The LEGO Group

ABOUT THE LEGO GROUP

The LEGO Group is engaged in the development of children’s creativity through play and learning. Based on the world-famous LEGO® brick, the company today provides unique play experiences to children of all ages.

The name LEGO® was created by the two Danish words LEg GOdt, meaning “play well”, and the development of children’s creativity through play and learning has been at the core of the company ever since it was founded. The LEGO brick, which was invented in its present form in 1958, and the LEGO building system form the platform for open-ended play and provide children with endless possibilities of realising their true potential.

The mission of the company is to “inspire and develop the builders of tomorrow”, and all products are based on the underlying philosophy of development through play. It is the LEGO philosophy that “good quality play” enriches a child’s life – and lays the foundation for its development throughout life.

The LEGO Group was founded by the Kirk Kristiansen family in 1932 and has since then been headquartered in Billund, Denmark. Production takes place in Denmark, the Czech Republic, Hungary, China and Mexico, and other large locations are USA, Germany, Singapore and the UK.

The LEGO Group is owned 75 % by KIRKBI A/S, and the remaining 25 % is owned by the LEGO Foundation through Koldingvej 2, Billund A/S.

HIGHLIGHTS FOR 2017

2017 was a challenging year for the LEGO Group. Revenue for the full year declined to DKK 35.0 billion compared with DKK 37.9 billion in 2016. Excluding the impact of foreign currency exchange, revenues for the full year declined by 7 % compared with 2016.

Revenue in established markets declined primarily due to actions taken to clean up inventories at the retail level. This decline impacted the operating profits. Furthermore, the LEGO Group simplified and reduced the size of the organisation to meet current business requirements. The LEGO Group ended the year in a better position. In December, consumer sales grew in 7 of the 12 largest markets and the LEGO Group entered 2018 with healthier inventories.

The LEGO Group’s profit before tax amounted to DKK 10.2 billion in 2017 against DKK 12.4 billion the year before, a decrease of 17.7 %. The reduction in profit was mainly a result of the lower revenue and continued investments in innovation and product development. The LEGO Group had strong operational cash flows of DKK 10.7 billion in 2017 against DKK 9.1 billion in 2016.

The number of average full-time employees decreased by 2 % to 16,480 employees in 2017.

On 1 October 2017 Niels B. Christiansen assumed the position as CEO. During 2018 the LEGO Group will stabilise the business by continuing to invest in quality play experiences, effective global marketing and improved execution. Long-term, the LEGO Group expects to grow low single digits in line with the global toy market.

MANAGEMENT

Niels B. Christiansen, President and Chief Executive Officer Marjorie Lao, Chief Finanical Officer

BOARD OF DIRECTORS

Jørgen Vig Knudstorp, Chairman Thomas Kirk Kristiansen, Deputy Chairman Eva Berneke Kjeld Kirk Kristiansen Jan Nielsen Kåre Schultz Søren Thorup Sørensen

Photo: The LEGO Group

5 YEARS’ PERFORMANCE

(m DKK)

40,000

30,000

20,000

10,000

0 2013 2014 2015 2016 2017

Revenue Operating profit (EBIT)

FINANCIAL HIGHLIGHTS

(m DKK)

2017 2016

Revenue Operating profit Profit for the year 34,995 37,934 10,359 12,448 7,806 9,436

Equity 20,714 20,039

Cash flow from operating activities

10,691 9,084 Investments (1,529) (3,000) Average number of employees (FTE) 16,480 16,836