EU taxonomy

This EU taxonomy disclosure has been prepared in accordance with Regulation (EU) 2020/852, as supplemented by Delegated Regulations (EU) 2021/2139, (EU) 2021/2178 and (EU) 2023/2486. These regulations have been applied to identify eligible activities and assess their alignment with the EU taxonomy, including against the DNSH criteria and minimum social safeguards.

The EU taxonomy offers standardised criteria for ensuring a common understanding of the concepts used for economic activities that make a substantial contribution to the climate and environmental objectives. According to the EU taxonomy’s requirements, companies that are currently covered by Directive 2014/95/EU about the publication of non-financial information – implemented in Dutch legislation through the Decree on Disclosure of Non-Financial Information (‘Besluit bekendmaking niet-financiële informatie’) – must give a picture of the taxonomy-eligible part of their economic activities where such activities are aligned with the taxonomy, in terms of Revenue, Capital Expenditure (CAPEX) and Operational Expenditure (OPEX), including certain qualitative information. The EU taxonomy consists of six environmental categories: climate change mitigation, climate change adaptation, protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection of biodiversity and ecosystems.

The annual report covers that part of the economic activities that is eligible for and aligned with the EU taxonomy for all environmental objectives. Hydratec deems an economic activity to be eligible if it corresponds to the activities that have been included in the Delegated Acts of the EU taxonomy. An eligible activity will only be deemed to be aligned if that activity (1) makes a substantial contribution to at least one of the six environmental objectives as defined in technical appendices to the EU taxonomy, (2) does no significant harm (DNSH) and does not negatively affect one or more of the other five environmental objectives, and (3) complies with socially accepted minimum values. If economic activities are to be aligned with the EU taxonomy, they must be fully compliant with these criteria. If these criteria are not observed and substantiated in full, the corresponding eligible activities will be deemed not to be compliant with the EU taxonomy. For the 2025 financial year, we have used the proportionality options as introduced in the delegated regulation amending Delegated Regulation (EU) 2021/2178 adopted on 4 July 2025, as further explained in the European Commission’s Q&A on EU Taxonomy simplifications. Hydratec is applying the simplifications included in Commission Delegated Regulation (EU) 2026/73 for the 2025 financial year.

Minimum social acceptability guarantees

The guarantees that at least a minimum social acceptability will be achieved, as included in the EU taxonomy, comprise criteria relating to human rights and responsible business practices, focusing in particular on anti-bribery and anti-corruption, fair competition and taxation. Hydratec acknowledges the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. These principles are anchored in various policy documents such as our ESG policy and the Code of Conduct. Although Hydratec has drawn up policy measures for supporting fair working standards and human rights, not all the measures have yet been fully implemented for complete alignment with these minimum social acceptability guarantees.

Human rights

Hydratec’s human rights policy is to minimise the risk of any direct or indirect negative impact on the community. Human rights violations impact not only an individual’s privacy but also Hydratec’s reputation with customers, suppliers and new or existing employees. We are aware that certain activities can be associated with risks and we therefore take measures proactively to avoid or tackle negative consequences. We have built in processes and mechanisms that can be used to check that these standards are being complied with, such as periodic audits and stakeholder contacts.

Bribery and corruption

Hydratec has a zero-tolerance policy with respect to bribery and corruption. Our dedication to tackling corruption is enshrined in the ESG Policy and the Code of Conduct, which employees and management alike are committed to and must adhere to.

Taxes

Our corporate values, as defined in the Code of Conduct, are also the basis of our fiscal policy. This policy is aligned to our strategy and the principles of responsible business practices. This is how we aim to have a transparent and responsible approach to taxation that is in line with our long-term value creation.

Fair competition

We support free-market mechanisms and the underlying legal and statutory foundations. For that reason, we stay up to date on legislation that forbids trade restrictions, harmful economic activities and unfair, misleading and unethical business practices. Our Code provides guidelines and principles for fair competition.

We acknowledge that the EU taxonomy comprises a dynamic regulatory standard that is continuously being developed and for which activities and criteria are regularly updated. Hydratec would therefore like to emphasise that the percentages for eligible and aligned economic activities should not be seen as a complete depiction of all our sustainability efforts, but only reflect our efforts in the context of the EU taxonomy as a framework. Despite progress in carrying out a more detailed analysis, the availability of data remains a challenge for disclosure of information about eligible and aligned economic activities. In the year under review, we assessed our activities once again in the light of the EU taxonomy, which led to an increase in our eligibility for sustainable economic activities. This revision is based on new understandings derived from further analyses according to the EU taxonomy. Our company’s core activities remain unchanged. The comparative figures have been adjusted to allow for this.

