Annual Report 2010
ouR Vision
– We WAnt
to Be
the Best
shoe
CompAny
in the
WoRld
ECCO Sko A/S
Industrivej 5
DK-6261 Bredebro
Comp. Reg. No. 43.088
VAT No. 45 34 99 18
Supervisory Board
Hanni Toosbuy Kasprzak
Chairman
Karsten Borch
Vice Chairman
Torsten E. Rasmussen
Mogens Munk-Rasmussen
Gitte Jochimsen
Employee representative
Jakob Møller Hansen
Employee representative
Managing Board
Dieter Kasprzak
President / Chief Executive Officer
Michael Hauge Sørensen
Chief Operating Officer
Annemette Nøhr
Executive Vice President / Chief Financial Officer
Jens Christian Meier
Executive Vice President / Group Production & Logistics
Andreas Wortmann
Executive Vice President / Brand & Products
Michel Krol
Executive Vice President / Managing Director, ECCO EMEA B.V.
Panos Mytaros
Executive Vice President / Managing Director, ECCO Leather Group
Auditors
KPMG
Banks
Danske Bank
Sydbank
Nordea
Contents
ECCO - ANNuAL REPORT 2010
The beginning
-
1
Milestones
-
3
Our brand
-
7
A tremendous effort by dedicated ECCO staff
-
9
Consolidated financial highlights and key ratio
-
12
Annual result 2010
-
13
Financial matters
-
14
A result created by people with passion
-
15
Working at ECCO
-
17
Corporate responsibility
-
19
The ECCO Code of Conduct
-
20
How we make shoes
-
21
Design
-
23
Product development
-
25
Making leather
-
27
Production
-
29
Our shoes
-
31
ECCO, the world’s fourth largest golf shoe brand
-
33
Fred Couples on GOLF STREET
-
34
The GOLF STREET phenomenon
-
34
Statement by the management on the Annual Report
-
35
Independent auditors’ report
-
37
Accounting policies
-
38
ECCO - ANNuAL ACCOuNTS 2010
Income statement for the year ended
31 December 2010
-
41
Balance sheet as of December 2010
-
42
-
44
financial statements
-
45
ECCO Group structure as of 31 December 2010
-
53
Consolidated cash flow statement for the year ended
31 December 2010
Notes to the Group and Parent Company
ECCO - Annual Report 2010
The beginning…
1
2
ECCO - Annual Report 2010
it WAs
A tRue
gReenfield
stARt
extremely long hours, tackled
The first real breakthrough came
endless problems and sometimes
in the late 1970s when ECCO’s
doubted whether they would
Chief Designer Ejnar Truelsen
succeed. On one occasion, poor
created the “JOKE”.
quality supplies from India almost
brought down the business.
This was followed by a series of
other revolutionary shoes, some
Money was tight and recycling
of which are still in production
was commonplace. Every piece
today. At the same time, Karl
of string was rolled up and saved
Toosbuy bought his first direct
and boxes from a nearby
injection machine to apply
TV shop were used to pack and
high-tech production technology
Farmland stretched for miles
dispatch the finished shoes.
to the business. So confident
around the small factory building
The staff’s dedication was total.
was he in the machine that he
on the outskirts of Bredebro,
Karl Toosbuy loved to recount
bought a second one before
where Birte and Karl Toosbuy
the incident when a member of
the results from the first had
had assembled a small team to
staff borrowed her father’s
materialised.
get production up and running.
tractor to get through the
Initially limited to ladies’ shoes
snow to get to work. He had
under the Venus brand, it was a
never experienced that in
tough start. The Toosbuys worked
Copenhagen.
3
ECCO - Annual Report 2010
4
ECCO - Annual Report 2010
milestones
1978 - ECCO JOKE
1990 - ECCO AMERICAS
1994 - TØNDER & FuTuRA
Karl Toosbuy wanted to make
ECCO was initially represented
In 1994, ECCO bought a former
shoes that broke with all
by a distributor in the uS. In 1990,
agricultural college in Tønder,
tradition - shoes that fitted the
however, ECCO established its
Denmark, and transformed
foot and were flexible, light and
own organisation, which built the
it into the ECCO Centre, the
comfortable. The first was ECCO
uS into the single largest market
company’s conference and
JOKE followed by ECCO FREE
for ECCO shoes. ECCO Canada
training centre. Karl Toosbuy and
and ECCO TIME.
set up operations in 1996.
his son-in-law, Dieter Kasprzak,
1980 - DESMA NO. 1
1991 - PRODuCTION IN
– the ECCO Group’s design and
The German produced DESMA
INDONESIA
development centre.
machine was the first high-tech
Needing a stable supply of
production equipment to be
uppers for its factories in Denmark
installed in Denmark. It enabled
and Portugal, ECCO built a
mass production of a consistently
factory in Indonesia in 1991. The
high quality.
plant included a beam house
went on to develop FuTuRA here
and a tannery because of the
1981 - LAuNCH OF SOFT
plentiful supply of local hides.
The next generation of ECCO
Shoe production followed later.
shoes, the SOFT, became the
Today, ECCO Indonesia is ECCO’s
best-selling ECCO shoe ever. The
largest production unit with over
SOFT and its later versions are still
5,500 employees.
greatly in demand 30 years on.
1993 - PRODuCTION IN THAILAND
1984 - PRODuCTION IN PORTuGAL
Three years after the opening of
In 1984, ECCO, which had until
the Indonesian factory, demand
then procured its raw materials
had risen to such an extent that
in Brazil, Yugoslavia and India,
a further production unit was
began production at its first
required. The decision was made,
fully owned factory abroad
therefore, to build a shoe factory
– in Portugal. The employees
and a tannery in Thailand.
produced 19,600 pairs a day at
peak production.
milestones
1996 - FIRST FLAGSHIP SHOP,
2003 - LAuNCH OF SHARK
2009 - LAuNCH OF BIOM
LONDON
Another milestone was reached
Several years of close
Historically, ECCO was a
with the launch of the SHARK
collaboration with the German
wholesaler. The opening of
shoe. Once again, ECCO’s
Sports Institute of Cologne
the first flagship retail shop in
designers broke with tradition
resulted in revolutionary running
London’s famous Oxford Street,
and pushed ECCO’s production
shoes using natural motion. BIOM,
therefore, heralded a significant
capabilities to the limit.
as the shoes are called, became
change. Since then, ECCO has
an instant success.
steadily increased the number
2005 - PRODuCTION IN XIAMEN
of fully owned shops across the
At the inauguration of the ECCO
2010 - ECCO EMEA
world.
factory in Xiamen, China, Karl
In 2010, to improve service to
Toosbuy declared that ECCO
customers in core markets, ECCO
1999 - PRODuCTION IN SLOVAKIA
had not come to Xiamen to
combined its sales offices in the
With more than two-thirds of all
produce low-cost shoes. He knew
Netherlands, the uK, Germany
products sold in Europe, ECCO
that the Chinese employees
and Poland into one regional
opened yet another factory, this
would make high quality
service centre in Amsterdam.
time in Slovakia. This enabled
products and he expected China
From here, a multilingual team
ECCO to reduce time to market
to become the world’s largest
supports the ECCO organisations
and improve its supply chain to
market for shoes.
in Europe, the Middle East and
European markets.
Africa.
ECCO - Annual Report 2010
2008 - TANNERY XIAMEN
5
2002 - ECCO ASIA PACIFIC
ECCO’s Leather Group decided
Focus turned to Asia. From a
to build a tannery alongside the
newly established headquarters
shoe factory in Xiamen. From the
in Hong Kong, a team set out to
outset, the aim was to break with
turn ECCO into Asia’s best known
traditional layout and operational
comfort shoe brand. Today,
methods. At its opening in 2008,
ECCO shoes are sold in more
the tannery was the world’s most
than 600 shops in 15 countries
advanced – both operationally
throughout the region and
and environmentally.
through a successful joint venture
in China.
6
ECCO - Annual Report 2010
ouR BRAnd
There is a basic truth that guides
simple - and always of high
We have passion for what we do
our values and practices: our
quality. ECCO shoes are no
– and passion creates quality.
Danish roots. What differentiates
exception. Our follow-the-foot
ECCO as a brand and as a
design philosophy, with its simple,
INNOVATIVE NEW CONCEPTS
company is not just our shoes
elegant aesthetics, is rooted in
Karl Toosbuy wanted to make
but also our entire approach to
Scandinavian design.
shoes that did not need to
ECCO - Annual Report 2010
shoemaking.
7
be broken in. They should fit
PASSION FOR SHOEMAKING
like a glove. That became
As a brand, ECCO rests on three
We are passionate about making
the beginning of ECCO’s
guiding principles that make us
shoes and everything that goes
revolutionary concept: to
unique.
with it - from tanning leather to
create shoes that were more
stitching. We relentlessly pursue
comfortable, lasted longer
SCANDINAVIAN DESIGN
new ideas, new technologies,
and enabled people to move
Across the world, Scandinavian
higher standards and better ways
naturally.
design is regarded as exclusive
of doing things. We are proud of
and stylish, yet functional and
our products and our company.
