Ecco Annual Report 2012 En

annual report 2012

Banks

Sydbank

nordea

Danske Bank

eCCo Sko a/SIndustrivej 56261 BredebroDenmarka/S reg. no. 43.088CVr no. 45 34 99 18

Banks

Sydbank

nordea

Danske Bank

ContentS

FIVe Year SuMMarY 6HIGHlIGHtS FroM 2012 7ManaGeMent report 8FInanCIal HIGHlIGHtS 10DeSIGn anD proDuCtS 13proDuCtIon anD SourCInG 16MarKet DeVelopMent 18eMploYeeS anD KnoWleDGe reSourCeS 22rISK FaCtorS anD rISK ManaGeMent 24Corporate reSponSIBIlItY 26StateMent BY tHe ManaGeMent 32ManaGeMent 33InDepenDent auDItorS’ report 34aCCountInG polICIeS 36annual aCCountS 39noteS 44Group StruCture 52eCCo 50 YearS 54

ECCO Annual Report 20126

FIVe Year SuMMarY

Financial highlights 2012 2011 2010 2009 2008DKK ’000

net revenue 8,061,236 7,088,826 6,111,148 5,041,200 5,374,142profit before amortisation and depreciation 1,512,381 1,276,606 994,720 768,307 1,033,467amortisation and depreciation (306,429) (329,871) (341,973) (272,383) (206,396)profit before financials 1,205,952 946,735 652,747 495,924 827,071net financials (66,083) (42,944) (21,711) (36,261) (81,220)Profit before tax 1,139,869 903,791 631,036 459,663 745,851Income taxes (320,843) (250,601) (155,423) (114,306) (171,982)Group profit 819,026 653,190 475,613 345,357 573,869Minority interests (135,354) (98,555) (65,635) (46,120) (46,470)

Profit for the year 683,672 554,635 409,978 299,237 527,399

Fixed assets 1,787,585 1,460,309 1,441,547 1,441,468 1,502,268Current assets 3,884,149 3,686,546 3,208,473 2,740,680 2,894,782assets 5,671,734 5,146,855 4,650,020 4,182,148 4,397,050

equity 3,121,885 2,931,289 2,586,961 2,431,839 2,473,419other liabilities 260,283 254,359 173,871 152,820 102,747Debt 2,289,566 1,961,207 1,889,188 1,597,489 1,820,884equity and liabilities 5,671,734 5,146,855 4,650,020 4,182,148 4,397,050

Cash flow from operating activities 795,509 669,684 700,151 984,524 788,592Cash flow from investing activities (593,639) (338,596) (236,732) (222,925) (482,718)Cash flow from financing activities (323,503) (370,956) (453,316) (576,525) (322,762)

number of employees (as of 31 December) 19,426 19,759 17,537 14,781 16,328

Key ratiosoperating margin 15.0% 13.4% 10.7% 9.8% 15.4%roaIC 22.3% 19.3% 14.8% 11.6% 19.2%return on assets 21.1% 18.5% 14.3% 10.7% 17.3%Investment ratio 1.9 1.0 0.7 0.8 2.3return on equity 22.6% 20.1% 16.3% 12.2% 23.2%Solvency ratio 55.0% 57.0% 55.6% 58.1% 56.3%liquidity ratio 2.4 2.5 2.2 2.3 1.9

DeFinitions oF Key ratios

operating margin: profit before financials x 100 Investment ratio: Investments for the year

net revenue amortisation and depreciation

roaIC: profit before financials x 100 return on equity: profit for the year x 100

average assets average equity

return on assets: profit before tax x 100 Solvency ratio: equity x 100

average assets assets

liquidity ratio: Current assets

Short-term debt

ECCO Annual Report 2012 7

HIGHlIGHtS FroM 2012

Business performance2012 was an exceptionally good year for eCCo.

Many factors contributed, but more than anything an extraordinary effort by the entire global eCCo team.

The flooding of ECCO’s factory in Ayutthaya in Thailand in october 2011 was a major setback for eCCo, reducing its production capacity overnight by a third.

all other units were asked to increase production to minimise the effect on eCCo’s customers. these events galvanised the entire eCCo organisation into a superb effort throughout 2012.

But it was also the solid performance in the marketplace by many of eCCo’s successful products – such as Sculptured, BIoM and eCCo’s golf shoes – which helped create a very satisfactory result.

eCCo saw strong progress in its asian and north american markets. Its core european markets delivered overall improved results. this development further strengthened ECCO’s geographical diversification.

ECCO’s total volume for the first time exceeded 20 million pairs – 20.2 million pairs were sold.

likewise, eCCo’s accessories businesses made good progress with revenue growth of 15% and eCCo leather increased external sales by 29%.

Financial performance- net revenue was DKK 8,061 million – an increase of DKK

972 million equal to 13.7%.

- Profit before tax was DKK 1,140 million – a growth of 26% over 2011. This is a profit before tax ratio of 14.1%, against 12.7% last year.

- the year’s company tax is calculated at DKK 321 million, against DKK 251 million in 2011.

- the year’s result is DKK 684 million, against DKK 555 million last year.

- the total assets increased from DKK 5,147 million to 5,672 million, and the equity increased from DKK 2,931 million to DKK 3,122 million.

- eCCo Sko’s solidity at year-end was slightly down from 57.0% to 55.0%.

- the return on equity increased from 20.1% to 22.6%.

organisational changes in 2012 - In mid-2012, eCCo introduced a simpler and more

efficient management structure.

- eCCo’s three regional sales organisations in north america, asia and eMea (europe, Middle east and africa) were brought together in a new Global Sales organisation, headed by Michel Krol, a member of eCCo’s Managing Board.

- all global leather, shoe production and sourcing activities were gathered in a new Global production organisation, headed by panos Mytaros, a member of eCCo’s Managing Board.

- Steen Borgholm, previously regional Director asia, was appointed CFo and joined eCCo’s Managing Board.

- Gerd rahbek-Clemmensen, Managing Director of eCCo Holding a/S, the eCCo Group parent company, joined the Supervisory Board of eCCo Sko a/S.

outlook- eCCo views 2013 as a year of consolidation after the

extraordinary growth during 2012.

- this growth will be lower than in 2012, but eCCo has strong new products in the market and also expects positive results from its reorganisation.


ManaGeMent report

It is not often that most initiatives and plans meet with success. But for eCCo, 2012 became one of those years where nearly everything went well – creating the background for yet another record-breaking year.

eCCo is one – if not the only – of the world’s shoe producers that controls the entire value chain from cow to consumer.

the process starts with eCCo’s designers. next, the product development team turns the designers’ ideas into reality and production takes over. eCCo makes leather at its own tanneries and cuts it, stitches uppers and injects soles at its own shoe factories. From eCCo’s distribution centres, shoes are sent to the stores – many owned by eCCo – and sold to eCCo’s consumers.

this is a very expensive set-up and at times complex to operate, but it also has many advantages.

this was proven in 2012 when eCCo had to cope with the massive challenges created by the flooding in Thailand in late 2011.

Being in control of the entire value chain allowed eCCo to increase production overnight in its other factories in europe and asia. this also enabled eCCo to move shoes from stocks to market and to communicate immediately with eCCo customers through eCCo’s network of sales offices.

the 19,500 eCCo employees rose enthusiastically to the challenge, and across the world many put in extraordinary efforts to minimise delivery problems for eCCo’s customers.

this more than anything created eCCo’s success in 2012.

strong product performanceeCCo, in parallel, saw great demand for its products.

the Golf division continued its strong performance and eCCo is now the 4th largest golf footwear brand in the world.

In Men’s shoes, eCCo had strong formal products such as Helsinki, new Jersey and Biarritz, and casual styles such as remote and androw.

In the ladies’ division, the new Sculptured products were much sought after. the Sculptured family grew and now includes Sculptured, Sculptured 65, Sculptured Sign and Sculptured 65 Sandal. the newest development is Sculptured 75, which proves that eCCo has been able to develop high-heeled ladies’ shoes without compromising on comfort and design.

eCCo’s marketing department, in connection with Sculptured, launched the SMIle campaign, demon-strating that you can smile even if you wear high heels all day long. the campaign ran on a global basis and was a great success.

In eCCo’s performance division, products such as eCCo offroad, BIoM lite ladies’ and BIoM Grip Men’s were bestsellers.

Market developmenteCCo continued its build-up of many international markets to reduce its historical dependence on its northern european markets.

the markets in asia now account for 24.2% of eCCo’s revenue against 20.2% in 2011; north america grew to 19.1% in 2012 against 17.9% in 2011; and as a result, eMea (europe, Middle east and africa) saw its percentage of revenue reduced to 56.6% - although the region saw its overall performance improve.

this geographical diversification also added to the improved result and this strategy will continue. eCCo is now active in 91 markets across the globe.

streamlined management structureas costs increase continuously – and in asia quite rapidly – increased efficiency becomes crucial. ECCO streamlined its management structure and today bases its operation on four pillars: Brand & products, production, Sales and administration. each is managed by a member of eCCo’s


Managing Board respectively, andreas Wortmann, panos Mytaros, Michel Krol and Steen Borgholm.

the Managing Board is headed by Dieter Kasprzak and its activities are coordinated by eCCo’s Coo Michael Hauge Sørensen.

the new organisation allows faster decision making, more efficiency and increased consumer contact, as tasks are delegated as close to the market as possible.

