Section 7 – Working capital

7.1. Inventories

Inventories comprises inventory from the LEGO Group.

25-50 years

5-20 years

2-25 years

Other fixtures, fittings, 3-10 years tools and equipment

The residual values and useful lives of the assets are reviewed and adjusted, if appropriate, at each balance sheet date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the income statement.

Inventories recognised as an expense during 2022 amounted to DKK 13,354 million (DKK 10,978 million in 2021). Write-down of inventories is recognised as a cost of DKK 144 million (DKK 75 million income in 2021).

Accounting policies

Inventories are measured at the lower of cost and net realisable value. Cost is accounted for on a first-in, first-out (FIFO) method. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure (indirect production costs), the latter being allocated on the basis of normal production capacity. Costs of purchased inventory are determined after decucting rebates and discounts. Net realisable value is the estimated selling price in the ordianry course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

All figures were in the income statement reported in the reporting line LEGO Group.

The LEGO Group applies a standard cost model that is defined by estimated production capacity. Cost and capacity can vary during the year and therefore adjustments for indirect production costs and purchase price variances are made to reflect the actual cost of inventories.

When the net realisable value is lower than cost, inventory items are impaired and measured at net realisable value.

7.2. Trade receivables

Trade receivables mainly consist of receivables within the LEGO Group and the

Trade receivables

age distribution can be specified as follows:

7.3. Other receivables

Realised losses for 2022 amounted to DKK 319 million compared to DKK 156 million in 2021.

The KIRKBI Group has no significant trade receivable risk in specific countries, but has some

Accounting policies

Trade receivables are initially recognised at fair value equal to the transaction price, and subsequently measured at amortised cost less allowance for lifetime expected credit losses.

Trade receivables are written off when all possible options have been exhausted and there are no reasonable expectations of recovery.

single significant trade debtors. The exposure for trade receivables is managed globally through fixed procedures, and credit limits are set as deemed appropriate for the customer, taking current local market conditions into account.

Accounting policies

Other receivables are measured at cost unless specifically stated otherwise.

The KIRKBI Group applies the IFRS 9 simplified approach to measure expected credit loss and a lifetime expected loss allowance for all trade receivables.

Exposure to credit risk on trade receivables is guided by the KIRKBI Group’s policies. Credit limits are set based on the customer’s financial position and current market conditions.

7.4. Other liabilities

Specified as follows: