Test and Measurement supplies test and measuring equipment for research and development, principally to the aerospace and automotive industries. For customers in these industries, our products and applications help them to design safer, more fuel-efficient, environmentally-friendly vehicle platforms whilst reducing time to market. Further applications are in consumer electronics and the environmental monitoring market. The operating companies in this segment are Brüel & Kjær Sound & Vibration and HBM.

Product testing and quality control are the principal drivers of demand in the test and measurement sector. Prototype testing is a costly, but unavoidable, stage in the development of many consumer durable products. R&D engineers must ensure not only that consumer requirements are met within shorter development cycle times, but also compliance with ever-increasing environmental, safety and efficiency targets. In addition to product development, increasing legislation and regulation on noise levels, for example EU directives on noise regulation for airports, cities and workplace noise, is also driving demand for our test and measurement applications.

Sales in Test and Measurement increased by 23% (8% at constant currencies) to £254.9 million. Operating profit increased by 13% to £29.7 million. An increase in R&D expenditure from 7.2% of sales to 7.8% led to operating margins, at 11.7%, being lower than the prior year figure of 12.6%.

Automotive industry investment is focused on research and development of new models, with the emphasis on bringing smaller, more fuel-efficient vehicles to market as quickly as possible. Shorter development cycles result in higher volumes of data requiring rapid analysis and manufacturers are now using software modelling to assess new vehicle designs before the prototype is built. This reduces the number of tests required and thus shortens the development time, helping to cut costs and reduce time to market. The acquisition of nCode extends our software capabilities in this area, providing customers with the technology to carry out fatigue and durability testing and life prediction, as well as noise and vibration analysis and accelerated testing. The acquisition of the LDS Test and Measurement business broadens our portfolio of data acquisition instruments and adds world-leading capability in vibration testing, enabling us to provide customers with complete test systems.

Materials testing is increasingly being used in applications such as construction, mechanical engineering, and the energy industry. Orders were received for a number of new projects in the field of renewable energies, including supplying and installing test and measurement equipment for a research project in Germany to minimise material usage in the main stem of wind turbines, which are made of expensive steel and commonly weigh around 350 tonnes. The research focuses on materials, assembly processes and new manufacturing methods for these critical support structures. HBM's systems are being used in onshore research to test the stresses which would result from the wind, waves and salt water to which the materials will be subjected when used offshore. We also received significant orders from leading commercial aircraft manufacturers for testing applications on new development programmes.

As regulation increases, particularly in the area of noise pollution from airports and cities, demand for environmental monitoring is growing. This has benefited Brüel & Kjær, who supply noise monitoring and analysis solutions to customers around the world. In February 2009, we extended our capabilities in environmental monitoring systems to offer customers an increased range of products, including a suite of noise management solutions and innovative web-based services.

The automotive industry is facing a challenging year. The focus for new vehicle development will continue to be on building smaller, more fuel-efficient cars which meet increasingly stringent legislation on noise emissions and pollution control, and the products acquired in 2008 give our companies greater capabilities to capture the opportunities available. In the aerospace industry, ongoing programmes for new aircraft offer good prospects for this segment. Additionally, good demand is expected for data acquisition and measurement applications in environmental monitoring.