ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD

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ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD
PRESENTATION TO THE PORTFOLIO COMMITTEE 2
NOVEMBER 2004
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PRESENTATION OUTLINE

• Introduction (Mr S C Makama Board Chairperson)
• Governance Report (Mr S C Makama Board
  Chairperson)
• Company Performance for 2003/04 (Dr L Makuleni
  Managing Director)
• Human Resource Report (Ms S A Bokwe)
• Financial Performance 2003/04 (Mr M P van
  Jaarsveld General Manager Finance)
• Conclusion (Dr L Makuleni)

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• INTRODUCTION

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VISION

• To be a centre of excellence in developing,
  producing and marketing biological products
  Serving AfricaServing the world.

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MISSION

• To translate science into biological products,
  knowledge and technology - resulting in improved
  animal health, food security and safety for all
  our stakeholders

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VALUES

• OBP will conduct business in such a way to
  ensure
• A high level of integrity
• High ethical standards
• The highest standards of quality and
• Excellence in everything that we do.
• We accept that
• People are our major assets
• As a State owned entity we have the
  responsibility to provide for Public Good
• We have a responsibility to our
• society and the environment

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VALUES

• As a Company we will strive to promote
• Respect for all people
• Animal welfare
• Development of our employees and
• Customer care and satisfaction.

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• CORPORATE GOVERNANCE

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CORPORATE GOVERNANCE FUNCTIONING OF BOARD

• The Board retains full and effective control of
  the Company
• To this end, the Board met quarterly, and also
  scheduled 6 additional meetings
• The Board is committed towards Good Corporate
  Governance
• Induction
• Director Development Programme
• Agreed to assessment of Board and Board Committees

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CORPORATE GOVERNANCE FUNCTIONING OF BOARD
COMMITTEES
COM MEMBERS NO. OF MEETINGS ACHIEVE-MENTS
Audit Com Mr H Qangule Mr S C Makama Ms K R Hlalele MD GM Finance attends by invitation 5 Meetings to deal with 2004/05 matters Developed Policies Dividend Materiality Fraud Man Going Concern AFS AR
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CORPORATE GOVERNANCE FUNCTIONING OF BOARD
COMMITTEES
COM MEMBERS NO. OF MEETINGS ACHIEVEMENTS
Rem-Co Mr S C Makama Dr M M Dyasi Ms M S Khoza Dr P J Pullinger Ms M D Noge MD, GMHR GM Finance attends by invitation 5 Meetings to deal with 2004/05 matters Director Rem Rem Policy for Company Revision of Conditions of Service Impl of market related rem
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CORPORATE GOVERNANCE FUNCTIONING OF BOARD
COMMITTEES
COM MEMBERS NO. OF MEETINGS ACHIEVEMENTS
Risk Man Com Dr L Makuleni Ms K R Hlalele Mr M P v Jaarsveld (GM Fin) Dr B Dungu (GM Ops, RD) EMU Manager attends by invitation 3 Meetings to deal with 2004/05 matters Risk Assessment Risk Man Plan Addressing risks of facility equipment
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CORPORATE GOVERNANCE FUNCTIONING OF BOARD
COMMITTEES
COM MEMBERS NO. OF MEETINGS ACHIEVEMENTS
R D Com Dr M M Dyasi Dr M Madikizela Dr L Makuleni Dr B Dungu (GM Ops, RD) National Sales Man. attends by invitation 2 Meetings to deal with 2004/05 matters Development of R D Strategy R D Needs Analysis Prioritizing assessing R D Projects Man. of IP
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CORPORATE GOVERNANCE FUNCTIONING OF BOARD
COMMITTEES
COM MEMBERS NO. OF MEETINGS ACHIEVEMENTS
OSH Action Com Ms S Burger (CS) Mr P M Pieterson (GM TQM) Mr T Msibi (LR) Monthly Meetings Assessment of Compli- ance Institute actions required Monitoring implementa- tion of actions
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• COMPANY PERFORMANCE FOR 2003/04

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HIGHLIGHTS

• Onderstepoort Biological Products Ltd has become
  a respected leader in its niche market the
  production and sale of animal vaccines and
  related biological products. World export sales
  are steady and firm trade with the continent is
  being stimulated and is increasing while domestic
  market sales continue to be encouraging.

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HIGHLIGHTS

• FINANCIAL
• Sales Growth
• Domestic
• Export
• Operational Profits

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HIGHLIGHTS

• Sales History

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HIGHLIGHTS
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HIGHLIGHTS

• Cumulative Sales Income 2003/04

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HIGHLIGHTS

• Cumulative Operating Profit
• 2003/04

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HIGHLIGHTS

• Our strengthened Research and Development
  capacity has resulted in OBP having identified
  and initiated research projects that have led to
  a number of products in the pipeline.

