Since it was founded in 1963 in the town of Bredebro in

Transcription

Since it was founded in 1963 in the town of Bredebro in
southwestern Denmark, ECCO has been owned and managed
by the Toosbuy family. Today, Hanni Toosbuy Kasprzak – the
daughter of Birte and Karl Toosbuy – is the principal stockholder
and Chairperson of the Supervisory Board. Her husband, Dieter
Kasprzak, is Chief Executive Officer (CEO), and Mikael Thinghuus
is Chief Operating Officer (COO).
ECCO’s Annual report 2006
ECCO – passion and results
The ECCO Sales and Marketing building in Tønder, Denmark with ECCO's Landmark "The Foot".
ECCO had an outstanding year in 2006 with significant
progress on all fronts. ECCO's new collections were
enthusiastically received by customers in all markets.
This led to a growth in revenues of 17% and a doubling
of the annual profit before tax to DKK 709 million.
2006 was thus the third year in a row with healthy and
solid growth.
In 2006, ECCO achieved a solvency ratio of 47%, which
ensures our financial independence, one of the objectives
that the company's owner has set for ECCO. Another
objective that was also met in 2006 is the achievement
of a profit before tax of over 15% of revenues. The 2006
profit was equivalent to 15.9% of revenues.
ECCO's primary goal continues to be to produce modern
casual shoes that push the boundaries of comfort
and quality, technical functionality and design. ECCO
continuously seeks to be the best, not the biggest.
We, therefore, maintain the almost unique position within
the shoe industry of controlling the entire value chain from
cow to consumer.
Our control over the processes and quality ensures that
we always have the maximum freedom to find the best
solution. It also gives us flexibility so that we can adjust
production and reallocate resources according to the
changing requirements of the markets. In 2006, this ability
allowed us to deal reasonably efficiently with unexpected
problems such as the fire at our factory warehouse in
Thailand and the EU's protectionist tariffs on shoes
manufactured in China.
By having such large-scale production of our own, we can
also ensure that ECCO's Code of Conduct is adhered to.
Control of the entire value chain has a further advantage.
By being present in retail, where our sales staff meet our
customers and listen to their reactions, we gain significant
knowledge of what our customers are looking for. This
knowledge is used in the development of our collections.
In this way the circle is complete.
ECCO's employees around the world have made an
enormous contribution in 2006. In ECCO's tanneries, shoe
factories, group functions, distribution centres, wholesale
and retail organisations, expertise is continuously built. It is
only by helping the employees to constantly extend their
knowledge and experience that ECCO's future can be
secured.
This also gives ECCO the opportunity to make things
better. We constantly look for ways to make improvements
in every single product group, in every single type of
leather and sole design, in every single one of our shops
and in every single one of our processes and working
procedures. This is a continuous effort, which will ensure
ECCO's competitive ability and success.
An area of focus is our supply chain which is under
pressure due to unexpectedly high sales, particularly in
Eastern Europe and North America. The EU's punitive
tariffs and the fire in our warehouse in Thailand increased
the pressure, and for a period resulted in delays of our
deliveries. This is not satisfactory.
This also emphasises the need to constantly adjust all
business processes.
ECCO’s Managing Board, from left: Mikael Thinghuus, COO, Dieter Kasprzak, CEO, and Jens Christian Meier, EVP Production.
Over the next two years, ECCO will carry out a major
simplification and upgrade of the company's central SAP
system. ECCO will also introduce an IT platform in
hundreds of sales outlets that will allow for a rapid, daily
insight into which shoes are selling best. This will improve
our ability to plan and control production and logistics.
Improved systems will also allow us to accelerate the Lean
approach, which has already begun to show results in the
form of the simplification of existing production processes.
ECCO will continue to make long-term investments in our
business systems, our value chain and particularly in our
dedicated employees.
First and foremost, the excellent financial results give us
the freedom to focus on the core of ECCO – the constant
development of new products, of shoes that push the
boundaries of design and quality. Shoes that are truly the
most comfortable in the world.
Dieter Kasprzak
Mikael Thinghuus
Jens Christian Meier
Chief Executive Officer
Chief Operating Officer
Executive Vice President, Production
Consolidated financial highlights and key ratios
FINANCIAL HIGHLIGHTS20062005200420032002
DKK ‘000
Net revenue4,470,4033,830,546
Profit before amortisation and depreciation
Amortisation and depreciation 3,393,6933,168,9303,359,838
937,822
628,879
447,972
370,295
342,776
(178,360)
(205,039)
(180,937)
(188,657)
(187,215)
Profit before financials
759,462
423,840
267,035
181,638
155,561
Net financials
(49,979)
(74,294)
(60,594)
(61,394)
(73,465)
Profit before tax
709,483349,546*206,441120,244
Income taxes
82,096
(209,423)
(124,512)
(42,883)
(49,264)
(21,743)
Group profit
500,060
225,034
163,558
70,980
60,353
Minority interests
(10,588)
697
(12,897)
(9,192)
(9,275)
Profit for the year489,472225,731150,661
61,788
51,078
Fixed assets
1,121,303
1,075,306
1,112,597
1,073,447
1,024,182
Current assets
2,529,377
2,210,052
1,832,582
1,714,309
1,884,018
Assets
3,650,680
3,285,358
2,945,179
2,787,756
2,908,200
Equity
1,729,513
1,285,750
1,034,026
951,016
958,160
57,079
87,358
56,877
31,257
37,413
Debt 1,864,088
1,912,250
1,854,276
1,805,483
1,912,627
Liabilities 3,650,680
3,285,358
2,945,179
2,787,756
2,908,200
Other liabilities Cash-flow from operating activities
427,374
515,078
272,973
336,378
594,382
Cash-flow from investing activities
(234,809)
(201,678)
(212,811)
(228,551)
(230,346)
Cash-flow from financing activities
(188,958)
(2,385)
(392)
(73,808)
(263,633)
Pairs of shoes sold (thousands)
14,776
12,906
12,045
11,225
10,564
Number of employees (as of 31 December)
12,670
10,534
9,657
9,388
8,839
*) P
rofit for the year 2005 is negatively influenced by a provision for non-recurring costs of DKK 48 million related to the restructuring of operations in Portugal.
Profit for the year before tax and provisions for non-recurring costs amounted to DKK 398 million.
KEY RATIOS
Operating margin
17.0%
11.1%
7.9%
5.7%
4.6%
ROAIC
21.9%
13.6%
9.3%
6.4%
5.2%
Return on assets
2.7%
20.5%
11.2%
7.2%
4.2%
Investment ratio
1.3
1,0
1.2
1.2
1.2
Return on equity
32.5%
19.5%
15.2%
6.5%
5.3%
Solvency ratio
47.4%
39.1%
35.1%
34.1%
33.0%
3.0
2.9
2.0
1.9
2.0
Liquidity ratio
DEFINITIONS OF KEY RATIOS
Operating margin:
Profit before financials x 100
Net revenue
Investment ratio:
ROAIC:
Profit before financials x 100
Return on equity:
Average assets
Return on assets:
Profit before tax x 100
Solvency ratio:
Average assets
Investments for the year
Liquidity ratio:
Amortisation and depreciation
Profit for the year x 100
Average equity
Equity x 100
Assets
Current assets
Short-term debt
Highlights of 2006
Income statement
In 2006, the ECCO Group achieved a highly satisfactory result.
The ECCO Group's profit before tax was DKK 709.5
million, compared with DKK 349.5 million in 2005.
This represents an increase of 103%.
average price per pair. The exchange rate effect on net
revenue was insignificant. Net revenue for accessories
increased by 33% and thus continued the positive
development from 2005. The Group's third business
area - sales of leather and wetblue – decreased by
11%, which is partially related to ECCO's rising need
for leather for its own shoe production.
One of the reasons for the strongly improved profit
level is a significant increase in the number of pairs
of shoes sold, where sales rose by 14.5% to almost
14.8 million pairs of shoes. Sales from ECCO's license
manufacturer in Japan, whose sales totalled just under
one million pairs of shoes, is to be added to this figure.
Growth was recorded in all product groups – Men’s,
Ladies’, Kids’, Golf and Performance, but Performance
and Kids’ in particular have developed very strongly.
Net sales of the ECCO Group
(in %)
1.2%
4.1% 1.9%
92.8%
Number of pairs (thousands)
Pairs of shoes sold (thousands)
Shoes
15,000
Accessories
Leather and wetblue
Others
12,000
Profit before financials increased by 79% to DKK 759.5
million, and the operating margin increased from 11.1%
to 17.0%. This constitutes a significant improvement
to the earnings of the Group, due to higher volumes
and higher average prices as well as developments in
production costs, which were positively influenced by
high capacity utilisation in our own factories.
9,000
6,000
3,000
0
2002
2003
2004
2005
2006
In 2006, ECCO attained net revenues of DKK 4,470
million, which represents an increase of 16.7% compared with 2005. 93% of net revenues were made up
of shoe sales, the remaining 7% of sales of accessories
as well as leather and wetblue.
Net revenue / Operating margin
Total costs increased by DKK 219 million, equivalent to
13.5%. This increase was primarily due to the fact that
ECCO is now itself responsible for distribution in China,
increased investment in marketing as well as continued
development in retail operations. Furthermore, a number of strategic projects has been implemented, which
will help create the foundation for future earnings.
Net revenue (DKK million)
DKK million
Operating margin
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
20.0%
16.0%
12.0%
8.0%
4.0%
2002
2003
2004
2005
2006
0,0%
Net shoe sales increased by 18.9%, which is partly
due to the considerable growth in the number of pairs
of shoes sold, and partly due to a 4% increase in the
Net financials totalled DKK -50.0 million compared with
DKK -74.3 million in 2005. This positive development
is primarily due to exchange-rate adjustments related
to debt denominated in foreign currency, which were
positive in 2006 at DKK 12.0 million compared with
a loss of DKK 5.8 million in 2005. Furthermore, net
interest-bearing liabilities in the Group were reduced
by approximately DKK 150 million.
Income tax amounted to DKK 209.4 million. The
effective tax rate was therefore 29.5% compared with
35.6% in 2005. The effective tax rate in 2005 was
negatively influenced by changes in deferred tax due to
restructuring as well as reorganisation of the corporate
structure.
Profit for the year after tax and minority interests was
DKK 489.5 million compared with DKK 225.7 million
in 2005, which represents an increase of 117%.
The profit achieved should be viewed in light of the
facts that in 2006, ECCO was hit by a fire at the factory
in Thailand, which has some effect on profits, and that
the final introduction of punitive tariffs on the import
of certain types of leather shoes from China had
a negative impact on profits. In both cases, it is difficult
to state the exact financial effect, as a large proportion
of this was due to complex production changes and
delayed deliveries to our customers.
The cash flow from investing activities was DKK 235
million net compared with DKK 202 million in 2005;
an increase of DKK 33 million or 16%. Investments
were primarily focused on the expansion of production
capacity in order to meet demand, including the
continued development of the newly-established
factory in China. Furthermore, as in previous years,
investments were made in development and the
roll-out of ECCO's concept sales.
Cash Flow from operating activities (DKK million)
600
Balance sheet
At the end of 2006, the Group's total assets stood at
DKK 3,651 million; an increase of DKK 365 million or
to 11.1%.
DKK million
500
400
300
200
100
0
Non-current assets totalled DKK 1,121 million, of which
DKK 1,007 million was property, plant and equipment.
The Group's inventories of finished products increased
by 19% at the end of the year, which is due to the
pending invoicing of spring and summer goods, which
in sales terms is expected to experience a significant
increase compared to the same period of the previous
year.
2003
2004
2005
2006
DKK 150 million has been repaid on non-current liabilities without corresponding increase of current liabilities
during the financial year. Paid out dividends amounted
to DKK 35 million.
Equity at the end of 2006 was DKK 1,730 million
compared with DKK 1,286 million at the end of 2005,
an increase of 35%. Profit for the year contributed
DKK 489 million. Currency translation of the equity of
foreign subsidiaries amounted to DKK -21 million and
currency translation of derivatives etc. amounted to
DKK 11 million. In addition, dividends were paid
totalling DKK 35 million.
The solvency ratio rose from 39.1% to 47.4%, which
supports ECCO's overall goal of retaining the highest
possible level of financial independence.
Cash flow statement
The consolidated cash flow from operating, investing
and financing activities was DKK 4 million compared
with DKK 311 million in 2005.
The consolidated cash flow from operating activities
was DKK 427 million compared with DKK 515 million in
2005; a decrease of DKK 88 million equivalent to 17%.
This decrease was primarily due to capital tied up in
inventories as well as receivables from sales.
2002
Organisation – delegation, clear responsibility
and sensible decisions
ECCO's organisation reflects the basic concept that
decisions should be made as close to the market as
possible and by those who are best qualified to make
them. Our 11 business units, supported by a strong
head office, therefore have broad freedom of action to
make the necessary decisions where things happen,
and when market developments demand.
Group functions
The ECCO Group's head office is responsible for
developing the brand, design and products and
concepts as well as other Group functions such as IT,
Finance, HR, logistics and legal affairs. In addition, the
head office functions as a support and supervisory unit
for ECCO's individual business units.
2002
2003
2004
Central Europe
Western Europe
Americas
Asia / Pacific
2005
No. of employees
Our HR activities were therefore strengthened and
professionalised in 2006 to ensure the long-term
development of both the organisation and the individual
employees. In addition, a good and stimulating work
environment is an important part of ECCO's image
and contributes to the recruitment of attractive
employees. A model has been created as the basis
for both identification and support of local and global
employee potential.
All business units have therefore introduced a
systematic development strategy for different groups
of specialists in the individual business areas. Talent
programmes have been implemented for both new
employees and experienced staff. Management
development programmes on all levels have been
implemented accordingly. All development programmes
are based on a method that combines theory and
practice as well as business and product knowledge
in a goal-oriented manner.
Composition of employees by geography
(End of year)
13,000
12,000
11,000
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
importance of being an attractive place to work for
all employees. We, therefore, focus on ensuring
that our employees benefit from life-long education,
constant challenges and new opportunities.
2006
Eastern Europe
Business units
ECCO's business units, with their strong leadership as
well as their own budgets and annual accounts, have
the opportunity to make rapid and focused decisions.
The business units thus have direct responsibility for
their own daily business and all related processes.
