Untitled

Annual Report

2023

Contents

2023 at a glance 4

About NX Filtration 6

Report of the Management Board 8

Business review 10

Sustainability report 18

2023 month by month 36

Financial Performance 42

Risks and Uncertainties 46

Corporate governance 74

Report of the Supervisory Board 88

Financial statements 100

Consolidated financial statements 102

Company financial statements 136

Other information 146

Provision in the Articles of Association relating

to profit appropriation

148

Independent auditor’s report 150

3NX Filtration - Annual Report2 Contents

2023

at a glance

€8.1 million

total income

59.6%

gross margin

254 billion

liters of clean

water enabled

Revenues were lower than anticipated, caused by

longer lead times to convert pilot projects into

orders for large full-scale projects, and further

impacted by the current financing environment

Jeroen Pynenburg appointed as new CEO for

the next stages of growth per May 2023

Successfully converted pilot projects into

orders for 24 demo and full-scale plants

Continuation of repeat orders from existing

partners across Europe, the Americas and Asia

Major steps forward with large global

OEMs that further intensified their pilot

programs, entered into cooperation

agreements with us, and started offering

our products in full-scale projects

Strong progress with our new megafactory,

on schedule to start-up in H1 2024

Two distinction awards from Global Water

Intelligence for Water Technology Company of

the Year and for Water Project of the Year

5NX Filtration - Annual Report4 2023 at a glance

About NX Filtration

NX Filtration is a provider of direct nanofiltration

membrane technology for producing pure and

affordable water to improve quality of life. Its direct

nanofiltration technology removes micropollutants

(including pharmaceuticals, medicines, PFAS and

insecticides), color and selective salts, but also

bacteria, viruses and nanoplastics, from water

whilst offering strong sustainability benefits.

NX Filtration sells its filtration membrane modules

in its two business lines: Clean Municipal Water and

Sustainable Industrial Water.

Business lines

Clean Municipal Water

In its Clean Municipal Water business line,

NX Filtration’s membrane technology enables

its customers to produce drinking water from

surface water by removing, amongst others,

micropollutants, nanoplastics and medicine

residues to treat wastewater streams to pre-

vent discharge of polluting substances in the

environment, and to reuse treated wastewater

for purposes that also include the production of

drinking water.

Sustainable Industrial Water

In its Sustainable Industrial Water business line,

NX Filtration’s membrane technology enables

its customers to treat surface or well water to

optimize quality and characteristics for process

water, prevent discharge of polluting waste-

water and reuse wastewater for industrial

processes and recover and recycle valuable raw

materials from wastewater streams, such as

indigo in the textile industry or cleaning chemi-

cals in beer breweries.

Commercialisation strategy

NX Filtration’s scalable commercial model is based on investing in pilot systems (mobile units that are

typically deployed at customers’ sites to test water treatment performance) that, over time, convert

into demo systems (larger systems that are typically deployed at customers’ sites to establish optimal

process parameters and conditions for a full-scale plant) or full-scale plants. As such, NX Filtration

aims to grow its installed base of pilot systems to create a strong basis for recurring revenues from

repeat projects and module replacements in the longer term. The route-to-market for NX Filtration’s

membrane modules is based on relationships with original equipment manufacturers (OEMs), who

are responsible for the design and delivery of the overall filtration system at the end-users facilities.

Once these OEM customers have worked with NX Filtration’s membrane technology, they become an

important element in the further commercial rollout of NX Filtration’s products in repeat projects and

module replacements in existing systems.

11186209

Pilots Demo plants Full-scale plants Of which repeat orders

of projects in 2023:#

Environmental Social Governance

US Sustainable Development Goal 6 - Pure and affordable water for all

Energy efficient operation

Green chemistry

Production energy savings

Safety

Training and development

Diversified employee base

Sustainable supply chain

Knowledge sharing

Avoiding chemicals in pre-treatment

Clean water

for all

Avoiding

emissions

at our

customers

Our internal

initiatives

Gross income (€ ‘000)

815

8,053

4,625

2,613

20232022

-4%

Other

income

Sustainable

Industrial Water

Clean Municipal

Water

808

8,354

4,977

2,569

Recurring

replacements

Repeat

orders

ReplacementsFull-scaleDemo plantsPilots

7NX Filtration - Annual Report6 About NX Filtration

Report of the

Management

Board

9NX Filtration - Annual Report8 Report of the Management Board

Business review

In 2023 we continued to work on our mission ‘clean and

affordable water for all’, whilst offering strong sus-

tainability benefits to our customers and providing an

inspiring working environment for our employees. In the

course of 2023, it became clear that NX Filtration is ex-

periencing an approximately 1.5 years delay in the roll-

out of its original business plan, that is caused by longer

lead times to convert pilot projects into orders for large

full-scale plants, as well as by the current financing envi-

ronment that negatively impacts our end-customers’ in-

vestment plans, as well as the ability and willingness of

OEMs to build-up or maintain stock of our modules an-

ticipation of orders for upcoming projects. At the same

time, the underlying drivers for our business are stron-

ger than ever: the market is developing very favorably,

our pipeline continues to grow, and we experience great

traction with major global water companies that are

clearly entering the next stage of roll-out of our tech-

nology. Our strong technology position is underscored

by a sustained high gross margin and a continuation of

repeat orders from existing partners across Europe, the

Americas and Asia. We have been making strong prog-

ress on the construction of our new megafactory that

we expect to start-up according to schedule in the first

half of 2024.

Market developments

Trends in the water markets that can benefit

from our direct nanofiltration technology have

developed very favorably in 2023. Driven by

droughts and water pollution, many countries

are implementing new regulations and invest

ment plans related to water. For example, in

March 2023, France introduced 53 measures to

share, reuse and save water. One of the objec

tives of this plan is to achieve 10% wastewater

reuse by 2030, compared to less than 1% today.

This represents nearly 1,000 projects in five

years to recycle and reuse water. Also in March

2023, the US Biden-Harris Administration

proposed the first-ever national drinking water

standard related to PFAS. In May 2023, Spain

announced a €2.2 billion package to alleviate

drought impact, and in June 2023 Germany

announced new limit values for PFAS in drinking

water.

In October 2023, the European Economic and

Social Committee (EESC) adopted its call

for a new and comprehensive water strate-

gy for Europe – an EU Blue Deal. Part of this

Blue Deal is the requirement to add additional

treatment steps to remove a broad spectrum

of micropollutants by 2045, with intermediate

targets in 2040 and 2035. Another European

regulation, the Water Framework Directive,

poses strict guidelines for surface water quality

that EU countries have to comply with by 2027,

with direct consequences for, amongst others,

industries and their wastewater treatment

processes.

Commercial roll-out

We are particularly proud that we are making

major steps forward with key OEMs across all

geographies. In Europe, large OEMs further

intensified their pilot programs with our techno-

logy, entered into cooperation agreements with

NX Filtration, and started offering NX Filtra

tion’s products in full-scale projects. We received

follow-on orders from various customers. In

the food & beverage market we realized a large

replacement order and have our technology

included in a new beer filtration concept that is

being brought to the market in 2024. In Asia, we

experience an increasing size of full-scale pro-

jects with large orders from various OEMs who

also entered into cooperation agreements with

NX Filtration that form the basis for further roll-

out of our technology. In the Americas, our sales

team continued to plant the seeds with a focus

on industrial and smaller municipal projects

across North America, and various larger drink

ing water projects across Latin America that

have many similarities with the fast commercial

roll-out we experience in Asia.

NX Filtration is actively working with its OEM

partners on deploying its direct nanofiltration

technology in, amongst others, the above-men

tioned market trends. Pilots play an important

role in this commercial roll-out strategy, that is

based on converting pilot projects into orders for

larger demo or full-scale projects, with subse

quent repeat orders from existing clients, and

periodic module replacements at existing plants.

Jeroen Pynenburg

CEO

Marc Luttikhuis

CFO

Michiel Staatsen

COO

Erik Roesink

Founder and CTO

11NX Filtration - Annual Report10 Business review

In our Sustainability Report, that forms part

of this Annual Report, we further elaborate on

these and other ESG related aspects.

New megafactory

We are fully on track with the construction

of our new large-scale manufacturing facility

within the anticipated Capex budget. We have

gained early-access to the building in December

2023 to enable the installation of production

equipment well ahead of schedule. Completion

of the factory and start of commissioning is

planned for the end of Q1 2024, and start-up

during the second quarter of 2024. In the sec-

ond half of the year we plan to move our entire

team and operations into this new facility. This

enables further efficiencies and optimizations

in our operations.

Initial machine capacity will be approximately

50k

membrane modules per year, with a poten-

tial to ramp-up capacity within the same facili-

ty footprint to a total targeted annual capacity

of >120 k

membrane modules.

ESG is strongly embedded in the design of

this factory, with more than 400 solar panels

for electricity generation, a unique peer-to-

peer heat exchange contract with neighboring

datacenter Previder, an extensive heat energy

management and reuse system, and an inhouse

water treatment facility.

Innovation

We are convinced that our breakthrough dNF

membrane technology will play an important

role in addressing global issues which center

around water quality and water scarcity. It

makes us proud that the breakthrough charac-

ter of our membrane technology is also being

recognized by various industry observers. We

received Global Water Intelligence Distinction

Awards for Water Technology Company of the

Year and Water Project of the Year (for the

Dumai City Wastewater Treatment Plant in

Indonesia), and a Frost & Sullivan award for

exceptional performance in the global industrial

water and wastewater treatment membrane

market.

In 2023, NX Filtration introduced its cut-

ting-edge Online Projection Tool featuring

advanced process design predictions for hol

low fiber nanofiltration membranes. This tool

(accessible to our customers and partners)

enables the evaluation of a system’s life cycle

performance, including energy and chemicals

consumption for designed processes. The data

derived from this tool proves valuable informa

tion for greenhouse gas savings for end-users

and also supports our internal Scope 3 analyses.

NX Filtration also introduced its Integrated

Rack Design (IRD) for dNF membrane modules.

Its compact design allows OEMs and end-users

to efficiently fit our membrane technology into

limited spaces in various settings, from small

industrial facilities to large municipal treatment

plants. The IRD’s modular design simplifies

on-site assembly, eliminating complexity for a

swift and resource-saving setup. Its flexibility

and scalability enables our OEM customers to

easily customize to specific needs, and seam-

lessly integrate with existing infrastructure for

optimal performance.

Outlook

Sustaining and accelerating adoption through

our commercial roll-out strategy remains top

priority in 2024. We will continue our existing

approach in which our global commercial teams

are working with OEMs to roll-out pilot proj

ects and convert these pilots into orders for

demo- and full-scale projects, as well as obtain

In 2023, NX Filtration initiated 209 pilot projects

compared to 167 in 2022. At the end of 2023, NX

Filtration had 190 pilot systems in its fleet, up

from 162 at the end of 2022. Pilot projects con

tinue to generate very positive outcomes with

our customers. In 2023 we delivered our dNF

modules for 6 demo projects and 18 full-scale

projects, of which 11 were repeat orders from

customers who had already worked with NX

Filtration before.

As our pilot program further matures, we are

also becoming more confident about the success

rate of our pilots. Since 2020, we have initiated

490 pilot projects. Of these, 78 have already

converted in a demo or full-scale project. The

vast majority of the initiated pilot projects are

either still running, have been extended into a

more extensive larger pilot project, or have been

concluded successfully but are still in the pro

cess of decision making, financing, permitting or

engineering. We estimate that less than 25% of

the commercial pilot projects we initiated are no

longer associated with a potential future proj

ect. This predominantly relates to pilot projects

with our smaller Mexplorer pilot systems, and

is in most cases caused by the project no longer

being pursued by the customer (for example

because of budget reasons), and in a limited

number of cases by our technology not being se

lected as preferred option for the related project

opportunity (for example because of risk averse

ness to work with a new technology or because

of very specific treatment requirements outside

the direct scope of our products).

Sustainability and ESG impact

Sustainability and a clear Environmental, Social

and Governance (ESG) agenda are at the heart

of NX Filtration’s business. We passionately

believe we have a responsibility to contribute

positively to society and the environment. We

have externally certified science-based CO

re-

duction targets, work with an independent ESG

risk rating from Sustainalytics, in which we rank

amongst the 14% best performers in our global

subindustry peer group, we are part of the

United Nations Global Compact initiative, and

have a formal ESG Committee comprised of the

two independent Supervisory Board members to

formalize governance and oversight responsibili

ties with regard to sustainability, environmental,

social, corporate governance and human capital

matters.

We have developed a targeted ESG framework

in which we address and monitor our impact

along three pillars:

1. Clean water for all: Our 2023 membrane

sales can enable the production of 254

billion liters of clean water

, which is equiva-

lent to the drinking water supply for 46

million persons during one year. In 2023,

NX Filtration enabled access to clean water

across 35 countries.

