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Össur operates within the global orthopaedic industry, delivering advanced and innovative solutions within the bracing and supports and prosthetics markets.
Össur’s bracing and supports products are used primarily to support joints and other body parts for therapeutic and preventative purposes. Össur offers a comprehensive line of custom made and off-the shelf products with a primary focus on osteoarthritis and injury solutions.
Prosthetics are artificial limbs and related products for individuals who were born without limbs or who have had limbs amputated. Össur offers a full range of premium lower limb prosthetics, including liners, knees and feet, as well as bionic upper limb products.
|ÖSSUR’S MANAGEMENT ESTIMATES:||BRACING AND SUPPORTS||PROSTHETICS|
|Market size||$2.7-3.0 billion||$1.2-1.3 billion|
The increasing number of the total global population aged 65 and older will underpin market growth as an aging society brings an increase in the frequency of vascular diseases and diabetes. These diseases are two of the main causes of amputation, as well as an increasing need for compression therapy solutions. An aging population also means an increased amount of fractures, joint instability and joint afflictions such as osteoarthritis, which increases the demand for different forms of bracing and supports products.
Obesity, which can result in diabetes and vascular diseases, is reaching epidemic proportions. Since diabetes and vascular diseases are the main causes of amputation, as the number of people afflicted by these diseases increases, the demand for prosthetics is expected to increase as well. Obesity and an aging population are also the main market drivers for osteoarthritis. At the same time active lifestyles and participation in sports increase, the demand for different types of support products continues to grow due to an increased number of sports related injuries and an increased demand for preventive products.
New technologies and technological combinations, as well as new materials, continuously yield improved products. Such technological advances lead to total market growth as demand is created for more technically advanced and expensive solutions.
Healthcare providers are constrained by budgets and, accordingly, they demand cost effective solutions without compromising quality. This has led to substantial investment in systems demonstrating and providing functional, clinical and economical outcomes to potential buyers. Two vital requirements for any market player in the orthopaedics industry are the ability to adapt to changing healthcare requirements and tailoring product offerings to meet the prevailing regulatory system.
The vast majority of Össur’s products are reimbursable through diverse public and private reimbursement systems. Reimbursement systems vary substantially between countries and product markets. Payers for Össur’s products usually include government reimbursement plans or insurance companies. Össur applies its reimbursement know-how from the earliest stages of product development to the post-sale education of customers. The Company pursues several strategies to manage and influence the reimbursement of Össur’s products and focuses on proving and communicating the functional and clinical outcome of its products.
Market environment in both segments has similar characteristics
In the orthopaedic industry, many stakeholders and decision makers are involved in purchasing decisions. Stakeholders can be categorized into five groups:
Individuals that use the products.
Healthcare professionals who prescribe products, based on the condition/clinical indication of the user.
Healthcare professionals who provide users with products, such as CPO’s, doctors, podiatrists.
Public and private insurance companies. Over 90% of Össur products are reimbursed by a third party.
Healthcare systems, insurance companies, medical associations, end-users and their families.
Investment in Össur’s shares involves a high degree of risk. Össur’s business, financial conditions, and results of operations going forward rest upon certain assumptions and could be negatively affected if any of the factors described below occur. The Company cannot ensure that its assumptions will be correct. Furthermore, additional risks and uncertainties not presently known to Össur, or that it currently deems immaterial, may adversely affect its business operations and financial results. The risk factors discussed below are not listed in order of priority.
This statutory statement on corporate governance is made in accordance with Article 66 (c) of the Icelandic Financial Statements Act No. 3/2006, as amended. This statement has been approved by the Board of Directors and is published in the Annual Report and on the Company‘s website. This statement covers the financial year that ended on 31 December 2016.
This statement includes information on the following items:
The Company has chosen to follow the Danish Recommendations on Corporate Governance because the Company‘s shares are traded on Nasdaq Copenhagen and it is recommended in the explanations to clause 4.1 of Nasdaq Copenhagen‘s rules for issuers of shares to apply the Danish Recommendations if foreign companies are not subject to other rules. Applying the Danish Recommendations will also make it easier for investors on the Danish market to assess the Company‘s corporate governance practices.
The latest Danish Recommendations on Corporate Governance, issued by the Corporate Governance Committee in May 2013 and updated in November 2014, are available on the Committee‘s website: www.corporategovernance.dk.