ECCO's 11 business units are the Leather Group,
the five shoe factories and the five sales regions,
i.e. Central Europe, Western Europe, Eastern Europe
and Middle East, the Americas and Asia/Pacific.
(See page 8).
People create results
Having the right employees for the right jobs is crucial
for ECCO, because our employees play a vital role
in the success of the business. We emphasise the
Group structure as of 31 December 2006
ECCO Sko A/S
Subsidiaries, Sales
ECCO Europe
Central
ECCO Europe
West
ECCO Europe East
and Middle East
SWEDEN
ECCO Sverige AB
THE NETHERLANDS
ECCO Europe West B.V.
DENMARK
Salgsselskabet
ECCO Danmark A/S
UK
ECCO Shoes UK Limited
-D
ENMARK
ECCO Retail A/S
NORWAY
ECCO Norge A/S
FINLAND
Oy ECCO-Suomi Ab
GERMANY
ECCO Schuhe GmbH
AUSTRIA
ECCO Trading GmbH
SWITZERLAND
ECCO Schuhe Schweiz
GmbH
BELGIUM
ECCO Belgium N.V.
FRANCE
ECCO France Diffusion
S.a.r.l.
PORTUGAL
ECCO (Portugal) Sales
– Comercialização de
Sapatos, Lda.
ECCO
Americas
POLAND
ECCO Europe East and
Middle East Sp. z o.o.
- POLAND
ECCO Shoes Poland
Sp. z o.o.
ECCO
Asia /Pacific
USA
ECCO USA, Inc.
HONG KONG
ECCO Asia Pacific Limited
-U
SA
ECCO Retail LLC
-H
ONG KONG
ECCO Shoes Hong Kong
Limited
CANADA
ECCO Shoes Canada, Inc.
-T
HE CZECH REP.
ECCO Boty Ceská
republika s.r.o.
-S
INGAPORE
ECCO Singapore
Pte. Ltd.
-A
USTRALIA
ECCO Shoes Pacific
Pty. Ltd.
-N
EW ZEALAND
ECCO Shoes
(NZ) Limited
- INDIA
ECCO India Trading
Private Limited
-S
LOVAKIA
ECCO Shoes Slovakia,
s.r.o
SPAIN
ECCO Shoes Iberica, S.L.
ITALY
ECCO Scarpe Italia S.r.l.
Accessories:
SWITZERLAND
ECCO Shoes International
Ltd
-S
INGAPORE
ECCO China Wholesale
Holding (Singapore) Pte.
Ltd.
-C
HINA
ECCO (Shanghai)
Co. Ltd.
Subsidiaries, Production
ECCO
Shoe Factories
PORTUGAL
Ecco’let (Portugal)
– Fábrica de Sapatos, Lda
ECCO
Leather
THE NETHERLANDS
ECCO Leather B.V.
-T
HE NETHERLANDS
ECCO Tannery
(Holland) B.V.
SLOVAKIA
ECCO Slovakia, a.s.
- INDONESIA
PT. ECCO Tannery
Indonesia
INDONESIA
P.T. ECCO Indonesia
THAILAND
ECCO (Thailand) Co., Ltd.
SINGAPORE
ECCO China Holding
(Singapore) Pte. Ltd.
THAILAND
ECCO Tannery (Thailand)
Co., Ltd.
-C
HINA
ECCO (Xiamen) Co.
Ltd.
Dormant companies have been left out
ECCO Sales regions
Central Europe
Western Europe
Americas
Asia / Pacific
Eastern Europe and Middle East
Our collections
With the ambition of being able to offer the world's
most comfortable shoes, ECCO invests more than
40 years of experience in two main collections each
year – spring/summer and autumn/winter. Our design
and product development departments refuse to
compromise in terms of the ongoing development of
our collections, and they continually focus on creating
products of the highest quality, best comfort and the
most innovative design.
But how is a successful shoe collection created?
Every year the collection work involves a long process
of laboratory testing, practical testing and local market
integration each year. And all of this is on top of the
daily design and product development work carried out
by people with a passion for shoes.
Composition of shoe sales in 2006
(in %)
One of ECCO's decisive competitive advantages is
our leading market position in the use of direct injected
soles. This special technology, where the soles are
injected into a special mould and attached to the upper
of the shoe under high pressure, is vital to ECCO's
famous comfort, lightness and quality. A significant
part of the collection work is our constant focus on
developing our technological knowledge, so that
we can create new, innovative and market-oriented
designs. The Futura Design Center at ECCO's head
office demonstrates our long-term investment in
innovation and design.
The collections are the backbone of our success,
and in 2006 they achieved a major breakthrough. A
mix of innovative design, top quality and ECCO's
comfort created a solid foundation for our 2006 result.
The design and previously unseen detailing of the
direct injection soles of our two 2006 collections
enabled us to increase the already substantial gap to
our competitors and to bring ECCO’s direct injection
products to the next level. Our customers clearly
rewarded our efforts. The direct injection products topped the list of the best-selling products in all segments.
10
15%
40%
15%
30%
Ladies’
Men’s
Kids’
Performance / Golf
Testing in the shoe laboratory
ECCO does not just collaborate with leading professors and scientists of anatomy, we own and operate
our own shoe laboratory. It is our goal that every single
shoe is tested to the maximum by professionals who
know the background of ECCO’s products. In our shoe
laboratory, all aspects of the shoes’ performance are
thoroughly tested: grip is tested on wet or slippery
surfaces, the durability and flexibility of the soles are
tested with advanced testing equipment, and the
resistance of the shoes to cold weather and the ability
to stay warm are tested in climate chambers, just to
At the big conferences at ECCO’s Conference Centre hard work creates the local collections
mention some of the many tests that we carry out in
our laboratory.
Practical tests
But at ECCO we are not satisfied with merely
subjecting our shoes to extreme tests in our test
laboratory. We also evaluate the shoes in the conditions
in which they are to be used: in the real world and on
real feet.
Our own employees are a central part of these practical
tests. Comfort is a quality which is difficult to measure
– comfortable shoes should be tested by real people.
Therefore, ECCO has organised a team of enthusiastic
testers who carry out long-term fit and wear tests.
In their own words, they describe their experiences
with the coming season's products. ECCO's own
employees are trained never to compromise on quality.
Due to our internal fit and wear testing it is not unusual
to see a businessman in jacket and tie wearing a pair of
white ECCO Supercross sneakers in ECCO's offices.
But the office carpeting or the factory concrete floors
are not suitable for the testing of all our shoes. Our golf
and running shoes are thoroughly tested by world-class
athletes, who test the shoes in the environments they
were produced for. Some of the world's best golfers,
such as Colin Montgomerie and Thomas Bjørn, test
ECCO's golf shoes on golf courses throughout the
world. Torbjørn Sindballe, who reclaimed the world
championships in long distance triathlon in 2006, is a
dedicated participant in the entire development process
and an unrivalled tester of ECCO's running shoes. Our
walking boots are tested in the mountains of Sweden,
Slovakia or Nepal by carefully selected people who
understand the importance of properly-made footwear.
The Danish mountaineer Mogens Jensen, who aims
to be the first asthmatic to reach the summit of Mount
Everest without using supplementary oxygen, tests
ECCO's outdoor products in the Himalayas.
We test a large number of shoe types. When ECCO
develops shoes with a new type of sole, we send our
shoes to refuse collectors, postmen and others, who
walk many kilometres every day. This way we test the
soles under maximum wear conditions.
Adaptation to local markets
Another important element in the collection work is
adaptation to local markets. ECCO is an international
business with global scope. It is therefore our goal that
both the spring/summer and autumn/winter collections
are matched with the newest trends and requirements
in our local markets. This is a big challenge, but a task
that has to be taken seriously.
With regards to adapting the global collections to local
market requirements, ECCO's headquarters arrange
at least two major conferences each year attended
by around 200 sales representatives, marketing
people and other representatives from ECCO's various
markets, so that local markets can take part in the
collection work. Their sales forecasts create the basis
for the selection of local market collections from the
global and regional collections. Based on our global
success, we are convinced that this time-consuming
work pays off.
11
Men's collection
ECCO Austin - Men's City shoe
The Men's collection had an outstanding year in 2006.
Sales from both the spring and autumn collections
exceeded 2 million pairs and ended a little over 4
million pairs for the year as a whole. Compared to
2005, the Men's collection therefore experienced a
growth of 11%.
pricing, it also stands apart by being in a higher price
range than the rest of the casual group.
Another new development is ECCO Austin, which is a
classic, handmade city shoe. Even in the launch season
of autumn/winter 2006, ECCO Austin was very popular,
and we can see that its popularity is growing in 2007.
As ECCO's City collection has been the driving force of
the major growth of recent years, the modernisation of
the casual series was central to the Men's collection
in 2006. Products that suit a more relaxed lifestyle are
increasingly in demand by customers all over the world.
Our City series remains very strong. One of the most
popular products is ECCO New York, which sells more
than 200,000 pairs each season.
It is a very important challenge to develop the collection
from more traditional to modern products, so that we
are even more competitive in the future. Therefore,
ECCO will continue the search for new technical
solutions, ideas and materials in the coming seasons,
so that we can make new products that can only be
produced thanks to the combination of ECCO's
know-how.
Greatest successes
ECCO's response to the more relaxed lifestyle is ECCO
Supercross. ECCO Supercross follows in the footsteps
of the Ladies’ collection success story of ECCO Shark,
ECCO Vibration and ECCO Spark and represents a
totally new product type for men in ECCO's casual product range. ECCO Supercross is a sneaker-style shoe
of outstanding construction and design. In terms of
12
Ladies’ collection
ECCO Spark - Ladies' sandal
In 2006, the Ladies’ collection successfully continued
the modernisation of the range, so that the appeal to
both loyal and completely new customer groups is
increased. The collection will also further strengthen
ECCO's position as an innovative brand of high quality.
With a growth rate of 5% compared to the previous
year, the Ladies’ collection stays on the right track.
As part of the significant collection development, we
have focused on developing modern alternatives to
some of ECCO's more classic products. Even though
we are aiming to attract new customers, we still intend
to service our existing, loyal customers.
Spark sandals were sold, which made ECCO Spark
the best-selling new product group in the 2006 spring/
summer collection.
ECCO Winter Breeze was definitely one of the
highlights of the 2006 autumn/winter collection.
Despite the fact that they go for an above-average
price, the smart appearance, fit and comfort made
them a bestseller. 115,000 pairs were sold in the
first season.
The process of modernisation will not affect the famous
ECCO comfort. On the contrary, the new products
are at least as comfortable as all our previous shoes,
since ECCO's technology makes it possible to
challenge the convention that a choice has to be made
between style and comfort. ECCO's customers can
have both smart appearance and extraordinary comfort.
Greatest successes
The ECCO Spark sandal is one of the best examples
of the new generation of ECCO shoes in the 2006
spring/summer collection. ECCO Spark has a far more
sporty look than all other sandals we have made, and,
in addition, it is manufactured using ECCO's direct
injection technology to guarantee utmost comfort and
the highest level of quality.
ECCO Spark’s unique appearance and features proved
to have both strong PR value and strong customer
appeal. In the first season, 169,000 pairs of ECCO
13
Kids’ collection
ECCO Heatwave - Kids' sandal
The Kids’ collection also experienced great success
in 2006 with a growth in sales of 31%. This increase
is not due to success in one or two markets, but due
to increased penetration in all of our markets. This has
strengthened our position in the segment of children's
footwear all over the world.
With regards to product development, the collection
made another great leap forward on the road to
distinguishing ECCO's kids shoes from other brands.
This was achieved through innovative design and the
best selection of materials - including an increase in the
number of direct injection products, which no one else
in the market can produce. Direct injection products are
very relevant in all segments, but the advantages of this
unique technology – lightness, comfort and flexibility
– seldom face up to such great challenges as with our
youngest customers, when they climb trees and explore
playgrounds all day long.
previous sandal successes. This is the inspiration for
ECCO Heatwave. Both quickly became bestsellers in
the summer of 2006.
One of the best-selling products in the autumn/winter
collection 2006 was ECCO Ice Breaker. This direct
injected product is also provided with a technically
advanced GORE-TEX® membrane that keeps feet
warm and dry whilst allowing them to breathe. More
than half of the kids footwear sold the autumn and
winter seasons are GORE-TEX® products.
But comfort and high quality are not the only factors
that matter to children today. Footwear also has to look
good. The development of unique and exciting designs
was therefore another key area for the Kids’ collection
in 2006.
Greatest successes
In keeping with the strategy of strengthening the
collection with more direct injection products, ECCO
launched the first sandal for kids with direct injection
soles in 2006: ECCO Heatwave.
This new sandal was developed on ECCO's experience
with Performance sandals for adults as a follow up to
14
Performance collection
ECCO Ultra Terrain Arctic
2006 was another outstanding year for the Performance collection with phenomenal growth. All three
segments – outdoor, walking and running – contributed
to the increase. The total growth in the number of pairs
sold was 83% compared to the previous year.
The fact that our efforts during recent years have been
rewarded by consumers encouraged us to expand our
Performance series. In 2006, we managed to activate
unused potential by developing and marketing
more products for outdoor, walking and running than
in previous seasons. The ability to develop new
technologies, improve existing products and create
functional and attractive designs is vital for success in
the long run and is key in order to increase our future
market shares.
wearing his special RXP 6000 running shoes from
ECCO.
Greatest successes
It was not a big surprise that the ECCO Offroad
sandal was a bestseller in spring/summer 2006. This
new sandal has everything that an adventurer could
wish for thanks to ECCO's direct injection soles. It is by
far the lightest and most comfortable sandal in its class
and with a durable rubber sole.
One of the best-selling products in the autumn/winter
collection was ECCO Ultra Terrain Arctic. This shoe was
specially developed to cope with switching from water
to land all day long, but the smart looks and the superflexible outsole make it as suitable for uneven terrain as
it is for urban environments.
Our primary focus in 2006 was the outdoor segment.
In this segment, ECCO offers something for both
true outdoor enthusiasts, who are looking for a
functionally superior product for active holidays, and
for holidaymakers looking for a comfortable and reliable
shoe for travel use. In both categories, ECCO's outdoor
series offers a large selection of individual, technical
and comfortable options.
In the walking segment, we succeeded in combining
all our shoemaking know-how and our top level quality
with a younger and more functional design.