8
ECCO - Annual Report 2010
A tRemendous
effoRt By dediCAted
eCCo stAff
With a turnover increase of more
heights in 2010 in a number of
in ECCO Retail Japan Co., Ltd.
than 21% compared to 2009,
strategic markets breaking new
as part of the company’s over-
ECCO experienced a strong
grounds in terms of distribution
all expansion plan for the Asia
recovery after a challenging
channels and conceptual
Pacific region.
2009.
execution.
The investment in ECCO owned
The profit before tax reached
ECCO’s Golf collection was very
and operated shops and partner
DKK 631 million, an increase of
well received globally. A clear
shops continued as in previous
37%, or 10.3% of net turnover.
highlight of the collection was
years.
The management considers
the GOLF STREET spikeless shoe
this result satisfactory given
which was one of the most
Investments were also made to
the continued high investment
talked about products in the
further boost production cap-
level, in particular, increased
golf industry.
acity to meet growing demand.
Consumer demand was par-
ECCO’s strategy of controlling
ticularly strong in a number of
the entire value chain includes
The solidity of the Group was
emerging markets, including
investments in tanneries and
maintained at a healthy level of
China and Poland. Russia, one
leather production. This segment
55.6%. Equity increased by DKK
of ECCO’s most important mar-
of ECCO’s business reached
155 million to DKK 2,587 million.
kets, experienced a record year.
a milestone in 2010 as the
Across the world, ECCO prod-
ECCO’s core Scandinavian and
increase in internal as well
ucts were in high demand. The
German markets showed excel-
as external demand. This
response from consumers was
lent growth, while markets such
strengthened ECCO’s position
especially strong in the latter
as the Netherlands and the
as a world leader in quality
part of 2010, with very positive
united Kingdom recovered at
leather production.
response to the Autumn/Winter
a slower pace. The important uS
2010 Collection and the newly
market also showed a positive
In 2010, ECCO continued its
launched brand campaign,
development.
focus on organisational develop-
capacity to meet growing
consumer demand.
ECCO - Annual Report 2010
company experienced a sharp
9
which focused on ECCO’s
Scandinavian heritage.
ment. A number of strategic
In 2010, ECCO made a number
learning programmes for ECCO’s
of strategic investments across
global leadership team were
The BIOM collection, which was
the value chain. ECCO took
initiated, and ECCO increased
launched in 2009, reached new
over the majority shareholding
the intake of candidates for
10
ECCO - Annual Report 2010
ECCO´s Managing Board, from left: Executive Vice President / Brand & Products Andreas Wortmann, Executive Vice President / Managing Director,
ECCO Leather Group Panos Mytaros, President / Chief Executive Officer Dieter Kasprzak, Chief Operating Officer Michael Hauge Sørensen,
Executive Vice President / Group Production & Logistics Jens Christian Meier, Executive Vice President / Managing Director, ECCO EMEA B.V.
Michel Krol, Executive Vice President / Chief Financial Officer Annemette Nøhr
the ECCO International Trainee
who is Managing Director ECCO
a step further so that ECCO can
Education (EITE).
Leather Group and Michel Krol,
continue its quest to become
who is Managing Director ECCO
the best shoe company in the
ECCO’s Executive Vice President
EMEA (Europe, Middle East and
world.
Michael Hauge Sørensen was
Africa) from 1 January 2011.
appointed new Chief Operating
Officer and take over the daily
With an order book above
management of ECCO with
previous years for the spring
effect from 1 January 2011.
summer season, the company
Dieter Kasprzak will continue as
has a positive outlook for 2011
Chief Executive Officer for ECCO
and will continue to invest at a
and will focus on ECCO’s activ-
level higher than in 2010.
ities within the areas of design
and production.
ECCO’s success in 2010 is the
result of the tremendous effort
In addition to the appointment
by our more than 17,500 em-
of a COO, ECCO has appoin-
ployees and their dedication to
ted two further members of the
ECCO. Their passionate efforts
Managing Board: Panos Mytaros,
enable us to take our ambitions
11
ECCO - Annual Report 2010
12
ECCO - Annual Report 2010
ConsolidAted finAnCiAl highlights
And key RAtios
FINANCIAL HIGHLIGHTS
DKK ’000
2010
2009
2008
2007
2006
6,111,148
994,720
(341,973)
652,747
(21,711)
631,036
(155,423)
475,613
(65,635)
5,041,200
768,307
(272,383)
495,924
(36,261)
459,663
(114,306)
345,357
(46,120)
5,374,142
1,033,467
(206,396)
827,071
(81,220)
745,851
(171,982)
573,869
(46,470)
5,219,525
1,041,971
(208,943)
833,028
(77,304)
755,724
(194,314)
561,410
(23,832)
4,470,403
937,822
(178,360)
759,462
(49,979)
709,483
(209,423)
500,060
(10,588)
409,978
299,237
527,399
537,578
489,472
Fixed assets
Current assets
Assets
1,441,547
3,208,473
4,650,020
1,441,468
2,740,680
4,182,148
1,502,268
2,894,782
4,397,050
1,217,827
2,997,382
4,215,209
1,121,303
2,529,377
3,650,680
Equity
Other liabilities
Debt
Equiity and liabilities
2,586,961
173,871
1,889,188
4,650,020
2,431,839
152,820
1,597,489
4,182,148
2,473,419
102,747
1,820,884
4,397,050
2,073,447
73,193
2,068,569
4,215,209
1,729,513
57,079
1,864,088
3,650,680
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
700,151
(236,732)
(453,316)
984,524
(222,925)
(576,525)
788,592
(482,718)
(322,762)
263,610
(305,055)
(114,347)
427,374
(234,809)
(188,958)
Number of employees (as of 31 December)
17,537
14,781
16,328
14,957
12,670
KEY RATIOS
Operating margin
ROAIC
Return on assets
Investment ratio
Return on equity
Solvency ratio
Liquidity ratio
10.7%
14.8%
14.3%
0.7
16.3%
55.6%
2.2
9.8%
11.6%
10.7%
0.8
12.2%
58.1%
2.3
15.4%
19.2%
17.3%
2.3
23.2%
56.3%
1.9
16.0%
21.2%
19.2%
1.5
28.3%
49.2%
2.2
17.0%
21.9%
20.5%
1.3
32.5%
47.4%
3.0
Net revenue
Profit before amortisation and depreciation
Amortisation and depreciation
Profit before financials
Net financials
Profit before tax
Income taxes
Group profit
Minority interests
Profit for the year
DEFINITIONS OF KEY RATIOS
Operating margin: Profit before financials x 100
Investment ratio: Investments for the year
Net revenue
ROAIC:
Profit before financials x 100
Amortisation and depreciation
Return on equity:
Average assets
Return on assets:
Profit before tax x 100
Average assets
Profit for the year x 100
Average equity
Solvency ratio:
Equity x 100
Assets
Liquidity ratio: Current assets
Short-term debt
AnnuAl Result 2010
The ECCO Group’s profit before
million in 2009. Exchange rate
Net cash flow from investments
tax amounted to DKK 631 million
adjustments on debt in foreign
and financing amounted to
compared to DKK 460 million
currencies had a positive
in 2009, an increase of DKK 171
impact in 2010 of DKK 27.7 mil-
million or 37%.
lion against a positive impact in
2009 of DKK 26.3 million. Group
Consolidated net cash flow was
interest expenses totalled DKK
DKK 10.1 million against DKK
The ECCO Group’s net turnover
49.4 million compared to DKK
185.1 million in 2009.
increased by more than 21%
62.6 million in 2009.
6,111 million in 2010.
Income taxes amounted to DKK
155 million with an effective
All business areas of shoes,
tax rate of 24.6% compared to
accessories and leather experi-
24.9% in 2009.
enced growth, with shoes still
being the main driver with 92%
Profit for the year after tax and
of the Group’s total net turn-
minority interests totalled DKK
over.
410.0 million compared to DKK
299.2 million in 2009.
The net turnover for shoes increased by 19%, which was due
EquITY AND CASH FLOW
to a combination of growth in
Consolidated total assets in-
the number of pairs sold and a
creased by DKK 468 million and
positive development in aver-
amounted to DKK 4,650 million
age prices. The net turnover
against DKK 4,182 million in
for accessories increased by
2009.
42%, accounting for 2.5% of the
Group’s total net turnover. The
Return on average invested
leather business experienced a
capital (ROAIC) was 14.8%
very strong year when focus on
against 11.6% in 2009.
external sales of leather started
to pay off. The Group’s sale of
Equity as of 31 December 2010
leather increased by 103%.
was DKK 2,587 million, an
increase of DKK 155 million.
The Group’s profit before financials and tax was DKK 653
The solvency ratio was 55.6% at
million compared to DKK 496
the end of 2010 compared to
million in 2009. This result was
58.1% in 2009.
mainly achieved through the
ECCO - Annual Report 2010
-799 million in 2009.
TuRNOVER
from DKK 5,041 million to DKK
13
DKK -690 million against DKK
significant increase in net turn-
Return on equity was 16.3% in
over.
