1. Annual Report 2015/16 Presentation to Portfolio Committee
18th October 2016
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2. PRESENTATION OUTLINE Introduction Governance Report Performance Report
Historical perspective
Vision, mission and mandate
Governance of OBP
Governance Report
Board of Directors
Board Subcommittees
Executive Team
Organisational Structure
Risk Assessment
Performance Report
Key Strategic Objectives
Non-financial Performance Highlights for 2015/16
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3. OBP DELEGATION Board Members OBP Executive Team
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4. Acronyms ARC – Agricultural Research Council
Audit, Risk and IT – Audit, Risk and Information Technology Committee
BDO – Business Development Officer
CEO – Chief Executive Officer
CFO – Chief Financial Officer
DAFF – Department of Agriculture Forestry and Fisheries
FY – Financial Year
GDP – Gross Domestic Product
GMP - Good Manufacturing Practice
ISO – International Standardization Organisation
METF -Medium Term Expenditure Framework
NKP – National Key Point
OBP – Onderstepoort Biological Products
OVI – Onderstepoort Veterinary Institute
PFMA – Public Finance Management Act
RDO – Research, Development and Operations Committee
Remco HR & Ethics – Remunerations Human Resources and Ethics Committee
SADC – Southern African Development Community
SOC – State Owned Company
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5. OBP BACKGROUND
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6. Historical Perspective
1908: Establishment of Onderstepoort Veterinary Research Institute 1968: Dedicated vaccine facility established 1992: OBP separated from OVI, which became part of the ARC 2000: OBP incorporated on 6th September (OBP Incorporation Act 19, 1999) 2001: OBP received funding of R9 million 2005: State owned land and buildings officially transferred to OBP 2013: Allocated funding from Treasury to refurbish manufacturing plant
Incorporated in 2000 – OBP Incorporation Act 19, 1999 (OBP Act)
Incorporated to ensure financial viability & sustainability – access to technology, GMP facilities, etc.
Facility build in 1968:
R&D, Manufacturing, QC labs and Experimental Animals facilities.
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7. Vision, mission and mandate
OBP’s mandate is the prevention and control of animal diseases that impact food security and human health and livelihood. This mandate is delivered through the continued development of innovative products and efficient manufacturing processes that ensure vaccine affordability and accessibility through diversity of distribution channels.
Vision:
To be a recognised global biotech manufacturer of animal health products, founded upon a team of skilled, innovative and passionate professionals.
Mission of OBP:
To translate science into exceptional biological health products and technologies that will result in improved animal and human health thereby providing food security for all stakeholders.
Values
OBP conducts its business in such a way as to ensure:
A high level of integrity
A high level of ethical standards
High standards of quality
Excellence in everything that we do
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8. Workforce Profile Occupational Levels Male Female Total A C I W
Top Management 1
Executive Management 4 2 7
Management 6 3 19
Skilled/advanced operational 27 30 5 67
Semi-skilled 23 58
Basic skilled 14 21
TOTAL PERMANENT 78 8 69 11
173
Temporary employees 15 85 76
188
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9. GOVERNANCE
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10. Governance of OBP
State owned company (SOC) of the Department of Agriculture, Forestry and Fisheries (DAFF)
3B entity under Public Finance Management Act (PFMA) and Treasury Regulations
Registered taxpayer
OBP Incorporation Act (OBP Act no 19, 1999)
Corporate governance codes & protocols
National Key Point
ISO standards & business specific regulatory authorities
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11. Board of Directors
Board was appointed on 15 May 2014 and Chairperson of Board on 1 August 2011 and term further extended for a period of 3 years.