In 2006, ECCO's running shoes were at the top of
the podium, when the Danish triathlete Torbjørn
Sindballe took first place in the long distance triathlon
world championships for the second time in his career
15
Golf collection
ECCO Women's New Classic - Golf shoe
Only a few years ago, ECCO entered the world of
golf and revolutionised the industry by launching
top-quality, fashionable golf shoes, which were also
actually comfortable to wear – a combination that has
been ECCO's trademark in golf ever since. In 2006,
the rate of growth remained high for the Golf collection.
to strengthening ECCO's market position within golf
shoes.
A major factor in this success is ECCO's focused
marketing efforts combined with our focus on staying
innovative, developing unique designs and challenging
technology every time we make a new golf shoe.
ECCO surprised the golf industry once more in 2006
with new products. This time it was the launch of
brightly-coloured sneaker-style shoes for a sport that
traditionally has used white, black and brown shades.
The colour experiment was rewarded by ECCO's
customers with impressive sales growth in 2006.
For the autumn/winter season, we increased our
selection of GORE-TEX® products, which are
particularly popular at that time of year. And for the
first time ever, we used the newest technology from
GORE-TEX®: the XCR membrane, which is even more
breathable.
ECCO has sponsorship agreements with a number of
the world's best golfers, including Thomas Bjørn, Colin
Montgomerie, Aaron Baddeley, Iben Tinning, Juli Inkster
and Thongchai Jaidee. In 2006, this impressive list was
extended with two more world class golfers, as Anna
Rawson and Fred Couples became new ECCO golf
ambassadors.
Greatest successes
The launch of two new groups, ECCO Men’s New
Casual and ECCO Women’s New Classic, exceeded all
expectations and hereby contributed very significantly
16
Sponsor agreements
Thongchai Jaidee – 37 years, Thailand.
No 1 Asian golfer in 2005
Anna Rawson – 26 years, Australia
Voted “The world’s sexiest golfer” in 2005 by Golf Punk.
Aaron Baddeley – 26 years, Australia
Two wins on the PGA Tour in USA.
Fred Couples – 48 years, USA
1992 Masters Champion
Iben Tinning – 33 years, Denmark
No. 1 in Europe in 2005 with 3 wins on the European Tour that year.
Thomas Bjørn – 36 years, Denmark
8 wins on the European Tour.
17
Sales – regions and shops
The interior design and overall service are carefully planned to support the customers’ total buying experience and expectations to everything linked
to ECCO’s products.
Growth in all regions
In 2006, ECCO experienced substantial growth in the
sales of shoes and accessories in all five sales regions.
In total, net revenue in DKK rose by 19%. The growth
in sales volume was some 14%.
In 2005, the equivalent figures were 13% and 7%. It is
overwhelmingly clear that such growth is proof that the
on-going development of ECCO's collections fulfils the
demands of active consumers in all parts of the world.
Eastern Europe and Middle East
Once again ECCO created strong growth in the Eastern
European region. Revenues increased by 43% whilst
the sales volume increased by 40%. As has been the
case in recent years, it continues to be the major
distributors that carry the big proportion of sales for
this region. A part of the growth in the case of the
distributors in 2006 was created through increased
activity towards wholesale customers. In the Eastern
European markets ECCO's brand is closely associated
with innovation, technology and modernity, which is
part of the reason for such excellent growth rates.
Composition of sales volume by geography,
in 2006
5%
23%
36%
19%
17%
Central Europe
Western Europe
Americas
Asia / Pacific
Eastern Europe
Central Europe
ECCO's Central European region consists of the
German-speaking countries and Scandinavia. In 2006,
we succeeded in continuing the positive development
of 2005 in this mature and competitive region. Revenue
growth was 8%, and the increase in the sales volume
was 7%. This result can primarily be attributed to a
focus on improved distribution and marketing of our
products. Furthermore, the growth was supported by a
general expansion of the product range in the region.
18
Western Europe
ECCO's Western European region covers the Benelux
countries, the United Kingdom and Southern Europe.
In 2006 a, revenue growth of 7% was attained,
along with an increase in sales volume of 3%. This
substantial revenue growth in relation to the increase
in sales volume indicates our focus on adding more
value for the customer to each individual shoe through
new, advanced features, which have resulted in a
higher price level.
Americas
ECCO’s American region covers the USA, Canada and
the South American markets. The increase in revenues
in ECCO Americas was 21% in 2006, whilst the growth
in sales volume was 19%. A more detailed segmentation of customers has resulted in improved management of sales activities. The result was further boosted
by the considerable new efforts made in the region
including a number of new activities in department
stores, where the entire organisation is involved in
wide-scope sales activities.
products for ECCO's shoes are natural extensions to
the main product and individual parts of the service
experience in ECCO shops.
Shop concept
ECCO is a global brand. Therefore, it is important that
ECCO's products are marketed in surroundings that
support the brand and strengthen the total experience
expected by the customer.
The goal-oriented training of shop personnel is a
cornerstone of ECCO's shop concept. All customers
must receive high-level, professional service, and
individual advice that fully lives up to the just
expectations they have of everything that is linked
to ECCO's products.
ECCO Shop in Bulgaria
The shop strategy is a strong and independent part
of ECCO's overall business strategy. Sales efforts
focus on ECCO's own and partner-operated shops
supplemented by carefully fitted Shop-in-Shops. This
way the best possible guarantee that the customers
receive the same good buying experience every single
time is achieved. In connection with the opening of
new shops the requirements for the choice of the right
partners and the best shop locations are just as strict
as the standards set for ECCO's products. Everything
has to fit together to form a synthesis.
The opening of new ECCO shops is a key part of
the overall growth strategy, as the search for new
partners and suitable locations naturally intensifies in
the regions, where the unused potential is greatest.
ECCO Shop in Denmark
Asia/Pacific
In 2006, the increase in revenues was some 56%, and
the growth in sales volume was 23%. In previous years
sales in China have been handled by a distributor, but
the 2006 sales in the Chinese market were handled
by our own subsidiary. The high growth in revenues is
partly to be seen in light of this change. The fact that
several smaller markets in the region began to gain
a footing in 2006 also contributed to profits, as did
the fact that ECCO's own retail activities developed
extremely well.
Accessories
Sales of accessories make up some 1% of ECCO's
total revenues, and the area experienced an excellent
growth rate of 33% in 2006. Accessories such as
matching bags help strengthen the complete brand
experience, whereas advice about and sales of care
Shops
- of which own shops
20052006
457
551
97
98
Shop-in-Shops
769
1018
- of which own shops
25
39
19
Own production – own choice
Assembly line at ECCO’s factory in Indonesia.
ECCO's unique choice
Development and healthy growth must be founded on
involvement and genuine interest in all separate parts
of the process. Therefore, it is ECCO's clear choice
to control the entire value chain from cow to consumer.
This choice is fundamental to our philosophy and
business strategy. To us, the care and focus given to
the entire value chain, right from the production of
leather in our own tanneries through the development
of shoes to marketing and sales, guarantee the highest
quality possible of the end product.
This business model is unique in the global shoe
industry, where the outsourcing of production has
been the dominant mantra for many years. At ECCO,
we deliberately go the completely opposite way,
which means that the majority by far of ECCO's total
production takes place in our own shoe factories.
As a central part of this strategy, major investment
continues to be made in our own production factories
and production technology, which will also be vital to
the development of ECCO's high level of quality in the
future.
Events in 2006 confirmed the view that our own
production gives ECCO clear competitive advantages
through the power of synergies that can constantly be
utilised, whether the aim is technological development,
better planning and logistics or an increased level of
expertise. At the same time, a high level of own
production gives us a unique opportunity to ensure
that our products are manufactured in a working
environment that fulfils ECCO's Code of Conduct
and lives up to health and safety standards for
our employees.
20
Direct injection
– a competitive advantage
Our long-term production strategy is to continuously
refine and develop ECCO's market-leading position
within direct injected soles. Our direct injection
technology involves placing the upper part of the shoe
in a mould before injecting the sole directly onto the
upper under high pressure. This is the foundation of
ECCO's trademarks – quality, lightness and comfort.
This expertise must be maintained and developed.
We, therefore, constantly refine and further develop
our technology, and thus our products. In line with
this goal, ECCO's internal mould workshops in
Denmark and Thailand were further developed in 2006,
so delivery times and development costs are constantly
reduced.
ECCO's own shoe factories
ECCO has own shoe factories in Portugal, Slovakia,
Thailand, Indonesia and China.
In 2006, 0.7 million pairs of shoes were produced
by the factory in Portugal (2.3 million in 2005), 1.9 million pairs in Indonesia (0.8 million in 2005), 4.8 million
pairs in Thailand (3.9 million in 2005), 3.2 million pairs
in Slovakia (2.8 million in 2005) and 1.0 million pairs in
China (0.5 million in 2005).
As a result of the EU’s decision to impose special
tariffs on the import of leather shoes from China, we
had to change our investment plan and production
arrangements in China. These tariffs have significant
financial consequences for ECCO, and in the end it is
the consumers who will have to pay, as the shoes will
The major part of ECCO’s total production is on our own shoe factories.
become more expensive. With the support of
the Danish government and the forward-looking
members of the European shoe industry, ECCO
unfortunately argued in vain against the EU's decision.
As a consequence of the tariffs, ECCO's investment
plans in China had to be adjusted. Furthermore,
production arrangements have been changed, so
that ECCO's Chinese factory now increasingly
supplies components to other ECCO units instead of
solely focusing on the production of finished shoes.
ECCO Portugal – global R&D centre
After a restructuring process, ECCO Portugal is now
a fully integrated part of ECCO's research and
development activities, which otherwise primarily
take place in Denmark. Due to the high-technology
shoe production of around 0.7 million pairs per year,
ECCO Portugal now functions as a service unit for
research and development for the other ECCO
factories. Here, new production processes for advanced products are developed, before the products are
transferred to other units for mass-production. Other
ECCO units visit Portugal for training in connection with
the actual production and technical aspects of new
products. ECCO Portugal also sends out technicians
to help organise and adapt the production lines for the
new products.
ECCO's Code of Conduct
At ECCO, we see ourselves as guests in the countries
in which we operate. ECCO wants to be a good "corporate citizen" in all areas of our global organisation.
Respect for other cultures is not an issue open for
discussion; it is a principle to be followed. As far back
as 1999, ECCO developed a set of ethical principles
– ECCO’s Code of Conduct - which is to be used in all
ECCO’s companies all over the world. ECCO's comprehensive own production offers a unique opportunity to
make sure that the principles of the Code of Conduct
are adhered to. The principles have been continuously
updated since 1999.
In 2006, we introduced a revised edition of ECCO's
Code of Conduct to support the continuous implementation of the code. Through partnership, openness, training and education, these changes are to support the
entire organisation in the application of the principles of
ECCO's Code of Conduct to provide even better protection of the environment and of all ECCO employees'
working conditions (see page 44).
Tangible fixed asset investments (DKK million)
250
DKK million
200
Around 60% of ECCO's new developments go through
ECCO Portugal, whereas less advanced products
can be produced right from the start at ECCO's other
factories. ECCO Portugal's own high-technology shoe
production primarily includes ECCO's advanced worldclass products such as the ECCO President, ECCO
Golf World Class and the new ECCO Montreal.
150
100
50
0
2002
2003
2004
2005
2006
21
ECCO has own tanneries in The Netherlands, Thailand and Indonesia.
Own tanneries
ECCO's most important raw material is first-class
leather, which is the reason why we have our own
tanneries in Holland, Thailand and Indonesia. When we
constantly develop our expertise in this area, we ensure
that this important raw material always lives up to
ECCO's strict quality requirements. ECCO's tanneries
also sell a significant part of their production to external
customers all over the world. In fact, ECCO's tanneries
are among the leading manufacturers of quality
leather for use as car and plane seats, gloves, bags
and shoes produced by other companies.
ECCO Lean
To maintain our competitiveness, ECCO must be
second-to-none compared to the very best in all
individual parts of the value chain. ECCO's continuous
development plan contains a detailed focus on the principles of Lean company development. ECCO Lean was
therefore initiated at the factory in Slovakia in 2005.
With employee involvement as the underlying ambition
of the project, the first ECCO Lean Academy was held
in Slovakia. In 2006, the newly-trained Lean change
agents, who were individually chosen for the task, were
sent out in ECCO's global organisation to implement
the Lean principles together with the local employees.
In 2006, this process, which includes the training of
managers and key personnel, has focused on ECCO's
factories in Slovakia, Indonesia and Thailand.
The Lean academies, which include two independent
groups per year, take place in a highly international and
multicultural atmosphere. At the two first academies,
there were 8 different nationalities represented
at both courses.
22
In 2006, ECCO Lean has specifically focused on the
development and improvement of production activities.
In 2007, efforts will be more directed towards the
tanneries, product development and distribution
centres. The whole of ECCO's value chain will be
covered by ECCO Lean in 2010.
ECCO and the environment
Environmental concerns are extremely high on ECCO's
list of priorities. We focus on the optimisation of
production methods already in use just as we develop
new environmentally-friendly manufacturing processes.
In 2006, ECCO has focused on gaining new knowledge
about the environment and working environment on a
global level as well as utilising this knowledge broadly
in the organisation through a wide distribution of knowhow. At our audit and Group environment conferences,
we develop the network that ensures the essential
exchange of experience between all environment and
working environment coordinators in the Group's
tanneries and shoe factories.
We place great emphasis on this global forum where
valuable ideas and best practices are exchanged.
Further information on the Group's environmental
efforts is found in the Group Environmental Statement
in the back of this annual report. Here the Group's
Policy for Environment, Health and Safety is presented
together with a number of initiatives from the tanneries
and shoe factories as well as statements from
ECCO's production units with key figures on the
year's environmental performance.
Financial matters
Financial risks
Due to the international scope of ECCO’s business
activities, a number of financial matters constantly
evaluated by management impacts the Group’s results
of operations and its equity. The approach to handling
financial risks is determinated by the Supervisory Board
and the Managing Board.
Foreign exchange risks
Foreign exchange risks are managed centrally. Through
active management of purchase and selling currencies
in our commercial transactions, we aim to minimise our
net positions in the main currencies, EUR and USD.
All material currency positions are hedged when
currency exposure takes place, which happens at
the point in time used for the calculation of purchase
and sale prices.