In 2011 and 2012 eCCo has worked intensively on improving its operational processes. Many initiatives have been launched to simplify and improve the daily operation. And the first results are promising. 2013 will see the roll-out of most of the projects and the effects should be visible this year.

one further focus area in 2013 will be eCCo’s supply chain. Customers expect more frequent deliveries of attractive new products, easy purchase processes and an ever higher level of service. eCCo’s control of the entire supply chain should allow eCCo to meet these expectations.

consolidation in 2013looking ahead into 2013, economic uncertainty remains high and a number of economies probably will struggle, with negative impact on consumer sentiment and demand.

after several years of aggressive growth, eCCo will restrain growth in 2013 to allow the organisation to consolidate the results achieved.

ECCO’s Managing Board from left: Steen Borgholm – Executive Vice President, Finance and Group CFO; Michael Hauge Sørensen – Chief Operating Officer; Dieter Kasprzak (sitting) – President & Chief Executive Officer; Michel Krol – Executive Vice President, Global Sales; Panos Mytaros – Executive

Vice President, Global Production; Andreas Wortmann – Executive Vice President, Brand & Products. The photo was shot in an old decommissioned tannery in the Copenhagen Meat Packing District, now a fashionable city centre for food, culture and various events.


ECCO’s financial result in 2012 was very satisfactory and the company remains financially strong.

Group net revenue increased by 13.7% to DKK 8,061 million.

net sales of shoes and accessories increased by DKK 881 million. the split between sales in eCCo’s three regions demonstrates the continuous improvement in geographical diversification.

eCCo leather increased its external sales by DKK 85.5 million. Importantly, most of this growth is in premium leathers and eCCo leather is gaining a strong position in the leather goods market.

In 2012 the profit before tax was the highest ever achieved at DKK 1,140 million – an increase of 26%. the profit before tax ratio also improved from 12.7% in 2011 to 14.1% in 2012.

Corporate tax is calculated at DKK 321 million, which is equivalent to a tax rate of 28.1% versus 27.7% in 2011.

the year’s result, after tax and minorities, increased from DKK 555 million in 2011 to DKK 684 million in 2012 – an increase of 23.3%.

Cash flow from operations increased to DKK 796 million from DKK 670 million in 2011 despite higher working capital requirements.

Investments increased from DKK 339 million in 2011 to DKK 594 million in 2012. the investments were primarily made in land, buildings and machinery.

By the end of 2012, eCCo Sko’s equity was DKK 3,122 million, equivalent to a solidity of 55.0%.

FInanCIal HIGHlIGHtS

net revenue split by region 2008-2012

net revenue 2008-2012

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

5,3745,041

6,111

7,089

8,061

mill

ion

DKK

in %

mill

ion

DKK

Profit before tax and profit margin 2008-2012

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0

200

400

600

800

1,000

1,200

460

746

13.9%

9.1%10.3%

12.7%14.1%

631

904

1,140

Profit before tax (PBT) PBT%

2008 2009 2010 2011 2012

europe Asia Pacific americas


total investments 2008-2012

483

223 237

339

594

0

100

200

300

400

500

600

700

2008 2009 2010 2011 2012

equity development and solidity 2008-2012

50%

52%

54%

56%

58%

60%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2,473 2,4322,587

2,9313,122

56%

58%

56%

55%

57%

Equity Solidity

2008 2009 2010 2011 2012

net working capital and ratio to net sales 2008-2012

1,9361,8181,568

2,123

2,395

20%

22%

24%

26%

28%

30%

32%

34%

36%

38%

40%

-

500

1,000

1,500

2,000

2,500

3,000

36%

31%30% 30% 30%

Net Working Capital (NWC) NWC%

2008 2009 2010 2011 2012

mill

ion

DKK

mill

ion

DKK

mill

ion

DKK

ECCO in 2012 established a new organisation that allows for faster decision-making, more efficiency and increased consumer orientation as tasks are delegated as close to the market as possible – such as in its 1,095 ECCO branded stores.


ECCO’s starting point is that everything begins with the foot. In 2012 the development of ECCO’s collection continued with a main focus on incorporating

the BIOM natural motion concept into the entire Performance collection.


everything begins with the footall eCCo shoes are designed at the eCCo Design Centre in Denmark, and they have all been made with one common starting point in mind – the foot! eCCo shoes are designed not only to look attractive but also to be comfortable and feel good. this is the challenge both designers and the research & Development team face every time a new eCCo shoe is being created. throughout the design process, considerations are made on how to combine great look with functionality and comfort. Designing an attractive eCCo shoe and ensuring great fit always go hand in hand. eCCo’s design philosophy builds on the tradition and heritage of Scandinavian design where simplicity, functionality and quality are combined into unique products. each eCCo shoe brings together the long tradition and heritage of Scandinavian design with a stylish and modern design approach combined with innovative shoemaking.

the eCCo r&D team builds on years of shoemaking experience and combines this knowledge with the possibilities offered by eCCo’s technology. the competences within direct injection shoemaking are continuously developed. In 2012 the initial steps were taken to reorganise the r&D area. the r&D teams in Denmark and portugal will eventually be merged to create one integrated development flow, from the first commercial briefing to the designers, and continuing right through to the smooth handover to production. this new structure in r&D will create an even stronger and more efficient development flow, yet will still be flexible and capable of responding rapidly to new ideas from the design team. ladies’Having a strong focus on attracting new consumers to the eCCo brand, the ladies’ Modern Casual segment has increased over the last seasons and is now the biggest category. one of the best performing products in 2012 was eCCo Spin, a casual but sports inspired lifestyle product in vibrant colour combinations.

new innovations within eCCo’s unique direct injection technology have resulted in new designs that were previously not possible to produce. It all began in 2011 when the first Sculptured shoe was launched. This was the starting point of one of the most successful categories within eCCo. the Sculptured family grew fast and now includes Sculptured, Sculptured 65, Sculptured Sign and Sculptured 65 Sandal. the newest development is the Sculptured 75, which demonstrates that eCCo has been able to develop high heeled ladies’ shoes without compromising on comfort and look.

the SMIle campaign behind the Sculptured 65 product was ECCO’s first product focused campaign approach for years and was globally aligned and strongly executed.In australia, eCCo’s 2.8 km catwalk was pronounced a world record and earned a Guinness World Records book entry. all in all, the SMIle campaign caught much media attention around the world.

Men’seCCo Men’s continues to be a strong and solid pillar within the eCCo portfolio.

Focus in 2012 was to further build on eCCo’s strong foundation within the Men’s Formal category. products like Helsinki, Birmingham and Biarritz dominated sales.

new products in the Casual category were launched to rejuvenate the collection and to attract new consumers. For some years, the sneakers area has been a major trend in the market and the development of eCCo androw is a great example of eCCo’s interpretation.

Kids’the strategy of Kids’ was re-focused with a clearer selection of attractive markets.

the Kids’ Casual collection is a strong pillar within the Kids’ area, dominated by seasonal products such as urban Safari sandals and winter boots with Gore-tex. However, the launch and expansion of the BIoM concept with its natural motion philosophy is very successful and will be expanded further.

DeSIGn anD proDuCtS


PerformanceIn 2012 products such as eCCo offroad, BIoM lite ladies’ and BIoM Grip Men’s were bestsellers.

the development of the collection continued with the main focus on incorporating the BIoM natural motion concept into the entire performance collection.

the performance area is special in relation to the other product divisions because part of the collection is only distributed through sports distribution channels.

a true highlight of 2012 was when the Scandinavian outdoor Group voted BIoM Hike as the best hiking boot of the year.

another success is the eCCo BIoM trail. the product won the test of the Danish “løbemagasinet” (running magazine), winning over 28 other trail shoes.

golfeCCo Golf continues to stand out as one of best performing areas in eCCo, and in 2012 eCCo became the world’s fourth biggest golf footwear brand.

the Golf division maintained its leadership in the hybrid category, with the Golf Street being the no. 1 product. the biggest news in 2012 was the launch of the BIoM Hybrid, which marries the best of the Golf Street with the BIoM philosophy.

awardsat europe’s largest consumer golf show – rhein Golf Show in Cologne, Germany – the Golf Street was honoured as the most innovative product.

