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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
ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD

PRESENTATION TO

THE PORTFOLIO COMMITTEE:

8 MARCH 2006

presentation outline
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)
functioning of board committees
FUNCTIONING OF BOARD COMMITTEES
  • Remuneration Committee:
    • Remuneration:
      • Directors
      • Executives
      • Employees
    • Assessment of Performance
    • Human Resource Matters
functioning of board committees1
FUNCTIONING OF BOARD COMMITTEES
  • Audit Committee:
    • Controls:
      • Internal Audit
      • External Audit
    • Financial Matters
      • Management Accounts
      • Investments
      • Financial Policies
functioning of board committees2
FUNCTIONING OF BOARD COMMITTEES
  • Risk Management Committee:
    • Annual Risk Assessment
    • Risk Management – mitigating risks
functioning of board committees3
FUNCTIONING OF BOARD COMMITTEES
  • Research and Development Committee:
    • Monitor and assess R & D projects
    • Intellectual Property Management
business plan
Business Plan
  • OBP Mandate
  • Market Definition
  • Situation Analysis
  • Primary Strategic Objectives
  • Primary Strategic Initiatives
company mandate
COMPANY MANDATE

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

market definition
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
market definition1
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
market definition south african animal health market size for the 2005 calendar year
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)

situation analysis
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
strategic objectives
STRATEGIC OBJECTIVES :
  • Financial objectives
    • Sales Revenue
        • 2006/07 = R113.65m
        • 2007/08 = R136.48m
        • 2008/09 = R164.18m
    • Obtain gross profit margin of 35%
strategic objectives 2005 6
STRATEGIC OBJECTIVES: 2005/6
  • Financial
    • Capex spend of R33 million
    • R&D operational expenses 5% of Sales Revenue
    • BEE: 40% x Procurement
strategic objectives 2005 61
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
strategic initiatives 2005 6
STRATEGIC INITIATIVES 2005/6
  • OBP Strategic Initiatives - - National Imperatives
    • Investment in Infrastructure
    • Skills Development
    • Accelerated Growth: Livestock Sector
obp strategic initiatives 2005 6
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
obp strategic initiatives 2005 61
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
obp strategic initiatives 2005 62
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
obp strategic initiatives 2005 63
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
obp strategic initiatives 2005 64
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

slide34
BUDGET:

2006/07

profit before interest tax1
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%)
cost of sales1
COST OF SALES

R6.0m Increase due to:

  • Increased repair & maintenance R1m
  • Increased Depreciation R5m
overhead expenses1
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
overhead expenses2
OVERHEAD EXPENSES

R5.5m Increase due to:

  • Increased Marketing: R0.9m
  • Other R0.4m
  • Higher salary recovery in COS

(-R4.0m)

graphical comparison of budget to previous years
GRAPHICAL COMPARISON OF BUDGET TO PREVIOUS YEARS
  • Sales (Local & Export)
  • Expenses
  • Expenses as % of sales
balance sheet cash flow
BALANCE SHEET & CASH FLOW
  • Land & Buildings transferred in 2005/06 – Valued at R47m
  • Increase in Operating Capital R5 786 needed as Sales increase
  • Negative cash flow mainly due to Capital expenditure: R33.1m
value adding activities
VALUE ADDING ACTIVITIES
  • Ensure a domestic capacity in vaccine production which will enable DoA to respond to disease outbreak.
  • Address disease problem specific to the region
  • Produce market driven products
value adding activities1
VALUE ADDING ACTIVITIES
  • Establish an economically viable Business Enterprise
  • Develop & retain local vaccine production related skills & expertise.
  • Establish strong R&D capabilities
conclusion
CONCLUSION:

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

conclusion1
CONCLUSION:
  • Sincere Appreciation
    • Shareholder
    • OBP Ltd BOD
    • OBP Ltd Exco
    • OBP Ltd Manco
    • OBP Ltd Staff
    • WE CANNOT SPELL SCCESS WITHOUT U
ad