2010 against 12.2% in 2009.
Operating margin was 10.7% in
Cash flow from operating
2010 compared to 9.8% in 2009.
activities amounted to DKK
700.2 million against DKK 984.5
Net financials totalled DKK -21.7
million compared to DKK -36.3
million in 2009.
14
ECCO - Annual Report 2010
finAnCiAl mAtteRs
FINANCIAL RISKS
to the net currency position in
Material eveNts after 31
Due to the international scope
other currencies than the local
DeceMber 2010
of ECCO’s business activities,
currency. Such positions are
The management is of the
a number of financial issues
hedged locally to the extent
opinion that no material events
affects the result of the Group’s
permitted by local foreign
have occurred after the end of
operations and its equity.
exchange regulations.
the accounting year that could
significantly impact the Group’s
The approach to handling
INTEREST RATE RISKS
financial risks is determined by
The Group’s interest rate risks
the Supervisory Board and the
relate to fluctuations in interest
Managing Board.
rates on the Group’s net interest
bearing debt and financing of
FOREIGN EXCHANGE RISKS
repayments. Interest rate risk
ECCO is exposed to more than
is reduced by taking up fixed-
20 different currencies and the
interest loans or by entering into
majority of these exposures are
interest rate swaps. At year-
so substantial that they require
end 2010 the Group had DKK
hedging. Accordingly, our over-
348 million of fixed rate debt
all policy defines that all signifi-
(including floating rate debt
cant net currency positions are
swapped into fixed rate debt),
hedged when the currency
representing 75% of the Group’s
exposure arises and aims for
long-term debt and 38% of the
a hedging horizon of 12 to 27
Group’s total interest bearing
months, corresponding to the
debt.
Group’s business model.
CREDIT RISKS
With few exceptions, the
The Group has no material
currency used in transactions
credit risks other than what has
between ECCO Sko A/S (Parent
been recognised in the finan-
Company) and a sales subsid-
cial statements.
iary is the local currency of the
sales subsidiary, thereby allo-
Letters of credit, bank guaran-
cating the foreign exchange risk
tees or debtor insurance are
to the Parent Company, which
used for selected markets/
sets up a corresponding hedge.
customers.
The exceptions are handled
individually in relation to the
LIquIDITY RISK
local market. The currency used
It is the responsibility of the
in transactions with external
Group’s treasury function to
distributors is either DKK, EuR
ensure that the Group has ad-
or uSD.
equate access to funding at all
times. The Group’s aggregate
ECCO’s own production units
credit facilities have increased
are settled in EuR and exter-
from approx. DKK 1,860 million
nal suppliers are primarily paid
at the end of 2009 to approx.
in EuR or uSD. The production
DKK 1,965 million at the end of
units thus bear the risk relating
2010.
financial status.
A Result CReAted
By people With pAssion
Employees are ECCO’s greatest
ness, a mix of nationalities,
ECCO offers its employees
resource and it is their commit-
cultures, languages and
advanced professional
ment and drive that makes
backgrounds. ECCO’s Danish
courses and, wherever possible,
ECCO what it is today. ECCO
headquarters alone is home
prefers to promote from within
people have a passion for what
to people from more than
the company. By doing so, we
they do and a drive to achieve
20 nations. Welcoming and
enhance the sense of family
the very best.
encouraging diversity provides
and ensure that our people and
a deeper understanding of the
products remain at the heart of
With almost 17,500 employees
countries and cultures in which
our business.
from over 50 countries, ECCO
we operate.
is a genuine multinational busi-
JING ZHAO,
the chance to utilise the
Project Leader,
capabilities on a larger scale,
Strategy
throughout the supply chain.
It has been a great learning
“I started out the year in our
experience for me. I get ideas
Lean department developing
and inspiration from those
and following the progress of
around me and I’m happy
our Lead Factory project in
to be a part of ECCO’s
Xiamen, which aims to optimise
development.”
stability and flexibility in production. Then I moved into the
Strategy department and had
NIKOLAI RABæK CHRISTENSEN
running and fitness shoes. The
Global Division Manager -
new business unit enables us
Performance Branding
to exploit this huge potential.
ECCO - Annual Report 2010
It has been fantastic to be a
15
“It has been a very exciting
part of the team building up
year. For me, the highlight of
ECCO Sports, and I am now
this year has been the creation
getting ready for a new
of the new business unit ECCO
challenge in the Asia-Pacific
Sport. I am sure that we have
region.”
just seen the beginning of
our success within the sports
industry, including our BIOM
16
of my colleagues’ daily work
Enterprise Portal Developer,
and an effective interface
Corporate IT
that connects people across
the entire ECCO Group. I also
“In 2010, we developed and
developed Portal components
implemented a new version of
in 2010, and I am especially
our intranet, the ECCO Portal,
proud of my new Reporting
that has proven to be much
System that enables our quality
more user friendly than the
& Environment employees
former version. It is a pleasure
throughout the Group to report
for me to see how the Portal
information electronically
has become an important part
instead of manually.”
CæCILIE CINDIE KOLDORF,
entire event process, but it
EITE Trainee, Sponsorship
was also a lot of work. There
and Events
were countless details to
coordinate, from the first
“It has been an incredible year!
meetings with ECCO’s CEO
I joined Sponsorships and Events
Dieter Kasprzak and our
in 2010 as my first job rotation
designers, to arrangements with
and worked on the Walk In Style
the press, PR agencies, stylists,
fashion show, ECCO’s largest PR
magazines, right down to the
event. It was great to be given
music and flowers on the
so much responsibility as a
night itself.”
trainee and be part of the
ELLA MADSEN,
creative ideas into physical
Shoe Technician,
models. It was an exciting
Pilot Production
process. Each time that I arrived
at the school, they came flying
“What I remember best from
from all directions. They really
2010 was ECCO’s new collab-
had some interesting ideas and
oration with the young students
they were very enthusiastic,
from the Kolding School of
which led to some very unique
Design. The students were given
shoes that were displayed here
the assignment to design ECCO
at ECCO.”
shoes of the future, and I was
to help them transform their
MOHAMAD RIBuANTO
more closely together with the
3D CAD Constructor,
Product Development depart-
Product Development
ment. This has been a very positive move because I can co-
“As 3D CAD Constructor, I trans-
operate with developers, speak
form shoe sketches made by
with technicians and share
designers into 3D computer
details with the Mould & Last
models and select the best fit-
department on a daily basis,
ting last for making samples.
making my work process much
I used to work in the Design
more efficient. For me, moving
Center in Tønder, but in 2010
to Bredebro has made 2010
I moved to Bredebro to work
a great year.”
ECCO - Annual Report 2010
XINYAN ZHOu
WoRking At eCCo
At ECCO, learning is a priority –
and internal mobility in a global
Lifelong learning helps ECCO
and important to the success of
network.
maintain competitive edge on
ECCO - Annual Report 2010
the company. ECCO operates
17
the market and commitment
a system of continuous learning
Continuous learning ensures
to sustainable solutions for the
from an employee’s first
that all employees are familiar
future.
introduction to the company
with the core values and high
throughout an employee’s life
ethical standards of ECCO
CAREER OPPORTuNITIES
with the company. Employees
formulated in the Code of
ECCO believes in empowering
are provided with ongoing
Conduct and also helps teach
its employees right from the
opportunities for professional
employees how to prevent and
beginning, and believes that
training, constant challenges
minimise the risk of accidents.
every individual and every ac-
18
ECCO - Annual Report 2010
tion can make a difference. We
lenges and internal mobility in
Education), Graduate and
value individuals who act with
a global network. We invest in
Specialist Trainee Programmes.
a social conscience, think inde-
our employees’ professional
These three programmes com-
pendently and take initiative.
and personal development and
bine expatriation, job rota-
provide them with challenging
tion and hands-on production
At ECCO, we invest in our
and rewarding opportunities for
experience. ECCO traditionally
people. Our ambition is to be
career growth.
recruits internally whenever pos-
a highly attractive workplace,
sible, so trainees have excellent
providing employees with on-
In 2010, ECCO welcomed fif-
opportunities for a career within
going opportunities for profes-
teen new trainees to the EITE
the ECCO Group once they
sional training, constant chal-
(ECCO International Trainee
graduate.
ECCO - Annual Report 2010
CoRpoRAte ResponsiBility
19
OuR APPROACH
business in accordance with the
allows us to carefully monitor
At ECCO, we want to be good
company’s ethical standards.
and control the impacts of
corporate citizens, wherever
Corporate responsibility includes
all our operations. As a large
we work. We work by clear
how we behave towards our
employer, ECCO understands its
principles that stipulate that
employees, communities, the
responsibility and accepts it.
we will behave in a correct
environment and our business
and decent manner. Our com-
partners.
mitment to being a responsible
Read more about ECCO’s
corporate responsibilty in
company is incorporated in the
WE OWN AND MANAGE
2010 online:
ECCO Code of Conduct.
