southwestern denmark, ecco has been owned and managed by

Since it was founded in 1963 in the town of Bredebro in southwestern Denmark, ECCO has been owned and managed by the Toosbuy family. Today, Hanni Toosbuy Kasprzak – the daughter of Birte and Karl Toosbuy – is the principal stockholder and Chairperson of the Supervisory Board. Her husband, Dieter Kasprzak, is Chief Executive Officer (CEO), and Mikael Thinghuus is Chief Operating Officer (COO).

ECCO’s Annual report 2006 �

ECCO’s Annual report 2006�

ECCO had an outstanding year in 2006 with significant progress on all fronts. ECCO's new collections were enthusiastically received by customers in all markets. This led to a growth in revenues of 17% and a doubling of the annual profit before tax to DKK 709 million.

2006 was thus the third year in a row with healthy and solid growth.

In 2006, ECCO achieved a solvency ratio of 47%, which ensures our financial independence, one of the objectives that the company's owner has set for ECCO. Another objective that was also met in 2006 is the achievement of a profit before tax of over 15% of revenues. The 2006 profit was equivalent to 15.9% of revenues.

ECCO's primary goal continues to be to produce modern casual shoes that push the boundaries of comfort and quality, technical functionality and design. ECCO continuously seeks to be the best, not the biggest.

We, therefore, maintain the almost unique position within the shoe industry of controlling the entire value chain from cow to consumer.

Our control over the processes and quality ensures that we always have the maximum freedom to find the best solution. It also gives us flexibility so that we can adjust production and reallocate resources according to the changing requirements of the markets. In 2006, this ability allowed us to deal reasonably efficiently with unexpected problems such as the fire at our factory warehouse in Thailand and the EU's protectionist tariffs on shoes manufactured in China.

By having such large-scale production of our own, we can also ensure that ECCO's Code of Conduct is adhered to.Control of the entire value chain has a further advantage. By being present in retail, where our sales staff meet our customers and listen to their reactions, we gain significant knowledge of what our customers are looking for. This knowledge is used in the development of our collections. In this way the circle is complete.

ECCO's employees around the world have made an enormous contribution in 2006. In ECCO's tanneries, shoe factories, group functions, distribution centres, wholesale and retail organisations, expertise is continuously built. It is only by helping the employees to constantly extend their knowledge and experience that ECCO's future can be secured.

This also gives ECCO the opportunity to make things better. We constantly look for ways to make improvements in every single product group, in every single type of leather and sole design, in every single one of our shops and in every single one of our processes and working procedures. This is a continuous effort, which will ensure ECCO's competitive ability and success.

An area of focus is our supply chain which is under pressure due to unexpectedly high sales, particularly in Eastern Europe and North America. The EU's punitive tariffs and the fire in our warehouse in Thailand increased the pressure, and for a period resulted in delays of our deliveries. This is not satisfactory.

This also emphasises the need to constantly adjust all business processes.

ECCO – passion and results

The ECCO Sales and Marketing building in Tønder, Denmark with ECCO's Landmark "The Foot".

ECCO’s Annual report 2006 �

Over the next two years, ECCO will carry out a major simplification and upgrade of the company's central SAP system. ECCO will also introduce an IT platform in hundreds of sales outlets that will allow for a rapid, daily insight into which shoes are selling best. This will improve our ability to plan and control production and logistics.

Improved systems will also allow us to accelerate the Lean approach, which has already begun to show results in the form of the simplification of existing production processes.

ECCO will continue to make long-term investments in our business systems, our value chain and particularly in our dedicated employees.

First and foremost, the excellent financial results give us the freedom to focus on the core of ECCO – the constant development of new products, of shoes that push the boundaries of design and quality. Shoes that are truly the most comfortable in the world.

Dieter KasprzakChief Executive Officer

Mikael ThinghuusChief Operating Officer

Jens Christian MeierExecutive Vice President, Production

ECCO’s Managing Board, from left: Mikael Thinghuus, COO, Dieter Kasprzak, CEO, and Jens Christian Meier, EVP Production.


Consolidated financial highlights and key ratios

FINANCIAL HIGHLIGHTS �006 �005 �00� �00� �00�DKK ‘000

Net revenue �,�70,�0� �,8�0,5�6 �,�9�,69� �,�68,9�0 �,�59,8�8

Profit before amortisation and depreciation 937,822 628,879 447,972 370,295 342,776

Amortisation and depreciation (178,360) (205,039) (180,937) (188,657) (187,215)

Profit before financials 759,462 423,840 267,035 181,638 155,561

Net financials (49,979) (74,294) (60,594) (61,394) (73,465)

Profit before tax 709,�8� ��9,5�6* �06,�� 0,�� 8�,096

Income taxes (209,423) (124,512) (42,883) (49,264) (21,743)

Group profit 500,060 225,034 163,558 70,980 60,353

Minority interests (10,588) 697 (12,897) (9,192) (9,275)

Profit for the year �89,�7� ��5,7�� 50,66� 6�,788 5�,078

Fixed assets 1,121,303 1,075,306 1,112,597 1,073,447 1,024,182

Current assets 2,529,377 2,210,052 1,832,582 1,714,309 1,884,018

Assets 3,650,680 3,285,358 2,945,179 2,787,756 2,908,200

Equity 1,729,513 1,285,750 1,034,026 951,016 958,160

Other liabilities 57,079 87,358 56,877 31,257 37,413

Debt 1,864,088 1,912,250 1,854,276 1,805,483 1,912,627

Liabilities 3,650,680 3,285,358 2,945,179 2,787,756 2,908,200

Cash-flow from operating activities 427,374 515,078 272,973 336,378 594,382

Cash-flow from investing activities (234,809) (201,678) (212,811) (228,551) (230,346)

Cash-flow from financing activities (188,958) (2,385) (392) (73,808) (263,633)

Pairs of shoes sold (thousands) 14,776 12,906 12,045 11,225 10,564

Number of employees (as of 31 December) 12,670 10,534 9,657 9,388 8,839

*) Profit for the year 2005 is negatively influenced by a provision for non-recurring costs of DKK 48 million related to the restructuring of operations in Portugal.

Profit for the year before tax and provisions for non-recurring costs amounted to DKK 398 million.

KEY RATIOS

Operating margin 17.0% 11.1% 7.9% 5.7% 4.6%

ROAIC 21.9% 13.6% 9.3% 6.4% 5.2%

Return on assets 20.5% 11.2% 7.2% 4.2% 2.7%

Investment ratio 1.3 1,0 1.2 1.2 1.2

Return on equity 32.5% 19.5% 15.2% 6.5% 5.3%

Solvency ratio 47.4% 39.1% 35.1% 34.1% 33.0%

Liquidity ratio 3.0 2.9 2.0 1.9 2.0

DEFINITIONS OF KEY RATIOS

Operating margin: Profit before financials x 100 Investment ratio: Investments for the year Liquidity ratio: Current assets Net revenue Amortisation and depreciation Short-term debt

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

ECCO’s Annual report 2006 5

Income statementIn 2006, the ECCO Group achieved a highly satisfactory result.

The ECCO Group's profit before tax was DKK 709.5 million, compared with DKK 349.5 million in 2005. This represents an increase of 103%.

One of the reasons for the strongly improved profit level is a significant increase in the number of pairs of shoes sold, where sales rose by 14.5% to almost 14.8 million pairs of shoes. Sales from ECCO's license manufacturer in Japan, whose sales totalled just under one million pairs of shoes, is to be added to this figure. Growth was recorded in all product groups – Men’s, Ladies’, Kids’, Golf and Performance, but Performance and Kids’ in particular have developed very strongly.

In 2006, ECCO attained net revenues of DKK 4,470 million, which represents an increase of 16.7% com-pared with 2005. 93% of net revenues were made up of shoe sales, the remaining 7% of sales of accessories as well as leather and wetblue.

Net shoe sales increased by 18.9%, which is partly due to the considerable growth in the number of pairs of shoes sold, and partly due to a 4% increase in the

average price per pair. The exchange rate effect on net revenue was insignificant. Net revenue for accessories increased by 33% and thus continued the positive development from 2005. The Group's third business area - sales of leather and wetblue – decreased by 11%, which is partially related to ECCO's rising need for leather for its own shoe production.

Profit before financials increased by 79% to DKK 759.5 million, and the operating margin increased from 11.1% to 17.0%. This constitutes a significant improvement to the earnings of the Group, due to higher volumes and higher average prices as well as developments in production costs, which were positively influenced by high capacity utilisation in our own factories.

Total costs increased by DKK 219 million, equivalent to 13.5%. This increase was primarily due to the fact that ECCO is now itself responsible for distribution in China, increased investment in marketing as well as continued development in retail operations. Furthermore, a num-ber of strategic projects has been implemented, which will help create the foundation for future earnings.

Net financials totalled DKK -50.0 million compared with DKK -74.3 million in 2005. This positive development is primarily due to exchange-rate adjustments related to debt denominated in foreign currency, which were positive in 2006 at DKK 12.0 million compared with a loss of DKK 5.8 million in 2005. Furthermore, net interest-bearing liabilities in the Group were reduced by approximately DKK 150 million.

Income tax amounted to DKK 209.4 million. The effective tax rate was therefore 29.5% compared with 35.6% in 2005. The effective tax rate in 2005 was negatively influenced by changes in deferred tax due to restructuring as well as reorganisation of the corporate structure.

Highlights of 2006

2002 2003 2004 2005 20060

3,000

6,000

9,000

12,000

15,000

Pairs of shoes sold (thousands)

Num

ber

of p

airs

(tho

usan

ds)

Net revenue / Operating margin

DK

K m

illio

n

2002 2003 2004 2005 20060

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

20.0%

12.0%

16.0%

8.0%

4.0%

0,0%

Net revenue (DKK million)

Operating margin

Shoes

Others

Accessories

Leather and wetblue

Net sales of the ECCO Group (in %)

92.8%

1.2%4.1% 1.9%

ECCO’s Annual report 20066

Profit for the year after tax and minority interests was DKK 489.5 million compared with DKK 225.7 million in 2005, which represents an increase of 117%.

The profit achieved should be viewed in light of the facts that in 2006, ECCO was hit by a fire at the factory in Thailand, which has some effect on profits, and that the final introduction of punitive tariffs on the import of certain types of leather shoes from China had a negative impact on profits. In both cases, it is difficult to state the exact financial effect, as a large proportion of this was due to complex production changes and delayed deliveries to our customers.

Balance sheetAt the end of 2006, the Group's total assets stood at DKK 3,651 million; an increase of DKK 365 million or to 11.1%.

Non-current assets totalled DKK 1,121 million, of which DKK 1,007 million was property, plant and equipment.

The Group's inventories of finished products increased by 19% at the end of the year, which is due to the pending invoicing of spring and summer goods, which in sales terms is expected to experience a significant increase compared to the same period of the previous year.

Equity at the end of 2006 was DKK 1,730 million compared with DKK 1,286 million at the end of 2005, an increase of 35%. Profit for the year contributed DKK 489 million. Currency translation of the equity of foreign subsidiaries amounted to DKK -21 million and currency translation of derivatives etc. amounted to DKK 11 million. In addition, dividends were paid totalling DKK 35 million.

The solvency ratio rose from 39.1% to 47.4%, which supports ECCO's overall goal of retaining the highest possible level of financial independence.

Cash flow statementThe consolidated cash flow from operating, investing and financing activities was DKK 4 million compared with DKK 311 million in 2005.

The consolidated cash flow from operating activities was DKK 427 million compared with DKK 515 million in 2005; a decrease of DKK 88 million equivalent to 17%. This decrease was primarily due to capital tied up in inventories as well as receivables from sales.

The cash flow from investing activities was DKK 235 million net compared with DKK 202 million in 2005; an increase of DKK 33 million or 16%. Investments were primarily focused on the expansion of production capacity in order to meet demand, including the continued development of the newly-established factory in China. Furthermore, as in previous years, investments were made in development and the roll-out of ECCO's concept sales.

DKK 150 million has been repaid on non-current liabili-ties without corresponding increase of current liabilities during the financial year. Paid out dividends amounted to DKK 35 million.

2002 2003 2004 2005 20060

100

200

300

400

500

600

Cash Flow from operating activities (DKK million)

DK

K m

illio

n


ECCO's organisation reflects the basic concept that decisions should be made as close to the market as possible and by those who are best qualified to make them. Our 11 business units, supported by a strong head office, therefore have broad freedom of action to make the necessary decisions where things happen, and when market developments demand.

Group functionsThe ECCO Group's head office is responsible for developing the brand, design and products and concepts as well as other Group functions such as IT, Finance, HR, logistics and legal affairs. In addition, the head office functions as a support and supervisory unit for ECCO's individual business units.

Business unitsECCO's business units, with their strong leadership as well as their own budgets and annual accounts, have the opportunity to make rapid and focused decisions. The business units thus have direct responsibility for their own daily business and all related processes. ECCO's 11 business units are the Leather Group, the five shoe factories and the five sales regions, i.e. Central Europe, Western Europe, Eastern Europe and Middle East, the Americas and Asia/Pacific. (See page 8).

People create resultsHaving the right employees for the right jobs is crucial for ECCO, because our employees play a vital role in the success of the business. We emphasise the

importance of being an attractive place to work for all employees. We, therefore, focus on ensuring that our employees benefit from life-long education, constant challenges and new opportunities.

Our HR activities were therefore strengthened and professionalised in 2006 to ensure the long-term development of both the organisation and the individual employees. In addition, a good and stimulating work environment is an important part of ECCO's image and contributes to the recruitment of attractive employees. A model has been created as the basis for both identification and support of local and global employee potential.

