Governance

Due diligence

Hydratec is aware of the potential risks within the value chain. Hydratec assumes its share of the responsibility for these risks, as we often contribute to them – whether directly or indirectly. In Q2 and Q3 of 2025, a due diligence project was carried out under OECD guidelines. In this project human rights, labour rights and environmental themses are assessed based on deskresearch and internal interviews.

To mitigate the risks identified in different value chains, Hydratec takes measures that affect Tier 1 suppliers. We focus on the following mitigating measures:

1. Supplier Code of Conduct:
   We maintain a Supplier Code of Conduct that can be used by all entities. This enables us to set consistent expectations towards supply chain partners and allows us to track signed agreements.

2. Internal audit system:
   We have a structured list of audit criteria for direct suppliers, centred around the risks identified. All entities can use these for audits, including annual evaluations, continuous monitoring and improvement plan follow-ups where necessary. Audits may be conducted by Hydratec entities or external auditors.

Risk management and internal controls over sustainability reporting

Risk management is an essential part of Hydratec’s business strategy. The objective is to identify and mitigate risks with a potential major negative impact on achieving strategic and financial goals, and therefore on the overall value of the business. This process focuses on both non-sustainability as well as sustainability topics and covers the entire organisation. This process aims to identify risks based on factors including the impact on the organisation and the likelihood of occurrence. On this basis, various measures will be developed to mitigate risks. The material topcis from the double materiality assessment are detailed in the following sections.

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.