2. Avoiding emissions at our customers:

With our membrane module sales in 2023,

we enabled 4,188 ton CO

e savings during

the deployment lifetime of our modules, by

avoiding the use of 7. 8 million kg of chemi-

cals and saving 96 GWh energy compared

to conventional technologies.

3. Our internal initiatives: We have imple-

mented various sustainability measures

and initiatives around ESG related themes

in our own operations, for our employees

and our partners.

Based on NX Filtration’s sales of approximately 2,451 membrane modules (dNF and UF only), multiplied by the expected capacity and

lifetime of such modules. See Sustainability Report for details, assumptions and methodologies

Estimation, based on 5-shift production and depending on product mix

13NX Filtration - Annual Report12 Business review

orders for repeat projects with OEMs that have

already gained experience with our technology

before.

In the context of the delayed roll-out of our

business plan we have taken cost control mea

sures without impacting our medium and long-

term growth ambitions. NX Filtration is focused

on making its ahead-of-the-curve investments

even more effective. For example, our glob

ally commercial organization has developed

professional onboarding processes for OEMs

and end-customers, and gained experience in

rolling-out pilot projects and converting these

into orders for larger projects. We will sustain

our global commercial team in its current size

of approximately 42 FTEs and continue to work

on effective execution and collaboration with

our ever-growing base of (OEM) partners. Also,

in terms of our fleet of pilot systems, we have

made ahead-of-the-curve investments, growing

this fleet from 85 systems at the beginning of

2022 to 190 systems at the end of 2023. There

with we are reaching our medium-term objec-

tive of 200 pilot systems, and will be shifting

our focus from rapid expansion of our pilot fleet

towards optimal deployment for near, medium

and long-term commercial opportunities.

2024 is a key year for our production footprint.

We are nearing the completion of our new

megafactory. In the second half of the year we

plan to move our existing operations into this

new facility to enable further efficiencies. The

additional capacity from the new megafactory

will enable us to supply our modules for larger

projects from our rapidly growing overall pipe

line of opportunities for the medium term.

Our outlook on total revenues for 2024 is in

excess of €16 million, a substantial increase

from €8.1 million in 2023. We are reiterating our

medium- and long-term objectives on revenue

growth and profitability, although the roll-out of

our business plan is delayed with approximately

1.5 years. The growth for the years to come is

further substantiated by strong building blocks

that are in place: e.g. benefiting from stronger

than ever market trends, making major steps

forward with key OEMs, and seeing a rapidly

growing pipeline of commercial opportunities.

We expect our current cash position (€50 mil

lion at year-end 2023) to be sufficient to fully

finance the construction of our new megafac

tory, and our operations in 2024. To implement

our growth strategy for the longer-term, we

are exploring a range of possibilities to increase

our financial flexibility, including asset-based

financing on our €58 million fixed asset base as

per year-end 2023. In conjunction with the open

ing of our megafactory by mid-2024, we plan to

organize a Capital Markets Day to provide an

update of market developments and the roll-out

of our business plan.

Management Board

Jeroen Marc Michiel Erik

Pynenburg Luttikhuis Staatsen Roesink

CEO CFO COO CTO

15NX Filtration - Annual Report14 Business review

In 2024 we will be opening

our new state-of-the-art

megafactory

17NX Filtration - Annual Report16 Business review

Sustainability

report

Introduction

Sustainability and ESG are at the heart of

NX Filtration’s business. Our vision is to be

a leading global provider of breakthrough

nanofiltration technology that enables

customers to, amongst others, produce pure

and affordable water, treat wastewater,

reduce their water footprint and achieve strong

sustainability benefits. Water scarcity and

water quality are major global and structural

issues and key drivers of the water market. For

example, it is estimated that 1.1 billion people

worldwide lack access to water, and a total of

2.7 billion people find water scarce for at least

one month of the year. By 2025, approximately

two-thirds of the world’s population may

face water shortages. In addition, the

discharge of wastewater increasingly poses

challenges for the environment (for example

the presence of antibiotic resistant bacteria

resulting in potential health issues) and for

the production of drinking water (for example

increased requirements on the removal of

micropollutants).

NX Filtration’s direct nanofiltration technology

can play a central role in addressing these

issues. Our technology is designed to remove

micropollutants (including pharmaceuticals,

medicines, PFAS and insecticides), colour

and selective salts from water in one single

step and also removes bacteria, viruses

and nanoplastics. The direct nanofiltration

technology also offers substantial sustainability

benefits compared to conventional water

treatment methods, as it avoids the use of

pretreatment chemicals in the water treatment

process and substantially reduces energy

consumption.

At NX Filtration, we believe we have a

responsibility to contribute positively to

society and the environment. 2023 marked

an important year for NX Filtration in terms

of progress on our ESG agenda: we are

very well on track to meet our externally

certified science-based CO

reduction

targets, we improved our ESG risk rating from

Sustainalytics, in which we rank amongst the

14% best performers in our global subindustry

peer group, we participated in the United

Nations Global Compact initiative, and our

formal ESG Committee further formalized

governance and oversight responsibilities

with regard to sustainability, environmental,

social, corporate governance and human

capital matters. Further reference is made

to the Risks and Uncertainties paragraph of

our Management Board Report in which we

describe our efforts in 2023 on various topics

such as code of conduct compliance, business

ethics and human rights.

As used throughout this Annual Report, “ESG”

means Environmental, Social and Governance.

Environmental factors for example include the

contribution NX Filtration makes to climate

change through (the reduction of) greenhouse

gas emissions, along with waste management

and energy efficiency by the use of its

products. Social factors for example include

human rights, labor standards throughout

the supply chain, and more routine issues

such as adherence to workplace health and

safety and gender equality. Governance refers

to a set of rules or principles defining rights,

responsibilities and expectations between

different stakeholders in NX Filtration’s

governance.

Alignment with UN Sustainable

Development Goals

To obtain input on material topics on

environmental, social and economic

parameters, NX Filtration performed a broad

stakeholder survey amongst employees,

customers, suppliers, communities and

partners. These material topics formed the

basis for the development of a materiality

matrix and the mapping to the UN SDGs.

Environmental material topics Social material topics Economical material topics

Importance for NX Filtration

Importance for stakeholders

Moderate

Carbon

neutrality

Community

involvement

Data security & privacy

Sustainable and responsible supply chain

Energy efficiency of operations

Diversity & equal opportunities

Risk management Hazardous

substances

Partnerships

Resource scarcity

Sustainability of end products

Training & development

Customer

satisfaction

Management of

customer relationship

Employee engagement

Climate change and

water challenges

People & process safety

Business ethics

& integrity

Sustainable innovation

and technology

Product

circularity

High Very high

Moderate High Very high

19NX Filtration - Annual Report18 Sustainability report

The SDGs are guiding NX Filtration’s ESG

agenda, by way of which NX Filtration supports

society. NX Filtration has selected five SDGs

that today form an integral part of NX

Filtration’s strategic framework. The SDGs

that NX Filtration seeks to contribute to are

SDG 6 – Clean water and sanitation, SDG 8

– Decent work and economic growth, SDG 9 –

Industry, innovation and infrastructure, SDG

12 – Responsible consumption and production

and SDG 17 – Partnership for the goals. NX

Filtration has set key performance indicators

(KPIs) for each SDG and is monitoring these

KPIs and initiating improvement actions. These

KPIs are described in the paragraph

NX Filtration’s integrated ESG framework.

ESG Committee

At NX Filtration we have a clear vision to be

among the best-in-class performing ESG

companies, not only in what we do, but also

in how we do it. We have therefore installed

a formal ESG Committee. The purpose of

the ESG Committee is to assist and support

the Management Board and the Supervisory

Board in carrying out its governance and

oversight responsibilities with regard to

sustainability, environmental, social, corporate

governance and other human capital matters.

The members of the ESG Committee are NX

Filtration’s independent Supervisory Board

members Ms C. (Carolina) Wielinga en Mr

B.A.M. (Benno) van Dongen. The installment

of a formal ESG Committee has further

shaped NX Filtration’s ESG agenda and the

broad duties and responsibilities include,

amongst others: (i) monitor, evaluate and

provide guidance on our policies, procedures

and practices with respect to ESG matters;

(ii) review and monitor the development and

implementation of targets, standards, metrics

or methodologies that NX Filtration may

establish from time to time, (iii) oversee our

public disclosure on ESG matters, (iv) review

and monitor initiatives to manage and mitigate

its environmental impact (greenhouse gas

(GHG)- and non-GHG reduction); (v) review and

monitor any significant examination or audit by

external auditors, regulators or key ESG rating

agencies on ESG matters (such as CICERO,

Sustainalytics and B Corporation); (vi) review

and monitor, as appropriate, human capital

initiatives, for example diversity and inclusion

initiatives, employee wellbeing or engagement

initiatives (such as UN Global Compact);

and (vii) review and monitor, as appropriate,

social initiatives and commitments, including,

among others, initiatives related to the field of

education.

The Science Based Targets

initiative (SBTi)

NX Filtration’s CO

reduction targets for Scope

1 and Scope 2 emissions have been officially

validated by the SBTi. By committing to the

SBTi, NX Filtration commits to a 42% decrease

in absolute Scope 1 and 2 emissions by 2030. To

achieve this target, NX Filtration will procure

green electricity, continues to switch to electric

vehicles, and further electrify its operations.

The SBTi defines and promotes best-practices

in setting emission reduction targets and is

considered the most ambitious and reputable

carbon target setting standard globally.

Science-based targets are emissions reduction

targets which are in line with scenarios deemed

necessary by climate scientists to meet the

goals of the Paris Agreement of limiting global

warming to a maximum of 1.5 °C.

Vision

To be a leading global provider of technology for producing pure

and affordable water to improve our quality of life.

Mission

Inspired by our team's passion for membranes we develop and produce

innovative products and solutions, enabling our partners to excel in

membrane filtration applications.

Company values

21NX Filtration - Annual Report20 Sustainability report

EU Taxonomy Objective 1

NX Filtration focuses on the technical screening

criteria for activity 3.6 ‘Manufacture of other

low carbon technologies’: the economic activity

manufactures technologies that are aimed

at and demonstrate substantial life-cycle

GHG emission savings compared to the best

performing alternative.

Given the CO

savings of its dNF products, NX

Filtration believes that 54% of its 2023 revenues

(dNF sales as percentage of total revenues from

sale of goods) could possibly align with objective

1 ‘climate change mitigation’, as these revenues

contribute to reducing energy consumption and

avoiding chemicals.

Approximately 90% of 2023 capex was

related to NX Filtration’s dNF products. This

dNF related Capex primarily relates to the

construction of a dedicated dNF membrane

spinning line and investments in pilot systems

for dNF products. NX Filtration’s 2023

operating expenses that are associated with its

dNF products represent approximately

54% of its total operating expenses (assumed

proportional to the share of dNF as part of

total revenues).

ESG regulations

Introduction

Regulation (EU) 2020/852 (Taxonomy), as

amended, on the establishment of a framework

to facilitate sustainable investment (the

EU Taxonomy Regulation) has introduced

a classification system for environmentally

sustainable economic activities. CSRD, and

therefore the EU Taxonomy, is mandatory for

NX Filtration as of 2026. This report is prepared

in light of the preparations towards compliance

with those regulations and is not intended to

comply with all the requirements at this point

in time. The numbers included in this report are

not audited by an independent auditor.

The EU Taxonomy Regulation sets out the four

conditions that an economic activity must

meet in order to qualify as environmentally

sustainable. A qualifying activity must: (i)

contribute substantially to one or more of the

six EU taxonomy environmental objectives,

(ii) not significantly harm any of the other

environmental objectives; (iii) be carried out in

compliance with minimum (social) safeguards

laid down in various principles, and (iv) comply

with technical screening criteria established by

the European Commission.

The environmental objectives that NX

Filtration seeks alignment to is climate change

mitigation, and the sustainable use and

protection of water and marine resources.

EU Taxonomy Objective 1 - climate change mitigation

Taxonomy requirement:

An economic activity shall qualify as contributing substantially to climate change mitigation

where that activity contributes substantially to the stabilization of greenhouse gas concentra-

tions in the atmosphere at a level consistent with the long-term temperature goal of the Paris

Agreement through the avoidance or reduction of greenhouse gas emissions or the increase of

greenhouse gas removals, including through process innovations or product innovations.