All business units have therefore introduced a systematic development strategy for different groups of specialists in the individual business areas. Talent programmes have been implemented for both new employees and experienced staff. Management development programmes on all levels have been implemented accordingly. All development programmes are based on a method that combines theory and practice as well as business and product knowledge in a goal-oriented manner.

Organisation – delegation, clear responsibility and sensible decisions

Composition of employees by geography(End of year)

Central Europe Western Europe Eastern Europe

Americas Asia / Pacific

No.

of e

mp

loye

es

01,000

2002 2003 2004 2005 2006

2,0003,0004,0005,0006,0007,0008,0009,000

10,00011,00012,00013,000


Group structure as of 31 December 2006

ECCO Europe East and Middle East

POLANDECCO Europe East and Middle East Sp. z o.o.

- POLAND ECCO Shoes Poland Sp. z o.o.

- THE CZECH REP. ECCO Boty Ceská republika s.r.o.

- SLOVAKIA ECCO Shoes Slovakia, s.r.o

ECCO Americas

USAECCO USA, Inc.

- USA ECCO Retail LLC

CANADAECCO Shoes Canada, Inc.

ECCO Asia /Pacific

HONG KONGECCO Asia Pacific Limited

- HONG KONG ECCO Shoes Hong Kong Limited

- SINGAPORE ECCO Singapore Pte. Ltd.

- AUSTRALIA ECCO Shoes Pacific Pty. Ltd.

- NEW ZEALAND ECCO Shoes (NZ) Limited

- INDIA ECCO India Trading Private Limited

- SINGAPORE

ECCO China Wholesale Holding (Singapore) Pte. Ltd.

- CHINA ECCO (Shanghai) Co. Ltd.

Dormant companies have been left out

THE NETHERLANDSECCO Europe West B.V.

UKECCO Shoes UK Limited

BELGIUMECCO Belgium N.V.

FRANCEECCO France Diffusion S.a.r.l.

PORTUGALECCO (Portugal) Sales – Comercialização de

Sapatos, Lda.

SPAINECCO Shoes Iberica, S.L.

ITALYECCO Scarpe Italia S.r.l.

ECCO Europe West

ECCO Sko A/S

SWEDENECCO Sverige AB

DENMARKSalgsselskabet ECCO Danmark A/S

- DENMARK ECCO Retail A/S

NORWAYECCO Norge A/S

FINLANDOy ECCO-Suomi Ab

GERMANYECCO Schuhe GmbH

AUSTRIAECCO Trading GmbH

SWITZERLANDECCO Schuhe Schweiz GmbH

Accessories:SWITZERLANDECCO Shoes International Ltd

ECCO Europe Central

ECCO Shoe Factories

PORTUGAL Ecco’let (Portugal) – Fábrica de Sapatos, Lda

SLOVAKIAECCO Slovakia, a.s.

INDONESIAP.T. ECCO Indonesia

THAILANDECCO (Thailand) Co., Ltd.

SINGAPOREECCO China Holding (Singapore) Pte. Ltd.

- CHINA ECCO (Xiamen) Co. Ltd.

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.

Subsidiaries, Production

Subsidiaries, Sales


Central Europe Western Europe Eastern Europe and Middle East


ECCO Sales regions

ECCO’s Annual report 2006�0

Our collections

With the ambition of being able to offer the world's most comfortable shoes, ECCO invests more than 40 years of experience in two main collections each year – spring/summer and autumn/winter. Our design and product development departments refuse to compromise in terms of the ongoing development of our collections, and they continually focus on creating products of the highest quality, best comfort and the most innovative design.

One of ECCO's decisive competitive advantages is our leading market position in the use of direct injected soles. This special technology, where the soles are injected into a special mould and attached to the upper of the shoe under high pressure, is vital to ECCO's famous comfort, lightness and quality. A significant part of the collection work is our constant focus on developing our technological knowledge, so that we can create new, innovative and market-oriented designs. The Futura Design Center at ECCO's head office demonstrates our long-term investment in innovation and design.

The collections are the backbone of our success, and in 2006 they achieved a major breakthrough. A mix of innovative design, top quality and ECCO's comfort created a solid foundation for our 2006 result. The design and previously unseen detailing of the direct injection soles of our two 2006 collections enabled us to increase the already substantial gap to our competitors and to bring ECCO’s direct injection products to the next level. Our customers clearly rewarded our efforts. The direct injection products top-ped the list of the best-selling products in all segments.

But how is a successful shoe collection created?

Every year the collection work involves a long process of laboratory testing, practical testing and local market integration each year. And all of this is on top of the daily design and product development work carried out by people with a passion for shoes.

Testing in the shoe laboratoryECCO does not just collaborate with leading profes-sors and scientists of anatomy, we own and operate our own shoe laboratory. It is our goal that every single shoe is tested to the maximum by professionals who know the background of ECCO’s products. In our shoe laboratory, all aspects of the shoes’ performance are thoroughly tested: grip is tested on wet or slippery surfaces, the durability and flexibility of the soles are tested with advanced testing equipment, and the resistance of the shoes to cold weather and the ability to stay warm are tested in climate chambers, just to

Composition of shoe sales in 2006(in %)

Ladies’

Performance / Golf

Men’s Kids’

40%

30%

15%

15%

ECCO’s Annual report 2006 ��

mention some of the many tests that we carry out in our laboratory.

Practical testsBut at ECCO we are not satisfied with merely subjecting our shoes to extreme tests in our test laboratory. We also evaluate the shoes in the conditions in which they are to be used: in the real world and on real feet.

Our own employees are a central part of these practical tests. Comfort is a quality which is difficult to measure – comfortable shoes should be tested by real people. Therefore, ECCO has organised a team of enthusiastic testers who carry out long-term fit and wear tests. In their own words, they describe their experiences with the coming season's products. ECCO's own employees are trained never to compromise on quality. Due to our internal fit and wear testing it is not unusual to see a businessman in jacket and tie wearing a pair of white ECCO Supercross sneakers in ECCO's offices.

But the office carpeting or the factory concrete floors are not suitable for the testing of all our shoes. Our golf and running shoes are thoroughly tested by world-class athletes, who test the shoes in the environments they were produced for. Some of the world's best golfers, such as Colin Montgomerie and Thomas Bjørn, test ECCO's golf shoes on golf courses throughout the world. Torbjørn Sindballe, who reclaimed the world championships in long distance triathlon in 2006, is a dedicated participant in the entire development process and an unrivalled tester of ECCO's running shoes. Our walking boots are tested in the mountains of Sweden,

Slovakia or Nepal by carefully selected people who understand the importance of properly-made footwear. The Danish mountaineer Mogens Jensen, who aims to be the first asthmatic to reach the summit of Mount Everest without using supplementary oxygen, tests ECCO's outdoor products in the Himalayas.

We test a large number of shoe types. When ECCO develops shoes with a new type of sole, we send our shoes to refuse collectors, postmen and others, who walk many kilometres every day. This way we test the soles under maximum wear conditions.

Adaptation to local marketsAnother important element in the collection work is adaptation to local markets. ECCO is an international business with global scope. It is therefore our goal that both the spring/summer and autumn/winter collections are matched with the newest trends and requirements in our local markets. This is a big challenge, but a task that has to be taken seriously.

With regards to adapting the global collections to local market requirements, ECCO's headquarters arrange at least two major conferences each year attended by around 200 sales representatives, marketing people and other representatives from ECCO's various markets, so that local markets can take part in the collection work. Their sales forecasts create the basis for the selection of local market collections from the global and regional collections. Based on our global success, we are convinced that this time-consuming work pays off.

At the big conferences at ECCO’s Conference Centre hard work creates the local collections

ECCO’s Annual report 2006��

ECCO Austin - Men's City shoe

Men's collection

The Men's collection had an outstanding year in 2006. Sales from both the spring and autumn collections exceeded 2 million pairs and ended a little over 4 million pairs for the year as a whole. Compared to 2005, the Men's collection therefore experienced a growth of 11%.

As ECCO's City collection has been the driving force of the major growth of recent years, the modernisation of the casual series was central to the Men's collection in 2006. Products that suit a more relaxed lifestyle are increasingly in demand by customers all over the world.

Our City series remains very strong. One of the most popular products is ECCO New York, which sells more than 200,000 pairs each season.

It is a very important challenge to develop the collection from more traditional to modern products, so that we are even more competitive in the future. Therefore, ECCO will continue the search for new technical solutions, ideas and materials in the coming seasons, so that we can make new products that can only be produced thanks to the combination of ECCO's know-how.

Greatest successesECCO's response to the more relaxed lifestyle is ECCO Supercross. ECCO Supercross follows in the footsteps of the Ladies’ collection success story of ECCO Shark, ECCO Vibration and ECCO Spark and represents a totally new product type for men in ECCO's casual pro-duct range. ECCO Supercross is a sneaker-style shoe of outstanding construction and design. In terms of

pricing, it also stands apart by being in a higher price range than the rest of the casual group.

Another new development is ECCO Austin, which is a classic, handmade city shoe. Even in the launch season of autumn/winter 2006, ECCO Austin was very popular, and we can see that its popularity is growing in 2007.


ECCO Spark - Ladies' sandal

Ladies’ collection

In 2006, the Ladies’ collection successfully continued the modernisation of the range, so that the appeal to both loyal and completely new customer groups is increased. The collection will also further strengthen ECCO's position as an innovative brand of high quality. With a growth rate of 5% compared to the previous year, the Ladies’ collection stays on the right track.

As part of the significant collection development, we have focused on developing modern alternatives to some of ECCO's more classic products. Even though we are aiming to attract new customers, we still intend to service our existing, loyal customers.

The process of modernisation will not affect the famous ECCO comfort. On the contrary, the new products are at least as comfortable as all our previous shoes, since ECCO's technology makes it possible to challenge the convention that a choice has to be made between style and comfort. ECCO's customers can have both smart appearance and extraordinary comfort.

Greatest successesThe ECCO Spark sandal is one of the best examples of the new generation of ECCO shoes in the 2006 spring/summer collection. ECCO Spark has a far more sporty look than all other sandals we have made, and, in addition, it is manufactured using ECCO's direct injection technology to guarantee utmost comfort and the highest level of quality.

ECCO Spark’s unique appearance and features proved to have both strong PR value and strong customer appeal. In the first season, 169,000 pairs of ECCO

Spark sandals were sold, which made ECCO Spark the best-selling new product group in the 2006 spring/summer collection.

ECCO Winter Breeze was definitely one of the highlights of the 2006 autumn/winter collection. Despite the fact that they go for an above-average price, the smart appearance, fit and comfort made them a bestseller. 115,000 pairs were sold in the first season.


ECCO Heatwave - Kids' sandal

Kids’ collection

The Kids’ collection also experienced great success in 2006 with a growth in sales of 31%. This increase is not due to success in one or two markets, but due to increased penetration in all of our markets. This has strengthened our position in the segment of children's footwear all over the world.

With regards to product development, the collection made another great leap forward on the road to distinguishing ECCO's kids shoes from other brands. This was achieved through innovative design and the best selection of materials - including an increase in the number of direct injection products, which no one else in the market can produce. Direct injection products are very relevant in all segments, but the advantages of this unique technology – lightness, comfort and flexibility – seldom face up to such great challenges as with our youngest customers, when they climb trees and explore playgrounds all day long.

But comfort and high quality are not the only factors that matter to children today. Footwear also has to look good. The development of unique and exciting designs was therefore another key area for the Kids’ collection in 2006.

Greatest successesIn keeping with the strategy of strengthening the collection with more direct injection products, ECCO launched the first sandal for kids with direct injection soles in 2006: ECCO Heatwave.

This new sandal was developed on ECCO's experience with Performance sandals for adults as a follow up to

previous sandal successes. This is the inspiration for ECCO Heatwave. Both quickly became bestsellers in the summer of 2006.

One of the best-selling products in the autumn/winter collection 2006 was ECCO Ice Breaker. This direct injected product is also provided with a technically advanced GORE-TEX® membrane that keeps feet warm and dry whilst allowing them to breathe. More than half of the kids footwear sold the autumn and winter seasons are GORE-TEX® products.

ECCO’s Annual report 2006 �5

Performance collection

2006 was another outstanding year for the Perfor-mance collection with phenomenal growth. All three segments – outdoor, walking and running – contributed to the increase. The total growth in the number of pairs sold was 83% compared to the previous year.

The fact that our efforts during recent years have been rewarded by consumers encouraged us to expand our Performance series. In 2006, we managed to activate unused potential by developing and marketing more products for outdoor, walking and running than in previous seasons. The ability to develop new technologies, improve existing products and create functional and attractive designs is vital for success in the long run and is key in order to increase our future market shares.

Our primary focus in 2006 was the outdoor segment. In this segment, ECCO offers something for both true outdoor enthusiasts, who are looking for a functionally superior product for active holidays, and for holidaymakers looking for a comfortable and reliable shoe for travel use. In both categories, ECCO's outdoor series offers a large selection of individual, technical and comfortable options.

In the walking segment, we succeeded in combining all our shoemaking know-how and our top level quality with a younger and more functional design.

In 2006, ECCO's running shoes were at the top of the podium, when the Danish triathlete Torbjørn Sindballe took first place in the long distance triathlon world championships for the second time in his career

wearing his special RXP 6000 running shoes from ECCO.

Greatest successesIt was not a big surprise that the ECCO Offroad sandal was a bestseller in spring/summer 2006. This new sandal has everything that an adventurer could wish for thanks to ECCO's direct injection soles. It is by far the lightest and most comfortable sandal in its class and with a durable rubber sole.

