EUROTAPE DOWNUNDER

1. EUROTAPE DOWNUNDER • Aspects and the markets – Australia and New Zealand

2. Good morning or as we would say in the native people of New Zealand’s language: Kia ora! I am pleased to be able to provide, what I hope, is an interesting insight and information into both the New Zealand and Australian Markets, in which we have been proud to represent EUROTAPE for many years.

3. Introduction: To start with, many of you here will know of our two countries having, I would hope, at least, to have studied these countries back in school and perhaps some have also had the opportunity to make the trip “down under”. For those of you that do not know much about our countries, I would like give a brief Geographical and Demographic outline on our part of the world. Firstly we are a very long way from Europe! • To fly direct it takes around 23 – 24 hours - plus at least one stop-over of at least 3 - 4 hours. • Even for our colleague here from South Africa, it is around 14 hours direct flight from his country to the closest edge of Australia and then it takes around 5-6 hours to fly across the middle of Australia to the most populated parts being the eastern sea border – and closest to New Zealand. DISTANCE - IS A PROBLEM!

4. When we order product from Eurotape it takes around 6 – 8 weeks - just for delivery via sea freight , which is another consideration in how we run our business – and certainly management of our stock levels becomes a very important function within our company! • Our two countries, in reality, are islands in the ocean – even though Australia is simply a huge country - with very few people, it is a very big land mass completely surrounded by vast amounts of water. • The population for Australia is now approaching just 25 million people, New Zealand is now around 4.5 million people. Both markets combined are not at all large , when compared to many countries here in Europe. • Personal income levels in Australia are relatively high, by Western World standards, with New Zealand somewhat less. Both economies rely very heavily on exports. • In Australia export income comes from the enormous mineral resources this country possesses - such as iron ore, coal, fertiliser production and petroleum based products together with tourism, with many fine natural resources such as the Great Barrier Reef. • For New Zealand, export income is from primary produce with Dairy products like cheese, milk powder and butter - meat and wool together with forestry are also strong contributors • Tourism is the second largest foreign currency earner in New Zealand and with four distinct or separate seasons over the course of a year, allows us to enjoy every imaginable type of outdoor activity from Mountaineering to Deep Sea Diving - and everything in between.

5. The Markets: • Both markets enjoy fully funded Public or Government Health care with public hospitals in all towns and cities. For reasons of clarity I would like to split the two markets, into their separate countries - as while we are very similar in many ways, with our business, they are quite different. Firstly New Zealand: • Reusable theatre products have been in this market now for more than twenty (20) years. • Predominantly the introduction was based around the Standard Textile fabrics. These are manufactured locally into gowns, drapes and wraps. • Approximately 2/3rds of all operating procedures in New Zealand are done in the Public or Government owned facilities with the balance in private hospitals and clinic’s – often with the same surgeons performing procedures in both Public and Private operating theatres. This has helped with the general spread of reusable packs – and I am sure it is the same all around the world, where the surgeons simply get what they want! • Presently the full reusable packs have achieved very good market penetration. Around 60% of packs being reusable with 40% disposable JUST in Public theatres. In the Private hospital theatres, the mix is around 20% of packs being reusableand the balance 80% disposable or single use.

6. New Zealand: • Reason for the big difference between the public and private hospital theatres, has been the inability of laundry operators to correctly supply the complete system with consistency and reliability – a disappointing situation. • We closely service all users in our market. Both our direct customers being the theatre pack organisation’s – public & private - and right through to the operating theatres. • Often we are involved with the laundry aspects of reusable's. This is an area that has given considerable areas of concern with fabric failures, lack of cleanliness and poor attention to the required standards. How do we promote reusable products? • I consider that we are a key link in the chain of the reusable supply program and again we try to work with the other “links” in the chain or partners to provide the best advice and service we can. The Future in New Zealand? Increasing environmental pressures are coming into force and more attention is being made to full life costing. This is resulting in increased interest in reusable programs.