Interest rate risks
The Group's interest rate risk is related to the changes
in the interest rate for the Group's liabilities including
refinancing and repayment. The interest rate risk is
limited to the take-up of fixed interest rate loans as
well as the entering into interest rate swaps.
At the end of 2006, 86% of the Group's liabilities
consisted of fixed interest rate loans/interest rate
swaps. No interest rate hedging has been carried
out for future take-up of loans.
Credit risks
The Group has no material credit risk apart from what
has been recognised in the financial statements.
For selected markets/customers, "letters of credit",
bank guarantees or debtor insurance are used but
the number, size division as well as the geographical
dispersion of customers create the necessary
diversification for consistent use of debtor insurance
not to appear cost-effective. Larger customers, such
as retail shops, purchasing associations or distributors
are evaluated individually and continuously.
23
Material events after 31 December 2006
It is the opinion of management that there have been
no events after the end of the accounting year that
could significantly affect the Group's financial status.
Outlook for 2007
ECCO also expects a positive trend in 2007, with
growth in net revenue of at least 10%. Around a quarter
of ECCO's sales takes place in the American market.
A fall in the dollar exchange rate will have a negative
impact on total revenues when converted to Danish
Kroner. The dollar exchange rate has been assumed to
be 5.82 DKK/USD in the expectations presented here.
The operating margin, which was 17% in 2006, will
probably stabilise at a slightly lower level, which should
be partly seen in the light of the full effect of the import
tariffs imposed for certain types of shoe from China.
ECCO will continue to make significant investments in
concept sales, selected own shops, the expansion of
the franchise shop network and marketing particularly
in the growth regions of Eastern Europe and the Middle
East, Americas and Asia/Pacific but also in our mature
markets in Western and Central Europe.
Furthermore, ECCO has implemented a number of
internal projects that will also have a negative effect
on the 2007 cost level but will help to ensure the
continued high quality of everything we do.
Management expects growth in all of ECCO's
sales regions and product divisions in 2007. This
is supported by the Group's sales for the spring/
summer 2007 collection and preliminary order intake
for the autumn/winter 2007 collection.
24
Annual accounts
2006
25
Statement by the Management on the Annual report
The Supervisory Board and Managing Board of ECCO
Sko A/S have today considered and adopted the Annual
report for 2006.
The Annual report is presented in accordance with
the Danish Financial Statements Act. We consider the
accounting policies to be appropriate to the effect that
the Annual report gives a true and fair view of the Group’s
and the Company’s assets, liabilities and financial position
at 31 December 2006 and of the results of the Group’s
and the Company’s operations and the consolidated cash
flows for the financial year ended 31 December 2006.
The Supplementary Environmental Statement of ECCO
Sko A/S gives a true and fair view within the framework
of generally accepted guidelines for the area.
We recommend that the Annual report be adopted by the
shareholders at the Annual General Meeting.
Bredebro, 21 March 2007
Managing Board
Dieter Kasprzak
Chief Executive Officer
Mikael Thinghuus
Chief Operating Officer
Jens Christian Meier
Executive Vice President, Production
Supervisory Board
Hanni Toosbuy Kasprzak
Chairperson
Karsten Borch Vice Chairman
26
Torsten E. Rasmussen
Mogens Munk-Rasmussen
Aage Andersen
Bernd Scheelke
Jakob Møller-Hansen
Employee representative
Auditors’ report
Independent auditors' report
To the shareholders of ECCO Sko A/S
We have audited the annual report of ECCO Sko A/S
for the financial year 1 January - 31 December
2006, which comprises the statement by the
Executive and Supervisory Boards on the annual
report, Management's review, accounting policies,
income statement, balance sheet, and notes for the
Group as well as for the parent company and the
consolidated cash flow statement. The annual report
has been prepared in accordance with the Danish
Financial Statements Act.
The Executive and Supervisory Boards'
responsibility for the annual report
The Executive and Supervisory Boards are
responsible for the preparation and fair presentation
of this annual report in accordance with the Danish
Financial Statements Act. This responsibility includes:
designing, implementing and maintaining internal
control relevant to the preparation and fair
presentation of an annual report that is free from
material misstatement, whether due to fraud or error;
selecting and applying appropriate accounting policies;
and making accounting estimates that are reasonable
in the circumstances.
Auditors' responsibility and basis of opinion
Our responsibility is to express an opinion on this
annual report based on our audit. We conducted our
audit in accordance with Danish Standards on Auditing.
Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain
reasonable assurance whether the annual report is free
from material misstatement.
An audit involves performing procedures to obtain
audit evidence about the amounts and disclosures
in the annual report. The procedures selected depend
on the auditors' judgement, including the assessment
of the risks of material misstatement of the annual
report, whether due to fraud or error. In making those
risk assessments, the auditors consider internal
control relevant to the Company's preparation and
fair presentation of the annual report in order to
design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company's
internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the
reasonableness of accounting estimates made by
the Executive and Supervisory Boards, as well as
evaluating the overall presentation of the annual report.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
audit opinion.
Our audit did not result in any qualification.
Opinion
In our opinion, the annual report gives a true and fair
view of the Group's and the parent company's financial
position at 31 December 2006 and of the results of
the Group's and the parent company's operations and
consolidated cash flows for the financial year 1 January
- 31 December 2006 in accordance with the Danish
Financial Statements Act.
Esbjerg, 21 March 2007
KPMG C.Jespersen
Statsautoriseret Revisionsinteressentskab
John Lesbo
State Authorised
State Authorised
Public Accountant
Public Accountant
Kenn K. Karlsen
27
Accounting policies
Basis of preparation
The financial statements of the Parent Company
and the Group for 2006 are presented in accordance
with the provisions of the Danish Financial Statements
Act applicable to class C companies.
Basis of consolidation
The consolidated financial statements comprise
ECCO Sko A/S and subsidiaries in which ECCO Sko
A/S has a controlling influence on the company’s
operations. The consolidated financial statements
are prepared on the basis of the audited financial
statements of ECCO Sko A/S and its subsidiaries
by adding items of a similar nature. The financial
statements used for consolidation are adapted to
the accounting policies of the Group.
On consolidation, intercompany income and
expenses, intercompany accounts and gains on
intercompany sales and purchases between the
consolidated companies are eliminated. On acquisition
of subsidiaries, the share of the acquired company’s
net asset value is determined based on the Group’s
accounting policies. If the acquisition price deviates
from the net asset value, the difference is allocated,
wherever possible, to the assets and liabilities or
provisions that have a higher or lower value.
The income statements of foreign subsidiaries
are translated at average exchange rates, and
the balance sheet is translated at the exchange
rates ruling on the balance sheet date. Exchange
differences arising on the translation of the opening
equity of foreign subsidiaries at the exchange rates
ruling on 31 December, and differences between the
net profit of subsidiaries at average exchange rates
and the exchange rates ruling at 31 December are
recognised in equity. As in previous years, property,
machinery, plant and equipment in the production
subsidiaries in Portugal, Indonesia, Thailand,
Slovakia and China is measured at cost in DKK
less accumulated depreciation. Currency translation
of receivables from foreign subsidiaries, where the
receivables are part of the total investment in the
subsidiary, is recognised directly in equity.
Minority interests
Minority interests’ share of profits and equity of
subsidiary undertakings is stated separately.
Income statement
Net revenue: Sales are recognised on dispatch of
products, and net revenue consists of amounts
28
invoiced excluding VAT and less returned products,
discounts and rebates.
Raw materials and consumables: Raw materials and
consumables include raw materials and consumables
used for in-house production. Cost also includes
consumption of commercial products.
Other external costs: Other external costs comprise
costs relating to the Company’s primary, ordinary
activity, including lasts, cutting dies, maintenance,
rent of plant, premises, office expenses, sales
promotion expenses, fees, etc.
Staff costs: Staff costs comprise remuneration to
employees, including pension and social security costs.
Profit from subsidiaries: Profit from subsidiaries
comprise the proportionate share of profits before tax.
The proportionate share of tax in the companies is
recognised in the line item “income taxes”.
Unrealised intercompany profits: Unrealised
intercompany profits comprise profits unrealised in
the Group on trading in products and fixed assets
between consolidated companies.
Income taxes: Estimated tax on the profit for the year
is recognised in the income statement along with the
year’s change in deferred tax. No tax is set aside for
investments in subsidiaries as it is intended to hold
the investments for more than three years.
ECCO Sko A/S and the Danish subsidiaries are
encompassed by the Danish regulations regarding
mandatory joint taxation. Subsidiaries are a part of
the joint taxation from the moment, where they are
a part of the consolidation in the annual accounts
to the moment, where they are omitted from the
consolidation.
ECCO HOLDING A/S is the administrative company in
the joint taxation and settles all payments of corporate
tax in the Danish subsidiaries with the tax authorities.
The current Danish corporate tax is allocated by
paying a joint taxation contribution between the
companies in the joint taxation. The contribution is
allocated according to the taxable income in the
companies. Companies in the joint taxation with a
taxable deficit receive a joint taxation contribution from
companies, which have been able to use this deficit to
reduce their taxable income.
The tax of this year, which consists of the current
corporate tax, the joint taxation contribution and the
change in deferred tax – also changes which are
caused by reduction of the corporate tax rate – is a
part of the income statement with the share, which can
be allocated to profit of the year, and is a part of the
equity with the share, which can be allocated to entries
in equity.
According to the Danish regulations regarding
mandatory joint taxation, the debt of ECCO Sko A/S
and the Danish subsidiaries towards the tax authorities
is settled when the companies have paid the joint
taxation contribution to the administrative company.
Deferred tax is calculated at 28% of the difference
between the carrying amounts and tax values of
current assets and fixed assets. Furthermore, the tax
value of tax losses carried forward is recognised in the
amount at which they are expected to be used.
If, on a net basis, there is a tax asset, the amount of
future tax savings is recognised, provided that it is
deemed more likely than not that the deduction can
be offset against future taxable profits.
Balance sheet
Intangible assets: Intangible assets are recognised at
cost less accumulated amortisation. Amortisation is
charged on a straight-line basis over 5-10 years.
Development projects: Development projects which are
clearly defined and identifiable and which are deemed
to be marketable in the form of new products in a future potential market are recognised as intangible assets.
Development costs are recognised at cost under
intangible assets and are amortised over the expected
useful life of the project, when the criteria for such
treatment are met.
Costs of maintaining existing patents/trademarks are
recognised in the income statement when incurred.
Goodwill on consolidation: Goodwill on consolidation is
determined at the date of acquisition as the difference
between the cost and the net asset value of the
acquired company applying the Group’s accounting
policies. Consolidated goodwill acquired from and
including 1 January 2002 is capitalised and amortised
on a straight-line basis over the expected useful
economic life, determined on the basis of earnings
projections for the individual business areas, not to
exceed 20 years. When the Parent Company acquires
shares at a price higher than the value determined
applying the equity method, such excess value is
recognised as an intangible asset and amortised over
the same period as goodwill on consolidation.
Property, plant, and equipment: Property, plant and
equipment is recognised at cost plus any revaluation
and less accumulated depreciation. Depreciation is
charged on a straight-line basis over the expected useful lives of the assets.
The expected useful lives are as follows:
- Buildings - Plant and machinery, vehicles,
fixtures and fittings - Computer software
20 years
5 years
3 years
Depreciation is not charged on land and staff housing.
Assets with a cost of less than DKK 11 thousand per
unit are charged to the income statement in the year of
acquisition. Investment grants are offset against the
assets that form the basis for the grants.
If an asset type is revalued, this applies to all assets
within that group of assets.
Development costs that do not meet the criteria for
recognition in the balance sheet are recognised as
costs in the income statement when incurred.
Investments: Investments in subsidiaries are recognised
applying the equity method at the proportionate share
of the equity of the companies, determined based
on the Group’s accounting policies, less unrealised
intercompany profits.
Recognised development costs are measured at the
lower of cost less accumulated amortisation and
writedowns and the recoverable amount.
Dividend receivable in subsidiaries is recognised in the
balance sheet when adopted by the shareholders at
the annual general meeting.
Patents and trademarks: The costs of registering new
patents and trademarks are recognised and amortised
over the term of the patent/trademark or its economic
life (5 years).
Dividends to be paid by the Parent Company are
recognised as a liability in the financial statements at
the time of adoption by the shareholders at the annual
general meeting. Dividend proposed in respect of the
29
financial year is stated as a separate line item in the
equity note.
event, the Company has a legal or constructive obligation, and it is likely that the obligation will materialise.
Inventories: Raw materials are measured at cost
determined on the basis of the most recent purchases.
Work in progress and finished products are measured
at calculated cost, consisting of the cost of raw
materials and consumables and manufacturing costs
plus a share of production overheads. Commercial
products are valued at acquisition price. Products with
a net realisable value lower than the cost or acquisition
price are written down to the lower value.
Cash flow statement
The cash flow statement shows the Group’s cash
flow during the year and liquidity position at the
beginning and end of the year. The cash flow statement
is divided into three principal areas: operating, investing
and financing activities. Cash and cash equivalents in
the cash flow statement comprise cash and securities
carried as current assets.
Receivables: Receivables are measured at amortised
cost less provisions for anticipated losses determined
based on an individual evaluation.
In the statements, figures in brackets represent losses
or items deducted.
Securities: Securities are measured at the most
recently quoted market price.
Financial instruments: Derivative financial instruments
are initially recognised in the balance sheet at cost and
subsequently remeasured at their fair value. Derivative
financial instruments are included in other receivables
and other debt.
Changes in the fair value of derivative financial
instruments that meet the criteria to be designated
as fair value hedges of a recognised asset or a
recognised liability are recognised in the income
statement together with any changes in the fair value
of the hedged asset or hedged liability.
Changes in the fair value of derivative financial
instruments that meet the conditions for hedging
future assets or liabilities are recognised in equity
under retained earnings. Income and expenses relating
to such hedge transactions are transferred from equity
on realisation of the hedged item.
Treasury shares: The cost of treasury shares is
recognised directly on the Company’s share capital
and is consequently not stated as an asset in the
balance sheet.
Currency translation: Receivables and payables
denominated in foreign currencies are translated to
the exchange rate ruling at year-end.