One of the best-selling products in the autumn/winter collection was ECCO Ultra Terrain Arctic. This shoe was specially developed to cope with switching from water to land all day long, but the smart looks and the super-flexible outsole make it as suitable for uneven terrain as it is for urban environments.

ECCO Ultra Terrain Arctic


ECCO Women's New Classic - Golf shoe

Golf collection

Only a few years ago, ECCO entered the world of golf and revolutionised the industry by launching top-quality, fashionable golf shoes, which were also actually comfortable to wear – a combination that has been ECCO's trademark in golf ever since. In 2006, the rate of growth remained high for the Golf collection.

ECCO surprised the golf industry once more in 2006 with new products. This time it was the launch of brightly-coloured sneaker-style shoes for a sport that traditionally has used white, black and brown shades.

The colour experiment was rewarded by ECCO's customers with impressive sales growth in 2006.

For the autumn/winter season, we increased our selection of GORE-TEX® products, which are particularly popular at that time of year. And for the first time ever, we used the newest technology from GORE-TEX®: the XCR membrane, which is even more breathable.

ECCO has sponsorship agreements with a number of the world's best golfers, including Thomas Bjørn, Colin Montgomerie, Aaron Baddeley, Iben Tinning, Juli Inkster and Thongchai Jaidee. In 2006, this impressive list was extended with two more world class golfers, as Anna Rawson and Fred Couples became new ECCO golf ambassadors.

Greatest successesThe launch of two new groups, ECCO Men’s New Casual and ECCO Women’s New Classic, exceeded all expectations and hereby contributed very significantly

to strengthening ECCO's market position within golf shoes.

A major factor in this success is ECCO's focused marketing efforts combined with our focus on staying innovative, developing unique designs and challenging technology every time we make a new golf shoe.


Sponsor agreements

Thongchai Jaidee – 37 years, Thailand.No 1 Asian golfer in 2005

Anna Rawson – 26 years, AustraliaVoted “The world’s sexiest golfer” in 2005 by Golf Punk.

Aaron Baddeley – 26 years, AustraliaTwo wins on the PGA Tour in USA.

Fred Couples – 48 years, USA1992 Masters Champion

Iben Tinning – 33 years, DenmarkNo. 1 in Europe in 2005 with 3 wins on the European Tour that year.

Thomas Bjørn – 36 years, Denmark8 wins on the European Tour.


The interior design and overall service are carefully planned to support the customers’ total buying experience and expectations to everything linked to ECCO’s products.

Growth in all regionsIn 2006, ECCO experienced substantial growth in the sales of shoes and accessories in all five sales regions. In total, net revenue in DKK rose by 19%. The growth in sales volume was some 14%.

In 2005, the equivalent figures were 13% and 7%. It is overwhelmingly clear that such growth is proof that the on-going development of ECCO's collections fulfils the demands of active consumers in all parts of the world.

Central EuropeECCO's Central European region consists of the German-speaking countries and Scandinavia. In 2006, we succeeded in continuing the positive development of 2005 in this mature and competitive region. Revenue growth was 8%, and the increase in the sales volume was 7%. This result can primarily be attributed to a focus on improved distribution and marketing of our products. Furthermore, the growth was supported by a general expansion of the product range in the region.

Western EuropeECCO's Western European region covers the Benelux countries, the United Kingdom and Southern Europe. In 2006 a, revenue growth of 7% was attained, along with an increase in sales volume of 3%. This substantial revenue growth in relation to the increase in sales volume indicates our focus on adding more value for the customer to each individual shoe through new, advanced features, which have resulted in a higher price level.

Eastern Europe and Middle EastOnce again ECCO created strong growth in the Eastern European region. Revenues increased by 43% whilst the sales volume increased by 40%. As has been the case in recent years, it continues to be the major distributors that carry the big proportion of sales for this region. A part of the growth in the case of the distributors in 2006 was created through increased activity towards wholesale customers. In the Eastern European markets ECCO's brand is closely associated with innovation, technology and modernity, which is part of the reason for such excellent growth rates.

AmericasECCO’s American region covers the USA, Canada and the South American markets. The increase in revenues in ECCO Americas was 21% in 2006, whilst the growth in sales volume was 19%. A more detailed segmenta-tion of customers has resulted in improved manage-ment of sales activities. The result was further boosted by the considerable new efforts made in the region including a number of new activities in department stores, where the entire organisation is involved in wide-scope sales activities.

Sales – regions and shops

Composition of sales volume by geography,in 2006

Central Europe Western Europe Eastern Europe


17%

19%

5%

23%

36%


Asia/PacificIn 2006, the increase in revenues was some 56%, and the growth in sales volume was 23%. In previous years sales in China have been handled by a distributor, but the 2006 sales in the Chinese market were handled by our own subsidiary. The high growth in revenues is partly to be seen in light of this change. The fact that several smaller markets in the region began to gain a footing in 2006 also contributed to profits, as did the fact that ECCO's own retail activities developed extremely well.

AccessoriesSales of accessories make up some 1% of ECCO's total revenues, and the area experienced an excellentgrowth rate of 33% in 2006. Accessories such as matching bags help strengthen the complete brand experience, whereas advice about and sales of care

products for ECCO's shoes are natural extensions to the main product and individual parts of the service experience in ECCO shops.

Shop conceptECCO is a global brand. Therefore, it is important that ECCO's products are marketed in surroundings that support the brand and strengthen the total experience expected by the customer.

The goal-oriented training of shop personnel is a cornerstone of ECCO's shop concept. All customers must receive high-level, professional service, and individual advice that fully lives up to the just expectations they have of everything that is linked to ECCO's products.

The shop strategy is a strong and independent part of ECCO's overall business strategy. Sales efforts focus on ECCO's own and partner-operated shops supplemented by carefully fitted Shop-in-Shops. This way the best possible guarantee that the customers receive the same good buying experience every single time is achieved. In connection with the opening of new shops the requirements for the choice of the right partners and the best shop locations are just as strict as the standards set for ECCO's products. Everything has to fit together to form a synthesis.

The opening of new ECCO shops is a key part of the overall growth strategy, as the search for new partners and suitable locations naturally intensifies in the regions, where the unused potential is greatest.

ECCO Shop in Bulgaria

ECCO Shop in Denmark

�005 �006 Shops 457 551 - of which own shops 97 98

Shop-in-Shops 769 1018

- of which own shops 25 39


Assembly line at ECCO’s factory in Indonesia.

ECCO's unique choiceDevelopment and healthy growth must be founded on involvement and genuine interest in all separate parts of the process. Therefore, it is ECCO's clear choice to control the entire value chain from cow to consumer.This choice is fundamental to our philosophy and business strategy. To us, the care and focus given to the entire value chain, right from the production of leather in our own tanneries through the development of shoes to marketing and sales, guarantee the highest quality possible of the end product.

This business model is unique in the global shoe industry, where the outsourcing of production has been the dominant mantra for many years. At ECCO, we deliberately go the completely opposite way, which means that the majority by far of ECCO's total production takes place in our own shoe factories. As a central part of this strategy, major investment continues to be made in our own production factories and production technology, which will also be vital to the development of ECCO's high level of quality in the future.

Events in 2006 confirmed the view that our own production gives ECCO clear competitive advantages through the power of synergies that can constantly be utilised, whether the aim is technological development, better planning and logistics or an increased level of expertise. At the same time, a high level of own production gives us a unique opportunity to ensure that our products are manufactured in a working environment that fulfils ECCO's Code of Conduct and lives up to health and safety standards for our employees.

Direct injection– a competitive advantageOur long-term production strategy is to continuously refine and develop ECCO's market-leading position within direct injected soles. Our direct injection technology involves placing the upper part of the shoe in a mould before injecting the sole directly onto the upper under high pressure. This is the foundation of ECCO's trademarks – quality, lightness and comfort.

This expertise must be maintained and developed. We, therefore, constantly refine and further develop our technology, and thus our products. In line with this goal, ECCO's internal mould workshops in Denmark and Thailand were further developed in 2006, so delivery times and development costs are constantly reduced.

ECCO's own shoe factoriesECCO has own shoe factories in Portugal, Slovakia, Thailand, Indonesia and China.

In 2006, 0.7 million pairs of shoes were produced by the factory in Portugal (2.3 million in 2005), 1.9 mil-lion pairs in Indonesia (0.8 million in 2005), 4.8 million pairs in Thailand (3.9 million in 2005), 3.2 million pairs in Slovakia (2.8 million in 2005) and 1.0 million pairs in China (0.5 million in 2005).

As a result of the EU’s decision to impose special tariffs on the import of leather shoes from China, we had to change our investment plan and production arrangements in China. These tariffs have significant financial consequences for ECCO, and in the end it is the consumers who will have to pay, as the shoes will

Own production – own choice


become more expensive. With the support of the Danish government and the forward-looking members of the European shoe industry, ECCO unfortunately argued in vain against the EU's decision. As a consequence of the tariffs, ECCO's investment plans in China had to be adjusted. Furthermore, production arrangements have been changed, so that ECCO's Chinese factory now increasingly supplies components to other ECCO units instead of solely focusing on the production of finished shoes.

ECCO Portugal – global R&D centreAfter a restructuring process, ECCO Portugal is now a fully integrated part of ECCO's research and development activities, which otherwise primarily take place in Denmark. Due to the high-technology shoe production of around 0.7 million pairs per year, ECCO Portugal now functions as a service unit for research and development for the other ECCO factories. Here, new production processes for advan-ced products are developed, before the products are transferred to other units for mass-production. Other ECCO units visit Portugal for training in connection with the actual production and technical aspects of new products. ECCO Portugal also sends out technicians to help organise and adapt the production lines for the new products.

Around 60% of ECCO's new developments go through ECCO Portugal, whereas less advanced products can be produced right from the start at ECCO's other factories. ECCO Portugal's own high-technology shoe production primarily includes ECCO's advanced world-class products such as the ECCO President, ECCO Golf World Class and the new ECCO Montreal.

ECCO's Code of ConductAt ECCO, we see ourselves as guests in the countries in which we operate. ECCO wants to be a good "cor-porate citizen" in all areas of our global organisation. Respect for other cultures is not an issue open for discussion; it is a principle to be followed. As far back as 1999, ECCO developed a set of ethical principles – ECCO’s Code of Conduct - which is to be used in all ECCO’s companies all over the world. ECCO's compre-hensive own production offers a unique opportunity to make sure that the principles of the Code of Conduct are adhered to. The principles have been continuously updated since 1999.

In 2006, we introduced a revised edition of ECCO's Code of Conduct to support the continuous implemen-tation of the code. Through partnership, openness, trai-ning and education, these changes are to support the entire organisation in the application of the principles of ECCO's Code of Conduct to provide even better pro-tection of the environment and of all ECCO employees' working conditions (see page 44).

The major part of ECCO’s total production is on our own shoe factories.

2002 2003 2004 2005 20060

50

100

150

200

250

Tangible fixed asset investments (DKK million)

DK

K m

illio

n


Own tanneriesECCO's most important raw material is first-class leather, which is the reason why we have our own tanneries in Holland, Thailand and Indonesia. When we constantly develop our expertise in this area, we ensure that this important raw material always lives up to ECCO's strict quality requirements. ECCO's tanneries also sell a significant part of their production to external customers all over the world. In fact, ECCO's tanneries are among the leading manufacturers of quality leather for use as car and plane seats, gloves, bags and shoes produced by other companies.

ECCO LeanTo maintain our competitiveness, ECCO must be second-to-none compared to the very best in all individual parts of the value chain. ECCO's continuous development plan contains a detailed focus on the prin-ciples of Lean company development. ECCO Lean was therefore initiated at the factory in Slovakia in 2005. With employee involvement as the underlying ambition of the project, the first ECCO Lean Academy was held in Slovakia. In 2006, the newly-trained Lean change agents, who were individually chosen for the task, were sent out in ECCO's global organisation to implement the Lean principles together with the local employees. In 2006, this process, which includes the training of managers and key personnel, has focused on ECCO's factories in Slovakia, Indonesia and Thailand.

The Lean academies, which include two independent groups per year, take place in a highly international and multicultural atmosphere. At the two first academies, there were 8 different nationalities represented at both courses.

In 2006, ECCO Lean has specifically focused on the development and improvement of production activities. In 2007, efforts will be more directed towards the tanneries, product development and distribution centres. The whole of ECCO's value chain will be covered by ECCO Lean in 2010.

ECCO and the environmentEnvironmental concerns are extremely high on ECCO's list of priorities. We focus on the optimisation of production methods already in use just as we develop new environmentally-friendly manufacturing processes. In 2006, ECCO has focused on gaining new knowledge about the environment and working environment on a global level as well as utilising this knowledge broadly in the organisation through a wide distribution of know-how. At our audit and Group environment conferences, we develop the network that ensures the essential exchange of experience between all environment and working environment coordinators in the Group's tanneries and shoe factories.

We place great emphasis on this global forum where valuable ideas and best practices are exchanged. Further information on the Group's environmental efforts is found in the Group Environmental Statement in the back of this annual report. Here the Group's Policy for Environment, Health and Safety is presented together with a number of initiatives from the tanneries and shoe factories as well as statements from ECCO's production units with key figures on the year's environmental performance.

ECCO has own tanneries in The Netherlands, Thailand and Indonesia.


Financial risksDue to the international scope of ECCO’s business activities, a number of financial matters constantly evaluated by management impacts the Group’s results of operations and its equity. The approach to handling financial risks is determinated by the Supervisory Board and the Managing Board.