EVERY STEP
eccocorporate.com
The ECCO Code of Conduct
ECCO is the only major shoe
provides information to guide
manufacturer to own and
employees and partners around
manage every step in the
the globe so that they conduct
shoemaking process. This
20
ECCO - Annual Report 2010
1. eCCo is a guest in each of the countries in which it operates and
respects the local culture.
2. eCCo supports, respects and takes a proactive approach to
protecting internationally defined human rights.
3. eCCo respects equal opportunities and fights discrimination in the
workplace.
4. eCCo respects the individual’s right to religious freedom.
5. eCCo respects the right to freedom of association.
6. eCCo wishes to provide employees with a workplace free of
harassment or abuse and condemns any form of enforced labour.
7. eCCo supports the un Convention on the Rights of the Child.
8. eCCo provides training, education and further development of
human resources at all levels.
9. eCCo aims to be a leader within the environment, health and
safety and supports sustainable development.
10. eCCo wishes to ensure that it complies with all relevant laws
and regulations.
21
ECCO - Annual Report 2010
HOW WE
MAKE SHOES
22
ECCO - Annual Report 2010
design
It all starts at ECCO’s Design Center.
ECCO’s designers search for inspiration from many sources – from fashion, art,
architecture, the car industry – and, of course, they closely follow what is happening
in society.
Nevertheless, they are always influenced by Scandinavian design, nature around
them and our ECCO heritage. No shoe ever leaves the Design Center without it first
ECCO - Annual Report 2010
being checked for lightness, softness, flexibility, comfort and fit.
23
24
ECCO - Annual Report 2010
pRoduCt
deVelopment
Product Development bridges the gap between Design
and Production. Shoemakers and engineers from the
Product Development department are responsible for
converting the ideas of ECCO designers into fully
specified prototypes for the end product.
The process requires in-depth knowledge of all the
materials required as well as insight into shoe construction,
production machinery and methods.
ECCO’s product development units in Denmark and
Portugal supply the ECCO tanneries and shoe factories
with detailed instructions on how to produce materials
ECCO - Annual Report 2010
and shoes.
25
26
ECCO - Annual Report 2010
27
ECCO - Annual Report 2010
28
ECCO has been producing leather since 1986 and
the ECCO Leather Group today comprises four
production units in the Netherlands, Indonesia,
Thailand and China.
While 85% of ECCO’s leather consumption is
produced at ECCO’s own tanneries, the ECCO
Leather Group also handles the external purchasing
of the remaining 15%.
ECCO Leather Group also sells leather to third
parties. Over 38% of the Leather Group’s production
is sold to non-ECCO companies.
ECCO - Annual Report 2010
mAking
leAtheR
pRoduCtion
As an innovative shoemaker, Karl Toosbuy always
saw the ECCO factories as the key to the company’s
success.
He also realised that shoemaking would always
involve a large element of manual work, with
craftsmen producing most of the shoes by hand.
He tried, therefore, to compensate for this by
automating the process wherever possible.
He developed technology, brought in assembly lines
and introduced robot technology and large-scale
assembly machines.
As a result, ECCO is the world leader in direct
injection technology. As new shoes are developed
and designed in Denmark, construction details
are transferred electronically to ECCO’s four main
factories in Thailand, Indonesia, Slovakia and China.
Although many processes have been automated,
the key to shoemaking remains the handcrafted
element, which is time-consuming and demanding.
Because ECCO’s philosophy is “quality first”, ECCO
trains its operators in a variety of skills. Following
a period at the ECCO training school, they gain
experience on the job and attend further courses
to become even better shoemakers.
ECCO - Annual Report 2010
Craftsmanship guarantees quality.
29
30
ECCO - Annual Report 2010
31
ECCO - Annual Report 2010
OUR SHOES
32
ECCO - Annual Report 2010
On a hill next to ECCO’s branch in Tønder stands a monumental bronze sculpture of a foot - 6 metres high. It is there
to remind everyone that the foot is the inspiration behind all ECCO shoes. Today, ECCO makes shoes for everyone
and for every occasion. Casual and formal. Kids’ shoes. Outdoor shoes. Shoes based on natural motion and shoes
for golfers. They all take their starting point in the foot.
eCCo, the WoRld’s fouRth
lARgest golf shoe BRAnd
Over the past decade, ECCO
decade ago, Bjørn became
none was more of a fairytale
has become the world’s fourth
the first high-profile Tour player
than Iben Tinning’s victory at
largest golf shoe brand in terms
to wear ECCO Golf shoes and
the Dubai Ladies Masters.
of sales, and a leader in the
showcase the brand logo in
Competing in her final tourna-
luxury category. This achieve-
competition.
ment as a professional, the
ment has been built, in part,
Danish legend wrapped her
through relationships with some
Since then, dozens of top-
amazing career in fitting fashion.
of the best and most high profile
ranked players have chosen to
Notably, she also became the
golfers – men and women
compete in the unique comfort,
first Tour player to win wearing
competing, and winning, on
quality, performance and style
the new BIOM Golf Natural
pro circuits around the world.
inherent to each pair of ECCO
Motion shoe.
golf shoes. They have won and
The roots of this strategy can be
set record scores on the PGA,
It was Fred Couples, however,
traced back to the origins
European, Asian, LPGA, Ladies
who experienced the greatest
of ECCO Golf. When company
European, Nationwide and
success and created a truly
founder Karl Toosbuy first
Challenge Tours.
global phenomenon that saw
developed a passion for golf,
the GOLF STREET become 2010’s
fellow Dane Thomas Bjørn was
ECCO Golf sponsored 13 Staff
one of the world’s top-ranked
Players in 2010, who won eight
players. Thus, more than a
combined tournaments. Perhaps
single biggest golf industry story.
fACt Box:
ECCO 2010 STAFF PLAYERS
• Fred Couples
• Stuart Appleby
• Aaron Baddeley
• Thomas Bjørn
• Thongchai Jaidee
• John Bickerton
• Bradley Dredge
• Steven Jeppesen
• Iben Tinning
• Thorbjørn Olesen
• Arjun Atwal
• Linda Wessberg
ECCO - Annual Report 2010
• Jennifer Johnson
33
34
“Clearly the GOLF STREET is a
non-traditional shoe but it’s still
probably the most comfortable
shoe that I have ever worn. I
love being able to leave my
hotel room or house and play golf
without changing into golf shoes.
These shoes can be worn anywhere which makes them a lot
easier to put on in themorning
and take off when I get home.
The comfort is unbelievable and
I love their style”.
the golf stReet phenomenon
ECCO Golf sales reached new
heights during Couples’ stir-
(London), Wall Street Journal
heights in 2010. This was driven
ring performance at the 2010
and countless others.
in part by the launch of GOLF
Masters.
STREET, a hybrid sport-casual
The term “Fred Couples golf
shoe designed to be worn on
Magazine editors, newspaper
shoes” rose to number four
and off the course.
writers and TV commentators
among all Google searches.
gushed over “Freddy’s cool
By the end of the year, Couples
GOLF STREET truly took the
kicks,” his “golf sneakers” and
had won four events and GOLF
world by storm via ECCO staff
“casual style.” Global press
STREET was widely heralded as
player Fred Couples. One of the
coverage also soared, with
2010’s single biggest golf indus-
game’s most popular and suc-
ECCO and GOLF STREET high-
try story. In total, the editorial
cessful players, Couples began
lighted in the world’s most
coverage for ECCO Golf shoes
wearing GOLF STREET at the
powerful media outlets. These
reached a potential audience
start of his inaugural Champions
included the BBC, Bloomberg,
of nearly 4 billion people and
Tour season. The buzz about his
CBS, CNBC, Fox, NBC, New
produced an ad equivalency
casual shoes reached incredible
York Times, Reuters, The Times
exceeding $50 million.
ECCO - Annual Report 2010
fRed
Couples
on
golf
stReet
stAtement
By the mAnAgement
on the AnnuAl RepoRt 2010
The Supervisory Board and
true and fair view of the Group’s
fair view within the framework of
Managing Board of ECCO Sko
and the Parent Company’s
generally accepted guidelines
A/S have today considered and
assets, liabilities and financial
for the area.
adopted the Annual Report for
position as of 31 December 2010
2010.
and of the results of the Group’s
We recommend that the Annual
and the Parent Company’s oper-
Report be adopted by the share-
The Annual Report is presented
ations and the consolidated cash
holders at the Annual General
in accordance with the Danish
flows for the financial year ended
Meeting.
Financial Statements Act. We
31 December 2010.
ECCO - Annual Report 2010
consider the accounting policies
35
to be appropriate to the effect
The management review from
that the Annual Report gives a
ECCO Sko A/S gives a true and
Bredebro, 23 March 2011
36
Dieter Kasprzak
Michael Hauge Sørensen
President
Chief Executive Officer
Chief Operating Officer
Annemette Nøhr
Jens Christian Meier
Andreas Wortmann
Executive Vice President
Chief Financial Officer
Executive Vice President
Group Production & Logistics
Executive Vice President
Brand & Products
Michel Krol
Panos Mytaros
Executive Vice President
Managing Director, ECCO EMEA B.V.
