LEGO-Group-Annual-Report-2017.pdf

After recognition of the profit for the year and

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After recognition of the profit for the year and distribution of dividend, the LEGO Group’s equity has increased by DKK 0.7 billion to DKK 20.7 billion in 2017. At the end of 2017, the equity ratio of the LEGO Group was 69.3% against 66.9% in 2016. Return on equity for the LEGO Group was 38.3% in 2017 against 49.9% in 2016. Investments During 2017, investments in property, plant and equipment amounted to DKK 1.5 billion in 2017, compared with DKK 2.9 billion in 2016. These investments included a phased expansion of facilities at two manufacturing plants to meet future demand for LEGO products. At the company’s plant in Monterrey, Mexico, work com- menced in 2017 to expand its warehouse, and in Nyíregy- háza, Hungary, construction of additional warehouse and processing capacity continued during the year. Both projects are expected to be completed in 2019. Research and development activities Each year, new launches account for approximately 60% of the LEGO Group’s sales to consumers. More than 250 designers from more than 40 different countries make up the creative core of product development within the company, with the majority being based in the company’s headquarters in Billund, Denmark. The development activities that enable such an extensive degree of innovation comprise a wide range of initiatives from trend spotting and anthropological studies to the development of specific products and campaigns. The LEGO Group also cooperates with a number of educa- tional institutions concerning various research projects within, among other topics, children’s play and new technologies. Management’s Review 5 The LEGO Group — Annual Report 2017
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Intellectual capital resources The number of full-time employees at the end of 2017 was 17,534 compared with 19,061 at the end of 2016. In the years leading up to 2017, the LEGO Group recruited a large number of employees to support global double-digit growth. In September 2017, the LEGO Group announced plans to adjust the organisation to support current business levels. As a result, it was decided to reduce the total global workforce by around 8%, impacting approximately 1,400 positions globally. The LEGO Group provided the affected employees with redundancy packages which reflected their service and with support transitioning to new positions or new opportunities either within or outside the Group. The resulting lay-offs were completed in 2017 and a new organisation structure is now in place. It will have greater focus on its commercial activity in markets and with partners around the world. On October 1, 2017, Niels B. Christiansen assumed the position as CEO. Responsible business conduct The LEGO Group works to have a positive impact on its stakeholders and its local communities. This is at the core of the Group’s culture and the foundation of the strategy it pursues.
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