The Company complies with the vast majority of the Danish Recommendations. The few deviations are explained below. A complete report on the Company‘s compliance with each recommendation is available on the Company‘s website.
The Board of Directors has an ongoing dialogue with the CEO on the identification, description and handling of the business risks to which the Company may be exposed. Material risks and risk management are discussed in the Annual Report.
The Company’s risk management and internal controls, in relation to financial processes, are designed to control the risk of material misstatements. The Company designs its processes to ensure there are no material weaknesses with internal controls that could lead to a material misstatement in its financial reporting. The external Auditors’ evaluation of these processes is included in the Auditor’s Report.
The Company goes through a detailed strategic and forecast process each year and a strategy and forecast report is prepared. The Board approves the Company’s strategy, forecasts and targets each year. Performances against targets are monitored on a monthly basis. This includes a year over year comparison where main reasons for changes are explained. A twelve month forecast is available at all times and forecasts are updated quarterly and reasons for changes explained.
To ensure high quality in the Company’s financial reporting systems, the following policies, procedures and guidelines for financial reporting and internal controls have been adopted, to which the subsidiaries and reporting units must adhere:
The responsibility for maintaining sufficient and effective internal controls and risk management in connection with financial reporting lies with the CEO.
The Company does not have an internal audit function, but uses internal control systems that are monitored by the Audit Committee and assessed by the external Auditors.
An auditing firm is elected at the Annual General Meeting for a term of one year. The external Auditors are not allowed to own shares in the Company. The external Auditors shall examine the Company’s annual consolidated financial statements in accordance with international standards on auditing, and shall, for this purpose, inspect accounting records and other material relating to the operation and financial position of the Company. The external Auditors shall have access to all of the Company’s books and documents at all times. The external Auditors report via the Audit Committee to the Board of Directors on any significant findings regarding accounting matters and any significant internal control deficiencies.
According to the Company‘s Articles of Association the Company is managed by:
The supreme authority in all affairs of the Company, within the limits established by the Company’s Articles of Association and statutory law, is in the hands of lawful Shareholders’ Meetings.
The Company’s controlling shareholder, William Demant Invest A/S, holds 42.4% of the shares and voting rights.
According to the Company’s Articles of Association the Board of Directors is responsible for the affairs of the Company between Shareholders’ Meetings.
The Board shall operate in accordance with the Company’s Articles of Association and the Board’s Rules of Procedure. The principal duties of the Board are as follows:
The Audit Committee shall operate in accordance with its Rules of Procedure. The principal duty of the Audit Committee is to ensure the quality of the Company’s Consolidated Financial Statements and other financial information, and the independence of the Company’s Auditors.
According to the Company‘s Articles of Association the Board of Directors appoints a CEO to manage the Company‘s daily operations.
The principal duties of the CEO are as follows:
References to the executive board in the corporate governance recommendations only apply to the CEO.
Further information on the Board of Directors, the Audit Committee and the CEO can be found in the Annual Report and on the Company’s website.
As regards the Board and the CEO, the Company follows the provisions on gender equality set out in the Icelandic Companies Act No. 2/1995 as amended. The Board is composed of 3 men and 2 women. When nominating candidates to the Board, the Board shall, in accordance with the Board’s Rules of Procedure, take into consideration the legal requirements as well as the composition of the Board and what kind of experience, knowledge, expertise and other qualities the candidate should possess. The Board applies similar criteria for the CEO.
Össur also has Equal Opportunities Plan in place. The purpose of Össur’s Equal Opportunities Plan is to ensure equal opportunities and equality of women and men within the Company. The goal is to utilize the skills, strengths and knowledge of employees in full, without gender-based discrimination. With this plan, the management and employees are at the same time reminded of the importance of everyone being able to reach their full potential regardless of sex, religion, opinion, nationality, race, sexual orientation, age or position, and to utilize equally the wealth inherent in the education, experience and attitudes of women and men.
The Equal Opportunities Plan is prepared in accordance with Icelandic Act No. 10/2008 on the Equal Position and Equal Rights of Women and Men. Reporting on the progress and objectives of the Equal Opportunities Plan is done in Össur’s Corporate Social Responsibility report that is published on the Company’s website.