The LEGO Group Annual Report 2021

1 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 Parent Company Management's Financial Statements Statement and 58 Income Statement Auditor's Report 59 Balance Sheet 71 Management's Statement 60 Statement of Changes in Equity 72 Independent Auditor's Report 61 Notes 3 Management's Review Management's Review Management's Review Management's Review Our ambition is to bring the power of LEGO

2 Play to even more children around the world.. 4 Management's Review Letter from the CEO. Our passionate and committed team of more As I look back over 2021, I am grateful for LEGO Super Mario and LEGO Star Wars . growth and announced plans to build a what the LEGO Group was able to achieve. We also welcomed adults with a range of new operationally carbon neutral factory in challenging builds which brought families Vietnam. Our passionate and committed team of more than 24,000 employees navigated together and inspired fans of all ages. Building a sustainable future brick by brick than 24,000 employees the ongoing uncertainty of the COVID-19 Our successful Rebuild the World brand Children are increasingly concerned about pandemic and worked tirelessly to meet extraordinary demand for our products.

3 Campaign further strengthened love for the brand, and we announced steps to remove the future of the planet. We are committed to giving them a voice and taking action to navigated the ongoing uncertainty of the 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 marke ting 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- I am also grateful for our fans. During the Innovative retail channels type brick made from recycled PET bottles. For COP26 (UN Climate Change Conference COVID-19 pandemic and 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.

4 It gives such strong purpose to our work when we see our stores and unveiled a new retail format designed to create immersive, memorable their ideas and released a set of ten Building Instructions for a Better World. worked tirelessly to meet extraordinary demand for 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. Investing in long-term growth world in 2021. Long-term investments in e- commerce continue to pay off, helping They inspire us with their creativity, resilience, and optimism. And we are our products. 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.

5 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 Our 2021 portfolio was the largest and continents make our supply chain short, 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 Niels B.

6 Christiansen anniversary, and licensed themes such as manufacturing network to meet long-term CEO, the LEGO Group 5 Management's Review Financial performance 2021 Performance Revenue Operating Profit Free Cash Flow billion DKK billion DKK billion DKK. Snapshot Top themes LEGO City LEGO Technic LEGO Creator Expert We are very pleased with our financial performance in 2021. Revenue, LEGO Harry Potter . operating profit, and consumer sales all grew double digits. Our LEGO Star Wars . performance was driven by strong demand for our portfolio and the benefits of our multi-year investments in e-commerce, product innovation, and a global supply chain network. Market share growth in largest markets 2018 2019 2020 2021 2018 2019 2020 2021. Revenue growth Operating Profit growth Return on Invested Capital 27% 32% 94%.

7 Environmental & social impact 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. Strategic investments 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 340. 1. million downloads of digital Building Instructions. branded stores in China, 95 opened in 2021. 25% of the LEGO Group is owned by the st prototype brick made LEGO Foundation which uses profit dividends to give millions of children from recycled material. million downloads of LEGO Life app. 70+ branded stores feature new, immersive store design.

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

9 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.

10 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.