Provisions
Provisions comprise anticipated costs of warranty
obligations, restructuring, etc. Provisions are
recognised when, as a consequence of a past
30
Income statement for the year ended 31 December 2006
Group

Parent Company
2006200520062005
Note DKK ‘000
1 Net revenue4,470,4033,830,5463,065,4272,621,123
Change in inventories of finished products
and work in progress
12,328
43,083
(136)
74,321
Costs of raw materials and consumables
(1,706,354)
(1,625,267)
(2,110,596)
(1,910,383)
Other external costs (918,559)
(769,850)
(319,631)
(241,258)
2 Staff costs (919,996)
(849,633)
(240,004)
(208,100)
5,6 Amortisation and depreciation
(178,360)
(205,039)
(43,455)
(58,053)
Profit before financials
759,462423,840351,605277,650
3 Financial income
96,408
40,754
34,814
14,712
Financial expenses
(146,387)
(115,048)
(53,718)
(61,929)
Profit from subsidiaries
-
-
364,563
193,401
Intercompany profit
-
-
(866)
(73,860)
Profit before tax
709,483349,546
696,398349,974
4 Income taxes
(209,423)
(124,512)
(206,926)
(124,243)
Group profit
500,060225,034489,472225,731
11 Minority interests
(10,588)
697
-
-
Profit for the year 489,472225,731489,472225,731
Proposed allocation:
Revaluation reserve for undistributed
profit in subsidiaries
(8,540)
5,446
356,012
185,285
142,000
35,000
489,472
225,731
Retained earnings
Proposed dividend
31
Balance sheet as of 31 December 2006
Group
Parent Company
Assets2006200520062005
Note DKK ‘000
FIXED ASSETS:
Intangible rights
52,345
62,611
52,345
62,61120,58822,463
5 Total intangible assets
20,588
Land and buildings
490,375
487,922
Plant and machinery
212,046
208,396
6,465
7,224
Other fixtures and fittings, tools and equipment
230,121
206,341
63,693
52,159
74,883
49,495
23,685
26,358
Property, plant and equipment in progress
6 Total property, plant and equipment1,007,425
108,671
22,463
113,531
952,154202,514199,272
7,8 Investments in subsidiaries
-
-
985,006
988,875
8 Receivables from subsidiaries
-
-
471,001
166,606
9 Deferred tax
61,533
60,541
40,183
38,858
61,533
60,5411,496,1901,194,339
Total long-term financial assets
TOTAL FIXED ASSETS1,121,3031,075,3061,719,2921,416,074
CURRENT ASSETS:
Raw materials and consumables
Work in progress
Finished products and commercial products
266,893
188,492
-
-
45,927
42,395
-
-
879,297
737,663
425,141
425,277
Total inventories1,192,117
968,550425,141425,277
Trade receivables 477,089
411,714
75,926
49,770
-
-
328,298
364,324
154,756
114,338
53,571
13,436
42,760
56,402
15,770
34,531
Receivables from subsidiaries
Other receivables
Prepayments
Total receivables
Securities
Cash
674,605
582,454473,565462,061
8,5264,852133125
654,129
654,196310,159105,970
TOTAL CURRENT ASSETS2,529,3772,210,0521,208,998
993,433
TOTAL ASSETS3,650,6803,285,3582,928,2902,409,507
32
Balance sheet as of 31 December 2006
Group
Equity and liabilities
Parent Company
2006200520062005
Note DKK ‘000
Share capital
5,500
5,500
5,500
5,500
Revaluation reserve
-
-
495,804
525,156
Retained earnings
1,724,013
1,280,250
1,228,209
755,094
10 Total equity1,729,5131,285,7501,729,5131,285,750
11 Minority interests43,79638,829
-
-
Provisions13,28348,529
-
-
1,162,789
852,094
777,056
12 Total long-term debt1,012,8791,162,789
852,094
777,056
Short-term part of long-term debt
173,918
134,953
125,656
84,556
Credit institutions
201,658
240,205
20,344
66,314
Trade payables
181,987
176,511
39,149
49,691
Payables to subsidiaries
-
-
70,865
91,489
Credit institutions
1,012,879
4 Income taxes
44,884
25,400
4,792
201
Other payables
178,458
128,378
15,728
13,509
Deferred income
70,304
44,014
70,149
40,941
Total short-term debt
851,209
749,461346,683346,701
Total debt1,864,0881,912,2501,198,7771,123,757
TOTAL EQUITY AND LIABILITIES3,650,6803,285,3582,928,2902,409,507
13 Contingent liabilities and collateral security
14 Fees to auditors appointed at the annual general meeting
15 Related parties
33
Consolidated cash flow statement for the year
ended 31 December 2006
20062005
DKK ‘000
Cash flow from operating activities
Profit before tax
709,483
349,546
Adjustment for non-cash operating items:
Amortisation and depreciation
178,360
205,039
Exchange rate adjustments
(420)
40,425
Tax adjustments
2,665
2,926
(Increase)/Decrease in inventories
(223,567)
(78,494)
(Increase)/Decrease in receivables
(92,151)
12,039
Increase/(Decrease) in payables
5,476
45,409
Increase/(Decrease) in other payables
76,370
(26,142)
Increase/(Decrease) in provisions
(35,246)
Income taxes paid
(193,596)
(71,660)
427,374
515,078
Working capital adjustments:
35,990
Cash flow from investing activities
Payments to invest in fixed assets:
Intangible assets
(5,446)
(18,293)
Property plant and equipment
(229,363)
(183,385)
(234,809)
(201,678)
Cash flow from financing activities
Change in minority interests
(4,466)
(7,109)
(Repayment of)/proceeds from new long-term debt
(149,910)
208,682
Increase/(Decrease) in short-term debt
418
(173,958)
Dividend paid (35,000)
(30,000)
(188,958)
(2,385)
Cash flow from operating, investing and financing activities
3,607
311,015
Cash and cash equivalents at beginning of year
659,048
348,033
Cash and cash equivalents at year-end
662,655
659,048
Breakdown of cash and cash equivalents:
Securities
8,526
Cash
654,129
654,196
662,655
659,048
34
4,852
Notes to the Group and Parent Company financial statements
1
Segment information
Group
20062005
DKK ‘000
Segment information
Shoes & accessories
4,200,789
3,527,334
Others
269,614
303,212
Total net revenue4,470,4033,830,546
Net revenue shoes & accessories
ECCO Europe West
666,328
622,046
ECCO Europe Central
1,338,950
1,244,280
ECCO Europe East and Middle East
699,101
490,597
ECCO Americas
1,150,579
948,970
ECCO Asia / Pacific
345,831
221,441
Total shoes & accessories4,200,7893,527,334
Reference is made to the ECCO Group structure page 8 regarding the definition of the geographic regions.
2
Staff costs and management and staff information
Group
Parent Company
2006200520062005
DKK ‘000
Salaries
835,549
770,325
226,358
195,214
Pensions
28,757
22,433
12,143
11,455
Other social security costs
55,690
56,875
1,503
1,431
Staff costs
919,996
Average number of employees
11,520
9,981
469
483
12,670
10,534
468
467
849,633240,004208,100
Number of employees at year-end
Fees to Managing Board and Supervisory Board:
Managing Board
-
-
33,150
13,774
Supervisory Board
-
-
417
400
35
3
Financial income
Parent Company
20062005
DKK ‘000
In the Parent Company, interest income from subsidiaries amounted to
4
22,029
12,352
Income taxes
Group
Parent Company
Cost
Debt
Cost
2006200620062006
Debt
DKK ‘000
Income taxes payable as at 1 January 25,400
201
Income taxes paid in 2006
(1,858)
Prior-year adjustment
Estimated tax for 2006
1,586
1,657
100,672
100,672
(193,596)
(95,880)
213,080
of which paid
213,080
Tax in subsidiaries
Year’s adjustment of deferred tax
5
(3,657)
106,056
(1,388)
209,42344,884206,9264,792
Intangible assets
Group
Parent Company
DKK ‘000
Cost at 1 January 121,803
Currency translation
(2,855)
Additions
8,665
Disposals
(3,660)
35,602
-
1,621
-
Cost at 31 December 123,95337,223
Accumulated amortisation at 1 January 59,192
(1,154)
Amortisation
14,011
Amortisation on assets sold
(441)
3,496
-
Accumulated amortisation at 31 December 71,60816,635
Carrying amount at 31 December
52,34520,588
Amortised over
5-10 years
36
13,139
5-10 years
6
Property, plant and equipment
Land
and
buildings
Plant
and
machinery
Fixtures and
fittings, tools
and equipment
Property, plant
and equipment
in progress
DKK ‘000
GROUP
Cost at 1 January
729,657
764,657
750,779
(4,310)
(47)
(8,227)
49,495
(447)
Additions
44,280
73,788
120,451
63,744
Disposals
(19,120)
(77,788)
(73,015)
(37,909)
Cost at 31 December
750,507
760,610
789,988
74,883
Accumulated depreciation at 1 January 241,735
556,261
544,438
-
(94)
(23)
(3,171)
-
Depreciation
30,887
60,868
72,594
-
Depreciation on disposals
(12,396)
(68,542)
(53,994)
-
Accumulated depreciation at 31 December 260,132
548,564
559,867
-
Carrying amount at 31 December 490,375212,046230,121
74,883
PARENT COMPANY
Cost at 1 January
225,316
92,668
215,608
26,358
Additions
4,579
4,273
37,985
25,666
Disposals
(6,683)
(21,305)
(30,852)
(28,339)
Cost at 31 December 223,212
75,636222,74123,685
Accumulated depreciation at 1 January
111,785
85,444
163,449
-
Depreciation
9,042
4,861
26,056
-
Depreciation on disposals (6,286)
(21,134)
(30,457)
-
69,171159,048
-
Accumulated depreciation at 31 December114,541
Carrying amount at 31 December108,671
Depreciated over
20 years
6,465
5 years 63,69323,685
3-5 years
(The officially rated cash property value at 1 October 2006 of the Parent Company’s properties was DKK 213,110 thousand).
37
7
Investments in subsidiaries
ECCO (Thailand) Co., Ltd.
ECCO Slovakia, a.s.
Share capital
95%
200,000 kTHB
94.78%
230,000 kSKK
Ecco'let (Portugal) Fábrica de Sapatos, Lda.
100%
P.T. ECCO Indonesia
100%
2,770 kEUR
43,976,000 kIDR
ECCO China Holding (Singapore) Pte. Ltd.
80%
26,000 kUSD
ECCO (Xiamen) Co. Ltd.
80%
10,000 kUSD
ECCO Shoe (Xiamen) Co. Ltd. (dormant)
80%
315 kUSD
ECCO Tannery Holding (Singapore) Pte. Ltd. (dormant)
100%
1,600 kUSD
ECCO Tannery (Xiamen) Co. Ltd. (China) (dormant)
100%
1,500 kUSD
ECCO Tannery (Thailand) Co. Ltd.
100%
185,000 kTHB
ECCO Tannery (Netherlands) B.V.
100%
1,000 kEUR
ECCO Leather B.V. (Netherlands)
100%
400 kEUR
PT. ECCO Tannery (Indonesia)
100%
ECCO Accessories Ltd. (UK) (dormant)
100%
200 kGBP
ECCO Asia Pacific Limited (Hong Kong)
100%
21,500 kHKD
ECCO Belgium N.V.
100%
360 kEUR
ECCO Boty Ceska republika s.r.o. (Czech Republic)
100%
5,000 kCZK
ECCO China Wholesale Holding (Singapore) Pte. Ltd.
37,403,550 kIDR
50%
200 kUSD
ECCO Europe East and Middle East Sp. z o. o. (Poland)
100%
12,500 kPLN
ECCO Europe West B.V. (Netherlands)
100%
23 kEUR
ECCO Exportadora Ltda (Brazil) (dormant)
100%
48 kBRL
ECCO France Diffusion S.a.r.l.
100%
ECCO India Trading Private Limited
100%
ECCO Internet, INC. (USA)
100%
100 kUSD
ECCO Norge A/S (Norway)
100%
15,000 kNOK
ECCO (Portugal) Sales-Comercialização de Sapatos, Lda.
100%
800 kEUR
ECCO Retail A/S (Denmark)
100%
1,000 kDKK
ECCO Retail LLC (USA)
100%
300 kUSD
ECCO Scarpe Italia S.r.l.
100%
100 kEUR
ECCO Schuhe GmbH (Germany)
100%
1,790 kEUR
ECCO Schuhe Schweiz GmbH (Switzerland)
100%
170 kCHF
50%
2,100 kUSD
ECCO (Shanghai) Co. Ltd
38
Ownership interest
50 kEUR
6,969 kINR
ECCO Shoes (NZ) Limited (New Zealand)
100%
100 kNZD
ECCO Shoes Canada, Inc.
100%
6,502 kCAD
ECCO Shoes Hong Kong Ltd.
100%
3,000 kHKD
ECCO Shoes International Ltd (Switzerland)
100%
2,250 kCHF
ECCO Shoes Pacific Pty. Ltd. (Australia)
100%
3,250 kAUD
ECCO Shoes Poland Sp. z o. o.
100%
10,000 kPLN
ECCO Shoes Slovakia s.r.o
100%
5,000 kSKK
ECCO Shoes UK Limited
100%
4,000 kGBP
ECCO Singapore Pte. Ltd.
100%
2,510 kSGD
ECCO Shoes Iberica, S.L. (Spain)
100%
4 kEUR
ECCO Sverige AB (Sweden)
100%
1,000 kSEK
ECCO Trading GmbH (Austria)
100%
400 kEUR
ECCO USA, Inc.