Technical screening and DNSH (do no significant harm) criteria available

NX Filtration’s activities:

The operation of water treatment systems based on NX Filtration’s dNF membranes require less

energy and therefore realise a significant CO

footprint reduction compared to water treatment

systems based on conventional technologies such as filtration with reverse osmosis (RO), adsorp-

tion (activated carbon) and oxidation. In research by the Energie en Grondstoffenfabriek, energy

consumption of various technologies for producing drinking water in the Netherlands have been

compared. In this research, it can be seen that the gross energy requirements for a system based

on direct nanofiltration are approximately 0.5 kWh/m

, as compared to approximately

1.7 kWh/m

for a combination of ultrafiltration and reverse osmosis.

In addition, NX Filtration’s dNF solution avoids or significantly reduces the use of chemicals in op-

erations, as it prevents the use of flocculants and coagulants in pre-treatment (which is required

for traditional filtration processes) and requires a very low cleaning frequency. From external

research by Stockholm university (Rahul Aggarwal, “Strategic Assesment of Drinking Water

Production Systems Environmental impacts from a Life Cycle perspective”, KTH Royal Institute

of Technology, school of architecture and the built environment, Stockholm, Sweden 2020), it can

be derived that each dNF module can avoid approximately 4 tons of chemicals during a five-year

lifetime, that would be required for conventional technologies such as the combination of ultrafil-

tration and reverse osmosis.

23NX Filtration - Annual Report22 Sustainability report

As part of NX Filtration’s assessment on

the DNSH-criteria, we can report that: (i)

we have assessed that our eligible activities

as such cannot be materially impacted by

physical climate risks, (ii) we are currently not

obliged to identify and address environmental

degradation risks in accordance with Directive

2000/60/EC (as implemented under Dutch

law), (iii) our eligible activities do not lead to

the manufacture, placing on the market or

use of certain substances that would possibly

harm the environment, whether on their own

or in mixtures, and (iv) our sites/operations

are not located in or near biodiversity-sensitive

areas (including the Natura 2000 network of

protected areas, UNESCO World Heritage sites

and Key Biodiversity Areas, as well as other

protected areas). Each of these conclusions

should be monitored over time and in 2024 and

onwards, NX Filtration will particularly focus on

alignment with the DNSH-criteria that requires

it to seek reuse of its secondary raw materials

and components in products manufactured and

requires recycling over disposal and the DNSH-

criterion to conduct an environmental impact

assessment (EIA), to the extent required.

EU Taxonomy Objective 3

NX Filtration’s potential contribution to

objective 3 of the EU Taxonomy Regulation

(the sustainable use and protection of water

and marine resources) can be found in various

(pilot) projects in which its dNF technology

enables companies to treat and reuse their

wastewater and, as such, reduce their water

consumption, for example through extracting

(and depleting) groundwater sources. An

example of such application is the use of dNF

technology for NX Filtration’s Recolab project

in Sweden. Recolab is the largest source-

separated sanitation plant in the world using

circular treatment. Key highlights of the project

are the energy-efficiency of the plant and the

circular processes that recycles wastewater to

drinking water quality.

This objective clearly aligns with the business purpose of NX Filtration. Based on the current techni-

cal screening criteria and according to our internal assessment, it however seems that we will not be

eligible to report alignment therewith. As part of our preparations for our public reporting obligations,

including discussions with external advisers, we will investigate this further in 2024 and onwards.

EU Taxonomy Objective 3 – the sustainable use and protection of water and marine resources

Taxonomy requirement:

An economic activity shall qualify as contributing substantially to the sustainable use and pro-

tection of water and marine resources where that activity either contributes substantially to

achieving the good status of bodies of water, including bodies of surface water and groundwater

or to preventing the deterioration of bodies of water that already have good status, or contrib-

utes substantially to achieving the good environmental status of marine waters or to preventing

the deterioration of marine waters that are already in good environmental status, by, inter alia:

(a) protecting the environment from the adverse effects of urban and industrial waste water dis-

charges, including from contaminants of emerging concern such as pharmaceuticals and micro-

plastics, for example by ensuring the adequate collection, treatment and discharge of urban and

industrial waste waters; (b) protecting human health from the adverse impact of any contami-

nation of water intended for human consumption by ensuring that it is free from any micro-or-

ganisms, parasites and substances that constitute a potential danger to human health as well as

increasing people’s access to clean drinking water; or (c) enabling any of these activities.

Technical screening and DNSH (do no significant harm) criteria available

NX Filtration’s activities:

NX Filtration’s membrane technology enables its customers to produce drinking water from

surface water by retaining, amongst others, bacteria, viruses, micropollutants (including phar-

maceuticals, medicines, PFAS and insecticides), nanoplastics and selective salts. In addition,

with NX Filtration’s products, customers can treat wastewater streams to prevent discharge of

polluting substances in the environment, and to reuse wastewater for purposes that also include

the production of drinking water.

With Dutch drinking water utility Vitens, we have performed tests on both synthetic feed waters

and on real waters containing a large range of PFAS compounds. Very high removal rates were

obtained for both our dNF40 and dNF80 products. KWR, an independent water research insti-

tute researched our dNF membranes with a full scale pilot installation under real live circum-

stances both on wastewater and surface water and found comparable, high removal rates for

e.g. PFOA, which is a perfluorinated carboxylic acid produced and used worldwide as an indus-

trial surfactant in chemical processes and as a material feedstock, and is a product of health

concern and one of many PFAS compounds).

25Sustainability report

NX Filtration’s integrated ESG

framework

NX Filtration has established an ESG

framework to embed ESG in its way of working.

This ESG framework consists of three layers.

The first layer constitutes the impact NX

Filtration is aiming to make with its technology

in addressing the global challenges around

water scarcity and water quality, contributing

to SDG 6 relating to clean water and

sanitation. NX Filtration seeks to be a leading

and global provider of breakthrough technology

for producing pure and affordable water to

improve quality of life.

Key KPIs in this respect mainly relate to SDG 6

(clean water and sanitation) and include i) the

amount of clean water production enabled by

NX Filtration membrane module sales and ii)

the number of countries in which NX Filtration

supplied its membrane modules.

The second layer constitutes the impact NX

Filtration is aiming to make on its customers’

operations and on its partners. The energy

efficient and chemicals free operation of NX

Filtration’s membranes requires less energy

compared to conventional technologies

(environmental impact) and NX Filtration’s

solution avoids the use of flocculants and

coagulants in pre-treatment (that is required

for traditional filtration processes) and requires

a low cleaning frequency (environmental and

social impact). NX Filtration has a strong

academic network; it partners and cooperates

with multiple universities and research

institutes around the world, including the

University of Twente, Saxion University of

Applied Sciences and the Universität Hamburg

(governance impact).

Key KPIs in this respect mainly relate to SDG

12 (responsible consumption and production)

and include i) GHG emissions scope 1 and 2 and

3 (upstream) and ii) avoided GHG emissions

during the use of NX Filtration’s membrane

modules.

The third layer constitutes NX Filtration’s own

organisation, in which it has implemented

various sustainability measures and is deploying

various initiatives around ESG related themes.

For example, NX Filtration’s coating process for

its dNF membranes is based on water-based

chemistry (green chemistry), in contrast to

conventional solvent-based coating processes

and NX Filtration has developed an energy

efficient membrane spinning process based on

a unique in-line polymer mixing concept.

NX Filtration is valuing a diverse workforce. For

example, its 166 FTEs at 31 December 2023

represented more than 15 nationalities.

Key KPIs in this respect mainly relate to SDG 8

(decent work and economic growth) including i)

growth in the number of employees and ii) lost

time injury rate, SDG 9 (Industry, innovation

and infrastructure) including i) the number of

patents filed and granted and ii) the number of

scientific publications authored or supervised

by NX employees and SDG 17 (partnerships

for the goals) including i) progress on the

implementation of the supplier code of conduct

and ii) NX Filtration’s network of research

partners.

On the following pages, various examples and

KPIs have been included on these three layers.

11186209

Pilots Demo plants Full-scale plants Of which repeat orders

of projects in 2023:#

Environmental Social Governance

US Sustainable Development Goal 6 - Pure and affordable water for all

Energy efficient operation

Green chemistry

Production energy savings

Safety

Training and development

Diversified employee base

Sustainable supply chain

Knowledge sharing

Avoiding chemicals in pre-treatment

Clean water

for all

Avoiding

emissions

at our

customers

Our internal

initiatives

Gross income (€ ‘000)

815

8,053

4,625

2,613

20232022

-4%

Other

income

Sustainable

Industrial Water

Clean Municipal

Water

808

8,354

4,977

2,569

Recurring

replacements

Repeat

orders

ReplacementsFull-scaleDemo plantsPilots

27NX Filtration - Annual Report26 Sustainability report

drinking water supply for persons

million

Clean water for all

Our impact in 2023*

Based on WHO assumptions of a need for at least 15 liter water

per person per day. Note that actual water consumption in

developed countries is much higher.

x 100,000

2023 membrane sales could

enable the production of:

254 billion liters

of clean water

Based on NX Filtration’s sales of approximately

2,451 membrane modules (dNF and UF),

multiplied by the expected capacity and

lifetime of such modules.

…which is equivalent to:

during

1 year

* Please note the statements and information provided in this section are unaudited.

In 2023

enabled clean water across 35 countries worldwide

Europe

2023 revenue of sale

of goods by region

Rest of the World

Europe

North America

Asia

12.2%

59.6%

26.1%

2.0%

29NX Filtration - Annual Report28 Sustainability report

Avoiding emissions

Our impact in 2023*Our impact in 2023*

* Please note the statements and information provided in this section are unaudited.

NX Filtration’s GHG

footprint in 2023

amounted to:

729

ton CO

versus:

4,188 ton

e savings

enabled during the deployment

of NX Filtration’s

membrane modules

avoidance of 7.8 million kg of chemicals

96 GWh energy savings

Downstream CO

e savings of

NX Filtration’s products

The downstream CO

e savings that NX

Filtration enables through offering its dNF

membrane modules as an alternative to

conventional water treatment technologies,

such as activated carbon or a combination of

ultrafiltration and reverse osmosis, add up to

approximately 3,578 kilo CO

e saved over the

typical lifetime of a module.

In this analysis, the chemicals and energy

footprint of NX Filtration’s technology has

been compared with a broad set of alternative

technologies based on sources including

Aggarwal (Rahul Aggarwal, “Strategic

Assesment of Drinking Water Production

Systems Environmental impacts from a

Life Cycle perspective”, KTH Royal Institute

of Technology, school of architecture and

the built environment, Stockholm, Sweden

2020) and The Water Factory (Energie en

Grondstoffenfabriek). CO

e savings of NX

Filtration’s other products have not been taken

into account in this analysis of downstream

savings, despite the fact that the production

and related activities (such as business travel)

of such products has been included in the GHG

footprint analysis of NX Filtration.

e emission and energy consumption

reduction programs at NX Filtration

Albeit emissions in upstream and business

related activities represent a relatively small

portion compared to downstream emissions,

NX Filtration is implementing various programs

to further reduce its energy consumption

and CO

e emissions per membrane module.

Programs focus on those areas where most

improvement can be made, most notable in

reducing waste in the production process. It is

expected that, after the start-up of the new

megafactory and the integration of our existing

operations into this facility, we will be able to

realize reductions of waste in production. Other

ongoing programs to reduce our CO

footprint

include the recovery of materials used in the

production process and further production

efficiencies. ESG is strongly embedded in the

design of our new megafactory, with more than

400 solar panels for electricity generation, a

unique peer-to-peer heat exchange contract

with a neighboring datacenter, an extensive

heat energy management and reuse system,

and an inhouse water treatment facility.

Methodology: GHG Protocol

The Greenhouse Gas Protocol (GHG Protocol)

defines three emission scopes.

• Scope 1 emissions refer to all direct

greenhouse gas emissions from sources

that are owned or controlled by the

organization itself.

•

Scope 2 emissions are all indirect greenhouse

gas emissions stemming from the

consumption of purchased electricity, steam,

or other sources generated upstream.

• Scope 3 emissions are all other indirect

greenhouse gas emissions resulting from

an entity’s operations. This includes both

upstream and downstream supply chains,

such as the extraction and production

of purchased materials and fuels, flight

emissions, waste disposal, investments, etc.

Please note the statements and information

provided in this section are unaudited.

Organizational boundaries

NX Filtration’s organisational boundary has

been determined according to the principles

laid down in the GHG protocol. NX Filtration

reports the emissions from its operations over

which it has financial or operational control.

Using this approach, this section includes

emissions from its subsidiaries, NX Filtration

B.V., NX Filtration International B.V., NX

Filtration Real Estate B.V. (each incorporated

in the Netherlands), NX Filtration (Beijing)

Membrane Technology Co. (incorporated under

Chinese law), Ltd., NX Filtration India Private

Limited (incorporated under Indian law), and

NX Filtration Americas, LLC (incorporated

under United States law) so the reported GHG-

data is on a fully consolidated basis.

