Ossur – 2005 Overview

Copyright OssurFebruary 2006

Ossur – 2005 OverviewJon Sigurdsson, President & CEO


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Ossur Milestones 2005

• Profitable year• Financial goals achieved• Bionic technology by Ossur – deserved attention• Well placed acquisitions• Comperhensive product lines• Broader group of customers

Ossur - becoming a leader in the Orthopaedic Industry


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1. Create shareholder value

by increasing earnings per share by 15% each year on average

2. Expand the Company’s business to USD 180 million in sales by the end of 2006

3. Ensure profitable operation by an EBITDA margin of 20%

1. EPS for the period 2000-2004

CAGR 34%

2. 12 months period ending 30 June 2005 total sales USD 196 million

3. Full year 2004 20%2005 20%

Financial Goals

2001 2006

AchievedAchieved

AchieveAchievedd

AchieveAchievedd

The Company’s Goals for 2010

Expand the Company’s business to USD 750 million in salesLong-term EBITDA 23%


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Bionic Technology by Ossur

• Rheo Knee launched towards year-end 2004– First Bionic product - $ 3.5 million in sales

• Power Knee – launch in 2006– Has already received awards for outstanding

technology

• Proprio Foot – launch in 2006

Further strenghtens Ossur as industry leader


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Acquisition History


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Integration Processes

• Integration planned along with the acquisition

• Integration projects and groups ready as of day one– Branding transition and co-branding

– Coordination of sales forces

– Coordination of marketing

– Coordination of administration

– Coordination of manufacturing & operations

• Integration period 12-18 months


Resulting in the Ossur Brand


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Pre-Acquisition

Post-Acquisition

Ankle/ Knees Liners Locks & Ankle/ Knee Upper Casting/ Neck/SpineFoot Adapters Foot Extremity Splints

Product Portfolio

Prosthetics Bracing & Support


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Product Portfolio

ORTHOPEDICS

BRACING & SUPPORTPROSTHETICS

BIONICS•Rheo Knee•Power Knee•Proprio FootKNEE•Rheo Knee•Power Knee•Total Knee•MauchFOOT & ANKLE•Proprio Fool•Flex Foot•Foot covers & cosmesisLINERS & SOCKETS•Iceross•IcexLOOKS & ADAPTERS•Icelock•Standard Adapters

PARTNERSHIPSERVICES

Ossur AcademyOssur Business SolutionsEmpowerDME PRO

ANKLE & FOOT•Ankle Braces•Active Uploading Walkers•Short leg Walkers•AFO Orthoses•Padding

UPPER EXTREMITY•Arm Slinge•Elbow Supports•Wrist Braces•Thumb Splints

CASTING & SPLINTS•Tape•Splints•Accessoried

KNEE•OA Braces•Ligament Braces•Rehab Braces•Patellofemoral Braces•Pediatric Braces•Sports Injury•Immobilizers•Sleeves & Covers

NECK/SPINE•Miami J•Halo•Cervical Collars•Philly Collars•BAck Supports•Papoose•Level 1 Trauma•Pediatric


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Diverse Specialists Groups

Ossur Sales Force

O&P Workshops Hospitals

Athletic TrainersPodiatrists Orthopedic Surgeons

Rheumatologists Physical Therapists

Distributors

The number of Ossur’s potential clients in the US have increased from 3.000 to 117.000

Private Label


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Ossur Today

Ossur is a global Orthopaedics company specializing in products and services in the areas of prosthetics and braces and supports, utilizing the bionic technology

Next Step: move into rehabilitation

Ossur is in the business of improved mobilityOffering patients a life without limitations


Locations

UK - IMP HoldingsSales, Distribution,

ManufacturingUSA, California

Innovation Sports


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Further Oportunities

Leverage on high-tech platform

Manufacturing cost leadership

Consolidate the Orthopedics market

Move into rehabilitation

http://creative.gettyimages.com/source/search/ImageEnlarge.aspx?MasterID=200174678-001&s=ImageDetailSearchState%7C3%7C5%7C0%7C15%7C2%7C1%7C0%7C0%7C1%7C35%7C60%7C2ed3.d7c5.03ff.e000.002f.76b0.00e0%7C1%7C0%7C%22strategy%22%7C%7C1%7C0&pk=6


Ossur – Financial Highlights 2005 Hjorleifur Palsson, CFO


Financial highlights:

• Year 2005

• Q4 2005

Agenda


• Net sales 161 million USD, up 29% from 2004

• Organic sales growth 9%

• GPM 61% (excluding inventory mark up)

• EBITDA 20% (excluding one time expenses)

• Amortization pressing profit ratios 2%

Financial Highlights 2005


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Financial Highlights 2005

Net sales 160,729 124,399 +29%

Gross profit 94,391 74,844 +26%

Operational profit 16,525 20,374 -19%

Net profit 11,688 15,227 -23%

EBITDA 25,832 25,045 +3%

EPS (US Cents) 3.53 4.80 -26%

Cash generated by operations 24,986 19,173 +30%

USD ´000 2005 2004 % Change


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Financial Highlights 2005 Excluding restructuring expenses, inventory step up and one time other income

Net sales 160,729 124,399 +29%

Gross profit 97,668 74,844 +30%

Operational profit 23,221 20,374 +14%

Net profit 15,561 15,227 +2%

EBITDA 32,528 25,045 +30%

EPS (US Cents) 4.70 4.80 -2%


USD ´000 2005 2004 % Change


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Key Ratios 2004 / 2005

124,4

74,8

20,415,2

25,0

160,7

97,7

23,215,6

32,5

0

20

40

60

80

100

120

140

160

180

Net sales Gross profit Op. profit Net profit EBITDA

USD

mill

ions

2004 2005

+29%

+14%+2%

+30%

+30%

Note: Excluding restructuring expenses, inventory step up and one time other income in 2005


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Income Statement 2005 by EntitiesExcluding restructuring expenses, inventory step up and one time other income

Net sales 132,934 26,700 1,095 160,729

Gross profit 80,524 16,602 542 97,668

Operational profit 20,512 2,772 -63 23,221

EBITDA 25,649 6,864 15 32,528

GPM % 61% 62% 49% 61%

R&D % 8% 8% 4% 8%

SG&A % 38% 45% 51% 39%

Operational profit % 15% 10% -6% 14%

EBITDA % 19% 26% 1% 20%

USD ´000 Össur Royce IMP Total


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Net Sales and Growth

68

81

94

124

16148%

19%16%

32%29%

0

20

40

60

80

100

120

140

160

180

2001 2002 2003 2004 2005

USD

mill

ions

0%

10%

20%

30%

40%

50%

Sale

s gr

owth


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Sales by Business Segments

Orthotic35%

Other1%

Prosthetic64%

2005

Orthotic24%

Other2%

Prosthetic74%

2004


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Sales by Markets

North America 93,264 63,704 46% 46%

Europe 37,370 32,620 15% 14%

Nordic (incl. Domestic) 17,874 17,013 5% 5%

Other International markets 11,674 8,158 43% 43%

Total continuing operations 160,182 121,495 32% 31%

Discontinued operations 547 2,904

Total 160,729 124,399 29%

USD ´000 2005 2004 % Growth

USD

% Growth LCY


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Sales by Markets

Europe23%

Nordic11%

International7%

North America59%

2005

North America53%

Europe26%

Nordic14%

International7%

2004


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Key Ratios 2003-2005Excluding restructuring expenses, inventory step up and one time other income

