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ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD. PRESENTATION TO THE PORTFOLIO COMMITTEE: 7 NOVEMBER 2006. PRESENTATION OUTLINE. Introduction & Governance Report (Ms N D Shabalala, Board Chairperson) Company Performance (Dr L C N Makuleni, Managing Director) Human Resource Report - PowerPoint PPT Presentation
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ONDERSTEPOORT BIOLOGICAL PRODUCTS LTD
PRESENTATION TO THE PORTFOLIO COMMITTEE: 7 NOVEMBER 2006
PRESENTATION OUTLINE
Introduction & Governance Report (Ms N D Shabalala, Board Chairperson)
Company Performance (Dr L C N Makuleni, Managing Director)
Human Resource Report (Ms S A Bokwe, GM: Human Resources)
Financial Performance for 2005/06 (Mr M P van Jaarsveld, GM: Finance)
Conclusion (Dr L C N Makuleni & Ms N D Shabalala)
THE OBP BOARD
Front (LtR): Dr Linda Makuleni (Managing Director), Ms Nozibusiso Shabalala (Board Chair)Back (LtR) Mr Montwedi Seane, Ms Stefanie Burger (Company Secretary),
Adv Dave Mitchell, Dr Ruth Forbes
THE OBP LTD EXECUTIVE TEAM
Front (LtR) Dr Linda Makuleni (MD), Mr Willie Botha (National Sales Manager)Back (LtR) Mr Pieter Pieterson (GM: TQM), Dr Alfred Kgasi (Business Development Manager),
Ms Siphokazi Bokwe (GM: HR), Dr Baty Dungu (GM: Ops, R & D)Mr Pierre v Jaarsveld (GM: Finance)
GOVERNANCE REPORT
CORPORATE GOVERNANCE – FUNCTIONING OF BOARD
The Board retains full and effective control of the Company
To this end, the Board met 6 times The Board is committed towards Good
Corporate Governance: Induction of Directors Director Development Programme
Conducted assessment of Board and Board Committees
CORPORATE GOVERNANCE – FUNCTIONING OF BOARD AND
COMMITTEES
Annual Board Plan – considering Reporting requirements:
Quarterly Board MeetingsThree Meetings of Committees per
annumTwo Strategy Planning & Review
Sessions per annum
FUNCTIONING OF BOARD COMMITTEES
Remuneration Committee:Board approved Committee Charter3 Meetings to deal with 2005/06 matters Membership:
Dr M Madikizela (Chairperson)Adv D J MitchellMr S S M SeaneMs N D ShabalalaMs S A Bokwe (GM: Human Resource)MD, GM: Finance (by invitation)
FUNCTIONING OF BOARD COMMITTEES
Remuneration Committee Activities:Remuneration of:
DirectorsExecutivesEmployees
Performance Assessment of ExecutivesHuman Resource Matters
FUNCTIONING OF BOARD COMMITTEES
Audit Committee:Board approved Committee Charter3 Meetings to deal with 2005/06 mattersMembership:
Adv D J Mitchell (Chairperson) Dr R U Forbes Ms N D ShabalalaMr M P van Jaarsveld (GM: Finance)MD, Internal Auditor, External Auditors (by
invitation)
FUNCTIONING OF BOARD COMMITTEES
Audit Committee Activities:Effectiveness of Internal Controls
Internal AuditExternal Audit
Financial MattersManagement AccountsInvestmentsFinancial PoliciesAnnual Financial Statements and Annual Report
FUNCTIONING OF BOARD COMMITTEES
Risk Management Committee:Board approved Committee Charter3 Meetings to deal with 2005/06 mattersMembership:
Dr R U Forbes (Chairperson)Adv D J MitchellMs N D ShabalalaDr L C Makuleni (Managing Director)
FUNCTIONING OF BOARD COMMITTEES
Risk Management Committee:Membership (Continued):
Dr B Dungu (GM: Ops, R & D)Mr P M Pieterson (GM: Total Quality)GM: Finance, Internal Audit, EMU Manager (by
invitation)
Risk Management Committee Activities Annual Risk AssessmentAnnual Risk Management PlanRisk Management – Continuous
