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ePaper created 2015-05-06, 08:22:31 | version 1.38.0
38 In the medical products market, the smooth and reliable delivery of raw materials and preliminary products is very important. This is achieved through quality control, contrac- tual arrangements, and the holding of emergency stocks. A process of continuous improvement and innovation also makes it possible to adapt quickly to changing customer demand, and even to anticipate it in certain areas. Security of supply represents another risk factor and is particularly relevant to precious metals. Previously, long- term supply contracts had been in place with the leading precious metal producers in all regions. These contracts were regularly updated to reflect market trends and the demand situation. Now, however, most of the contracts are being terminated by the South African mine operators. The required amounts of platinum and palladium will henceforth be procured through other contracts and through increased recycling volumes. High demand for some industrial metals could lead to scarcity and there- fore supply shortages. For this reason, customers provide both primary metals and precious metals in substantial volumes. Heraeus also continues to have access to fine metal (pure precious metal) recovered from refining batches and from used products that are reintroduced to the precious metal cycle. This significantly reduces procurement risks, despite often fluctuating production volumes from individual mines. Legal opportunities and risks Opportunities can be identified in this area. For example, rapid advancement of the legislation relating to the tran- sition to renewable energies and an improvement in state healthcare provision in Germany are leading to an expan- sion of business. Heraeus is also pursuing patent strate- gies and stepping up measures to establish and protect intellectual property as a means of securing existing and future business and thereby increasing legal certainty. Over the coming years, this will be manifested in the suc- cessive, Europe-wide implementation of the court ruling on the patent dispute with Biomet Inc., which had a favorable outcome for Heraeus. Despite a careful review of the patent situation, violations of industrial and intellectual property rights can occur. Occasionally, this can lead to expensive and protracted lawsuits. It is therefore not possible to rule out for the future that Heraeus may have to deal with allegations or charges of patent rights infringements. Should any risks in connection with legal disputes regarding potential patent infringements crystallize, they will be taken into account in the consolidated financial statements. Possible infringements or violations of law are limited by the compliance management system. Likewise, the pos- sibility of theft in sensitive precious metals areas, already minimized through stringent security standards, is further reduced through continual improvements to security meas- ures in line with global standards and control mechanisms. Due to the extensive global business activities and the different statutory environments in which the company operates, Heraeus is particularly exposed to the possibility of tax and customs-related risk. These are accounted for through the recognition of appropriate provisions or pre- empted by augmenting staff numbers in the corresponding central Group functions.