3 Sub-committees :
Audit, Risk and IT Committee
Remco, HR and Ethics Committee
Research, Development and Operations Committee (RDO Committee)
Committees and board scheduled to meet 4 times per annum
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12. Board of Directors Dr ME Mogajane Dr JH Adams (Chairperson)
(Non-Executive Director)
Dr JH Adams (Chairperson)
Dr M Mashaba
(Non-Executive Director)
Dr ST Cornelius (CEO) (Executive Director)
Dr MR Mashego (Non-Executive Director)
Ms KT Mdlulwa (Non-tExecutive Direcor)
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13. OBP Structure
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14. GM: Legal, Compliance & Company Secretary
Executive Management Team
Dr ST Cornelius
CEO
Mr Matsobane Gololo
CFO
Mr Simphiwe Ntombela OE
Dr Jacob Modumo
BDO
Ms Mpume Ramutle
HR Executive
Mr Louis Serfontein
GMP Project
Ms Zodwa Mobeng
GM: Legal, Compliance & Company Secretary
Dr Bethuel Nthangeni
CSO
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15. Risk Assessment Key Risk for 2015/2016 were identified.
Mitigating strategies were implemented.
The top 12 risks are listed with in the AR.
Descriptions of progress are included in the report.
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16. Performance Report
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17. Strategic Objectives
SG 1:
Build a global high-performing organisation equipped with modern technology and expertise to develop and manufacture competitive products to achieve financial sustainability.
SG 2:
Improve stakeholder relations management and communications.
SG 3:
Facilitate more aggressive national and international market access and implement an effective distribution strategy.
SG 4:
Continuously review research and development strategies in line with market trends
SG 5:
Contribute to government priorities in respect to emerging farmers, food security and economic growth.
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18. Strategic Goal 1: Objective statement Baseline Justification
Build a global high-performing organisation equipped with modern technology and expertise to develop and manufacture competitive products to achieve financial sustainability.
Objective statement
To attain a high-performance organisation underpinned by appropriate structures, institutional stability, competitive products, shared values and financial sustainability through the following:
1.1 Alignment of structure to strategy
1.2 Institutional stability
1.3 Performance management
1.4 Financial sustainability
Production efficiency
1.6 Quality products
1.7 A GMP compliant facility as detailed in the approved plan
Baseline
OBP currently has a workforce that requires further skills enhancement to align to changing technology, processes and quality standards and to have increased ability to innovate.
Staff turnover rate of above 12%.
Performance management system implemented in 2011.
Reliance on manual processes and reporting.
Out-dated production systems, processes, facilities and equipment
ISO 9001:2008 certified.
Inadequate budgets for plant upgrade and new GMP facility.
Current product portfolio.
Declining market share
Unfunded vaccine reserve
Justification
Optimal organisational performance is dependent on an enabling environment, which is underpinned by behavioural standards agreed upon by all employees. Comprehensive organisational design can only become a reality when a desired organisational culture has been defined and articulated across the organisation. With the preceding in mind, there is a need to introduce significant changes in the organisational culture, mind-set and performance of employees to enable the organisation to adapt to changes in quality, production and industry trends and technology. This will ensure that we reap the benefits of an engaged and diverse workforce.
 There is a critical need to reduce costs, increase yields, and improve efficiencies and productivity across the organisation. Improved profitability and sustainability of the organisation and ensuring value-add will go a long way towards increasing OBP’s competitiveness and shareholder satisfaction. For this to happen consistently, improved business processes must be implemented and business practices must allow access to critical information that guides decision making in the short- and long-term.
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19. Improve stakeholder relations management and communications.
Strategic Goal 2:
Improve stakeholder relations management and communications.
Objective statement
To improve the relations with all stakeholders through the use of effective stakeholder relations management and communication strategies through the following:
2.1 Improved customer and stakeholder satisfaction.
2.2 A communications strategy implemented
2.3 Stakeholder management plan developed and implemented
2.4 A brand management framework developed and implemented
Baseline
The only formal indicator is the Customer Satisfaction Index results from the survey conducted in 2010, but customer feedback exists from different stakeholders.
Current level of customer and market perception based on Q4 2014/2015 on-line customer satisfaction survey.
OBP currently has a Communications and Public Relations policy
The stakeholder database.
Justification
The key requirement for the success of the organisation is its engagement with stakeholders to achieve mutual goals. Stakeholders have been identified. The OBP website facilitates some interface with customers, but it has not resulted in a meaningful interaction or significant customer satisfaction.