In november at the pro Shop europe awards, eCCo BIoM Hybrid was also voted as the product of the Year.

accessoriesIn 2012 eCCo launched a new strategy for accessories, utilising its Scandinavian design capabilities with leather expertise to create a new line of leather goods.

the eCCo natal – a soft, slouchy sac bag best showcases the new direction, which will be followed up with a recognisable line of leather goods in 2013.

the strongest leather style for eCCo continues to be the business bag which appeals to eCCo consumers around the world.

ECCO Golf Street,Spring & Summer 2012


ECCO BIOM Lite, Spring & Summer 2012

ECCO Sculptured 65, Autumn & Winter 2012

ECCO Bradley, Autumn & Winter 2012

ECCO Snowrush, Autumn & Winter 2012

ECCO Biarritz, Autumn & Winter 2012

ECCO Spin, Spring & Summer 2012

ECCO BIOM Hike, Autumn & Winter 2012

ECCO Androw,Spring & Summer 2012

ECCO Natal, Spring & Summer 2012


unique within the shoe industry, eCCo continues to control and own its value chain, including its own tanneries and shoe factories.

eCCo’s current production footprint encompasses four tanneries located in the netherlands, thailand, China and Indonesia, and five shoe factories in Slovakia, Portugal, thailand, China and Indonesia. Furthermore, eCCo has a global sourcing organisation located in China.

In July 2012 all production and sourcing activities were brought together in a single organisation in order to establish one flow for shoe production and sourcing, and to ensure best practice sharing and synergies across the shoe production organisations.

shoe productionThe first part of 2012 was impacted by the recovery efforts following the October 2011 flooding in Thailand.

one third of eCCo’s total production for the Spring/Summer 2012 season was reallocated from thailand to other eCCo production units and external suppliers.

this included restarting production in eCCo’s factory in portugal.

In Indonesia the production of uppers was increased in the newly built Factory 3. overall – despite the recovery challenges – the global production output was in line with expectations and the production was fully restored by the second half of the year.

Capacity included the start-up of temporary production in rented facilities in lopburi in thailand.

production was restarted already in March 2012, and by May 2012, eCCo was producing more than half its normal output in thailand. In a remarkable effort, eCCo production staff from ayutthaya travelled four hours by bus every day throughout the year to lopburi to operate the temporary factory.

renovation of the tannery in indonesia eCCo’s tannery in Indonesia was completely rebuilt in 2012. a substantial number of the tannery machines were replaced, with new drying units, new piping, electricity and water preparation, as well as new offices.

the lay-out was designed to create more efficient production flow. Various other improvements, such as roof insulation and roof windows, were installed to improve the general working environment.

proDuCtIon anD SourCInG

In 2012 all production and sourcing activities were brought together in a single coherent production unit with an aim to ensure full alignment within the production of leather and of shoes. ECCO in Indonesia encompass

a tannery and a shoe factory with over 7,000 employees, making this ECCO’s largest facility.


New finishing plant in the NetherlandseCCo leather Group’s external sales increased by 29% in 2012, and the group achieved a strong supplier position in the premium leather goods industry.

to further improve the service levels to this important customer group, eCCo leather in 2012 decided to build a new finishing plant in the Netherlands next to the ECCO leather headquarters in Dongen. the facility will start production in the autumn of 2013.

leather & shoemaking academiesIn 2012 eCCo established educational facilities so that it could offer its young leather and shoe specialists in-depth management training.

eCCo leather academy and eCCo Shoe Making academy started in January 2012, training 20 young eCCo employees.

the eCCo leather academy cooperates with external universities, and most of the 12 participants already had a graduate background. the one year intensive training covers both scientific and managerial subjects. all 12 participants have now returned to

their factories in managerial roles. a new group of 12 started courses early in 2013.

the eCCo Shoe Making academy runs a two year sandwich course, with a greater emphasis on practical training, and the eight 2012 participants will graduate at the end of 2013. a new intake of 10 employees began their training early in 2013.

eCCo realises that to retain staff it is necessary to offer this advanced, highly focused education, and eCCo expects to be able to develop most of its future managers internally, via its academies.

ECCO’s current production footprint encompasses four tanneries and five shoe factories across Europe and Asia. It is unique to the shoe industry that ECCO controls and owns most of its value chain, including its own tanneries and shoe factories. This gives ECCO a firm grip on production, and product quality and cost.

SHOE PRODUCTION

LEATHER PRODUCTION

PORTUGAL

SLOVAKIA

THE NETHERLANDS

CHINA (XIAMEN)

INDONESIA

THAILAND


MarKet DeVelopMent

During 2012 eCCo initiated a reorganisation of its global sales activities to manage its three sales regions – Americas, Asia Pacific and Europe, Middle East & Africa – in a new unified Global Sales organisation.

the new Global Sales organisation has been set up to secure current market development within the different distribution channels; wholesale, retail, e-commerce, m-commerce and outlets.

overall, the ambition is to increase eCCo’s branded retail space so that it is in line with eCCo’s brand aspirations, ensuring that consumers will have an attractive shopping experience at every touch point they have with the eCCo brand.

these three regions cover a total of 91 markets in which eCCo products are sold today.

at year-end consumers were able to purchase eCCo products in a total of 1,095 eCCo branded stores, of which eCCo Sko a/S owns and operates 181, and its sister company KrM a further 123 stores. the remaining 791 branded stores are partner-operated stores.

Furthermore, eCCo products are sold from more than 14,000 other selling points across the world, including shop- in-shops, shop points and multi-brand wholesale locations.

revenue development by region 2008-2012

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

3,503

606 1,020

715 929

3,632

1,009

1,139

4,178

1,367

1,210

4,324

1,851

1,460

mill

ion

DKK

europe Asia Pacific americas

3,202

ECCO’s EMEA region comprises Eastern and Western Europe, Russia, the Middle East and Africa. The region is ECCO’s largest and accounts for 57% of ECCO’s global sales.


eMea2012 has been a good year within the eMea region.

a total of 100 new eCCo stores were opened in 2012. eCCo’s store and shop-in-shop concepts have worked well and their expansion has been extended in the plans for 2013.

eCCo’s focus on leading market developments within e-commerce has made very positive progress in 2012. the result has been significant net sales growth, and expansion into a total of 12 markets via an e-commerce set-up.

eCCo’s product ranges again proved commercially viable with good sell-through figures. ECCO received several awards, particularly within the Golf and performance ranges.

Asia Pacific ECCO’s Asia Pacific region comprises all of Asia, Australia and new Zealand, and accounts for 24% of eCCo’s total sales.

In 2012 ECCO covered a total of 91 markets via 1,095 ECCO branded stores and more than 14,000 other selling points across the world. ECCO’s Ocean Terminal Store in Hong Kong is one of ECCO’s best performing stores.

ECCO in 2012 covered a total of 91 markets via 1,095 ECCO branded stores and more than 14,000 other selling points across the world. ECCO’s Ocean Terminal Store in Hong Kong is one of ECCO’s best performing stores.

net revenue in eMea 2008-2012

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

3,503

2008 2009 2010 2011 2012

3,202

3,632

4,178 4,324

mill

ion

DKK

ECCO’s Asia Pacific region comprises all of Asia, Australia and New Zealand, and accounts for 24% of ECCO’s global sales.


ECCO in 2012 established a unified Global Sales organisation to secure the current market development within the different distribution channels: wholesale, retail, e-commerce, m-commerce and outlet.


By the end of 2012 eCCo, in this region, had a total of 147 eCCo branded stores, of which 68 were owned and operated by eCCo. additional to this, eCCo products were sold from close to 800 shop-in-shops and 1,200 other selling points.

eCCo enjoys a strong market position and good brand recognition in several key asian markets, most importantly in China, which is now eCCo’s second largest market in size.

expansion into new marketsIn December 2012 eCCo entered the South Korean market in a joint venture with a local distribution partner. South Korea is a promising market with 50 million inhabitants with strong purchasing power and a climate well suited for eCCo’s range of products.

In Indonesia, eCCo has had a production facility since 1991, but no sales activities. In December 2012 retail activities began via a local distributor. Indonesia is a high growth market with a population of 240 million people.

north americaeCCo’s americas region is eCCo’s smallest, but the uSa remains eCCo’s single largest market, with continued significant growth opportunities.

By the end of 2012, eCCo americas had a total of 87 eCCo branded stores, of which 72 were owned and operated by eCCo and the remainder were run by partners.

gaining market share eCCo realised double digit sales growth in the uSa, which reflected increased market share in important product categories. In Canada, the market position was maintained. a continued controlled expansion in retail was pursued in specific geographical clusters.

net revenue in americas 2008-2012

1,020929

1,1391,210

1,460

0

200

400

600

800

1,000

1,200

1,400

1,600

2008 2009 2010 2011 2012

Net revenue in Asia Pacific 2008-2012

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

606715

1,009

1,367

1,851

2008 2009 2010 2011 2012

mill

ion

DKK

mill

ion

DKK

ECCO’s Americas region encompasses Canada and the USA, and accounts for 19% of ECCO’s global sales.


ecco peopleeCCo is a multicultural company with 19,500 employees and operating in 91 countries.

eCCo recognises the importance of investing in people, as it is the employees of eCCo who drive the company forward. attract and retaineCCo is determined to attract and retain the best people for our global community.

eCCo offers employees lifelong training, new challenges and mobility in eCCo’s businesses around the globe.

