Objectives and strategy

Hydratec intends to make a sustainable contribution worldwide to the demand for food, health and mobility. Demand is still on the rise in response to global population growth and rising prosperity. Diversifying into Industrial Systems and Hightech Components makes Hydratec more agile and resilient to market fluctuations.

Sustainable innovation is the key

Hydratec’s independent, versatile companies develop smart products and functions which contribute to customers’ success. Our employees collaborate closely with customers and continually look for ways of improving products and production processes. We not only improve primary functions, but also logistics, maintenance and design. We equally provide consultation, paying special attention to improving sustainability and preventing waste in particular. Diversity across all layers of the organisation boosts the variety of our solution directions, improving the quality and speed of innovation.

Innovation is key for Hydratec to gain and maintain a leading position in the Food, Health and Mobility markets. Innovation enables us to add value to our customers' processes and stand out from the crowd. Most of our innovations are aimed at eliminating waste in processes and products, as we are certain that is where we can make the greatest environmental impact. Digitalisation is playing an increasingly important role in this.

In our drive for innovation and improvement, our customers are the biggest source of inspiration: if we understand their processes in depth – sometimes better than customers themselves – we can identify opportunities to improve them materially and effectively. We are looking for cooperation wherever possible, with our customers of course, but also with suppliers and knowledge institutes, such as universities and colleges. Together, we have more knowledge and innovative strength.

Leading positions

We aim for leading positions in the various niche markets and respond quickly to changes. Our long-term strategy is for all our activities to contribute to generating consistent growth in terms of revenue and result at least in line with the market. This is how we make it possible to create high added value for the end user.

Our far-reaching services lead to substantial customer loyalty. We make the difference for our customers by making use of smart technologies and we are expanding the product range at existing customers. We invest a lot of effort in various Operational Excellence programmes to prevent wastage in our own and our customers’ production processes. There are several ways to prevent waste. One of them is to reduce the energy needed to manufacture products. We are cutting back on the use of materials and resources.

Industrial Systems' products are sold on a project-by-project basis and worldwide, which means results may fluctuate. This makes their dependency on macroeconomic factors considerable, but it also spreads the risks. Our operations at Hightech Components are more process-oriented, which means that the fluctuations are generally less significant than at Industrial Systems.

Independent and agile

The management boards of the companies are responsible for their own operating activities within the agreed framework, and concentrate on their own specific markets. This independence makes the organisation agile and innovative. This organisational set-up once again proved its worth in 2025. All operations were able to adapt quickly and at their own discretion to the circumstances, such as fluctuating interest rates, inflation and import tariffs, as well as developments in the supply chain and the labour market. In addition, we have a cost-efficient structure, with limited central staffing, which reduces overheads.

The Management Board of Hydratec has regular consultations with the management of the companies to discuss all aspects of the business and periodic developments of results. These consultations are based on a fixed framework of regular reports including analyses of the key performance indicators. Frequent informal meetings are also held. All this takes place on the basis of ambitious, but realistic targets, derived from scenarios which serve as guidelines for all those involved. We evaluate strategic market positions and market options for each segment and perform a SWOT analysis annually. This leads to decisions on long-term investments and priorities for product market developments. One of our guidelines is the continued development of the organisation and an appropriate return for our shareholders.

Entrepreneurship and ambition

To respond actively to relevant changes and opportunities in the market, it is essential for each business to have effective, highly motivated management and employees. We dedicate additional effort to hiring and engaging talented staff, such as by offering internships and graduation placements on an ongoing basis. We furthermore continually promote employee development, which includes offering education and training.

Financial targets

We aim for sufficient profitability for all the companies within Hydratec. This will create room for investment in people, innovation and growth, so we have the space to handle setbacks. We set a longer-term operating result target for each segment unless special economic circumstances arise or adjustments are needed in the organisation. For Industrial Systems this is at least 12%, and for Hightech Components at least 8%, which is consistent with the Hydratec growth target and a minimum solvency target of 30%.

Growth

It is our ambition to continue to grow in terms of both quality and quantity with the current activities. The key drivers for this are world population increase, prosperity and the innovative power of Hydratec. In addition, we want to expand and broaden our existing activities through acquisitions and joint operations. Our acquisition strategy on the basis of current activities is ‘buy and build’. We will dispose of operations that have insufficient long-term potential for Hydratec and can develop better structurally within other organisations.

Sustainable long-term value creation

Hydratec’s ESG policy covers the most material impacts on people, the environment and society, for both own operations and supply chain. By engaging with stakeholders, Hydratec can capture multiple perspectives, gain a broader understanding of value creation, and ensure that the business strategy and decision-making match the needs, expectations and concerns of stakeholders. This is how we make positive and enduring impact. Our most impactful and/or influential stakeholders are our: (i) shareholders (ii) customers and (iii) employees. Furthermore, Hydratec is aware of different stakeholder groups that have a greater or lesser influence on Hydratec or are influenced by Hydratec. Examples include suppliers, governments and local communities. Hydratec is aware of the potential risks within the value chain. We hold ourselves partly responsible for these risks, as we may contribute to them directly or indirectly.  To address these risks in different value chains, Hydratec takes measures that also include Tier 1 suppliers. For example, we have drawn up a Supplier Code of Conduct.

We have focus areas for sustainability: environmental, social and governance – each with underlying priorities. To achieve our targets, we have developed an ESG policy that focuses on greenhouse gas emissions, circularity, diversity, equality and inclusion, and business integrity. This policy aims to prevent, mitigate and, where necessary, remediate current and potential impacts and risks.

We believe that long-term value creation is only possible by maintaining a corporate culture that embraces transparency and trust. Transparency on progress on our ESG activities to mitigate negative impacts and increase positive impacts will be provided in the annual report in the coming years.

We aim to add value to society based on our strategy, both in the Netherlands and internationally. We have depicted our business model in a diagram to highlight how we do that.

• It starts with the aim of using Industrial Systems and Hightech Components to sustainably meet the need for food, health and mobility for the growing global population.

• This is something we work on together: agile, close to the market and with plenty of knowledge of niche markets.

• With driven employees and technical innovations, we add sustainable value to customers’ processes to tackle waste.

• Customers appreciate our efforts and, as a result, our market share and profitability are growing.

• This leads to healthy financial results which enable us to invest in training and development for our employees, in innovations and in acquisitions.

In our business model, we also deal with external factors such as governance and risks.

The management report as referred to in Part 9 of Book 2 of the Dutch Civil Code monitors the elements from the foreword to the historical summary inclusive. This version of the annual financial reporting of Hydratec Industries N.V. for the financial year ending on 31 December 2025 is not presented in the ESEF format as specified in the regulatory technical standards for ESEF (Delegated Regulation (EU) 2019/815). The set of ESEF reports can be downloaded at the download page.