7. Australia: • Reusable theatre products have been in the Australian market for more than fifteen (15) years. Predominantly the introduction was again based around the Standard Textile fabrics. These are again manufactured locally into gowns and drapes, though there is now an increasing amount of pre made garments and drapes being imported. • There has also been other USA based fabrics in our market and now -somewhat unfortunately - Asian made fabrics. • The experience of Asian made fabrics has generally not been good. Mainly with inconsistent quality – only exception to this has been fabrics made in Japan. These have been very good, but are expensive, when compared to the American made fabrics. • Again, like New Zealand - approximately 2/3rds of all procedures in Australia are done in a Public or Government owned facility with the balance in private hospitals and clinic’s. There is a fewer amount of surgeons working in both Public & Private hospitals in Australia. This has again helped a little with the general spread of the reusable product. • Presently reusable packs have achieved poor market penetration - only around 5% of packs are reusable with 95% disposable JUST in Public hospital theatres – and the same percentage of packs being reusable and disposable in the private theatres. • The two states that are the strongest for use of reusable’s are; New South Wales and Victoria. Fortunately both states have a high population in each. • Across the market there is a good amount of reusable gowns in use.

8. Australia: • Generally growth will be slower in the Australian market - when compared to what we have enjoyed in New Zealand. It is important that the growth, when it is achieved, is in a controlled and sensible way. • Customers are now increasingly wanting to move away from single use, due to the full life cost, strong concern regarding damage to the environment, disposal costs and in the future the carbon emission tax that will further impact on costs. • Most customers consider there is a place for both single use and reusable’s. • Products that do not directly affect the draping of the patient and that can provide safety of the surgical team will swing back to favour the use of reusable products – post operative infection rates are one that more emphasis is - quite rightly - now being increasingly focused on. • There is also an increased use of reusable outer wraps – this is an easy change, with immediate cost and operational benefits. • While there is a place for both reusable and disposables or single use products - I believe with the new Australian standards (that are about to be written again) primary difference will now state that the drapes and gowns, are to be of a fabric that is impervious to fluids – this will create a better oppurtunity for reusable products. • A key consideration in Australia (& New Zealand) is the presence of the multinational suppliers. We have the 3M, Kimberly Clark, and Baxter Healthcare Companies of the world present - all with their substantial marketing budgets, inducement programmes and incentive payments.

9. Australia: • We also have disposable fabric being manufactured in market. This allows a very flexible pricing platform to the market, and it is hard to overcome this advantage on a price by price basis. • Another reason for the big difference between the two types of supply has again been the inability of - predominantly the laundry operators to correctly supply the complete system, with the required consistency and reliability – again a disappointing situation. This is now slowly changing, as all laundries are being forced to develop new product ranges - as with reduced tonnage due to micro and day surgery. These operators are now looking more favourably at reusable programs as a way to increase process tonnage and revenue. • We closely service all potential users in our market – both direct customers being the theatre pack organisations, in public & private health care providers, and to a lesser degree through to theatres. Often now we are again involved with the problems in laundering aspects of theatre pack ingredients – this is an area that has given considerable areas of concern with garment failure: • Lack of cleanliness • Poor attention to standards and processes together with the detail necessary for the provision of a reliable and quality service. How do we promote reusable products? Again we consider that we provide a link in the chain of the reusable supply program and again we try to work with the other “links in the chain” or partners to provide the best advice we can.

10. The Future for Australia? • For the past three years we have been working closely with various other interested suppliers to get a state government in Australia to adopt a full reusable program and right now, this is finally about to start • The state government of New South Wales – the largest population of any state within Australia will, over the next 12 – 24 months, see the introduction of approximately one million reusable Theatre Gowns together with wraps etc – we anticipate this being followed by a full Drape program as a complement to the Gown program - estimations for Drapes will be around 375,000 to 400,000 units – all up a very significant change in this market. Other states we expect, and hope - will also follow and adopt the recyclable programs in full • The direction for these changes has come from the National Australian government, is primarily due to environmental pressures now coming into force - both now and anticipated for the future - together with more attention being now made to the all important full life costing comparatives. General Comparative: • In general, our markets are very much behind what I have observed over the years here in Europe. • Conformance to standards is at a “just meet” level - while the standards that are now being re-written hopefully these will become more meaningful and accurate to attain the care levels that can be achieved in this business.

11. Closing: Lastly - in closing - I would like to say thank you to the Eurotape Company for this opportunity. For many years now, we have had a very good relationship and I consider partnership with Eurotape. They have proven to be the very best supplier we have. This covers the obvious quality of their products but also the people, service and accountability - all key areas that we value in our business. Thank you for your interest and attention!