Annual Report 2016/2017 1 | Onderstepoort Biological Products © | May 26, 2018

Focus areas 01 02 03 04 05 About Governance Organisational Performance OBP Governance Organisational Performance Focus areas 04 05 Financial Report Conclusion 2 | Onderstepoort Biological Products © | May 26, 2018

Mission and Vision Vision To be a recognised global biotech manufacturer of animal health products, founded upon a team of skilled, innovative and passionate professionals Mission To translate science into exceptional biological health products and technologies that will result in improved animal and human health, hence food security for all stakeholders X x X . X Strategic Goal 1: Build a successful, high performance organisation Strategic Goal 2: Improve stakeholder relationship management and communications Strategic Goal 4: Implement research and development strategies in line with market trends x x . Strategic Goal 3: Facilitate a more aggressive national and international market access and implement an effective distribution strategy. Strategic Goal 5: Contribute to government priorities with respect to support to emerging farmers, food security and economic growth. High level of integrity High level of ethical standards high standards of quality Excellence in everything we do 3 | Onderstepoort Biological Products © | May 26, 2018

OBP Top Facts 1 SA LEADER LEADER 179 DISTRIBUTION PRODUCT DEVELOPMENT In the local manufacturing of Livestock vaccines 1 DISTRIBUTION network New SA LEADER Investment in PRODUCT DEVELOPMENT FACILITIES Upgrading manufacturing 179 employees UNQUALIFIED AUDIT 2016/2017 4 | Onderstepoort Biological Products © | May 26, 2018

Workforce Profile 5 | Onderstepoort Biological Products © | May 26, 2018

02 Governance 6 | Onderstepoort Biological Products © | May 26, 2018

Governance Structure 7 | Onderstepoort Biological Products © | May 26, 2018

Board of Directors Dr Charlotte Nkuna, Mr Yaasir Haffejee, Mr Ronald Ramabulana, Ms Fulufhelo Mphuthi, Dr Pieter Vervoort, Ms Koekie Mdlulwa 8 | Onderstepoort Biological Products © | May 26, 2018

Executive Management team Back row: Dr Bethuel Nthangeni, Mr Matsobane Gololo, Mr Simphiwe Ntombela Front row: Dr Jacob Modumo, Ms Mpume Ramutle, Ms Zodwa Mobeng 9 | Onderstepoort Biological Products © | May 26, 2018

03 Organisational Performance 10 | Onderstepoort Biological Products © | May 26, 2018

SG1: Build a global high-performing organisation equipped with modern technology and expertise to develop and manufacture competitive products to achieve financial sustainability. Strategic Objective Target Performance Status 1.1 Alignment of structure to strategy Implement approved structure Not achieved Decision taken that a productivity study be conducted prior to the finalisation of the organisational structure Develop job profiles in line with approved structure Conduct skills audit 1.2 Maintain institutional capacity Implement succession planning policy Achieved Implement retention strategy Remuneration policy revised and approved Decision taken to develop an HR Policy Manual 1.3 Performance management system Implement the revised performance management policy 11 | Onderstepoort Biological Products © | May 26, 2018

SG1: Build a global high-performing organisation equipped with modern technology and expertise to develop and manufacture competitive products to achieve financial sustainability. Strategic Objective Target Performance Status 1.4 Financial stability R145 mil sales revenue Over achieved +R24 million above target R44 mil export sales +R67 million above target R3 mil total vaccine sales in provinces Not achieved Sales from Government Departments inhibited by the RT10 tender 3% increase on number of doses sold to export market 9,1 mil doses +9,5 % increase in opportunistic export sales 15% reduced total costs in relation to sales revenue +36% increased revenue due to opportunistic export sales 12 | Onderstepoort Biological Products © | May 26, 2018

SG1: Build a global high-performing organisation equipped with modern technology and expertise to develop and manufacture competitive products to achieve financial sustainability. Strategic Objective Target Performance Status 1.5 Production efficiency 260 batched produced Not achieved Reported figure excludes antigens and batches under test Batch rate failure Virology : 10% Bacterial: 5% Water for injection: 5% 15% production downtime Over achieved +3% improvement recognised 80% equipment operating capacity +4% improvement recognised 1.6 Quality products 4 internal audits +11 internal audits conducted Maintain ISO accreditation Achieved 1.7 A GMP compliant facility as per the approved plan 100% layout changes implemented Implementation of proposed layout changes would disrupt production Phase 2 – 80% completed Estimate on detailed design were over budget. The Board resolved that management look at other alternatives 13 | Onderstepoort Biological Products © | May 26, 2018

