I'd like to welcome you most warmly to this year's Annual General Meeting of Coloplast. Thank you to those who have found their way up here. We are pleased you took the time to come. I always look forward to welcome you to the Annual General Meeting. This year, once again, it will be held in Danish and transmitted in English on the website, so that shareholders all over the world are able to follow proceedings. Welcome to those who listen in through that channel. First of all, I'd like to introduce the board and the executive management. Together with me up here on the rostrum, we have the company's Vice Chair of the Board, Mr. Niels Peter Louis-Hansen, and Lars Rasmussen, the CEO. Other members elected by the AGM are Per Magid, Brian Petersen, Sven Håkan Björklund, Jørgen Tang-Jensen, Jette Nygaard-Andersen, and Birgitte Nielsen.
The three employee-elected board members are Martin Gjørtz Müller, Thomas Barfod, and Thomas Barfod. The three other members of the executive management are Mr. Anders Lonning-Skovgaard, Allan Rasmussen, and Kristian Villumsen. According to the Articles of Association, the board will appoint a chairman of the meeting. This year it will be Søren Meisling from law firm Bech-Bruun. He is seated up here next to me, and he has read the agenda, and I will now ask him to take over the meeting. Once again, welcome to our AGM. Thank you very much. I'd like, first of all, to thank the board for appointing me chairman of this annual general meeting. My first formal job as a chairman is to establish that the meeting has been duly convened and is quoried.
In item 4 on the agenda, 4.1 , actually, there is a proposal concerning amendments to the Articles of Association. In order to be adopted by the AGM, a minimum of 50% of the share capital, DKK 108 million, must be represented at the AGM. I can tell you that when I checked a while ago, before I entered the room, more than 60% of the share capital was registered as being present at the meeting, which means that the requirement concerning us being quoried has been met. Concerning whether the meeting has been duly convened, I have checked Danish legislation and the requirements in the Articles of Association, and I compared this with the measures that the company has made in order to go ahead with the convening of the meeting and arranging it.
I find that the company has complied with the requirements in all respects, so we are legally convened. Unless there are objections from the room, I find that you agree with me and my assessment. That appears to be the case. Thank you very much. Just a couple of household details. I would point out that sound and image recording is not allowed during the meeting, unless it is required for you, for your own personal duties, in, a job angle. Please silence your mobile phones so that we are not disrupted by mobile phones. Following the requirements of Danish legislation, according to which we need to be very specific concerning the number of votes in connection with a ballot, if you leave the meeting in order not to return, please go outside and deregister your attendance.
If you just want to go outside to wash your hands and come back, don't do anything. According to Danish legislation on company law, you, for every resolution passed by the AGM, must do a complete explanation of the voting, which means that you must be able to explain, for the purpose of the minutes, how many shares that cast valid votes, the percentage of the voting stock that it represents, the exact number of votes for and against, and also abstentions, the number of abstentions. It is possible, according to another provision in Danish law, to go ahead with the vote, as has always been the tradition. Where it is sufficient, just to establish whether or not a specific resolution has been passed, with a statement of the number of votes for and against.
I intend to use that latter provision instead of having to go ahead with a more cumbersome, complete explanation of every vote. Unless there are objections to this from shareholders in the room, I take it that you agree with me. Of course, you can always change your mind as we proceed in the meeting. That's okay and allowed. Okay. I see no objections. Thank you very much. The agenda of the meeting reflects that this is the ordinary general meeting. First item is a report by the board on the company's activities. Two, presentation and approval of the audited annual report. Three, decision concerning appropriation of the profit. Four, proposals from the board. There are four, I will come back to them when we get to that point during the proceedings. Item five, election of members to the board.
Six, election of auditor, and seven, any other business. By tradition, we always deal with the first three points in one go, so that we take the report from the board, we have presentation of the annual report, and we discuss the appropriation of the profit. After those 3 items have been dealt with, we have a discussion with the shareholders present, and I intend to follow that tradition today. You appear to agree with me, I will now hand over to the Chairman of the Board, Mr. Michael Pram Rasmussen. I always look forward to the annual general meeting and to present the board's report on Coloplast for the past financial year. Coloplast is a strong and ambitious company, and we're continuing our positive development.
Your board and executive management intend to ensure that this trend continues going forward, we can continue to grow and make life easier for even more users across the world. When we grow and improve our earnings, we provide a number of benefits for Coloplast shareholders. Customers gain access to new and better products, employees get better career opportunities, society benefits from innovation, growth, and tax revenue, our shareholders get a return on their investment. At Coloplast, our strategy is aimed at achieving profitable growth. In other words, our ambition is to outgrow the market and improve earnings at the same time. We actually achieved that goal in the past financial year, 2015, 2016. We delivered approximately 7% in organic growth in a market growing 4%-5%.
For that reason, I'd like to extend a very warm thank you to all our employees, managers, and the executive team for all the hard work they put in to achieve this solid full year performance. Turning now to our business areas. Ostomy Care has excelled this year, delivering the strongest growth performance in a decade. growth cuts across sales regions, and it was driven especially by the new SenSura Mio product portfolio. Both users and healthcare professionals have given very positive feedback on our new products, and especially the latest addition to our product portfolio, the SenSura Mio Convex, has been exceedingly well-received. Geographically, Europe is the main growth driver overall, and our UK subsidiary performed particularly well.
In the past year, our local business in the U.K., Coloplast Charter, produced strong growth after a challenging 2014, 2015. It's once again taking market share. In the U.S., we face challenges of consolidation among distributors and changes in their buying patterns. This led to considerable inventory reductions in the market. We experienced the effects of those changes this past year. However, we also note that Coloplast's underlying revenue growth in the U.S. market is above 10%. We expect the reported figures to reflect the underlying growth in the current financial year. To support our ambition to bring innovative products and services to the U.S. market, we've entered into a definitive agreement last year to acquire the U.S. distributor, Comfort Medical, at a price of approximately DKK 1.1 billion.