In 2012, eCCo university was established to provide a range of global and local courses within the areas of Finance, project Management, Business administration, and Strategic leadership.

Promoting from within eCCo has a policy to promote from within the Group, whenever possible. Many of eCCo’s current leaders – including senior management – began their careers as young trainees with eCCo.

trainee programmes and talent managementone recurring initiative is that, every year, eCCo offers talented young individuals the opportunity to be a part of one of three eCCo trainee programmes. the duration of these programmes is either two or three years long, and they are supported with individual career plans. another initiative is eCCo’s talent Management programme. During 2012 a number of talented eCCo employees were invited to attend this two-year sandwich course to ensure a strong pipeline of talents and future leaders for eCCo.

the above 2012 initiatives help eCCo to attract, retain, and develop competent people enabling eCCo to compete in the global market.

eMploYeeS anD KnoWleDGe reSourCeS


0

5,000

10,000

15,000

20,000

2008 2009 2010 2011 2012

16,328

14,781

17,537

19,759 19,426

composition of employees by geography 2008-2012 composition of employees by function (end of year 2012 in %)

europe Asia Pacific americas HQ leather production Sales

Sales 9.3%

production 81.9%

leather 5.8%

HQ 2.9%

2.9%9.3% 5.8%

81.9%

ECCO has a policy wherever possible to promote from within the Group. Today, many ECCO leaders – including senior management – started their careers as young trainees with ECCO. In 2012 ECCO established educational facilities

to be able to offer its young leather and shoe specialists an in-depth management training.


rISK FaCtorS anD rISK ManaGeMent

Financial risKsDue to the international scope of eCCo’s business activities, the Group’s results and its equity are affected by several financial factors, which the Group monitors and manages continuously.

The approach to handling financial risks is determined by the Supervisory Board and the Managing Board.

Foreign exchange riskseCCo is exposed to more than 20 different currencies and the majority of these exposures requires hedging. The overall policy defines that all significant currency exposures are hedged when the exposure arises, with a hedging horizon of 13 to 27 months, corresponding to the Group’s business model.

With a few exceptions, the currency used in transactions between the parent company and a sales subsidiary is the local currency of the sales subsidiary, thereby placing the foreign exchange risk with the parent company, which sets up a corresponding hedge. the currency used in transactions with external distributors is DKK, eur or uSD.

eCCo’s own production units are paid in eur and external suppliers are primarily paid in eur or uSD. the production units thus bear the risk relating to the currency exposure in currencies other than the local currency. Such positions are hedged locally to the extent permitted by local foreign exchange regulations.

interest rate risksthe Group’s interest rate risks relate to fluctuations in interest rates on the Group’s net interest-bearing debt. Interest rate risk is reduced by taking up fixed-interest loans or by entering into interest rate swaps. at year-end 2012 the Group had DKK 602 million of fixed rate debt (including floating rate debt swapped into fixed rate debt), representing 87% of the Group’s long-term debt and 61% of the Group’s total interest bearing debt.

credit risksthe Group has no material credit risks other than what has been recognised in the financial statements.

liquidity riskIt is the responsibility of the Group’s treasury function to ensure that the Group has adequate access to funding at all times.

the increase in the Group’s aggregate credit facilities has led to an improvement in the Group’s un-utilised credit facilities and the Group holds sufficient facilities to cater for the seasonal fluctuations.

Material events after 31 December 2012the management is of the opinion that no material events have occurred after the end of the accounting year that could significantly impact the Group’s financial status.

oPerational risKsgoalsthe aim of eCCo’s work with enterprise risk management is to maintain a structure and environment for managing risks according to organisational requirements, and in response to relevant changes in eCCo’s business environment.

It is a key element in this work to constantly raise awareness in the organisation of the need for risk management and for this to be considered in all decision-making, as well as to facilitate continued improvement of risk management practices throughout the organisation.

organisationeCCo’s enterprise risk management defines that the Supervisory Board is ultimately accountable for risk management and for providing assurance to stakeholders that key risks are properly managed.

eCCo’s Managing Board is accountable for the oversight and strategic management of risks under their control. together they determine eCCo’s strategic approach to risk.

Current and potential risks are prioritised and eCCo’s enterprise risk list is defined based on the likelihood of an event happening that may have an impact on business objectives.

improvement in 2012During 2012 ECCO’s major operational risks were defined and assessed, and an enterprise risk management framework was implemented. risk reports and action plans were developed, along with a roll-out of risk mitigation tools.


ECCO’s direct injection technology is essential to the company. Machines are located at all its five shoe factories – here in Indonesia. This helped ECCO recover quickly from the flooding of ECCO’s factory in Thailand in 2011.


the eCCo Code of Conduct outlines the core principles that govern how eCCo conducts its business.

the Code applies to all employees, suppliers and business partners worldwide. It is built on a foundation of respect for people, the environment and society. It sets out clear principles and high ethical and legal standards in the areas of human rights, education, health and safety, and the environment.

PeopleeCCo believes in treating others with dignity and care, and the health, safety and well-being of employees is a primary concern.

societyeCCo operates in very diverse communities, with different cultures, religions, languages and traditions. eCCo always wishes to be a good citizen, wherever we work.

For example eCCo in xiamen, China has worked closely with authorities to help local people with handicaps get jobs with eCCo.

In 2012 this effort was honoured when eCCo in xiamen, received China’s national advanced enterprise for

employment award from the State Council, the highest employer award ever granted at a national level.

the State Council honoured eCCo for making an outstanding contribution to creating employment positions for physically-challenged employees, serving as a role model and enjoying a positive social reputation.

eCCo was also commended for contributing to the local community. particularly notable was the fact that 73% of eCCo’s 3,300 xiamen employees reside in the local area, which is an unusually high proportion for labour-intensive companies in China.

eCCo also seeks to cooperate with its local societies in other ways.

eCCo’s tannery in the city of Dongen, in the netherlands, partnered with local government, schools, and artists to carry out a unique project, “Courageous leather”, designed to highlight the historical roots of the industry.professional artists and over 300 children from various local primary schools visited eCCo’s tannery to gain inspiration and knowledge of the leather-making process. leather was provided by eCCo to all participants. the children then embarked on an artistic journey lasting

Corporate reSponSIBIlItY


several months, culminating in a presentation of musical performances, drawings and paintings in the tannery production hall for over 1,000 members of the local community.

gooD goVernanceFrom paper to practiceevery day the eCCo Code of Conduct and related policies are transformed from paper to practice. eCCo has an internal Code of Conduct audit team of 25 employees who part-time conduct audits at eCCo’s own tanneries and shoe factories, and at external suppliers.

our internal audit team is reinforced with external professional organisations such as the leather Working Group (lWG).

Key areas assessed by the rigorous leather Working Group protocol include environmental management systems, water usage, energy consumption, air emissions, effluent treatment and waste management.

other external auditors concentrate on issues related to working conditions, such as health and safety, working hours and salaries.

If an audit reveals inadequate performance, eCCo works with the supplier to ensure that the necessary improvements are made. eCCo will discontinue a relationship if the supplier is not willing to collaborate on the measures requested.

In 2012, 80 audits were conducted and five supplier contracts were terminated.

The health, safety and well-being of employees continue to be primary concerns. ECCO does business fairly and creates an environment of cooperation and inclusion in the workplace.


enVironMentas a global manufacturer of leather and shoes, we consume natural resources every day. as we continue to increase production, we implement environmentally sound methods and technology.

turning waste into energyafter investing in a highly advanced wastewater facility for leather production in 2011, eCCo tannery Holland and its partner company Waterstromen, commissioned a new facility for the generation of renewable energy. Consequently, in early 2012 a large biomass digester, which turns organic waste into usable fuel, was put into operation.

this biogas digester provides a source of renewable fuel and also helps to dispose of waste materials by converting waste from both the leather-making processes, and the wastewater treatment plant, into biogas.

the majority of this biogas is used to produce energy which is used to run production processes that previously depended on non-renewable fossil fuels.

the remaining biogas is used to heat installations.

Starting in 2013, all excess organic material from the hides will be converted into biogas, but in the meantime any residual waste produced by the new digester is delivered and fed as a fuel into a power plant to generate electricity with reduced environmental impact.

this project enables eCCo tannery Holland to reduce waste and to substitute virtually all of its consumption of non-renewable natural gas with renewable biogas.

the aim is to use more than 40% of the total tannery waste and replace up to 60% of the total natural gas consumption with biogas.

one step at a timeeCCo’s water management follows the policy of reduce, reuse and recycle. In addition to wastewater treatment, eCCo has worked to improve water efficiency by applying best practice technologies and implementing effective water management techniques.

