1. | Onderstepoort Biological Products © | 13 March 2012

2. Introduction of OBP Delegation OBP Background Governance OBP Corporate Plan Review process OBP’s Alignment to Government programmes Strategic Objectives Key Objectives and indicators Financials Performance Monitoring Conclusions PRESENTATION OUTLINE

3. OBP DELEGATION Board Members Dr JH Adams : Chairperson Mr NT Baloyi : non- executive director OBP Executives o Dr Theresa Smit : Acting CEO and COO o Mr Matsobane Gololo : CFO o Mrs Ntombizodwa Mobeng – General Manager : Legal, Compliance & Company Secretary | Onderstepoort Biological Products © | 13 March 2012

4. OBP BACKGROUND

5. Historical Perspective 1908: Establishment of Onderstepoort Veterinary Research Institute 1968: Dedicated vaccine facility established 1981: Vaccine facility operated with trade account and able to begin to fund operations from sale of vaccines 1992: OBP separated from OVI, which became part of the ARC 2000: OBP incorporated on6 th September (OBP Incorporation Act 19, 1999) 2001:OBP received funding of R9 million (last grant received, to date) 2005: State owned land and buildings officially transferred to OBP 2007:Achieved ISO 9001:2008 certification 2010: Achieved a revenue milestone > R 100 million 2011: Achieved revenue milestone > R 160 million | Onderstepoort Biological Products © | 13 March 2012

6. Vision, mission and mandate | Onderstepoort Biological Products © | 13 March 2012 Mandate: OBP exists to prevent and control animal diseases that impact food security, human health and livelihood Vision: To be a global biotech manufacturer of animal health products, underpinned by a skilled, innovative and passionate staff Mission of OBP: The mission of OBP is to translate science into biological and health products, knowledge and technology resulting in improved animal and human health, food security and safety, for all stakeholders. The primary objective of OBP is to manufacture/produce quality vaccines for the prevention and control of livestock diseases in South Africa, Africa and globally.

7. Visionary Themes | Onderstepoort Biological Products © | 13 March 2012 Vision 2020 To become a global centre of excellence in veterinary vaccinology driven by our innovative employees Recognised centre of scientific excellence Profitability and growth sustainability Production efficiencies and optimisation Product range expansion Employer of choice Products and processes Diversification into human health Recognised brand locally and globally Effective distribution network and satisfied customers Cost efficiencies and optimisation Regulatory compliance company wide Innovative organisation >> > > > > > > > > > > > > >>>>>> >>>> Identified during strategy session and presented in OBP Strategic Plan 2009-2013

8. Workforce Profile | Onderstepoort Biological Products © | 13 March 2012 Occupational Levels MaleFemaleTotal ACIWACIW Executive Management 200120016 Management7215600122 Skilled/advanced operational 2620924101373 Semi-skilled330003000770 Basic skilled21000800032 TOTAL PERMANENT 884115721022203 Interns and Learners 400030007 GRAND TOTAL924115751022210

9. OBP Product Portfolio  Rift Valley Fever – live, inactivated, Clone 13  African horse sickness  Bluetongue  B-Phemeral  Chlamysure  Lumpyskin  PI and IBR (in Leukopast 3) Fowl Pox ORF Equine Influenza | Onderstepoort Biological Products © | 13 March 2012 Actinomyces (Corynebacterium) pyogenes Anthrax Black Quarter Botulism Botulism/black quarter Blue Udder Brucella Rev 1 Brucella S19 Calf paratyphoid (live & inactivated) Corynebacterium Ovis E Coli Enterotoxaemia (pulpy kidney) Fowl Typhoid Gangrene Complex Haemophilus Coryza Lamb Dysentry Leukopast 3 (with IBR and PI) Leukopast Pasteurella Bovine Pasteurella Ovine Septicum Swelled Head Tetanus Vibrio (Campylobacter) Other Products Frozen infective blood against (in conjunction with ARC-OVI) Anaplasmosis Heartwater Redwater African / Babesiosis Redwater Asiatic / Babesiosis Antiserum Diagnostic Reagents (eg dourine, rose bengal) Bacterial Vaccine ProductsViral Vaccine Products