Comfort Medical is a privately owned distributor of medical equipment with nationwide distribution of catheters and ostomy supplies, and its business model is based on capturing patients through direct advertisement and physician referrals. The company is expected to record sales of $38 million or approximately DKK 270 million for the full year 2016. In the past couple of years, we've been able to build a strong consumer channel in the U.S., which means that we are able to enroll an increasing number of patients upon discharge from hospitals. Actually, 1/3 of newly discharged patients are enrolled in our program, and this is remarkable, considering that we hold a market share of 15%. With the acquisition of Comfort Medical, we have established yet another platform for getting more consumers to use our products.
In Continence Care, many users in the U.S. struggle with old-fashioned products. At the same cost, they will be able to get much better products, such as our products. We continue to be among the world's most profitable MedTech companies. Our EBIT margin before special items is 34% at constant exchange rates, and 33% in DKK . As for the special items, since 2011, we have been named in lawsuits in the United States, involving product liability claims resulting from the use of transvaginal surgical mesh products designed to treat pelvic organ prolapse and stress urinary incontinence. In the full year financial statements, Coloplast increased the total provision of DKK 750 million in respect of these lawsuits, involving the use of transvaginal surgical mesh products. This brought the total provision to a total of DKK 5.25 billion.
It is estimated that more than 90% of the known cases have now been settled, so we are now beginning to see the light at the end of the tunnel. It's a very unfortunate matter, but we believe that this latest provision will cover the costs of closing the remaining cases. Before I go into details concerning the past year and its financial results, I'd like to present to you Coloplast's new strategy, LEAD 20, which is about generating profitable growth and will give you an idea of how we are working with our growth initiatives. Based on the LEAD 20 strategy, we communicated a new long-term financial guidance in connection with our capital markets day that was held in June in Minneapolis, where we have our U.S. headquarters.
Our updated long-term target is for annual organic growth in the range of 7% to 9%, and an annual improvement in EBIT margin of between 0.5- 1 percentage points. I would point out that not many companies can grow as much as we do or have ambitions to reach such a high EBIT margin. This will be delivered by executing our new strategy that has a three to five-year time horizon. Allow me to present the 4 themes of our strategy. The first is that we deliver superior products and innovation. Innovation is a cornerstone in all our business areas. For instance, in Ostomy Care, superior products and innovation means that future generations of ostomy bags will deliver a clinically proven reduction of leakage. Our ambition in the Continence Care business is to reduce the burden of bladder management.
In Wound Care, we will deliver fewer days with wounds for users, and in our Urology Care business, we will strengthen our product portfolio. In the course of this year, we launched three new products, all of them good examples of how superior products and innovation can help us achieve our growth ambitions. In Ostomy Care, we launched the SenSura Mio Convex. What's remarkable about this is that it's the first product where clinical studies have shown that a stoma bag like this reduces leakage. This is a breakthrough because leakage is a paramount concern for users of stoma bags. The SenSura Mio Convex also features a significantly improved filter and a neutral color for a more discreet user experience. Sales have surpassed expectations, and we cannot keep up with the demand.
We expect to have access to new capacity from the end of March 2017, and we look forward to accommodating the current huge demand for our product. In the Continence Care business, we launched the SpeediCath Flex catheter for men. It makes it easier and less complicated to use a catheter. Lastly, in Wound Care, we launched the Biatain Silicone Sizes and Shapes portfolio, a series of dressings in various shapes and sizes that conform to the contours of the body. For instance, the hollow of the knee or the elbow. We aim for the new products to drive growth in their respective business areas. The second theme of the LEAD 20 strategy is about having a unique user-focused market approach. In our Ostomy Care and Continence Care businesses, we continue efforts to build a consumer-oriented healthcare company.
Our approach is to have direct interaction with users, such as through the Coloplast Care program. Today, Coloplast Care reaches out to more than 400,000 users worldwide. The third theme is about leadership. Strong leadership development is key to supporting growth for us. Coloplast is a growing company, and we constantly need new leaders, and our ambition is to fill two of every three vacant leadership positions with in-house candidates. This will test our ability to recruit and develop the next generation of leaders across geographies and functions. We expect to establish at least 250 new leadership positions by 2020. Efficiency is the fourth theme, and unparalleled efficiency is already a part of our DNA.
Our ambition is to enhance efficiency on an ongoing basis in the way we manufacture our products, or in the way we fulfill our aim of bringing new products to market faster, as in the current Innovation Excellence project. These are initiatives that will consistently increase our company's competitive ability. In addition, we will ensure that Coloplast always has effective and scalable administrative functions.... Achieving our long-term goals of high organic growth rates and improved earnings requires investment. We will be investing as much as DKK 2 billion over the next five years. Our investment focus will target strategic initiatives in innovation, expansion of the Wound Care business, and the professionalization of our user-focused market approach across selected markets. Our ambition is to double our Wound Care business by 2020, 2021. To do that, we will invest in innovation aimed at expanding our product portfolio.
Other investments include setting up a dedicated Wound & Skin Care organization in the U.S., where today we have only a small market share. From a geographical perspective, our investment focus will be on the U.S., the U.K., Japan, Australia, and selected emerging markets. In order to deliver on our ambition for future growth, we expanded, in 2015, 2016, the Coloplast factory at Tatabánya in Hungary by a further 20,000 square meters. We are currently planning to build one more factory in Hungary in 2017, 2018. I'd like now to review the three geographical markets we operate in. Europe is our core market. We generate 63% of our revenue in Europe, where we are a clear market leader in Ostomy Care and Continence Care.
