2022 at a glance

2022 was a year with continued progress in the execution of KIRKBI’s strategy of building a sustainable future for the family ownership of the LEGO® brand, highlighted by two significant investments within digital play and learning as well as final preparation of the generational handover to the fourth generation of the owner family

In many ways, 2022 was a special year for KIRKBI. It marked the 90th anniversary of the LEGO brand, a milestone few companies get to experience. The anniversary gave us an opportunity to celebrate, reflect on the history and bring Learning-through-Play to even more children and families, among others at the World Play Day in August.

It was also a year of global instability. Not least due to the war in Ukraine sadly impacting the lives of innocent people, families, and children –combined with global economic uncertainty and continued COVID-19 restrictions in parts of the world. In March, the LEGO Foundation, Ole Kirk’s Fond, and the LEGO Group made an emergency donation of DKK 110 million to humanitarian aid as well as protection of Ukrainian children and families impacted by the war. Later in the year, another donation from the LEGO Foundation of DKK 100 million was made for rebuilding of the Ukrainian education system.

For the year, KIRKBI granted DKK 0.2 billion to charity, while the LEGO Foundation committed total grants of DKK 3.2 billion, primarily related to Learning-through-Play initiatives. Ole Kirk’s Fond granted DKK 0.3 billion to children and families.

The performance across all business areas led to a consolidated KIRKBI result for 2022 of DKK 10.7 billion, comprising a strong performance in the LEGO Brand Group and a negative investment return impacted by the development in the financial markets. As most of the investment return comprises unrealised value adjustments with no impact on cash flows, the 2022 after tax cash inflows to KIRKBI were at DKK 11.7 billion, slightly lower than the DKK 13.5 billion realised in 2021.

Continued development of the LEGO® Brand

Resting on 90 years of legacy, 2022 was also a year of reaching important milestones for the continued development of the LEGO brand.

In April, KIRKBI announced a USD 1 billion investment in Epic Games, known for building creative experiences for large and small creators, accelerating the engagement in the world of Digital Play. Six months later, KIRKBI completed its first 100 % acquisition in Digital Learning with the USD 875 million acquisition of BrainPOP, supporting the ongoing global transformation of education.

KIRKBI’s investment in Epic Games and acquisition of BrainPOP accelerated the engagement in the worlds of Digital Play and Digital Learning –ensuring continued development of the LEGO® brand.

KIRKBI’s investment in Epic Games was made after the LEGO Group and Epic Games entered into a long-term partnership agreement. The purpose of the partnership is to create a future metaverse, allowing for a safe, immersive, creative, and engaging digital experience for children of all ages.

Throughout the year, the LEGO Group continued to see strong engagement in LEGO play experiences from families, children, and adults across the world. The financial performance was very satisfactory with double-digit revenue and consumer sales growth, increased market shares, and a profit before tax of DKK 17.7 billion. At the same time, the LEGO Group continued to prioritise the strategic initiatives designed to drive long-term sustainable growth with investments for the future in innovation across the portfolio, new retail stores, further development of e-commerce platforms, expansion of the manufacturing capacity, digitalisation, and sustainability.

Merlin Entertainments, including the LEGOLAND ® Parks, continued investing in new attractions mainly with the opening of LEGOLAND Korea, and a new LEGOLAND Park being established in Shanghai. On the back of two years severely impacted by the COVID-19 pandemic, the activity level started to normalise in 2022 with recovery especially in the US and Europe while Asia continued to be impacted by lockdown and restrictions. In November, Merlin Entertainments announced a new CEO.

Sustainable investment activities

In a challenging market, KIRKBI maintains its focus on long-term value creation in the Core Capital portfolio and expanding the activities within Thematic Capital to drive impact for a more sustainable world. The year marks a 10-year period with an average annual return of 7.7 %, and also a year with investments in the first plots of land in Denmark with the intent to establish new forestry to create a positive impact on environment, climate, and biodiversity.

KIRKBI’s investment activities are an integral part of the sustainability strategy, which is focused on driving positive impact and reducing CO 2 emissions across own operations and the investment portfolio. KIRKBI has defined that 45 % of the listed and private equities, bonds, and debt portfolios must have validated science-based targets by 2025. At end-2022, the coverage reached 28 %, with an additional 12 % committed to the initiative. Furthermore, a Real Estate tenant strategy was implemented to optimise the sustainability profile of properties. KIRKBI’s validated science-based targets are an example of the continued support of the ten Principles of the UN Global Compact.

Final phase of generational handover

For the owner family, the year comprised final preparations for the generational handover between the third and fourth generation. A gradual handover which has been ongoing for several years and which will be completed in the spring of 2023, when Thomas Kirk Kristiansen takes over as Chairman of the Board of Directors of KIRKBI A/S from Kjeld Kirk Kristiansen.

Preparing for an exciting 2023, we want to extend a warm thank you to our dedicated and passionate employees, who once again delivered strong commitment throughout the year, also reflected in an employee engagement and leadership score well above benchmark. Also, a warm thank you to our many partners. We look forward to continuing the collaboration in 2023 executing on our strategy and building a sustainable foundation for the continued family ownership.

Kjeld Kirk Kristiansen Chairman of the Board

Søren Thorup Sørensen CEO