The LEGO Group delivered a turnover of DKK 15,692 million in the first half of 2016 while at the same time accelerating investments in building capacity and capabilities around the globe in order to prepare for future growth.
Sales growth was driven by innovation in well-established lines like LEGO® City and LEGO NINJAGO, as well as in the brand new theme LEGO NEXO KNIGHTS. Regionally, sales growth was particularly strong in both Europe and Asia with both regions achieving high double-digit growth, while sales development in the Americas region was flat year over year.
Key financial figures from the 2016 interim result:
- Revenue in the first half of 2016 increased by 10% compared with the same period last year measured in local currency (i.e. excluding the impact of foreign exchange rate changes).
- Revenue for the first half of 2016 increased by 11% in DKK to DKK 15,692m compared with DKK 14,142m for the same period last year.
- Operating profit (profit before financial items and tax) for the first half of 2016 was DKK 4,655m compared to DKK 4,607m for the first half of 2015, an increase of 1% year over year.
- Net profit for the first half of 2016 was DKK 3,489m compared with DKK 3,553m for the first half of 2015.
- Cash flow from operating activities was DKK 3,947m compared with DKK 4,349m during the first half of 2015.
Commenting on the financial result, LEGO Group President and CEO JørgenVig Knudstorp says: “It is our ambition to reach many more children all over the world with fun and creative LEGO experiences and it is exciting for all of us to see that our products are loved and cherished by children globally. Maintaining double-digit growth year on year through more than a decade is a testament to the never ending possibilities that children find in LEGO play, and the result of the hard work of more than 18,000 LEGO colleagues around the world.“
Satisfactory sales growth
In the first half of 2016, the LEGO Group experienced double-digit growth in Europe and Asia, while the Americas were flat year over year.
“It is particularly impressive that we continue our high growth in Europe where we have our most mature markets. At the same time, we are very satisfied to see high growth rates for Asia where we are making considerable investments in capacity and capabilities. In the US, we acknowledge that we have not provided the initiatives and support needed to keep the same high level of growth. As a result, we have worked closely with our customers and dialed up our initiatives in the American market, in order to regain momentum,“ says Executive Vice President and Chief Financial Officer John Goodwin.
Lines such as LEGO City, LEGO Creator, LEGO Technic, LEGO NINJAGO and LEGO Star Wars™ delivered very strong global results during the first six months of the year. Furthermore, the new product theme LEGO NEXO KNIGHTS, which launched at the beginning of the year, is off to a good start.
“The LEGO brick and the LEGO building system offer endless opportunities for great creative play, and with the new theme LEGO NEXO KNIGHTS we have taken our ability to combine physical and digital play through building sets, digital gaming and inspirational storytelling to an all new high,” says John Goodwin.
Significant investments in capacity and capability building for the future
During the first half of 2016, the LEGO Group has continued an already extensive global investment programme. A new factory in Jiaxing, China has begun manufacturing LEGO elements and it will be under continued construction until 2017. A significant expansion of the factory in Monterrey, Mexico, adding moulding, processing and warehousing capacity has started, and the new facility will potentially double the capacity in the future. Furthermore, at the LEGO Group’s factory in Nyíregyháza, Hungary, groundwork for an expansion that may double the capacity here started during the first half of 2016.
The significant growth of the company is also reflected in the employee base. To support the continued growth and globalisation of the company, the LEGO Group has added more than 3,500 new colleagues in the first half of 2016 compared to the first half of 2015, a year over year growth of +24%. As a result, the LEGO Group currently employs 18,500 employees globally.
“As well as adding capacity, the substantial intake of new employees aims to add new capabilities to equip the company to be able to respond to future consumer needs and market trends. These investments in people and infrastructure will obviously have an impact on our short term profit growth. But they are part of our long term plan to sustain the development and delivery of fun, high quality, and creative play experiences for more children in more parts of the world in the future”, says John Goodwin.
Continuing development of responsibility ambition
It is the LEGO Group’s ambition to make a positive impact on the planet. Among the many responsibility initiatives is the ambition of balancing the LEGO Group’s global energy consumption with renewable energy capacity, which is one of several means to achieve continued improvement on the company’s energy efficiency.
