23958414 2022-01-01 2022-12-31 23958414 2022-01-01 2022-12-31 1 23958414 2022-12-31 23958414 2022-01-01 2022-12-31 2 23958414 2022-01-01 2022-12-31 3 23958414 2022-01-01 2022-12-31 4 23958414 2021-01-01 2021-12-31 23958414 2021-01-01 2021-12-31 1 23958414 2021-12-31 23958414 2021-01-01 2021-12-31 2 23958414 2021-01-01 2021-12-31 3 23958414 2021-01-01 2021-12-31 4 23958414 2020-01-01 2020-12-31 23958414 2020-01-01 2020-12-31 1 23958414 2020-12-31 23958414 2020-01-01 2020-12-31 2 23958414 2020-01-01 2020-12-31 3 23958414 2020-01-01 2020-12-31 4 23958414 2019-01-01 2019-12-31 23958414 2019-01-01 2019-12-31 1 23958414 2019-12-31 23958414 2019-01-01 2019-12-31 2 23958414 2019-01-01 2019-12-31 3 23958414 2019-01-01 2019-12-31 4 23958414 2018-01-01 2018-12-31 23958414 2018-01-01 2018-12-31 1 23958414 2018-12-31 23958414 2018-01-01 2018-12-31 2 23958414 2018-01-01 2018-12-31 3 23958414 2018-01-01 2018-12-31 4 23958414 2021-12-31 fsa:ContributedCapitalMember 23958414 2022-01-01 2022-12-31 fsa:ContributedCapitalMember 23958414 2022-12-31 fsa:ContributedCapitalMember 23958414 2021-12-31 fsa:ReserveForDevelopmentExpenditureMember 23958414 2022-01-01 2022-12-31 fsa:ReserveForDevelopmentExpenditureMember 23958414 2022-12-31 fsa:ReserveForDevelopmentExpenditureMember 23958414 2021-12-31 fsa:OtherReservesMember 23958414 2022-01-01 2022-12-31 fsa:OtherReservesMember 23958414 2022-12-31 fsa:OtherReservesMember 23958414 2021-12-31 fsa:RetainedEarningsMember 23958414 2022-01-01 2022-12-31 fsa:RetainedEarningsMember 23958414 2022-12-31 fsa:RetainedEarningsMember 23958414 2021-12-31 fsa:ProposedDividendRecognisedInEquityMember 23958414 2022-01-01 2022-12-31 fsa:ProposedDividendRecognisedInEquityMember 23958414 2022-12-31 fsa:ProposedDividendRecognisedInEquityMember 23958414 2022-01-01 2022-12-31 1 23958414 2022-01-01 2022-12-31 2 23958414 2022-01-01 2022-12-31 1 23958414 2022-01-01 2022-12-31 2 23958414 2022-01-01 2022-12-31 3 23958414 2022-01-01 2022-12-31 4 23958414 2022-01-01 2022-12-31 5 23958414 2022-01-01 2022-12-31 1 iso4217:DKK xbrli:pure The Board of Directors and the Executive Board have today discussed and approved the annual report for 2022 of Hottinger Brüel & Kjær A/S. The annual report has been prepared in accordance with the Danish Financial Statements Act. It is our opinion that the financial statements give a true and fair view of the Company's financial position on 31 December 2022 and of the results of the Company's operations for the financial year 1 January – 31 December 2022. Further, in our opinion, the Management's review gives a fair review of the development in the Company's operations and financial matters and the results of the Company's operations and financial position. We recommend approval of the annual report at the annual general meeting. Virum Steen Pinnerup Director Danica Sucur Managing Director Benjamin John Bryson Chairman Kimberly Cooper Miller Steen Pinnerup Ole Thorhauge Employee representative Martin Meier Employee representative To the shareholder of HOTTINGER BRÜEL & KJÆR A/S We have audited the financial statements of Hottinger Brüel & Kjær A/S for the financial year 01.01.2022 - 31.12.2022, which comprise the income statement, balance sheet, statement of changes in equity and notes, including a summary of significant accounting policies. The financial statements are prepared in accordance with the Danish Financial Statements Act. In our opinion, the financial statements give a true and fair view of the Entity’s financial position at 31.12.2022 and of the results of its operations for the financial year 01.01.2022 - 31.12.2022 in accordance with the Danish Financial Statements Act. We conducted our audit in accordance with International Standards on Auditing (ISAs) and additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the "Auditor’s responsibilities for the audit of the financial statements" section of this auditor’s report. We are independent of the Entity in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, Management is responsible for assessing the Entity’s ability to continue as a going concern, for disclosing, as applicable, matters related to going concern, and for using the going concern basis of accounting in preparing the financial statements unless Management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the financial statements, and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Entity to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures in the notes, and whether the financial statements represent the underlying transactions and events in a manner that gives a true and fair view. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Management is responsible for the management commentary. Our opinion on the financial statements does not cover the management commentary, and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the management commentary and, in doing so, consider whether the management commentary is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether the management commentary provides the information required under the Danish Financial Statements Act. Based on the work we have performed, we conclude that the management commentary is in accordance with the financial statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement of the management commentary. Copenhagen, DELOITTE Statsautoriseret Revisionspartnerselskab 33963556 Tim Kjær-Hansen State-Authorised Public Accountant mne23295 Hottinger Brüel & Kjær A/S Teknikerbyen 28 2830 Virum 77 41 20 00 www.hbkworld.com hrm@hbkworld.com 23958414 Lyngby-Taarbæk Weidekampsgade 6 2300 Copenhagen S 7788000000 8209000000 8959000000 188000000 614000000 1190000000 Profit/loss from financial items Profit/loss from financial items Profit/loss from financial items Profit/loss from financial items Profit/loss from financial items -43000000 -91000000 -23000000 -63000000 -39000000 109000000 425000000 896000000 188000000 243000000 214000000 Tangible assets Tangible assets Tangible assets Tangible