monitoring and evaluation of Risk Management plan
FUNCTIONING OF BOARD COMMITTEES
Research and Development Committee:Board approved Committee Charter3 Meetings to deal with 2005/06 mattersMembership:
Mr S S M Seane (Chairperson)Dr M Madikizela Dr L C Makuleni (Managing Director)Dr B Dungu (GM: Operations, R & D)National Sales Manager (by invitation)
FUNCTIONING OF BOARD COMMITTEES
Research and Development Committee Activities:R&D Strategy and Policy
Intellectual Property Management
Monitor and evaluate Strategic R&D Projects
OCCUPATIONAL HEALTHAND SAFETY COMMITTEE
Reports Quarterly to the Board7 Meetings to deal with 2005/06 mattersMembership:
Ms S Burger (Company Secretary) Mr P M Pieterson (GM: Total Quality)Mr L Gcwensa (Labour Relations Manager)
Mr B Shandu (Manager: Engineering, Maintenance and Utilities)
OCCUPATIONAL HEALTHAND SAFETY COMMITTEE
Committee Activities:Legal Compliance PolicyStrategy
COMPANY PERFORMANCE:2005/06
COMPANY PERFORMANCE:
FINANCIAL
OPERATIONS
RESEARCH AND DEVELOPMENT
TOTAL QUALITY MANAGEMENT
Onderstepoort Biological Products Ltd hasbecome a respected leader in its niche
market: the production and sale of animal vaccines and related
biological products.
COMPANY PERFORMANCE
FINANCIAL
Sales HistorySales compared to budget & last yearOperational Profits
COMPANY PERFORMANCE:FINANCIAL
Annual Sales History:
-
10
20
30
40
50
60
70
80
2001 2002 2003 2004 2005 2006
Total Local Export
R'm
COMPANY PERFORMANCE:FINANCIAL
Sales Income 2005/06 (Cum)
0102030405060708090
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
This Year Budget Last Year
R'm
COMPANY PERFORMANCE:FINANCIALOperating Profit (Cum)
-25
-20
-15
-10
-5
0
5
10
15
20
25
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
This Year Budget Last Year
R'm
COMPANY PERFORMANCE: DOMESTIC SALES & MARKETING
Building partnerships with:Provincial Departments of Veterinary
ServiceVeterinariansCommodity GroupsEmerging and Commercial Farmers
Expert panel meetingCustomer Survey
COMPANY PERFORMANCE: DOMESTIC SALES & MARKETING
SponsorshipsFemale farmer of the yearNERPOSAVA congress
Farmers’ daysExtended distribution network
Major agreements with BEE companies
COMPANY PERFORMANCE: EXPORT SALES & MARKETING
Appointment of Business Development Manager
Interacted with existing and prospective Export Clients
Developed Strategies for different Export Regions
COMPANY PERFORMANCE: EXPORT SALES & MARKETING
Attended International Conferences and presented Technical Papers
Sponsorships:FAOBotswana & Namibian Veterinary
Congresses
License Technology & Strategic Partnerships
3 Research and Development Projects on Trans-Boundary Diseases
Other Strategic Projects IP Management
COMPANY PERFORMANCE: RESEARCH AND DEVELOPMENT
Facility UpgradePhysical Infrastructure AuditFacility Upgrade Plan
Streamlining Production Processes Production Planning Processes
COMPANY PERFORMANCE: OPERATIONS
Repair and maintenance expenses
0.0
1.0
2.0
3.0
4.0
5.0
2001 2002 2003 2004 2005 2006
COMPANY PERFORMANCE: OPERATIONS
COMPANY PERFORMANCE: TOTAL QUALITY MANAGEMENT
Experimental Animals Animal Ethics Co-operation with other Government
Departments for animal housing
COMPANY PERFORMANCE: TOTAL QUALITY MANAGEMENT
Quality Assurance:Supplier Quality and BEE AuditsPlant Quality AuditsPlanning of first external ISO audit