“In terms of energy efficiency specifically, we set a target of 10% increase of energy efficiency from 2013-2016, through our commitment to the World Wildlife Foundation’s climate savers programme. And we are very pleased to have exceeded that target with an accumulated energy efficiency improvement of 16%”, says John Goodwin.
A substantial step towards the LEGO Group’s ambition to have all energy consumption balanced by renewable energy by 2020, is the investment announced in April 2016, in the Burbo Bank Extension offshore wind farm, off the coast of the UK. The investment is made in a partnership between the LEGO Group’s parent company KIRKBI A/S, DONG Energy and PKA, and the farm will be able to supply CO2- free power equivalent to the annual electricity consumption of more than 230,000 households. The wind farm is expected to be fully commissioned in the first half of 2017.
During the first half of 2016, the LEGO Group has continued setting up the Sustainable Materials Centre, announced in 2015. The centre aims to deliver on the LEGO Group’s ambition of ensuring that all raw materials used for manufacturing LEGO products, including packaging, are sustainable by 2030.
Approximately 70 of the expected 100 employees who will be working on this exciting challenge are now engaged in the project, and the building to house the Sustainable Materials Centre is currently being designed.
“For the LEGO Group, investing in an ambitious responsibility agenda is an ongoing and integral part of our company – to continue to improve how we run our business in relation to our environmental impact. In that process, we focus on a broad range of efforts, with energy efficiency and investments in renewable energy being one cornerstone. Another is our search for sustainable materials, on which we will continue our dedicated work in the coming years”, says John Goodwin.
ComplyAdvantage Releases State Of Financial Crime Report For 2021
Designed as an must-have strategic roadmap for compliance teams, the comprehensive report covers financial crime insights related to fraud, cyber, and money laundering, the rise of crypto,
and the ever-changing sanctions landscape
ComplyAdvantage, a global data technology company transforming financial crime detection, today announced the availability of the firm’s much anticipated report The State Of Financial Crime 2021. Designed as a strategic guide for global compliance teams, the report lays out the many emerging threats that governments and financial institutions will face in 2021, along with prescriptive recommendations for implementing best compliance practices for combating financial crimes.
The research on which The State Of Financial Crime 2021 report is based was administered in November and December 2020. Interviews were conducted with 600 C-suite and senior compliance decision makers across North America, Europe, and Asia Pacific. The respondents represented enterprise banking, investments, crypto, insurance organizations, and fintechs.
One of the biggest challenges that compliance teams face is keeping current on the rapidly evolving regulations, and the advances of criminal behavior while balancing their organizations’ risk appetite. Risk indicators are also becoming harder to spot as the amount of information available grows exponentially and the speed of change gathers pace. This is why ComplyAdvantage has dedicated the company’s resources and anti-money laundering (AML) expertise in order to help compliance executives mitigate regulatory risks related to the most extreme AML financial crimes.
The State Of Financial Crime 2021 delves into the most important financial crime trends that Compliance Officers are most concerned with in the coming year. Specifically, these trends include increased fraud related to COVID-19 relief; risk vulnerabilities related to inconsistencies in global AML and counter financing of terrorism (CFT) system; the growth in sophistication of computer and mobile-enabled cybercrimes via payment systems; the continued use of sanctions as a tool of first resort and more.
A sample of key insights from the report include:
- SARs filing was on the rise with 74% of respondents saying they filed more SARS in 2020 than the previous year
- 93% of respondents stated that real-time AML risk data would improve their compliance operations
- Cybersecurity and third party risk management were noted as organizations’ biggest compliance-related pain points in 2020. With 54% of respondents ranking cybersecurity as a top pain point.
- 62% of respondents plan on upgrading their legacy systems in 2021.
- 54% of respondents plan on replacing or upgrading their transaction monitoring system in 2021.