We aim to retain and expand this position by launching strong new products and by engaging even more with our users, for instance, through the Coloplast Care program. We generate 22% of our revenue in developed markets outside Europe. That is in the U.S., Canada, Japan, and Australia. We intend to accelerate growth in these markets and take additional market share. The U.S. continues to represent one of the most important investment opportunities for Coloplast, and our ambition is to exceed 10% in organic growth per year. We're launching new products in the U.S. market, while also investing in the sales organization and in user-directed initiatives intended to drive market demand. In Japan, the healthcare authorities have increased subsidies for disposable catheters, so that the up to 100,000 catheter users in the country can get access to better products.
This is a breakthrough for Coloplast because it means that we can now serve the market with much better products than before. Australia, too, has raised the subsidy provided to citizens with a permanent disability, and as in Japan, the change will give users better access to modern catheter products. These new subsidy rules are expected to contribute to long-term growth. The remaining 15% of our revenue is generated by what we call other markets, the emerging markets. In the past year, we lost growth momentum in these markets, mainly due to slower growth in the Wound Care business in China, Brazil, and Saudi Arabia. Coloplast will continue to invest in selected emerging markets in order to work together with the health authorities and healthcare professionals in these countries to make assistive products more accessible.
In South Korea, subsidies to the country's catheter users were increased this past year, making life easier for South Koreans with spinal cord injuries, for example, by giving them access to better catheters. Now, a look at the consolidated financial highlights for the past financial year. We released our full year financial results for 2015, 2016 on the 2nd of November, and on the same day, our annual report and the updated corporate responsibility perform were released. Backed by a positive growth performance in all business areas in all regions, Coloplast expanded its position as a global market leader in the past financial year. Organic revenue growth came to 7%. In DKK , revenue was up 6% to DKK 14,681 million, from DKK 13,909 million last year.
Measured in DKK , revenue growth was adversely affected by developments in the British pound, in the Argentine pesos, and the Brazilian real. Gross margin came to 69% at constant exchange rates and 68% in DKK . EBIT before special items increased 7% to DKK 4,846 million. EBIT before special items came to 34% at constant exchange rates compared to 33% last year. Measured in DKK , the EBIT margin came to 33%. EBIT was affected by an increase in provisions of DKK 750 million to cover potential settlements and costs in connection with the lawsuits in the United States concerning injuries resulting from the use of transvaginal surgical mesh products.
Net profit for the year was DKK 3,728 million before special items. After special items, it came to DKK 3,143 million, against DKK 899 million last year. Return on Invested Capital, ROIC, for the year before special items and after tax was 49%, up from 48% last year. At the closing of the financial year, we had 10,275 employees, of whom 8,875 worked in international locations. During the year, the number of employees increased 6%. Our headcount is growing, especially in sales and production. This reflects the fact that our business is growing and that we are investing in growth.
Our Ostomy Care business grew 9%, its best performance in a decade. It was driven mainly by the SenSura Mio portfolio, which includes the SenSura Mio Convex, which is now available in 16 countries. Revenue came to DKK 5,935 million, corresponding to 40.4% of consolidated revenue. We retained our position as global market leader in Ostomy Care products. We now hold 35%-40% of the market, and market growth is estimated at between 4% and 5%. The Continence Care business generated 5% inorganic growth. Growth was mainly driven by sales of the SpeediCath intermittent catheters, especially the compact catheters and Peristeen. Continence Care revenue increased to DKK 5,182 million or 35.3% of consolidated revenue. We remain global market leader in this field.
We have a market share of about 40%. Market growth is estimated at between 5% and 6%. The Urology Care business grew 9%, driven mainly by sales of penile implants and implants for women suffering from stress urinary incontinence and pelvic organ prolapse. Revenue was DKK 1,497 million, which corresponds to 10.2% of our consolidated revenue. We currently hold a total of 10%-15% share of the overall global market for urology products, which grows an estimated 3%-5% per year. Wound & Skin Care product sales grew by 6%, driven mainly by sales of the Biatain Silicone portfolio in Europe. Revenue grew to DKK 2,067 million, or 14.1% of our consolidated revenue.
Growth in the Wound Care market alone is estimated at between 3%-5%, and we estimate that our market share is between 7%-9%. Now, a look at our geographical markets. In Europe, organic growth came to 6%. Revenue came to DKK 9,213 million, which equals 63% of consolidated revenue. In what we call other developed markets, organic growth came to 6%. Revenue was DKK 3,177 million, which amounts to 22% of consolidated revenue. In emerging markets, organic growth came to 14%, and revenue came to DKK 2,291 million, which is 15% of consolidated revenue. A glance at our costs. We're in good control of our costs.
Distribution costs, which include sales and marketing costs, came to DKK 4,131 million, or 28% of revenue, which is on a par with last year. Administrative expenses came to DKK 561 million, compared to DKK 600 million last year, down DKK 39 million. Last year's administrative expenses, however, included non-recurring costs of DKK 75 million relating to the U.S. Department of Justice's investigation of sales and marketing practices in the U.S., and there were also losses on some trade receivables in Southern Europe. Measured as a percentage of revenue, this year's administrative expenses accounted to 4.4%, which is on a par with last year, both before and after non-recurring costs. R&D costs came to DKK 509 million, which is an increase of 15% from last year's level.
This is due to a general increase in activity levels and is also due to new product launches, such as SpeediCath Flex and Biatain Silicone Sizes & Shapes. R&D costs amounted to 3% of revenue, which is on a par with last year. The total amount in assets came to DKK 11,00 7 million, up DKK 190 million from last year. Equity increased by DKK 362 million to DKK 5,068 million . Free cash flow for the year came to DKK 2, 425 million, against DKK 2, 869 million last year. Cash flows for the year included approximately DKK 1, 600 million, paid in respect of lawsuits involving product liability in the U.S.