10. Unqualified audits from period of 2000/1 to 2009/10 FYs Qualified audit for 2010/11 FY Achieved R100 m sales in 2010/11 FY and R 160m in 2011/12 FY - largely attributable to significant sales of RVF vaccines due to RVF outbreak in several provinces Significant declines in sales and sales revenue in current FY (2011/12) and thus expected to achieve revenues well below budget (R20m-R25m below budget) Profitability – average of 23% improvement in margins Product innovation – launched 4 products in 2011 FY | Onderstepoort Biological Products © | 13 March 2012 Business Performance

11. | Onderstepoort Biological Products © | 13 March 2012 GOVERNANCE

12. 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 | Onderstepoort Biological Products © | 13 March 2012

13. Board of Directors o Board was appointed on 1 March 2011 and Chairperson of Board on 1 June 2011 o 3 Sub-committees have been formed o Audit, Risk and IT Committee o Remco, HR and Ethics Committee o R&D, Sales and Marketing, Operations and Quality Committee (RDSMO&Q Committee) o Committees and board scheduled to meet 4 times per annum | Onderstepoort Biological Products © | 13 March 2012

14. Board of Directors | Onderstepoort Biological Products © | 13 March 2012 From left, back row: Ms ND Mobeng (Company Secretary); Dr AT Kgasi; Dr ST Cornelius (Acting Chairperson); Mr NT Baloyi From left, front row: Dr PE Hanekom and Dr AH Graham Appointed 1 March 2011 Absent in photo: Mr JH Adams (Chairperson)

15. OBP Structure | Onderstepoort Biological Products © | 13 March 2012 VACANT OUTSOURCED

16. | Onderstepoort Biological Products © | 13 March 2012 Executive Management Team Dr Theresa Smit Acting CEO/COO Mr Matsobane Gololo CFO Dr Jacob Modumo BDO Ms Nompumelelo Ramutle HR Executive Mr Pieter Pieterson Quality Executive Ms Ntombizodwa Mobeng GM: Legal, Compliance & Company Secretary Dr Jeanette Heath Acting CSO

17. | Onderstepoort Biological Products © | 13 March 2012 OBP CORPORATE PLAN 2012/13 to 2015/16

18. Annual Strategy Review Process Situational analysis conducted Sales and Marketing (external and competitor environment) Financial position of the organisation Production (challenges and capabilities) Other Divisions SWOT analysis Review/identification of strategic goals Identification of key outcomes and targets of goals identified Considered available internal resources required to successfully implement strategy o Prioritisation Alignment of OBPs strategy to government initiatives/plans Compliance – National Treasury framework for Strategic Plans and Annual Performance Plans | Onderstepoort Biological Products © | 13 March 2012

19. Government wide plans Strategic Plan Annual Performance Plan Planning Cycle Concepts

20. Alignment to Government Programmes | Onderstepoort Biological Products © | 13 March 2012 As an SOE, OBP will strive to contribute towards the following programmes/initiatives: Medium-term strategic framework : o Outcome 5 – Skilled and capable workforce to support an inclusive growth path. o Outcome 7 – Vibrant, equitable, sustainable rural communities, contributing towards food security for all New growth path – o Job driver 2 – Improving job creation in economic sectors: Agricultural value chain & Manufacturing. o Job driver 3 – Seizing the potential of new economies: Knowledge economy DAFF’s strategic objectives: o Strategic Goal 1: Increased profitable production of food, fibre and timber products by all categories of producers (subsistence, smallholder and commercial o Strategic Goal 5: Increase contribution of the sector to economic growth and development