100%
7,500 kUSD
ECCO Wholesale Limited (UK) (dormant)
100%
1,200 kGBP
Eccolet Portugal ApS (Denmark)
100%
200 kDKK
Oy ECCO-Suomi Ab (Finland)
100%
102 kEUR
Salgsselskabet ECCO Danmark A/S
100%
1,000 kDKK
8
Investments in subsidiaries
Investments in
subsidiaries
Receivables from
subsidiaries
2006200520062005
DKK ‘000
Cost at 1 January
647,302
551,355
166,606
82,691
Additions
26,350
95,947
315,068
87,493
Disposals
-
-
(10,673)
(3,578)
Cost at 31 December 673,652
647,302471,001166,606
Accumulated revaluation at 1 January 525,156
470,429
-
-
Currency translation of foreign subsidiaries
(20,812)
49,282
-
-
Profit after tax of subsidiaries
258,505
127,446
-
-
Dividend
(267,045)
(122,000)
-
-
Net revaluation
(29,352)
54,727
-
-
Accumulated revaluation at 31 December495,804
525,156
-
-
(183,584)
-
-
Intercompany gains
(184,450)
Carrying amount at 31 December
985,006
9
988,875471,001166,606
Deferred tax
Group
Parent Company
2006200520062005
DKK ‘000
Deferred tax comprises:
Inventories, unrealised intercompany gains
52,860
58,166
44,844
Tax loss
5,164
3,113
-
-
Other assets
3,509
(738)
(4,661)
(11,839)
Recognised at 31 December
61,533
Recognised at 1 January
(60,541)
Total adjustment
992
Of which adjusted in equity
(2,665)
50,697
60,54140,18338,858
(112,336)
(38,858)
(95,996)
(51,795)1,325
(57,138)
(2,926)
(63)
(2,926)
39
10
Equity
Group
Parent Company
2006200520062005
DKK ‘000
The share capital consists of:
112 shares (in amounts from DKK 500 to DKK 1,658,200)
Total share capital
5,500
5,500
5,500
5,500
Reserve for net revaluation at 1 January -
-
525,156
470,429
Net revaluation
-
-
(29,352)
54,727
Reserve for net revaluation at 31 December
0
0495,804
525,156
Reserve for net revaluation according to the equity method
Brought forward from prior years/revaluation reversed
1,280,250
1,028,526
755,094
Proposed dividend in respect of the financial year
142,000
35,000
142,000
35,000
Dividend paid
(35,000)
(30,000)
(35,000)
(30,000)
Exchange rate adjustment to year-end exchange rates
(20,812)
49,282
-
-
5,294
Currency translation of subordinated loan capital in subsidiaries
558,097
(5,063)
5,294
(5,063)
Gain on financial swap
5,226
1,986
5,226
1,986
Retained from profit for the year
347,472
190,731
356,012
185,286
Adjustment of currency hedges of future sales
9,940
(569)
9,940
(569)
Total retained earnings1,724,0131,280,2501,228,209
755,094
Total equity1,729,5131,285,7501,729,5131,285,750
The nominal value of treasury shares is DKK 550 thousand; they were acquired in 1989 at DKK 6,875 thousand. The treasury shares are
carried at DKK 0.
40
11
Minority interests
Group
20062005
DKK ‘000
Minority interests at 1 January
38,829
Additions
-
44,338
30,742
Disposals
(4,466)
(37,851)
Share of profit for the year
10,588
(697)
(1,155)
2,297
Minority interests at 31 December 43,79638,829
Breakdown of minority interests:
Minority interests regarding ECCO (Thailand) Co., Ltd,
5,921
5,413
Minority interests regarding ECCO Slovakia, a.s.
4,685
5,458
Minority interests regarding ECCO China Holding (Singapore) Pte. Ltd.
23,133
27,363
Minority interests regarding ECCO China Wholesale Holding (Singapore) Pte. Ltd.
10,057
595
43,796
38,829
12
Long-term debt
Group
Parent Company
2006200520062005
DKK ‘000
Long-term debt due more than five years
after the end of the financial year
202,420
178,449
202,420
178,449
41
13
Contingent liabilities and collateral security
Group
Parent Company
2006200520062005
DKK ‘000
CONTINGENT LIABILITIES
Rent and lease liabilities
429,194
492,096
35,508
39,752
Guarantees and letters of comfort for staff
429
865
429
865
Guarantees and letters to suppliers and subsidiaries
147,739
10,550
141,276
3,087
Litigation
-
1,865
-
1,865
Sponsorships
12,250
11,681
12,250
11,681
Bearer mortgages on property, plant and equipment
172,333
174,500
80,000
80,000
Guarantee for import duty
20,960
31,368
-
-
COLLATERAL SECURITY
The following assets have been lodged in security of the
Group’s loans from credit institutions and other long-term debt:
14
Fees to auditors appointed at the annual general meeting
Group
Parent Company
2006200520062005
DKK ‘000
Total fees to auditors appointed at the annual general meeting:
KPMG
6,780
6,511
1,576
1,220
740
75
87
Others
915
7,695
7,2511,6511,307
KPMG
1,739
2,160
717
Others
257
134
75
87
1,996
2,294
792
764
Of which fees for non-audit services:
42
677
15
Related parties
ECCO Sko A/S has the following related party with controlling influence:
ECCO HOLDING A/S
Industrivej 5, Bredebro, Denmark
There have been no material transactions with the Parent Company other than the distribution of dividend.
ECCO Sko A/S' related parties with controlling influence comprise the Company’s shareholders, Supervisory Board, the
Managing Board as well as relatives of these persons. Related parties also comprise companies in which the individuals
mentioned above have material interests.
ECCO Sko A/S trades on normal market conditions with companies in which the same individuals have controlling
influence.
The Company’s list pursuant to section 28b of the Danish Companies Act of shareholders with more than 5% of the votes
or more than 5% of the nominal value of the share capital includes:
- ECCO HOLDING A/S, Bredebro, Denmark (Parent Company)
- Kasprzak Holding ApS, Bredebro, Denmark
43
ECCO’s Code of Conduct
ECCO’s 10 Commitments:
Objectives:
ECCO designs, manufactures and markets footwear
and related accessories to consumers around the
world. Over the last more than 40 years, ECCO has
developed from a local Danish company into an
international company with production units and
sales subsidiaries all over the world.
1.ECCO is a guest in each of the countries in which
it operates and will as such respect the culture of the individual country.
Today, ECCO is one of the world’s leading manufacturers and marketers of high-quality footwear. ECCO has
attained this position through constant innovation and
sound business principles. However, it is just as crucial
to ECCO’s success that the company leads the way
when it comes to good corporate citizenship.
No matter where in the world ECCO operates, this
is done according to a set of principles which stipulate
that we will behave in a correct and decent manner.
This is our heritage as a Danish company. The principles apply to employee relations, to environmental
considerations and to relations with business partners.
As expressed by K. Toosbuy, the founder of ECCO,
‘ECCO is a guest in each of the countries in which
it operates and shall as such respect the culture of
the country’.
The respect for other people and cultures is deeply rooted in the company. As a large employer, ECCO understands its responsibility and accepts it.
ECCO will only achieve long-term business success
by demonstrating good corporate citizenship, which
in turn can only be secured if the business
is based on constant achievement of good results.
This is the very heart of ECCO's Code of Conduct
as regards sustainable development, issues related
to religion, employee relations, health and safety,
environmental protection and community relations.
2. ECCO supports, respects and has a proactive approach to the protection of internationally
defined human rights.
3. ECCO respects equal opportunities and supports abolishment of discrimination in the workplace.
4. ECCO respects a person’s right to freedom of
religion.
5. ECCO respects the right to freedom of
association.
6. ECCO wishes employees to have access to a
workplace free of harassment or abuse and
condemns any forms of compulsory labour.
7. ECCO supports the UN Convention on the
Rights of the Child.
8. ECCO provides training, education and further development of human resources on all levels.
9. ECCO aims to be a leading company in the area of
environment, health and safety and aims to promote
sustainable development.
0. ECCO wishes to ensure that the conduct of its 1
business as an absolute minimum always
complies with all relevant laws and regulations.
Read more about ECCO's Code of Conduct
at: http://corporate.ecco.com/coc.pdf
It is essential to ECCO that ECCO's Code of Conduct
is an integral part of the entire value chain. We therefore expect not only the companies within the ECCO
Group, but also our external suppliers, wholesale and
retail customers to acknowledge and respect ECCO's
Code of Conduct. We regularly control that ECCO's
Code of Conduct is being complied with.
44
Group environmental
statement 2006
45
ECCO and the environment
View of the marshland in Southern Jutland neighbouring ECCO’s corporate head office: for a global company Danish roots are an obligation
– also in terms of the environment…
National differences in a global community
Like all other important activities in the ECCO Group
our policy for environment, health and safety and our
related activities are developed across borders. Since
the beginning of the seventies ECCO has manufactured shoes at the global market and our environment,
health and safety activities are increasingly internationally
organised – with a sharp view on the global perspective.
Focus and challenges are continuously increasing.
It is an important area which will fill up more and more
in the everyday life at ECCO in the future - in headquarters, in sales subsidiaries as well as in our production
units. It includes both ECCO’s own factories and our
suppliers. It is a never-ending process.
There are also legislative and cultural differences across
borders when it comes to environment, health and
safety. This challenges the organisation’s procedures and
strategic development. Many people all over the ECCO
Group are involved in preparing, implementing and
anchoring our global programme about environment,
health and safety on a daily basis. Everybody has the
same objective, namely to ensure that ECCO takes the
environment into consideration at all times, when leather
and shoes are manufactured. It is done in a global
community – across the national differences that
naturally exist.
Employee involvement
Employee involvement in ECCO’s global environmental
programme is an absolute necessity in order to be
successful. Without local effort, an ambitious global
policy about environment, health and safety does not
amount to much. All tanneries and shoe factories have
46
an environmental, health and safety committee with both
management and employee members. The committees
are pivotal in the day-to-day environmental activities of
the production units. In addition, training in environmental, health and safety issues forms an integral part of the
in-house training programme “From cow to shoe” for all
new employees.
ENVIRONMENTAL IMPACT AND THE
ECCO GROUP
Environmental impact is defined by ECCO to
be the effect on human beings and the external
environment which results from the production,
use and disposal of ECCO products.
Internal environmental impact means:
The effects on the employees manufacturing the
products, i.e. health and safety issues such as
physical, chemical, biological and ergonomic
factors, employee conditions and rights, as well
as social factors.
External environmental impact means:
The effect on the near and distant environments,
i.e. soil, water and air, for example in the form of
waste, wastewater and emissions.
Environment, health and safety in constant
development
The ECCO Group’s Policy for Environment, Health and
Safety represents the overall framework for the Group’s
global environment, health and safety activities.
The ECCO Group’s Policy for Environment,
Health & Safety
The ECCO Group is a global company with
approximately 13,000 employees. The Group has
the whole value chain at its disposal in terms of
tanneries, shoe factories, sales subsidiaries and
shops. In this way the Group controls the whole
process from rawhides to finished shoes. We
seek to achieve an environmentally suitable
development and production of our products.
The ECCO Group uses a minimum of harmful
chemical substances and absolutely no forbidden
substances. All raw materials and components
must fulfil the international recognized SG list
for leather products published by German test
institutes. The ECCO Group has chosen to
extend the list so as to include harmful chemical
substances, which we find critical.
Environmental Issues
It is the ECCO Group’s objective actively to
minimize the environmental impact on near and
distant surroundings. This is done by optimum
utilization of raw materials and energy sources
and by reducing and re-using waste from tannery
processes and shoe production wherever
possible.
To ensure an appropriate development of
the Group in terms of environmental issues
every ECCO tannery and shoe factory shall
continuously:
-P
romote the four R’s: Reduce, Re-use, Repair,
Recycle
- Ensure the lowest possible consumption of
resources and amount of waste
- Minimize the use of harmful substances
- Train and educate employees to minimize the
environmental impact
accidents and by minimizing health and safety
impact for all employees.
To ensure an appropriate development of the
Group in terms of health and safety issues
every ECCO tannery and shoe factory shall
continuously:
-R
educe health and safety impact for the individual employee to a minimum
- Strengthen, prevent and improve health and
safety impact to prevent any kind of work accident and prevent repetition
- Ensure the employees’ job satisfaction and
health at the workplace
- Use the employees’ resources in the most
appropriate way for all parties
- Establish one or more organisations to handle
health and safety issues and hereby ensure a
high level of employee involvement
- Train and educate employees to ensure an
optimum working environment
The ECCO Group will engage the employees in
environmental, health and safety issues through
information, training and education. It rests on the
employee to take responsibility and do an active
effort aiming at continuous improvements of
environmental, health and safety issues.
The ECCO Group will openly co-operate with
authorities and at all times meet the legislation
related to environmental, health and safety issues.
The ECCO Group will on a yearly basis re-assess
the ECCO Group’s Policy for Environment, Health
& Safety at the yearly environmental conference
held for all tanneries and shoe factories
Health & Safety Issues
The ECCO Group’s most important resource is
the employees. The ECCO Group wishes to promote and strengthen a physical, psychological
and social healthy working environment for all
employees. This is among other things done by
actively involving employees in preventing work
D. Kasprzak
CEO
M. Thinghuus
COO
J.C. Meier
EVP Production
47
The efforts on environment, health and safety take place
across borders in a daily co-operation between ECCO’s
Group Environmental Department and decentralised
environmental entities within and outside ECCO.
ECCO Group
Environmental
Department
Feed back
• Group Policy for Environment, Health & Safety
Feed back
• Strategy for Development of Environment,
Health & Safety
• Guidelines for tanneries & shoe factories
Subsidary
environmental
function
• Reporting & Monitoring, Auditing,
Benchmarking
• Education & Training Programmes
• Exchange of ’Best Practices’, Group
Conference
Affiliate
environmental
function
• ECCO Environmental Management
System
Supplier
environmental
function
At the annual audits and Group environment, health
and safety conferences, a network is developed which
ensures the gathering of knowledge and exchange of
experiences among all the environment, health and
safety coordinators at the Group’s tanneries and shoe
factories. ECCO attaches a great deal of importance to
this global forum for the exchange of valuable ideas and
best practice.
We especially focus on audits. During 2006 a lot of work
has been put into thorough audits in ECCO. In the coming years we will increase these efforts further to ensure
that ECCO's Code of Conduct is observed at our own
factories and at our suppliers at all times (ECCO’s Code
of Conduct is further described in page 44).
Harmful chemical substances
In the global environmental activities, the ECCO Group
aims to meet the criteria for harmful chemical substances based, among other things, on the internationally
recognized SG list for shoes. SG is an abbreviation of
the German term Schadstoffgeprüft (tested for harmful
substances). The SG list contains threshold values for
harmful substances in textiles and leather products.
This list is based on the latest knowledge about the
effect of certain chemicals on human beings and animals
and it is published by the recognised German testing
institute TÜV Produkt und Umwelt GmbH, Rheinland
in collaboration with the Institut Fresius GmbH and
Prüf- und Forschungsinstitut Pirmasens. These institutes
constantly assess the effects of different substances
used in the industry.
48
ECCO has chosen to extend the list to include
harmful substances which we consider to be critical.