Many efforts during the year targeted process management, increasing the number of possibilities to carefully monitor and measure consumption at every step and station of production.

ECCO in Thailand is implementing a solar installation for water heating to reduce LPG consumption in the tannery. Planned in 2012, a 1,537 m2 solar thermal system will in 2013 go into production with a capacity to heat up water of 78 m3 per day. Currently, the installation is commissioned to be the biggest solar project in Thailand.


primary focus areas involved eCCo’s tanneries:

at eCCo’s tannery in Indonesia automated dosing was installed to reduce water used in recipes.

at the tannery in xiamen, China, a recovery system was established so that the hide draining process could recycle 80% of the water used.

the xiamen tannery also established a system to recycle water used in the wastewater treatment plant, saving an average of 290 tons of water per week.

at the tannery in the netherlands, new work processes were introduced to reduce the use of water in cleaning processes.

Throughout all ECCO’s tanneries, additional flow meters were installed in order to track process requirements.

these process integrated measures have led to a significant reduction of water consumption and a significant reduction of waste.

eCCo in thailand is implementing a solar installation for water heating to reduce LPG (liquefied petroleum gas) consumption in the tannery. planned in 2012, the 1,537 m2 solar thermal system will come into operation in 2013, with a capacity to heat up 78 m3 of water per day. the installation, when commissioned, will be the biggest solar water heating installation in thailand.

MeasUring PerForMance - shoe Productionenergy consumption, measured in megajoules per pair, has dropped 21% since 2009, with a decline of 1% per pair of shoes in 2012. this continual reduction has been achieved through successful energy efficiency projects and increased use of renewable energy sources.

the amount of waste per pair of shoes rose by 1% in 2012. Heavier shoe materials coupled with sudden relocations to other facilities after the thailand flooding in 2011 account for this increase.

eCCo has made significant gains in recycling rates, showing an increase of 34% since 2009. overall performance in 2012 improved by 4%. production in portugal led the way by recycling 64% of its total waste.

Increased energy efficiency

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

2012201120102009

11.0811.19

12.68

14.06

ene

rgy

(MJ

pe

r pa

ir)

slight increase in waste

0.29

0.30

0.31

0.32

0.33

0.34

0.35

0.36

0.37

0.38

2012201120102009

0.32

0.36 0.36

0.37

Wa

ste

(kg

pe

r pa

ir)

increase in recycled waste

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

0.18

2012201120102009

0.12

0.14

0.150.16

re

cyc

led

wa

ste

(kg

pe

r pa

ir)


MeasUring PerForMance - leather productionenergy consumption in our tanneries, measured in megajoules per square foot of leather, was seemingly higher in 2012 than in 2011. However, due to a fundamental change in production processes these figures are not directly comparable.

the processing of raw hides reached record highs in 2011 – partly replacing processing of finished leathers. This type of processing requires less energy, which strongly impacted overall energy consumption.

During 2012, the beam house in Indonesia was closed due to renovation. this closure created a major shift in production among eCCo’s four tanneries, increasing the processing of wet blue to finished leather, which consumes twice the energy as the processing of raw hides.

the amount of waste generated per square foot showed a sharp decrease of 29% from 2011 to 2012.

this substantial reduction of waste in 2012 can be attributed to the decrease in the production of raw hides to wet blue.

another major contributor was a highly advanced wastewater treatment plant and biogas system in the netherlands, which became fully operational in 2012.

The 2012 waste and recycled waste figures thus represent a transitional phase in which eCCo will be working to make the processing metrics more compatible and transparent.

the change in the types of products processed by the tanneries also impacted the volumes of recycled waste, which showed a decrease of 34%. recycled waste per square foot decreased proportionally with the amount of waste generated in 2012. the amount of wastewater per square foot decreased by 9% compared to 2011. this decrease is linked to water consumption. the sharp increase in the production of wet blue to finished leather in 2012 required considerably less water, thus reducing the overall amount of wastewater.Water consumption has shown a steady decrease over the past four years, a drop of 16% since 2009.

the decrease in water consumption of 2% from 2011 to 2012 was due to the change in production patterns.

tannery energy consumption

2.10

2.20

2.30

2.40

2.50

2.60

2.70

2.80

2012201120102009

2.63

2.34

2.672.69

ene

rgy

(MJ

pe

r sq

ft)

Decline in tannery waste

0

50

100

150

200

250

300

350

2012201120102009

285 285 295

209

Wa

ste

(g

ram

pe

r sq

ft)

recycled waste in tanneries

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

2012201120102009

0.15 0.15

0.14

0.10

re

cyc

led

wa

ste

(kg

pe

r sq

ft)


Decrease in wastewater

0.0000

0.0020

0.0040

0.0060

0.0080

0.0100

0.0120

2012201120102009

0.0097 0.0097

0.00880.0080

Wa

ste

wa

ter (

m3

pe

r sq

ft)

continued decrease in water consumption

0.0080

0.0085

0.0090

0.0095

0.0100

0.0105

0.0110

2012201120102009

0.0108

0.0100

0.00930.0091

Wa

ter (

m3

pe

r sq

ft)

At ECCO’s tannery in Dongen, the Netherlands, new work processes

was introduced to reduce the use of water in cleaning processes.


the Supervisory Board and Managing Board of eCCo Sko a/S have today considered and adopted the annual report for 2012.

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 parent Company’s assets, liabilities and financial position as of 31 December 2012 and of the results of the Group’s and the parent Company’s

operations and the consolidated cash flows for the finan-cial year ended 31 December 2012.

the management review from 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, 28 February 2013

StateMent BY tHe ManaGeMent


SuperVISorY BoarD

ManaGInG BoarD

Kjeld Mortensenemployee representative

Gitte Jochimsenemployee representative

Hanni toosbuy KasprzakChairman

Karsten BorchVice Chairman

panos Mytarosexecutive Vice president, Global production

Michel Krolexecutive Vice president, Global Sales

andreas Wortmannexecutive Vice president, Brand and products

Steen Borgholmexecutive Vice president, Finance and Group CFo

Michael Hauge SørensenChief operating officer

Dieter Kasprzakpresident & Chief executive officer

Mogens Munk-rasmussenMember of eCCo Supervisory Board

Dieter Kasprzak Member of eCCo Supervisory Board

Gerd rahbek-ClemmensenMember of eCCo Supervisory Board

ManaGeMent


InDepenDent auDItorS’ report

to the shareholDers oF ecco sKo a/s

independent auditors’ report on the consolidated financial statements and the parent company financial statements

We have audited the consolidated financial statements and the parent company financial statements of eCCo Sko a/S for the financial year 1 January – 31 December 2012. the consolidated financial statements and the parent company financial statements comprise accounting policies, income statement, balance sheet, statement of changes in equity and notes for the Group as well as for the parent company and consolidated cash flow statement. the consolidated financial statements and the parent company financial statements are prepared in accordance with the Danish Financial Statements act.

Management’s responsibility for the consolidated financial statements and the parent company financial statementsManagement is responsible for the preparation of consolidated financial statements and parent company

financial statements that give a true and fair view in accordance with the Danish Financial Statements act and for such internal control that Management determines is necessary to enable the preparation of consolidated financial statements and parent company financial statements that are free from material misstatement, whether due to fraud or error.

auditors’ responsibility our responsibility is to express an opinion on the consolidated financial statements and the parent company financial statements based on our audit. We conducted our audit in accordance with International Standards on auditing and additional requirements under Danish audit regulation. this requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statements and the parent company financial statements are free from material misstatement.

an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements and the


esbjerg, 28 February 2013

KPMgStatsautoriseret revisionspartnerselskab

John lesboState Authorised

Public Accountant

Søren JensenState Authorised

Public Accountant

parent company financial statements. the procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements and the parent company financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company’s preparation of consolidated financial statements and parent company financial statements that give a true and fair view 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 Management, as well as evaluating the overall presentation of the consolidated financial statements and the parent company financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

our audit has not resulted in any qualification.

opinionIn our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the Group’s and the parent company’s financial position at 31 December 2012 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 2012 in accordance with the Danish Financial Statements act.

statement on the Management’s reviewpursuant to the Danish Financial Statements act, we have read the Management’s review. We have not performed any further procedures in addition to the audit of the consolidated financial statements and the parent company financial statements. on this basis, it is our opinion that the information provided in the Management’s review is consistent with the consolidated financial statements and the parent company financial statements.


aCCountInG polICIeS

Basis of preparationthe financial statements of the parent Company and the Group for 2012 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. 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, when the risk has been passed to the customer. net revenue consists of amounts 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 profit after tax.