Base year

NX Filtration has set the base year at 2020

as this is the first year that NX Filtration has

verifiable emission data available on essentially

all scopes.

GHG footprint of NX Filtration

The reported GHG footprint of NX Filtration

includes all emissions of Scope 1, Scope 2, and

business travel of Scope 3, in line with the GHG

protocol.

NX Filtration’s total emissions in 2023

amounted to 729 ton CO

e (CO

equivalent).

Scope 1 CO

e emissions amounted to 481 ton,

of which 7% related to lease cars and 93% to

natural gas combustion). The natural gas usage

(222,266 cubic Nm3) was CO

compensated

through NX Filtration’s energy supplier by

investments in Verified Emission Reduction

units. Scope 2 CO

e emissions amounted to

0 ton under the well to wheel approach. If we

include CO

e emissions due to the construction

and demolition of wind turbines (under an LCA

approach) we add approximately 0.014 grams

of CO

e per kWh meaning 27 ton CO

e emission

for electricity (based on 1,963 MWh). These

Scope 2 emissions were all off-set as 100%

of the purchased electricity (1,963 MWh) was

sourced from European wind projects. Reported

Scope 3 CO

e emissions related to business

travel (currently the only Scope 3 emissions

that are monitored) amounted to 222 ton CO

in 2023.

31NX Filtration - Annual Report30 Sustainability report

Our internal initiatives

Employees

growth in the number of employees

Our employee base grew from 135 FTE at the end of 2022 to 166 FTE at the end of 2023, representing

more than 15 nationalities. In addition to the Netherlands, NX Filtration has sales representation in

Belgium, China, Egypt, France, Germany, India, Indonesia, Japan, Singapore, Spain, UAE, United States

and Vietnam, and works with commercial and technical partners in various other parts of the world.

NX Filtration is placing strong emphasis on training and development with a focus on innovation, not only

for NX Filtration’s employees, but also for customers, partners and graduates. We are facilitating

internships, joint research programs and partnerships with universities and research institutes.

Our impact in 2023*

* Please note the statements and information provided in this section are unaudited.

23%

Safety

lost time injuries and

fatalities in 2023

NX Filtration harnesses a culture of safety, where

health and safety risks are minimized with a

methodology based on the safety awareness

model. The management of NX Filtration is highly

committed to improving health and safety

conditions. This commitment is shown, amongst

others, by a clear communication to all employ-

ees. Upon joining NX Filtration, each employee

receives an introduction safety training and each

department meeting starts with a health and

safety topic. A proactive hazard reporting system

has been introduced, wherein every employee is

motivated to report hazards, to secure a safe

workplace for all by improving and securing

processes by learning from hazards/near misses

and preventing it will not happen in future. Our

QSHE manager is responsible for managing and

improving our health and safety agenda.

NX Filtration had 0 lost time injuries and 0

fatalities in 2020, 2021, 2022 and 2023. NX

Filtration has a safety policy, conducted safety

trainings and is pro-actively sharing alerts and

performance.

NX Filtration actively engages with its suppliers

about its Supplier Code of Conduct.

Compliance therewith is included in legally

binding agreements with our material suppliers

and contractors for our new megafactory. We

also conducted and continue to conduct various

audits with existing and new suppliers. At NX

Filtration, we are very much committed to

strengthen the value chain by actively engaging

with our suppliers, not only from a pure

business perspective but also to pursue certain

standards and values. We value a reliable and

sustainable business relationship, a better

environment, a safe workplace, high quality

standards and the highest integrity. The

principles we value most and are regarded as a

minimum standard for us to cooperate based

upon, are laid down in our Supplier Code of

Conduct, which we apply to all of our suppliers.

The spirit thereof is professional, reliable,

down-to-earth and accountable.

Suppliers

adherence to NX Filtration’s

Supplier Code of Conduct

by all material suppliers and

contractors for our new

megafactory

100%

Our patent portfolio included 9 patent

families (of which 1 newly added in 2023) with

in total 50 patents granted (of which 14

added in 2023). In addition, we are working on

various programs to further improve the

sustainability of our production process, that

is already working according to a ‘green

chemistry’ process. Each of the initiatives on

NX Filtration’s research & development

roadmap is monitored against its

contribution to our sustainability objectives.

Research &

development

patents as per

31 December 2023

In total, our people authored in approximately

47 peer reviewed scientific publications since

2016. In 2023, our people authored in 11 peer

reviewed scientific publications, amongst

others, in the Journal of Membrane Science

and in Separation and Purification

Technology.

Throughout 2023 a total of 13 students and

trainees were part of the NX Filtration’s

team, e.g., as an intern for their BSc or MSc

thesis. More than 20 lectures were given by

NX Filtration’s team at various conferences

and shows, amongst which at the 13th

International Congress on Membranes and

Membrane Processes (ICOM 2023, Japan),

the 15th Aachener Tagung Wassertechnologie

(15. ATW, Germany), and at the Desalytics

Water Week (UAE). In 2023, we also started

to host interactive workshops on our dNF

technology to further engage stakeholders,

such as end-users and technology providers.

Knowledge

sharing

scientific publications

authored by

NX Filtration employees

Academic

network

partnerships with

universities and research

institutes around the world

33NX Filtration - Annual Report32 Sustainability report

Looking ahead

Looking into the future, NX Filtration

foresees robust growth in its business. While

expanding, the company remains steadfast in

its commitment to Environmental, Social, and

Governance (ESG) principles. NX Filtration

places importance on maintaining high ESG

standards, recognizing our significance for

long-term success, customer satisfaction,

environmental well-being, and societal benefits.

The ongoing substantial growth of NX Filtration

opens up numerous opportunities to integrate

ESG considerations with the right standards

right from the outset. The construction of our

new megafactory at the High Tech Systems

Park in Hengelo, the Netherlands, represents a

significant chance to implement measures for

advancing ESG initiatives.

In 2024, NX Filtration aims to persist in its

business expansion, concurrently increasing

the impact through the sale of membrane

products. This commitment contributes to

global access to clean and safe water while

simultaneously reducing energy and chemical

usage in water treatment processes. As our

business scales up, the goal is to further

decrease energy consumption and implement

measures to minimize greenhouse gas (GHG)

emissions. This involves initiatives such as

procuring green electricity, continuing the

transition to electric vehicles, and electrifying

operations. Other crucial factors in achieving

this objective encompass enhancing efficiency

in new production lines, adopting more energy-

efficient production methods, and moving

towards low-carbon distribution and logistics

through active engagement with suppliers.

Furthermore, 2024 will be a year in which

NX Filtration will diligently prepare for

reporting in accordance with the CSRD and

the EU Taxonomy, to be expected at the

earliest in 2026. This will align NX Filtration’s

processes to meet new sustainability reporting

requirements. We are engaging external advice

to guide us on first preparatory steps, for

example on our double materiality assessment.

35NX Filtration - Annual Report34 Sustainability report

January

NX Filtration receives follow-on order from

Ekopak for water treatment project in

Belgium

Ekopak, an ESG-driven company specializing

in decentralized circular water solutions such

as Water-as-a-Service (WaaS), selected NX

Filtration to supply its dNF membrane mod-

ules for the extension of a

rainwater recovery

project in Belgium.

The project aims

to reduce de-

pendency on

groundwater

and uses

rainwa-

ter, that is

gathered in

a local pond,

as a source

for high quality

water production

for industrial use.

February

NX Filtration receives follow-on orders

for large scale drinking water projects in

Indonesia

NX Filtration was selected by PT. Bayu Surya

Bakti Konstruksi, an Indonesian specialist in

constructing water and wastewater treatment

plants, to supply its dNF membrane modules

for various new proj-

ects. These orders

follow previous

projects in Indo-

nesia related to

drinking water

supply for the

city of Dumai in

Sumatra, Mer-

anti Island, and

Indonesia’s biggest

state owned hospital in

Jakarta. The new orders

relate to various treatment

plants that PT. Bayu is currently

developing in Indonesia.

March

NX Filtration receives order from Green-

Tech for full-scale advanced water treat-

ment applications in China

NX Filtration was selected by GreenTech En-

vironmental, a leading publicly listed company

in advanced water treatment and wastewater

recycling in China, to supply its dNF membrane

modules for large-scale water supply projects

in China. The commercial agreement followed

a pilot program of approximately one year,

in which NX Filtration’s dNF technology was

tested on the removal of emerging micropol-

lutants from surface waters in China. The new

full-scale project developments will use dNF

membrane modules to produce drinking water

from micro-polluted surface water and quality

reclaimed water from alternative water sourc-

es, which are increasingly important sources for

water production across China.

May

NX Filtration strengthens executive team

with Jeroen Pynenburg as CEO for the next

stages of growth

NX Filtration proudly announced the appoint-

ment of Jeroen Pynenburg as Chief Executive

Officer (CEO). Michiel Staatsen, who previously

held both the positions of CEO and Chief Oper-

ations Officer (COO), continued to focus on his

role in the Management Board as COO. Jeroen

Pynenburg has an extensive track-record of

managing strong growth at ESG companies.

Over the past four years, Jeroen held the posi-

tion of Business Unit Director Electric Vehicle

Charging Equipment at Alfen and prior to that,

Jeroen was Global lead Electric Vehicle Infra-

structure Service and Applications at ABB.

May

NX Filtration receives two distinction

awards at the Global Water Summit 2023

NX Filtration received two important distinc-

tion awards from Global Water Intelligence at

the annual Global Water Summit, the major

business conference for the water industry

worldwide, with this year’s theme Creating

a Climate for Growth. NX Filtration received

distinctions in the category Water Technology

Company of the Year and Water Project of the

Year. The latter was awarded to the Dumai City

Wastewater Treatment Plant on the island of

Sumatra in Indonesia. This plant, commissioned

by local utility PDAM Dumai

and contracted PT

Bayu Surya Kon-

struksi, uses

NX Filtra-

tion’s dNF

mem-

brane

modules

to treat

water for

potable

purposes

from the

local Masjid

River.

June

NX Filtration receives award from Frost

& Sullivan for the customer value of its

membrane technology

NX Filtration received a customer value

award from Frost & Sullivan for its dNF

membrane technology. The award recognizes

NX Filtration’s exceptional performance in

the global industrial water and wastewater

treatment membrane market. Frost &

Sullivan’s customer value leadership award

recognizes the company that offers products or

solutions that uniquely addresses key customer

challenges. Frost & Sullivan applies a rigorous

analytical process to evaluate nominees, in

2023 month by month

37NX Filtration - Annual Report36 2023 month by month

September

NX Filtration wins the 2023 Impact Scaler

Award for outstanding growth and social

impact

NX Filtration is thrilled to announce that it has

been honored with the prestigious 2023 Impact

Scaler Award. The Impact Scaler Award is a

special recognition reserved for the top-per-

forming high-growth firms within the Top

250 Growth Companies that not only experi-

ence rapid expansion but also have a deeply

ingrained commitment to making a positive

social impact.

September

NX Filtration supplies beer filtration

membranes to Carlsberg Fredericia in

Denmark

NX Filtration supplied its membranes to

Carlsberg’s Fredericia brewery in Denmark,

one of the largest breweries in Europe, that

has a strong focus on process optimization and

sustainability. NX Filtration’s microfiltration

membranes are being used to further improve

performance and sustainability of Carlsberg’s

flagship brewery. Microfiltration of-

fers a superior alternative

for traditional filtration

methods because of

its higher and more

constant quality,

lower energy use,

the possibility

of continuous

operation and

the avoidance

of environmen-

tal impact.

October

Envirogen deploys water treatment tech-

nology at UK rail project

NX Filtration proudly supplied Envirogen Group

with its ultrafiltration membrane modules for

the wastewater treatment of Align JV that is

delivering UK’s new high speed rail network.

Together, we’ve crafted a cost-effective solution

for wastewater treatment that reflects Enviro

gen’s dedication to innovation and environment.

November

IWE paper industry starts demo plant for

sustainable water re-use

Industriewater Eerbeek

(IWE), a subsidiary of

three Dutch paper

mills focusing on

wastewater

treatment,

has started

a demon-

stration

plant for the

re-use of its

wastewater

based on dNF

technology from

NX Filtration. The

NX Filtration techno-

logy is an integral part of a

zero liquid discharge pilot test, organized and

operated by Nijhuis Saur Industries (NSI), Pure

Water Group and REDstack.

which Frost & Sullivan’s global team of analysts

researched markets and companies on criteria

related to business impact and customer

impact.

June

Aqualia and NX Filtration enter next phase

in using direct nanofiltration technology

Aqualia, a water cycle management company in

18 countries, and NX Filtration further extend

ed their relationship. Over the past two years

Aqualia validated NX Filtration’s dNF technol

ogy through a series of pilot tests on various ap-

plications, including drinking water production

and wastewater reuse.

