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