Unrealised intercompany profits: unrealised intercompany profits comprise profits unrealised in the Group on trading in products 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.

eCCo Sko a/S and the Danish subsidiaries are encompassed by the Danish regulations regarding mandatory joint taxation. Subsidiaries are 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 al 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 is part of the income statement with the share which can be allocated to profit of the year, and is 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 con-tribution to the administrative company.

Deferred tax is calculated as 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.

Development costs that do not meet the criteria for recognition in the balance sheet are recognised as costs in the income statement when incurred.

recognised development costs are measured at the lower of cost less accumulated amortisation and write-downs and the recoverable amount.

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).

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 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 10 years. When shares are acquired 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 are recognised at cost 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 20-30 years - plant and machinery, vehicles, fixtures and fittings 5-10 years - Computer software 3 years

Depreciation is not charged on land and staff housing. assets with a cost of less than DKK 12 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 re-valued, this applies to all assets within that group of assets.

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.

Dividend receivable in subsidiaries is recognised in the balance sheet when adopted by the shareholders at the annual General Meeting.

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


financial year is stated as a separate line item in the equity note.

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 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.

Receivables: receivables are measured at amortised cost less provisions for anticipated losses determined based on an individual evaluation.

Securities: Securities are measured at the most recently quoted market price.

Financial instruments: Derivative financial instru¬ments are initially recognised in the balance sheet at cost and subsequently re-measured 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.

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 event, the company has a legal or constructive obligation, and it is likely that the obligation will materialise.

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.

In the statements, figures in brackets represent losses or items deducted.

aCCountInG polICIeS


annual aCCountS 2012


InCoMe StateMent 2012

Group parent Company

2012 2011 2012 2011note DKK ’000

1 net revenue 8,061,236 7,088,826 5,085,385 4,404,835 Change in inventories of finished products and work in progress 210,371 138,515 94,618 135,177 Costs of raw materials and consumables (3,541,872) (2,937,517) (4,048,477) (3,550,029) other external costs (1,508,449) (1,446,555) (271,624) (268,261)2 Staff costs (1,708,905) (1,566,663) (352,180) (338,786)5.6 amortisation and depreciation (306,429) (329,871) (70,334) (80,240) Profit before financials 1,205,952 946,735 437,388 302,696 3 Financial income 257,573 158,180 269,256 126,496 Financial expenses (323,656) (201,124) (265,701) (125,542) profit from subsidiaries - - 370,935 323,787 Intercompany profit - - (18,119) 3,876

Profit before tax 1,139,869 903,791 793,759 631,313

4 Income taxes (320,843) (250,601) (110,087) (76,678)

group profit 819,026 653,190 683,672 554,635

11 Minority interests (135,354) (98,555) - -

Profit for the year 683,672 554,635 683,672 554,635

proposed allocation:

revaluation reserve for undistributed profit in subsidiaries 122,967 55,263 retained earnings 274,705 141,372 proposed dividend 286,000 358,000

683,672 554,635


BalanCe SHeet aS oF 31 DeCeMBer 2012


assets 2012 2011 2012 2011note DKK ‘000

FIxeD aSSetS: Intangible rights 30,088 34,763 12,030 12,933

5 total intangible assets 30,088 34,763 12,030 12,933

land and buildings 783,110 644,860 136,500 139,194 plant and machinery 402,697 225,233 3,661 5,466 other fixtures and fittings, tools and equipment 266,438 227,127 73,650 84,818 property, plant and equipment in progress 133,079 201,416 105,268 30,870

6 total property, plant and equipment 1,585,324 1,298,636 319,079 260,348

7.8 Investments in subsidiaries - - 1,533,851 1,428,6468 receivables from subsidiaries - - 1,018,019 899,2899 Deferred tax 172,173 126,910 72,267 51,573

total long-term financial assets 172,173 126,910 2,624,137 2,379,508

total FiXeD assets 1,787,585 1,460,309 2,955,246 2,652,789

Current aSSetS: raw materials and consumables 322,342 334,444 - - Work in progress 41,867 32,204 - - Finished products and commercial products 1,313,186 1,112,478 573,901 479,283

total inventories 1,677,395 1,479,126 573,901 479,283

trade receivables 1,121,800 1,087,214 252,728 226,108 receivables from subsidiaries - - 727,499 603,224 receivables from affiliated companies 121,129 69,026 - - other receivables 334,672 309,555 45,818 86,6114 Income taxes 39,082 - 39,082 29,95813 prepayments 66,420 96,341 31,543 37,465

total receivables 1,683,103 1,562,136 1,096,670 983,366 securities 34,973 34,401 24 43 cash 488,678 610,883 3,209 11,277

total cUrrent assets 3,884,149 3,686,546 1,673,804 1,473,969

total assets 5,671,734 5,146,855 4,629,050 4,126,758


BalanCe SHeet aS oF 31 DeCeMBer 2012

equity and liabilities 2012 2011 2012 2011note DKK ’000

Share capital 4,950 4,950 4,950 4,950 revaluation reserve - - 1,059,685 1,041,685 retained earnings 3,116,935 2,926,339 2,057,250 1,884,654

10 total equity 3,121,885 2,931,289 3,121,885 2,931,289

11 Minority interests 200,427 208,681 - -

Provisions 59,856 45,678 - -

Credit institutions 693,240 514,510 665,629 475,314

12 total long-term debt 693,240 514,510 665,629 475,314

Short-term part of long-term debt 59,861 75,629 59,861 75,629 Credit institutions 258,959 255,136 119,909 92,355 trade payables 523,404 511,338 126,456 126,923 payables to subsidiaries - - 291,786 240,411 payables to affiliated companies 1,628 1,107 - -4 Income taxes 106,967 29,847 - - other payables 468,020 454,301 77,784 65,49813 Deferred income 177,487 119,339 165,740 119,339

total short-term debt 1,596,326 1,446,697 841,536 720,155

total debt 2,289,566 1,961,207 1,507,165 1,195,469

total eQUity anD liaBilities 5,671,734 5,146,855 4,629,050 4,126,758

14 Contingent liabilities and collateral security15 Fees to auditors appointed at the annual General Meeting16 Information about shareholder conditions



2012 2011DKK ‘000

cash flow from operating activitiesprofit before tax 1,139,869 903,791adjustment for non-cash operating items:amortisation and depreciation 306,429 329,871exchange rate adjustments (141,198) 61,517tax adjustments 34,252 (3,599)Working capital adjustments:(Increase)/decrease in inventories (198,269) (222,945)(Increase)/decrease in receivables (81,885) (294,996)Increase/(decrease) in payables 12,587 95,151Increase/(decrease) in other payables 71,866 77,548Increase/(decrease) in provisions 14,178 18,842Income taxes paid (362,320) (295,496) 795,509 669,684

cash flow from investing activitiespayments to invest in fixed assets:Intangible assets (15,710) (22,575)tangible assets (577,929) (316,021) (593,639) (338,596)

cash flow from financing activitiesMinority interests (132,288) (49,116)(repayment of)/proceeds from new long-term debt 178,730 51,367Increase/(decrease) in short-term debt (11,945) (111,207)Dividend paid (358,000) (262,000) (323,503) (370,956)

cash flow from operating, investing and financing activities (121,633) (39,868)Cash and cash equivalents at beginning of year 645,284 685,152Cash and cash equivalents at year-end 523,651 645,284

Breakdown of cash and cash equivalents:Securities 34,973 34,401Cash 488,678 610,883 523,651 645,284

ConSolIDateD CaSH FloW StateMent 2012


noteS


2012 2011 2012 2011DKK ’000

Salaries 1,515,869 1,385,894 331,924 319,568pensions 58,370 59,744 19,613 18,571other social security costs 134,666 121,025 643 647

staff costs 1,708,905 1,566,663 352,180 338,786

average number of employees 19,551 18,763 562 554

number of employees at year-end 19,426 19,759 570 566

Fees to Managing Board and Supervisory Board:Managing Board - - 68,833 70,060Supervisory Board - - 700 700

2. Staff costs and management and staff information

1. Segment information

Group

2012 2011DKK ’000

segment informationShoes & accessories 7,636,111 6,754,712others 425,125 334,114

total net revenue 8,061,236 7,088,826

net revenue shoes & accessorieseCCo europe, Middle east & africa 4,324,499 4,178,048eCCo americas 1,460,136 1,210,084eCCo asia / pacific 1,851,476 1,366,580

total shoes & accessories 7,636,111 6,754,712

reference is made to the eCCo Group structure page 52 regarding the definition of the geographic regions.