This led to an agree

ment between

the two com

panies that

forms the

basis for

the use

of NX Fil

tration’s

dNF tech

nology in

various fu

ture projects

across Aqual

ia’s territories.

August

Product Star Award for NX Filtration at

the 2023 Qingdao International Water

Conference

NX Filtration’s hollow fiber nanofiltration

membrane technology has been awarded the

prestigious “Product Star” accolade organized

by the China Desalination Association at the

2023 (18th) Qingdao International Water

Conference & Water Exhibition and the 2023

(6th) Water Industry China Starlight Award

evaluation ceremony in Qingdao in China. This

achievement marks the high appreciation for

NX Filtration’s breakthrough membrane tech-

nology by the Chinese water industry.

September

Jacobs Engineering, Harn RO, and NX

Filtration publish on the advantages of

sustainable surface water treatment with

hollow fiber nanofiltration membranes in

the US

In Melbourne, Florida, Jacobs Engineering, Harn

RO, and NX Filtration teamed up to prove the

performance, sustainability and economical

benefits of direct nanofiltration technology

through extensive testing with a full-scale

demo unit against traditional technologies. The

Melbourne Water Treatment Plant

draws surface water from

Lake Washington,

which experienc-

es high organic

content during

summer

and turbid-

ity spikes

caused by

rainfall and

lake turnover

events in win-

ter. The perfect

place for this

demonstration.

2327

39NX Filtration - Annual Report38 2023 month by month

December

First peer-to-peer heat exchange in the

Netherlands for NX Filtration’s new mega-

factory

NX Filtration entered into an agreement with

Previder (part of Odin Group), an IT solutions

provider, to source residual heat from Previder’s

adjacent datacenter for its new megafactory.

This is the first peer-to-peer heat exchange

between a datacenter and an external user

in the Netherlands, that significantly reduces

emissions of both parties. This unique heat

exchange agreement with Previder

adds to a broader set of

sustainability initiatives

that we are imple-

menting at our

new factory and

enables us to

avoid the us-

age of fossil

fuels in our

production

processes.

November

Nijhuis Saur Industries and NX Filtration

partner to address water scarcity and re-

duce water footprint

In a significant stride towards minimizing the

water footprint of its clients, Nijhuis Saur

Industries announced a partnership with NX Fil-

tration. This collaboration enables the market

to benefit from NX Filtration’s nanofiltration

technology, that effectively remove a wide

range of contaminations from water in a sus-

tainable process, through Nijhuis Saur Indus-

tries’ extensive fleet of mobile water treatment

systems. This is a testa-

ment to the shared

commitment of

both organi-

zations to

address

the chal-

lenges

of water

scarci-

ty and

improve

water quali-

ty to close the

water loop.

November

Launch of new Integrated Rack Design and

Projection Tool at Aquatech Amsterdam

2023

At Aquatech Amsterdam, NX Filtration

launched its Integrated Rack Design, a modular

rack setup for dNF membranes that is cost-ef-

fective, flexible, scalable, and has a small

footprint. We also introduced a new Projection

Tool, an intuitive online platform designed for

rapid and iterative system analysis, specifical-

ly tailored for our dNF membrane modules. It

provides a reliable estimation of key component

rejection, enhancing the appreciation for our

breakthrough membrane technology.

November

KHS Group launches new

beer filtration concept

based on NX Filtration

membrane technology

KHS Group, one of the

world’s leading manu-

facturers of filling and

packaging systems for

the beverage and liquid

food industries, launched a

new beer membrane filtration

concept, Innopro EcoClear, at the

BrauBeviale 2023. The new system

is based on membrane modules from NX

Filtration, offering significant advantages in

terms of superior quality, operational uptime

and sustainability.

December

REGAIN consortium partners with NX

Filtration to demonstrate municipal waste-

water reuse

The REGAIN research project, a Dutch con-

sortium of a water board, an industrial water

company, and two research institutes, has

selected NX Filtration’s hollow fiber nanofil-

tration membrane technology to be one of the

three technologies to be tested on its effective-

ness and efficiency in removing pharmaceutical

residues from wastewater. The objective of this

test is to avoid the discharge of such residues

into the Unesco nature reserve Waddenzee and

to enable the production of industrial grade

water by re-using treated wastewater.

198

41NX Filtration - Annual Report40 2023 month by month

Financial Performance

NX Filtration is a provider of direct nanofiltration (dNF)

membrane technology for producing pure and affordable

water to improve quality of life. Its direct nanofiltration

technology removes micropollutants (including pharma-

ceuticals, medicines, PFAS and insecticides), colour and

selective salts, but also bacteria, viruses and nanoplas-

tics, from water whilst offering strong sustainability

benefits. NX Filtration sells its filtration membranes in

the form of modules in its two business lines: Clean

Municipal Water and Sustainable Industrial Water. As

there is a strong interrelationship between NX Filtration’s

different business activities, management reviews the

profitability of the Company on an aggregate level.

All financial information can be found in the consolidated

financial statements.

Gross income

Gross income decreased by 4% from €8,354

thousand in 2022 to €8,053 thousand in 2023.

Revenues from the sale of goods decreased

by 4% from €7,546 thousand in 2022 to

€ 7,238 thousand in 2023. Other income slightly

increased from €808 thousand in 2022 to €815

thousand in 2023. A reduction in government

grants for innovation projects was offset by

rental income from pilots growing from €400

thousand in 2022 to €641 thousand in 2023.

NX Filtration is experiencing an approximately

1.5 years delay in the roll-out of its original

business plan. This delay in revenue growth is

caused by longer lead times to convert pilot

projects into orders for large full-scale projects.

This is driven by both pilot trajectories taking

longer than anticipated, as well as longer lead

times towards larger projects after the pilot

phase, amongst others caused by permitting

lead times, decision making and engineering.

These delays were further impacted by the

current financing environment that negatively

impacts our end-customers’ capex plans, as

well as the ability and willingness of OEMs to

build-up or maintain stock of our modules in

anticipation of upcoming projects.

11186209

Pilots Demo plants Full-scale plants Of which repeat orders

of projects in 2023:#

Environmental Social Governance

US Sustainable Development Goal 6 - Pure and affordable water for all

Energy efficient operation

Green chemistry

Production energy savings

Safety

Training and development

Diversified employee base

Sustainable supply chain

Knowledge sharing

Avoiding chemicals in pre-treatment

Clean water

for all

Avoiding

emissions

at our

customers

Our internal

initiatives

Gross income (€ ‘000)

815

8,053

4,625

2,613

20232022

-4%

Other

income

Sustainable

Industrial Water

Clean Municipal

Water

808

8,354

4,977

2,569

Recurring

replacements

Repeat

orders

ReplacementsFull-scaleDemo plantsPilots

43NX Filtration - Annual Report42 Financial Performance

Although the top line development was below

expectations we have made major steps

forward with large global OEMs that further

intensified their pilot programs, entered into

cooperation agreements with us, and started

offering our products in full-scale projects. Our

strong technology performance is underscored

by a continuation of repeat order from existing

partners across the globe.

In our Clean Municipal Water business line,

revenues were €2,613 thousand in 2023,

compared to €2,569 thousand in 2022. This

business line benefitted from various drinking

water projects in Asia. In Europe major

steps forward were made with several key

OEMs (e.g. Veolia, Aqualia, Suez and Nijhuis

Saur). We received follow-on orders from,

amongst others, Belgian Water-as-a-Service

company Ekopak and UK-based industrial

water treatment provider Envirogen. In Asia,

we experience an increasing size of full-scale

projects with large orders from e.g. Greentech

in China and Hydroflux in Australia, who also

entered into cooperation agreements with NX

Filtration that form the basis for further roll-

out of our technology. In the Americas, our sales

team continued to plant the seeds with a focus

on industrial and smaller municipal projects

across North America, and various larger

drinking water projects across Latin America.

In our Sustainable Industrial Water business

line, revenues were €4,625 thousand in 2023,

compared to €4,977 thousand in 2022. The

focus in this business line remains on industries

looking to reduce their water footprint and

optimize their water systems in a sustainable

way. In the food & beverage market we realized

a large replacement order for Carlsberg’s

flagship Fredericia brewery in Denmark, and

have our technology included in KHS Group’s

new beer filtration concept that it is bringing to

the market in 2024.

Gross margin, EBITDA and Net

result

Gross margin increased from 57.3% in 2022 to

59.6% in 2023 and is underpinning our strong

technology position. The gross margin was

positively impacted by our continues focus

to improve our productivity, our successful

multiple sourcing strategy and positive product

mix effects.

EBITDA loss was €11,936 thousand in 2023

compared to a loss of €8,549 thousand in

2022. The EBITDA loss is mainly driven by

investing in the organization ahead-of-the-

curve to facilitate future business. For 2024,

we are taking cost control measures without

impacting our medium and long-term. The

loss before tax was € 14,347 thousand in 2023

compared to a loss before tax of €11,895

thousand in 2022. The net loss (after tax)

was € 23,292 thousand in 2023 compared

to a net loss of € 8,642 thousand in 2022,

mainly impacted by a derecognition of € 8,945

thousand of accumulated deferred tax losses

of previous years and not recognizing any

deferred tax benefits for the current year. In

line with IFRS regulations and interpretations,

management evaluated positive and negative

evidence supporting the valuation of deferred

tax assets for tax losses. The one and half year

delay in the business plan, that the Company is

currently anticipating, changed the balance in

this assessment resulting in the derecognition

of the deferred tax assets. Management

emphasis that this assessment is not a change

in its medium and long term targets. This

derecognition has no cash implications and the

tax losses remain available for the Company at

the moment it starts to generate profits.

Cash flows and investments

The net cash position at 31 December 2023

amounted to €49.9 million, compared to a net

cash position of €104.3 million at 31 December

2022. We expect our current cash position to be

sufficient to fully finance the construction of our

new mega factory, and our operations in 2024.

To support our growth strategy for the longer-

term, we are exploring a range of possibilities

to increase our financial flexibility, including

asset-based financing, for more information

we refer to our Going Concern assessment

which is included in the Consolidated financial

statements section (note 1).

Operating cash flow is €11,744 thousand

negative, compared to €15,702 thousand

negative in 2022. Working capital

increased to

€9,046 thousand at 31 December 2023 versus

€8,626 thousand at 31 December 2022, as a

result of higher account receivables as well as

increased inventory levels to meet the growing

demand in 2024 and facilitate a smooth

production ramp-up of our new megafactory.

This increase is partly mitigated by high trade

payables related to our capex expenditure.

Capital expenditures amounted to €43,940

thousand in 2023 as compared to €12,670

thousand in 2022. The capex mostly relates

to the ongoing construction of our new mega

factory. We are fully on track with our new

megafactory. We have gained early access to

the building in December 2023 to frontload the

installation of equipment ahead of schedule,

and completion and start of commissioning is

planned for the end of Q1 2024. Additionally,

NX Filtration capitalized €731 thousand of

development costs which demonstrates the

company’s continued efforts to invest in

innovations for the future.

Total FTE increased from 135 at 31 December

2022 to 166 at 31 December 2023, further

shaping our global organization to position us

well for the growth ahead of us. Key additions

were mainly made in our application team and

production department. The Company does not

pay any dividend for the year.

Working capital defined as inventories plus trade and other receivables minus trade and other payables

45NX Filtration - Annual Report44 Financial Performance

Below is a summary of our risks, our risk appetite, likelihood and potential impact. For a detailed

description of these risks and how we believe we mitigate these risks we refer to the disclosure set out

after the below table. Additional risks not known to us, or currently believed not to be material, could

later turn out to have a material impact on our business, revenue, assets, liquidity, capital resources or

net income.

Risk category Risk description

Risk appetite Likelihood Potential impact

General

Business

We will likely need additional financing

in the near future, and such financing

may not be available on favourable

terms, or at all.

Low Medium High

Strategic and

Commercial

We are dependent upon acceptance

of our technology by customers and

future partners. A lack thereof will

likely impact our ability to achieve and

maintain market acceptance.

High Medium High

Unsuccessful pilot projects or

inconsistent performance of our

products could harm the customer

support for our products.

Medium Medium High

The demand for NX Filtration’s

products depends on the continuation

of market trends towards greater

sustainability, including trends to

lowering the corporate water footprint

and decarbonisation. Such trends

could change due to a number of

factors outside our control, following

which the demand for our products

could be reduced.

High Low Medium

Increased competition in the water

treatment solution market may

materially adversely affect our ability

to gain market share.

High Medium Medium

Our business and strategy depends,

in part, on significant customers and

our relationship with OEMs. If such

relationships fail to develop this could

have a materially adverse effect on our

business.