The free cash flow have been returned partly to shareholders by way of share buybacks and dividends. In the second quarter of 2015-2016, we launched a DKK 1 billion share buyback program running until the end of the 2016-2017 financial year. The first part of the share buyback program of DKK 500 million was completed in August this year. The board of directors recommends to the AGM that a year-end dividend of DKK 9 per share be approved, which brings the dividend paid for the year to DKK 13.5 per share, compared to DKK 12.5 per share last year. This corresponds to DKK 2, 859 million for 2015-2016, and it is a payout ratio of 91%.
On the final business day in the past financial year, our share was listed at DKK 472.7 at the Nasdaq Copenhagen. On the final day of the financial year under review, it was at DKK 514, an increase of 9%. If we include the dividends paid out in December last year, and after the release of the first half interim report, our shares have produced a return on investment of 11%. By comparison, an investment in the C20 index during the same period would have yielded a return of 0%. Since the release of our full- year results on the second of November, our share unfortunately has declined by 3.7%. At lunchtime today, it was DKK 450. Now the financial forecasts.
We maintain our long-term financial guidance of 7%-9% in sales growth per year and an EBIT margin improvement of 0.5- 1 percentage point per year. For 2016-2017, we expect organic revenue growth in the range of 7%-8% at constant exchange rates and 5%-6% in DKK . To this should also be added another 1- 2 percentage points in DKK due to the acquisition of Comfort Medical. We expect an EBIT margin of between 33% and 34% at constant exchange rates and about 33% when stated in DKK . Capital expenditure is expected to be in the neighborhood of DKK 700 million. The effective tax rate is expected to be at around 23%. That was a lot of words and a lot of figures. I've now reached the end of my report today.
I hope it has not been too soporific, but we need to do it. This is, after all, an AGM. I'd like to conclude by once again extending a warm thank you to employees, managers, and ex- our executive team for a job well done. I'd also like to take this opportunity to thank my colleagues on the board of directors for good and constructive collaboration. We've talked a lot about the value created for Coloplast in the course of the year and also for our shareholders. I'd like to end by showing you a new video, which gives you an idea of the value we create for our users, because it's only with satisfied users that we're able to create growth in the long term. Let's see.
There's nothing more relaxing than being in a stream. To feel the water pressing against the back of your legs, it makes you forget about everything that's going on, there's just nothing like it.
I love the theater. This is the first production that I've been in since 2002.
My workshop is both my work and my hobby. It means everything to me.
I've recently returned to work after three years of being unemployed, and I now work outdoors in the community with physically disabled people, trying to help them access the countryside again and get back to doing the stuff that they didn't think possible.
If someone asks me today whether I want to be completely healthy again, I always say, "No." Now I can just sit down and go, "Oh, beautiful day today," have a cup of coffee, and let the day be a day.
I started playing hockey 'cause my dad played hockey. As soon as I threw a pair of skates on, I was in love with it. I've been playing goalie ever since I started skating, and what I loved about it was the excitement of trying to stop somebody else from scoring a goal.
I was so concerned about maybe possibly having an accident on stage or not being well enough to commit to the full run of a production, 'cause when you do a production, you have to commit to it.
I really enjoy doing this, and I can do it. I make special machines for the concrete industry....Ja, det er jeg jo meget glad for, at kunderne de er, de er også tilfredse, de sender bud efter mig.
I've been able to actually commit to this, so it's been amazing.
We have a bucket list in mind of places that we'd like to go. One of them that we've talked about is Iceland. Another place would be to New Zealand.
I consider myself more active now, purely, 'cause I've had a better perspective. Having something quite major happen to you, kind of puts in place what's important to you.
Now that I'm in my twenties and I have my implant, it's made relationships flourish. There's something that wasn't there before that can be there now. Predominantly, it comes from me being confident.
Det her, det er jo min hobby. Jeg fortsætter da, indtil det bliver kedeligt, eller jeg ikke kan.
It was a real eye-opener where you can still get to using a wheelchair.
This company exists because we want to help people with intimate healthcare needs. Understanding of the people you serve is critical, and understanding is much more than just asking questions. It's the ability to get yourself in the shoes of the people that you work for, not just in a rational way, but also in an emotional way.
We actually, ideally would like to have people forget that they have a chronic heart disease. It's all about making people just live the life they want.
Ja, tak til klap.
Thank you to the chairman of the board for his report. Before I give the floor to speakers, I now have the figures for today's attendance. 64.8% of the equity in the company has been represented. Now the time has come for shareholders to be able to put questions and comments to what they have heard from the rostrum today and other things in relation to the business. I will draw up a list of speakers, please bring, when you are called up here, a slip with your name on it so that I can pronounce it accurately and correctly. I already have a list of speakers, actually, the first speaker is Claus Berner Møller from the Danish Labour Market Supplementary Pension Fund. Thank you very much. I'm Claus Berner Møller, I represent the Danish Labour Market Supplementary Pension Fund.
First of all, I'd like to thank the chairman for the report and for his review of the financial highlights. As always, you did well. 2016, 2017 was another year of good earnings growth. Organic growth in sales came to 6%-7%, which is at the lower end of your ambitions to grow up to 9%. You had some headwind because of consolidation among distributors in the US, and you were also affected by difficult markets in Wound Care, in particular in China, Saudi Arabia. This means that 7% is actually a fine result. Of course, you try to increase growth in the United States, and the last acquisition of Comfort Medical is a case in point.
In this connection, I'd like to hear a bit more about the way you intend to include it in your sales strategy in the United States. Are we to expect additional initiatives over there? In fiscal 2016, 2017, there's been another provision made, this time DKK 750 million, which is much below the DKK 3 billion of the year before. We've heard what this is intended to cover, namely, the lawsuits in the United States. Urology care has been very expensive for you in the past couple of years, and that's why it's highly relevant to ask what you are thinking about in relation to the future of this part of your business. There is a certain risk in the division. On the other hand, the division has achieved fine growth and as divestment at this point in time is probably not optimal.