assets Tangible assets 761000000 737000000 946000000 1201000000 1200000000 Right of use assets Right of use assets Right of use assets Right of use assets Right of use assets 2177000000 2289000000 0 0 0 Addition tangible assets Addition tangible assets Addition tangible assets Addition tangible assets Addition tangible assets 385000000 871000000 82000000 89000000 126000000 3798000000 3528000000 3450000000 4932000000 4972000000 4864000000 1020000000 1020000000 1020000000 2843000000 2794000000 2347000000 142000000 187000000 227000000 262000000 1991000000 2290000000 0.22 0.66 0.14 0.75 1.33 3.99 4.00 5.76 5.62 4.83 0.35 0.88 0.39 1.65 3.42 453 425 432 439 449 Operating margin Operating profit x 100 Revenue Equity ratio Equity at year end x 100 Total equity & liabilities at year end Return on equity Profit/loss for the year x 100 Average Equity Operating review Principal Hottinger Brüel & Kjær A/S activities Hottinger Brüel & Kjær A/S develops and markets products and services relating a wide range of products within Test & Measurement segment. The company undertakes the developing, manufacturing and marketing directly from the factory in Virum, Denmark. Sales takes place through a network of affiliated sales companies and distributors. Hottinger Brüel & Kjær A/S is managed together with other affiliated companies as part of the global Hottinger Brüel & Kjær business unit also known as Spectris Dynamics in the Spectris group. The legal ownership of other affiliated companies lies elsewhere within Spectris plc. Development in activities and financial Position Total sales increased from DKK 674,3 million in 2021 to DKK 728,2 million in 2022, corresponding to 8,0%. Revenue matched last year´s expectation of improved sales performance due to the change in business activities. Profit before tax for the year was DKK 11,8 million compared to DKK 35,7 million in 2021. Equity amounts to DKK 289,0 million at the end of the year. The company’s financial position remains strong with an equity ratio at 39,9%. The 2022 result is considered to be satisfactory. Research and development activities Hottinger Brüel & Kjær A/S provides differentiated sensing, testing, modelling and simulation solutions to help customers accelerate their product innovation. Hottinger Brüel & Kjær A/S provides its customers with a complete portfolio of solutions across the test and measurement product life cycle, that unite the physical world of sensors, testing and measurement with digital world of simulation, modelling software and analysis. By creating a scalable and open date acquisition hardware, software and simulation ecosystem, product developers can optimize time to market, drive innovation, and enhance their competitive edge in the global marketplace. Our research and development activities continue to focus on improving our solutions to further enhance our competitiveness in the core market segments. Our research team is involved in several global cooperative research projects with major customers, universities, and other partners. Risk management General risks The company is continuously looking for ways to minimise business risks, through several activities, addressing commercial, operational, and financial risks. As Hottinger Brüel & Kjær A/S is part of Spectris Group our risk management approach is aligned with Group policy and procedures. We recognise that managing risk effectively is a requirement for achieving strategic objectives. In Spectris risk management forms an integral part of the day-to-day operations and the Group has a well-established process which delivers visibility and accountability for risk management across Spectris businesses. This process forms part of the Group´s overall internal control framework. During 2022, Impero was introduced as new internal control system in Hottinger Brüel & Kjær A/S. Financial risks Currency Hottinger Brüel & Kjær A/S is exposed to currency risks via our exposures in various markets, primarily USD, GBP and JPY denominated risks. Currency risks are mitigated by using a combination of natural hedges and financial instruments. Hottinger Brüel & Kjær A/S uses Forward Exchange Contracts set up and managed by Group Treasury in Spectris Plc. and the exposure for the company is with Spectris plc while market exposure lies with Spectris plc. Interest The cash and debt positions of the company are exposed to global interest rate fluctuations. Group cash pooling structures are reflecting market rates. Credit Receivables are mainly trade receivables with customers worldwide and other group companies. Hottinger Brüel & Kjær A/S adopts a prudent approach to credit control. Customers are credit rated continuously to mitigate debtor risks. Intellectual capital All Hottinger Brüel & Kjær A/S employees are important contributors to the business – from developing a Hottinger Brüel & Kjær A/S product to implementing solutions for our customers. We focus on maintaining and developing our employees to ensure business continuity in our product development. Environmental issues Hottinger Brüel & Kjær A/S recognizes the principle of sustainable development, and has consequently established an Environmental Management System with the purpose of • managing all significant environmental aspects of activities, products, and services, and thereby controlling the environmental impact from our activities and preventing pollution • continuously improving the overall environmental performance and encouraging stakeholders to do the same • creating sustainable value for our customers by helping them solve their sound and vibration challenges In this manner Hottinger Brüel & Kjær A/S has committed itself to environmental responsibility to satisfy all the legal commitments in addition to the terms of our customers. The company is ISO 14001 accredited. As Hottinger Brüel & Kjær A/S is a part of Spectris Group we are working on the same environmental agenda https://www.spectris.com/sustainability-at-our-core/ - though we do not have our own version, it is planned from Spectris side to add an equivalent to our hbkworld.com website towards the end of 2023. Outlook Management expects a result for 2023 in line or better than 2022. We are expecting a gradual normalization of supply chain conditions and input cost adversities experienced in 2022. The estimates are influenced by the volatile market conditions and geopolitical situation that may further accelerate or decelerate geopolitical head winds. Management is continuously monitoring the markets and business development to take appropriate measures against any adverse impacts on employees, customers, and financial performance. Branches The company had a branch in Sweden, responsible for sales in the Swedish market. Figures related to the Swedish branch are included in the annual report. The branch was closed end of 2022. Revenue will be covered by the Danish entity from 2023 and onwards. Corporate social responsibility With regard to 99a of the Danish Financial Statements Act, Hottinger Brüel & Kjær A/S is acutely aware of our role as a member of society at a local as well as at a global level. Hottinger Brüel & Kjær A/S consequently target efforts to ensure that our business operations and activities are developed in a financially, socially and environmentally responsible manner. As a member of the Spectris group of companies, whose ultimate parent Spectris plc (www.spectris.com) is listed on the London Stock Exchange, Hottinger Brüel & Kjær A/S follows the Corporate Social Responsibility related principles set out in the Spectris Code of Business Ethics (available for download at: https://www.spectris.com/sustainability/ethics-and-culture). In order to monitor and reduce the environmental impact of Hottinger Brüel & Kjær’s operations, an Environmental Management System has been established. Further information is available at: https://www.bksv.com/en/about/quality-environment/environmental-management. Hottinger Brüel & Kjær A/S statutory CSR statement is a part of the Spectris sustainability strategy as described in section “Sustainability Report” of the Spectris plc Annual Reports and accounts 2022, pages 20 ff. The report is available for download at: https://www.spectris.com/assets/Uploads/Results-reports-and-presentations/Spectris-AR-2022.pdf. Further information on the groups’ Corporate Social Responsibility standards and activities including e.g. Anti-slavery statement is available on the Spectris webpage (see details at: https://www.spectris.com/sustainability). Goals and policies for the underrepresented gender In Hottinger Brüel & Kjær A/S members of the Board of Directors and other management levels are chosen solely on the basis of their competences. The Board of Directors also recognizes and promotes the benefits of a diverse management group in respect of experience, culture, education, international background, and gender. It is the company’s policy to attract, develop and maintain the most qualified candidates for all open positions including management positions. Women and men are invited equally to apply for all relevant positions and take responsibility for their own learning and development. When recruiting externally for management positions it is a contractual requirement that the agency provides a diverse shortlist of qualified candidates. A similar requirement and procedure is implemented for internal recruitments. Internal recruiters as well as external agencies are required to track and document their processes to secure diversity in the candidate pool and final selection. To support the specific diversity target of a more even gender distribution, it is a requirement that the underrepresented gender is represented in the final candidate pool and interview stage. The proportion of the underrepresented gender for the executive level (Board of Directors and Executive Board) was 25% (1 out of 4 members) in 2022. Early 2023 change in management means the ratio is increased to 50%. Employee representatives are not included in the standard ratio calculation. The company is pleased the target of equal representation has been reached for this level. Hottinger Brüel & Kjær A/S’s objective is to increase the proportion of the underrepresented gender on all management levels. Managers are defined as persons with direct reports and comprise all levels from the executive management to the lowest organizational level. In recent years the development has been as follows: Year 2018 2019 2020 2021 2022 2023 (target) Pct. 22% 27% 23% 28% 31% >30% The company remains committed to increase its underrepresented gender proportions and is increasing its focus on D&I specifically. The company’s target of 30% are provisionally moved to 2023, but pending further recalibration of the impact from Spectris Dynamics’ global reorganizing of the company workforce and operating model. Hottinger Brüel & Kjær A/S statutory underrepresented gender policy is part of the Spectris sustainability strategy as described in section “Diversity & Inclusion” of the Spectris plc Annual Reports and accounts 2022 – also accessible at https://www.spectris.com/sustainability-at-our-core/people/diversity-and-inclusion/ Hottinger Brüel & Kjær A/S focuses on the physical and digital security to protect information and ensure data privacy. In the light of 99d of the Danish Financial Statements Act and the developments regarding the proposals by the EU Commission for a joint approach on data ethics across the European Union, Hottinger Brüel & Kjær A/S currently progresses in deriving a joint data ethics policy in conjunction with other entities jointly forming the “HBK Platform”, which are domiciled in other EU member states. We have in 2022 set up a HBK Data Ethics Policy and will continue the work with data ethics in accordance with 99d of the Danish Financial Statements Act and new legislation and recommendations going forward. At Hottinger Brüel & Kjær A/S, we commit to using and processing data in an ethically acceptable way in all aspects of our business. Data ethics goes beyond compliance with data privacy laws. We comply with all legal requirements but acknowledge and respect that our use of data (both personal data and non-personal data) may create risks for the users that applicable laws do not cover. We manage these risks by adhering to the principles described below. The purpose of this policy is to formalize Hottinger Brüel & Kjær A/S data ethics principles and describe how we wish to use and process data, making it clear to our customers, employees and other stakeholders that we are dedicated to these efforts. Our data ethics principles Hottinger Brüel & Kjær A/S data ethics principles derive from our corporate values centered around ‘winning right – achieving the right results in the right way’. We have identified three main principles which, together with Hottinger Brüel & Kjær A/S corporate values, work as Hottinger Brüel & Kjær A/S data ethical compass: Transparency Hottinger Brüel & Kjær A/S will provide transparency around the principles of storage, use, and processing of data to our employees, customers, and other stakeholders to ensure their continuing confidence in Hottinger Brüel & Kjær A/S. We ensure that our data ethics principles remain clear, understandable, and easily accessible. Integrity Integrity in data use and processing for Hottinger Brüel & Kjær A/S is about prioritizing safety and caretaking of those people whom our solutions and internal processes affect. Thus, our use and processing of data may never compromise the fundamental rights, freedom and safety of an individual. Accountability All data collection involves human decisions. We strive to implement mechanisms to control the context in which data is collected, the systems that are used for data processing, and the methods for ensuring data quality. We acknowledge that data and systems can be misused or used for unintended purposes. We assess and document permissible use of our data and systems and take measures to avoid impermissible use. Governance Each year we will account for this policy in accordance with section 99d of the Danish Financial Statements Act. Events after the balance sheet date No events have occurred after the balance sheet date to this date, which would affect the evaluation of this annual report. 728175000 674302000 285003000 234420000 443172000 439882000 504000 538000 148146000 141774000 253672000 257062000 25808000 -3204000 16050000 44788000 2910000 0 7203000 9086000 11757000 35702000 1115000 9445000 10642000 26257000 2981000 3288000 11125000 12931000 14106000 16219000 10280000 10559000 13952000 17500000 11257000 9075000 40615000 36548000 76105000 73682000 217702000 228923000 307913000 318824000 83911000 62122000 19204000 9669000 56169000 53023000 0 91144000 159284000 215958000 68678000 71776000 147271000 143107000 26461000 22431000 15411000 11769000 257821000 249083000 417105000 465041000 725018000 783865000 102000000 102000000 8678000 10086000 -196000 -403000 168471000 181507000 5796000 4912000 4410000 4470000 10206000 9382000 223155000 229808000 223155000 229808000 6575000 6171000 37204000 32825000 29545000 35792000 70416000 61303000 48755000 83312000 10209000 12082000 202704000 231485000 425859000 461293000 725018000 783865000 102000000 10086000 -403000 181507000 20000000 313190000 0 0 262000 0 0 262000 0 0 55000 0 0 55000 0 0 0 -86000 0 -86000 0 0 0 15000000 20000000 35000000 0 -1408000 0 1408000 0 0 0 0 0 642000 10000000 102000000 8678000 -196000 168471000 10000000 288953000 true Pursuant to Section 86 (4) of the Financial Statements Act, the Company has not prepared a cash flow statement. Further pursuant to Section 96 (3) of the Financial Statement Act, the company has not disclosed fee for auditors appointed at the general meeting. Change in accounting policies The annual report has been presented applying accounting policies consistent with last year. Consolidated financial statements With reference to Act section 112 of the Danish Financial Statements and to the consolidated financial statements of Spectris Plc, the Company has not prepared consolidated financial statements. Cash flow statement With reference to section 86 (4) of the Danish Financial Statements Act and to the cash flow statement included in the consolidated financial statements of Spectris Plc, the Company has not prepared a cash flow statement. Significant accounting judgments and estimates In accounting for lease contracts, various judgments are applied in determining right-of-use assets and lease liabilities. Judgments include assessment of lease periods, utilisation of extension options and applicable discount rates. Recognition and measurement Assets are recognised in the balance sheet when it is probable that future economic benefits will flow to the Company and the value of the asset can be reliably measured. Liabilities are recognised in the balance sheet when an outflow of economic benefits is probable and when value of the liability can be reliably measured. On initial recognition, assets and liabilities are measured at cost. Subsequently, assets and liabilities are measured as described below for each individual item. Certain financial assets and liabilities are measured at amortised cost implying the recognition of a constant effective interest rate to maturity. Amortised cost is calculated as initial cost with deduction of any principal repayments and addition or deduction of the cumulative amortisation of any difference between cost and nominal amount. In recognising and measuring assets and liabilities, any gains, losses and risks occurring prior to the presentation of the Annual Report that evidence conditions existing at the balance sheet date are taken into account. Income is recognised in the income statement as earned, including value adjustments of financial assets and liabilities measured at fair value or amortised cost. Equally, costs incurred to generate the year's earnings are recognised, including depreciation, amortisation, impairment and provisions as well as reversals as a result of changes in accounting estimates of amounts which were previously recognised in the income statement. Foreign currency translation On initial recognition, transactions denominated in foreign currencies are translated at the exchange rates at the transaction date. Foreign exchange differences arising between the exchange rates at the transaction date and at the date of payment are recognised in the income statement as financial income or expenses. Receivables and payables and other monetary items denominated in foreign currencies are translated at the exchange rates at the balance sheet date. The difference between the exchange rates at the balance sheet date and at the date at which the receivable or payable arose or was recognised in the latest financial statements is recognised in the income statement as financial income or expenses. Fixed assets acquired in foreign currencies are translated at the exchange rates at the transaction date. Derivative financial instruments Derivative financial instruments are initially recognised in the balance sheet at cost and are subsequently measured at fair value. Changes in the fair value of derivative financial instruments designated as and qualifying for recognition as a hedge of the fair value of a recognised asset or liability are recognised in the income statement together with changes in the fair value of the hedged asset or liability. Changes in the fair value of derivative financial instruments designated as and qualifying for recognition as a hedge of future assets or liabilities are recognised in other receivables or other payables and in equity. If the hedged forecast transaction results in the recognition of assets or liabilities, amounts previously recognised in equity are transferred to the cost of the asset or liability, respectively. If the hedged forecast transaction results in income or expenses, amounts previously deferred in equity are transferred to the income statement in the period in which the hedged item affects profit or loss. For derivative financial instruments that do not qualify for hedge accounting, changes in fair value are recognised in the income statement. Income statement Revenue Revenue is measured based on the fair value of the consideration specified in a contract with a customer, net of returns and discounts, and excludes amounts collected on behalf of third parties, value added tax and other sales-related taxes. Hottinger Brüel & Kjær A/S recognises revenue when it transfers control of a product or service to a customer. Revenue from the provision of services, including ongoing support, servicing and maintenance, is recognised in line with the delivery of the service, either at a point in time or, for some ongoing services, over time. Revenue from the sale of goods, where the goods are not required to be installed, is recognised at a point in time when control of the goods has transferred. This may occur, depending on the individual customer terms, when the product is transferred to a freight carrier, or when the customer has received the product. Simple installations are those which the customer perceives as a separate performance obligation within the overall contract to deliver goods. Revenue is recognised for simple installations separately from the delivery of goods, and only at a point in time when the installation has occurred. Occasionally, the initial contract covers both the supply of goods and ongoing support, servicing and maintenance. For such contracts revenue is allocated across each of the individual components in line with their relative price and value of the performance obligation and each element is accounted for as described above. Payment is normally due at the point that the performance obligation is completed. For some of the segment’s business the customer may make partial payment in advance. Such payments are recognised as contract liabilities until the performance obligation has been satisfied. Sales-related warranties associated with the products cannot be purchased separately and they serve as an assurance that the products sold comply with agreed-upon specifications Revenue is recognised in accordance with the over-time recognition principle following the satisfaction of various milestones as the performance obligation is fulfilled towards the customer. Revenue from the sale of goods for resale and finished goods was recognised in the income statement provided that delivery and transfer of risk to the buyer had taken place before year end and that the income could be reliably measured and was expected to be received. The net revenue from sale of service contracts was recognised in the income statement over the term of the individual contracts. Construction contracts were recognised as revenue by reference to the stage of completion. Accordingly, revenue corresponds to the selling price of work performed during the year (the percentage of completion method). When the income from a construction contract cannot be estimated reliably, revenue was recognized only corresponding to the costs incurred to the extent that it was probable that they would be recovered. Revenue is measured at fair value net of VAT, taxes and discounts in relation to the sale. Production costs Production costs comprise costs incurred in generating the revenue for the year. Such costs include direct and indirect costs for raw materials and consumables, wages and salaries. Other operating income and costs Other operating income and costs comprise items of a nature secondary to that of the principal activities of the enterprises. Other external costs Other external costs comprise distribution costs and costs related to sales, sales campaigns, administration, office premises, operating leases, etc. Staff costs Staff costs comprise salaries and wages as well as social security contributions, pension contributions, etc for entity staff. Financial