Foss Analytical A/S

Ledelsesberetning

Management CommentaryFinancial Highlights20242023202220212020TDKK TDKK TDKK TDKK TDKKKey FiguresIncome StatementRevenue 1.809.393 1.760.406 1.782.702 1.660.314 1.579.750 Operating Profit 519.881 507.295 475.858 479.039 468.593 Net financial items -23.144 -16.330 -11.378 -123 -20.757 Profit for the year 402.148 393.857 363.467 366.798 341.425 Balance SheetTotal assets 874.036 830.270 777.625 703.445 724.295 Equity 434.811 437.212 405.890 409.282 383.692 Investments in tangible assets 10.175 12.285 5.136 11.691 6.076 Number of employees, average 648 600 591 577 590 Rat ios %Operating profit for the year vs. revenue 28,7% 28,8% 26,7% 28,9% 29,7%Return on investments 59,5% 61,1% 61,2% 68,1% 64,7%Solvency ratio 49,7% 52,7% 52,2% 58,2% 53,0%Return on equity 92,2% 93,4% 89,2% 92,5% 102,1%Financial highlights are defined and calculated in accordance with "Recommendations & Ratios" issued by the Danish Society of Financial Analysts. Please refer to Accounting Principles.Management Commentary The FOSS mission FOSS contribute to the sustainable use of our planet’s agricultural resources and thus to the nutrition and health of the people of the world. FOSS provide analytics beyond measure to add value to our customers by improving quality and optimising food and agricultural production. Main Activity FOSS creates solutions that secure and improve food quality and optimize production. From raw material to finished product. Our analysis instruments refine measurements into information management that enables businesses to run intelligent data-driven productions with less waste and bigger yields. Controlling cost and quality across all sectors and value chains, we help food and agricultural producers limit the number of human errors, scale their business faster and reduce labour costs. We call these analytics beyond measure. We cover these food and agricultural industries: Dairy, Feed & Forage, Grain, Flour Milling & Oilseed Pro-cessing, Laboratories, Meat, Raw Milk Testing and Wine & Beer. FOSS Analytical A/S is 100% owned by FOSS A/S which is part of the N. Foss & Co. A/S consolidated group accounts (Ultimate Parent Company). FOSS Analytical A/S develops and produces its products in Denmark and markets them worldwide through affiliated companies, independent distributors and directly. Research & Development Activities The effort within Research & Development for generating new products and further development of existing products constitutes an important part of the FOSS values. A number of product improvements are constantly being developed whilst the product development constantly results in introduction of new products to both new as well as existing customer segments. Making sustainability a better business while improving food quality FOSS creates solutions that secure and improve food quality and optimize production. From raw material to finished product. The analysis instruments refine measurements into information management that enables business to run intelligent data-driven productions with less waste and bigger yields. Our world-leading analytical solutions makes a tangible difference for the food and agricultural industry and its use of the world’s valuable natural resources – while at the same time improving product quality and saving time and money. FOSS takes what used to be complex, time consuming, and expensive and makes it fast, dedicated, and easy-to-use. Our innovation renders elements such as manual registration, laboratory experts and the use of chem-icals unnecessary, and replaces it with intelligent solutions that give you data to act on and the power to control, optimise and run a business based solely on high quality insights and cutting-edge innovation. This has made us a crucial companion in the development of the new food and protein sources of the future. External Environment Our policy is based on an environmental proper operation and external environment is a natural part of the targets in the Company related to product quality and production. FOSS Analytical A/S currently does not have, nor in recent times has it had, court cases related to environmental matters. Collaborating to improve sustainability performance In addition to the sustainable benefits of our solutions FOSS believe in acting ethically and responsibly. FOSS is an active member of the UN Global Compact. As a member, we are committed to aligning strategies and operations with universal principles on human rights, labor, the environment and anti-corruption. Each year we produce a Communication on Progress (COP) report showing the practical actions we have taken to imple-ment the Ten Principles in our company. FOSS is also a member of the SEDEX initiative, the world's largest collaborative platform for sharing responsible sourcing data on supply chains, used by more than 60,000 members. As a member our production facilities rdare audited by a 3 party to assess performance against the SEDEX best practice criteria in the areas of health & safety, labor, the environment and business integrity. We also support the Sustainable Development goals and report on how we contribute to goals 2,3, 8, and 12. For more information on sustainability and information requires by Danish Financial Statements Act 99a, please refer to the ESG section in the Management review in the Annual Report 2024 for the parent FOSS A/S (https://www2.fossanalytics.com/FOSS-Annual-Report-2024). Knowledge Development, production and marketing of high technology analytical solutions demand highly skilled employ-ees. In order to preserve the Company’s ability to satisfy our global customers’ demand for dedicated analytical solutions it is a prerequisite that we maintain the extensive specialist knowledge and other competencies, which are deeply rooted in the organization. This is ensured through continued maintenance, education and recruiting of competent and dynamic employees on all levels. Considerable resources are used in order to make this possible. In addition, focus on employer branding to attract and retain talent and experts is high. Risk Operating Risk The main operating risk for the Company is concerning the ability to be strongly positioned in the market and at the cutting edge of the technological development for end-to-end solutions that secure and improve food quality. The Company has entered longer-term contracts with key suppliers for delivery of components that are a part of production in the aim of securing a stable supply and a higher predictability in price development. In recent years our offering to the market contains more digital offerings as well as more online and interface connections within our IT infrastructure. It is our aim to continuously reduce our risk of being compromised and thus significant resources for improving the Group’s IT infrastructure and security are being invested. Financial risk The financial risk is primarily related to changes in currency exchange rates. Currencies with possible highest impact is USD, AUD and CNY. Credit risk The main credit risk for the Company derives from ordinary customer transactions with restrictive guidelines for trade with new customers and customers located in zones of particular high credit risk while trade with known and credit rated customers are completed on accommodative conditions. These conditions have his-torically resulted in very few losses on debtors. Development in activities and financial conditions Revenue has increased with 2,8% to a total of DKK 1.809 million vs. DKK 1.760 million last year. Gross Profit amounts to DKK 1.085 million (DKK 1.020 million in 2023). Operating Profit amounts to DKK 520 million (DKK 507 million in 2023) yielding a profit margin of 28,7% (including non-recurring costs) compared to 28,8% in 2023. Profit before tax amounts to DKK 513 million (DKK 494 million in 2023). The result is slightly below expected. Profit for the year has increased with 2,1% to DKK 402 million (DKK 394 million in 2023), which is lower than expected 6% although found satisfactory. Proposed dividend for the year is DKK 402 million. Average number of employees during 2024 is 648 (600 in 2023). The Company has in 2024 bought IP rights for a value of DKK 28 million. Uncertainty relating to recognition and measurement There are no significant uncertainties related to the annual report according to the management. Unusual circumstances The annual report is not impacted by any unusual circumstances. Expected development Investments in sales and distribution activities as well as product development activities will continue in 2025. Management expects this to strengthen FOSS Analytical A/S’ market position and contribute to fulfil the growth strategy for the Company in supplying high quality solutions for the increasing demand of food quality. It is the expectation that the Company will see increasing revenue and profit before tax on 6% to 8% in the coming year. Subsequent events No events have occurred after the balance sheet date to this date, which would influence the evaluation of this annual report.