“Due to the massive economic, political and social disruption brought about by COVID-19, international crime syndicates, rogue nations, global terrorists and cyber-criminals have become increasingly more aggressive, “said Charles Delingpolefounder and CEO of ComplyAdvantage. “Therefore, we felt it was imperative to prepare Compliance Officers and their teams for the potential onslaught of financial crimes driven by nefarious organizations.
Already the preferred choice of some of the world’s largest banks, enterprises and high-growth fintechs, ComplyAdvantage uses machine learning and natural language processing to help regulated organizations manage their risk obligations and prevent financial crime. The company’s proprietary database is derived from millions of data points that provide dynamic, real-time insights across sanctions, watchlists, politically exposed persons, and negative news. This reduces dependence on manual review processes and legacy databases by up to 80% and improves how companies screen and monitor clients and transactions.
ComplyAdvantage releases The State Of Financial Crime 2021 a comprehensive report covering financial crime trends related to fraud, cyber, and money laundering. #compliance #financialcrime #AML #antimoneylaundering #cybercrime
Open Banking: a new mindset for future service delivery
By Christoph Berentzen, Head of API Banking, Commerzbank, addresses what Open Banking means to the Bank and how its proper implementation can redefine the way in which the banking industry approaches collaboration – and, ultimately, client services
As they have in years past, integrated banking solutions will undoubtedly continue to gain traction in 2021 and beyond, due to their almost limitless power to increase efficiency and enhance facility for banks and their clients. Indeed, Open Banking – and its underlying API technology – is one such solution that we believe can certainly continue to transform the delivery of financial services for the better.
Of course, the concept is nothing new. Banks have long been investing in its potential, but we expect, over the coming years, that the adoption of externally accessible interfaces will hit the mainstream – permeating into many more industry segments than we currently see today. And as such, we expect Open Banking to be an integral part of our industry in the future.
Indeed, this is a future where additional user value is created by allowing greater interoperability between software applications – allowing consented data to flow from customer to banks and selected third parties to create new possibilities, enhanced products or more efficient customer service.
Yet the question still remains: how can banks usher in this new era of value creation? In our view, bringing such solutions to life will necessitate a move away from siloed thinking, towards far greater interconnectedness. Bank-fintech collaboration – as well as corporate customer buy-in – will be critical. In the end, the concept of Open Banking will shift traditional client or partner relationships, to a much closer partnership on equal terms. Banks, in turn, must be ready for this shift.
Not just another platform…
First, what is meant by Open Banking? An oft-cited term, we found in our research that many corporates use the concept interchangeably with standardised application programming interfaces (APIs). APIs allow for seamless data flows between internal and external systems, and, thanks to standardised working, neither system needs a detailed understanding of the other for them to interact and communicate. If properly implemented, therefore, API technology provides greater flexibility but also helps to connect the myriad IT systems within an institution, and between institutions, without creating more dependencies.
While it’s true that Open Banking can bear similar results, for us at Commerzbank, the concept goes beyond just the practicalities of data-sharing or the process of building platforms. It represents a whole mindset that encourages innovation and competition among banking players. As such, its influence extends to all financial products, as well as their underlying processes exposed via APIs (such as consumer loans or corporate payments). In short, APIs are better thought of as a foundation for the broader concept of Open Banking.
The rise of APIs has been particularly accelerated by various regulatory initiatives – notably the Revised Payment Services Directive (PSD2) in the European Union, as well as initiatives in the UK, the US and Hong Kong. Even though most of these, and other regulatory initiatives, mainly focused on payment services, they prepared the ground for the proliferation of the technology across the financial services industry, and supported the emergent trend towards Open Banking, creating more integrated services across organisational borders.
Yet Open Banking’s principles, while partly fostered by regulatory action, have also been shaped by the demands of corporate clients. These entities perennially seek ways to improve their operations and financial management, as well as have high expectations for seamless integration into their systems. They often require a wide range of customisable banking services specifically tailored to their industry and needs.
There are already examples of how APIs are transforming the provision of banking services in the corporate space. Bank of America, for instance, is collaborating with Flywire – a payment platform focused on payment optimisation for universities, hospitals, and businesses – to further strengthen their cross-border payment capabilities for their corporate end-users. Yet, importantly, Open Banking holds more potential than a mere platform or payment solution: accompanying the technological advancements is a paradigm shift that entirely alters how companies organise their product offering and service creation.
