The LEGO Group Annual Report 2020 CV R n o: 54 56 25 19 Page 2 Annual Report 2020 Management’s Review Content Management’s Consolidated Review Financial Statements 04 Letter from the CEO 15 Income Statement 05 2020 Performance Snapshot 15 Statement of Comprehensive Income 06 Strategic Overview 16 Balance Sheet 09 2020 Sustainability Highlights 17 Statement of Changes in Equity 10 2020 Financial Review 18 Statement of Cash Flows 12 Financial Highlights of the LEGO Group 19 Notes 13 Board of Directors and Management Parent Company Management’s Financial Statements Statement and 54 Income Statement Auditor’s Report 55 Balance Sheet 66 Management’s Statement 56 Statement of Changes in Equity 67 Independent Auditor’s Report 57 Notes Page 3 Annual Report 2020 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. Page 4 Annual Report 2020 Management’s Review Letter from the CEO As I look back over 2020 for the LEGO and strategic investment programme. For Foundation we donated funds to support Group I am filled with pride, humility and the past two years, the LEGO Group has COVID-19 relief in local communities. And gratitude. Proud of the extraordinary agility stepped up investments in driving long-term we repurposed our factories to make visors and resilience of our colleagues who kept growth – through innovating play, building for frontline health professionals. the world playing during the pandemic. the LEGO brand, innovating the retail Humble that millions of families around the ecosys tem and expanding into new markets We also stepped up our efforts to have a world turned to LEGO® play to help them to reach more children around the world. positive impact on the environment and so- get through a challenging time. And grate- ciety our children will inherit. We announced ful to be part of a family-owned company In 2020, we saw early benefits of these our plans to invest up to USD 400 million who supports those most in need, while investments. A strong, diverse portfolio (DKK 2.6 billion) over three years to acceler- continuing to build a sustainable business attracted builders of all ages. The launch ate our environmental and social responsi- set to thrive for generations. of LEGO® Super Mario™ introduced an bility initiatives. Our latest move, trialling the entirely new way to play and was one replacement of single-use plastic bags in our While the pandemic changed almost every of our most successful new themes. Our products with paper, was inspired in part by aspect of how we live and work, the one global brand campaign ‘Rebuild the World’ letters from hundreds of children. constant was our team’s focus on bringing resonated with families everywhere. Invest- the power of Learning through Play to chil- ments in our e-commerce platforms al- We take these letters seriously and read dren and families. This dedication contribut- lowed fans to continue to shop while stores and respond to each one. That’s because ed to very strong financial performance in closed. And we reached more children in we look to children as our role models. 2020, with double-digit top and bottom China through opening 91 new stores and Their creativity has driven us for more I am proud of the agility, line growth. We are very pleased with these launching LEGO® Monkie Kid™, the first than eighty years – and continues to do results and I would like to thank everyone theme inspired by a local legend. so. It is also what drives us to invest and resilience and dedication of in the LEGO Group, who contributed to this grow to ensure we can continue to inspire all our colleagues who kept success. The passion and dedication of all Our contribution to society & the planet and develop the builders of tomorrow for our LEGO colleagues is inspiring and they As the pandemic paused millions of generations to come. the world playing during responded to extraordinary challenges in children’s education, closed down com- 2020 and helped to achieve ways we couldn’t have imagined. munities and disrupted supply chains we Niels B. Christiansen worked to support those most in need. We CEO, the LEGO Group these very strong results. Benefits from long-term investments brought Learning through Play to homes The strong momentum we saw in 2020 was around the world through our digital cam- also the product of a focused, long-term paign #LetsBuildTogether. With the LEGO Page 5 Annual Report 2020 Management’s Review Our contribution to 2020 Performance the planet and society COVID-19 response Our ‘Planet Promise’ is a commitment to have As the COVID-19 pandemic paused millions Snapshot a positive impact on the world and society of children’s education, closed down children will inherit. In 2020, we made progress communities and disrupted supply chains against this promise, as well as announcing up we worked to support those most in need. to USD 400 million (DKK 2.6 billion) investment The LEGO Group is very pleased with the progress made High-performing to accelerate sustainability efforts. 