Perhaps in the longer term, there are opportunities instead of threats in this business area. I'd like to hear more. To round off, I'd like to encourage you to do something to the contents and the illustrations and layout of your annual report. I know that you have made a conscious choice to give it low priority. You because you are keenly aware of your costs, but you are a strong company in every respect, and I think that it's time now for you to improve your annual report. Otherwise. It may actually be something that is reminiscent of the past. I'd like to wish you all the best in future, and thank you for the hard work you've put in the past.
Ja. Tak til klap.
Thank you very much, Mr. Chairman. The next speaker is the Chairman of the Board for a reply. Well, thank you, Mr. Berner Møller, for your kind words. Well, at least in the first part of your presentation. Seriously, I didn't mean it that way. It's true, we are pleased that we have succeeded in achieving organic growth of 7%, because we have had the wind against us in the market. As you also said, both in Brazil and in Saudi Arabia and China, we've had problems, what we call emerging markets. Last year, we saw growth of 7%, now it's 14%, and that's the way it goes up and down. Our healthcare business in the U.K. has really gone well, whereas in the past year, things were difficult over there. There are always areas where we see these fluctuations.
All we can do is to invest in our business, geographically and in products, because we know that there will be fluctuations, and there will be things that happen that we cannot take account of, because that's the way the world is. We are pleased that we managed to live up to the objectives that we announced. I also said in my report that we will be investing up to an additional DKK 2 billion to increase growth on top of the acquisition of Comfort Medical by 2020. Comfort Medical, you asked a question about it, our strategy is not new. We've not changed it. It's not a reflection of a new strategy that we acquired Comfort Medical, but it was a good opportunity for us to add to the user-focused sales channels that we already have in the U.S.
They have a very good record of having direct access to users. Many others have done the same over there, this company is a good match for us. It's not a change of strategy, it's a tactical opportunity to add to the user contact that we already have. It enables us to sell pharma products to users, so it's a very good acquisition, and there is no change of strategy in it at all. I hope this was enough by way of explanation concerning that acquisition. The DKK 750 million. It is so annoying to have to make yet another provision. We did a reservation last year, and now this year, we had to make an additional one, and it's been several years now that we've been fighting with these lawsuits.
What we see now is that we have come far, and we have actually finished many of the cases and closed them. That's why I say that we now see a light at the end of the tunnel. Don't ever, if you can avoid it, get involved in class actions in the United States. I hope we are well out of it now. It's true what you say about urology care. There is a risk of being in the market, and the products that we have in the U.S. have been approved by FDA. Although everything has been approved and we see that problems arise, the U.S. is not always a predictable market in relation to class actions, but we've done everything we can not to have a repeat performance of this. We have a good business over there, and there is growth.
Of course, the natural question to ask is, what about in future? What are the risks of being in this market? There are things we need to consider, and we don't have the answer yet. We are making good business over there, and we are doing everything we can to take account of the risks. Right now, it is not the right time to sell. We have growth, and there are cases that haven't been finally settled. We still think that we can make a good business out of this. We need to think perhaps someone one day is willing to pay a very large amount for this business, but for the time being, we would like to run it ourselves and to take account of the risks as well as we can.
That's the most honest answer I can give you at the present stage. I hope that this is satisfactory. You're right. It is so boring to read our annual report. It probably doesn't get more boring than this. It is a conscious choice. We were in a situation where we wanted to cut down on all costs and all these fancy annual reports. Today, everything is available on the internet, in any case. I don't really know what to say. We still want to have a printed version because we want to leave something behind when we visit partners and customers. We can perhaps give it a facelift. We have this. This is another booklet about Coloplast, our business, et cetera. We give it to people that want to know more about Coloplast.
The accounts, well, that's primarily for financial analysts and investors, and all the people who want to read the boring figures. Whereas partners and users would like to read about the idea behind our business. We've decided to divide the resources like this. I hope this will go down well with you. There are copies available outside. When you leave, please pick up one. Thank you, says the chairman. The next speaker is Per Juul from the Association of Danish Private Shareholders. You have the floor, sir. Thank you very much. I am Per Juul, and I represent the Danish Association of Private Shareholders. We safeguard the interests of private investors in Denmark. Thank you to the chairman for a good report.
We greatly appreciate getting figures, in particular, figures like the ones you can show us. Thank you for the large shareholder that goes to the restroom after your presentation. I'm thinking of ATP, the Supplementary Labour Market Pension Fund. You said organic growth in fixed exchange rates of 6%-7%. You made it. There was some headwinds, so it wasn't as expected, stated in DKK. Currencies and exchange rates are difficult. EBIT margin, 33%-34% in fixed exchange rates, you made that as well. Then there was this extra provision concerning the U.S. lawsuit. Since the closing of the fiscal year, the share price has gone down. 13% is the decline. I think you said 3%, I think we can agree that it's declined to DKK 450.
Overall, from the beginning of the last fiscal year and until the present day, there's a slightly negative development. Could be because of this additional provision you've had to make. Could also because of your new strategy, where you have gone from 7%-10% in guidance to 7%-9%. In Novo Nordisk, another Danish company, we see that the financial analysts are very sensitive to such changes. You're doing well. You are a market leader, and you have achieved 7%-9% in organic growth and also an improved EBIT margin. I have three questions to you. Håkan Björklund will leave the board and will not be replaced. This means the resignation of an experienced board member.