Regulatory Office:Review of current registered product
dossiersRegistration of OBP products
Internationally
HUMAN RESOURCEREPORT: 2005/06
HUMAN RESOURCES
Employment Equity ReportHuman Resource DevelopmentHIV/ AIDSRemunerationSocial Responsibility
64%
32%
3%
1%
Black Coloured Indian White
EQUITY STATUS REPORTEMPLOYEE DISTRIBUTION BY RACE
EQUITY STATUS REPORTEMPLOYEMENT EQUITY 2005/06
0
20
40
60
80
100
120
140
African Coloured Indian Whites
Target 2005/6 Actual 2005/6
EQUITY STATUS REPORTEMPLOYEE DISTRIBUTION
BY GENDER: 2004/5 vs. 2005/6
0
20
40
60
80
100
120
Male Female
2004/05 2005/06
EQUITY STATUS REPORTSTAFF WITH DISABILITY
0
1
2
3
4
Senior
Management
Managenent Specialists Skilled Semi - skilled
HUMAN RESOURCES DEVELOPMENT
Areas of focusABETBursariesMulti-skillingIn-House Technical TrainingManagement Development Programme
TRAINING AND DEVELOPMENT
65%
32%
1%
3%
African Coloured Indian White
PERCENTAGE OF TRAINING COSTS PER OCCUPATIONAL
CATEGORY
5% 5%10%
15%
0%15%
50%
Legislators, Owners,Senior Officials &ManagersProfessionals
Technicians & AssociateProfessionals
Clerks
Service Workers & Shop& Market Sales Workers
Artisan & RelatedWorkers
Plant & MachineOperators & Assemblers
HIV/ AIDS
Launched company strategy on HIV/ AIDS
KAPB study conducted OBP’s statement of intent was signed
by the Managing Director on World Aids day in 2005
REMUNERATION
We strive to offer competitive salaries Remuneration based on performance
and scarcity of skillsSurvey market yearly as part of 3 year
agreement
RETENTION
Staff Complement: 207Labour Turnover- 3%Management Turnover – 0% 56 % of staff- employed longer than 10
yearsTurnover in staff recruited since
Corporatisation - 1%Climate Survey conducted
OBP SOCIAL RESPONSIBILITY
Take a girl child to workParticipated in Cell C take a girl child to work
OBP SOCIAL RESPONSIBILITY
Internship Programme for EngineersTwo appointed within the Company, of which one
received a better offerExperiential training of Scientists
(Landbank / OBP Collaboration)Accommodated two graduates for experiential
training for a period of twelve months
Partnerships with Service Providers:Students placed with OBP Service Providers for
experiential training (e.g. Stuart – Scott)
OBP SOCIAL RESPONSIBILITY
Tumeleng Mission (Klipgat)HospiceCrèche
Children’s homeDonated our time and money
FINANCIAL RESULTS OFFINANCIAL RESULTS OFONDERSTEPOORT BIOLOGICAL ONDERSTEPOORT BIOLOGICAL
PRODUCTS LTDPRODUCTS LTD
2005/062005/06
INDEX
Income Statement
Balance Sheet
Cash flow
INCOME STATEMENT
SalesCost of salesOther incomeOperating profit
-1020304050607080
2001
2002
2003
2004
2005
2006
Export Local
LOCAL SALES vs. EXPORT SALES (R’m)
44%
26%
36%
6% 7%-4%
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
2001 2002 2003 2004 2005 2006
-10%
0%
10%
20%
30%
40%
50%
ANNUAL SALES GROWTH: (RAND MILLION)
18%
15%
-6%
12%
0%
31%
-5.0
10.015.0
20.025.030.0
35.040.0
45.050.0
2001 2002 2003 2004 2005 2006
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
LOCAL SALES &ANNUAL GROWTH (YEAR ON YEAR)
EXPORT SALES &ANNUAL GROWTH (YEAR ON YEAR)
-36%
14%0%
131%
62%
303%
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
2001 2002 2003 2004 2005 2006
-100%
-50%
0%
50%
100%
150%
200%
250%
300%
350%
COST OF SALES
2004/05: R41.2m2005/06: R40.4mDecrease: R0.8m
Improved production technology & quality implemented in the Viral Production Unit.