High Medium High

We do business with municipal clients

and, as a result, we face risks of delays

related to the procurement process,

budget decisions driven by statutory

and regulatory determinations

and compliance with government

contracting requirements.

High Medium Medium

Risks and

Uncertainties

47NX Filtration - Annual Report46 Risks and Uncertainties

Risk category Risk description

Risk appetite Likelihood Potential impact

Operational

If our new manufacturing facility were

to become inoperable, we would be

unable to produce sufficient products

and our business would be harmed.

Low Low High

We are dependent on third-party

suppliers to deliver raw materials

and components for our products.

Supply interruptions could lead to

interruptions of our own production,

increased costs, order cancellations

and loss of market share.

Low Medium High

Significant increases in the cost of raw

materials, components and finished

goods may materially adversely affect

our business.

Medium Medium Low

We depend on the ability to hire and

retain management, key employees

and other qualified and skilled

employees and we may not be able to

attract and retain such personnel.

Medium Medium Medium

Disruptions of our information

technology systems could have

a material adverse effect on our

business.

Low Medium High

Any difficulties we encounter

while we expand or transition our

manufacturing operations in-house,

now or in the future, could materially

and adversely affect our ability to

manufacture and deliver our products.

Low Low High

Our current operations are

international in scope, and we plan

further geographic expansion, creating

a variety of operational challenges.

High Medium Low

Risk category Risk description

Risk appetite Likelihood Potential impact

Technology

Our failure to protect intellectual

property rights may undermine our

competitive position, and litigation to

protect our intellectual property rights

may be costly, time consuming and

distracting from daily operations.

Low Low Medium

We may be unsuccessful in adequately

protecting our technological know-how

that is not covered by intellectual

property registration.

Low Low Medium

New products or technological

improvements by competitors,

including by larger players in the

industry investing in research and

development for product substitution

of our dNF products, or improvements

to our dNF technology could materially

adversely affect our business and our

ability to gain market share.

Medium Low Medium

Compliance

We are exposed to risks associated

with product liability, warranties, recall

claims or other lawsuits or claims that

may be brought against us.

Low Low Medium

We are subject to various laws and

regulations in multiple jurisdictions in

which we operate, and unfavorable

changes or failure by us to comply

with these regulations could have

a material adverse effect on our

business.

Low Medium Medium

We may be exposed to the risk of fraud

and other dishonest activities, which

could have a material adverse effect

on our business, financial condition or

results of operations.

Low Medium Medium

49NX Filtration - Annual Report48 Risks and Uncertainties

For information about NX Filtration’s credit

risk, liquidity and market risks as well as the

capital management structure, please refer

to the information outlined in Note 3 and 4

of the Consolidated Financial Statements.

Furthermore, risks related to external

reporting are considered limited due to the

limited number of estimates in the financial

statements, and because NX Filtration was

not faced with any indication for impairment in

financial year 2023.

For each risk factor, we set out how we

believe we mitigate these risks. However, we

may not be successful in deploying some or

all of these mitigating actions effectively. If

circumstances occur or are not sufficiently

mitigated, our business, financial condition,

results of operations and prospects could be

material adversely affected. In addition, risks

and uncertainties could cause actual results to

vary from those described, which may include

forward-looking statements, or could impact our

ability to meet our objectives or be detrimental

to our financial condition or reputation.

General Business, Strategic

and Commercial Risks and

Uncertainties

NX Filtration will likely need additional

financing in the near future, and such

financing may not be available on favorable

terms, or at all.

Given the slower than anticipated sales

growth, the Company will likely need additional

financing in the future for general corporate

purposes, and to implement its growth strategy

for the longer-term. We are exploring a range of

possibilities to increase our financial flexibility,

including debt-based strategies considering

that we have already invested approximately

€57.9 million in property, plant & equipment by

December 2023. However, we may be unable to

obtain desired additional financing on favorable

terms or at all, including accessing the capital

markets when it may be necessary or beneficial

to do so, which could negatively impact our

flexibility to react to changing economic and

business conditions. For example, during periods

when credit markets are volatile, lenders may

fail or refuse to provide capital. If adequate

funds are not available on acceptable terms, we

may be unable to fund growth opportunities,

successfully develop or enhance products, or

respond to competitive pressures, any of which

could negatively affect our business, financial

condition and results of operation.

We are fully cognizant of the risks associated

with our current reliance on cash reserves and

we are committed to implementing proactive

measures to address these concerns. To

mitigate the identified risks, we have outlined

the following strategic initiatives: (i) we are

actively engaged in exploring diverse funding

sources, (ii) recognizing the importance of

sustainable growth, we are developing a

comprehensive revenue generation strategy

aimed at diversifying income streams, and (iii)

we are implementing robust cost management

measures to optimize operational efficiency

and ensure prudent use of available resources.

We are dependent upon acceptance of our

new technology by customers and future

partners. A lack thereof will likely impact

our ability to achieve and maintain market

acceptance.

NX Filtration’s ability to succeed is mainly

dependent upon achieving and maintaining

the acceptance by customers and future

partners of its innovative inside-out hollow

fiber dNF membranes that are based on

patented technology and production methods.

Historically, governments, municipal and

industrial companies have fully relied on water

filtration activities using conventional water

treatment technology. In order for NX Filtration

to achieve its business objectives, it must

convince these governments and companies

that its technology and capabilities justify

the switch to its products. If NX Filtration,

together with its (OEM) partners, cannot

convince governments and companies of the

effectiveness of its dNF membranes or if NX

Filtration is unable to obtain the necessary

approvals, it is unlikely to keep existing

customers or attract additional customers

and future partners on acceptable terms or to

develop a sustainable, profitable business.

The market for dNF is still at a relatively early

stage of operation and customers may not

recognise the need for, or the benefits of,

the dNF products. Therefore, the extent to

which the dNF products will be able to meet

its customers’ requirements and achieve

significant market acceptance is uncertain.

By contrast, the markets for UF, traditional

nanofiltration and reverse osmosis treatment

technologies are large and well established,

which may make the commercialisation of new

water treatment technologies longer than

foreseen and ultimately unsuccessful, including

dNF membrane technology or other future

technology developments.

The use of a new type of water filtration

depends on compatibility with existing

infrastructures, installations and equipment,

as well as the manner in which such technique

may be used by a manufacturer. Manufacturers

may elect not to use, distribute or install NX

Filtration’s products due to regulatory and

political considerations, including but not

limited to tax exemptions, subsidies, trade

barriers, handling and safety requirements,

and for a variety of other reasons, including

(i) product and process safety considerations;

(ii) advantages of alternative water filtration

methods; (iii) lack of cost-effectiveness; (iv)

timing of market introduction of competitive

products; (v) process economics in realising

economies of scale; (vi) incompatibility with

required product specifications; (vii) lack of

fit with existing infrastructure; and (viii) the

fact that NX Filtration is in an early stage of

operation and potential uncertainty around its

future development and ability to deliver its

products in the future.

If NX Filtration fails to achieve a broad

market acceptance for its products to replace

or compete with current UF, traditional

nanofiltration and reverse osmosis treatment

technologies or if NX Filtration is not able to

successfully commercialise the membrane

technology that it develops, NX Filtration may

not be able to generate significant revenue,

which could have a material adverse effect

on its business, financial condition, results of

operations and prospects.

To mitigate this risk, NX Filtration is actively

developing, piloting and investing in its

technology. NX Filtration benefits from a

unique team of leading membrane technology

experts with technical, operational and

commercial experience with an extensive

background in membrane technology and the

water sector. Based on the concept of its pilot-

based roll-out model, NX Filtration invests in

significantly expanding the number and size

of its pilot systems to accelerate acceptance

of its technology. Furthermore, it is expected

that this risk is reducing over time, as the

market for dNF is expected to gradually mature

and NX Filtration’s customers are gaining

more experience with dNF products, including

business case development, internal approval

procedures and project management.

Unsuccessful pilot projects or inconsistent

performance of our products could harm

the customer support for our products.

Currently, in relation to its new dNF technology,

the vast majority of NX Filtration’s projects are

at a pilot system phase during which customers

test the dNF technology before making a

decision whether to proceed with a demo or

full-scale installation investment. Some or all

of such pilot systems may not ultimately lead

51NX Filtration - Annual Report50 Risks and Uncertainties

to full-scale installations, including for reasons

beyond NX Filtration’s control, such as where

third parties would not adequately integrate

the products into a pilot, demo or full-scale

system. Its products may not be functional,

may be faulty or may not meet customers’

expectations. This may lead to requirements

for NX Filtration to repair or improve its

products after sale and/or installation, which

may diminish operating margins or lead to

actual losses. In respect of water filtration

systems that are built together with OEMs,

NX Filtration may be made responsible if

such systems are faulty or not functional.

Furthermore, there could be unwillingness by

OEMs to roll-out NX Filtration’s technology

across their customer base if its products do

not display the promised performance. Any of

the above events could materially adversely

affect NX Filtration’s business, financial

condition, results of operations and prospects.

To mitigate this risk, NX Filtration generally

offers on-site commissioning, technical support

and training by its engineers. NX Filtration

seeks to maintain a constructive dialogue with

the customer that is testing NX Filtration’s

technology through a pilot system. NX

Filtration believes the vast majority of ongoing

pilots have a clear visibility towards follow-on

demo or full-scale projects and, the amount of

customers that have not been retained after

using NX Filtration’s technology by way of a

pilot system is considered to be limited.

The demand for NX Filtration’s products

depends on the continuation of market

trends towards greater sustainability,

including trends to lowering the corporate

water footprint and decarbonisation. Such

trends could change due to a number of

factors outside our control, following which

the demand for our products could be

reduced.

The present and projected demand for NX

Filtration’s products is driven by the need to

address global and structural water scarcity

and water quality issues. Such issues include,

but are not limited to, people not having daily

access to clean, drinkable water, the fact that

approximately 80% of global wastewater flows

back in nature without being treated, the fact

that approximately 95% of medicine waste

reaches nature through sewerage systems,

limited reuse of treated wastewater globally,

and micro-plastics ending up in any water

environment and eventually the food- and

waterchain. Additionally, pollution is a major

concern in many emerging countries due to

the lack of adequate wastewater treatment

facilities where wastewater is discharged

untreated, directly into the sea or rivers. The

key drivers of demand for NX Filtration’s

products include climate change/droughts,

regulations, universal access to clean water,

corporate responsibility, discharge surcharges,

and health awareness.

Furthermore, water plays an integral part

in the production process of companies in a

wide variety of sectors, such as within the

agricultural, food and beverage, textile, power

generation, mining, high tech, datacenter, semi-

conductor, and pulp and paper sectors. Such

sectors heavily depend on water that is used as

an ingredient or for operational purposes such

as for cleaning, heating, cooling and transport.

Many companies are reliant on water supply

and exposed to the risk of water scarcity

through their supply chains, since they rely on

(hydropower) energy and input from water-

dependent agricultural and industrial sectors.

Companies are becoming increasingly aware

of the severity of water scarcity issues and its

eventual impact on their businesses and seek

to strategically address these by setting goals

to reduce their corporate water footprint (i.e.

the total volume of water that is used directly

or indirectly to run and support a business).

Increasingly, customers are demanding the use

of products and technologies that contribute to

decarbonisation and governments globally and

locally are enacting pro-climate environmental

standards and regulations.

These current and expected trends could

change due to a number of factors which are

outside of the NX Filtration’s control, including

the modification or elimination of economic

incentives encouraging decarbonisation, the use

of alternative forms of water treatment and

the public perception moving away from the

idea that CO

emissions negatively impact the

environment. If any of these or other changes

were to occur, demand for NX Filtration’s

products could be reduced significantly, which

could, in turn, have a material adverse effect

on its business, financial condition, results of

operations and prospects.

To mitigate this risk, NX Filtration continuously

monitors trends and initiates R&D efforts

accordingly. To verify its R&D and product

development projects, NX Filtration actively

engages with its customers, academic partners

and stakeholders that are active in the global

water market to anticipate trends and market

developments and to provide it with a deep

understanding of the (future) needs of NX

Filtration’s customers.

Increased competition in the water treatment

solution market may materially adversely

affect our ability to gain market share.

The water treatment solution market is

highly competitive, and NX Filtration faces

significant competition from large international

competitors as well as smaller regional

competitors in certain markets. NX Filtration

faces competition in countries across the globe

and the products of NX Filtration’s competitors

are typically sold globally. NX Filtration

primarily competes with organisations that

offer conventional water treatment solutions

(such as reverse osmosis, adsorption and

oxidation processes), organisations that

develop products similar to those offered by

NX Filtration and organisations that offer

alternative technologies. NX Filtration’s

competitors generally have global distribution

networks, a global sales force and have

therefore already achieved economies of

scale, as opposed to NX Filtration. In addition,

industry players that do not currently compete

with NX Filtration but may have greater

financial resources, may enter the market and

disrupt the competitive environment, which

may influence NX Filtration’s ability to grow

its market share. Such existing or new industry

players may have longer operating histories,

customer incumbency advantages, stronger

relationships with industrial companies,

more access to and influence on municipal

governments and more capital resources than

NX Filtration does.