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20. 3.2 Current markets maintained 3.3 Distribution strategy implemented
Strategic Goal 3:
Facilitate more aggressive national and international market access and implement an effective distribution strategy 
Objective statement
To grow into a sustainable organisation with sufficient levels of profitability to provide adequate support, government food security programmes and economic growth through the following:
3.1 Develop new markets
3.2 Current markets maintained
3.3 Distribution strategy implemented
Baseline
Declining market share
Low presence in foreign markets
Some market segments we do not operate in
Current product portfolio
Products in declining phase of the product lifecycle
Unfunded vaccine reserve
Justification
There is a need to increase and grow local and export market share to ensure the sustainability of the organisation and to ensure that our growth strategy is implemented in a socially and environmentally responsible manner.
OBP exports vaccines mostly to SADC and Africa and to a limited extent to the rest of the world. If one considers the world’s livestock numbers and the future need for protein then there is potential to grow OBP’s business.
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21. 4.1 Improved products and processes 4.2 New generation products
Strategic Goal 4:
 Continuously review research and development strategies in line with market trends.
Objective statement
To improve current product portfolio and increase critical product mix by increasing the number of products based on market demand through the following :
4.1 Improved products and processes
4.2 New generation products
4.3 Modern technology implemented
Baseline
Current product portfolio
Products in declining phase of the product lifecycle
Current production technologies
Justification
There is a critical need to increase product use and improve production efficiencies. For this to happen consistently, improved production processes must be realised through employment of modern and high yielding technologies.
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22. 5.1 Support to the smallholder and emerging farmers’ market
Strategic Goal 5:
Contribute to government priorities in respect to emerging farmers, food security and economic growth.
Objective statement
To contribute and support food security and economic growth through government programmes by:
5.1 Support to the smallholder and emerging farmers’ market
5.2 CoSupport to government initiatives
5.3 Support agricultural small businesses
5.4 Social responsibility support.
Baseline
Current economic growth is at 2.5%. Agriculture’s contribution to the Gross Domestic Product (GDP) is approximately 3.5% and the livestock industries contribute approximately 60% of this total.
The total value of agricultural exports as OBP’s share of the vaccine market is approximately R20 million.
OBP’s current declining vaccine sales and market share is a reflection of the number of farmers it is affecting. The sales figures and market share among smallholder farmers are much less than for commercial farmers. No jobs have been created or funding facilitated for smallholder and emerging farmers.
Justification
Sustainable processes in support of food security will ensure economic growth and the ability to explore growth possibilities previously ignored. There is a need to develop new and improved quality third-generation or combination vaccines to meet the livestock market needs in South Africa and Africa.
The organisation needs to operate within the strategies and initiatives of government and to ensure operations contribute to a sustainable environment, i.e. as OBP we have to operate within a framework that is seen to support and promote relevant national outcomes.
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23. FINANCIALS
2015/16
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24. Audit opinion Overall – Clean Audit, Financials – no findings.
OBP received a Clean Audit Award from the AG.
Financials – no findings.
Performance targets – No findings for the SGs evaluated by the AG.
Other concerns: None.
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25. Financial Performance – Statement of Comprehensive Income
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26. Statement of Financial Position
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27. Statement of Cash Position
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28. Financial Performance – Statement of Comprehensive Income
2015/16
2014/15
R 000
Revenue
92 699
81 714
Cost of Sales
22 884
32 044
Gross profit
69 815
49 670
Total Expenditure
(99 161)
(95 163)
Operating Profit (Loss)
(17 111)
(37 713)
Investment income
27 517
11 845
Profit or loss
19 436
(16 753)
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29. Financial Position – Balance Sheet
Total assets increased by 67% Year on Year
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30. 2015/16 Audit opinion
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31. Summary of the financials.
Healthy balance sheet.
Cash reserves increased (due to the earmarked funds for the upgrade).
Total assets increased significantly.
Increased gross profit.
Reduced operating loss.
Overall nett profit.
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32. THANK YOU www.obpvaccines.co.za Dr Steven Cornelius
Chief Executive Officer
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