500,000 visors for #LetsBuildTogether during 2020 to deliver long-term sustainable growth. Themes healthcare workers campaign engaged We are very satisfied with our results in 2020. Revenue, made in three LEGO® with children and LEGO® Technic operating profit and consumer sales all grew double-digits. factories. families. LEGO® Star Wars™ We leveraged our strong financial foundation to continue LEGO® City to make strategic investments in areas such as product Environment 1.2 million sets donated to With the LEGO LEGO® Classic innovation, our retail network and brand to support growth children in need of play. Foundation we LEGO® Friends in the long term. LEGO® Replay is a We began trialling donated funds to simple way to donate paper bags to 35,000 sets donated support COVID-19 pre-loved LEGO bricks replace single-use to frontline healthcare relief in local to children in need. plastic bags in our Revenue Operating Profit workers in the UK. communities. After a successful products. DKK 43.7 billion DKK 12.9 billion launch in the US in 45 13 2019, we expanded the Cash Flow from programme to Canada 12 in 2020. 35 Operations DKK billion Learning through Play 11 We believe that all children should 25 119,000 kg of LEGO bricks have access to play, which helps them 10 have been donated so develop life-long skills. far, reaching over 15 9 13.4 2017 2018 2019 2020 2017 2018 2019 2020 13.4 54,00054,000 25%25% 3.23.2 mm children in need of play. of profit goes to the children reached across Revenue Operating Return on LEGO Foundation. The 28 countries through growth profit growth Invested Capital LEGO Foundation brings local community 100%100% Learning through Play engagement, Learning balanced by to children in need, through Play pro- renewable energy. including refugees and grammes, partnerships those in underprivi- and Build to Give, a 13%13% 19%19% 75.3%75.3% leged communities. holiday giving campaign. Page 6 Annual Report 2020 Management’s Review Strategic Overview Building a brighter future the LEGO Group is also well prepared to We believe in the power of play to shape inspire children for generations to come. a child’s future. Through play, children learn skills that will help them succeed in Innovating play an uncertain world. Skills such as problem One of the LEGO Group’s top-selling prod- solving, communication, creativity, collabo- ucts in 2020 was a LEGO Classic box of ration and resilience. bricks. This proves the enduring popularity of the brick and the endless opportunities to As we look to the future, change is accel- build, unbuild and rebuild that offers. Just six erating. Children starting education today two-by-four LEGO bricks of the same colour will enter a workforce many of us may not offer 915,103,765 different possibilities. recognise. The skills that will be in demand are ones that they can start building now through play. In a study we conducted in 2020 with more than 18,000 parents in 18 countries, parents rated play as being as important as homework to their child’s future success and well-being 1. Play also has the power to unite. In the same study, around 90% of respondents said that play helped to bring the family together and remain emotionally healthy, especially during the past year 2. It’s these life-long benefits that inspire 1 According to the LEGO Play Well Study 2020, parents see our ambition to bring LEGO® play to more play (44%) as being as important as homework (43%) to their children and families around the world. An child’s future success and well-being. ambition supported by focused, long-term 2 According to the LEGO Play Well Study 2020, during the COVID-19 pandemic, play is important to help the whole investment efforts designed to ensure that family stay entertained (91%) and emotionally healthy (88%). Page 7 Annual Report 2020 Management’s Review The LEGO® brick will always be at the share our passion for creativity and self-ex- We will continue to accelerate investment heart of our business. Each year, around pression. We also signed agreements for in our retail ecosystem to create great 55% of our portfolio is new. Our talented long-term collaborations with Universal LEGO brand experiences for our shoppers designers configure LEGO elements in Pictures and Universal Music Group to tell and fans online and in-store.