NX Filtration competes primarily on the

basis of, among other things, price, product

technology and performance, delivery times,

ease of operation, sustainability benefits,

flexibility, design and innovation, reputation,

brand recognition and customer access as well

as the scope and quality of the products and

the suitability of the products as components

in systems built by original equipment

manufacturers (OEMs). NX Filtration’s ability

to compete may be adversely affected by a

number of factors, such as the following (i)

new products or product improvements by

competitors, including product substitution of

NX Filtration’s products for new or alternative

technologies; (ii) greater financial and technical

resources available to other competitors

specialising in water treatment; (iii) larger

players in the industry investing in research

and development relating to hollow fiber

direct nanofiltration (dNF), ultrafiltration

(UF) or microfiltration (MF) technology; (iv)

competitors having lower production costs (due

to geographic location, currency fluctuations

or other advantages), larger production

and assembly capacity or larger spending

budgets, more buying power with respect to

raw materials, which may enable competitors

53NX Filtration - Annual Report52 Risks and Uncertainties

to compete more aggressively in offering discounts and lowering

prices; (v) consolidation among competitors in the water treatment

industry; (vi) raw material suppliers seeking opportunities to

forward integrate membrane spinning capabilities; and (vii)

competitors temporarily offering their products and services at

significant discounts in order to enter the market or to increase

their market share, thereby impacting profitability throughout the

sector. If NX Filtration is unable to compete successfully for any

of the above reasons, its business, financial condition, results of

operations and prospects could be materially adversely affected.

To mitigate this risk, NX Filtration is fully committed to leverage

on the competitive edge of its dNF products versus conventional

water treatment solutions. Key characteristics of the dNF product

are lower energy usage, avoidance of pre-treatment chemicals,

simpler system set-up with a smaller physical footprint and

reduced cleaning and maintenance cost. As a consequence of

expected future cost savings, the price NX Filtration can charge

for its membrane modules is significantly higher than the price of

alternative membrane modules. Furthermore, NX Filtration believes

it will experience limited price pressure as its pricing strategy

is based on total cost of ownership (TCO) comparisons with

alternative technologies that are well-advanced on their cost curve

(i.e. these technologies have been existing for several decades and

are being produced and delivered by large global players).

Furthermore, NX Filtration continuously invests in innovation,

operations and its organisation amongst other to further improve

performance of its products and to further reduce its costs. In

addition, NX Filtration believes its IPO in 2021 has increased brand

awareness and global reputation to drive future sales. Finally, NX

Filtration is building its global sales and distribution network along

its geographical market groups. This network allows NX Filtration to

quickly roll-out its innovative product on a global scale.

Our business and strategy depends, in part, on significant

customers and our relationship with OEMs. If such

relationships fail to develop this could have a materially

adverse effect on our business.

NX Filtration’s business and strategy depends, in part, on significant

customers and its relationship with OEMs, which have the potential

to roll-out the NX Filtration’s technology across their customer

base. Generally, NX Filtration would have to cooperate with a third

party to integrate its products in a system or installation. If the

OEMs are unable to adequately integrate NX Filtration’s product

into their system design such roll-out may materially adversely

55NX Filtration - Annual Report54 Risks and Uncertainties

affect NX Filtration’s commercialisation

efforts. Although NX Filtration seeks to

penetrate a market in which a wide and

diversified number of companies could become

customers, in any particular period and most

notably within the current early-stage of

NX Filtration, a substantial amount of NX

Filtration’s revenue from sale of goods currently

comes from and in the coming years could come

from a relatively small number of customers

and the impact of such customer concentration

is unpredictable. While NX Filtration’s initial

commercial model is based on pilot systems,

which allow prospective customers to test NX

Filtration’s technology for their application,

NX Filtration has successfully converted and

aims to convert these pilot systems into full-

scale installations. NX Filtration may not be

successful in converting all pilot systems into

full-scale installations or, once installed, win

repeat projects from such end-customers or

may only be able to do so on less favourable

terms. If NX Filtration is unable to win, renew or

extend such contracts on favourable terms, it

could have a negative impact on NX Filtration’s

revenue and profits or NX Filtration’s ability

to realise its business objectives. More

generally, NX Filtration’s inability to maintain

relationships with key customers or OEMs could

have a negative impact on NX Filtration’ sales

and profits. Failure by NX Filtration to win,

renew or extend larger customer contracts

could have a material adverse effect on NX

Filtration’s business, financial condition, results

of operations and prospects.

To mitigate this risk, NX Filtration seeks

to build strong relationships with OEMs

while applying certain standards, policies

and practices under which its engineers are

expected to operate. Together with the OEMs,

NX Filtration is continuously reviewing potential

areas of improvement, and ensuring thorough

evaluations of all incidents and sharing

resulting improvements and best practices.

NX Filtration seeks to grow its relationships

with OEM customers, mainly by the efforts of

its commercial staff that targets and trains

OEM customers to use dNF technology in

their projects. Once these OEM customers

have been trained and have worked with NX

Filtration’s products, they can become an

important element in the further commercial

roll-out of NX Filtration’s products. A key

strategic advantage of NX Filtration is that

it does not provide filtration systems and

installations itself and, as such, is regarded as

an independent supplier of membrane modules

that can work with multiple OEM companies

without creating channel conflicts. NX

Filtration develops joint business plans with key

OEMs that include customer service objectives

and NX Filtration regularly monitors progress

to improve customer performance and enhance

our customer relationships.

We do business with municipal clients

and, as a result, we face risks of delays

related to the procurement process,

budget decisions driven by statutory

and regulatory determinations and

compliance with government contracting

requirements.

Doing business with public sector customers

presents a variety of risks. The procurement

process for municipal governments and their

agencies can be highly competitive, expensive

and time-consuming, often requiring significant

upfront time and expense without any

assurance that these efforts will generate a

sale. In addition, demand for NX Filtration’s

products may be adversely impacted by public

sector budgetary cycles and funding availability

that, in any given fiscal cycle, may be reduced or

delayed or not provided at all.

Public sector customers may also have

contractual, statutory, or regulatory rights to

terminate existing contracts with NX Filtration

for convenience or due to a default, and any

such termination may adversely affect NX

Filtration’s future results of operations. If a

contract is terminated due to a default, NX

Filtration may be liable for excess costs incurred

by the customer for procuring alternative

products or services or be precluded from

doing further business with government

entities. Further, entities providing services

to governments are required to comply with

a variety of complex laws, regulations, and

contractual provisions relating to the formation,

administration or performance of government

contracts that give public sector customers

substantial rights and remedies, many of which

are not typically found in commercial contracts.

These may include rights with respect to

price protection, the accuracy of information

provided to the government, contractor

compliance with supplier diversity policies and

other terms that are particular to government

contracts, such as termination rights. NX

Filtration’s non-compliance with such terms

could result in repercussions with respect to

contractual and customer satisfaction issues.

To mitigate this risk, management and

relevant internal stakeholders including the

departments for sales, sales engineering and

operations make a thorough assessment

of the likelihood that efforts for municipal

clients will result in a sale. The general rule

is that a procurement process for municipal

clients is only commenced after a satisfactory

outcome of such an assessment. Furthermore,

NX Filtration is continuously diversifying its

customer base and the sectors it currently

operates in.

Operational Risks and

Uncertainties

If our new manufacturing facility were to

become inoperable, we would be unable

to produce sufficient products and our

business would be harmed.

An important part of NX Filtration’s scale-up

is the finalization of our new manufacturing

facility in the Netherlands within the next

nine months that will primarily focus on

the increased production of NX Filtration’s

products. The new manufacturing facility

could expose NX Filtration to product

comparability issues meaning that the

products could not immediately have similar

quality attributes before and after the

manufacturing process changes. That may

further delay the introduction of additional

capacity to manufacture its products, as the

facility and the equipment that will be used

to manufacture its products will be costly to

install and could require substantial lead time

to install and qualify for use. Any substantial

delay in bringing the new manufacturing

facility up to full production may hinder NX

Filtration’s ability to produce all of the products

needed to meet orders, which, in turn, could

materially damage NX Filtration’s business,

financial condition and operating results. Even

if NX Filtration’s new manufacturing facility

is brought up to full production, it may not

provide NX Filtration with all of the operational

and financial benefits it expects to receive.

Furthermore, the costs of complying with

environmental laws and regulations and any

claims concerning noncompliance, or liability

with respect to contamination in the future,

could have a material adverse effect on NX

Filtration’s business, financial condition, results

of operations and prospects.

To mitigate this risk, NX Filtration has an

extensive expansion and implementation

roadmap in place for further increasing

production capacity going forward. The

construction plans are based on a highly

modular concept that foresee a gradual scale-

up of production capacity based on existing

blueprints of key process steps, including NX

Filtration’s spinning line for the production of

its membranes.

57NX Filtration - Annual Report56 Risks and Uncertainties

We are dependent on third-party suppliers to deliver

raw materials and components for our products. Supply

interruptions could lead to interruptions of our own

production, increased costs, order cancellations and loss of

market share.

NX Filtration’s production process depends on the availability,

quality and timely supply of raw materials, components and

finished goods from third-party suppliers. NX Filtration obtains

a significant portion of its processed raw materials from a few

key suppliers. With respect to a few raw materials and/or the

processing thereof, NX Filtration has sourced and may in the

future source from one of these suppliers or other single suppliers

from time to time due to specific quality or other requirements

or because the small volumes required may not justify the cost

of sourcing from multiple suppliers or other suppliers may not be

available to provide necessary quantities. If any of NX Filtration’s

suppliers is unable to meet its obligations under purchase orders or

supply agreements, including due to their own production capacity

limitations or otherwise limited supply of materials as a result of

their obligations to other customers, or does not deliver the quality

that is necessary to meet the raw material standards applied by NX

Filtration, NX Filtration may be forced to pay higher prices to obtain

the necessary raw materials from other suppliers, may be faced

with increased lead times, may need to change suppliers, or may not

be able to locate suitable alternatives at all. Changing suppliers can

be time-consuming and costly, as resources are required to qualify

new suppliers and ensure the quality, approval and consistency of

the raw materials. Supply interruption could lead to interruption of

NX Filtration’s own production at one or more production facilities.

Furthermore, if NX Filtration experiences significant increased

demand for its products, there can be no assurance that additional

supplies of raw materials, components and finished goods will

be available when required on terms that are acceptable to NX

Filtration, or at all, or that any supplier would allocate sufficient

supplies to NX Filtration in order to meet its requirements or fill its

orders in a timely manner.

NX Filtration may experience supply problems in the future or be

unable to extend current or enter into new supply agreements,

especially agreements for raw materials with relatively low

volume requirements, where NX Filtration’s negotiating power

is limited. If NX Filtration fails to maintain its relationships with

current suppliers, if suppliers offer pricing and other terms that

are not satisfactory, or if a supplier fails to supply raw materials

that meet NX Filtration’s quality, quantity and cost requirements,

NX Filtration may be unable to fill customers’ orders on a timely

59NX Filtration - Annual Report58 Risks and Uncertainties

and cost-effective basis or in the required

quantities, which could result in production

disruptions, damage claims, order cancellations,

decreased sales or loss of market share and

damage to NX Filtration’s reputation. These

factors could, in turn, have a material adverse

effect on NX Filtration’s business, financial

condition, results of operations and prospects.

To mitigate this risk, NX Filtration always seeks

to have multiple interchangeable suppliers

for its key purchases. For its standardised

commodity raw materials and parts suppliers,

NX Filtration has a multiple supplier strategy in

place in order to ensure continuous operations.

NX Filtration is in continuous dialogue with its

key suppliers to discuss potential supply chain

challenges and, in case of any disruptions, seeks

to jointly address these and return to normal

course of business as quickly as possible. Any

potential disruptions can further be mitigated

by, temporarily, increasing stock levels and

adjusting working procedures.

Significant increases in the cost of raw

materials, components and finished goods

may materially adversely affect our

business.

