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ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD

ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD. PRESENTATION TO THE PORTFOLIO COMMITTEE: 8 MARCH 2006. PRESENTATION OUTLINE:. Introduction (Ms N D Shabalala, Board Chairperson) Business Plan (Dr L Makuleni – Managing Director)

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ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD

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  1. ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD PRESENTATION TO THE PORTFOLIO COMMITTEE: 8 MARCH 2006

  2. PRESENTATION OUTLINE: • Introduction (Ms N D Shabalala, Board Chairperson) • Business Plan (Dr L Makuleni – Managing Director) • Budget 2006/07 (Mr M P van Jaarsveld – Chief Financial Officer) • Conclusion (Dr L Makuleni)

  3. INTRODUCTION

  4. OBP FUNCTIONING BOARD COMMITTEES

  5. FUNCTIONING OF BOARD COMMITTEES • Remuneration Committee: • Remuneration: • Directors • Executives • Employees • Assessment of Performance • Human Resource Matters

  6. FUNCTIONING OF BOARD COMMITTEES • Audit Committee: • Controls: • Internal Audit • External Audit • Financial Matters • Management Accounts • Investments • Financial Policies

  7. FUNCTIONING OF BOARD COMMITTEES • Risk Management Committee: • Annual Risk Assessment • Risk Management – mitigating risks

  8. FUNCTIONING OF BOARD COMMITTEES • Research and Development Committee: • Monitor and assess R & D projects • Intellectual Property Management

  9. BUSINESS PLAN 2006/07:

  10. Business Plan • OBP Mandate • Market Definition • Situation Analysis • Primary Strategic Objectives • Primary Strategic Initiatives

  11. COMPANY MANDATE “To play a pivotal role in the management and prevention of animal diseases in the Country, SADC, and Africa”

  12. MARKET DEFINITION : • Biotechnology, Animal Health, Veterinary Vaccines • Geographic Focus • Domestic • Commercial • Emerging sector • Government Tender Business • International: • SADC, East Africa, North Africa, West Africa • EU • Middle East • South America • India, China

  13. MARKET DEFINITION : • Target Species: • Cattle, Sheep, Goats, Horses • Other possible species (e.g. poultry, rabies, camel) • 50 Products: • Bacterial, Viral, protozoa and diagnostic • Produce vaccines unique to African disease (tick- borne and insect-borne, African Horse Sickness, Bluetongue, Lumpy Skin Disease, Rift valley Fever, CBPP) • Sole / main producer of eight vaccines • Broad product range (Clostridial, Neo-natal, reproductive, respiratory etc.) • Local Strains

  14. MARKET DEFINITION: SOUTH AFRICAN ANIMAL HEALTH MARKET SIZEFOR THE 2005 CALENDAR YEAR • Total Market R843 million • Antibiotics R241 million • Ectos R161 million • Endectos R76 million • Endos R65 million • Vet. Vaccines R70 million (excluding Intervet) (OBP Ltd R 38.8 million)

  15. SITUATION ANALYSIS: • Well established competitors • Well trained sales, marketing, and technical staff • Broader Animal Health Product Range • Distribution channels established and profit margin driven • Stringent Regulatory requirement Internationally, Local Regulatory requirement less stringent • International Markets Requirement - GMP Accreditation • Well informed customers • Outbreaks of Trans-Boundary Diseases

  16. STRATEGIC OBJECTIVES : • Financial objectives • Sales Revenue • 2006/07 = R113.65m • 2007/08 = R136.48m • 2008/09 = R164.18m • Obtain gross profit margin of 35%

  17. STRATEGIC OBJECTIVES: 2005/6 • Financial • Capex spend of R33 million • R&D operational expenses 5% of Sales Revenue • BEE: 40% x Procurement

  18. STRATEGIC OBJECTIVES 2005/6 • Non – Financial • Upgrade of Packaging Department • Production Success Rate 90% • ISO Accreditation Audit Review • Release 2 products per year • EE & Skills Plan • Implement Succession Plan • Ensure Good Corporate Governance: • Risk Assessment • Three year rolling Internal Audit Plan

  19. STRATEGIC OBJECTIVES HRD BUDGET 2005/06

  20. STRATEGIC OBJECTIVES HRD BUDGET 2006/7

  21. EMPLOYMENT EQUITY TARGETS 2005/6

  22. EMPLOYMENT EQUITY ACTUAL TO DATE

  23. EMPLOYMENT EQUITY ACTUAL VS. TARGET FOR 2006/7

  24. EMPLOYMENT EQUITY TARGET STATS 2006/7

  25. EMPLOYMENT EQUITY TARGET 2006/7

  26. GENDER ACTUAL VS TARGET 2006/7

  27. GENDER ACTUAL VS TARGET 2006/7

  28. STRATEGIC INITIATIVES 2005/6 • OBP Strategic Initiatives - - National Imperatives • Investment in Infrastructure • Skills Development • Accelerated Growth: Livestock Sector

  29. OBP Strategic Initiatives 2005/6 • OBP Strategic Initiatives - - National Imperatives • Investment in Infrastructure • Upgrade of Facility and Equipment - GMP • Improve Production Processes • Improve Production Planning System • Preventative Maintenance of Facility and Equipment

  30. OBP Strategic Initiatives 2005/6 • OBP Strategic Initiatives - - National Imperatives: • Skills Development • OBP Technical , Sales & Marketing Dept • Farmers days ( NB OBP, Provincial Dept – AHT & State vets,) • Disease management program • OBP/ UP /ARC-OVI : Collaboration • Expert Panel Meetings

  31. OBP Strategic Initiatives 2005/6 • OBP Strategic Initiatives - - National Imperatives: • Build Expertise • Production Process Technology • IP management • Learnership Program - Process Engineers in Biotechnology • Building R&D capacity & capability • Succession Planning

  32. OBP Strategic Initiatives 2005/6 • OBP Strategic Initiatives - - National Imperatives • Accelerated Growth: • Marketing and Distribution • Vaccine manufacturing facilities within the Continent • R&D on Trans boundary diseases – vaccines • CBPP, Rinderpest, PPR, Sheep & Goat Pox

  33. OBP Strategic Initiatives 2005/6 • OBP Strategic Initiatives - - National Imperatives • Accelerated Growth: • New / Improved Products • Master Seed Management • Total Quality Management • Experimental Animal Facility • International Registration of OBP Product Line

  34. BUDGET: 2006/07

  35. PROFIT BEFORE INTEREST & TAX

  36. PROFIT BEFORE INTEREST & TAX R8.9m Improvement due to: • Increase in Sales 22% In spite of • Increase in Cost of Sales (-10%) • Increase in Overheads (-15%)

  37. INCREASE IN SALES

  38. COST OF SALES

  39. COST OF SALES R6.0m Increase due to: • Increased repair & maintenance R1m • Increased Depreciation R5m

  40. OVERHEAD EXPENSES

  41. OVERHEAD EXPENSES R5.5m Increase due to: • New positions & vacancies R3.7m • Market related salary adjustment R3.1m • Contractors (Work study, Audits, etc.) R0.6m • Increased Travel: R0.8m

  42. OVERHEAD EXPENSES R5.5m Increase due to: • Increased Marketing: R0.9m • Other R0.4m • Higher salary recovery in COS (-R4.0m)

  43. CASH FLOW 2006/07

  44. CAPITAL EXPENDITURE

  45. GRAPHICAL COMPARISON OF BUDGET TO PREVIOUS YEARS • Sales (Local & Export) • Expenses • Expenses as % of sales

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