LEGO-Group-Annual-Report-2017.pdf

Note 1 continued 23 notes the lego group annual

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Note 1 (continued) 23 Notes The LEGO Group — Annual Report 2017
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Gross profit × 100 Revenue Operating profit (EBIT) × 100 Revenue Net profit for the year × 100 Revenue Gross margin Operating margin Net profit margin Note 1 (continued) Note 2. Significant accounting estimates and judgements When preparing the Consolidated Financial Statements it is necessary that Management makes a number of accounting estimates and judgements that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses. Estimates and judgements used in the determination of reported results are continuously evaluated. Management bases the judgements on historical experience and other assumptions that Management assesses are reasonable under the given circumstances. Actual results may differ from these estimates under different assumptions or conditions. The following accounting estimates and judgements are those that Management assesses to be material: Property, plant and equipment Assessment of estimated residual value and useful life of property, plant and equipment requires estimates. It is Management’s assessment that the estimates are reasona- ble (note 13). Inventories Calculation of indirect production costs requires estimates and judgements regarding various assumptions. The sensitivity of the measurement to these assumptions can be significant. It is the assessment of Management that the assumptions and estimates made are reasonable (note 15). Trade receivables Management makes allowance for doubtful trade receiv- ables in anticipation of estimated losses resulting from the subsequent inability of customers to make required payments. Management analyses trade receivables and examines historical bad debt, customer concentrations, customer creditworthiness, payment history and changes in customer payment terms (note 16). Return on equity (ROE) Return on invested capital (ROIC) Equity ratio Net profit for the year × 100 Average equity Operating profit (EBIT) × 100 Average invested capital Equity × 100 Total liabilities and equity 24 Notes The LEGO Group — Annual Report 2017
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Note 3. Revenue Note 4. Expenses by nature Note 5. Auditors’ fees (mDKK) 2017 2016 Sale of goods 34,383 37,379 Licence income 612 555 34,995 37,934 (mDKK) Note 2017 2016 Raw materials and consumables used 5,283 5,587 Employee expenses 6 6,676 6,788 Depreciation and amortisation 7 1,490 1,295 Licence and royalty expenses 2,583 2,893 Other external expenses 8,604 8,923 24,636 25,486 (mDKK) 2017 2016 Fee to PwC Statutory audit of the Financial Statements 10 11 Other assurance engagements 1 3 Tax assistance 13 11 Other services 13 21 37 46 25 Notes The LEGO Group — Annual Report 2017
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Note 6. Employee expenses (mDKK) Note 2017 2016 Wages and salaries 5,800 5,848 Termination benefit and restructuring 232 33 Pension costs 20 211 338 Other expenses and social security expenses 470 617 Total employee costs for the year 6,713 6,836 Employee costs included in: Intangible assets (2) (13) Property, plant and equipment (35) (35) Total employee costs expensed in the income statement 6,676 6,788 Classified as: Production costs 1,956 1,962 Sales and distribution expenses 2,825 2,899
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