OPERATING INCOME
2004/05: R6.8m2005/06: R3.3mDecrease: R3.5m
R 6.6 R 7.5
R 20.2R 14.1
R 5.1
R 19.5 7%
19%
29%29%
15%17%
0
5
10
15
20
25
2001 2002 2003 2004 2005 2006
0%
10%
20%
30%
40%
Profit Margin
OPERATING PROFIT vs. MARGIN
0
10
20
30
40
50
60
70
80
2002 2003 2004 2005 2006
Sales Total costs
SALES vs. TOTAL COSTS
0%
10%
20%
30%
40%
50%
60%
2003 2004 2005 2006
COS Overheads Linear (COS) Linear (Overheads)
COS AND OVERHEADS AS A % OF SALES
INCREASE IN COST OF SALES
Depreciation: R1.1mProduction cost: R1.7mLabour: R3.0mProduct losses: (-R2.2m)Stock movement: (-R4.4m)
INCREASE IN OVERHEAD EXPENSES
R&D: R2.1mStaff cost R4.8mMarketing: R1.4mElectricity: R0.7mBad debt: (-R6.1m)
BEE PROCUREMENT
OBP’s new Procurement Policy established end of 2004
Policy based on:PPPF Act (Act No 5 of 2000)AgriBEE ( BBBEE Framework for Agriculture) July 2004DTI BEE Strategy (July 2004)
OBP BEE Procurement:2004/05 = 48%2005/06 = 56%
BALANCE SHEET
PPE (Fixed Assets)InventoryTrade receivablesCashTrade payablesProvisions
PROPERTY PLANT & EQUIPMENT
2004/05: R29.0m2005/06: R88.0mIncrease: R60.0m
Acquisitions: +R65.5mDepreciation: -R5.5m
Transfer of land and buildings to OBP R53.6mPlant & equipment: R11.9m
INVENTORY
2004/05: R13.1m2005/06: R12.5mDecrease: R0.6m
TRADE RECEIVABLES
2004/05: R5.7m2003/04: R8.9mIncrease: R3.2m
CASH
2004/05: R77.4m2003/04: R80.7mIncrease: R3.3m
Increase due to operational cash flow.Cash invested in three major banks.Cash is retained for upgrade of the facilities
TRADE PAYABLES
2004/05: R5.8m2003/04: R9.5mIncrease: R3.7m
CASH FLOW
Cash position of OBP
OBP’s Liquidity
80.777.4
69.766.9
57.6
29.9
0
10
2030
40
50
6070
80
90
2001 2002 2003 2004 2005 2006
CASH POSITION
R 0
R 50
R 100
R 150
R 200
R 250
2004 2005 2006
Liab.
Cash
Invent
Debtor
Fixed A
ASSETS vs. LIABILITIES
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
CONCLUSION CHALLENGES / OPPORTUNITIES:
Growing the Company: Domestic market International markets
International Strategic Partners Funding for Upgrade
CONCLUSION CHALLENGES / OPPORTUNITIES:
Improve Product Line: New / improved products New technology
GMP / ISO accreditation Intellectual Property management
CONCLUSION
Company in operation for six years:Positive Growth: Financial, Human
Resource, Operational Processes, Client Base (including export)
Significant role in NEPAD: Trans-boundary diseases