Trade receivables 475 299 Other debt 85
Other receivables 123 373 Total non-current liabilities 4.5 6 23
Prepayments 12,748 8,463 148 86
Income tax receivables 1,037 1,177 Borrowings 3.6 4,647 3,184
Loans to related parties 27,646 20,741 Lease liabilities 3.7
Cash at banks Trade payables 3.8, 4.5 10 10
Total current assets 47,991 37,202 Income tax liabilities 714 581
Provisions 5,116 2,947
Total assets Deferred revenue 427 541
Other debt 67 75
Total current liabilities 501 360

7,371 5,957
Total liabilities 14,206 10,471

Total equity and liabilities 18,853 13,655

47,991 37,202

17 Consolidated Financial Statements

Statement of Changes in Equity

1 January – 31 December

2021 (mDKK) Share capital Reserve for Reserve for Retained earnings Total equity § Accounting policies
hedge accounting currency translation
Balance at 1 January 20 24,522 23,547 Reserve for hedge accounting
Profit for the year – 75 (1,070) 13,285 13,285 The reserve for hedge accounting consists of
Comprehensive income/(expenses) for the year - - - the effective portion of gains and losses on
Dividend paid relating to prior year - 10 306 hedging instruments designated as cash flow
(236) 532 (8,000) (8,000) hedges.
Balance at 31 December 20 - - 29,817
29,138 Reserve for currency translation
(161) (538) Retained earnings The reserve for currency translation consists
Total equity of exchange rate differences that occur when
2020 (mDKK) Share capital Reserve for Reserve for 22,615 translating the foreign subsidiaries’ financial
hedge accounting currency translation 9,916 22,183 statements from their functional currency into
Balance at 1 January 20 (9) 9,916 the LEGO Group’s presentation currency. On
Profit for the year – (35) (417) (552) disposal of the net investment, the reserve for
Comprehensive income/(expenses) for the year – – – (8,000) currency translation of that foreign subsidiary is
Dividend paid relating to prior year – 24,522 (8,000) recognised in the income statement. Reduction

110 (653) 23,547 of a net investment in a foreign operation which
Balance at 31 December 20 – – does not result in loss of control is not treated
as a disposal.
75 (1,070)

18 Consolidated Financial Statements

Statement of Cash Flow Note 2021 2020 § Accounting policies Cash flow used in investing activities includes
the purchase and sale of intangible and tangible
1 January – 31 December 5.4 17,005 12,500 The statement of cash flow has been prepared assets.
5.4 2,044 2,763 using the indirect method, and shows the
(mDKK) 4.1 888 consolidated cash flow from operating, invest- Cash flow used in financing activities includes
4.1 927 7 ing and financing activities for the year and the the obtaining and repayment of long-term lia-
Profit before income tax 11 (119) consolidated cash at banks at the beginning bilities, short-term bank loans and the payment
Adjustments for non-cash items 3.1 and end of the year. The statement of cash flow of dividends to shareholders. Payment of lease
Change in working capital 3.2 (147) (2,657) cannot be derived directly from the balance liabilities is included under financing activities
Interest received (3,792) 13,382 sheet and income statement. and the related interest is included as a financial
Interest paid 5.5 16,048 item under operating activities.
Income tax paid 5.5 (51) Cash flow from operating activities is specified
Cash flow from operating activities 4.2 (45) (1,840) as the profit before income tax for the year Cash at banks comprises cash that readily can
(3,114) adjusted for operating items without cash flow be converted into cash.
Purchases of intangible assets 7 effect, changes in the working capital (such
Purchases of property, plant and equipment 3 (1,884) as trade payables, trade receivables, prepaid
Proceeds from sale of property, plant and equipment (3,156) costs, etc.), payments relating to financial items
Cash flow used in investing activities (10) and income tax paid.
(10) (606)
Repayments of borrowings (697) 12,388
Payment of lease liabilities 14,469 (14,975)
Repayments from related parties (18,754) (8,000)
Payments to related parties (8,000) (11,203)

Dividends paid to shareholders (12,992)
Cash flow used in financing activities 295
(100)
Total cash flow 858
1,177 295
Cash at banks at 1 January (100)
Cash flow for the year (40) 24
Effect of exchange (losses)/gains
1,037 1,177
Cash at banks at 31 December

Consolidated Financial Statements 19

Notes Basis of Results Operating assets
Notes preparation for the year and liabilities
Notes
20 1.1 Basis for preparation of the 22 2.1 Revenue 28 3.1 Intangible assets
Consolidated Financial Statements 23 2.2 Expenses by nature 30 3.2 Property, plant and equipment
24 2.3 Employee costs 32 3.3 Inventories
21 1.2 Changes in accounting policies 25 2.4 Depreciation, amortisation 33 3.4 Trade receivables
35 3.5 Employee benefit obligations
21 1.3 Significant accounting estimates and impairment 36 3.6 Provisions
and judgements 25 2.5 Research and development 37 3.7 Deferred revenue
38 3.8 Other debt
expenses
26 2.6 Tax

