Bio Onderstepoort Products & Perishable Products Export Control Board Annual Reports 2006/7

AGRICULTURE AND LAND AFFAIRS PORTFOLIO COMMITTEE
30 October 2007
BIO ONDERSTEPOORT PRODUCTS & PERISHABLE PRODUCTS EXPORT CONTROL BOARD ANNUAL REPORTS 2006/7

Chairperson: Mr M Mohlalga (ANC)

Documents handed out:
Bio Onderstepoort Products Ltd Annual Report 2006/7
Bio Onderstepoort Products Ltd presentation [Part1][Part2]
Perishable Products Export Control Board Annual Report 2006/7 [available at www.ppecb.com]
Perishable Products Export Control Board presentation
Bio Onderstepoort Products website

Audio recording of meeting

SUMMARY
Bio Onderstepoort Products Ltd and the Perishable Products Export Control Board presented their Annual Reports to the Committee. Bio Onderstepoort Products explained their Governance Report, Company Performance for 2006/07, Human Resources Report, as well as their Financial Performance for 2006/07. The Committee commended the Bio Onderstepoort’s impressive financial performance as well as their good work in establishing strong research and development in vaccinology, progress on employment equity, and establishing healthy trade relations with the international market.

The Perishable Products Export Control Board (PPECB) presentation had to be cut short as Members of Parliament had to receive the South African Rugby team who were visiting Parliament.

MINUTES
Bio Onderstepoort Products Ltd briefing
Ms Nozibusiso Shabalala (Ondersterpoort Products Board Chairperson) introduced their Board of Directors and explained their corporate governance procedures so that the Board retained full and effective control of the company. The Board was committed to good corporate governance and had conducted assessments of the Board, the Board Committees and the individual directors.

Ms Vuyelwa Penxa (OBP Chief Executive Officer) highlighted the company’s performance for 2006/07, stating that Bio Onderstepoort Products had become a respected leader in its niche market with regards to the production and sales of animal vaccines and related biological products. The company had experienced annual sales growth since its inception of 2001. They had provided pamphlets and leaflets in all South African languages, and interacted with the Department of Agriculture on articles to raise awareness of disease management.

Mr Mava Dada (OBP Chief Finance Officer) stated that in terms of their Employment Equity status, their racial composition was structured with the majority being black African employees, followed by white, coloured and then Indian staff. The company employed individuals with disabilities, offered adult basic education, bursaries for employees and customised learning interventions. A full report was given on
 
Discussion
Dr A van Niekerk (DA) wanted more particulars on the ISO certification because he says that the last time the company was awaiting this and now they have achieved it. He also wanted an explanation on the declining revenue from foreign sales, he asked if it was due to market decline or if it was non-compliance with the international standards. He also enquired about the company’s relations with the institutions in terms of research and development.

Mr D Dlali (ANC) asked about the mechanisms used in terms of prompt reports and surveillance. Was the company ready for diseases such as the lumpy skin disease that really destroyed animals in the Eastern Cape because emerging farmers are scared that they will be faced with a similar situation. In terms of corporate governance, he pointed out that out of the three meetings, it seemed as if a meeting of one person was regarded as a meeting thus he asked for some clarity.

Mr A Nel (DA) indicated that in the presentation, the company says that they want to empower farmers with knowledge about animal disease management as one of their objectives. He asked the company to elaborate on how many farmers that would be. In terms of supplying tickets for emerging farmers, Mr Nel requested an explanation on how they determine where to supply, and what the criteria was.

Mr S Abraham (ANC) said that one needed to determine what the status is at OBP with regard to minimum information security standards. He asked if the company had any asset register and if they do, could the committee also have access to it. Mr Abraham asked if OBP had any run-ins or problems with tax or removal of any items with regards to intellectual property and if so what are those? OBP was operating in a very competitive industry with suppliers of similar products and he believed that the company had not seen much exposure from the rest of the companies in the industry and other international groupings that play an extensive part in the provision of vaccines. He asked the company where they positioned themselves.

Ms Shabalala replied that they have an asset register. The CFO, Mr Dada, added that they would not be comfortable with releasing this register as one has to be cautious in a competitive market. He extended and invitation to the Committee to visit the organisation and they could view the asset register then.

Ms Shabalala said that in terms of asset losses, they had experienced theft of equipment in the past one and a half years through break-ins. Their reaction had been to eliminate the initial security company and employ another one and she was happy to report that there have not been any break-ins since then.

With regard to resignations by senior staff members and in terms of intellectual property, they have a system whereby employees that are leaving, ensure their contact details are placed with the joint planning committee so that they can keep track of them and they are thus contactable.

In terms of the audit issue, the company is audited by Nkonki Inc, a firm of chartered accountants. In past years they had Price Waterhouse Coopers as their auditors. Using private auditors was a decision taken by the panel and representatives of the department. Where the Auditor-General required that the company disclose its annual financial statements, the company was pleased to inform the Committee that they had two chartered accountants on site and were thus positive about meeting this requirement. Performance auditing would now be an added requirement.

The ISO certification was approved and accredited within this financial year. The decline in international sales was due to a loss of their Southern Europe market but they had several strategies to recover these declining foreign sales and they were quite positive about the future. They had arrangements with the University of Pretoria, University of the Free State, University of Cape Town institutions where research and development is concerned. The upgrading timeframe is five years but they would experience difficulty in producing while upgrading the system because they also produce sterile products.

Perishable Products Export Control Board (PPECB) presentation
The Perishable Products Export Control Board (PPECB) briefed the Committee on their legislative mandate, governance and structures, business model and strategic emphasis, and their Annual Report and financial statements for 2006/07.

The presentation was cut short due as the Committee had to gather with the rest of parliamentarians to receive the South African Rugby team, fresh from their World Cup victory in France. The Committee thanked the PPECB for their good work, noting that they looked forward to seeing the issue of equity and transformation further addressed.

The meeting was adjourned.