Revenue

The EU taxonomy’s definition of the eligible revenue KPI covers the net revenue generated from products or services that are related to eligible economic activities, divided by the total net revenue. The net revenue figure used for calculating the revenue KPI in 2025 was €263.1 million. This sum matches the Group revenue as included in paragraph 1.23 of the consolidated financial statements. Further explanations and the accounting policies used can also be found in the same explanatory section. The assessment of eligible revenue was carried out by reviewing revenue flows against the relevant economic activities as listed in the Delegated Acts of the EU Taxonomy and by checking the availability of internal information to assess compliance with the technical screening criteria, DNSH criteria and minimum social safeguards.

The production of electrical and electronic equipment, CE1.2

This economic activity is defined as the production of electrical and electronic devices for industrial, professional and consumer use. The project-related revenue of the Industrial Systems companies and the engineering revenue of Helvoet comply with this definition and are thus eligible for the EU taxonomy.

Sales of spare parts, CE5.2

As project organisations in specialist mechanical engineering, the Industrial Systems companies also offer spare parts as one element of the service they provide for the machines delivered. These spare parts are sold to existing customers to extend the service lives of machines that were previously sold, which means that this economic activity is eligible for the EU taxonomy.

The revenue flows that are eligible for the EU taxonomy fall within the environmental objective of the ‘transition to a circular economy’. This total revenue flow came to €149.5 million in 2025, representing 57% of Hydratec’s total revenue. Various internal control measures have been implemented to avoid anything being counted twice. In line with last year, the sale of electrical machinery and spare parts has been identified as business activities under the EU taxonomy. For both these economic activities, there is as yet insufficient overlap between internal information (about recycled/sustainable materials, compliance with relevant sustainability labels and use after the end of the operational service life) and the evidence that the EU taxonomy requires for concluding that the eligible revenue flows genuinely do match the EU taxonomy.

Capital investments

The investments that are used for calculating the CapEx KPI can be derived from the overview of how tangible fixed assets and leased assets have changed (1.30 and 1.31 respectively). We have adopted a threshold of €0.1 million for determining which investments fall within the scope of this assessment. This means that 88% of our CAPEX portfolio has been evaluated. We have ensured that no investments have been counted twice and that each KPI is only assigned once. Further details of the allocation of these fixed assets and the associated accounting policies can be found in explanatory notes 1.30 and 1.31 of the financial statements.

Renovation of existing buildings, CCM7.2

This economic activity is defined as construction and civil engineering work (or preparations for them) at existing buildings. As we are continuing to invest in our production sites and other locations, a large proportion of the eligible investments relate to renovating existing buildings. At both Rollepaal and Timmerije, these investments are aimed at making the premises more sustainable.

Transport using motorbikes, cars and light commercial vehicles, CCM6.5

The definition of this economic activity covers the purchase, financing, hiring, leasing and commercial operation of vehicles that fall within the scope of Regulation (EC) no. 715/2007 by the European Parliament and the Council. Additions to the rented assets are new lease contracts for cars, thereby facilitating commuting to and from work for staff. This economic activity complies with the relevant definition and it is therefore eligible for the EU taxonomy.

The investments that are eligible for the EU taxonomy fall within the environmental objective of ‘climate change mitigation’. Based on our assessment, 24% of the CAPEX has been classified as eligible, whereas 0% is aligned with the objectives of the EU taxonomy. This is principally due to the lack of the internal information that the EU taxonomy requires in order for this assessment to be made.

Operational expenditure

In the 2024 financial year, relevant operating expenses amounted to 6% of revenue. As our core activities have not changed materially since then and based on an analysis of operating expenses for 2025, we conclude that OpEx will also remain below the 10% threshold in 2025. For this reason, we will not carry out any further taxonomy assessment or reporting with regard to operating expenses, other than the required disclosures.

Share of revenue, CapEx and OpEx from taxonomy activities

Revenue, CapEx and OpEx breakdown by taxonomy activities

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.