21. | Onderstepoort Biological Products © | 13 March 2012 Government programme StrategyOBP Alignment MTSF Outcome 5: Skilled and capable workforce to support an inclusive growth path. o Human capital development programme o Learnership and Internship programmes. Outcome 7: Vibrant, equitable, sustainable rural communities, contributing towards food security for all. o Promotion of vaccination as a cost-effective measure to manage diseases and improve livestock production. o Continued development and manufacturing of vaccines against economically important animal diseases. New growth path Jobs driver 2: Agricultural value chain o Vaccines continue to play a critical role as a cost effective solution to animal health during the critical livestock production phase. Job Driver 2: Seizing the potential of new economies o There is a need to transition into new innovative “3 rd generation biotechnology” for safer, more efficacious and affordable vaccines. Jobs driver 2: Manufacturing – IPAP2 (Scale-up and broaden interventions in the Plastic, Pharmaceutical and Chemical sectors) o Increased revenues from local and export sales of OBP products into current and new markets once the manufacturing facility is GMP certified resulting in job creation. Alignment to Government Programmes

22. | Onderstepoort Biological Products © | 13 March 2012 Government programme StrategyOBP Alignment DAFF Strategic Plan Strategic Goal 1: Increased profitable production of food, fibre and timber products by all categories of producers (subsistence, smallholder and commercial) Strategic Goal 5: Increase contribution of the sector to economic growth and development o OBP’s mandate is to assist government in the control and prevention of animal diseases that impact food security and public health o Improved animal health and reduction in losses due to morbidity or mortality of animals, and ability to export to other markets will contribute to the growth and development of the livestock (agriculture) sector Alignment to Government Programmes

23. Strategic Objectives | Onderstepoort Biological Products © | 13 March 2012 SG 1:Build a successful, high performance organisation SG 2: Improved business processes and management practices SG 3:Build a profitable and sustainable company

24. | Onderstepoort Biological Products © | 13 March 2012 Strategic Goal 1: Build a successful, high performance organisation Objective statementTo build an innovative, passionate, high performance culture through a highly skilled and motivated workforce through improved and on-going human capital development and management: 1.1 Improved and on-going human capital development and management 1.2 Improved alignment of organisational structure to strategy 1.3 Build the brand recognition of OBP 1.4 Drive a high performance culture 1.5 Design and implement a change enablement framework for OBP 1.6 Build a customer-centric and service-focussed business BaselineWorkforce that requires further skills enhancement to align to changing technology, processes and quality standards and increased ability to innovate. Structure needs to be aligned to strategy HR and organisational development plan in process of being implemented JustificationThere is a need to introduce significant change in the organisational culture, mind set and performance of employees in the organisation 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

25. | Onderstepoort Biological Products © | 13 March 2012 Strategic Goal 2: Improve business processes and management practices Objective statementTo improve business processes and management practices through the following: 2.1 Optimise business processes through implementation of the Enterprise Resource Planning (ERP) system 2.2 Provide service delivery support throughout the organisation - Security management, legal services, stakeholder and communication services and IT 2.3 Improved financial management and reporting of the company 2.4 Manage and achieve efficiencies across the full value chain for vaccine production 2.5 Invest in upgrading the quality and manufacturing systems to comply with local and foreign standards 2.6 Effective plant and utilities management 2.7 Achieve compliance and governance throughout the organisation 2.8 Develop a sustainable Corporate Social Investment (CSI) programme BaselineProfitable company with zero debt Manual processes and reporting Outdated production systems, processes, facilities and equipment ISO 9001:2008 certified JustificationThere is a critical need to improve efficiencies and productivity across the organisation – to reduce costs, increase yields and value add and to ensure the profitability and sustainability of the organisation. Improved business processes and practices are required to improve access to critical information and reports to guide the decision making of the organisation in the short- and long-term.