…But a sandpit for innovation and a new approach to banking
And herein lies Open Banking’s primary advantage: it promotes collaboration between banks, technology providers and clients, which ultimately breeds innovation. Ultimately, such innovation is a result of the interplay between several distinct components: implementing the right infrastructure, using relevant data or information, following a collaborative approach, and instilling a culture of trust that encourages an open mindset and experimentation. Our expectations, in turn, are twofold: data sharing will grant banks better access to higher-quality information with which new ideas can be developed; and the emergence of equal partnerships – where each party can contribute their unique capabilities.
Given the considerable potential that Open Banking shows for our corporate customers, at Commerzbank, we began our API program in 2017 with a view to going beyond the regulatory requirements of PSD2. And though we started out using API technology to optimise internal information flows, Commerzbank soon discovered the significant potential of this technology to accelerate collaboration. Today, third parties and Fintechs can co-create solutions, based on our banking data, which corporate clients can subsequently integrate into their systems.
The process is not without its organisational hurdles, of course. Our advice to other organisations is to set up agile-minded teams. Our API program team was an early adopter of mixed agile teams with experts from business and IT following the “Spotify model”. Recently, the bank introduced a new delivery organization with more than 50 agile teams as a foundation for Commerzbank’s future business model with short innovation cycles and a customer-centric approach.
Second, entities should ensure that this transition to open thinking is gradual. In our initial talks with partners, many stated that corporates were hesitant about the concept. As such, we spent the first 18 months on internal API development, testing, and educating with focus on IT decoupling and efficiency aspects. However, we also acknowledged that focusing on internal operations would not be enough. Following the first proof of concept, selected partners were enabled to use Commerzbank APIs according to highest security standards and compliant with banking regulatory mandatories, to better understand how we can design and manage such partnerships.
Ultimately, when it comes to delivering banking services that address the specific needs of today’s corporate clients, creating user value will be the result of deep-rooted cooperation. As a way of working that extends beyond any single organisation, Open Banking is, therefore, a solid foundation for this new future. And, if done properly, the concept offers unprecedented possibilities for clients to take advantage of customized and more automated banking solutions, which address needs much more holistically. We ask you to take part in this development and begin by sharing your ideas with your partners and clients. It may just be the first step towards realising this vision.
Automating your way out of disruption
By David Brightman, Director of Product Marketing at BlackLine
The coronavirus pandemic has underlined the vital role that automation plays in the finance function. Manual tasks, inefficient processes and a lack of data insight are holding back finance functions that have not yet automated – and preventing them from competing effectively in a tumultuous market. For these organisations, the ongoing business challenges caused by the pandemic should be seen as an opportunity to ensure future projects have the best chance of success. This means facilitating standardisation and planning, as well as redesigning processes so that the same inefficiencies are not perpetuated.
Unfortunately, the finance function, like most aspects of business, are facing severe disruption as a result of the pandemic. Numerous projects relating to implementing or scaling automation have been delayed or cancelled, and many distributed teams are battling with an over-reliance on paper-based documents or office-bound tasks that are no longer feasible. Many of these issues would have been softened had companies already completed the move to digitise their processes before the pandemic, but research suggests that very few companies have fully addressed the automation gap.
The automation gap
In fact, a survey commissioned by BlackLine and conducted by FSN suggests that only 9% of organisations managed to completely transform their finance function through automation before the pandemic. This is despite the fact that digitally transformed companies are two and a half times less likely to report delays in their existing project timescales compared to companies that have not invested in finance automation – and 20% are less likely to report delays to future automation projects.
Having already experienced the benefits of automation, these companies are also less likely to have reduced their budgets for finance automation projects. Furthermore, the research found that finance and accounting (F&A) teams that entered this crisis further down the automation path were better positioned to weather the pandemic. This is because automation enabled these finance professionals to spend a greater amount of time on valuable, strategic tasks that could help guide the organisation through the changing business landscape. And when business was in flux, and teams had to transition to remote-working with little time to prepare, they had more resiliency to ensure the financial close ran like clockwork, without compromising financial statement integrity.