These appear in the appendix “ECCO Supplement to
the SG-list”. The Group Environmental Department
updates these requirements for harmful substances
on an ongoing basis to ensure that they are always in
compliance with the international criteria.
Resource consumption from cow to shoe
The production of ECCO shoes requires a number of
different resources, including energy, water, raw
materials and components. For several years, we have
made dedicated efforts to reduce the consumption of
resources in our production of shoes, among other
things by ensuring that the best possible production
technologies are used, and that the production
equipment used at all ECCO tanneries and factories
is well-functioning and up to date.
Our tanneries produce process wastewater,
whereas our shoe factories mainly produce domestic
wastewater. All tanneries have sophisticated
wastewater treatment plants for the treatment of
tannery wastewater. This way, ECCO ensures that
wastewater is treated to such a degree that we not
only meet local discharge requirements but also comply
with the Best Available Technology (BAT) for tanneries.
The main environmental impact from our shoe factories
derives from energy consumption and waste production.
The global environmental activities in ECCO foster many
initiatives, which all have the aim to reduce this waste.
As it shows on the following pages, it is the project
“Flesh to Fuel” which has lately contributed positively
to improve the environment and minimize the impact
from our tanneries - an exciting and innovative project
which focuses on converting waste to energy. On the
following pages you can also read about ECCO’s Code
of Conduct on a practical level and ECCO's Code of
Conduct Audits.
At the end of this Group Environmental Statement, there
are statements containing information and key figures in
relation to environmental, health and safety aspects for
all ECCO tanneries and shoe factories for the past five
years. The key figures for the individual production units
are not materially different from those of the preceding
years; the trend seen in recent years continues.
For additional information please go to:
www.ecco.com/environment
Checking is good – education is better
As one of the world's leading shoe manufacturers with
activities in over 60 countries, ECCO puts great emphasis on environmental, health and safety conditions. In
2006, we changed our environmental audits to Code of
Conduct audits to ensure that we protect people and the
environment in the best way possible. In these audits a
large number of areas, including the environment, health
and safety, is audited.
accidents as well as respect for culture, freedom of
religion, discrimination, union relations etc.
Communication and control
Communication is a decisive element in auditing
work. This is about building up trust in each other and
ensuring through dialogue that all rules and laws are
followed down to the last detail.
We are constantly working to create a positive atmosphere around audits and to continuously learn from each
other's experiences: good examples in the form of 'best
practices' are important to emphasise. As part of the
audit all areas of the applicable production location are
reviewed. This means discussions with both managerial
and ordinary staff and paperwork that e.g. covers
overtime payments etc. is reviewed and checked.
At the audits a lot of time is used in the entire production area
The basis for our audits is ECCO's Code of Conduct
- a piece of paper with detailed descriptions of how
we want to act throughout the world. ECCO's Code of
Conduct Audit is the practical guarantee that the words
on paper are adhered to in daily operation.
The key words in ECCO’s audit programme are
partnership, openness, education and training.
We believe that through teamwork and cooperation
we can reach much higher and achieve better results,
than we could through checking. In the short-term,
checks maybe reveal things that can be improved.
But an audit is much more than just checking. It is
through education and coaching that we really guarantee
that things are as they should be. In all corners of
the business – in our own factories as well as at
our suppliers. This is achieved through audits from
headquarters, and ECCO employees are stationed
at the most significant suppliers.
A comprehensive programme
ECCO's Code of Conduct Audit also ensures a
uniform standard for ECCO’s environmental, health
and safety-related conditions at the tanneries and shoe
factories. This also ensures that all involved parties gain
the necessary insight and knowledge on the area, and
therefore proper understanding to create motivation to
uphold all rules.
The audit programme reflects the 10 commitments in
ECCO's Code of Conduct, such as for example
waste handling, resource utilization, workplace
assessment, safety conditions, prevention of industrial
Status and suggestions for improvements are presented to management and
environmental officers at the concluding meeting.
When the review is complete, concluding meetings are
held with management and the environmental managers.
An action plan and timetable are prepared for aspects
that need improving and a complete status report
is compiled. In this way everyone is involved in the
process. This creates understanding and a commitment
to following the agreements in daily life.
If the rules are not followed
Everything has a consequence. And if a production site
does not comply with the applicable laws and rules, or
demonstrates a lack of understanding in this area, ECCO
will carefully consider sanctions. We have full access
to change procedures in our own factories. At our suppliers, future collaboration will be carefully considered,
if ECCO's Code of Conduct is not adhered to.
The key words for ECCO's Code of Conduct Audit are
partnership, openness, education and cooperation.
Hereby the foundation for a good environment, health
and safety work conditions can be created.
Further information on the 10 commitments of ECCO's
Code of Conduct can be found on page 44.
49
ECCO Code of Conduct – more than just words
ECCO is a guest in many countries of the world. We
want to act tactfully and with respect for culture, religion,
laws and rules – locally and globally. ECCO's Code of
Conduct is a way of thinking, expressed in 10 commitments, with the aim to ensure that no ECCO employee is
in any doubt as to how we, as a Danish company, intend
to act. This applies both in Denmark and beyond the
country's borders. These commitments cover topics that
affect employee relations, environmental aspects and
relationships with collaboration partners. Adherence to
and the implementation of these are vital, and because
the ECCO Group itself owns the major part of its production facilities, we have very good opportunities to
enter into close dialogue with all employees about the
Code of Conduct and thereby ensure that our Code is
kept. The Group's environmental department carries
out audits each year, and here the primary focus is to
evaluate, how we can comply with the requirements we
set in real life.
When prayer is an everyday event
A concrete example of how ECCO's Code of Conduct
is practised in reality: Commitment no.1: ECCO is a
guest in each of the countries in which it operates and
will as such respect the culture of the individual country.
Commitment no.4: ECCO respects a person’s right to
freedom of religion.
Commitments 1 and 4 of ECCO's Code of Conduct
concern the fact that ECCO as a Danish company in all
our decisions and actions will remember that we are a
guest in the country where we are represented and
therefore will always do our best to respect different
cultures. For example the individual's right to follow his
or her chosen belief is to be respected. But there is
more to that principle than a simple desire to respect
50
religion. At ECCO it is also to be practically possible
to practise one's religion. We believe that with some
consideration this can be possible without disrupting
our production flow.
A good example is our factory in Indonesia. The factory
operates in the world's largest Muslim country, and of
over 4,000 employees who work at ECCO's factory,
around 95% are practising Muslims. This means that religion and prayer are a part of everyday life at the factory.
According to Islam, believers must pray five times a day
if possible. As a guest in the country ECCO wishes to
respect this, and the factory has therefore furnished six
prayer rooms which the employees can use. In the same
way, special washroom facilities have been installed to
allow the employees the opportunity to cleanse their
bodies before prayer – in the way prescribed by Islam.
Normally, the employees pray 1 – 2 times during a working day – the remaining prayers take place early in the
morning and in the evening after the end of the working
day. The approximately 2,000 employees working at the
same time pray on shifts, so that production does not
come to a complete standstill, while everybody prays.
Beyond the special prayer times everyone can of course
use regular breaks for praying. On Fridays, on which,
according to the Koran, Muslim men have to pray in
a mosque at noon, the employees have an extra long
break to do so. During Ramadan – Muslims' period of
fasting – Muslims are not allowed to consume food and
drink from sunrise to sunset. During these periods ECCO
has reduced daily working hours by half an hour per shift
and the employees are allowed to sleep at the factory
during breaks. It is ECCO Indonesia's policy that employees still receive their salaries during periods when they
pray or take the day off for other religious reasons.
The future brings obligations – luckily
As a global brand ECCO has a clear obligation to live
up to the standards that consumers rightly demand
of our shoes. We view the daily challenge of ensuring
sustainability to be an exciting task.
It is ECCO's philosophy that constant challenges
contribute to the biggest changes and the most
noticeable development. This applies both when
designing new shoes and when new and alternative
ideas are considered in a sustainable manner.
sustainability globally – and with more than just nice
words on paper. Through collaboration in the council,
we can ensure that concrete initiatives are more rapidly
implemented in the real world – quite simply because
we can learn from one another, and we are united in
carrying out the task".
The members of the council are the highest-level managers in the companies. This means that there is great
ability to act and a short distance to decision-making in
the council. In 2007, the primary areas of focus include:
Our ambition is to influence the entire sustainable
development in a direction that ensures the safety of
future generations. This means proper focus on the
environment, society and economy.
·T
he companies' responsibility in the supplier chain
(including principles of value chain management and
credible auditing and cooperation)
· The council's influence in connection with the Danish
government's preparation of a new sustainability
strategy.
When we work together
Sustainability is not just a national matter. The
production chain is world-wide – as are environmental
concerns. It is therefore a considerable task to ensure
global sustainability - a task that no company can
perform alone.
ECCO is particularly able to contribute with its vast
knowledge and experience in the first area of focus.
This is due to the fact that ECCO is characterized by
the global division of work in contrast to many of the
other participants in the Council. Global division of work
means that all of ECCO's production technology as well
as most of our suppliers are located outside of Denmark.
This requires management of the global value chain.
ECCO has therefore joined forces with 18 other Danish
companies, all of whom are globally-oriented. This is a
broad circle of progressive Danish commercial companies that have founded the "Council for Sustainable
Business Development". In this unique forum many
useful experiences are exchanged between companies
that operate in many of the same countries as ECCO.
ECCO's Chief Operating Officer, Mikael Thinghuus, says
about the collaboration:
"For ECCO it has been a matter of course since we
started in 1963 that we have an obligation towards the
community around us. When we started up in the small
Southern Jutland town of Bredebro sustainability was
principally concerned with ensuring good employee
conditions and terms for the local workers, who made
great efforts to help ECCO get started.
Today the task has grown with the company – and we
have grown with the task. As one of the world's leading
shoe manufacturers we do everything we can to ensure
The Council for Sustainable Business
Development is founded by the following
companies:
Arla Foods amba
Bang & Olufsen A/S
Brdr. Hartmann A/S
Coop Danmark A/S
Danfoss A/S
Danisco A/S
Datagraf
ECCO Sko A/S
Grundfos Management A/S
Hilton Scandic
ISS Management A/S
Jysk A/S
Key2Green
Louis Poulsen El-teknik A/S
MATAS A/S
NORDEA Bank Danmark A/S
Novozymes A/S
Post Danmark
Tanaco Danmark A/S
Tryg Vesta A/S
51
From Flesh to Fuel
This fleshy tissue – which represents approximately 20% of the weight of the raw hide – actually has a coveted energy potential in terms of bio fuel.
This is utilized in the tannery’s boilers when heating water. This way, diesel is replaced by bio fuel as energy source.
When the hide is removed from the animal carcass,
a certain amount of fleshy tissue comes with it. This
represents approximately 20% by weight of the raw
hide. This is not needed for the leather making process
and as such represents a waste material with all the
costs of disposal. Like many process industries one of
the biggest challenges facing the global leather industry
is the large amounts of energy and water needed for
the tanning process.
opportunity is to compost - the outcome could be a
useful fertilizer. Either way a further significant reduction
in land fill would be possible.
Against this background, the Research & Development
Centre of ECCO’s tannery division has taken part in
developing a special technology to reduce the impact
of this disposal. The new technology consists of a
“Flesh to fuel “ plant which is installed at ECCO’s
tannery in Indonesia. The plant enables the extraction
of tallow (animal fat) from the animal protein and waste
water associated with it. The tallow is pure enough
to be used as a bio fuel in a specially modified boiler
which provides hot water for the tannery processes.
In this way, we significantly reduce the use of diesel
and the high CO2 pollution associated with burning it,
contributing positively to the current climate debate
about reducing the use of fossil fuels. Another
important environmental plus from this process is
that it reduces land filling by 50%.
Idea, word – and action
Flesh-to-fuel is a good example of how to cooperate
in a closed loop system inhouse at a tannery. A
concrete way of conducting the ECCO Group Policy
of Environment, Health and Safety in reality – by
focusing on the four R’s: Reduce, Re-use, Repair
and Re-cycle.
ECCO’s tannery in Indonesia is a member of a regional
network of waste water treatment. This network
considers environmental problems and solutions.
ECCO will share and cooperate with local tanneries
who wish to conduct trials on the Flesh to Fuel plant.
A further potential
Bio fuel (tallow) represents 15% of the fleshy material
removed from the hides, 55% is water the remaining
30% is protein. We are still working on an environmentally sound method of reusing the protein. One
possibility is transforming them into bio plastic. ECCO
is working on setting up a joint project with a leading
German University specializing in this field. Another
52
4 employees at the machine where the fleshy tissue is cut from the raw hides.
The plant at ECCO’s tannery in Indonesia.
Diagram: From rawhide to tallow. Tallow is the coveted Bio fuel.
Green fleshings
(after soaking)
Collection tank
Heat exchanger
Tri-canter
Tallow
Solids
Waste Water
Mincer
Facts in figures:
- In the last three month of 2006, 8,000 liters per
month of diesel was replaced by bio fuel.
- This means that CO2 emissions are reduced by
22 tons per month.
- The total investment is EUR 900,000 in developing the flesh-to-fuel plant.
-E
CCO has invested EUR 450,000. Further,
subsidies of EUR 450,000 are achieved from
the Dutch Agency for International Business
and Coorperation (EVD) which is part of the
Dutch Ministry of Economic Affairs. Its mission
is to promote and encourage international
business and international coorperation.
53
Sludge reduction
There are constantly new projects in progress to
reduce the environmental impact at the Research and
Development Centre of ECCO’s tannery division in the
Netherlands. A project deals with the possibility to
reduce the amount of so called sludge.
Sludge is a waste product which is generated as a
consequence of cleaning solids from tannery waste
water.
The aim of the current project is to:
- Reduce the total amount of sludge produced
- Obtain better dewatering of the sludge so that less
water will be transported to landfill.
A number of techniques have been evaluated, but the
most interesting to date involves the disintegration
of the sludge with ultrasonic sound. The expression
ultrasonic is used about velocities higher than the
velocity of sound.
Untreated sludge
The sludge especially contains microorganisms, which
are built up of cells. These cells contain a lot of water,
which is difficult to remove. The cell water contains a
lot of “food” useful in the tannery’s own waste water
treatment plant. With ultrasonic sound it appears to be
possible to break down the cells and make the “food”
available.
Because of the broken cell structure and the availability
of the extra “food”, digestion of the sludge is enhanced.