income and expenses Financial income and expenses comprise interest income and expense, gains and losses on securities, payables and transactions denominated in foreign currencies, amortisation of financial assets and liabilities as well as surcharges and refunds under the on-account tax scheme, etc. Tax on profit for the year The parent company Spectris Denmark ApS is the administrative company for the joint taxation and consequently settles all corporation tax payments with the tax authorities. The current Danish corporation tax is allocated by settlement of joint taxation contribution between the jointly taxed companies in proportion to their taxable income. In this relation, companies with tax loss carry forwards receive joint taxation contribution from companies that have used these losses to reduce their own taxable profits. The tax expense relating to the profit/loss for the year is recognised in the income statement, and the tax expense relating to amounts directly recognised in equity is recognised directly in equity. Balance sheet Intangible fixed assets Software Software is measured at cost less accumulated depreciation and impairment losses. Software is depreciated on a straight-line basis over the expected useful life of 3 to 5 years. Software are written down to the lower of recoverable amount and carrying amount. Research and development Self-funded research and development costs are capitalised when they meet certain criteria. These criteria include demonstration of technical feasibility, intent of completing a new asset and generation of probable future economic benefits. R&D assets are measured at cost less accumulated depreciation and impairment losses and are depreciated on a straight-line basis over the expected useful life of 10 years. In general gains and losses on the disposal of intangible assets are determined as the difference between the selling price less selling costs and the carrying amount at the date of disposal. Gains and losses are recognised in the income statement as other operating income or other operating costs, respectively. Tangible fixed assets Property, plant and equipment Land and buildings, plant and machinery and fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation. Land is not depreciated. Cost comprises the purchase price and any costs directly attributable to the acquisition until the date when the asset is available for use. The cost of self-constructed assets comprises direct and indirect costs of materials, components, sub suppliers, and wages and salaries. Depreciation is provided on a straight-line basis over the expected useful lives of the assets. The expected useful lives are as follows: Production plant and Machinery 10 years Fixtures and fittings, tools and equipment 3-10 years Land and building leases 20 years Property, plant, and equipment are written down to the recoverable amount if this is lower than the carrying amount. Gains and losses on the disposal of property, plant and equipment are determined as the difference between the sales price less disposal costs and the carrying amount at the date of disposal. The gains or losses are recognised in the income statement as other external costs. Leases Whether a contract contains a lease is assessed at contract inception. For identified leases, a right-of-use asset and corresponding lease liability are recognised on the lease commencement date. Upon initial recognition, the right-of-use asset is measured at a cost corresponding to the lease liability recognised, adjusted for any lease prepayments, or directly related costs, including dismantling and restoration costs. The lease liability is measured at the present value of lease payments of the leasing period discounted using the interest rate implicit in the lease contract. In cases where the implicit interest rate cannot be determined, an appropriate incremental borrowing rate is used. In determining the lease period, extension options are only included if it is reasonably certain they will be utilised. At subsequent measurement, the right-of-use asset is measured less accumulated depreciation and impairment losses and adjusted for any remeasurements of lease liability. Accounting policies (continued) Depreciation is carried out following the straight-line method over the lease term or the useful life of the right-of-use asset, whichever is shortest. The lease liability is measured at amortised cost using the effective interest method and adjusted for any remeasurements or modifications made to the contract. Extension options are only included in the lease term if extension of the lease is reasonably certain. Right-of-use assets and lease liabilities are not recognized for low value lease assets or leases with a lease term of 12 months or less. These are recognized as an expense on a straight-line basis over the term of the lease. Any service elements separable from the lease contract are also accounted for following the same principle. Land and building leases normally have a lease term of up to 30 years whereas leases of cars normally have a lease term up to 3 years. Assets held for sale Land and buildings held for resale is stated at the lower of cost and net realisable value. Cost is assigned by specific identification and includes the cost of acquisition, and development and borrowing costs during development. Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell. Impairment of assets The carrying amount of intangible assets, property, plant and equipment is subject to an annual test for indications of impairment other than the decrease in value reflected by depreciation. Impairment tests are conducted on individual assets or groups of assets when there is an indication that they may be impaired. Write-down is made to the recoverable amount if this is lower than the carrying amount. The recoverable amount is the higher of an asset's net selling price and its value in use. The value in use is determined as the present value of the expected net cash flows from the use of the asset or the group of assets. Inventories Inventories are measured at cost in accordance with weighted-average method. Where the net realisable value is lower than cost, inventories are written down to this lower value. The net realisable value of inventories is calculated as the sales amount less costs of completion and expenses required to effect the sale and is determined taking into account marketability, obsolescence and development in the expected selling price. The cost of raw materials and consumables comprises the cost of acquisition plus delivery costs. The cost of finished goods and work in progress includes the cost of raw materials, consumables, direct labour and indirect production overheads. Indirect production overheads include the indirect cost of material and labour as well as maintenance and depreciation of production machinery, buildings and equipment and expenses relating to plant administration and management. Receivables Receivables are measured at amortised cost. Write-down is made for bad debt losses when there is objective evidence that a receivable has been impaired. If there is objective evidence that an individual receivable has been impaired, write-down is made on an individual basis. Write-downs are calculated as the difference between the carrying amount and the present value of the expected cash flows, including the realisable value of any received collateral. Prepayments Prepayments comprise costs incurred concerning subsequent fiscal years. Equity Proposed dividends are recognised as a liability at the date when they are adopted at the annual general meeting (declaration date). The expected dividend payment for the year is disclosed as a separate item under equity. An amount corresponding to development expenditure capitalised as intangible assets is transferred to “reserve for development expenditure” under equity. The reserve is reduced with amortisation of intangible assets and adjusted with a deferred tax rate of 22%. Corporation tax and deferred tax The joint taxation system means that the Company’s tax obligation is settled when payment to the administration company (Spectris Denmark ApS) are made. Current tax payable and receivable is recognised in the balance sheet as tax computed on the taxable income for the year, adjusted for tax on the taxable income of prior years and for tax paid on account. Accounting policies (continued) Deferred tax is measured using the balance sheet liability method on all temporary differences between the carrying amount and the tax base of assets and liabilities. Where different tax rules can be applied to determine the tax base, deferred tax is measured based on Management's planned use of the asset or settlement of the liability, respectively. Deferred tax assets, including the tax base of tax loss carry forwards, are recognised at the expected value of their utilisation; either as a set-off against tax on future income or as a set-off against deferred tax liabilities in the same legal tax entity and jurisdiction. Deferred tax is measured in accordance with the tax rules and at the tax rates applicable at the balance sheet date when the deferred tax is expected to crystallise as current tax. Change in deferred tax as a consequence of changed tax rate is recognised in the income statement. Other provisions Provisions comprise anticipated costs related to deferred tax and warranties. Provisions are recognised when, as a result of past events, the Company has a legal or a constructive obligation and it is probable that there may be an outflow of resources embodying economic benefits to settle the obligation. Warranties comprise obligations to make good any defects within the warranty period. Provisions for warranties are measured and recognised based on past experience. Financial liabilities Financial liabilities are recognised at the date of borrowing at the net proceeds received less transaction costs paid. In subsequent periods, the financial liabilities are recognised at amortised cost, corresponding to the capitalised value using the effective interest rate. Accordingly, the difference between the proceeds and the nominal value is recognised in the income statement over the term of the loan. Financial liabilities also include the capitalised residual obligation on finance leases. Other liabilities are measured at net realisable value. Deferred income Deferred income comprises payments received from customers concerning income in subsequent years. Revenue Domestic 29,754 28,260 Foreign 698,421 646,042 728,175 674,302 With reference to section 96, 1 of the Danish Financial Statements Act the company does not disclose segment information. The disclosure of details about the company’s performance of business areas is considered sensitive market information. Financial income Interest income, other 395 0 Exchange rate gain 2,515 0 2,910 0 Staff costs Wages and salaries 275,211 277,063 Pensions 18,361 16,567 Social security costs 3,227 3,038 Other staff costs 7,714 3,850 304,513 300,518 Wages related to the construction of plant and machinery and indirect production overheads on inventories -50,841 -43,456 253,672 257,062 The Company has set up a bonus plan for executive employees. The value of the bonus plan is based on earnings in the Hottinger Brüel & Kjær A/S organisation. Further, the Company’s Executive Board and a number of key employees are included in the incentive programme with Spectris Plc. in the UK, according to which share options in Spectris Plc. are issued based on the results for the last 3 years and the development in Spectris Plc.'s share price. In the fiscal year, no share options have been exercised by the Executive Board under this programme. In 2021 no share options were exercised. Share options granted in 2022 amount to DKK 956 thousand (2021: DKK 2,209 thousand). Staff costs comprise remuneration, pension, bonus plan and company car for the Executive Board totaling DKK 