Foreign exchange risksForeign exchange risks are managed centrally. Through active management of purchase and selling currencies in our commercial transactions, we aim to minimise our net positions in the main currencies, EUR and USD.All material currency positions are hedged when currency exposure takes place, which happens at the point in time used for the calculation of purchase and sale prices.

Interest rate risksThe Group's interest rate risk is related to the changes in the interest rate for the Group's liabilities including refinancing and repayment. The interest rate risk is limited to the take-up of fixed interest rate loans as well as the entering into interest rate swaps.At the end of 2006, 86% of the Group's liabilities consisted of fixed interest rate loans/interest rate swaps. No interest rate hedging has been carried out for future take-up of loans.

Credit risksThe Group has no material credit risk apart from what has been recognised in the financial statements.

For selected markets/customers, "letters of credit",bank guarantees or debtor insurance are used but the number, size division as well as the geographical dispersion of customers create the necessary diversification for consistent use of debtor insurance not to appear cost-effective. Larger customers, such as retail shops, purchasing associations or distributors are evaluated individually and continuously.

Financial matters

It is the opinion of management that there have been no events after the end of the accounting year that could significantly affect the Group's financial status.

Outlook for �007ECCO also expects a positive trend in 2007, with growth in net revenue of at least 10%. Around a quarter of ECCO's sales takes place in the American market. A fall in the dollar exchange rate will have a negative impact on total revenues when converted to Danish Kroner. The dollar exchange rate has been assumed to be 5.82 DKK/USD in the expectations presented here.

The operating margin, which was 17% in 2006, will probably stabilise at a slightly lower level, which should be partly seen in the light of the full effect of the import tariffs imposed for certain types of shoe from China.

ECCO will continue to make significant investments in concept sales, selected own shops, the expansion of the franchise shop network and marketing particularly in the growth regions of Eastern Europe and the Middle East, Americas and Asia/Pacific but also in our mature markets in Western and Central Europe.

Furthermore, ECCO has implemented a number of internal projects that will also have a negative effect on the 2007 cost level but will help to ensure the continued high quality of everything we do.

Management expects growth in all of ECCO's sales regions and product divisions in 2007. Thisis supported by the Group's sales for the spring/summer 2007 collection and preliminary order intake for the autumn/winter 2007 collection.

Material events after 31 December 2006


Annual accounts 2006



Managing Board

Dieter Kasprzak Mikael Thinghuus Chief Executive Officer Chief Operating Officer

Jens Christian Meier Executive Vice President, Production

Supervisory Board

Hanni Toosbuy Kasprzak Karsten Borch Chairperson Vice Chairman

Torsten E. Rasmussen Mogens Munk-Rasmussen

Aage Andersen Bernd Scheelke Jakob Møller-Hansen Employee representative Employee representative Employee representative

The Supervisory Board and Managing Board of ECCO Sko A/S have today considered and adopted the Annual report for 2006.

The Annual report is presented in accordance with the Danish Financial Statements Act. We consider the accounting policies to be appropriate to the effect that the Annual report gives a true and fair view of the Group’s and the Company’s assets, liabilities and financial position at 31 December 2006 and of the results of the Group’s and the Company’s operations and the consolidated cash

flows for the financial year ended 31 December 2006.The Supplementary Environmental Statement of ECCO Sko A/S gives a true and fair view within the framework of generally accepted guidelines for the area.

We recommend that the Annual report be adopted by the shareholders at the Annual General Meeting.

Bredebro, 21 March 2007

Statement by the Management on the Annual report


Auditors’ report

Independent auditors' report

To the shareholders of ECCO Sko A/SWe have audited the annual report of ECCO Sko A/S for the financial year 1 January - 31 December 2006, which comprises the statement by the Executive and Supervisory Boards on the annual report, Management's review, accounting policies, income statement, balance sheet, and notes for the Group as well as for the parent company and the consolidated cash flow statement. The annual report has been prepared in accordance with the Danish Financial Statements Act.

The Executive and Supervisory Boards' responsibility for the annual reportThe Executive and Supervisory Boards are responsible for the preparation and fair presentation of this annual report in accordance with the Danish Financial Statements Act. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of an annual report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors' responsibility and basis of opinionOur responsibility is to express an opinion on this annual report based on our audit. We conducted our audit in accordance with Danish Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the annual report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual report. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the annual report, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company's preparation and fair presentation of the annual report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Executive and Supervisory Boards, as well as evaluating the overall presentation of the annual report.

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

Our audit did not result in any qualification.

OpinionIn our opinion, the annual report gives a true and fair view of the Group's and the parent company's financial position at 31 December 2006 and of the results of the Group's and the parent company's operations and consolidated cash flows for the financial year 1 January - 31 December 2006 in accordance with the Danish Financial Statements Act.

Esbjerg, 21 March 2007

KPMG C.JespersenStatsautoriseret Revisionsinteressentskab

John Lesbo Kenn K. Karlsen

State Authorised State Authorised

Public Accountant Public Accountant


Basis of preparationThe financial statements of the Parent Company and the Group for 2006 are presented in accordance with the provisions of the Danish Financial Statements Act applicable to class C companies.

Basis of consolidationThe consolidated financial statements comprise ECCO Sko A/S and subsidiaries in which ECCO Sko A/S has a controlling influence on the company’s operations. The consolidated financial statements are prepared on the basis of the audited financial statements of ECCO Sko A/S and its subsidiaries by adding items of a similar nature. The financial statements used for consolidation are adapted to the accounting policies of the Group.

On consolidation, intercompany income and expenses, intercompany accounts and gains on intercompany sales and purchases between the consolidated companies are eliminated. On acquisition of subsidiaries, the share of the acquired company’s net asset value is determined based on the Group’s accounting policies. If the acquisition price deviates from the net asset value, the difference is allocated, wherever possible, to the assets and liabilities or provisions that have a higher or lower value.

The income statements of foreign subsidiaries are translated at average exchange rates, and the balance sheet is translated at the exchange rates ruling on the balance sheet date. Exchange differences arising on the translation of the opening equity of foreign subsidiaries at the exchange rates ruling on 31 December, and differences between the net profit of subsidiaries at average exchange rates and the exchange rates ruling at 31 December are recognised in equity. As in previous years, property, machinery, plant and equipment in the production subsidiaries in Portugal, Indonesia, Thailand, Slovakia and China is measured at cost in DKK less accumulated depreciation. Currency translation of receivables from foreign subsidiaries, where the receivables are part of the total investment in the subsidiary, is recognised directly in equity.

Minority interestsMinority interests’ share of profits and equity of subsidiary undertakings is stated separately.

Income statementNet revenue: Sales are recognised on dispatch of products, and 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 profits before tax. The proportionate share of tax in the companies is recognised in the line item “income taxes”.

Unrealised intercompany profits: Unrealised intercompany profits comprise profits unrealised in the Group on trading in products and fixed assets between consolidated companies.

Income taxes: Estimated tax on the profit for the year is recognised in the income statement along with the year’s change in deferred tax. No tax is set aside for investments in subsidiaries as it is intended to hold the investments for more than three years.

ECCO Sko A/S and the Danish subsidiaries are encompassed by the Danish regulations regarding mandatory joint taxation. Subsidiaries are a part of the joint taxation from the moment, where they are a part of the consolidation in the annual accounts to the moment, where they are omitted from the consolidation.

ECCO HOLDING A/S is the administrative company in the joint taxation and settles all payments of corporate tax in the Danish subsidiaries with the tax authorities.

The current Danish corporate tax is allocated by paying a joint taxation contribution between the companies in the joint taxation. The contribution is allocated according to the taxable income in the companies. Companies in the joint taxation with a taxable deficit receive a joint taxation contribution from companies, which have been able to use this deficit to reduce their taxable income.

Accounting policies


The tax of this year, which consists of the current corporate tax, the joint taxation contribution and the change in deferred tax – also changes which are caused by reduction of the corporate tax rate – is a part of the income statement with the share, which can be allocated to profit of the year, and is a part of the equity with the share, which can be allocated to entries in equity.

According to the Danish regulations regarding mandatory joint taxation, the debt of ECCO Sko A/S and the Danish subsidiaries towards the tax authorities is settled when the companies have paid the joint taxation contribution to the administrative company.

Deferred tax is calculated at 28% of the difference between the carrying amounts and tax values of current assets and fixed assets. Furthermore, the tax value of tax losses carried forward is recognised in the amount at which they are expected to be used.

If, on a net basis, there is a tax asset, the amount of future tax savings is recognised, provided that it is deemed more likely than not that the deduction can be offset against future taxable profits.

Balance sheetIntangible 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 futu-re 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 writedowns 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 acquired from and including 1 January 2002 is capitalised and amortised on a straight-line basis over the expected useful economic life, determined on the basis of earnings projections for the individual business areas, not to exceed 20 years. When the Parent Company acquires shares at a price higher than the value determined applying the equity method, such excess value is recognised as an intangible asset and amortised over the same period as goodwill on consolidation.

Property, plant, and equipment: Property, plant and equipment is recognised at cost plus any revaluation and less accumulated depreciation. Depreciation is charged on a straight-line basis over the expected use-ful lives of the assets.

The expected useful lives are as follows: - Buildings 20 years - Plant and machinery, vehicles,

fixtures and fittings 5 years - Computer software 3 years

Depreciation is not charged on land and staff housing. Assets with a cost of less than DKK 11 thousand per unit are charged to the income statement in the year of acquisition. Investment grants are offset against the assets that form the basis for the grants.

If an asset type is revalued, this applies to all assets within that group of assets.

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 calculated cost, consisting of the cost of raw materials and consumables and manufacturing costs plus a share of production overheads. Commercial products are valued at acquisition price. Products with a net realisable value lower than the cost or acquisition price are written down to the lower value.

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 instruments are initially recognised in the balance sheet at cost and subsequently remeasured at their fair value. Derivative financial instruments are included in other receivables and other debt.

Changes in the fair value of derivative financial instruments that meet the criteria to be designated as fair value hedges of a recognised asset or a recognised liability are recognised in the income statement together with any changes in the fair value of the hedged asset or hedged liability.

Changes in the fair value of derivative financial instruments that meet the conditions for hedging future assets or liabilities are recognised in equity under retained earnings. Income and expenses relating to such hedge transactions are transferred from equity on realisation of the hedged item.

Treasury shares: The cost of treasury shares is recognised directly on the Company’s share capital and is consequently not stated as an asset in the balance sheet.

Currency translation: Receivables and payables denominated in foreign currencies are translated to the exchange rate ruling at year-end.

ProvisionsProvisions 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 obliga-tion, and it is likely that the obligation will materialise.

Cash flow statementThe 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.


Income statement for the year ended 31 December 2006

Group Parent Company

�006 �005 �006 �005Note DKK ‘000

1 Net revenue �,�70,�0� �,8�0,5�6 �,065,��7 �,6��,��

Change in inventories of finished products

and work in progress 12,328 43,083 (136) 74,321

Costs of raw materials and consumables (1,706,354) (1,625,267) (2,110,596) (1,910,383)

Other external costs (918,559) (769,850) (319,631) (241,258)

2 Staff costs (919,996) (849,633) (240,004) (208,100)

5,6 Amortisation and depreciation (178,360) (205,039) (43,455) (58,053)

Profit before financials 759,�6� ��,8�0 �5�,605 �77,650

3 Financial income 96,408 40,754 34,814 14,712

Financial expenses (146,387) (115,048) (53,718) (61,929)

Profit from subsidiaries - - 364,563 193,401

Intercompany profit - - (866) (73,860)

Profit before tax 709,�8� ��9,5�6 696,�98 ��9,97�

4 Income taxes (209,423) (124,512) (206,926) (124,243)

Group profit 500,060 ��5,0�� 89,�7� ��5,7��

11 Minority interests (10,588) 697 - -

Profit for the year �89,�7� ��5,7�� 89,�7� ��5,7��

Proposed allocation:

Revaluation reserve for undistributed

profit in subsidiaries (8,540) 5,446

Retained earnings 356,012 185,285

Proposed dividend 142,000 35,000

�89,�7� ��5,7��


Balance sheet as of 31 December 2006


Assets �006 �005 �006 �005Note DKK ‘000

FIXED ASSETS:

Intangible rights 52,345 62,611 20,588 22,463

5 Total intangible assets 5�,��5 6�,6�� 0,588 ��,�6�

Land and buildings 490,375 487,922 108,671 113,531

Plant and machinery 212,046 208,396 6,465 7,224

Other fixtures and fittings, tools and equipment 230,121 206,341 63,693 52,159

Property, plant and equipment in progress 74,883 49,495 23,685 26,358

6 Total property, plant and equipment �,007,��5 95�,�5� �0�,5�� 99,�7�

7,8 Investments in subsidiaries - - 985,006 988,875

8 Receivables from subsidiaries - - 471,001 166,606

9 Deferred tax 61,533 60,541 40,183 38,858

Total long-term financial assets 6�,5�� 60,5�� ,�96,�90 �,�9�,��9

TOTAL FIXED ASSETS �,��,�0� �,075,�06 �,7�9,�9� �,��6,07�

CURRENT ASSETS:

Raw materials and consumables 266,893 188,492 - -

Work in progress 45,927 42,395 - -

Finished products and commercial products 879,297 737,663 425,141 425,277

Total inventories �,�9�,��7 968,550 ��5,�� 5,�77

Trade receivables 477,089 411,714 75,926 49,770

Receivables from subsidiaries - - 328,298 364,324

Other receivables 154,756 114,338 53,571 13,436

Prepayments 42,760 56,402 15,770 34,531

Total receivables 67�,605 58�,�5� �7�,565 �6�,06�

Securities 8,5�6 �,85� �� 5

Cash 65�,��9 65�,�96 ��0,�59 �05,970

TOTAL CURRENT ASSETS �,5�9,�77 �,��0,05� �,�08,998 99�,��

TOTAL ASSETS �,650,680 �,�85,�58 �,9�8,�90 �,�09,507


Balance sheet as of 31 December 2006


Equity and liabilities �006 �005 �006 �005 Note DKK ‘000

Share capital 5,500 5,500 5,500 5,500

Revaluation reserve - - 495,804 525,156

Retained earnings 1,724,013 1,280,250 1,228,209 755,094

10 Total equity �,7�9,5�� ,�85,750 �,7�9,5�� ,�85,750

11 Minority interests ��,796 �8,8�9 - -

Provisions ��,�8� �8,5�9 - -

Credit institutions 1,012,879 1,162,789 852,094 777,056

12 Total long-term debt �,0��,879 �,�6�,789 85�,09� 777,056

Short-term part of long-term debt 173,918 134,953 125,656 84,556

Credit institutions 201,658 240,205 20,344 66,314

Trade payables 181,987 176,511 39,149 49,691

Payables to subsidiaries - - 70,865 91,489

4 Income taxes 44,884 25,400 4,792 201

Other payables 178,458 128,378 15,728 13,509

Deferred income 70,304 44,014 70,149 40,941

Total short-term debt 85�,�09 7�9,�6� ��6,68� ��6,70�

Total debt �,86�,088 �,9��,�50 �,�98,777 �,��,757

TOTAL EQUITY AND LIABILITIES �,650,680 �,�85,�58 �,9�8,�90 �,�09,507

13 Contingent liabilities and collateral security

14 Fees to auditors appointed at the annual general meeting

15 Related parties


Consolidated cash flow statement for the year ended 31 December 2006

�006 �005DKK ‘000

Cash flow from operating activities

Profit before tax 709,483 349,546

Adjustment for non-cash operating items:

Amortisation and depreciation 178,360 205,039

Exchange rate adjustments (420) 40,425

Tax adjustments 2,665 2,926

Working capital adjustments:

(Increase)/Decrease in inventories (223,567) (78,494)

(Increase)/Decrease in receivables (92,151) 12,039

Increase/(Decrease) in payables 5,476 45,409

Increase/(Decrease) in other payables 76,370 (26,142)

Increase/(Decrease) in provisions (35,246) 35,990

Income taxes paid (193,596) (71,660)

��7,�7� 5�5,078

Cash flow from investing activities

Payments to invest in fixed assets:

Intangible assets (5,446) (18,293)

Property plant and equipment (229,363) (183,385)

(��,809) (�0�,678)

Cash flow from financing activities

Change in minority interests (4,466) (7,109)

(Repayment of)/proceeds from new long-term debt (149,910) 208,682

Increase/(Decrease) in short-term debt 418 (173,958)

Dividend paid (35,000) (30,000)

(�88,958) (�,�85)

Cash flow from operating, investing and financing activities �,607 ��,0�5

Cash and cash equivalents at beginning of year 659,048 348,033

Cash and cash equivalents at year-end 66�,655 659,0�8

Breakdown of cash and cash equivalents:

Securities 8,526 4,852

Cash 654,129 654,196

66�,655 659,0�8



�006 �005 �006 �005DKK ‘000

Salaries 835,549 770,325 226,358 195,214

Pensions 28,757 22,433 12,143 11,455

Other social security costs 55,690 56,875 1,503 1,431

Staff costs 9�9,996 8�9,6�� 0,00� �08,�00

Average number of employees 11,520 9,981 469 483

Number of employees at year-end 12,670 10,534 468 467

Fees to Managing Board and Supervisory Board:

Managing Board - - 33,150 13,774

Supervisory Board - - 417 400

� Segment information

� Staff costs and management and staff information

Group

�006 �005DKK ‘000

Segment information

Shoes & accessories 4,200,789 3,527,334

Others 269,614 303,212

Total net revenue �,�70,�0� �,8�0,5�6

Net revenue shoes & accessories

ECCO Europe West 666,328 622,046

ECCO Europe Central 1,338,950 1,244,280

ECCO Europe East and Middle East 699,101 490,597

ECCO Americas 1,150,579 948,970

ECCO Asia / Pacific 345,831 221,441

Total shoes & accessories �,�00,789 �,5�7,��

Reference is made to the ECCO Group structure page 8 regarding the definition of the geographic regions.

Notes to the Group and Parent Company financial statements


� Financial income


DKK ‘000

Cost at 1 January 121,803 35,602

Currency translation (2,855) -

Additions 8,665 1,621

Disposals (3,660) -

Cost at �� December ��,95� �7,��

Accumulated amortisation at 1 January 59,192 13,139

Currency translation (1,154) -

Amortisation 14,011 3,496

Amortisation on assets sold (441) -

Accumulated amortisation at �� December 7�,608 �6,6�5

Carrying amount at �� December 5�,��5 �0,588

Amortised over 5-10 years 5-10 years


�006 �005DKK ‘000

In the Parent Company, interest income from subsidiaries amounted to 22,029 12,352

Parent Company

� Income taxes

Cost Debt Cost Debt

�006 �006 �006 �006DKK ‘000

Income taxes payable as at 1 January 25,400 201

Income taxes paid in 2006 (1,858)

Prior-year adjustment 1,586 1,657

Estimated tax for 2006 213,080 213,080 100,672 100,672

of which paid (193,596) (95,880)

Tax in subsidiaries 106,056

Year’s adjustment of deferred tax (3,657) (1,388)

�09,�� ,88� �06,9�6 �,79�

5 Intangible assets



6 Property, plant and equipment


DKK ‘000

GROUP

Cost at 1 January 729,657 764,657 750,779 49,495

Currency translation (4,310) (47) (8,227) (447)

Additions 44,280 73,788 120,451 63,744

Disposals (19,120) (77,788) (73,015) (37,909)

Cost at �� December 750,507 760,6�0 789,988 7�,88�

Accumulated depreciation at 1 January 241,735 556,261 544,438 -

Currency translation (94) (23) (3,171) -

Depreciation 30,887 60,868 72,594 -

Depreciation on disposals (12,396) (68,542) (53,994) -

Accumulated depreciation at �� December �60,�� 5�8,56� 559,867 -

Carrying amount at �� December �90,�75 ��,0�6 ��0,�� 7�,88�

PARENT COMPANY

Cost at 1 January 225,316 92,668 215,608 26,358

Additions 4,579 4,273 37,985 25,666

Disposals (6,683) (21,305) (30,852) (28,339)

Cost at �� December ��,�� 75,6�6 ��,7�� ,685

Accumulated depreciation at 1 January 111,785 85,444 163,449 -

Depreciation 9,042 4,861 26,056 -

Depreciation on disposals (6,286) (21,134) (30,457) -

Accumulated depreciation at �� December ��,5�� 69,�7� �59,0�8 -

Carrying amount at �� December �08,67� 6,�65 6�,69� ��,685

Depreciated over 20 years 5 years 3-5 years

(The officially rated cash property value at 1 October 2006 of the Parent Company’s properties was DKK 213,110 thousand).

Land and

buildings

Plant and

machinery

Fixtures and fittings, tools

and equipment

Property, plant and equipment

in progress



7 Investments in subsidiaries

Ownership interest Share capital

ECCO (Thailand) Co., Ltd. 95% 200,000 k THB

ECCO Slovakia, a.s. 94.78% 230,000 k SKK

Ecco'let (Portugal) Fábrica de Sapatos, Lda. 100% 2,770 k EUR

P.T. ECCO Indonesia 100% 43,976,000 k IDR

ECCO China Holding (Singapore) Pte. Ltd. 80% 26,000 k USD

ECCO (Xiamen) Co. Ltd. 80% 10,000 k USD

ECCO Shoe (Xiamen) Co. Ltd. (dormant) 80% 315 k USD

ECCO Tannery Holding (Singapore) Pte. Ltd. (dormant) 100% 1,600 k USD

ECCO Tannery (Xiamen) Co. Ltd. (China) (dormant) 100% 1,500 k USD

ECCO Tannery (Thailand) Co. Ltd. 100% 185,000 k THB

ECCO Tannery (Netherlands) B.V. 100% 1,000 k EUR

ECCO Leather B.V. (Netherlands) 100% 400 k EUR

PT. ECCO Tannery (Indonesia) 100% 37,403,550 k IDR

ECCO Accessories Ltd. (UK) (dormant) 100% 200 k GBP

ECCO Asia Pacific Limited (Hong Kong) 100% 21,500 k HKD

ECCO Belgium N.V. 100% 360 k EUR

ECCO Boty Ceska republika s.r.o. (Czech Republic) 100% 5,000 k CZK

ECCO China Wholesale Holding (Singapore) Pte. Ltd. 50% 200 k USD

ECCO Europe East and Middle East Sp. z o. o. (Poland) 100% 12,500 k PLN

ECCO Europe West B.V. (Netherlands) 100% 23 k EUR

ECCO Exportadora Ltda (Brazil) (dormant) 100% 48 k BRL

ECCO France Diffusion S.a.r.l. 100% 50 k EUR

ECCO India Trading Private Limited 100% 6,969 k INR

ECCO Internet, INC. (USA) 100% 100 k USD

ECCO Norge A/S (Norway) 100% 15,000 k NOK

ECCO (Portugal) Sales-Comercialização de Sapatos, Lda. 100% 800 k EUR

ECCO Retail A/S (Denmark) 100% 1,000 k DKK

ECCO Retail LLC (USA) 100% 300 k USD

ECCO Scarpe Italia S.r.l. 100% 100 k EUR

ECCO Schuhe GmbH (Germany) 100% 1,790 k EUR

ECCO Schuhe Schweiz GmbH (Switzerland) 100% 170 k CHF

ECCO (Shanghai) Co. Ltd 50% 2,100 k USD

ECCO Shoes (NZ) Limited (New Zealand) 100% 100 k NZD

ECCO Shoes Canada, Inc. 100% 6,502 k CAD

ECCO Shoes Hong Kong Ltd. 100% 3,000 k HKD

ECCO Shoes International Ltd (Switzerland) 100% 2,250 k CHF

ECCO Shoes Pacific Pty. Ltd. (Australia) 100% 3,250 k AUD

ECCO Shoes Poland Sp. z o. o. 100% 10,000 k PLN

ECCO Shoes Slovakia s.r.o 100% 5,000 k SKK

ECCO Shoes UK Limited 100% 4,000 k GBP

ECCO Singapore Pte. Ltd. 100% 2,510 k SGD

ECCO Shoes Iberica, S.L. (Spain) 100% 4 k EUR

ECCO Sverige AB (Sweden) 100% 1,000 k SEK

ECCO Trading GmbH (Austria) 100% 400 k EUR

ECCO USA, Inc. 100% 7,500 k USD

ECCO Wholesale Limited (UK) (dormant) 100% 1,200 k GBP

Eccolet Portugal ApS (Denmark) 100% 200 k DKK

Oy ECCO-Suomi Ab (Finland) 100% 102 k EUR

Salgsselskabet ECCO Danmark A/S 100% 1,000 k DKK



8 Investments in subsidiaries

9 Deferred tax

�006 �005 �006 �005DKK ‘000

Deferred tax comprises:

Inventories, unrealised intercompany gains 52,860 58,166 44,844 50,697

Tax loss 5,164 3,113 - -

Other assets 3,509 (738) (4,661) (11,839)

Recognised at �� December 6�,5�� 60,5�� 0,�8� �8,858

Recognised at � January (60,5��) (��,��6) (�8,858) (95,996)

Total adjustment 99� (5�,795) �,��5 (57,��8)

Of which adjusted in equity (2,665) (2,926) (63) (2,926)


Investments in subsidiaries

Receivables from subsidiaries

�006 �005 �006 �005DKK ‘000

Cost at 1 January 647,302 551,355 166,606 82,691

Additions 26,350 95,947 315,068 87,493

Disposals - - (10,673) (3,578)

Cost at �� December 67�,65� 6�7,�0� �7�,00� �66,606

Accumulated revaluation at 1 January 525,156 470,429 - -

Currency translation of foreign subsidiaries (20,812) 49,282 - -

Profit after tax of subsidiaries 258,505 127,446 - -

Dividend (267,045) (122,000) - -

Net revaluation (29,352) 54,727 - -

Accumulated revaluation at �� December �95,80� 5�5,�56 - -

Intercompany gains (�8�,�50) (�8�,58�) - -

Carrying amount at �� December 985,006 988,875 �7�,00� �66,606



�0 Equity

�006 �005 �006 �005DKK ‘000

The share capital consists of:

112 shares (in amounts from DKK 500 to DKK 1,658,200)

Total share capital 5,500 5,500 5,500 5,500

Reserve for net revaluation according to the equity method

Reserve for net revaluation at 1 January - - 525,156 470,429

Net revaluation - - (29,352) 54,727

Reserve for net revaluation at �� December 0 0 �95,80� 5�5,�56

Brought forward from prior years/revaluation reversed 1,280,250 1,028,526 755,094 558,097

Proposed dividend in respect of the financial year 142,000 35,000 142,000 35,000

Dividend paid (35,000) (30,000) (35,000) (30,000)

Exchange rate adjustment to year-end exchange rates (20,812) 49,282 - -

Currency translation of subordinated loan capital in subsidiaries (5,063) 5,294 (5,063) 5,294

Gain on financial swap 5,226 1,986 5,226 1,986

Retained from profit for the year 347,472 190,731 356,012 185,286

Adjustment of currency hedges of future sales 9,940 (569) 9,940 (569)

Total retained earnings �,7��,0�� ,�80,�50 �,��8,�09 755,09�

Total equity �,7�9,5�� ,�85,750 �,7�9,5�� ,�85,750

The nominal value of treasury shares is DKK 550 thousand; they were acquired in 1989 at DKK 6,875 thousand. The treasury shares are

carried at DKK 0.