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3. Financial income

parent Company

2012 2011DKK ’000In the parent Company, interest income from subsidiaries amounted to 29,579 23,156


4. Income taxes

Cost Debt Cost Debt 2012 2012 2012 2012DKK ’000

Income taxes payable as at 1 January - 29,847 - (29,958)Beginning of year adjustment - 45,523 - -Income taxes payable as at 1 January, adjusted - 75,370 - (29,958)Income taxes paid in 2012 - (120,480) - (2,311)prior-year adjustment 9,566 9,566 1,762 1,762estimated tax for 2012 357,722 357,722 129,019 129,019pre-paid tax - (241,840) - (127,807)Income taxes recorded directly at equity - (12,123) - (9,787)Year’s adjustment of deferred tax (46,445) - (20,694) -exchange rate adjustment - (330) - - 320,843 67,885 110,087 (39,082)

DKK ’000

Cost at 1 January 143.629 50.226Currency translations (990) -additions 22.487 12.964Disposals (52.675) -

cost at 31 December 112.451 63.190accumulated amortisation at 1 January 108.866 37.293Currency translation (1.099) -amortisation 20.494 13.867amortisation on assets sold (45.898) -

accumulated amortisation at 31 December 82.363 51.160carrying amount at 31 December 30.088 12.030amortised over 5-10 years 5-10 years

5. Intangible assets



6. tangible Fixed assets

DKK ’000

groUPCost at 1 January 1,194,927 833,598 1,070,345 201,416Currency translation (1,260) (15,206) (4,486) (3,976)additions 274,825 268,087 187,980 (42,552)Disposals (95,017) (32,760) (103,818) (21,809)

cost at 31 December 1,373,475 1,053,719 1,150,021 133,079

accumulated depreciation at 1 January 550,067 608,365 843,218 -Currency translation 614 (14,874) (5,362) -Depreciation 83,633 85,712 116,590 -Depreciation on disposals (43,949) (28,181) (70,863) -

accumulated depreciation at 31 December 590,365 651,022 883,583 -carrying amount at 31 December 783,110 402,697 266,438 133,079

Parent coMPanyCost at 1 January 306,005 68,329 444,107 30,870additions 10,925 272 31,228 96,037Disposals (218) (280) (12,393) (21,639)

cost at 31 December 316,712 68,321 462,942 105,268

accumulated depreciation at 1 January 166,811 62,863 359,289 -Depreciation 13,613 2,077 40,773 -Depreciation on disposals (212) (280) (10,770) -

accumulated depreciation at 31 December 180,212 64,660 389,292 -carrying amount at 31 December 136,500 3,661 73,650 105,268Depreciated over 20-30 years 5-10 years 3-5 years -

land and

buildings

plantand

machinery

Fixtures andfittings, tools

and equipment

property, plantand equipment

in progress

noteS


7. Investments in subsidiaries

ownership interest Share capital

shoe ProDUctioneCCo (thailand) Co., ltd. 95% 200,000 t. tHBeCCo Slovakia, a.s. 100% 7,634 t. eurecco’let (portugal) Fábrica de Sapatos, lda. 100% 2,770 t. eurp.t. eCCo Indonesia 100% 43,976,000 t. IDreCCo China Holding (Singapore) pte. ltd. 80% 16,000 t. uSDeCCo (xiamen) Co. ltd. (China) 80% 15,600 t. uSDeCCo (Dongguan) Business Consultancy Co. ltd. (China) 80% 500 t. uSD

leatherDanna leather (xiamen) Co. ltd. (China) 100% 2,175 t. uSDeCCo tannery Holding (Singapore) pte. ltd. 100% 13,300 t. eureCCo tannery (xiamen) Co. ltd. (China) 100% 17,000 t. uSDeCCo tannery (thailand) Co. ltd. 100% 185,000 t. tHBeCCo tannery (Holland) B.V. (the netherlands) 100% 1,000 t. eureCCo leather B.V (the netherlands) 100% 400 t. eurpt. eCCo tannery Indonesia 100% 37,403,550 t. IDr

saleseCCo asia pacific limited (Hong Kong) 100% 21,500 t. HKDeCCo Baltic SIa (latvia) 50% 2 t. lVleCCo China Wholesale Holding (Singapore) pte. ltd. 50% 200 t. uSDeCCo Distributors ltd. (Ireland) 50% 1 t. eureCCo eMea Sales Se (the netherlands) 100% 121 t. eureCCo eMea B.V. (the netherlands) 100% 23 t. eureCCo exportadora ltda (Brazil) (under liquidation) 99% 48 t. BrleCCo India trading private limited 100% 66,830 t. InreCCo Internet, Inc. (uSa) 100% 100 t. uSDeCCo Japan Co. ltd. 98% 100,000 t. JpYeCCo Korea limited 51% 200 t. KrWeCCo Macao limited 100% 25 t. MopeCCo Middle east a/S (Denmark) 100% 2,250 t. DKKeCCo retail llC (uSa) 100% 2,300 t. uSDeCCo Schuhe GmbH (Germany) 100% 1,790 t. eureCCo Schuhe Schweiz GmbH (Switzerland) (under liquidation) 100% 170 t. CHFeCCo (Shanghai) Co. ltd. (China) 50% 2,100 t. uSDeCCo Shoes (nZ) limited (new Zealand) 100% 100 t. nZDeCCo Shoes Canada, Inc. 100% 6,502 t. CaDeCCo Shoes Hellas S.a. (Greece) (dormant) 51% 60 t. eureCCo Shoes Hong Kong ltd. 100% 3,000 t. HKDeCCo Shoes International ltd (Switzerland) 100% 2,250 t. CHFeCCo Shoes romania S.r.l. 100% 0,25 t. roneCCo Shoes pacific pty. ltd. (australia) 100% 3,250 t. auDeCCo Singapore pte. ltd. 100% 2,510 t. SGDeCCo uSa, Inc. 100% 7,500 t. uSDeccolet portugal apS (Denmark) 100% 200 t. DKK

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8. Financial fixed assets, subsidiaries

Investmentsin subsidiaries

receivablesfrom subsidiaries

2012 2011 2012 2011DKK ‘000

Cost at 1 January 671,819 670,736 899,289 480,284additions 122,798 1,083 545,763 722,748Disposals (17,474) - (427,033) (303,743)cost at 31 December 777,143 671,819 1,018,019 899,289accumulated revaluation at 1 January 1,041,685 923,924 - -

Currency adjustment of foreign subsidiaries (12,958) 9,122 - -adjustment of currency hedging of future sales in subsidiaries (92,009) 53,376 - -profit after tax of subsidiaries 370,935 323,787 - -Dividend (247,968) (268,524) - -

net revaluation 18,000 117,761 - -accumulated revaluation at 31 December 1,059,685 1,041,685 - -intercompany gains (302,977) (284,858) - -carrying amount at 31 December 1,533,851 1,428,646 1,018,019 899,289

9. Deferred tax

2012 2011 2012 2011DKK ‘000

Deferred tax comprises:Inventories, unrealised intercompany gains 62,254 70,731 70,745 70,731other assets and tax deficit 109,919 56,179 1,522 (19,158)

recognised at 31 December 172,173 126,910 72,267 51,573recognised at 1 January (126,910) (129,395) (51,573) (55,787)total adjustment 45,263 (2,485) 20,694 (4,214)

Currency translation 1,182 - - -of which adjusted in equity (4,788) 3,599 (4,788) 3,599


noteS


10. equity

2012 2011 2012 2011DKK ‘000

the share capital consists of:112 shares (in amounts from DKK 500 to DKK 1,658,200) share capital at 1 January 4,950 5,500 4,950 5,500Decrease in share capital (cancellation of own shares) - (550) - (550)total share capital at 31 December 4,950 4,950 4,950 4,950

reserve for net revaluation according to the equity methodreserve for net revaluation at 1 January - - 1,041,685 923,924net revaluation - - 18,000 117,761reserve for net revaluation at 31 December - - 1,059,685 1,041,685

Brought forward from prior years 2,926,339 2,581,461 1,884,654 1,657,537retained share capital - 550 - 550proposed dividend in respect of the financial year 286,000 358,000 286,000 358,000Dividend paid (358,000) (262,000) (358,000) (262,000)exchange rate adjustment to year-end exchange rates (12,958) 9,122 - -Gain/(loss) on financial swaps (15,182) (13,589) (15,182) (13,589)retained from profit for the year 397,672 196,635 274,705 141,372adjustment of currency hedges of future sales (106,936) 56,160 (14,927) 2,784

total retained earnings 3,116,935 2,926,339 2,057,250 1,884,654total equity 3,121,885 2,931,289 3,121,885 2,931,289


noteS

Group

2012 2011DKK ‘000

Minority interests at 1 January 208,681 147,035additions 11,492 (6,858)Disposals (143,780) (42,258)Share of profit for the year 135,354 98,555exchange rate adjustments (11,320) 12,207

Minority interests at 31 December 200,427 208,681

11. Minority interests


12. long-term debt

13. prepayments


2012 2011 2012 2011DKK ’000

long-term debt due more than five yearsafter the end of the financial year 140,051 144,647 140,051 144,647

prepayments consist of forward contracts etc.

