Resource use and circular economy – E5

Impact, risks and opportunity management

With regard to resource and material use, the extraction of primary raw materials such as oil and steel can lead to the depletion and, in turn, the scarcity of raw materials. Resource scarcity can result in higher purchasing costs for Hydratec. Handling waste streams in an irresponsible way can lead to continued demand for new raw materials, thereby speeding up their depletion. In addition, there may be higher costs for treating the waste, which will affect Hydratec financially. On that basis, resource use and circular economy have been found to be material topics. The topics of resource inflows, resource outflows and waste have been included in this section as a result. During the DMA, the entire value chain was taken into account, both upstream and down, as well as in general. Most of the focus around this topic is on our own organisation. No specific methods were used during the assessment. Different stakeholders were taken into account during the assessment and were consulted in different ways (see ‘Stakeholder interests and views’).

Objectives

Hydratec has set targets for 2030 that focus on resource inflows and outflows that are not aligned with legislation and regulations. The targets for resource inflows and outflows are different for Hydratec’s Industrial Systems and Hightech Components segments. For Industrial Systems, the aim is to include five circular principles in the design of the new systems, namely: service life, repairability, refurbishment, recycling and ease of disassembly. For Hightech Components, the target is to purchase 15% recycled content for resources. In addition, 50% of product groups sold must be recyclable. For both segments, the focus is on resource inflows in efforts to procure products and resources. Moreover, circular principles including recyclability will be taken into account in the design of the installations and products.

Policy

Over the past year, Hydratec has adopted a policy to manage our material impact and risks related to resource use and circular economy. The policy focuses on circularity issues, such as identifying, assessing, managing and remediating them within the value chain, geographic locations and our own organisation.

Hydratec is committed to identifying and addressing the material impact of resource inflows and outflows. Opportunities for innovation and cost savings are identified in relation to the principles of the circular economy. The impact is managed by implementing strategies and innovations in favour of the circular economy. A key part of this policy is the transition from using virgin materials to using recycled materials. The focus is on purchasing renewable and recycled materials. Furthermore, Hydratec focuses on the waste hierarchy, prioritising reuse, recycling and other forms of recovery.

Hydratec is committed to making products and production lines more sustainable. The focus is on environmentally-friendly design, explicitly aiming to reduce the use of resources, especially virgin materials. Our guiding principle is to minimise the environmental impact throughout the entire lifecycle of our products.

Actions

By the end of 2025, actions had been formulated on material use and the circular economy. The aim of these actions is to achieve our policy objectives. In formulating these actions, the potential impact as well as the significant financial resources associated with implementing these actions are identified. These resources are subdivided into operating expenses and capital expenditure.

Hightech Components

Within Hightech Components, the focus is on increasing the proportion of recycled plastic in the materials used. To this end, various measures are being explored, including holding discussions with suppliers and customers on the possibilities to increase the use of plastic recyclate further.

Industrial Systems

Industrial Systems plays a vital role in circularity, as circular principles can be incorporated into operations here as early as the design phase. In the coming years, the design of new products and installations will focus on the use of recycled materials, sustainability and durability, repairability, the possibility of refurbishment, recyclability and disassembly.

To support this, research is being conducted into product recyclability and further standardisation within the product portfolio. In addition, the extent to which reusable packaging can be used and, where possible, deployed will be investigated. Greater emphasis is also being placed on refurbishment within after-sales, through modifications to machine projects and further professionalisation of the service organisation, with the aim of making spare parts more readily available and extending machine service life.

Metrics

The metrics reported are mainly related to the impact of circularity and less to the associated financial and other risks. The following metrics provide insight into the relationship between the impact and Hydratec. To gain an understanding of the financial and other risks surrounding circularity and to help manage them, the operating result as a percentage of the revenue has been used as a financial metric, despite the fact that it is also affected by other factors. If the purchase costs increase and this poses a risk to operations, this may affect the operating result.

Direct weight measurements and internally available information on the weights of installations and materials used have been used for material inflow and outflow calculations. Where these were not available, extrapolation or estimates have been used, on the basis of knowledge and expertise within the different entities and the Group.

Resource inflows

To determine which resources to report on, the materiality of resources for Hydratec has been taken into account. All products (including packaging), materials, water and tangible assets have been considered in our own organisation and in the value chain, both upstream and down. Hydratec decided to focus on the largest resource flows for Industrial Systems and the procurement of raw materials for Hightech Components. This decision stems from the large variation in resource flows. For Industrial Systems, the largest resource flows are steel, stainless steel, aluminium and electronic components incorporating copper. For Hightech Components, the resource flows are mainly granular material.

Resource outflows

Hydratec focuses on various circular principles to contribute to the circular economy. The includes reducing material and raw material use, both in our own operations and in our customers’ applications. Furthermore, weight reduction is an increasingly important design requirement for the market and our strategy, and it significantly reduces the application’s material and, in many cases, energy consumption. In addition to reducing material use, efforts are being made to extend the service life of products. This is achieved by increasing product quality, so that systems and components last longer than alternative solutions. At present, no specific quantitative insights are available on the service life of products in comparison with industry averages, nor is product repairability systematically measured.

The objective is to increase the proportion of selected products and materials in the production process that are designed in line with circular principles. Key products and materials are developed with circularity in mind, with emphasis on sustainability, efficient material use and reuse. This results in a production process that supports the circular economy.

Progress

The previous tables in this section contain consolidated data for Hydratec as a whole. This paragraph specifically addresses progress on the circularity targets for each segment (Industrial Systems and Hightech Components), as set out in the section on ESG strategy.

Progress was made on circularity in both segments in 2025. At Industrial Systems, new installations are designed based on the five circular principles (service life, repairability, refurbishment, recycling and ease of disassembly) wherever possible. This anchors circularity in the design phase of new systems. At the same time existing installations were designed and built at a time when circularity was not yet an integral principle and, as such, do not fully comply with circular principles in all cases. Hydratec therefore applies the circular principles step by step, incorporating circularity when modifying, replacing or renewing existing machinery and installations. In this way, our existing portfolio is gradually made more sustainable, taking into account technical and economic feasibility.

Progress has also been made within Hightech Components. By 2025, 17.5% of resources that are purchased were made from recycled materials, putting the segment above the current 2030 target. In addition, the recyclability of 33.9% of all products sold has been determined, which is a significant initial step towards structurally understanding and increasing the circularity of product outflow.

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.