Group

�006 �005DKK ‘000

Minority interests at 1 January 38,829 44,338

Additions - 30,742

Disposals (4,466) (37,851)

Share of profit for the year 10,588 (697)

Currency translation (1,155) 2,297

Minority interests at �� December ��,796 �8,8�9

Breakdown of minority interests:

Minority interests regarding ECCO (Thailand) Co., Ltd, 5,921 5,413

Minority interests regarding ECCO Slovakia, a.s. 4,685 5,458

Minority interests regarding ECCO China Holding (Singapore) Pte. Ltd. 23,133 27,363

Minority interests regarding ECCO China Wholesale Holding (Singapore) Pte. Ltd. 10,057 595

��,796 �8,8�9

�� Minority interests

�� Long-term debt


�006 �005 �006 �005DKK ‘000

Long-term debt due more than five years

after the end of the financial year 202,420 178,449 202,420 178,449



�� Fees to auditors appointed at the annual general meeting

�� Contingent liabilities and collateral security


�006 �005 �006 �005DKK ‘000

CONTINGENT LIABILITIES

Rent and lease liabilities 429,194 492,096 35,508 39,752

Guarantees and letters of comfort for staff 429 865 429 865

Guarantees and letters to suppliers and subsidiaries 147,739 10,550 141,276 3,087

Litigation - 1,865 - 1,865

Sponsorships 12,250 11,681 12,250 11,681

COLLATERAL SECURITY

The 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 172,333 174,500 80,000 80,000

Guarantee for import duty 20,960 31,368 - -


�006 �005 �006 �005DKK ‘000

Total fees to auditors appointed at the annual general meeting:

KPMG 6,780 6,511 1,576 1,220

Others 915 740 75 87

7,695 7,�5� �,65� �,�07

Of which fees for non-audit services:

KPMG 1,739 2,160 717 677

Others 257 134 75 87

�,996 �,�9� 79� 76�



�5 Related parties

ECCO Sko A/S has the following related party with controlling influence:

ECCO HOLDING A/S Industrivej 5, Bredebro, Denmark

There have been no material transactions with the Parent Company other than the distribution of dividend. ECCO Sko A/S' related parties with controlling influence comprise the Company’s shareholders, Supervisory Board, the Managing Board as well as relatives of these persons. Related parties also comprise companies in which the individuals mentioned above have material interests.

ECCO Sko A/S trades on normal market conditions with companies in which the same individuals have controlling influence. The Company’s list pursuant to section 28b of the Danish Companies Act of shareholders with more than 5% of the votes or more than 5% of the nominal value of the share capital includes:

- ECCO HOLDING A/S, Bredebro, Denmark (Parent Company)- Kasprzak Holding ApS, Bredebro, Denmark

ECCO’s Code of Conduct

Objectives:ECCO designs, manufactures and markets footwear and related accessories to consumers around the world. Over the last more than 40 years, ECCO has developed from a local Danish company into an international company with production units and sales subsidiaries all over the world.

Today, ECCO is one of the world’s leading manufactu-rers and marketers of high-quality footwear. ECCO has attained this position through constant innovation and sound business principles. However, it is just as crucial to ECCO’s success that the company leads the way when it comes to good corporate citizenship.

No matter where in the world ECCO operates, this is done according to a set of principles which stipulate that we will behave in a correct and decent manner. This is our heritage as a Danish company. The princip-les apply to employee relations, to environmental considerations and to relations with business partners.

As expressed by K. Toosbuy, the founder of ECCO, ‘ECCO is a guest in each of the countries in which it operates and shall as such respect the culture of the country’.

The respect for other people and cultures is deeply roo-ted in the company. As a large employer, ECCO under-stands its responsibility and accepts it.

ECCO will only achieve long-term business success by demonstrating good corporate citizenship, which in turn can only be secured if the business is based on constant achievement of good results.

This is the very heart of ECCO's Code of Conduct as regards sustainable development, issues related to religion, employee relations, health and safety, environmental protection and community relations. It is essential to ECCO that ECCO's Code of Conduct is an integral part of the entire value chain. We there-fore expect not only the companies within the ECCO Group, but also our external suppliers, wholesale and retail customers to acknowledge and respect ECCO's Code of Conduct. We regularly control that ECCO's Code of Conduct is being complied with.

ECCO’s �0 Commitments:

1. ECCO is a guest in each of the countries in which it operates and will as such respect the culture of the individual country.

2. ECCO supports, respects and has a proactive approach to the protection of internationally defined human rights.

3. ECCO respects equal opportunities and supports abolishment of discrimination in the workplace.

4. ECCO respects a person’s right to freedom of religion.

5. ECCO respects the right to freedom of association.

6. ECCO wishes employees to have access to a workplace free of harassment or abuse and condemns any forms of compulsory labour.

7. ECCO supports the UN Convention on the Rights of the Child.

8. ECCO provides training, education and further development of human resources on all levels.

9. ECCO aims to be a leading company in the area of environment, health and safety and aims to promote sustainable development.

10. ECCO wishes to ensure that the conduct of its business as an absolute minimum always complies with all relevant laws and regulations.

Read more about ECCO's Code of Conduct at: http://corporate.ecco.com/coc.pdf


Group environmental statement 2006



View of the marshland in Southern Jutland neighbouring ECCO’s corporate head office: for a global company Danish roots are an obligation – also in terms of the environment…

National differences in a global communityLike all other important activities in the ECCO Group our policy for environment, health and safety and our related activities are developed across borders. Since the beginning of the seventies ECCO has manufac-tured shoes at the global market and our environment, health and safety activities are increasingly internationally organised – with a sharp view on the global perspective.

Focus and challenges are continuously increasing. It is an important area which will fill up more and more in the everyday life at ECCO in the future - in headquar-ters, in sales subsidiaries as well as in our production units. It includes both ECCO’s own factories and our suppliers. It is a never-ending process.

There are also legislative and cultural differences across borders when it comes to environment, health and safety. This challenges the organisation’s procedures and strategic development. Many people all over the ECCO Group are involved in preparing, implementing and anchoring our global programme about environment, health and safety on a daily basis. Everybody has the same objective, namely to ensure that ECCO takes the environment into consideration at all times, when leather and shoes are manufactured. It is done in a global community – across the national differences that naturally exist.

Employee involvementEmployee involvement in ECCO’s global environmental programme is an absolute necessity in order to be successful. Without local effort, an ambitious global policy about environment, health and safety does not amount to much. All tanneries and shoe factories have

an environmental, health and safety committee with both management and employee members. The committees are pivotal in the day-to-day environmental activities of the production units. In addition, training in environmen-tal, health and safety issues forms an integral part of the in-house training programme “From cow to shoe” for all new employees.

Environment, health and safety in constant developmentThe ECCO Group’s Policy for Environment, Health and Safety represents the overall framework for the Group’s global environment, health and safety activities.

ECCO and the environment

ENVIRONMENTAL IMPACT AND THE ECCO GROUP

Environmental impact is defined by ECCO to be the effect on human beings and the external environment which results from the production, use and disposal of ECCO products.

Internal environmental impact means:The effects on the employees manufacturing the products, i.e. health and safety issues such as physical, chemical, biological and ergonomic factors, employee conditions and rights, as well as social factors.

External environmental impact means:The effect on the near and distant environments, i.e. soil, water and air, for example in the form of waste, wastewater and emissions.


The ECCO Group’s Policy for Environment, Health & SafetyThe ECCO Group is a global company with approximately 13,000 employees. The Group has the whole value chain at its disposal in terms of tanneries, shoe factories, sales subsidiaries and shops. In this way the Group controls the whole process from rawhides to finished shoes. We seek to achieve an environmentally suitable development and production of our products.

The ECCO Group uses a minimum of harmful chemical substances and absolutely no forbidden substances. All raw materials and components must fulfil the international recognized SG list for leather products published by German test institutes. The ECCO Group has chosen to extend the list so as to include harmful chemical substances, which we find critical.

Environmental IssuesIt is the ECCO Group’s objective actively to minimize the environmental impact on near and distant surroundings. This is done by optimum utilization of raw materials and energy sources and by reducing and re-using waste from tannery processes and shoe production wherever possible.

To ensure an appropriate development of the Group in terms of environmental issues every ECCO tannery and shoe factory shall continuously:

- Promote the four R’s: Reduce, Re-use, Repair, Recycle

- Ensure the lowest possible consumption of resources and amount of waste

- Minimize the use of harmful substances- Train and educate employees to minimize the

environmental impact

Health & Safety IssuesThe ECCO Group’s most important resource is the employees. The ECCO Group wishes to pro-mote and strengthen a physical, psychological and social healthy working environment for all employees. This is among other things done by actively involving employees in preventing work

accidents and by minimizing health and safety impact for all employees.

To ensure an appropriate development of the Group in terms of health and safety issues every ECCO tannery and shoe factory shall continuously:

- Reduce health and safety impact for the indi-vidual employee to a minimum

- Strengthen, prevent and improve health and safety impact to prevent any kind of work acci-dent and prevent repetition

- Ensure the employees’ job satisfaction and health at the workplace

- Use the employees’ resources in the most appropriate way for all parties

- Establish one or more organisations to handle health and safety issues and hereby ensure a high level of employee involvement

- Train and educate employees to ensure an optimum working environment

The ECCO Group will engage the employees in environmental, health and safety issues through information, training and education. It rests on the employee to take responsibility and do an active effort aiming at continuous improvements of environmental, health and safety issues.

The ECCO Group will openly co-operate with authorities and at all times meet the legislation related to environmental, health and safety issues. The ECCO Group will on a yearly basis re-assess the ECCO Group’s Policy for Environment, Health & Safety at the yearly environmental conference held for all tanneries and shoe factories

D. KasprzakCEO

M. ThinghuusCOO

J.C. MeierEVP Production

The efforts on environment, health and safety take place across borders in a daily co-operation between ECCO’s Group Environmental Department and decentralised environmental entities within and outside ECCO.

At the annual audits and Group environment, health and safety conferences, a network is developed which ensures the gathering of knowledge and exchange of experiences among all the environment, health and safety coordinators at the Group’s tanneries and shoe factories. ECCO attaches a great deal of importance to this global forum for the exchange of valuable ideas and best practice.

We especially focus on audits. During 2006 a lot of work has been put into thorough audits in ECCO. In the com-ing years we will increase these efforts further to ensure that ECCO's Code of Conduct is observed at our own factories and at our suppliers at all times (ECCO’s Code of Conduct is further described in page 44).

Harmful chemical substancesIn the global environmental activities, the ECCO Group aims to meet the criteria for harmful chemical substanc-es based, among other things, on the internationally recognized SG list for shoes. SG is an abbreviation of the German term Schadstoffgeprüft (tested for harmful substances). The SG list contains threshold values for harmful substances in textiles and leather products.

This list is based on the latest knowledge about the effect of certain chemicals on human beings and animals and it is published by the recognised German testing institute TÜV Produkt und Umwelt GmbH, Rheinland in collaboration with the Institut Fresius GmbH and Prüf- und Forschungsinstitut Pirmasens. These institutes constantly assess the effects of different substances used in the industry.

ECCO has chosen to extend the list to include harmful substances which we consider to be critical. These appear in the appendix “ECCO Supplement to the SG-list”. The Group Environmental Department updates these requirements for harmful substances on an ongoing basis to ensure that they are always in compliance with the international criteria.

Resource consumption from cow to shoeThe production of ECCO shoes requires a number of different resources, including energy, water, raw materials and components. For several years, we have made dedicated efforts to reduce the consumption of resources in our production of shoes, among other things by ensuring that the best possible production technologies are used, and that the production equipment used at all ECCO tanneries and factoriesis well-functioning and up to date.

Our tanneries produce process wastewater, whereas our shoe factories mainly produce domestic wastewater. All tanneries have sophisticated wastewater treatment plants for the treatment of tannery wastewater. This way, ECCO ensures that wastewater is treated to such a degree that we not only meet local discharge requirements but also comply with the Best Available Technology (BAT) for tanneries.

The main environmental impact from our shoe factories derives from energy consumption and waste production. The global environmental activities in ECCO foster many initiatives, which all have the aim to reduce this waste.

As it shows on the following pages, it is the project “Flesh to Fuel” which has lately contributed positively to improve the environment and minimize the impact from our tanneries - an exciting and innovative project which focuses on converting waste to energy. On the following pages you can also read about ECCO’s Code of Conduct on a practical level and ECCO's Code of Conduct Audits.

At the end of this Group Environmental Statement, there are statements containing information and key figures in relation to environmental, health and safety aspects for all ECCO tanneries and shoe factories for the past five years. The key figures for the individual production units are not materially different from those of the preceding years; the trend seen in recent years continues.

For additional information please go to:www.ecco.com/environment


Group Policy for Environment, Health & Safety

Strategy for Development of Environment,

Health & Safety

Guidelines for tanneries & shoe factories

Reporting & Monitoring, Auditing,

Benchmarking

Education & Training Programmes

Exchange of ’Best Practices’, Group

Conference

ECCO Environmental Management

System

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ECCO Group Environmental

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Supplier environmental

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Affiliate environmental

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Subsidary environmental

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Checking is good – education is better

As one of the world's leading shoe manufacturers with activities in over 60 countries, ECCO puts great empha-sis on environmental, health and safety conditions. In 2006, we changed our environmental audits to Code of Conduct audits to ensure that we protect people and the environment in the best way possible. In these audits a large number of areas, including the environment, health and safety, is audited.