Executive Vice President
Managing Director, ECCO Leather Group
supeRVisoRy BoARd
Hanni Toosbuy Kasprzak
Karsten Borch
Chairman
Vice Chairman
Mogens Munk-Rasmussen
Torsten E. Rasmussen
Gitte Jochimsen
Jakob Møller Hansen
Employee representative
Employee representative
ECCO - Annual Report 2010
mAnAging BoARd
independent AuditoRs’ RepoRt
TO THE SHAREHOLDERS OF
of management to prepare a
of the company’s internal
ECCO SKO A/S
management’s review that gives a
control. An audit also includes
We have audited the financial
fair review in accordance with the
evaluating the appropriateness
statements of ECCO Sko A/S for
Danish Financial Statements Act.
of accounting policies used and
the financial year 1 January – 31
the reasonableness of accounting
December 2010, pages 38-52.
AuDITORS’ RESPONSIBILITY AND
estimates made by management,
BASIS OF OPINION
as well as evaluating the overall
The financial statements comprise
Our responsibility is to express an
presentation of the financial
accounting policies, income
opinion on the financial statements
statements. We believe that the
statement, balance sheet, cash
based on our audit. We conducted
audit evidence we have obtained
flow statement and notes. The
our audit in accordance with
is sufficient and appropriate to
financial statements have been
Danish Standards on Auditing.
provide a basis for our audit
prepared in accordance with the
Those standards require that we
opinion. Our audit did not result in
Danish Financial Statements Act.
comply with ethical requirements
any qualification.
and plan and perform the
In addition to our audit, we have
audit to obtain reasonable
OPINION
read the management’s review
assurance whether the financial
In our opinion, the financial
prepared in accordance with
statements are free from material
statements give a true and fair
the Danish Financial Statements
misstatement.
view of the company’s financial
Act and issued a statement in this
ECCO - Annual Report 2010
regard.
37
position at 31 December 2010 and
An audit involves performing
of the results of its operations and
procedures to obtain audit
its cash flows for the financial year
MANAGEMENT’S RESPONSIBILITY
evidence about the amounts
1 January – 31 December 2010
Management is responsible for the
and disclosures in the financial
in accordance with the Danish
preparation and fair presentation
statements. The procedures
Financial Statements Act.
of the financial statements in
selected depend on the auditors’
accordance with the Danish
judgement, including the
STATEMENT ON THE
Financial Statements Act. This
assessment of the risks of material
MANAGEMENT’S REVIEW
responsibility includes: designing,
misstatement of the financial
Pursuant to the Danish Financial
implementing and maintaining
statements, whether due to
Statements Act, we have read
internal control relevant to the
fraud or error. In making those risk
the management’s review. We
preparation and fair presentation
assessments, the auditors consider
have not performed any other
of financial statements that are
internal control relevant to the
procedures in addition to the
free from material misstatement,
company’s preparation and
audit of the financial statements.
whether due to fraud or error;
fair presentation of the financial
On this basis, it is our opinion
selecting and applying appropriate
statements in order to design audit
that the information given in the
accounting policies; and making
procedures that are appropriate
management’s review is consistent
accounting estimates that are
in the circumstances, but not
with the financial statements.
reasonable in the circumstances.
for the purpose of expressing
Further, it is the responsibility
an opinion on the effectiveness
Esbjerg, 23 March 2011
John Lesbo
Søren Jensen
State Authorised Public Accountant
State Authorised Public Accountant
KPMG
Statsautoriseret Revisionspartnerselskab
38
BASIS OF PREPARATION
ruling on 31 December, and differ-
Unrealised intercompany profits:
The financial statements of the
ences between the net profit of
unrealised intercompany profits
Parent Company and the Group
subsidiaries at average exchange
comprise profits unrealised in the
for 2010 are presented in accord-
rates and the exchange rates ruling
Group on trading in products and
ance with the provisions of the
at 31 December are recognised
fixed assets between consolidated
Danish Financial Statements Act
in equity. Currency translation of
companies.
applicable to class C companies.
receivables from foreign subsidiaries, where the receivables are
Income taxes: Estimated tax on the
BASIS OF CONSOLIDATION
part of the total investment in the
profit for the year is recognised in
The consolidated financial state-
subsidiary, is recognised directly in
the income statement along with
ments comprise ECCO Sko A/S and
equity.
the year’s change in deferred tax.
subsidiaries in which ECCO Sko A/S
No tax is set aside for investments in
has a controlling influence on the
MINORITY INTERESTS
subsidiaries as it is intended to hold
company’s operations. The consoli-
Minority interests’ share of profits
the investments for more than three
dated financial statements are pre-
and equity of subsidiary under-
years.
pared on the basis of the audited
takings is stated separately.
financial statements of ECCO
ECCO Sko A/S and the Danish sub-
Sko A/S and its subsidiaries by
INCOME STATEMENT
sidiaries are encompassed by the
adding items of a similar nature.
Net revenue: Sales are recog-
Danish regulations regarding man-
The financial statements used for
nised on dispatch of products, and
datory joint taxation. Subsidiaries
consolidation are adapted to the
net revenue consists of amounts
are part of the joint taxation
accounting policies of the Group.
invoiced excluding VAT and less
from the moment where they are
returned products, discounts and
a part of the consolidation in the
rebates.
annual accounts to the moment
On consolidation, intercompany
income and expenses, inter-
where they are omitted from the
company accounts and gains on
Raw materials and consumables:
intercompany sales and purchases
Raw materials and consumables
between the consolidated com-
include raw materials and consum-
ECCO HOLDING A/S is the adminis-
panies are eliminated. On acquisi-
ables used for in-house production.
trative company in the joint taxa-
tion of subsidiaries, the share of
Cost also includes consumption of
tion and settles all payments of
the acquired company’s net asset
commercial products.
corporate tax in the Danish
value is determined based on the
consolidation.
subsidiaries with the tax authorities.
Group’s accounting policies. If the
Other external costs: Other exter-
acquisition price deviates from the
nal costs comprise costs relating to
The current Danish corporate
net asset value, the difference is
the company’s primary, ordinary
tax is allocated by paying a joint
allocated, wherever possible,
activity, including lasts, cutting dies,
taxation contribution between the
to the assets and liabilities or
maintenance, rent of plant, prem-
companies in the joint taxation. The
provisions that have a higher or
ises, office expenses, sales promo-
contribution is allocated accord-
lower value.
tion expenses, fees, etc.
ing to the taxable income in the
companies. Companies in the
The income statements of foreign
Staff costs: Staff costs comprise
joint taxation with a taxable deficit
subsidiaries are translated at
remuneration to employees, includ-
receive a joint taxation contribution
average exchange rates, and
ing pension and social security
from companies which have been
the balance sheet is translated at
costs.
able to use this deficit to reduce
the exchange rates ruling on the
their taxable income.
balance sheet date. Exchange dif-
Profit from subsidiaries: Profit from
ferences arising on the translation
subsidiaries comprise the propor-
The tax of this year, which consists
of the opening equity of foreign
tionate share of profit after tax.
of the current corporate tax, the
subsidiaries at the exchange rates
joint taxation contribution and
ECCO - Annual Report 2010
ACCounting poliCies
ACCounting poliCies
the change in deferred tax – also
market are recognised as
price higher than the value deter-
changes which are caused by
intangible assets.
mined applying the equity method,
reduction of the corporate tax
such excess value is recognised as
rate – is part of the income state-
Development costs are recognised
an intangible asset and amortised
ment with the share which can be
at cost under intangible assets and
over the same period as goodwill
allocated to profit of the year, and
are amortised over the expected
on consolidation.
is part of the equity with the share
useful life of the project, when the
which can be allocated to entries
criteria for such treatment are met.
Property, plant, and equipment:
in equity.
Development costs that do not
Property, plant and equipment
meet the criteria for recognition in
are recognised at cost plus any
According to the Danish regula-
the balance sheet are recognised
revaluation and less accumu-
tions regarding mandatory joint
as costs in the income statement
lated depreciation. Depreciation
taxation, the debt of ECCO Sko A/S
when incurred.
is charged on a straight-line basis
and the Danish subsidiaries towards
over the expected useful lives of
the tax authorities is settled when
Recognised development costs
the companies have paid the joint
are measured at the lower of cost
taxation contribution to the admin-
less accumulated amortisation and
The expected useful lives are as
istrative company.
writedowns and the recoverable
follows:
the assets.
amount.
Deferred tax is calculated as the
- Buildings
difference between the carry-
Patents and trademarks: The costs
ing amounts and tax values of
of registering new patents and
current assets and fixed assets.
trademarks are recognised and
Furthermore, the tax value of tax
amortised over the term of the
losses carried forward is recognised
patent / trademark or its economic
in the amount at which they are
life (5 years).
20 years
- Plant and machinery, vehicles,
fixtures and fittings
5 years
- Computer software
3 years
expected to be used.
