ONDERSTEPOORT%20BIOLOGICAL%20PRODUCTS%20LTD

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ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD

• PRESENTATION TO THE PORTFOLIO
• COMMITTEE ON AGRICULTURE
• AND LAND AFFAIRS

• STRATEGIC PLAN AND BUDGET
• FOR 2007/08 2009-10

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PRESENTATION OUTLINE

• Introduction
• (Ms N D Shabalala, Board Chairperson)
• Business Plan for 2007/08 2009/10
• (Mr F B Hadebe, Acting C.E.O.)
• Recent Developments at OBP
• (Ms N D Shabalala, Board Chairperson)
• Budget for 2007/08 2009/10
• (Mr M P van Jaarsveld)
• Conclusion
• (Mr F B Hadebe, Acting C.E.O.)

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• INTRODUCTION

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THE PRESENTATION TEAM

• Ms N D Shabalala
• (Board Chairperson)
• Adv D J Mitchell
• (Chairperson of the Audit Committee)
• Mr S S M Seane
• (Chairperson of the R D Committee)
• Mr F B Hadebe
• (Acting C.E.O.)
• Dr L C N Makuleni resignation
• Mr MP van Jaarsveld

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• BUSINESS PLAN
• 2007/08 2009/10

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MANDATE

• To play a pivotal role in the management and
  prevention of animal diseases in the Country,
  SADC, and Africa

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VISION

• To be a global biotech manufacturer and provider
  of animal products, underpinned by a skilled,
  innovative and passionate team.

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MISSION

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

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GOALS

• Improving and streamlining of current
  processes
• MRP/ ERP System
• Forecasting
• Supply Chain Management
• Research and Development
• Improve Products
• Production Process Improvement
• Production Processes
• Production Planning
• Improved Technology

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GOALS

• Growth and Development
• Domestic Market
• Commercial farmers
• Emerging farmers
• Provincial Departments of Agriculture
• Export Market
• Explore and develop the export market
• Develop products against trans-boundary diseases

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GOALS

• Protection and Management of Intellectual
  Property (IP)
• Phase I IP Audit
• Phase II Implementation of IP Management
  Framework (IP Awareness)
• Ownership of IP discussions with ARC and
  Shareholder

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STRATEGIC THRUST

• Differentiation
• Collaboration

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STRATEGIC THRUST

• Differentiation
• Develop a position on issues affecting the
  industry
• Avian Flu (OVI)
• Trans-boundary diseases
• Strategic Vaccines
• Minimize the cost of production
• Monitoring and Control
• Planning (Capex)

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STRATEGIC THRUST

• Differentiation
• Use emerging and advanced technologies in all its
  operations
• Upgrade of Facility and Equipment
• GMP accreditation
• Innovation in all operational areas
• Research and Development New and improved
  products

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STRATEGIC THRUST

• Differentiation
• Enhance visibility and improve market image
• Branding
• Domestic Market serving especially the emerging
  farmer sector
• International Market entering new markets

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STRATEGIC THRUST

• Differentiation
• Open dialogue with stakeholders to enhance
  stakeholder understanding and participation
• National Government Departments (including
  Department of Health)
• Provincial Departments
• Local Government

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STRATEGIC THRUST

• Collaboration
• Alliances with strategic partners in the industry
  and with similar organisations
• R D
• Technology
• Funding
• Partnerships with other entities to undertake
  joint policies, programmes and projects.
• Driving force and champion in all collaborations

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OBJECTIVES

• Turnover of R500 million annual turnover in 6
  years
• List on the stock exchange within three years
  after achieving a turnover of R500 million (2nd
  phase of Corporatisation)
• Become a specialist in tropical diseases.
• Become a specialist in preventative products
  for animal healthcare

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• RECENT DEVELOPMENTS AT OBP

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RECENT DEVELOPMENTS

• Restructuring
• Declaration as National Key Point

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RESTRUCTURING

• Need for restructuring
• Aligning structure to strategy
• Re-align functions enhancing communication and
  functioning
• Board and EXCO Strategised and new Structure
  evolved