My question is: Is there an idea in setting up a board committee that it has as its job to look for potential new board members? You propose that the strike price should be reduced from 15% above the share price to 5% only, which means that the executive management make money on share options at a different level. You have three years to reach that 5% increase. I'd like to hear more about your line of arguments in favor of this move. My last question has actually been dealt with because the former shareholder said the same. I would like to hear more about your strategic benefits from the acquisition in the U.S., but then the Chairman of the Board already touched upon that.
We also think, as the last speaker said, that you could do better in terms of providing us with a bit more exciting annual report, perhaps some pictures of the products. I know things are available on the Internet, and perhaps you think that people are not really looking that well in photos, so there's no reason to include photos of members of executive management. The paragraph or the section about risk is very short and takes up only part of a page. You could do better than that. Thank you very much. Thank you, says the chairman of the meeting, and hands over to the chairman of the board for a reply. I, too, would like to thank you, Mr. Juul, for your observations concerning the accounts, and I'd also like to answer your questions, of course.
You had a number of them. The first one had to do with this nomination committee on the board. Why don't we have one? We're one of the very few Danish companies not to have one, and it's actually also against the recommendations concerning good governance. I perhaps ought to say, of course we will. We are a small board, and we have decided that the chairman's committee, the vice chairman, and myself, will deal with this. We deal with many other things, and after we have discussed things, we take it up with the board. We think we are more actually involved than if this was assigned to a committee. It is a matter for the whole board. It's not a very large board we have, and we have good experience with involving the whole board.
We don't have a remuneration committee either. We do exactly the same thing as I've just explained. In many places, they have lots of committees on the board, and it appears to be the trend these days. We think it's fine to involve all board members actively, and I really appreciate us having a very active board. That's why we do this. Well, yeah. Thank you very much. I'm not saying that what we're doing is right, but it's good for us, and that's... We, you know, good corporate governance is a set of recommendations, and we can only read the recommendations and decide whether they suit us or there are things that are better for us.
You comply or explain, and we have explained, and we feel that we are very proactive in relation to this. The strike price. I'd like to explain why, and I understand why you ask the question. It's actually also an item on our agenda, and I'll get back to explaining why. Could we deal with this later when it's an item on the agenda? Because I'd like to explain why we have made this proposal. Comfort Medical, we've touched upon that, and then the annual report. Well, I think the pressure is mounting on me, so I think I'll go back to my chair. Thank you very much. Thank you to the chairman of the board. The next speaker on my list is Mr. Bjørn Hansen. You have the floor, sir. Thank you very much. Thank you for a good report.
Michael, it's always very charming to listen to you. You're competent, you're good, and it is a good small-sized board that we have. The vice chairman and yourself are doing fine, and last year I was very critical in my comments in relation to Mr. Lars Rasmussen. I'd like to apologize because it said that his bonus was zero last year, and this year he's been given an amount, and I hope it will be approved because it's good, it's a good achievement, a fine achievement, to buy a business such as the one that has just been acquired in the U.S. I think it's also a good idea to make the reservation concerning the lawsuits. I remember my boss. My boss had a very powerful method and a very soft one.
He said, "This is a U.S. dollar, and U.S. dollar always involves fees to lawyers." I have a question. It says here in the Danish press that in 2015, an additional reservation has been made, $750 million, concerning lawsuits in the U.S. Perhaps, are there other manufacturers involved in the cases that have not yet been settled? Is this only the tip of the iceberg? I also would like to hear, how much has been paid to each individual woman sustaining an injury? We understand that the Ministry of Justice has stopped some cases or all of them. I understand that this is now all behind us in for some of the cases. 262 cases, I have heard. They began in 2012 and 2013.
The $3.5 billion in reservation, that means $13 million and something per person. Which U.S. rules apply now? Could we have some examples of these cases? The amounts are pretty high, and we know that there's a lot of money to be made in the U.S. I was pleased to hear that with the new acquisition, we hope that we can reach a higher market share in the U.S. over a fairly limited span of time. I think it is good that we are conservative and not start by claiming that now we will grow by 300%. Coloplast is a good company. I'd like to hear whether these injuries are lifelong, or is it merely a question of American lawyers taking a share of 30%-40% in case of a settlement out of court?
There was a case in Europe in which costs were awarded, or rather, were awarded to the claimant. It was about DKK 1 million. There's been a Capital Markets D ay in the U.S. Was it Chicago you went to last? I think it was, wasn't it? Oh, well. According to the Danish media in October, it says Coloplast, or is it Coloplast Incorporated? Many cases have been settled. Is this only with Coloplast Denmark as the defendant, or does it involve the U.S. business? Will they also start attacking the family? I'd like to know about the order book. The Chairman of the Board already touched upon this. It looks fine. Aren't you forgetting China? After the decline of the British pound in the U.K., you've really done well. Not many businesses in Denmark can match what you've been doing.
There are always some glitches along the way, you're doing fine. We hope that you will make sure that headquarters remain in Denmark, you will also establish activities in other countries when barriers to trade are being introduced. Perhaps it's a good idea to have product development here, and then in order to satisfy demand, have companies in the big markets. The Americans are very good at bringing products faster to market, I think your products are of a high quality and very efficient, We I think it should stay that way. I also want to know a bit about your patents, because I believe there's a patent that expires next year. Will that affect sales in a positive manner? Is your market share so good that it doesn't really matter?
I'd like to wish everyone a happy New Year, I also brought something, a small present for Mr. Rasmussen. Lars Rasmussen, that is. It's wonderful to attend these AGMs. Thank you very much. Thank you, says the chairman of the meeting. Now, Mr. Bram Rasmussen for a reply. Thank you for your contribution. I'll see if I can answer as many questions as possible. Well, I just need to read my notes here. Let's start with a bit about the U.S. Your first question was whether there were other manufacturers than ourselves involved in lawsuits in the U.S., the answer is yes. We represent a fairly small proportion of the lawsuits over there in this respect. Had we only seen the top of the iceberg? You say, no, is my answer. We have come a long way, we see fewer and fewer cases.