The basis for our audits is ECCO's Code of Conduct - a piece of paper with detailed descriptions of how we want to act throughout the world. ECCO's Code of Conduct Audit is the practical guarantee that the words on paper are adhered to in daily operation.

The key words in ECCO’s audit programme are partnership, openness, education and training. We believe that through teamwork and cooperation we can reach much higher and achieve better results, than we could through checking. In the short-term, checks maybe reveal things that can be improved. But an audit is much more than just checking. It is through education and coaching that we really guarantee that things are as they should be. In all corners of the business – in our own factories as well as at our suppliers. This is achieved through audits from headquarters, and ECCO employees are stationed at the most significant suppliers.

A comprehensive programmeECCO's Code of Conduct Audit also ensures a uniform standard for ECCO’s environmental, health and safety-related conditions at the tanneries and shoe factories. This also ensures that all involved parties gain the necessary insight and knowledge on the area, and therefore proper understanding to create motivation to uphold all rules.

The audit programme reflects the 10 commitments in ECCO's Code of Conduct, such as for example waste handling, resource utilization, workplace assessment, safety conditions, prevention of industrial

accidents as well as respect for culture, freedom of religion, discrimination, union relations etc.

Communication and controlCommunication is a decisive element in auditing work. This is about building up trust in each other and ensuring through dialogue that all rules and laws are followed down to the last detail.

We are constantly working to create a positive atmos-phere around audits and to continuously learn from each other's experiences: good examples in the form of 'best practices' are important to emphasise. As part of the audit all areas of the applicable production location are reviewed. This means discussions with both managerial and ordinary staff and paperwork that e.g. covers overtime payments etc. is reviewed and checked.

When the review is complete, concluding meetings are held with management and the environmental managers. An action plan and timetable are prepared for aspects that need improving and a complete status report is compiled. In this way everyone is involved in the process. This creates understanding and a commitment to following the agreements in daily life.

If the rules are not followedEverything has a consequence. And if a production site does not comply with the applicable laws and rules, or demonstrates a lack of understanding in this area, ECCO will carefully consider sanctions. We have full access to change procedures in our own factories. At our sup-pliers, future collaboration will be carefully considered, if ECCO's Code of Conduct is not adhered to.

The key words for ECCO's Code of Conduct Audit are partnership, openness, education and cooperation. Hereby the foundation for a good environment, health and safety work conditions can be created.

Further information on the 10 commitments of ECCO's Code of Conduct can be found on page 44.

At the audits a lot of time is used in the entire production area

Status and suggestions for improvements are presented to management and environmental officers at the concluding meeting.

ECCO is a guest in many countries of the world. We want to act tactfully and with respect for culture, religion, laws and rules – locally and globally. ECCO's Code of Conduct is a way of thinking, expressed in 10 commit-ments, with the aim to ensure that no ECCO employee is in any doubt as to how we, as a Danish company, intend to act. This applies both in Denmark and beyond the country's borders. These commitments cover topics that affect employee relations, environmental aspects and relationships with collaboration partners. Adherence to and the implementation of these are vital, and because the ECCO Group itself owns the major part of its pro-duction facilities, we have very good opportunities to enter into close dialogue with all employees about the Code of Conduct and thereby ensure that our Code is kept. The Group's environmental department carries out audits each year, and here the primary focus is to evaluate, how we can comply with the requirements we set in real life.

When prayer is an everyday eventA concrete example of how ECCO's Code of Conduct is practised in reality: Commitment no.�: ECCO is a guest in each of the countries in which it operates and will as such respect the culture of the individual country. Commitment no.�: ECCO respects a person’s right to freedom of religion.

Commitments � and � of ECCO's Code of Conduct concern the fact that ECCO as a Danish company in all our decisions and actions will remember that we are a guest in the country where we are represented and therefore will always do our best to respect different cultures. For example the individual's right to follow his or her chosen belief is to be respected. But there is more to that principle than a simple desire to respect

religion. At ECCO it is also to be practically possible to practise one's religion. We believe that with some consideration this can be possible without disrupting our production flow.

A good example is our factory in Indonesia. The factory operates in the world's largest Muslim country, and of over 4,000 employees who work at ECCO's factory, around 95% are practising Muslims. This means that reli-gion and prayer are a part of everyday life at the factory.

According to Islam, believers must pray five times a day if possible. As a guest in the country ECCO wishes to respect this, and the factory has therefore furnished six prayer rooms which the employees can use. In the same way, special washroom facilities have been installed to allow the employees the opportunity to cleanse their bodies before prayer – in the way prescribed by Islam. Normally, the employees pray 1 – 2 times during a work-ing day – the remaining prayers take place early in the morning and in the evening after the end of the working day. The approximately 2,000 employees working at the same time pray on shifts, so that production does not come to a complete standstill, while everybody prays. Beyond the special prayer times everyone can of course use regular breaks for praying. On Fridays, on which, according to the Koran, Muslim men have to pray in a mosque at noon, the employees have an extra long break to do so. During Ramadan – Muslims' period of fasting – Muslims are not allowed to consume food and drink from sunrise to sunset. During these periods ECCO has reduced daily working hours by half an hour per shift and the employees are allowed to sleep at the factory during breaks. It is ECCO Indonesia's policy that emplo-yees still receive their salaries during periods when they pray or take the day off for other religious reasons.

ECCO Code of Conduct – more than just words


ECCO’s Annual report 2006 5�

As a global brand ECCO has a clear obligation to live up to the standards that consumers rightly demand of our shoes. We view the daily challenge of ensuring sustainability to be an exciting task.

It is ECCO's philosophy that constant challenges contribute to the biggest changes and the most noticeable development. This applies both when designing new shoes and when new and alternative ideas are considered in a sustainable manner.

Our ambition is to influence the entire sustainable development in a direction that ensures the safety of future generations. This means proper focus on the environment, society and economy.

When we work togetherSustainability is not just a national matter. The production chain is world-wide – as are environmental concerns. It is therefore a considerable task to ensure global sustainability - a task that no company can perform alone.

ECCO has therefore joined forces with 18 other Danish companies, all of whom are globally-oriented. This is a broad circle of progressive Danish commercial compa-nies that have founded the "Council for Sustainable Business Development". In this unique forum many useful experiences are exchanged between companies that operate in many of the same countries as ECCO.

ECCO's Chief Operating Officer, Mikael Thinghuus, says about the collaboration:

"For ECCO it has been a matter of course since we started in 1963 that we have an obligation towards the community around us. When we started up in the small Southern Jutland town of Bredebro sustainability was principally concerned with ensuring good employee conditions and terms for the local workers, who made great efforts to help ECCO get started.

Today the task has grown with the company – and we have grown with the task. As one of the world's leading shoe manufacturers we do everything we can to ensure

sustainability globally – and with more than just nice words on paper. Through collaboration in the council, we can ensure that concrete initiatives are more rapidly implemented in the real world – quite simply because we can learn from one another, and we are united in carrying out the task".

The members of the council are the highest-level mana-gers in the companies. This means that there is great ability to act and a short distance to decision-making in the council. In 2007, the primary areas of focus include:

· The companies' responsibility in the supplier chain (including principles of value chain management and credible auditing and cooperation)

· The council's influence in connection with the Danish government's preparation of a new sustainability strategy.

ECCO is particularly able to contribute with its vast knowledge and experience in the first area of focus. This is due to the fact that ECCO is characterized by the global division of work in contrast to many of the other participants in the Council. Global division of work means that all of ECCO's production technology as well as most of our suppliers are located outside of Denmark. This requires management of the global value chain.

The future brings obligations – luckily

The Council for Sustainable Business Development is founded by the following companies:

Arla Foods ambaBang & Olufsen A/SBrdr. Hartmann A/SCoop Danmark A/SDanfoss A/SDanisco A/SDatagrafECCO Sko A/SGrundfos Management A/SHilton Scandic ISS Management A/SJysk A/SKey2GreenLouis Poulsen El-teknik A/SMATAS A/SNORDEA Bank Danmark A/SNovozymes A/SPost DanmarkTanaco Danmark A/STryg Vesta A/S

This fleshy tissue – which represents approximately 20% of the weight of the raw hide – actually has a coveted energy potential in terms of bio fuel. This is utilized in the tannery’s boilers when heating water. This way, diesel is replaced by bio fuel as energy source.

From Flesh to Fuel

When the hide is removed from the animal carcass, a certain amount of fleshy tissue comes with it. This represents approximately 20% by weight of the raw hide. This is not needed for the leather making process and as such represents a waste material with all the costs of disposal. Like many process industries one of the biggest challenges facing the global leather industry is the large amounts of energy and water needed for the tanning process.

Against this background, the Research & Development Centre of ECCO’s tannery division has taken part in developing a special technology to reduce the impact of this disposal. The new technology consists of a “Flesh to fuel “ plant which is installed at ECCO’s tannery in Indonesia. The plant enables the extraction of tallow (animal fat) from the animal protein and waste water associated with it. The tallow is pure enough to be used as a bio fuel in a specially modified boiler which provides hot water for the tannery processes. In this way, we significantly reduce the use of diesel and the high CO2 pollution associated with burning it, contributing positively to the current climate debate about reducing the use of fossil fuels. Another important environmental plus from this process is that it reduces land filling by 50%.

A further potentialBio fuel (tallow) represents 15% of the fleshy material removed from the hides, 55% is water the remaining 30% is protein. We are still working on an environmentally sound method of reusing the protein. One possibility is transforming them into bio plastic. ECCO is working on setting up a joint project with a leading German University specializing in this field. Another

opportunity is to compost - the outcome could be a useful fertilizer. Either way a further significant reduction in land fill would be possible.

ECCO’s tannery in Indonesia is a member of a regional network of waste water treatment. This network considers environmental problems and solutions. ECCO will share and cooperate with local tanneries who wish to conduct trials on the Flesh to Fuel plant.

Idea, word – and actionFlesh-to-fuel is a good example of how to cooperate in a closed loop system inhouse at a tannery. A concrete way of conducting the ECCO Group Policy of Environment, Health and Safety in reality – by focusing on the four R’s: Reduce, Re-use, Repair and Re-cycle.


Facts in figures: - In the last three month of 2006, 8,000 liters per

month of diesel was replaced by bio fuel.- This means that CO2 emissions are reduced by

22 tons per month.- The total investment is EUR 900,000 in develo-

ping the flesh-to-fuel plant.

- ECCO has invested EUR 450,000. Further, subsidies of EUR 450,000 are achieved from the Dutch Agency for International Business and Coorperation (EVD) which is part of the Dutch Ministry of Economic Affairs. Its mission is to promote and encourage international business and international coorperation.


Collection tank

Green fleshings(after soaking)

Heat exchanger Tri-canterTallow

Waste Water

Solids

Mincer

The plant at ECCO’s tannery in Indonesia.4 employees at the machine where the fleshy tissue is cut from the raw hides.

Diagram: From rawhide to tallow. Tallow is the coveted Bio fuel.


There are constantly new projects in progress to reduce the environmental impact at the Research and Development Centre of ECCO’s tannery division in the Netherlands. A project deals with the possibility to reduce the amount of so called sludge.

Sludge is a waste product which is generated as a consequence of cleaning solids from tannery waste water.

The aim of the current project is to:- Reduce the total amount of sludge produced- Obtain better dewatering of the sludge so that less

water will be transported to landfill.

A number of techniques have been evaluated, but the most interesting to date involves the disintegration of the sludge with ultrasonic sound. The expression ultrasonic is used about velocities higher than the velocity of sound.

The sludge especially contains microorganisms, which are built up of cells. These cells contain a lot of water, which is difficult to remove. The cell water contains a lot of “food” useful in the tannery’s own waste water treatment plant. With ultrasonic sound it appears to be possible to break down the cells and make the “food” available.

Because of the broken cell structure and the availability of the extra “food”, digestion of the sludge is enhanced. As a consequence of this process biogas is produced.

The two photographs below show the sludge before and after the treatment with ultrasonic sound. This initiative will be investigated and developed further in 2007.

Sludge reduction

Untreated sludge

Treated sludge


ECCO Walkathon 2006 in the Danish capital Copenhagen.

ECCO Walkathon helps children change the world

ECCO Walkathon is a charity walking event that took its first steps in Copenhagen in 1999. It was ECCO's founder Karl Toosbuy, who had the idea of giving walkers their own Walkathon – in the same way that runners have their marathon. A day where the participants give money with their feet and gain new impressions with their eyes.

But ECCO Walkathon is more than just an enjoyable day spent with family and friends. It is in essence the realization of ECCO’s mission to offer a "smooth and delicate walk", while supporting a good cause. And since its beginning in 1999 the event has developed into an international event. In 2006 over 40,000 people gave 2.8 million Danish Kroner to charitable causes in Copenhagen, Berlin, Stockholm, Amsterdam and Warsaw.

��70 children in schoolUNICEF's school project for child workers in Bangladesh was one of the many projects that was supported by the ECCO Walkathon 2006. The project focused on setting up pavement schools for the poorest children – particularly girls– who were forced to work for the survival of their families.

Schooling is a distant and unachievable dream for many poor children in Bangladesh, where 1.5 mil-lion girls do not attend school. Collaboration between UNICEF and ECCO Walkathon has made it possible to help around 1,370 of these children to attend school.