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HIGHLIGHTS

• RESEARCH AND DEVELOPMENT
• Broaden Research and Development Partners
• International
• Local Academic Institutions
• 3 Research and Development Projects on
  Trans-Boundary Diseases

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HIGHLIGHTS

• RESEARCH AND DEVELOPMENT
• Establish and Strengthen Research and
  Development Capacity
• 3 Functional Departments
• Increase Number of Scientists
• Increase R D Expenditure (5 of sales)

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HIGHLIGHTSSCIENTISTS EQUITY STATUS
REPORT 2000
2004
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HIGHLIGHTS

• The streamlining of production processes has had
  the effect of improving our production success
  rate to 90, as well as improving our production
  quality, our product availability and thereby
  ensuring increased customer satisfaction

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HIGLIGHTS

• OPERATIONS
• Production Success Rate 75 to 90
• Facility Upgrade
• Physical Infrastructure Audit
• Facility Upgrade Plan
• Streamlining Production Processes
• Production Planning Processes

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HIGHLIGHTS

• The new state-of-the-art small animal holding
  facility that has been erected is important for
  facilitating experimental work requiring
  controlled environment and bio-containment. It
  will also provide much needed opportunities for
  international researchers to form partnerships
  with OBP (Ltd).

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EXPERIMENTAL ANIMAL FACILITY
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HIGHLIGHTS

• TOTAL QUALITY MANAGEMENT
• Regulatory Affairs
• Dossiers submitted
• Local
• International

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HIGHLIGHTS

• TOTAL QUALITY MANAGEMENT
• Two new products submitted, and registered
• Quality System
• Experimental Animal Facility

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• HUMAN RESOURCE REPORT 2003/04

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HIGHLIGHTS

• Our Human Resource Management and Development
  Policies have enabled OBP to effect a successful
  restructuring and transformation in terms of
  representivity and gender especially within the
  management and decision making cadres.

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HIGHLIGHTS

• HUMAN RESOURCE
• Staff Compliment 187
• Human Resource Development
• Skills Development
• ABET
• Bursaries
• Multi-skilling
• In-House Training
• Management Development programme
• System and Process in place

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COMPANY PERFORMANCE

• EQUITY REPORT
• Executive 50 Designated group, 40 female)
• Management 69 Designated group, 32 female)
• Scientist 75Designated group, 50 female)

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EQUITY STATUS REPORTMANAGEMENT LEVEL (2000 vs.
2004)
2000 2004
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SKILLS PROFILE2002/03
PG Post Graduate
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SKILLS PROFILE2003/04
PG Post Graduate
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• Financial results of
• Onderstepoort Biological Products Ltd
• 2003/04

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Index

• Sales
• Production
• Cost Analysis
• Profit
• Capital expenditure
• Cash position
• Balance Sheet

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Sales in doses

• Budget 95m
• Actual 100m
• Variance 5m
• Percentage 5

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Sales in Rand

• Budget R61m
• Actual R70m
• Variance R9m
• Percentage 14

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Local Sales in Rand

• Budget R40m
• Actual R36m
• Variance R4m
• Percentage -4

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Export Sales in Rand

• Budget R21m
• Actual R34m
• Variance R13m
• Percentage 59

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Expenses

• Budget R44m
• Actual R36m
• Variance R8m
• Percentage 19

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Operating profit

• Budget R7m
• Actual R20m
• Variance R13m
• Percentage 185

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Assets

• 2003 R11.4m
• 2004 R24.9m
• Difference R13.5m
• Increase due to
• Building of a Small Animal Holding Facility
  (R15m)
• Other equipment (R1.1m)
• Less Depreciation of (R2.6m)

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Inventories

• 2003 R14.7m
• 2004 R20.7m
• Difference R 6.0m
• Increase due to
• Blue Tongue vaccines for export order to Italy

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Trade other receivables

• 2003 R6.0m
• 2004 R3.7m
• Difference R2.3m
• Decrease due to
• Payment for Italy export-order was invoiced and
  due in 2003, but not in 2004.

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Foreign exchange assets

• 2003 R -
• 2004 R0.9m
• Difference R0.9m
• Increase due to
• New Accounting standard (AC133)

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Cash

• 2003 R66.9m
• 2004 R69.7m
• Difference R 2.8m
• Increase due to
• Operational profits
• Less Capital expenditure

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Trade other payables

• 2003 R3.1m
• 2004 R4.6m
• Difference R1.5m
• Increase due to
• Outstanding payments on the Small Animal Holding
  Facility

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Embedded derivatives

• 2003 R -
• 2004 R3.3m
• Difference R3.3m
• Increase due to
• New Accounting standard (AC 133)

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Provisions

• 2003 R15.5m
• 2004 R13.8m
• Difference R 1.7m
• Decrease due to
• 2003 Provision for product recall was cancelled
  in 2004

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Liquidity Ratio

• 2003 4.0 times
• 2004 3.7 times
• Difference 0.3 times
• Industry standard 2 times
• Decrease due to
• Higher payables in 2004

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Return on Assets Ratio

• 2003 24
• 2004 21
• Difference 3
• Industry standard 15
• Decrease due to
• Higher asset value in 2004

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Return on Equity

• 2003 43
• 2004 38
• Difference 5
• Industry standard Must be better than
  Reserve Bank rates
• Decrease due to
• Provision for new accounting std

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• CONCLUSION

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CONCLUSION

• VALUE OF OBP TO SA
• Ensure domestic competencies in vaccine
  products
• Farming community able to respond swiftly to
  disease outbreaks
• Establish economic viable vaccine business
• Develop and retain skills and expertise in
  vaccinology
• Establish strong Research and Development
  capability in
• vaccinology