5,917 thousand (2021: DKK 7,910 thousand). Intangible assets Software R&D assets Total Cost at 1 January 2022 56,676 18,063 74,739 Additions 562 - 562 Disposals - - -48 - Cost at 31 December 2022 57,238 18,063 75,301 Depreciation and impairment at 1 January 2022 53,388 5,132 58,520 Depreciation and impairment 869 1,806 2,675 Disposals - - - Depreciation and impairment at 31 December 2022 54,257 6,938 61,195 Carrying amount at 31 December 2022 2,981 11,125 14,106 Depreciation period 3-5 years 10 years - The additions of DKK 0,6m mainly consist of two projects; HBK Sales Force project and the ERP system. Projects are vital to the digital journey of HBK and have demonstrated promising outcome. There are no indications for impairment considerations. Property, plant and equipment Property, Fixtures, plant and Production fittings, equipment Leasehold plant and tools and under improve-machinery equipment construction ments Total Cost at 1 January 2022 63,076 35,936 9,075 36,967 145,054 Transfers - - - - - Additions 3,217 2,879 26,394 6,033 38,523 Disposals - -1,184 -24,212 - -25,396 Cost at 31 December 2022 66,293 37,631 11,257 43,000 158,181 Depreciation and impair-ment at 1 January 2022 52,517 18,436 - 419 71,372 Transfers - - - - - Depreciation 3,496 6,427 - 1,965 11,888 Disposals - -1,184 - - -1,184 Depreciation and impair-ment at 31 December 2022 56,013 23,679 - 2,384 82,076 Carrying amount at 31 December 2022 10,280 13,952 11,257 40,616 76,105 Depreciation period 10 years 3-10 years - 20 years - Leases Right of use assets Total Right Buildings Cars of use assets Cost at 1 January 2022 232,628 65 232,693 Additions Cost at 31 December 2022 232,628 65 232,693 Depreciation and impairment at 1 January 2022 3,726 44 3,770 Depreciation 11,200 21 11,221 Depreciation and impairment at 31 December 2022 14,926 65 14,991 Carrying amount at 31 December 2022 217,702 0 217,702 Depreciation period 20 years 1-2 years Lease Liabilities Buildings Cars TOTAL Lease liabilities fall due as follows: Within 1 year 6,575 0 6,575 Between < 1 and > 5 years 30,432 0 30,432 More than 5 years 192,723 0 192,723 TOTAL 229,730 0 229,730 Financial expenses Interest expenses, group companies 62 1,633 Interest expenses, leases 6,738 3,351 Interest expenses, other 0 156 Exchange rate losses 0 3,532 Other financial costs 403 414 7,203 9,086 Tax on profit for the year Joint taxation contribution 0 12,531 Other current taxes 0 203 Adjustment of tax relating to previous years -60 -205 Deferred tax for the year 1,175 -3,084 1,115 9,445 Specification of tax on profit for the year Current tax/joint taxation contribution 0 12,734 Deferred tax 1,115 -3,289 1,115 9,445 Tax recognition Tax on profit for the year 1,115 9,445 Tax on equity movements 55 758 1,170 10,203 10000000 20000000 642000 6257000 Prepayments Prepaid software-licenses 14,411 10,179 Other 1,000 1,590 15,411 11,769 Share capital The share capital consists of 102,000 shares of DKK 1,000. All shares have the same voting rights. The share capital is unchanged in the last five financial years. Deferred tax Deferred tax at 1 January 4,912 8,201 Adjustment for previous year(s) -346 0 Adjustment for the year 1,230 -3,289 Deferred tax at 31 December 5,796 4,912 Provision for deferred tax relate to: Intangible assets 3,103 3,568 Manufacturing equipment -1,932 -903 Leasing -2,646 0 Land and buildings 0 -3,720 Current assets 4,802 7,787 Provisions 3,170 -1,820 Losses carried forward -701 0 Deferred tax at 31 December 5,796 4,912 Other provisions Warranty provision at 31 December 4,410 4,470 The warranty provision covers expected costs to be incurred for products already sold and is expected to be used in full within one year. Depreciation and impairment Intangible assets 2,675 4,201 Property, plant, and equipment 11,888 11,425 Reversal of impairment 24 -22,600 Right of use assets 11,221 3,770 25,808 -3,204 Contractual obligations, contingencies etc Obligations regarding guarantees made for customers amount to DKK 12,908 thousand (2021: DKK 12,722 thousand). The company participates in the Danish joint taxation group alongside the Danish parent company and other Danish subsidiaries owned by Spectris Plc. The company is jointly but unlimited liable for all claims for Danish company taxes within the Danish joint taxation group. Financial instruments 2022 2021 (Gain) and (Gain) and Con-loss Con-loss tract recognised tract recognised in Currency Period value in equity Period value equity 0–12 0 0 0–12 50,213 1,514 DKK/USD months months 0–12 30,380 273 0–12 37,759 -216 DKK/JPY months months 0–12 33 -21 0–12 33,590 -798 GBP/DKK months months 30,413 252 121,562 500 Related parties Control Ownership The ultimate parent company of the group: Principal shareholder: Spectris plc. Spectris Denmark ApS Melbourne House Teknikerbyen 28, Søllerød 44-46 Aldwych, London, WC2B 4LL 2830 Virum England Denmark www.spectris.com A copy of the consolidated financial statements of Spectris plc. can be obtained from Hottinger Brüel & Kjær A/S, Teknikerbyen 28, Søllerød, 2830 Virum, Denmark. Hottinger Brüel & Kjær A/S and the principal shareholder are included in the 2022 consolidated financial statements of Spectris plc., who holds a controlling interest. Transactions with related parties Related parties Other related with control parties DKK’000 DKK’000 Intercompany sales - 350,198 Intercompany cost of goods sold - 36,497 IT & Management Recharges -68,051 63,403 Employee & Other Recharge 7,491 1,900 Interest -288 - Intercompany receivables - net 30,660 89,625 Subsequent events As mentioned in the Management’s Review, the Company continues to monitor business impact considering appropriate measures to mitigate financial risk. Annual report Auditor's report on audited financial statements ParsePort XBRL Converter 2022-01-01 2022-12-31 2021-01-01 2021-12-31 2023-06-22 Ben Bryson Reporting class C, large enterprise 1957-09-03 2023-06-22 23958414 Hottinger Brüel & Kjær Teknikerbyen 28 2830 Virum Opinion Basis for Opinion 2023-06-22