At the pavement school the children learn the most basic skills they need to create a better future for themselves. The schools give the children more self-respect and make them aware of their own rights, so that they can help change and develop the community they live in.

ECCO Walkathon 2006 supported pavement schools for the poorest children in Bangladesh.


�006 �005 �00� �00� �00�

Production output

Uppers produced [pairs] 1,458 1,868 3,805 3,720 4,482

Shoes produced [pairs] 28,472 7,645 20,577 38,000 211,413

Energy and water consumption

Electricity [MWh] 2,379 2,353 2,560 2,734 2,896

Gas [m3] 165,221 130,463 132,873 139,970 118,335

Water [m3] 1,921 2,145 2,407 3,013 3,738

Consumption of sole material

Polyol and isocyanate [kg] 27,160 23,680 23,660 21,280 174,400

TPU [kg]] 7,000 7,400 5,600 8,700 17,200

Hardener [kg] 965 - - 2,800 12,810

Colour paste [kg] 893 522 30 75 3,050

Release agent [kg] 392 292 292 930 3,648

Finishing products [kg] - 30 - 440 2,343

Waste

Recyclable waste [tons] 3071 3021 3441 4591 2661

Waste otherwise disposed of [tons] 144 115 198 150 164

Waste to Kommunekemi [tons] 28 24 32 36 38

Industrial accidents

Accidents causing less than 1 day’s absence 6 10 12 7 16

Accidents reported to the Danish National Working

Environment Authority 1 2 2 3 4

1) The amount of recyclable waste stated includes cardboard which is disposed of for recycling purposes from ECCO’s distribution warehouse, DC-Tønder, At DC-Tønder, shoes are

repacked in shoe boxes from the factories according to customer specifications, which results in the production of a certain amount of packaging material waste which is disposed

of to a recycling company.

Production Development Denmark

Location: Bredebro, Denmark

Activity: Development and preparation of new articles and

prototype testing

Year of incorporation: 1963

No. of employees: 95

Special environmental

information: An important part of ECCO’s shoe production is the

moulding of soles, which is subject to approval according

to item D107. On 14 March 2002, the production was

granted environmental approval by Sønderjyllands Amt

(regional authority) covering shoe production as the main

activity and production of polymer materials (soles) as the

secondary activity. It should be noted that there has been

no violation of conditions during the financial year and that

no claims have been received related to this.

Statements from ECCO units - Denmark


Statements from ECCO units - Portugal

�006 �005 �00� �00�2 �00�

Production output

Uppers produced [pairs] 4,451 18,741 20,737 79,690 241,961

Shoes produced [pairs] 722,675 2,315,342 2,649,178 2,442,395 2,590,327


Electricity [MWh] 3,667 4,923 5,894 5,474 5,547

Gas [m3] 48,579 58,976 48,178 17,702 7,607

Oil [l] - - - - -

Water [m3] 730 1,583 3,013 3,551 8,661


Polyol and isocyanate [kg] 350,082 815,760 872,130 884,746 922,340

TPU [kg] 42,140 108,006 83,783 76,651 174,843

Hardener [kg] 17,066 35,326 42,323 68,040 18,290

Colour paste [kg] 7,629 19,307 19,326 18,507 20,346

Release agent [kg] 6,810 14,752 17,126 18,079 11,625

Finishing products [kg] 11,788 26,097 22,531 20,393 18,666

Waste



Chemical waste [tons] 42 121 94 67 63



Accidents causing 1 or more day’s absence 8 10 23 17 18

2) The tannery activities were permanently discontinued with effect from Q1 2003.

Ecco’let (Portugal) Fábrica de Sapatos, Lda.

Location: Santa Maria da Feira, Portugal

Activity: Research & Development Centre. Production of sale

samples and prototypes.




P.T. ECCO Tannery Indonesia & P.T. ECCO Indonesia

Location: Surabaya, Indonesia

Activity: Tannery and shoe factory. Production of wetblue, crust,

leather, uppers and shoes.

Year of establishment: 1991

Number of employees: Tannery: 379 Shoe factory: 3998

Statements from ECCO units - Indonesia

�006 �005 �00� �00� �00�

Production output

Wetblue produced [ft2] 19,459,930 18,532,447 18,249,560 15,970,001 15,338,582

Leather produced [ft2] 15,970,842 13,296,854 15,098,971 14,062,152 12,048,197

Uppers produced [pairs] 5,803,771 5,382,521 5,326,300 4,664,023 4,063,840

Shoes produced [pairs] 1,848,821 812,461 246,018 29,119 -


Electricity - tannery [MWh] 6,915 7,952 14,072 9,556 6,830

Electricity - factory [MWh] 10,653 8,228 4,300 5,375 6,772

Gas - factory [m3] 840 - - - -

Oil - tannery [l] 528,185 534,000 560,000 608,000 469,000

Oil - factory [l] 630 - - - -

Water - tannery [m3] 306,104 322,981 430,738 419,263 392,178

Water - factory [m3] 126,900 87,900 81,970 106,018 162,901


Polyol and isocyanat [kg] 420,657 - - - -

TPU [kg] 4,423 - - - -

Hardener [kg] 23,559 - - - -

Colour paste [kg]] 8,107 - - - -

Release agent [kg] 8,033 - - - -

Finish products [kg] 34,628 - - - -

Waste

Recyclable waste - tannery [tons] 3,507 4,684 9,6683 4,764 2,667

Recyclable waste - factory [tons] 452 260 24 - 229

Waste otherwise disposed of - tannery [tons] 3,597 5,334 5,585 5,012 5,398

Waste otherwise disposed of - factory [tons] 29 27 19 20 -

Chemical waste - tannery [tons] 22 22 25 28 -

Chemical waste - factory [tons] 24 - 4 - -

Tannery wastewater

Volume [m3] 278,137 293,587 327,367 351,808 369,471

BOD [mg/l] 15-18 29-36 19-49 50-65 40-55

Chromium [mg/l] 0,02-0,24 0,09-0,18 0,05-0,17 0,03-0,13 0,03

pH 6,8-7,4 6,2-6,7 7,1-7,2 6,8-7,1 6,8-7,1


Accidents causing less than 1 day’s absence - tannery 18 8 17 18 15

Accidents causing less than 1 day’s absence - factory 77 84 57 88 103

Accidents causing 1 or more day’s absence - tannery 0 5 2 9 6

Accidents causing 1 or more day’s absence - factory 19 27 8 22 33

3) The relatively high figure is due to the replacement of various machinery.


�006 �005 �00� �00� �00�

Production output

Leather produced [ft2] 12,020,621 9,978,619 10,095,425 9,138,590 8,046,037

Uppers produced [pairs] 2,752,234 3,127,255 3,237,054 2,868,227 2,708,639

Shoes produced [pairs] 4,864,367 3,860,069 3,910,382 3,319,623 3,264,747


Electricity - tannery [MWh] 5,831 5,663 5,827 5,456 5,129

Electricity - factory [MWh] 12,284 10,880 10,671 9,038 7,460

Oil - tannery [l] 386,614 366,219 390,000 360,000 307,350

Oil - factory [l] 17,751 10,069 13,044 4,800 4,800

Water - tannery [m3] 111,020 96,766 107,704 97,484 95,424

Water - factory [m3] 54,130 53,164 45,932 51,961 66,375


Polyol and isocyanate [kg] 1,562,353 1,143,301 1,280,455 928,548 1,115,821

TPU [kg] 328,525 269,431 111,424 56,796 -

Hardener [kg] 80,750 83,419 104,234 236,381 99,521

Colour paste [kg] 42,618 27,359 28,833 24,809 34,706

Release agent [kg] 21,518 18,726 29,587 8,590 10,168

Waste

Recyclable waste - tannery [tons] 63 32 38 585 264

Recyclable waste - factory [tons] 115 124 144 168 404

Waste otherwise disposed of - tannery [tons] 1,367 1,668 1,600 1,253 1,124

Waste otherwise disposed of - factory [tons] 968 756 815 326 330

Chemical waste - tannery [tons] 65 47 50 158 50

Chemical waste - factory [tons] 5 2 28 408 397

Tannery wastewater

Volume [m3] 97,843 84,267 83,367 88,389 87,133

BOD [mg/l] 10,0-15,0 10,0-13,0 5,7-13,0 5,3-8,0 6,0-8,0

Chromium [mg/l] 0,09-0,19 0,10 0,20-0,21 0,04-0,17 0,09-0,10

pH 7,5-7,7 7,5-7,7 7,5-7,6 7,3-7,6 7,5-7,8


Accidents causing less than 1 day’s absence - tannery 6 13 21 7 16

Accidents causing less than 1 day’s absence - factory 19 31 64 46 72

Accidents causing 1 or more day’s absence - tannery 8 2 3 1 1

Accidents causing 1 or more day’s absence - factory 16 8 16 16 7

ECCO Tannery (Thailand) Co. Ltd & ECCO (Thailand) Co., Ltd

Location: Ayudhthaya, Thailand

Activity: Tannery and shoe factory. Production of crust and finished

leather as well as uppers and finished shoes

Year of establishment: 1993

Number of employees: Tannery 209 Shoe factory 2981

Special information about

environmental issues: ECCO Thailand is ISO 14001 certified

Statements from ECCO units - Thailand


�006 �005 �00� �00� �00�

Production output

Uppers produced [pairs] - 75,786 163,297 259,136 792,473

Shoes produced [pairs] 3,227,331 2,841,235 2,771,025 2,265,312 1,974,408


Electricity [MWh] 7,440 6,204 5,722 4,730 4,337

Gas [m3] 260,231 274,611 250,204 179,301 96,457

Oil [l] - - - 2,281 1,600

Water [m3] 11,387 12,163 11,460 14,419 12,565


Polyol and isocyanate [kg] 1,210,592 1,049,100 1,134,160 724,030 539,681

TPU [kg] 221,863 144,050 158,249 150,524 140,825

Hardener [kg] 66,821 51,900 50,310 41,340 30,390

Colour paste [kg] 23,717 20,800 17,085 15,034 9,550

Release agent [kg] 12,066 13,960 12,888 8,985 6,175

Finishing products [kg] 34,492 18,210 24,958 15,662 13,309

Waste



Chemical waste [tons] 119 44 45 40 21



Accidents causing 1 or more day’s absence 26 12 19 18 13

ECCO Slovakia, a.s.

Location: Martin, Slovakia

Activity: Shoe factory. Production of uppers and shoes



Statements from ECCO units - Slovakia


�006 �005 �00� �00� �00�

Production output

Wetblue produced [ft2] 40,175,548 36,631,214 39,863,636 26,704,106 30,886,062


Electricity [MWh] 6,129 6,133 5,192 5,704 5,677

Gas [m3] 1,086,834 1,065,340 846,300 672,286 864,715

Water [m3] 362,286 337,996 244,593 273,784 287,676

Waste

Recyclable waste [tons] 13,222 17,895 4,249 9,480 11,702

Waste otherwise disposed of [tons] 7,153 295 141 125 182

Chemical waste [tons] 1,210 570 430 552 650

Tannery wastewater

Volume [m3] 360,511 365,820 267,668 302,895 306,138

BOD [mg/l] 11,0-15,0 12,5-14,0 9,0-14,0 9,0-22,0 7,0-20,0

Chromium [mg/l] 0,05-0,13 0,10-0,20 0,20-0,30 0,10-0,20 0,20-0,30

pH 7,5-8,1 7,7-8,0 7,2-7,7 7,0-8,0 6,6-7,6


Accidents causing less than 1 day’s absence 5 7 2 - -

Accidents causing 1 or more day’s absence 3 1 6 - -

ECCO Tannery (Holland) B.V.

Location: Dongen, The Netherlands

Activity: Tannery. Production of wetblue.

Leather development and research centre

Year of incorporation: Acquired by ECCO in 2001


Statements from ECCO units - The Netherlands


Statements from ECCO units - China

ECCO Xiamen

Location: Xiamen, China

Activity: Shoe factory. Production of uppers and shoes



�006 �005

Production output

Uppers produced [pairs] 1,725,406 428,076

Shoes produced [pairs] 867,642 475,724


Electricity [MWh] 4,412 3,435

Gas [m3] - -

Oil [l] 8,415 -

Water [m3] 29,882 23,096


Polyol and isocyanate [kg] 322,974 152,479

TPU [kg] 97,697 -

Hardener [kg] 18,557 7,744

Colour paste [kg] 5,793 2,945

Release agent [kg] 2,635 1,133

Finishing products [kg] 4,739 2,046

Waste

Recyclable waste [tons] 193 8,4

Waste otherwise disposed of [tons] 334 0,5

Chemical waste [tons] 3,7 3,6


Accidents causing less than 1 day’s absence 402 24

Accidents causing 1 or more day’s absence 24 2

ECCO Shop in UK

ECCO Shop in USA

ECCO Shop in Austria

ECCO Shop i Russia

ECCO Shop in Australia

ECCO Shop in Japan

ECCO Men's New Casual - Golf shoe.

Colin Montgomerie - Member of the Brittish empire, 43 years from Scotland and 8 times winner of the European Order of Merit.

ECCO Ice Breaker - Kids' boot.

ECCO Performance - Men's Offroad sandal.

ECCO Supercross - Men's Casual shoe.

ECCO Winter Breeze - Ladies' boot.

Sporty sneakers in ECCO’s offices are not a rare thing, when comfort is tested by the employees.

Comfort and fit are tested on a daily basis – even if warm winter boots do not match the outfit of the day.

southwestern denmark, ecco has been owned and managed by

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