Foss Analytical A/S

Ledelsesberetning
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. 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 please see our Sustainability report and our Sustainability policy, which can be found in FOSS A/S Group financial statement 2023. 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 Groups IT infrastructure and security are being invested. Financial risk The financial risk is primarily related to changes in currency exchange rates. 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 decreased with -1.3% to a total of DKK 1,760 million vs. DKK 1,783 million last year. The result for 2023 is slightly below last year expectations, due to geopolitical turmoil. Gross Profit amounts to DKK 1020 million (DKK 952 million in 2022). Operating Profit amounts to DKK 507 million (DKK 476 million in 2022) yielding a profit margin of 28.8% (including non-recurring costs) compared to 26.7% in 2022. Profit before tax amounts to DKK 494 million (DKK 463 million in 2022). Profit for the year has increased with 8.5% to DKK 394 million (DKK 363 million in 2022), which is in line with expectations. Proposed dividend for the year is DKK 394 million. Average number of employees during 2023 is 600 (591 in 2022). 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 2023. 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 profitability on 6% to 8% in the coming year.