SG2: Improve stakeholder relations and communications Strategic Objective Target Performance Status 2.1 Improve customer and stakeholder satisfaction Customer relations management strategy approved and implemented Not achieved 2.2 Communication strategy implemented Implement and adhere to the communications strategy and policy The customer policy was presented to the Board was not approved 2.3 A Brand management framework developed and implemented Implement Brand awareness strategy 14 | Onderstepoort Biological Products © | May 26, 2018

SG3: Facilitate a more aggressive national and international market access and implement an effective distribution strategy Strategic Objective Target Performance Status 3,1 New markets developed and maintained 8 agents appointed in 8 new international markets Over achieved +2 agents appointed 1 distribution agreement signed 2 dossiers submitted in new international market Achieved 8 current export markets maintained +16 export markets maintained above target 3.2 Current markets maintained 36 million doses sold Not achieved Major coops started purchasing in quarter 2 due to implementation of the distribution strategy 3.3 distribution strategy implemented Distribution strategy implemented 15 | Onderstepoort Biological Products © | May 26, 2018

SG4: Implement research and development strategies in line with market trends Strategic Objective Target Performance Status 4.1 Improved products and processes 1 new product dossier submitted to the Registrar Not achieved Delay in conducting clinical trials 1 amended dossier on production processes submitted to the Registrar Achieved 1 GMP aligned production process 4.2 New generation products Technology validation for 2 new generation recombinant technologies 16 | Onderstepoort Biological Products © | May 26, 2018

SG5: Contribute to government priorities in respect to emerging farmers, food security and economic growth Strategic Objective Target Performance Status 5.1 Support to the smallholder and emerging farmer’s association and agricultural small business 3 projects with emerging farmers association Achieved 22 training sessions/events with small holder farmers and technicians facilitated Over achieved +8 events facilitated above target 2 Agricultural co-ops in rural areas supported 2000 doses supplied to small holder farmers +100 doses supplied above target 17 | Onderstepoort Biological Products © | May 26, 2018

04 Financial Performance 18 | Onderstepoort Biological Products © | May 26, 2018

Financial Performance Revenue increased by 100% from R87m in 2013/14 to R174m in 2016/17 due to changed distribution model locally and increased export market. Profit for the year also increased by 654% from a loss of R9m in 2013/14 to a profit of R48m in 2016/17. 19 | Onderstepoort Biological Products © | May 26, 2018

Assets and Liabilities Assets increased by 141% from R309m in 2013/14 to R745m in 2016/17 mainly due to funding received and recapitalization assets procured. Liabilities increased from R169m to R561m mainly due to the grant received which is classified as a long-term liability. 20 | Onderstepoort Biological Products © | May 26, 2018

Equity Equity increased by 31% from R140m in 2013/14 to R184m in 2016/17 due to increased profitability of the company. 21 | Onderstepoort Biological Products © | May 26, 2018

Cash and cash equivalents Cash and cash equivalents increased by 209% from R156m in 2013/14 to R482m in 2016/17 due to government grant and increased revenue over the period. 22 | Onderstepoort Biological Products © | May 26, 2018

Statement of Comprehensive Income 23 | Onderstepoort Biological Products © | May 26, 2018

Statement of Financial Position 24 | Onderstepoort Biological Products © | May 26, 2018

Statement of Cash Flow 25 | Onderstepoort Biological Products © | May 26, 2018

Conclusion 05 26 | Onderstepoort Biological Products © | May 26, 2018

Conclusion Unqualified audit report Improved organisational performance New distribution strategy yielding results Strong balance sheet Revenue growth in 2016/17 financial year Improved production output 27 | Onderstepoort Biological Products © | May 26, 2018

THANK YOU Dr Bethuel Nthangeni Acting Chief Executive Officer www.obpvaccines.co.za 28 | Onderstepoort Biological Products © | May 26, 2018