Capital structure Other
and financing disclosures

39 4.2 Share capital 51 5.1 Fees to independent auditor
39 4.3 Borrowings 51 5.2 Remuneration of
40 4.4 Leases
42 4.5 Financial assets and liabilities Group Management
44 4.6 Financial risks
48 4.7 Derivative financial instruments 52 5.3 C ontingent assets, contingent
liabilities and other obligations

53 5.4 Cash flow specifications
54 5.5 Related parties
55 5.6 E vents occurring after

the reporting period

56 5.7 Group structure

20 Consolidated Financial Statements

Basis for preparation of the Free cash flow
Consolidated Financial Statements Cash flow from operating activities -
Cash flow used in investing activities
Note 1.1
Gross margin
This section introduces the LEGO Group’s Change in classification in the income statement They are deconsolidated from the date where Group entities Gross profit x 100
accounting policies and significant accounting Comparative figures in the income statement control ceases. The results and financial position of subsidiaries Revenue
estimates and judgements. A more detailed de- have been restated to match this year’s presen- that have a functional currency different from
scription of accounting policies and significant tation. The adjustment of comparative figures Intercompany transactions, balances and unre- the presentation currency in the LEGO Group, Operating margin
accounting estimates and judgements related have no effect on operating profit. alised gains on transactions between entities are translated into the presentation currency as Operating profit (EBIT) x 100
to specific reported amounts is disclosed in the in the LEGO Group are eliminated. Unrealised follows: Revenue
respective notes. Change in classification in the balance sheet losses are also eliminated unless the transaction

Comparative figures in the balance sheet have provides evidence of impairment of the asset • Assets and liabilities for each subsidiary are Net profit margin
General Accounting Policies been restated to match this year’s presentation. transferred. Subsidiaries’ accounting policies translated into DKK at the closing rate at the Net profit for the year x 100
The Consolidated Financial Statements of the The adjustment of comparative figures have no have been changed, where necessary, to ensure balance sheet date. Revenue
LEGO Group have been prepared in accor­ effect on total assets. consistency with the policies adopted by the
dance with International Financial Reporting LEGO Group. • Income and expenses for each subsidiary are Return on equity (ROE)
Stan­dards (IFRS) as adopted by the EU and Change in classification in the notes translated into DKK at the exchange rate at Net profit for the year x 100
additional requirements of the Danish Financial Comparative figures in the notes have been Foreign currency translation transaction date. An average exchange rate Average equity
Statements Act applying to enterprises of restated to match this year’s restatements in the Functional currency per month is used as equivalent to the extent
reporting class C (large). income statement and balance sheet. Additional Items included in the financial statements it does not deviate significantly from the actual Return on invested capital (ROIC)
off-balance notes have been restated. of each of the LEGO Group’s entities are exchange rate at transaction date. Operating profit (EBIT) x 100
The Consolidated Financial Statements are measured using the currency of the primary Average invested capital
presented in Danish kroner (DKK), which is the The adjustment of comparative figures is not a economic environment in which the entity • Differences deriving from translation of the
functional currency of the Parent Company. All change in accounting policies. operates. foreign subsidiaries’ opening equity to the Equity ratio
amounts are rounded to nearest million DKK, exchange rates prevailing at the balance Equity x 100
unless otherwise stated. Consolidation practice Transactions and balances sheet date, and differences from the transla- Total liabilities and equity
The Consolidated Financial Statements comprise Foreign currency transactions are translated tion of the income statements of the foreign
The Consolidated Financial Statements have of LEGO A/S (Parent Company) and entities into the presentation currency using the subsidiaries from average exchange rates Financial ratios have been calculated in ac-
been prepared in accordance with the historical controlled by LEGO A/S. Control is achieved exchange rates prevailing at the date of the to balance sheet date exchange rates are cordance with the guidelines from the Danish
cost convention, with the exception of finan- when the LEGO Group is exposed or has the transactions. Foreign exchange gains and recognised in Statement of Comprehensive Society of Financial Analysts.
cial assets and financial liabilities, which are rights to variable returns from its involvement of losses resulting from the settlement of such Income and classified as a separate reserve
measured at fair value as disclosed in Note 4.5 the investee and can affect those returns through transactions and from the translation at balance for exchange rate adjustments under equity.
Financial assets and liabilities. its power over the investee. LEGO A/S and these sheet date exchange rates of monetary assets
entities are referred to as the LEGO Group. and liabilities denominated in foreign curren- Financial highlights
As described in note 1.2, accounting policies cies are recognised in the income statement, Revenue growth in constant currency is calcu-
are unchanged from last year. Subsidiaries are fully consolidated from the date except when deferred in equity as reserve for lated as revenue growth adjusted for exchange
where control is transferred to the LEGO Group. exchange rate adjustments. rate translation effects.