At one point, there were lots of cases. We have now closed more than 90% of the known cases. That's why I think I'm safe in saying that we are not just seeing the tip of the iceberg. The payments made per woman in settlement, we are not saying that in public. This is deliberate. We don't say it here, we don't say it in the accounts. It might be damaging to the company if we state the cost per case. That's the reason that we sort of give for not being public about this. That is allowed. That's why we're allowed not to publish the amount. It's not just because we want to keep it secret, there it is. The U.S. Department of Justice has not been involved in this.
Last year, in my report, we mentioned a case in which the U.S. Department of Justice checked out some marketing practices. That was last year. It was closed last year. I'm quite sure that that's what you're referring to. It has nothing to do with this set of cases involving injuries to the lower abdomen. There are lifelong injuries? No, lots of things happen. There are television commercials worth millions of DKK every month, where lawyers ask people to contact them if they have suffered problems. It's a different situation from what we know from the Danish setting, and that's why an awful lot of cases occur in this way. We don't pay the lawyers because we settle the cases. I think that the lawyers operate under a no cure, no pay system.
They get a considerable part of the amount in compensation. They have a strong financial incentive, I think, in these cases. That's the way I intend to explain it and say nothing more. Our growth. It's true that we have had underlying growth. We've had some challenges with a store facility in the U.S. This is also now almost behind us. That's why we expect to see two-digit growth in the U.S. from now on. It's true that the U.K. has made a good contribution. China is slowing down, slowing down from a very high level. China in 2015, 2016, I mean, we are in Wound Care, seeing a growth rate in the past year of about 20%. That is a lot, but it's just lower than the year before, so all things are relative.
Concerning production and plans of production locations, as I said in my report, we have increased our production capacity in Hungary. 20,000 square meters have been added, and another expansion is planned for next year because of the high demand for SenSura Mio, our ostomy product. There's a huge demand. That's wonderful, and we are very busy to expanding down there, and construction is proceeding according to plan. We still have production in Denmark, but it's only on a small scale. We test products here, but it is a small production of our total production level. The majority of production takes place in other countries, and we are also currently looking for other locations than Hungary, because we don't want to put all our eggs in 1 basket. I think I more or less managed to cover most of your questions.
I hope you found my answers satisfactory. Thank you very much to the chairman. I have no further lists, speakers on my list, but if there is someone requesting the floor, now's the time. Doesn't seem to be the case. All right. I find that we have closed the discussion concerning the first three items on our agenda, so we can now turn to the vote. Before we get to that point, however, I would like to say in connection with the approval of the audited annual report, we have the audit report, in which the auditors explain about the work they've done and what they think of the accounts, and they write, well, that they have no additional comments to make, and it's been signed by PricewaterhouseCoopers on the 2nd of November this year.
Item three on the agenda is about distribution of the profit, and you see the details on page 70 of the annual report. Let's now proceed to the vote. I find that the shareholders have approved the annual report, have taken account of the report by the board of the chairman, and a decision has been made concerning the distribution of the profit in accordance with the annual report, and there are no objections. Thank you very much. Item four has four elements, as I said in my introductory statement. The first one, and they are not interconnected, so we deal with them individually also when it comes to voting. The first sub item is 4.1, is the first proposal from the Board of Directors. It has to do with an amendment to Article 5.2 of the Articles of Association.
The authorization conferred to the board of directors, there's a proposal here that it be made valid until the AGM in 2021. Are there any comments to this proposal so that there is an extension of five years of this authorization? That doesn't seem to be the case. I find then, that we have approved this amendment to the Articles of Association. 4.2, is a proposal from the board concerning a change in the fee paid to members of the board, so that the basic fee be raised from DKK 400,000 to DKK 450,000. I'd like to give the floor to the chairman of the board for a statement concerning this proposal.
Yeah.
Thank you. I'd like to explain our proposal. Some people may think that this is a considerable increase, and I don't really like having to justify my own fee, but there it is. The basic fee we propose will increase from DKK 400,000 to DKK 450,000, because we are at the lower end of the OMXC20 companies. In other respects, we are at the high end, but for several years we've been lagging behind in this respect. Because as a board, you don't really like to come up with proposals for too high increases. We have made some small increases from time to time, and then all of a sudden we find that we are lagging behind, and that's what we found now. I've said this before, we do not have a nomination committee on the board.
We don't have a remunerations committee, which in other companies will trigger an additional fee to the board members involved. That's why we think that it is now the time to make sure that we are actually in keeping with the average of the rest of the OMXC20 companies listed on the stock exchange. We feel that this is important because it also enables us to be attractive as a board. That's why we propose an increase from DKK 400,000 to DKK 450,000. Thank you, says the chairman of the meeting. Any comments to this proposal and to the statement made by the chairman of the board? That is not the case. I find then, that the discussion has taken place, and we have adopted the proposal from the board of directors.
The next item is 4.3, which is a proposal from the board of directors to amend the general guidelines concerning remuneration of members of the board of directors and executive management. There are two parts of this. First, there's a proposal to change the text, which explains about the bonus benchmarks that are based on value creation and profitability, but may be changed. Value creation, the proposal runs, should be changed to growth, so that the sentence is: at the date of adoption of these guidelines, the bonus benchmarks are based on growth and profitability, but they may be changed by the board of directors.
The second part has to do with changing the strike price, and here it currently says, "Options are awarded at a strike price, which is 15% higher than the market price at the award date." There's a proposal to change it, so that they are awarded at a strike price, which is 5% higher than the market price at the award date, calculated as the average price of all trades on the last trading day of the calendar year. These are the amendments, that's what 4.3 contains. I'd like to ask the Chairman of the Board to explain the background for these proposals. Thank you very much. I asked to be allowed to postpone a reply to this stage. First, the bonus, which is linked to growth and profitability.
