1. Össur hf. Entering the Orthotic market

2. Agenda  Strategy / background  The Orthotic Market  Orthotic from professional perspective  Generation II Group  Financials  Summary

3. Strategy / background

4. The O&P Industry

5. Ossur Orthotics New Orthotic productline introduced 1. September 2003. Ossur´s first step into the Orthotic market Products based on Ossur´s knowledge and experience in R&D and knowledge in materials technology like carbon fiber and silicone

6. Clear direction... Organic growth enhanced with well-placed acquisitions

7. The Orthotic Market

8. Entrance into the Orthotic market Current: Prosthetic New: Orthotic

9. Orthotics - Summary Main Categories SpinalUpper limbLower limb 30% of the US market* 15% of the US market* 55% of the US market* *Source: Frost & Sullivan

10. Basic markets Prescription Market Soft Brace Market

11. Points of marketing –Miscellaneous Market with many points of marketing: Physicians: –Orthopedic surgeons –Physiatrists –Family physicians –Emergency physicians –Pediatricians –Rheumatologists Physiotherapists Occupational Therapists Podiatrist (USA) CPOs

12. Products –Custom Manufacturing –Off the Shelf Products –Soft Bracing Systems Ave price $1200Ave price $400-600Ave price $150-450Ave price $25-150 KAFO (Knee and Ankel Foot Orthosis) Knee Braces AFO (Ankle Foot Orthosis) Soft Braces

13. The Orthotic Market The Orthotic Market: $2-3 billion. USD Annual Growth 5-6% The Reimbursement market in US 2000, $865 (Frost & Sullivan) CAGR 1996-2003 6% The Retail market in US 2000, $557 (Frost & Sullivan) Brace & Support market in US 2000, $682 (Frost & Sullivan), CAGR 1999-2000 5.8% The Reimbursement market in Europe 2002 $347 (Frost & Sullivan) Growth rate from 1996-2003 average 5.993% (Frost & Sullivan)

14. Market by Segments O&P $ 500-700m MEDICAL$ 700-1500m RETAIL$ 800m TOTAL MARKET$ 2-3bn

15. Growth Reasons for the market growth: –Aging of the population –New Technologies –More Market Oriented Manufacturers –More End-users knowledge of improved Healthcare –More Groups of Healthcare professionals –Sport Injuries

16. Professional perspective

17. Orthotics - Function  Support  Stability  Assist/ resist movement  Correction  Protect  Preventative © Vietcot

18. Osteoarthritis OA results from degeneration of the joint cartilage The synovial sac swells and the liquid in the joints increases The joint expands The main causes of osteoarthritis are: Damage to joints brought on by lifelong usage Family history of arthritis Fractures and other injuries Obesity Women are generally affected at a younger age than men Healty joint Osteoarthritis

19. Ligament injuries ACL / Anterior Cruciate Ligament PCL / Posterior Cruciate Ligament MCL / Medial Cruciate Ligament LCL / Lateral Cruciate Ligament

20. Drop Foot Secondary to –Charcot-Marie-Tooth –CVA –MS –Neurological conditions

21. Ossur’s product line in Orthotics

22. Generation II Group

23. Generation II Orthotics, Inc. 75 employees Head Office Administration Manufacturing R&D Service Centers Direct sales channel Distributors Vancouver, Canada

24. Generation II USA, Inc. Seattle, USA 79 employees Administration Manufacturing R&D Marketing Direct sales channel Distributors

25. GII Operation in Europe Brussel, Belgium 16 employees Administration Assembly Manufacturing Marketing Direct sales channel Distributors

26. GII Product lines OA / Osteoarthritis Braces Ligement Braces Rehabilitation Braces

27. Patent Intellectual Property 7 strong patents

28. Competitive advantage of the G2 group Category Champion of the Osteoarthretic Knee Brace segment in North-America, Strong patents and Product Portfolio Strongest scientific coverage of clinical results in the industry Sales channel into O&P and Medical Excellent reputation

29. Competition Overview

30. Financials

31. Financing strategy 1.Increase financial strength and build up cash 2.Negotiate external financing and lock-in low long term fixed interests 3.Acquisition

32. The acqusion in numbers Share purchase31 million USD Fees and transition costs 2 million USD Total 33 million USD

33. External financing June 2003: 10 million USD, refinancing, 5 year bullet, fixed interests 10 million USD, financing, 5 year bullet, fixed interests 5 million revolving credit, 5 year bullet, floating interests Sept. 2003: 10 million revolving credit, 5 year bullet, floating interests

34. Fixed interests Lock-in 20 million USD Acquisition

35. GII Group Key figures Net sales23 million USD GPM 65%15 million USD EBITDA 13% 3 million USD CAPEX 1 million USD

36. Estimated post merger Balance sheet Equity Fixed 44% 60% 40% Current Long term Short term 38% 18%

37. .. in actual numbers

38. Summary

39. According to strategy Right company – worth the wait Perfect fit to new orthotic line Leading market share within OA braces No dilution to shareholders & additional financing favorable Top and bottom line synergies