Costs of maintaining existing pa-
Depreciation is not charged on
If, on a net basis, there is a tax
tents/trademarks are recognised
land and staff housing. Assets
asset, the amount of future tax
in the income statement when
with a cost of less than DKK 12
savings is recognised, provided
incurred.
thousand per unit are charged
ECCO - Annual Report 2010
that it is deemed more likely
39
to the income statement in the
than not that the deduction
Goodwill on consolidation:
year of acquisition. Investment
can be offset against future
Goodwill on consolidation is deter-
grants are offset against the
taxable profits.
mined at the date of acquisition
assets that form the basis for
as the difference between the
the grants.
BALANCE SHEET
cost and the net asset value of
Intangible assets: Intangible assets
the acquired company applying
If an asset type is revalued, this
are recognised at cost less accu-
the Group’s accounting policies.
applies to all assets within that
mulated amortisation. Amortisation
Consolidated goodwill acquired
group of assets.
is charged on a straight-line basis
from and including 1 January
over 5-10 years.
2002 is capitalised and amortised
Investments: Investments in
on a straight-line basis over the
subsidiaries are recognised
Development projects:
expected useful economic life,
applying the equity method at the
Development projects which are
determined on the basis
proportionate share of the equity of
clearly defined and identifiable
of earnings projections for the
the companies, determined based
and which are deemed to be
individual business areas, not to
on the Group’s accounting
marketable in the form of new
exceed 10 years. When the Parent
policies, less unrealised
products in a future potential
Company acquires shares at a
intercompany profits.
40
value of derivative financial
activities. Cash and cash
is recognised in the balance sheet
instruments that meet the criteria
equivalents in the cash flow
when adopted by the shareholders
to be designated as fair value
statement comprise cash and
at the Annual General Meeting.
hedges of a recognised asset or
securities carried as current assets.
a recognised liability are
Dividends to be paid by the
recognised in the income state-
In the statements, figures in
Parent Company are recognised
ment together with any changes
brackets represent losses or
as a liability in the financial
in the fair value of the hedged
items deducted.
statements at the time of adoption
asset or hedged liability. Changes
by the shareholders at the Annual
in the fair value of derivative
General Meeting. Dividend pro-
financial instruments that meet the
posed in respect of the financial
conditions for hedging future assets
year is stated as a separate line
or liabilities are recognised in equity
item in the equity note.
under retained earnings. Income
and expenses relating to such
Inventories: Raw materials are
hedge transactions are transferred
measured at cost determined
from equity on realisation of the
on the basis of the most recent
hedged item.
purchases. Work in progress and
finished products are measured
Treasury shares: The cost of treasury
at calculated cost, consisting
shares is recognised directly on
of the cost of raw materials and
the company’s share capital and
consumables and manufacturing
is consequently not stated as an
costs plus a share of production
asset in the balance sheet.
overheads. Commercial products
are valued at acquisition price.
Currency translation: Receivables
Products with a net realisable value
and payables denominated in
lower than the cost or acquisition
foreign currencies are translated
price are written down to the
to the exchange rate ruling at
lower value.
year-end.
Receivables: Receivables are
Provisions: Provisions comprise
measured at amortised cost less
anticipated costs of warranty
provisions for anticipated losses
obligations restructuring, etc.
determined based on an individual
Provisions are recognised
evaluation.
when, as a consequence of a
past event, the company has a
Securities: Securities are measured
legal or constructive obligation,
at the most recently quoted market
and it is likely that the obligation
price.
will materialise.
Financial instruments: Derivative
CASH FLOW STATEMENT
financial instruments are initially
The cash flow statement shows
recognised in the balance sheet
the Group’s cash flow during the
at cost and subsequently
year and liquidity position at the
remeasured at their fair value.
beginning and end of the year.
Derivative financial instruments are
The cash flow statement is divided
included in other receivables and
into three principal areas:
other debt. Changes in the fair
operating, investing and financing
ECCO - Annual Report 2010
Dividend receivable in subsidiaries
inCome stAtement foR the yeAR
ended 31 deCemBeR 2010
Group
Parent Company
2010
2009
2010
2009
6,111,148
5,041,200
4,027,916
3,326,366
17,473
(2,529,332)
(1,262,485)
(1,342,084)
(341,973)
(252,463)
(1,718,903)
(1,165,306)
(1,136,221)
(272,383)
(58,488)
(3,062,976)
(257,810)
(288,914)
(87,063)
(367,274)
(2,128,327)
(352,268)
(275,675)
(74,804)
Profit before financials
652,747
495,924
272,665
128,018
3 Financial income
Financial expenses
Profit from subsidiaries
Intercompany profit
193,329
(215,040)
-
132,684
(168,945)
-
96,038
(98,927)
271,959
(68,731)
78,076
(103,453)
212,059
17,645
631,036
459,663
473,004
332,345
(155,423)
(114,306)
(63,026)
(33,108)
Group profit
475,613
345,357
409,978
299,237
11 Minority interests
(65,635)
(46,120)
-
-
Profit for the year
409,978
299,237
409,978
299,237
98,171
49,807
262,000
66,957
(107,720)
340,000
409,978
299,237
Note DKK ’000
1 Net revenue
Change in inventories of finished products
and work in progress
Costs of raw materials and consumables
Other external costs
2 Staff costs
5,6 Amortisation and depreciation
Profit before tax
4 Income taxes
Proposed allocation:
ECCO - Annual Report 2010
Revaluation reserve for undistributed
profit in subsidiaries
Retained earnings
Proposed dividend
41
42
Group
Assets
Note DKK ’000
Parent Company
2010
2009
2010
2009
38,371
39,144
15,594
18,162
38,371
39,144
15,594
18,162
663,401
226,939
275,800
107,641
631,520
248,600
378,465
70,320
132,751
3,916
103,303
60,723
137,288
5,347
139,695
38,801
1,273,781
1,328,905
300,693
321,131
129,395
73,419
1,305,925
480,284
55,787
1,189,017
643,363
27,823
129,395
73,419
1,841,996
1,860,203
1,441,547
1,441,468
2,158,283
2,199,496
250,014
29,951
976,216
190,746
18,476
970,218
344,106
402,594
1,256,181
1,179,440
344,106
402,594
979,294
234,335
219,071
782,949
51,098
53,511
670,477
102,446
52,465
60,803
27,371
149,973
449,241
2,340
68,314
29,362
1,267,140
886,191
1,080,489
699,230
32,771
27,408
161
212
652,381
647,641
24,663
134,673
tOtal cUrreNt assets
3,208,473
2,740,680
1,449,419
1,236,709
tOtal assets
4,650,020
4,182,148
3,607,702
3,436,205
FIXED ASSETS:
Intangible rights
5 total intangible assets
Land and buildings
Plant and machinery
Other fixtures and fittings, tools and equipment
Property, plant and equipment in progress
6 total property, plant and equipment
7,8 Investments in subsidiaries
8 Receivables from subsidiaries
9 Deferred tax
total long-term financial assets
tOtal fiXeD assets
CuRRENT ASSETS:
Raw materials and consumables
Work in progress
Finished products and commercial products
total inventories
Trade receivables
Receivables from subsidiaries
Other receivables
4 Income taxes
Prepayments
total receivables
securities
cash
ECCO - Annual Report 2010
BAlAnCe sheet
As of 31 deCemBeR 2010
BAlAnCe sheet
As of 31 deCemBeR 2010
Group
Equity and liabilities
Note DKK ’000
2010
2009
2010
2009
5,500
2,581,461
5,500
2,426,339
5,500
923,924
1,657,537
5,500
738,869
1,687,470
2,586,961
2,431,839
2,586,961
2,431,839
147,035
132,990
-
-
26,836
19,830
-
-
Credit institutions
463,143
430,887
439,133
410,771
12 total long-term debt
463,143
430,887
439,133
410,771
101,752
340,220
417,294
70,687
415,834
80,258
136,951
392,210
281,518
305,701
50,222
101,752
14,231
105,312
196,738
16,814
67,104
79,657
136,951
127,034
107,426
116,228
55,734
50,222
total short-term debt
1,426,045
1,166,602
581,608
593,595
total debt
1,889,188
1,597,489
1,020,741
1,004,366
tOtal eQUitY aND liabilities
4,650,020
4,182,148
3,607,702
3,436,205
Share capital
Revaluation reserve
Retained earnings
10 total equity
11 Minority interests
Provisions
Short-term part of long-term debt
Credit institutions
Trade payables
Payables to subsidiaries
4 Income taxes
Other payables
Deferred income
ECCO - Annual Report 2010
13 Contingent liabilities and collateral security
14 Fees to auditors appointed at the Annual General Meeting
15 Related parties
43
Parent Company
44
2010
2009
631,036
459,663
341,973
42,602
2,016
272,383
(60,035)
3,891
(76,741)
(433,414)
135,776
140,169
7,006
(90,272)
700,151
321,944
55,160
59,978
18,890
3,349
(150,699)
984,524
(18,360)
(218,372)
(236,732)
(15,585)
(207,340)
(222,925)
(58,383)
32,256
(87,189)
(340,000)
(453,316)
1,738
124,503
(426,766)
(276,000)
(576,525)
10,103
675,049
685,152
185,074
489,975
675,049
32,771
652,381
685,152
27,408
647,641
675,049
DKK ’000
Cash flow from operating activities
Profit before tax
Adjustment for non-cash operating items:
Amortisation and depreciation
Exchange rate adjustments
Tax adjustments
Working capital adjustments:
(Increase)/Decrease in inventories
(Increase)/Decrease in receivables
Increase/(Decrease) in payables
Increase/(Decrease) in other payables
Increase/(Decrease) in provisions
Income taxes paid
Cash flow from investing activities
Payments to invest in fixed assets:
Intangible assets
Property plant and equipment
Cash flow from financing activities
Change in minority interests
(Repayment of)/proceeds from new long-term debt
Increase/(Decrease) in short-term debt
Dividend paid
cash flow from operating, investing and financing activities
Cash and cash equivalents at beginning of year
cash and cash equivalents at year-end
Breakdown of cash and cash equivalents:
Securities
Cash
ECCO - Annual Report 2010
ConsolidAted CAsh floW stAtement
foR the yeAR ended 31 deCemBeR 2010
notes to the gRoup And
pARent CompAny finAnCiAl stAtements
1.