-22% -22%-24%

-10%-7% -8%

-19%-16% -15%

5%

12% 10%10%

20% 20%

57%60% 61%

2003 2004 2005

% o

f sal

es

Gross profitS&MR&DG&ANet profitEBITDA


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Expensed R&D Investment

5.1

7.1

9.69.1

12.4

7.5%

8.7%

10.2%

7.3%7.7%

0

2

4

6

8

10

12

14

2001 2002 2003 2004 2005

USD

mill

ions

0%

2%

4%

6%

8%

10%

12%

% o

f sal

es


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Cash Flow from Operations

12.1

14.3

19.2

25

14.9%

15.1%

15.4%

15.6%

0

5

10

15

20

25

30

2002 2003 2004 2005

USD

mill

ions

14.4%

14.6%

14.8%

15.0%

15.2%

15.4%

15.6%

% o

f sal

es


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Balance Sheet

Fixed assets 325,873 67,944 +380%

Current assets 82,113 40,971 +100%

Total Assets 407,986 108,915 +275%

USD ´000 31.12.2005 31.12.2004 % Change

Stockholders’ equity 152,829 54,720 +179%

Long-term liabilities 215,361 35,622 +505%

Current liabilities 39,796 18,573 +114%

Total equity and liabilities 407,986 108,915 +275%

Current ratio 2.1 2.2

Equity ratio 37% 50%


Top 15 Shareholders 31.12. 2005

William Demant Invest A/S Investment Fund 141.952.402 36,88Eyrir Invest ehf Investment Fund 56.185.481 14,60Mallard Holding S.A. Founder 36.926.769 9,59Vik Investment Holding S.a.r.L. President & CEO 24.446.907 6,35Arion safnreikningur Custody Bank 23.721.240 6,16Lífeyrissjóður verslunarmanna Pension Fund 13.303.854 3,46Gildi -lífeyrissjóður Pension Fund 6.324.888 1,64FL Investment ehf Investment Fund 4.722.007 1,23Fidelity Funds-Nordic Fund Investment Fund 3.908.072 1,02Mycenaean Holding S.a.r.L. VP of R&D 3.560.347 0,92Landsbanki Íslands hf,aðalstöðv Bank 3.171.796 0,82Sameinaði lífeyrissjóðurinn Pension Fund 2.773.772 0,72Ker Holding S.a.r.L. VP of S&M 2.124.450 0,55Lífeyrissjóður Austurlands Pension Fund 1.925.403 0,50Lífeyrissjóður Vestfirðinga Pension Fund 1.853.364 0,48

Top 15 Shareholders 326.900.752 84,92Others ( 3.141) 58.039.695 15,08

Total 384.940.447 100,00

Nominal value %


• Royce included the full quarter

• IMP Holding included from December 1st 2005

• Total sales 49.6 million USD, up 59% from 2004

• Organic sales growth 8%

• EBITDA 18% excl. one time expenses

• Amortization pressing profit ratios 5%

Financial Highlights Q4 2005


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Financial Highlights Q4

Net sales 49,590 31,282 +59%

Gross profit 29,223 18,344 +59%

Operational profit 3,938 4,695 -16%

Net profit 3,088 3,426 -10%

EBITDA 7,931 5,934 +34%

EPS Q4 (US Cents) 0.81 1.09 -26%


USD ´000 Q4 2005 Q4 2004 % Change

Note: Including one time expenses of 1 million USD in Q4 2005, 0.7 million USD net of tax.


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Financial Highlights Q4Excluding restructuring expenses and inventory step up

Net sales 49,590 31,282 +59%

Gross profit 29,878 18,344 +63%

Operational profit 4,897 4,695 +4%

Net profit 3,789 3,426 +11%

EBITDA 8,890 5,934 +50%

EPS Q4 (US Cents) 0.99 1.09 -9%


USD ´000 Q4 2005 Q4 2004 % Change


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Income Statement Q4 2005 by Entities

Excluding restructuring expenses and inventory step up

Net sales 31,621 16,874 1,095 49,590

Gross profit 18,852 10,484 542 29,878

Operational profit 3,225 1,735 -63 4,897

EBITDA 4,606 4,269 15 8,890

GPM % 60% 62% 49% 60%

R&D % 8% 8% 4% 8%

SG&A % 42% 46% 51% 42%

Operational profit % 10% 10% -6% 10%

EBITDA % 15% 25% 1% 18%

USD ´000 Össur Royce IMP Total


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EBITDA Ratio

14%

16%

0%

10%

19%

21%22%

19%20%

18%

22%23%

18%

20%

12%

18%

16%

11%

17%

25%

Q12002

Q22002

Q32002

Q42002

2002 Q12003

Q22003

Q32003

Q42003

2003 Q12004

Q22004

Q32004

Q42004

2004 Q12005

Q22005

Q32005

Q42005

2005

% o

f sal

es

Note: Excluding unusual other income, restructuring expenses, inventory step up in 2005


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Sales by Markets Q4 2005

North America 32,161 15,469 108% 108%

Europe 10,151 8,116 25% 32%

Nordic (incl. Domestic) 4,460 4,713 -5% 7%

Other International markets 2,818 2,163 30% 30%

Total continuing operations 49,590 30,461 63% 66%

Discontinued operations 821

Total 49,590 31,282 59%

USD ´000 Q4 2005 Q4 2004 % Growth

USD

% Growth LCY


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Documents

Ossur – 2005 Overview