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PREVIOUS STRUCTURE
Minister
Board
Managing Director
Internal Audit
Company Secretary
Operations, Research and Development
Finance
Human Resource
Sales Marketing Executive
Business Development
Total Quality
Quality Control
Accounting
Export
Industrial Relations
Regulatory Affairs
Sales Admin
R D
Production
Procurement
EMU Facilities Maintenance Engineering
Skills Development
Experimental Animals
Raw Materials
Bacterial
Domestic Sales
IT
HR Administration
Viral
Quality Assurance
Packaging
Technical
Immunology
Distribution
Bacterial
Viral
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APPROVED STRUCTURE
Minister
Board
Chief Executive Officer External Liaison and
stakeholder management
Project Management Office (GMP Implementation)
Company Secretary
Chief Operations Officer
Chief Financial Officer
Shared Services Executive
Sales Marketing Executive
Fin Admin , Payroll admin Non Core Procurement
Asset Management Working Capital Management
H RM
Sales International
R D
Production
Quality Control
IT
Media Production
Bacterial
Sales National
SCM
EMU Facilities Maintenance Engineering
Risk Management
Viral
Procurement
Packaging
Technical
Costing
Planning
Regulatory
Inventory Raw Materials Packaging
Materials Finished Products
Bacterial
Production Process Improvement
Viral
Distribution
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NATIONAL KEY POINT STATUS

• OBP was declared as NKP on 22 January 2007
• Impact
• Business
• Alliances
• Financial / Funding
• Legal

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Budgetfor the medium termstarting 2007/08
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Index

• Local Sales
• Export Sales
• Cost of Sales
• Expenses
• Other income
• Profit
• Capex
• Cash Flow

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Local Sales (Rm)
Budget 2007/08 Budget 2006/07 Variance Var.
61 56 5 10
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Local Sales

• Volume growth (5)
• Distributor performance contract
• Launch of Triplesure
• Market share unchanged, but
• Outbreaks expected (Insect borne)
• Price growth (5)
• In line with inflation
• Competitive pricing

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Export Sales (Rm)
Budget 2007/08 Budget 2006/07 Variance Var.
31 58 -27 -46
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Export Sales

• Export market very competitive
• Positioning OBP
• Product registration
• Developing new markets
• Classical constraints (barriers to entry)
• New product development
• RD
• Time

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Total Sales (Rm)
Budget 2007/08 Budget 2006/07 Variance Var.
93 114 -21 -18
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Cost of Sales (Rm)
Budget 2007/08 Budget 2006/07 Variance Var.
63 67 4 6
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Cost of Sales

• Lower sales volume 18
• Higher cost of production -9
• Of outsourced products
• GMP environment - more expensive
• Higher labour cost -2
• Increase in staff costs (inflation)

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Expenses (Rm)
Budget 2007/08 Budget 2006/07 Variance Var.
46 42 4 10
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Expenses

• Salaries inflation (5)
• 11 new positions
• 2006/07 budget salaries (MRS lower)
• Marketing in export market (16)
• New Product launches (local incl.)
• New markets
• RD expenses (95)
• Product development
• Some RD outsourced to OVI SA universities
  Internationals

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Net Profit (Rm)
Budget 2007/08 Budget 2006/07 Variance Var.
-13 6 -19 -315
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Net Profit

• OBP is a volume driven business
• Lower export sales
• High portion of fixed costs (salaries)
• Large investments in RD

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Capex (Rm)
Budget 2007/08 Budget 2006/07 Variance Var.
18 16 -2 -13
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Capex (Rm)
Upgrade freeze drier (Packaging) 3.8
Replace filling machine (Packaging) 2.5
Upgrade fermentor (Bacterial Production) 3.0
Implement ERP system (Operations) 2.5
Other 6.5
TOTAL 18.3
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Cash flow (Rm)
Budget 2007/08 Budget 2006/07 Variance Var.
-26 -20 -6 -30
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