Segment information
Group
2010
2009
segment information
Shoes & accessories
Others
5,780,644
330,504
4,846,352
194,848
total net revenue
6,111,148
5,041,200
Net revenue shoes & accessories
ECCO Europe West and East
ECCO Europe Central
ECCO Americas
ECCO Asia/Pacific
1,924,054
1,707,840
1,139,397
1,009,353
1,680,418
1,521,987
928,681
715,266
total shoes & accessories
5,780,644
4,846,352
DKK ’000
Reference is made to the ECCO Group structure page 53-54 regarding the definition of the geographic regions.
2.
Staff costs and management and staff information
Group
Parent Company
2010
2009
2010
2009
Salaries
Pensions
Other social security costs
1,202,742
40,475
98,867
1,010,866
33,808
91,547
272,937
14,311
1,666
259,872
14,090
1,713
staff costs
1,342,084
1,136,221
288,914
275,675
Average number of employees
15,827
15,011
552
558
Number of employees at year-end
17,537
14,781
548
549
-
-
32,921
700
17,709
600
DKK ’000
ECCO - Annual Report 2010
Fees to Managing Board and Supervisory Board:
Managing Board
Supervisory Board
45
46
ECCO - Annual Report 2010
notes to the gRoup And
pARent CompAny finAnCiAl stAtements
3.
Financial income
Parent Company
DKK ’000
In the Parent Company, interest income from subsidiaries amounted to
4.
2010
2009
21,662
19,396
Income taxes
Group
Parent Company
Cost
2010
Debt
2010
179
213,245
(52,465)
52,286
179
213,245
(142,558)
Cost
2010
Debt
2010
DKK ’000
Income taxes payable as at 1 January
Income taxes paid in 2010
Prior-year adjustment
Estimated tax for 2010
of which paid
Year’s adjustment of deferred tax
5.
(58,001)
155,423
70,687
179
92,827
(29,980)
63,026
Intangible assets
Group
Parent Company
DKK ’000
Cost at 1 January
Currency translation
Additions
Disposals
cost at 31 December
Accumulated amortisation at 1 January
Currency translation
Amortisation
Amortisation on assets sold
142,438
(3,604)
16,965
(2,927)
152,872
103,294
(4,820)
20,349
(4,322)
46,496
1,909
48,405
28,334
4,517
(40)
accumulated amortisation at 31 December
114,501
32,811
carrying amount at 31 December
Amortised over
38,371
15,594
5-10 years
5-10 years
(68,314)
68,135
179
92,827
(76,013)
16,814
notes to the gRoup And
pARent CompAny finAnCiAl stAtements
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
Currency translation
Additions
Disposals
1,017,465
37,579
47,030
17,279
898,775
56,008
55,762
(76,351)
1,104,226
(43,213)
101,691
(107,548)
70,320
3,496
33,825
-
cost at 31 December
1,119,353
934,194
1,055,156
107,641
Accumulated depreciation at 1 January
Currency translation
Depreciation
Depreciation on disposals
385,945
(3,574)
62,032
11,549
650,175
26,410
105,375
(74,705)
725,761
(17,094)
154,217
(83,528)
-
accumulated depreciation at 31 December
455,952
707,255
779,356
-
carrying amount at 31 December
663,401
226,939
275,800
107,641
PareNt cOMPaNY
Cost at 1 January
Additions
Disposals
279,938
8,570
(1,302)
67,486
329
(2,623)
393,733
34,442
(10,181)
38,801
21,922
-
cost at 31 December
287,206
65,192
417,994
60,723
Accumulated depreciation at 1 January
Depreciation
Depreciation on disposals
142,650
13,029
(1,224)
62,139
1,674
(2,537)
254,038
67,843
(7,190)
-
accumulated depreciation at 31 December
154,455
61,276
314,691
-
carrying amount at 31 December
ECCO - Annual Report 2010
Depreciated over
47
132,751
3,916
103,303
60,723
20 years
5 years
3-5 years
-
48
7.
Investments in subsidiaries
Ownership interest
Share capital
ECCO (Thailand) Co., Ltd.
ECCO Slovakia, a.s.
Ecco’let (Portugal) - Fábrica de Sapatos, Lda.
PT. ECCO Indonesia
ECCO China Holding (Singapore) Pte. Ltd.
ECCO (Xiamen) Co. Ltd. (China)
95%
100%
100%
100%
80%
80%
200,000
7,634
2,770
43,976,000
16,000
15,600
t.
t.
t.
t.
t.
t.
THB
EuR
EuR
IDR
uSD
uSD
Danna Leather (Xiamen) Co., Ltd. (China)
ECCO Tannery Holding (Singapore) Pte. Ltd.
ECCO Tannery (Xiamen) Co. Ltd. (China)
ECCO Tannery (Thailand) Co., Ltd.
ECCO Tannery (Holland) B.V. (The Netherlands)
ECCO Leather B.V. (The Netherlands)
PT. ECCO Tannery Indonesia
100%
100%
100%
100%
100%
100%
100%
75
12,000
17,000
185,000
1,000
400
37,403,550
t.
t.
t.
t.
t.
t.
t.
uSD
EuR
uSD
THB
EuR
EuR
IDR
ECCO Asia Pacific Limited (Hong Kong)
ECCO Baltic SIA (Latvia)
ECCO Belgium N.V.
ECCO Boty Ceská republika s.r.o. (Czech Rep.)
ECCO China Wholesale Holding (Singapore) Pte. Ltd.
ECCO Cyprus Limited
ECCO e-store ApS (Denmark)
ECCO EMEA Sales SE (The Netherlands)
ECCO Europe East and Middle East Sp. z o.o. (Poland)
ECCO Europe B.V. (The Netherlands)
ECCO Exportadora Ltda (Brazil) (dormant)
ECCO France Diffusion S.a.r.l.
ECCO Hungary Kft. (Hungary)
ECCO India Trading Private Limited
ECCO Internet, Inc. (uSA)
ECCO Macao Limited
ECCO Middle East A/S (Denmark)
ECCO Norge A/S (Norway)
ECCO (Portugal) Sales Comercialização de Sapatos, Lda.
ECCO Retail A/S (Denmark)
ECCO Retail LLC (uSA)
ECCO Retail Japan Co., Ltd.
ECCO Scarpe Italia S.r.l.
ECCO Schuhe GmbH (Germany)
ECCO Schuhe Schweiz GmbH (Switzerland)
ECCO Shoes Netherlands B.V.
ECCO (Shanghai) Co., Ltd. (China)
ECCO Shoes (NZ) Limited (New Zealand)
ECCO Shoes Canada, Inc.
ECCO Shoes Hellas S.A. (Greece) (dormant)
ECCO Shoes Hong Kong Limited
ECCO Shoes International AG (Switzerland)
ECCO Shoes Pacific Pty. Ltd. (Australia)
ECCO Shoes Poland Sp. z o.o.
ECCO Shoes Slovakia, s.r.o.
ECCO Shoes uK Limited
ECCO Singapore Pte. Ltd.
ECCO Shoes Iberica, S.L. (Spain)
ECCO Sverige AB (Sweden)
ECCO Trading GmbH (Austria)
ECCO uSA, Inc.
ECCO Wholesale Limited (uK) (dormant)
Eccolet Portugal ApS (Denmark)
Oy ECCO-Suomi Ab (Finland)
Salgsselskabet ECCO Danmark A/S
100%
50%
100%
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
90%
100%
100%
100%
100%
50%
100%
100%
51%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
21,500
2
360
5,000
200
2
125
120
12,500
23
48
50
500
66,830
100
25
2,250
15,000
800
1,000
300
400,000
100
1,790
170
18
2,100
100
6,502
60
3,000
2,250
3,250
10,000
166
4,000
2,510
4
1,000
400
7,500
1,200
200
102
1,000
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
t.
