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TIN100: Bigger, better, and winning on the agri-tech front

TIN100: Bigger, better, and winning on the agri-tech front

What do agriculture and high-tech have in common? More than you might think. According to Greg Shanahan, publisher of the TIN100 Report (an analysis of the performance of the top New Zealand-founded high-tech companies) one of the big surprises this year was strong growth in the primary sector.

tin100 report 2012 top 10 list greg shanahan This year all of the top eight companies in the primary industry tech  sector reported revenue growth, reflecting a global focus on efficient food production.

Agri-tech has a role to play in the new economy, he says – the primary sector grew 10 percent year-on-year and we've got our size and isolation to thank for that.

Shahanan also credits our relative shortage of low-cost labour for driving innovation to create efficiencies, which is paying off economically and can be seen in everything from outsourcing to payments/financial service solutions.

And he says New Zealand tech companies are becoming increasingly sophisticated; this year's TIN100 clearly showed a trend toward larger companies, with 18 reporting revenue over $100 million. Two companies - Christchurch's Skope Industries and Orion Health cracked the $100 million revenue mark for the first time.

Xero and Diligent, which broke through into the TIN100 for the first time this year, both reported triple-digit revenue growth.

Private companies with VC backing showed the most growth in 2012. On the other hand, the performance public companies was mixed, with an overall decline in revenue of 3 percent, and a pre-tax profit fall of 26 percent (driven by Rakon, SmartPay and Fisher & Paykel Appliances).

Revenues were flat for the largest companies (the three $500 million-plus companies, F&P Appliances, Datacom, and F&P Healthcare, saw revenue dip slightly)

The strongest growth was seen in the under $20 million category, growing 5.4 percent. The mid-sized companies also expanded.


2012 TIN100: Top 10 companies by revenue

2-12 tin 100 top ten companies by revenue

The top 10 list is virtually identical to last year's, with the top four – F&P, Datacom, F&P Healthcare, and Tait – remaining unchanged. Douglas Pharmaceuticals was replaced by Schneider Electrical, whilst the other top companies have simply shuffled around in a show of musical chairs.

To qualify in the TIN100 this year, tech companies had to achieve $13.45 million in revenue, up from $12.95 million last year.

In the 2011-12 year TIN100 companies increased their combined revenue by 2.2 percent to $7.28 billion.  The next 100 companies ranked by revenue (TIN100+) grew by 4 percent to $679 million.
 
And despite a combination of a rising dollar and tough international markets, TIN100 export sales increased by 2.3 percent to $5.18 billion over the same period.
 
“As the revenue profile of these companies gets larger they are showing increasing maturity and a preparedness to invest in their own futures,” Shanahan says.
 
“There are larger companies in record numbers.  An all-time high of 34 with revenues over $50 million and a record number of 18 with revenues over $100 million."
 
The TIN100 companies, which employ a total of over 28,800 staff, globally increased staff numbers by 5.2 percent across the year with many companies highlighting the struggle to recruit people with specialist IT skills. 


Shaun Coffey, chief executive of Industrial Research Ltd, says it is encouraging that companies are continuing to invest in their value proposition with R&D spend up by 8 percent and sales and marketing spend up by 5 percent.
 
“The importance of investing in R&D is not lost on TIN100 companies,” he says.
 
“They are increasing their investment in research and development to stay ahead in the highly competitive technology game.”

When asked what he expects to see in future TIN100 findings (this year's report is the eighth so far), Shanahan cautions that it's a volatile market.

Nonetheless, he expects Australian growth to continue (sales into Australia grew by 7 percent to a third of total TIN100 revenue, more or less equal with domestic sales) in the short to medium term, and if the US economy begins to pick up, there's opportunity there too.

"New Zealand has always been well positioned in the US," he says, though it's been hit hard of late by the double whammy of a record strong dollar and the GFC.

But the real growth market is closer to home.

"We're seeing increasing numbers of Tin 100 companies getting a foothold in Asia."

While exports to Asia comprise a relatively small percentage of total revenue, Shanahan expects that to change before long.

Over the years 42 TIN100 companies have been bought by overseas businesses, and the rate of acquisitions has risen significantly in the past two years (something Shanahan puts down to founder and investor fatigue and increased global interest in Kiwi tech companies).

Three current or former TIN100 companies were acquired by foreign owners in the first half of 2012: Flo-Dry Engineering by Denmark's Haarsley Industries, Sonar6 by Cornerstone OnDemand, and Energy Intellect by Singapore-based EDMI.

2012 TIN100: 10 companies to watch (highest dollar value growth)
2012 tin 100 companies to watchIn addition, the report listed 10 emerging companies in the TIN100+ (the report actually includes 200 companies now, and these are firms in the lower half which experienced the highest growth – 38 percent as a group). They are Technopak, Vega Industries, Simpl Group, Hitech Solutions, Flintfox International, Kaiparasoft, Quick Circuit, Tomizone, GFG Group and Panztel.