As a consequence of this process biogas is produced.
Treated sludge
The two photographs below show the sludge before
and after the treatment with ultrasonic sound.
This initiative will be investigated and developed
further in 2007.
54
ECCO Walkathon helps children change the world
ECCO Walkathon 2006 in the Danish capital Copenhagen.
ECCO Walkathon is a charity walking event that took
its first steps in Copenhagen in 1999. It was ECCO's
founder Karl Toosbuy, who had the idea of giving
walkers their own Walkathon – in the same way
that runners have their marathon. A day where the
participants give money with their feet and gain new
impressions with their eyes.
But ECCO Walkathon is more than just an enjoyable
day spent with family and friends. It is in essence the
realization of ECCO’s mission to offer a "smooth and
delicate walk", while supporting a good cause. And
since its beginning in 1999 the event has developed
into an international event. In 2006 over 40,000 people
gave 2.8 million Danish Kroner to charitable causes
in Copenhagen, Berlin, Stockholm, Amsterdam and
Warsaw.
1370 children in school
UNICEF's school project for child workers in
Bangladesh was one of the many projects that was
supported by the ECCO Walkathon 2006. The project
focused on setting up pavement schools for the
poorest children – particularly girls– who were forced
to work for the survival of their families.
Schooling is a distant and unachievable dream for
many poor children in Bangladesh, where 1.5 million girls do not attend school. Collaboration between
UNICEF and ECCO Walkathon has made it possible to
help around 1,370 of these children to attend school.
At the pavement school the children learn the most
basic skills they need to create a better future for
themselves. The schools give the children more
self-respect and make them aware of their own
rights, so that they can help change and develop
the community they live in.
ECCO Walkathon 2006 supported pavement schools for the poorest
children in Bangladesh.
55
Statements from ECCO units - Denmark
Production Development Denmark
Location:
Bredebro, Denmark
Activity:Development and preparation of new articles and
prototype testing
Year of incorporation:
1963
No. of employees:
95
Special environmental
information:An important part of ECCO’s shoe production is the
moulding of soles, which is subject to approval according
to item D107. On 14 March 2002, the production was
granted environmental approval by Sønderjyllands Amt
(regional authority) covering shoe production as the main
activity and production of polymer materials (soles) as the
secondary activity. It should be noted that there has been
no violation of conditions during the financial year and that
no claims have been received related to this.
2006
2005200420032002
Uppers produced [pairs]
1,458
1,868
3,805
3,720
4,482
Shoes produced [pairs]
28,472
7,645
20,577
38,000
211,413
Production output
Energy and water consumption
Electricity [MWh]
Gas [m3]
Water [m3]
2,379
2,353
2,560
2,734
2,896
165,221
130,463
132,873
139,970
118,335
1,921
2,145
2,407
3,013
3,738
27,160
23,680
23,660
21,280
174,400
7,000
7,400
5,600
8,700
17,200
Consumption of sole material
Polyol and isocyanate [kg]
TPU [kg]]
Hardener [kg]
965
-
-
2,800
12,810
Colour paste [kg]
893
522
30
75
3,050
Release agent [kg]
392
292
292
930
3,648
-
30
-
440
2,343
3071
3021
3441
4591
2661
144
115
198
150
164
28
24
32
36
38
6
10
12
7
16
1
2
2
3
4
Finishing products [kg]
Waste
Recyclable waste [tons]
Waste otherwise disposed of [tons]
Waste to Kommunekemi [tons]
Industrial accidents
Accidents causing less than 1 day’s absence
Accidents reported to the Danish National Working
Environment Authority
1) The amount of recyclable waste stated includes cardboard which is disposed of for recycling purposes from ECCO’s distribution warehouse, DC-Tønder, At DC-Tønder, shoes are
repacked in shoe boxes from the factories according to customer specifications, which results in the production of a certain amount of packaging material waste which is disposed
of to a recycling company.
56
Statements from ECCO units - Portugal
Ecco’let (Portugal) Fábrica de Sapatos, Lda.
Location:
Santa Maria da Feira, Portugal
Activity:Research & Development Centre. Production of sale
samples and prototypes.
1984
No. of employees:
290
2006
20052004200322002
Production output
4,451
18,741
20,737
79,690
241,961
722,675
2,315,342
2,649,178
2,442,395
2,590,327
Electricity [MWh]
Gas [m3]
Oil [l]
Water [m3]
3,667
4,923
5,894
5,474
5,547
48,579
58,976
48,178
17,702
7,607
-
-
-
-
-
730
1,583
3,013
3,551
8,661
350,082
815,760
872,130
884,746
922,340
TPU [kg]
42,140
108,006
83,783
76,651
174,843
Hardener [kg]
17,066
35,326
42,323
68,040
18,290
Colour paste [kg]
7,629
19,307
19,326
18,507
20,346
Release agent [kg]
6,810
14,752
17,126
18,079
11,625
11,788
26,097
22,531
20,393
18,666
Waste
258
247
212
330
184
88
192
352
360
394
Chemical waste [tons]
42
121
94
67
63
45
68
80
128
137
Accidents causing 1 or more day’s absence
8
10
23
17
18
2) The tannery activities were permanently discontinued with effect from Q1 2003.
57
Statements from ECCO units - Indonesia
P.T. ECCO Tannery Indonesia & P.T. ECCO Indonesia
Location:
Surabaya, Indonesia
Activity:Tannery and shoe factory. Production of wetblue, crust,
leather, uppers and shoes.
Year of establishment:
1991
Number of employees:
Tannery: 379 Shoe factory: 3998
2006
2005
200420032002
Production output
Wetblue produced [ft2] 19,459,930
18,532,447
18,249,560
15,970,001
15,338,582
Leather produced [ft2] 15,970,842
13,296,854
15,098,971
14,062,152
12,048,197
5,803,771
5,382,521
5,326,300
4,664,023
4,063,840
1,848,821
812,461
246,018
29,119
-
Electricity - tannery [MWh]
6,915
7,952
14,072
9,556
6,830
Electricity - factory [MWh]
10,653
8,228
4,300
5,375
6,772
Gas - factory
[m3]
Oil - tannery [l]
840
-
-
-
-
528,185
534,000
560,000
608,000
469,000
630
-
-
-
-
Water - tannery [m3]
Oil - factory [l]
306,104
322,981
430,738
419,263
392,178
Water - factory [m3]
126,900
87,900
81,970
106,018
162,901
Polyol and isocyanat [kg]
420,657
-
TPU [kg]
Hardener [kg]
-
-
-
4,423
-
-
-
-
23,559
-
-
-
-
Colour paste [kg]]
8,107
-
-
-
-
Release agent [kg]
8,033
-
-
-
-
Finish products [kg]
34,628
-
-
-
-
3,507
4,684
9,6683
4,764
2,667
Waste
Recyclable waste - tannery [tons]
Recyclable waste - factory [tons]
452
260
24
-
229
Waste otherwise disposed of - tannery [tons]
3,597
5,334
5,585
5,012
5,398
Waste otherwise disposed of - factory [tons]
29
27
19
20
-
Chemical waste - tannery [tons]
22
22
25
28
-
Chemical waste - factory [tons]
24
-
4
-
-
278,137
293,587
327,367
351,808
369,471
40-55
Tannery wastewater
Volume [m3]
BOD [mg/l]
Chromium [mg/l]
pH
15-18
29-36
19-49
50-65
0,02-0,24
0,09-0,18
0,05-0,17
0,03-0,13
0,03
6,8-7,4
6,2-6,7
7,1-7,2
6,8-7,1
6,8-7,1
8
17
18
15
Accidents causing less than 1 day’s absence - factory
Accidents causing less than 1 day’s absence - tannery 18
77
84
57
88
103
Accidents causing 1 or more day’s absence - tannery
0
5
2
9
6
Accidents causing 1 or more day’s absence - factory
19
27
8
22
33
3) The relatively high figure is due to the replacement of various machinery.
58
Statements from ECCO units - Thailand
ECCO Tannery (Thailand) Co. Ltd & ECCO (Thailand) Co., Ltd
Location:
Ayudhthaya, Thailand
Activity:Tannery and shoe factory. Production of crust and finished
leather as well as uppers and finished shoes
Year of establishment:
1993
Number of employees:
Tannery 209 Shoe factory 2981
Special information about
environmental issues:
ECCO Thailand is ISO 14001 certified
2006 2005
200420032002
Production output
Leather produced [ft2] 12,020,621
9,978,619
10,095,425
9,138,590
8,046,037
2,752,234
3,127,255
3,237,054
2,868,227
2,708,639
4,864,367
3,860,069
3,910,382
3,319,623
3,264,747
Electricity - tannery [MWh]
5,831
5,663
5,827
5,456
Electricity - factory [MWh]
12,284
10,880
10,671
9,038
5,129
7,460
Oil - tannery [l]
386,614
366,219
390,000
360,000
307,350
Oil - factory [l]
17,751
10,069
13,044
4,800
4,800
[m3]
111,020
96,766
107,704
97,484
95,424
Water - factory [m3]
54,130
53,164
45,932
51,961
66,375
1,562,353
1,143,301
1,280,455
928,548
1,115,821
328,525
269,431
111,424
56,796
-
Hardener [kg]
80,750
83,419
104,234
236,381
99,521
Colour paste [kg]
42,618
27,359
28,833
24,809
34,706
Release agent [kg]
21,518
18,726
29,587
8,590
10,168
63
32
38
585
264
Water - tannery
TPU [kg]
Waste
Recyclable waste - tannery [tons]
115
124
144
168
404
Waste otherwise disposed of - tannery [tons]
Recyclable waste - factory [tons]
1,367
1,668
1,600
1,253
1,124
Waste otherwise disposed of - factory [tons]
968
756
815
326
330
Chemical waste - tannery [tons]
65
47
50
158
50
Chemical waste - factory [tons]
5
2
28
408
397
97,843
84,267
83,367
88,389
87,133
BOD [mg/l]
10,0-15,0
10,0-13,0
5,7-13,0
5,3-8,0
6,0-8,0
Chromium [mg/l]
0,09-0,19
0,10
0,20-0,21
0,04-0,17
0,09-0,10
7,5-7,7
7,5-7,7
7,5-7,6
7,3-7,6
7,5-7,8
Tannery wastewater
Volume [m3]
pH
Accidents causing less than 1 day’s absence - tannery
6
13
21
7
16
Accidents causing less than 1 day’s absence - factory
19
31
64
46
72
Accidents causing 1 or more day’s absence - tannery
8
2
3
1
1
Accidents causing 1 or more day’s absence - factory
16
8
16
16
7
59
Statements from ECCO units - Slovakia
ECCO Slovakia, a.s.
Location:
Activity:
No. of employees:
Martin, Slovakia
Shoe factory. Production of uppers and shoes
1998
1048
2006 2005
200420032002
Production output
-
75,786
163,297
259,136
792,473
3,227,331
2,841,235
2,771,025
2,265,312
1,974,408
Electricity [MWh]
7,440
6,204
5,722
4,730
4,337
260,231
274,611
250,204
179,301
96,457
-
-
-
2,281
1,600
11,387
12,163
11,460
14,419
12,565
1,210,592
1,049,100
1,134,160
724,030
539,681
221,863
144,050
158,249
150,524
140,825
Hardener [kg]
66,821
51,900
50,310
41,340
30,390
Colour paste [kg]
23,717
20,800
17,085
15,034
9,550
Release agent [kg]
12,066
13,960
12,888
8,985
6,175
34,492
18,210
24,958
15,662
13,309
Gas
[m3]
Oil [l]
Water [m3]
TPU [kg]
Waste
233
108
55
44
67
371
282
220
233
194
119
44
45
40
21
60
54
77
23
17
24
26
12
19
18
13
Statements from ECCO units - The Netherlands
ECCO Tannery (Holland) B.V.
Location:
Dongen, The Netherlands
Activity:Tannery. Production of wetblue.
Leather development and research centre
Acquired by ECCO in 2001
106
No. of employees:
2006 2005
2004
20032002
Production output
Wetblue produced [ft2] 40,175,548
36,631,214
39,863,636
26,704,106
30,886,062
Electricity [MWh]
Gas
[m3]
Water [m3]
6,129
6,133
5,192
5,704
5,677
1,086,834
1,065,340
846,300
672,286
864,715
362,286
337,996
244,593
273,784
287,676
Waste
Recyclable waste [tons] 13,222
17,895
4,249
9,480
11,702
7,153
295
141
125
182
1,210
570
430
552
650
Tannery wastewater
Volume [m3]
360,511
365,820
267,668
302,895
306,138
BOD [mg/l]
11,0-15,0
12,5-14,0
9,0-14,0
9,0-22,0
7,0-20,0
Chromium [mg/l]
0,05-0,13
0,10-0,20
0,20-0,30
0,10-0,20
0,20-0,30
7,5-8,1
7,7-8,0
7,2-7,7
7,0-8,0
6,6-7,6
5
7
2
-
-
3
1
6
-
-
pH
61
Statements from ECCO units - China
ECCO Xiamen
Location:
Activity:
No. of employees:
Xiamen, China
Shoe factory. Production of uppers and shoes
2005
2090
2006
2005
1,725,406
428,076
Production output
867,642
475,724
Electricity [MWh]
Gas [m3]
Oil [l]
Water [m3]
4,412
3,435
-
-
8,415
-
29,882
23,096
322,974
152,479
TPU [kg]
97,697
-
Hardener [kg]
18,557
7,744
Colour paste [kg]
5,793
2,945
Release agent [kg]
2,635
1,133
4,739
2,046
193
8,4
334
0,5
3,7
3,6
402
24
24
2
Waste
62
ECCO Shop in UK
ECCO Shop in USA
ECCO Shop in Austria
ECCO Shop i Russia
ECCO Shop in Australia
ECCO Shop in Japan
ECCO Men's New Casual - Golf shoe.
Colin Montgomerie - Member of the Brittish empire, 43 years
from Scotland and 8 times winner of the European Order of Merit.
ECCO Ice Breaker - Kids' boot.
ECCO Performance - Men's Offroad sandal.
ECCO Supercross - Men's Casual shoe.
ECCO Winter Breeze - Ladies' boot.
Sporty sneakers in ECCO’s offices are not a rare thing, when comfort is tested by the employees.
Comfort and fit are tested on a daily basis – even if warm winter boots do not match the outfit of the day.