HKD
LVL
EuR
CZK
uSD
EuR
DKK
EuR
PLN
EuR
BRL
EuR
HuF
INR
uSD
MOP
DKK
NOK
EuR
DKK
uSD
JPY
EuR
EuR
CHF
EuR
uSD
NZD
CAD
EuR
HKD
CHF
AuD
PLN
EuR
GBP
SGD
EuR
SEK
EuR
uSD
GBP
DKK
EuR
DKK
ECCO - Annual Report 2010
notes to the gRoup And
pARent CompAny finAnCiAl stAtements
notes to the gRoup And
pARent CompAny finAnCiAl stAtements
8.
Investments in subsidiaries
Investments
in subsidiaries
Receivables
from subsidiaries
2010
2009
2010
2009
Cost at 1 January
Additions
Disposals
670,151
585
-
666,019
4,132
-
643,363
134,429
(297,508)
724,318
83,097
(164,052)
cost at 31 December
670,736
670,151
480,284
643,363
Accumulated revaluation at 1 January
738,869
672,491
-
-
87,406
(4,818)
-
-
(522)
271,959
(173,788)
4,239
212,059
(145,102)
-
-
DKK ’000
Currency translation of foreign subsidiaries
Regulation in connection with foreign
currency hedging of future sales of subsidiaries
Profit after tax of subsidiaries
Dividend
Net revaluation
185,055
66,378
-
-
accumulated revaluation at 31 December
923,924
738,869
-
-
intercompany gains
(288,735)
(220,003)
-
-
carrying amount at 31 December
1,305,925
1,189,017
480,284
643,363
9.
Deferred tax
Group
Parent Company
2010
2009
2010
2009
71,700
57,695
56,210
17,209
71,700
(15,913)
56,210
(28,387)
recognised at 31 December
129,395
73,419
55,787
27,823
recognised at 1 January
DKK ’000
ECCO - Annual Report 2010
Deferred tax comprises:
Inventories, unrealised intercompany gains
Other assets
49
(73,419)
(78,845)
(27,823)
(34,392)
total adjustment
55,976
(5,426)
27,964
(6,569)
Of which adjusted in equity
(2,016)
(3,891)
(2,016)
3,109
50
ECCO - Annual Report 2010
notes to the gRoup And
pARent CompAny finAnCiAl stAtements
10.
Equity
Group
Parent Company
2010
2009
2010
2009
5,500
5,500
5,500
5,500
Reserve for net revaluation according to the equity method
Reserve for net revaluation at 1 January
-
-
738,869
672,491
Net revaluation
-
-
185,055
66,378
reserve for net revaluation at 31 December
-
-
923,924
738,869
2,426,339
262,000
(340,000)
87,406
2,273
2,467,919
340,000
(276,000)
(4,818)
(577)
1,687,470
262,000
(340,000)
2,273
1,795,428
340,000
(276,000)
(577)
2,459
147,978
(6,994)
(2,493)
(40,763)
(56,929)
2,459
49,807
(6,472)
(2,493)
(107,720)
(61,168)
total retained earnings
2,581,461
2,426,339
1,657,537
1,687,470
total equity
2,586,961
2,431,839
2,586,961
2,431,839
DKK ’000
The share capital consists of:
112 shares (in amounts from DKK 500 to DKK 1,658,200)
total share capital
Brought forward from prior years/revaluation reversed
Proposed dividend in respect of the financial year
Dividend paid
Exchange rate adjustment to year-end exchange rates
Currency translation of subordinated loan capital in subsidiaries
Gain/(loss) on financial swaps
Retained from profit for the year
Adjustment of currency hedges of future sales
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.
notes to the gRoup And
pARent CompAny finAnCiAl stAtements
11.
Minority interests
Group
2010
2009
Minority interests at 1 January
Additions
Disposals
Share of profit for the year
Exchange rate adjustments
132,990
(58,383)
65,635
6,793
86,266
22,602
(20,864)
46,120
(1,134)
Minority interests at 31 December
147,035
132,990
DKK ’000
12.
Long-term debt
Group
Parent Company
2010
2009
2010
2009
147,820
38,383
147,820
38,383
DKK ’000
Long-term debt due more than five
years after the end of the financial year
13.
Contingent liabilities and collateral security
Group
Parent Company
2010
2009
2010
2009
799,309
38,911
11,100
725,399
7,362
13,531
14,174
6,089
11,100
19,821
1,223
13,531
230,973
33,150
148,261
6,574
168,474
14,900
80,000
-
DKK ’000
CONTINGENT LIABILITIES
Rent and lease liabilities
Guarantees and letters to suppliers and subsidiaries
Sponsorships
COLLATERAL SECuRITY
ECCO - Annual Report 2010
The following assets have been lodged in security
of the Group’s loans from credit institutions and
other long-term debt:
51
Bearer mortgages on property, plant and equipment
Guarantee for import duty
52
ECCO - Annual Report 2010
notes to the gRoup And
pARent CompAny finAnCiAl stAtements
14.
Fees to auditors appointed at the Annual General Meeting
Group
Parent Company
2010
2009
2010
2009
9,051
1,947
10,998
8,692
1,766
10,458
2,192
2,192
1,954
55
2,009
KPMG
Auditor’s fee
Other assurance services and statements
Tax consulting
Others
KPMG in total
6,209
259
1,783
800
9,051
5,799
1,974
919
8,692
1,169
562
461
2,192
1,041
612
301
1,954
Others
Auditor’s fee
Other assurance services and statements
Tax consulting
Others
Others in total
1,098
31
816
2
1,947
1,008
568
190
1,766
-
55
55
DKK ’000
Total fees to auditors appointed at
the Annual General Meeting:
KPMG
Others
15.
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 ECCO Sko A/S
- Kasprzak Holding ApS, Bredebro, Denmark
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 individuals mentioned above have
material interests.
gRoup stRuCtuRe As of 31 deCemBeR 2010
ECCO SKO A/S
SuBSIDIARIES, SALES
reGiON ECCO AMERICAS
reGiON ECCO EuROPE, MIDDLE EAST & AFRICA
THE NETHERLANDS
ECCO Europe B.V.
THE NETHERLANDS
ECCO EMEA Sales SE
THE NETHERLANDS
ECCO Shoes
Netherlands B.V.
DENMARK
ECCO Retail A/S
POLAND
ECCO Shoes
Poland Sp. z o.o.
THE CZECH REP.
ECCO Boty
Ceská republika s.r.o.
DENMARK
ECCO e-store ApS
BELGIUM
ECCO Belgium N.V.
NORWAY
ECCO Norge A/S
FRANCE
ECCO France
Diffusion S.a.r.l.
FINLAND
Oy ECCO-Suomi Ab
HUNGARY
ECCO Hungary Kft.
GERMANY
ECCO Schuhe GmbH
CYPRUS
ECCO Cyprus Limited
AUSTRIA
ECCO Trading GmbH
LATVIA
ECCO Baltic SIA
SWITZERLAND
ECCO Schuhe
Schweiz GmbH
DENMARK
ECCO Middle East A/S
SPAIN
ECCO Shoes Iberica, S.L.
ITALY
ECCO Scarpe Italia S.r.l.
Accessories:
SWITZERLAND
ECCO Shoes International AG
ECCO - Annual Report 2010
DENMARK
Salgsselskabet
ECCO Danmark A/S
POLAND
ECCO Europe East and
Middle East Sp. z o.o.
UK
ECCO Shoes uK Limited
PORTUGAL
ECCO (Portugal) Sales
Comercialização de
Sapatos, Lda.
53
SWEDEN
ECCO Sverige AB
SLOVAKIA
ECCO Shoes
Slovakia, s.r.o.
UNITED ARAB EMIRATES
ECCO Middle East A/S
(Branch)
USA
ECCO uSA, Inc.
USA
ECCO Retail LLC
uSA
ECCO Internet, Inc.
CANADA
ECCO Shoes Canada, Inc.
54
ECCO - Annual Report 2010
SuBSIDIARIES, PRODuCTION
reGiON ECCO ASIA/PACIFIC
HONG KONG
ECCO 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
ECCO SHOE factOries
SLOVAKIA
ECCO Slovakia, a.s.
INDONESIA
PT. ECCO Indonesia
THAILAND
ECCO (Thailand) Co., Ltd.
SINGAPORE
ECCO China Holding (Singapore)
Pte. Ltd.
CHINA
ECCO (Xiamen) Co. Ltd.
PORTUGAL (Product development)
Ecco’let (Portugal)
– Fábrica de Sapatos, Lda.
ECCO leather
INDIA
ECCO India Trading
Private Limited
SINGAPORE
ECCO China
Wholesale Holding
(Singapore) Pte.
Ltd.
CHINA
ECCO
(Shanghai)
Co., Ltd.
JAPAN
ECCO Retail Japan
Co., Ltd.
THE NETHERLANDS
ECCO 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 Sko A/S
Industrivej 5
DK-6261 Bredebro
Tel.: +45 74 91 16 25
Fax: +45 74 71 03 60
ecco.com
Comp. Reg. No. 43.088
VAT No. 45 34 99 18