The Treasury

Global Navigation

Personal tools

You are here: Home > Publications > Research and Policy > Treasury Staff Insights: Rangitaki > A snapshot of Government-owned commercial entity AsureQuality (30 May 2017)

 

A snapshot of Government-owned commercial entity AsureQuality

Published 30 May 2017

Treasury Staff Insights: Rangitaki article by Kyle Lunman

This article provides a high level overview of AsureQuality (AQ), a 100% government owned entity specialising in food safety and biosecurity services to the food and primary production sectors. The blog covers both entity specific information as well as an overview of the sector AQ operates in.

The Treasury's Commercial Operations team oversees the performance of the Crown's portfolio of commercial and financial assets including State-Owned Enterprises and Crown Entities.

The purpose of this blog is to present a range of key information about a specific Government-owned commercial business for the benefit of the NZ public. The blog provides an overview of AsureQuality (AQ), a 100% State-Owned Enterprise specialising in food safety and biosecurity services to the food and primary production sectors. The blog covers both entity specific information as well as an overview of the sector AQ operates in.

We aim to publish other similar 'company snapshot' blogs in the future.

Company Overview

Sector Food safety & biosecurity
Head Office Auckland
Locations NZ, Australia, Asia, Mid-East
CEO John McKay
Chair Janine Smith
Entity type Limited company
Ownership State-Owned Enterprise
Employees 1700
Website www.asurequality.com

 

($m, NZD) 2012 2013 2014 2015 2016
Revenue 154.4 160.0 173.1 189.2 189.7
EBIT 11.1 14.5 17.1 16.0 18.1
NPAT 7.4 10.1 12.5 11.4 12.4
Total Assets 73.9 75.0 80.6 86.0 108.1
Total Liabilities 39.0 37.7 41.5 43.7 59.0
Equity Value 89.3 116.3 128.0 153.0 195.0
Capex & Investments 8.9 6.3 7.7 4.4 24.8
Dividends 7.1 7.7 9.5 10.0 7.0

AsureQuality (AQ) provides food safety and biosecurity services to the food and primary production sectors including audit, inspection, farm assurance, biosecurity and food testing. AQ was formed in 2007 following the merger of two State-Owned Enterprises (SOE), AgriQuality and ASURE. The company has historically derived most of its business domestically, but in more recent times it has expanded principally via acquisitions and joint ventures to its current state, with a network of labs across NZ, Australia, Asia and the Middle East.

Sector Overview

New Zealand

AQ holds a significant market position in New Zealand. While a handful of small independent niche labs exist, there are only two other companies of scale: Hill Laboratories, which was established in 1984 and is predominantly focussed on New Zealand only, and Eurofins, a large global player which entered the market in 2012 by acquiring an existing lab. SAI Global, an Australian-listed company of medium global scale (2015 Revenue of $1B in NZD), and SGS, the largest global player (refer table below), both have a modest presence in New Zealand. AQ offers a broader suite of services than its peers in New Zealand.

International

Globally there are a number of large private and publicly listed companies offering a full range of services across many countries, of which a handful are the main dominant players. Some of the largest publicly-listed examples are summarised below. These companies offer a variety of services across many sectors such as chemicals, mining, construction, medical, transportation and energy (whereas AQ specialises mainly in the food sector).

2015 $m NZD* Eurofins BV SGS Intertek AQ
Revenue 3,003 7,138 8,168 3,834 189
NPAT 139 393 835 (614) 11
Assets 5,698 7,942 8,428 3135 86
Liabilities 4,033 6,207 2,833 2535 59

Growth

In 2016 AQ entered into a joint venture with Bureau Veritas, a significant publicly-listed global player, to acquire Dairy Technology Services Food Laboratory (DTS) in Australia. DTS is the largest food testing service provider in Australia. AQ is looking to leverage the investment to strengthen relationships with its trans-Tasman customers and establish a strong presence in both markets.

Revenue & EBIT growth
Revenue and EBIT growth.

Key Risks

Competition

AQ is a relatively small player on a global scale and may face increased competition as it expands beyond New Zealand borders. There are many large multi-national companies with significant scale and potentially greater access to capital. Also, AQ's customers include large multi-national food companies that may establish their own 'in-house' labs to complete their testing, impacting demand for AQ's services (the inverse may also occur, where companies may look to divest in-house labs and outsource to providers such as AQ).

Concentration

While the company has exposure to a broad range of sectors across the primary sector, it may be particularly susceptible to any adverse events in the New Zealand dairy or meat sectors. This could include such events as commodity shocks or biosecurity threats.

Commodity cycles

New Zealand continues to export a significant amount of its agriculture products and downturns in a particular sector such as dairy or beef could have an impact on AQ's sales volumes.

 

Feedback

Treasury Staff Insights: Rangitaki Mailbox
Email: staffinsights@treasury.govt.nz


The Treasury welcomes feedback on this article. If you intend to email comments or questions on this article please note these provisions.

 

Treasury Staff Insights: Rangitaki

See Treasury Staff Insights: Rangitaki for other articles in this series.

Page top