With such a strong case for automating, what is holding finance teams back?
Challenges to effective finance transformation
The majority of organisations are yet to jump on the automation bandwagon and there are a number of reasons why. Challenges include a lack of commitment to fully instigate automation across the business, a lack of resources, short timeframes for implementation, and pressure from executives who want to see a faster ROI, to name a few. With pandemic-related issues added to the mix, it’s understandable that there is some hesitancy when it comes to investing in automation.
However, from managing data, assessing risk factors, stress testing, to uncovering inefficiencies and budgeting, automation can and has been proven to help. For those organisations that still have reservations, looking at existing automation successes and learning from their peers is an excellent way to kick-start your own business automation strategy.
It’s important to remember that modernising your finance function can have a huge impact on business outcomes, producing real-time updates that can be used to guide decision making and risk management. However, moving to modern accounting means taking a unified approach. Integrating systems and data for a single source of truth, so you can standardise and control processes for consistency, efficiency, visibility, and change management is the only sustainable path forward.
Tips for initiating automation within your business
To begin with, businesses must have a clear understanding of the current state of their finances and where they stand within the industry landscape. What are the challenges? Where are the potential bottlenecks and opportunities for efficiencies to be created? This is a vital step in improving transparency. If businesses don’t have a clear view over what is happening within their own organisation, how can they expect to make important decisions that will improve business outcomes?
To achieve this, finance teams should look to migrate any on-premise applications to the cloud. This will enable easier access and control over how and where data is stored, while also integrating applications to function as one whole system that communicates with all necessary business departments. This will give a clearer, real-time overview of where the business is at and where necessary changes are most critical.
Next, CFOs need to look at simplifying and streamlining some of the tasks F&A teams face day-to-day. For example, when automating financial close and reconciliation processes, it’s essential that process owners, not technical staff, can make changes quickly. Updates like adding or changing accounts for reconciliation automation, or applying technology like artificial intelligence to transactional matching, modifying variance exception thresholds, changing standard or custom report fields, should all be within accounting’s span of control. Ensuring the right people have access to the right data and reports, as and when these are needed, reduces bottlenecks considerably. This in turn leaves more time for making sure reports are up to the highest possible standard and insights are used to make any necessary adjustments fast.
Once transparency is instilled and time wasting bottlenecks are reduced, businesses can begin to regain control of their systems, through investing in new ERP systems and automating their budgeting, planning and forecasting (BPF) processes. Without transforming the BPF process that provide agility and insights, businesses would be forced to run in circles, producing forecasts that would become obsolete within days. In these uncertain times, companies need to be reforecasting daily and weekly, or at the very least monthly to have any sort of handle on the business. Where some organisations were getting by with minimal sophistication in their BPF, the unprecedented effects of lockdown have exposed significant weaknesses in these processes.
Finally, F&A teams should seek to connect with a community of experts dedicated to driving modern accounting and the automation journey, to achieve a more collaborative accounting experience. This could include networking, tapping into virtual best practices and finance transformation summits, and hearing from peers at other organisations about what has worked (or hasn’t) on their modern accounting journey. For automation to succeed, it’s also critical that F&A control their destiny. Ownership means F&A can take charge of process automation themselves, without relying on IT or technical consultants. This ensures that technology can be confidently owned and managed by end-users – those closest to reengineering the business processes themselves. If the technology creates friction to driving change, digitisation efforts will ultimately grind to a halt.
This has been a trying year, and businesses have a lot to learn from recent months – successes and failures alike. Taking a holistic approach to automation, understanding the benefits of automating each process, and identifying the competitive insight that can be generated through new techniques and technologies will enable CFOs to work their investment in automation harder and smarter. If you haven’t already decided what your automation plans are for the upcoming year, this is the time to begin.
ComplyAdvantage Releases State Of Financial Crime Report For 2021
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