It's only natural that this is what we communicate, that should also be reflected in the bonus. We simply coordinate what we say externally and what we do internally. This is the reason why we would like to amend the text itself. The next one is a bit more difficult. If only I had a whiteboard, so I could make a drawing for you, because actually it requires a bit of explanation. For some people, they will say, "Going from 15 to five, that is giving away presents." Let me explain how you fix remuneration to an executive management. You know more or less what the pay level is for the type of executive management we have there. What is the gross amount in pay? It may consist of a fixed element and a flexible element in the form of bonuses or stock options.
I can do comparisons, both with Danish companies and international companies, to find out what others are paying. You can then say how large a proportion should be fixed, how much should be bonus, how much should be in the form of stock options? We would like to give the executive management a stock option element. Why? Because we want there to be coordination here. We want executive management to be allowed to see results when things are going well, as shareholders see results when things are going well. Options, what are they worth? You don't know until after a number of years when you know about the share price development, but there is a model that is recognized, and which must be used, according to which you can calculate what they are worth at the time of the award. It's called the Black-Scholes model.
This is technical, but there are a number of assumptions included in it. It is recognized, it's global. The value of the options that you award to an executive management, you know exactly what it's worth at the award date. In addition to the pay package to the executive management, or rather, out of this pay total amount, you decide how much should be used in options, and then you know exactly how much they get. If an executive management gets options, and they are unlikely to have a lot of value over time, at one stage, the executive management will say: "Why don't you just change this so that we get a fixed pay instead?" We would like them to have options. It's important for them to continue liking options.
What's interesting about options is that it is an element of retention, that's one of our goals. We don't want our competent executive staff to leave us to take up positions with competitors. Our executive management members are attractive to our competitors, so we want to retain them. If they leave us, they will lose the options awarded to them, and that's something they don't like. The way things look today, we have nothing with which to retain our senior management, because the options awarded to them in the past years are not worth a lot today. I also want you to know, if we change the strike price from 15 to five, it means. I'm sorry, this is technical, but I want you to understand the background for this.
The Black-Scholes calculation means that they don't get this for free, they have to buy it. Let's say they have to pay DKK 120 per option, and if they get DKK 1 million worth, if we take down the strike price, it will be more expensive for them to buy. Where previously they could get perhaps 10,000 options, because of the lowering of the strike price, they can only buy 7,000. That's just an example. They get fewer options, but on the contrary, there's a greater likelihood that the stock options will be worth more. If they decide to leave us, they leave behind a bag of money. It's not as if we are just pouring money into their pockets for the sake of their blue eyes.
It's because we want to retain them, and we have the current strike price. If things will develop very well, they will really make a lot of money. Our price, share price did very well until we announced the accounts or published them. It fell, not as if we didn't publish some very good financial statements, but there is some negative sentiment in relation to shares, our share right now. It could be because of the U.S., I don't know. What I can see is that in our share price, there is also an element representing our announcements, and we expect organic growth between 7%-9%. We expect growth in the profit ratio. Many of these very fine results are already included in the share price, so there is not the same likelihood of an explosion in our share price in future.
That's why we look at the strike price. I'm sorry about this lengthy explanation, which is very technical, but it's simply that this is the way we feel that we will get most out of our money, and this is the way that we will keep the motivation high among executive staff and also retain them. It was lengthy, but it was to the best of my ability. That's the reason why we have made this proposal. The Chairman of the meeting, thank you very much to the Chairman of the Board. I'd like to hear if there are any comments? That does not seem to be the case. I find that there are no comments from the audience. I find that the AGM has approved the proposal from the Board of Directors.
The last item here under 4 is 4.4, which is about granting authority to the company's Board of Directors to allow the company to acquire treasury shares, representing up to 10% of the company's share capital. The highest and lowest amount to be paid for the shares is the price applicable at the time of purchase, ±10%, and this authority will be valid until the AGM in 2017. Are there any comments from the audience? That doesn't seem to be the case. I find, in this respect, too, that the AGM has approved the proposal from the Board of Directors. Thank you very much. Item 5 is about election of members to the Board of Directors.
Out of the existing Board and its members, Mr. Torbjörn Bjerklund has announced that he does not wish to be reelected, whereas all the other board members are willing to become reelected. Mr. Pram Rasmussen, Mr. Louis-Hansen, Mr. Magid, Ms. Nielsen, Ms. Nygaard-Andersen, Mr. Petersen, and Mr. Tang-Jensen are all willing to be reelected. Are there any other candidates or nominations? That doesn't seem to be the case. I find that these board members have been reelected. Item six... Yes, let's give these people a round of applause. That's appropriate. Item six, appointment of auditors. The board of directors proposes the reappointment of PricewaterhouseCoopers as the company's auditors. I'd like to hear if there are other nominations. The auditors shake their heads, so apparently not. Okay, I find that PricewaterhouseCoopers have been reelected. Why don't we give them, too, a round of applause, since we started doing that?
The last item on the agenda is item seven, any other business. We cannot have any votes and pass any resolutions, but this is the time to bring up issues that you wish to discuss with the company. There are no such items of business to be transacted here. Well, we have now exhausted the agenda, so it is my job as chairman of the meeting to close the meeting. Thank you very much for making it easy for me to conduct this meeting. Thank you very much. The chairman of the board, well, I'd like once again to say warm thanks for taking the time to come here. We really appreciate it, and thank you very much for the support that you give our proposals. We don't take this for granted, and we greatly appreciate it.
The chairman of the meeting claims he's had an easy job. Sometimes it's also a question of having prepared yourself well. Thank you very much for the job you put in here. I wish everyone a Merry Christmas and a Happy New Year. We are adjourned.