14. Contingent liabilities and collateral security


2012 2011 2012 2011DKK ‘000

contingent liaBilitiesrent and lease liabilities 803,879 1,038,545 13,318 22,815Guarantees and letters to suppliers and subsidiaries 81,043 68,655 41,512 40,383

collateral secUritythe following assets have been lodged in security of the Group’s loans from credit institutions and other long-term debt:Bearer mortgages on property, plant and equipment 186,418 223,455 168,666 162,367Guarantee for import duty 42,577 37,407 14,900 14,900

the company is taxed jointly with other Danish companies in the eCCo Group. as a wholly owned subsidiary the company is jointly and unlimited liable together

with the other companies as regards joint taxation of Danish taxation at source on dividends, interests and royalties within the joint taxation group.

parent Company and Group are involved in litigation disputes which are not expected to have any material impact.

noteS


15. Fees to auditors appointed at the annual General Meeting


2012 2011 2012 2011DKK ‘000

total fees to auditors appointed at the annual General meeting:KpMG 12,449 9,801 2,503 1,983others 2,879 1,710 1,431 - 15,328 11,511 3,934 1,983

KPMgauditor’s fee 7,701 6,194 1,147 1,023other assurance services and statements 249 533 - -tax consulting 4,125 2,603 1,166 548others 373 471 189 412KPMg in total 12,448 9,801 2,502 1,983

othersauditor’s fee 605 857 - -tax consulting 875 845 48 -others 1,400 8 1,384 -others in total 2,880 1,710 1,432 -

16. Information about shareholder conditions

the company’s list pursuant to Section 55 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 is the parent company of eCCo Sko a/S eCCo Sko a/S’ related parties with controlling influence comprise the company’s shareholders, the Supervisory Board, the Managing Board as well as relatives of these persons. related parties also comprise companies in which the individualsmentioned above have material interest.

noteS


SubSidiarieS, SaleS

eCCO SkO a/S

GrOup StruCture aS Of 31 deCember 2012

REGIONeurOpe, middle eaSt & afriCa

AUSTRIA (branch)eCCO austria, Zweigniederlassung eCCO emea Sales Se

BELGIUM (branch)eCCO belgum, branch van eCCO emea Sales Se

CYPRUS (branch)eCCO Cyprus, eCCO emea Sales Se

CZECH REPUBLIC (branch)eCCO emea Sales Se - organizační složka

DENMARK (branch)eCCO emea Sales danmark, filial af eCCO emea Sales Se, Holland

FINLAND (branch)eCCO finland, filial till eCCO emea Sales Se

FRANCE (branch)eCCO emea Sales Se

HUNGARY (branch)eCCO emea Sales Se Hungarian branch Office

ITALY (branch)eCCO emea Sales Se - italian branch

THE NETHERLANDSeCCO emea b.V.

THE NETHERLANDS eCCO emea Sales Se

NORWAY (branch)eCCO Norway

POLAND (branch)eCCO emea Sales Se Spółka europejska oddział w polsce

PORTUGAL (branch)eCCO emea Sales Se Sucursal em portugal

SLOVAKIA (branch)eCCO emea Sales Se, organizačná zložka SPAIN (branch)eCCO emea SaleS Se, SuCurSal eN eSpaÑa

SWEDEN (branch)eCCO Sweden, filial till eCCO emea Sales Se (Nederländerna)

SWITZERLAND (branch)eCCO emea Sales Se, amsterdam, Zweigniederlassung Schweiz, Hünenberg

UK (branch)eCCO emea SaleS Se

DENMARK eCCO middle east a/S

UNITED ARAB EMIRATES ECCO Middle East A/S (Branch)

IRELAND (JV)eCCO distributors ltd.

LATVIA (JV)eCCO baltic Sia

GERMANYeCCO Schuhe GmbH

DENMARKeCCO retail a/S

Accessories:

SWITZERLANDeCCO Shoes international aG

REGION ameriCaS

USAeCCO uSa, inc.

USA eCCO retail llC

USA eCCO internet, inc.

CANADAeCCO Shoes Canada, inc.


SubSidiarieS, prOduCtiONSubSidiarieS, SaleS

REGION aSia/paCifiC

HONG KONGeCCO asia pacific limited

HONG KONG eCCO Shoes Hong kong limited

MACAO eCCO macao limited

TAIWAN ESHK Ltd. Taiwan Branch

SINGAPORE eCCO Singapore pte. ltd.

AUSTRALIA eCCO Shoes pacific pty. ltd.

NEW ZEALAND eCCO Shoes (NZ) limited

INDIA eCCO india trading private limited

SINGAPORE (JV)

eCCO China Wholesale Holding (Singapore) pte. ltd.

CHINA eCCO (Shanghai) Co., ltd.

JAPAN (JV)

eCCO Japan Co., ltd.

eCCO SHOE FACTORIES

SLOVAKIAeCCO Slovakia, a.s.

INDONESIApt. eCCO indonesia

THAILANDeCCO (thailand) Co., ltd.

SINGAPORE (JV)eCCO China Holding (Singapore) pte. ltd.

CHINA eCCO (Xiamen) Co. ltd.

PORTUGAL (product development) ecco’let (portugal) – fábrica de Sapatos, lda.

eCCO LEATHER

THE NETHERLANDSeCCO leather b.V.

THE NETHERLANDS eCCO tannery (Holland) b.V.

INDONESIA pt. eCCO tannery indonesia

THAILAND eCCO tannery (thailand) Co., ltd.

SINGAPORE eCCO tannery Holding (Singapore) pte. ltd.

CHINA

eCCO tannery (Xiamen) Co. ltd.

CHINA danna leather (Xiamen) Co., ltd.

dOrmaNt COmpaNieS HaVe beeN left Out


eCCo was founded in 1963 by Birte and Karl toosbuy. today Hanni toosbuy Kasprzak, their daughter, is the owner of the eCCo Group. eCCo has come a long way over the past 50 years - from a small shoe factory in Bredebro with just a few employees and a small production of women’s shoes, to a modern, global shoe enterprise with 19,500 employees and sales of over 20 million pairs per year.

1960s – the beginning in BredebroKarl toosbuy was trained as a shoemaker at Hertz shoe factory in Copenhagen where he mastered the craftsmanship of shoemaking. His was only 33 years

old when he became head of production at nordsko shoe factory in Copenhagen. But, almost from the beginning of his career, Karl toosbuy wanted to have his own factory. this was not just his dream – it was his unwavering goal. and so he and his wife, Birte, bought the factory in Bredebro in 1963, and began to build their business.

there was a considerable element of personal risk: money was generated by selling the family home in Copenhagen, and by raising loans. Both Birte and Karl toosbuy’s fathers lent the young couple money for the new enterprise.

1970s – the quest for the uncompromising shoeDuring the 1970s, the Scandinavian footwear industry was in financial crisis and many manufacturers were forced to close. Karl toosbuy realised the importance of taking a number of strategic decisions to safeguard the company’s financial prospects and secure its position in future markets.

So eCCo set about establishing upper production abroad. In 1974, in Brazil, followed by India and

YearS


Yugoslavia in 1978 and, later by thailand. In parallel eCCo worked on the development of a new type of shoes to fit the foot. In 1978 ECCO launched the first design classic: Joke.

1980s – technological innovationFor eCCo, the 1980s was a decade of technological innovation. Perhaps the most significant turning point was the acquisition of the first Desma machine in 1981. Direct injection technology had been developed originally for the mass production of low-cost shoes. But Karl toosbuy took this a stage further: he realised that it would be possible to create a production system that used direct injection technology to produce high quality shoes quickly and efficiently. And this gave ECCO a significant competitive advantage in the 1980s. In 1984 it was necessary to establish a production subsidiary and the first factory outside Denmark was inaugurated in portugal.

1990s – international growththe decade was characterised by massive growth on all fronts. eCCo built a new factory in Indonesia and set up others in thailand and Slovakia. thailand

and Indonesia also saw the building of new tanneries. Sales subsidiaries were added in Hong Kong, australia and new Zealand, Finland, Sweden, Belgium and poland. these were heavy investments for a company of eCCo’s size, but put the company among the world’s leading shoe manufacturers.

2000s – change of the guardIn 2003, Karl toosbuy decided to set up production in China. He met some resistance from his Board but pointed out that the idea was not to make cheap shoes there. He wanted to make shoes of the highest quality and believed the new factory would enable eCCo to embed the brand in the consciousness of the vast Chinese market over a 10 to 20 year period. Karl toosbuy was a visionary to the last.

He died in 2004, proud and satisfied with his life’s work; and glad that his daughter had agreed to continue the company as a family owned business. Hanni toosbuy Kasprzak and her husband, Dieter Kasprzak, took over the management and now run eCCo in partnership, as Chairman and Ceo.



Inspired by the old ECCO classics JOKE, FREE and TIME, ECCO has developed a 50th Anniversary shoe: the ECCO MIND. This shoe embodies both where ECCO has been and where ECCO is going. The ECCO MIND will be launched this spring.

Documents

Ecco Annual Report 2012 En