26. | Onderstepoort Biological Products © | 13 March 2012 Strategic Goal 3: Build a profitable and sustainable company Objective statement To build a profitable and sustainable company focussed on core competencies that will drive future growth and opportunities through the following: 3.1 Increase OBP’s market share in vaccine sales (volume and revenue) 3.2 Increase revenue and profits 3.3 Enhance and invest in product development and innovation 3.4 Commitment to environmental principles in business operations Baseline Profitable business Declining market share 1 st and 2 nd generation products Commercial products, orphan disease products and products for social good and many with no or negative gross profit margins Many products in declining phase of products life-cycle Limited environmental awareness 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 done in a socially responsible manner There is a need to develop new and improved quality 3rd generation and/or combination vaccines to meet the livestock market needs/demands in South Africa and Africa. The organisation needs to operate within the strategies and initiatives of the government and to ensure operations contribute to a sustainable environment.

27. | Onderstepoort Biological Products © | 13 March 2012 Strategic Goal InitiativesEstimated budget allocation SG 1 2012/132013/142014/15 Training costsR 800 000R 1 200 000 BrandingR 600 000R 800 000 TotalR 1 400 000R 2 000 000 SG 2 Operational expenditureR 58 865 598R 62 220 937R 65 767 531 Repair and MaintenanceR 4 107 075R 4 341 178R 4 588 625 Utilities CostsR 4 200 000R 4 439 400R 4 692 445 Quality control costsR 30 000R 31 710R 33 517 Experimental animal costsR 3 865 567R 4 085 905R 4 318 810 TotalR 71 068 242R 75 119 131R 79 400 931 SG 3 R&D and innovationR 7 806 446R 8 894 354R 9 428 015 Marketing/brandingR 3 441 180R 3 811 866R 5 587 437 Administrative costsR 15 598 309R 15 247 464R 16 162 311 Total R 26 845 935R 12706 220R 31 177 763 Estimated Budget Allocation to Key Initiatives of each of the Strategic Goals

28. | Onderstepoort Biological Products © | 13 March 2012 FINANCIALS 2012/13 to 2015/16

29. Financial Projections – Income statement | Onderstepoort Biological Products © | 13 March 2012

30. Financial Projections – Balance Sheet | Onderstepoort Biological Products © | 13 March 2012

31. Financial Projections – Cash Flow Statement | Onderstepoort Biological Products © | 13 March 2012

32. Facilities and Equipment upgrade/replacement | Onderstepoort Biological Products © | 13 March 2012 Project name2011/122012/132013/142014/15Total Replacement/upgrading of production and packaging equipment R 26.3mR 34.0mR 50.55mR 55.5mR 166.35m Facility upgrade: Phase I and part of Phase II R 1.8mR 18.5mR 30mR 6mR 56.3m TotalR 28.1mR 52.5mR 80.55mR 61.5mR 222.65m

33. | Onderstepoort Biological Products © | 13 March 2012 PERFORMANCE MONITORING

34. Performance Monitoring o Effective implementation of strategy o Impact of strategic initiatives : o Achievement of KPI’s o Strategic goals achieved o Sustainability o Use experience in annual reviews o Quarterly performance monitoring o Annual performance reporting: o Treasury regulations – Auditor General o Pre-determined objectives o Performance Management of Employees o Alignment to organisational strategy o Quarterly or bi-annul performance monitoring of employees | Onderstepoort Biological Products © | 13 March 2012

35. CONCLUSIONS

36. Conclusion o At an operational level : o Despite significant growth due to RVF vaccine sales in 2009/10 and 2010/11 the business has is likely to stabilise at an estimated revenue of R 90m – R105m o Investing profits in: o Development of new vaccines. o Replacing critical equipment to maintain manufacturing capacity. o Emerging sector: o Support through provincial government o Rural vaccine distribution opportunities o Skills development prioritised: o Learnership and Internship programme o Bursaries and development programme o Training budget increased. o GMP project high priority o OBP not in a position to fund this on its own – support from DAFF, other government entities or third parties is required | Onderstepoort Biological Products © | 13 March 2012

37. THANK YOU Dr Theresa Smit Acting CEO/COO www.obpvaccines.co.za