NX Filtration uses various raw materials,

components and finished goods in its

operations, including polymers such as

polyethersulfone, polyvinyl chloride (PVC)

and epoxy. The prices for these raw materials,

components and finished goods fluctuate

depending on market conditions and global

demand for these materials and could

adversely affect NX Filtration’s business

and operating results. In recent years, PVC

in particular experienced a significant price

increase, largely attributable to persistent

supply-side issues globally. NX Filtration’s

ability to achieve profitability is, and will

continue to be, dependent in part upon its

ability to reduce production costs and costs

of materials required to make these products

(including raw materials). As a consequence,

sudden and significant increases in the prices of

raw materials or similar volatility with respect

to the currency exchange rates between the

euro and the currency of such goods may lead

to corresponding price increases in components

and finished goods used in the assembly of

NX Filtration’s products. NX Filtration is also

indirectly exposed to fluctuations of labour

costs, commodity prices and energy costs as

the prices of raw materials and components

it orders from third-party suppliers and

manufacturers will likely increase if the costs of

NX Filtration’s suppliers increase. NX Filtration

does not hedge the price exposure for its

raw materials. Increases in the costs of raw

materials and components and as a result in

finished goods may therefore have a material

adverse effect on NX Filtration’s business,

financial condition, results of operations and

prospects, particularly because it is generally

not able to pass on such price increases

or reduce other costs to offset the higher

commodity prices. Furthermore, the price of

commodities could become so high that there

is a decline in the demand of the products

provided by NX Filtration.

To mitigate this risk, NX Filtration always seeks

to have multiple interchangeable suppliers for

its key purchases, also from a cost perspective.

For its standardised commodity raw materials

and parts suppliers, NX Filtration has a multiple

supplier strategy in place in order to ensure

continuous operations. Furthermore, NX

Filtration’s pricing strategy is based on TCO

comparisons with alternative technologies

that are likely impacted by similar raw material

price increases as NX Filtration may be exposed

to, and developments in raw material prices

are monitored and where possible addressed

through a pro-active pricing strategy.

We depend on the ability to hire and retain

management, key employees and other

qualified and skilled employees and we

may not be able to attract and retain such

personnel.

NX Filtration’s future performance and its

ability to reach its strategic objectives depends

in significant part on the continued service

of the senior management of the Company

and other key personnel, including employees

involved in research and development,

operations, marketing and sales personnel and

employees with critical know-how and expertise.

Other than customary notice periods, none of

NX Filtration’s key employees is required to stay

for any specific term. In addition, NX Filtration

does not have “key person” life insurance

policies covering any of its officers or other key

employees. The loss of the services of one or

more members of senior management or other

key personnel, or the inability to hire (additional)

members of the senior management, could

disrupt its operations, delay the development

and introduction of NX Filtration’s products and

anticipated expansion projects, which could,

in turn, have a material adverse effect on NX

Filtration’s business, financial condition, results

of operations and prospects.

NX Filtration’s success also depends on its

continuing ability to attract, retain and develop

qualified and skilled personnel, including

financial personnel, sales personnel, scientists,

designers, technical employees and engineers

with the requisite technical background.

Competition for such personnel is intense,

in particular for technical and industrial

employees, and there is significant competition

for talented individuals with the specialised

knowledge of water filtration and membrane

technology. This is particularly relevant in the

Netherlands, as the country where NX Filtration

has its headquarters, significant business

operations and research and development

activities. NX Filtration’s efforts to retain and

motivate management and key employees

or attract and retain other highly qualified

personnel in the future may not be successful.

A failure to attract and retain key personnel

may have a material adverse effect on NX

Filtration’s business, financial condition, results

of operations and prospects.

To mitigate this risk, NX Filtration seeks

to leverage on its public profile and the

widespread interest in the growing water

technology market, with in particular the

sustainable character of NX Filtration’s

technology, in order to attract talent. Hiring,

retention and development are key focus areas

of the HR department and management. NX

Filtration continuously assesses capability

gaps for its key positions and has initiatives in

place to close any employee capability gaps and

maintains a remuneration structure aimed at

attracting and retaining talent.

Disruptions of our information technology

systems could have a material adverse

effect on our business.

NX Filtration depends on its information

technology (IT) systems to, among other

things, conduct operations, to interface with

customers, to maintain financial records and

accuracy. All of NX Filtration’s internal data

is stored at Microsoft cloud services. NX

Filtration’s production process specifically

depends on the use of custom-made

processing software based upon standardised

internationally accepted software platforms

such as Siemens S7 and others. IT systems

or such custom-made processing software

failures, including risks associated with

upgrading systems, network disruptions and

breaches of security could disrupt operations

by impeding NX Filtration’s cyber security, its

protection of customer or group information

and its financial reporting, leading to increased

costs. In addition, NX Filtration’s computer

systems, including its back-up systems,

could be damaged or interrupted by power

outages, computer and telecommunications

61NX Filtration - Annual Report60 Risks and Uncertainties

failures, viruses, ransom software, internal

or external security breaches, events such as

fires, earthquakes, floods and/or errors by NX

Filtration’s employees. Disruptions, security

breaches or failures of NX Filtration’s IT

systems could impair its ability to effectively

and timely produce and provide products,

which could damage NX Filtration’s reputation

and could have a material adverse effect on

its business, financial condition, results of

operations and prospects.

To mitigate this risk, NX Filtration uses cloud

based solutions for its own IT systems from

suppliers that offer proven and tested security

which they continuously update to protect

it from the latest threads. Furthermore, to

mitigate the risks related to privacy related

information as well as data protection in

general several actions have been taken and

NX Filtration maintains a cyber-security

insurance policy. Additionally, NX Filtration has

implemented an information security policy to

safeguard and secure remote communication

and operation of its products & services. The

mitigation of these risks starts with an IT

security policy that is in place and sufficient

resources to manage the IT related risks. As

such, NX Filtration seeks to further strengthen

its IT focus in 2024. To further mitigate the risks

related to privacy related information as well as

data protection in general several actions have

been taken. For 2023 and ending in January

2024, a cybersecurity consultant has been

contracted to execute several tests upon our

systems thus auditing the implementation of

above described policies, services and systems.

Any difficulties we encounter while we

expand or transition our manufacturing

operations in-house, now or in the future,

could materially and adversely affect our

ability to manufacture and deliver our

products.

Because of the significant variation in the

manufacturing stages of its products, NX

Filtration has separated its production into

two manufacturing sites. NX Filtration has

one primary facility that manufactures the

membranes and one primary facility that

manufactures the modules. Therefore, a

disruption in service at such facilities would

likely have a significant impact on the sale of

its products almost immediately. If either of NX

Filtration’s manufacturing facilities is unable to

operate, or if any project is delayed or cancelled,

for an extended period of time, NX Filtration’s

sales may decline due to the disruption

and it may not be able to meet customers’

needs, which could cause them to seek other

suppliers. As NX Filtration’s membrane

production capacity at the Institutenweg has

been expanded with an additional spinning

line and the implementation of various

process improvements and expansions, it may

experience unexpected delays or difficulties

in executing this expansion. Any difficulties

NX Filtration encounters while it expands or

transitions its manufacturing operations in-

house, now or in the future, could materially

and adversely affect NX Filtration’s ability

to manufacture and deliver its products to

customers. If any of the risks described above

arise, this could have a material adverse effect

on NX Filtration’s business, financial condition,

results of operations and prospects.

To mitigate this risk, NX Filtration is

continuously improving its quality assurance

processes and controls to ensure consistent

production continuity and quality. In addition to

pro-actively managing the production process,

we have further enhanced our production

development processes based on clear objective

setting, risk identification and debottlenecking

reviews. We have also centralized our quality

organization to report directly to the CEO to

bolster cross functional focus.

Our current operations are international

in scope, and we plan further geographic

expansion, creating a variety of operational

challenges.

A component of NX Filtration’s growth strategy

involves the further expansion of its operations

and customer base internationally. The

countries in which NX Filtration has launched

(pilot) projects include Canada, Hungary, India,

Indonesia, the Netherlands, Philippines, Spain,

Sweden, Switzerland, Turkey and the United

States. NX Filtration is continuing to adapt to

and develop strategies to address international

markets, but there can be no guarantee that

such efforts will have the desired effect. For

example, NX Filtration anticipates that it will

need to expand its international sales force

and establish relationships with new partners

in order to expand into the countries where NX

Filtration wants to conduct its business, and

if NX Filtration fails to identify, establish and

maintain such relationships, it may be unable

to execute its expansion plans. NX Filtration

expects that its international activities will

continue to grow in the next few years as it

continues to pursue opportunities in existing and

new international markets, which will require

significant dedication of management attention

and financial resources. NX Filtration’s current

and future international business and operations

involve a variety of risks, some of which are

outside of NX Filtration’s control, including

(i) slower than anticipated dNF membrane

technology adoption by international businesses

and municipalities; (ii) difficulty controlling the

application of NX Filtration’s solutions and the

installation of pilot systems in distant or remote

jurisdictions; (iii) changes in a specific country’s

or region’s political, economic, or legal and

regulatory environment, including pandemics,

tariffs, trade wars or long-term environmental

risks; (iv) the need to adapt and localise NX

Filtration’s products and service offerings for

specific countries; (v) greater difficulty collecting

accounts receivable and longer payment cycles;

(vi) challenges relating to underdeveloped

infrastructure or lack of qualified management

or adequately trained customers and personnel

in certain jurisdictions; (vi) challenges inherent

in efficiently managing, and the increased

costs associated with, an increased number

of employees over large geographic distances,

including the need to implement appropriate

systems, policies, benefits, and compliance

programs that are specific to each jurisdiction;

and (vii) currency exchange rate fluctuations and

the resulting effect on NX Filtration’s revenue

and expenses, and the cost and risk of entering

into hedging transactions if NX Filtration choses

to do so in the future. If NX Filtration invests

substantial time and resources to further

expand its international operations and is unable

to do so successfully and in a timely manner,

it could have a material adverse effect on NX

Filtration’s business, financial condition, results

of operations and prospects.

To mitigate this risk, NX Filtration’s processes

are set up to quickly understand, adapt to, and

effectively apply international cultural and

legal norms for doing business. We have actual

presence of dedicated staff in some regions we

operate in. We continuously monitor economic,

political and general societal changes and, where

deemed necessary, develop response strategies

to such events, including pandemics.

Technology Risks and

Uncertainties

Our failure to protect intellectual property

rights may undermine our competitive

position, and litigation to protect our

intellectual property rights may be costly,

time consuming and distracting from daily

operations.

Intellectual property rights are vital to NX

Filtration’s business. Although NX Filtration

has taken many protective measures to protect

its technologies and know-how, including

patents, trade secrets, employee and third-

63NX Filtration - Annual Report62 Risks and Uncertainties

party nondisclosure agreements, trademarks, copyright, limited

access, segregation of knowledge (including on the particular set-up

of the supply-chain and production process), password protections

and other measures, policing the unauthorised use of proprietary

technology can be difficult, time-consuming and expensive. Also,

litigation may be necessary to enforce NX Filtration’s intellectual

property rights, protect its trade secrets or determine the validity

and scope of the proprietary rights of others. Such litigation may

result in NX Filtration’s intellectual property rights being challenged,

limited in scope or declared invalid or unenforceable. NX Filtration

cannot be certain that the outcome of any litigation will be in its

favor, and an adverse determination in any such litigation could

impair its intellectual property rights and may harm NX Filtration’s

business, prospects and reputation.

NX Filtration inter alia relies on (i) multiple patents relating to

NX Filtration’s dNF technology, (ii) trade secrets and trademark

rights, and (iii) non-disclosure, confidentiality and other types

of contractual restrictions to establish, maintain and enforce

its intellectual property and proprietary rights. However, the

rights of NX Filtration under these laws and agreements may

not fully protect NX Filtration, and the actions NX Filtration

takes to establish, maintain and enforce its intellectual property

rights may not be adequate. For example, NX Filtration’s trade

secrets and other confidential information could be disclosed in

an unauthorised manner to third parties, NX Filtration’s owned or

licensed intellectual property rights could be challenged, invalidated,

circumvented, infringed or misappropriated or the intellectual

property rights of NX Filtration may not be sufficient to provide

it with a competitive advantage. Any successful challenge to any

of NX Filtration’s intellectual property rights could deprive NX

Filtration of rights necessary for the successful commercialisation

of its products or any technology relating thereto (including the

dNF technology). Patent prosecution process is expensive and

time consuming, and NX Filtration may not file and prosecute all

necessary or desirable patent applications at a reasonable cost or

in a timely manner or in all jurisdictions where protection may be

commercially advantageous. It is also possible that NX Filtration

fails to identify patentable aspects of its research and development

output before it is too late to obtain patent protection. In addition,

the laws of some countries do not protect proprietary rights as

fully as Dutch law does. As a result, NX Filtration may not be able

to protect its proprietary rights adequately abroad. Furthermore,

intellectual property rights can be limited in time. Each of NX

Filtration’s current patents provide protection against infringement

of the technology patented by such patent for 20 years after the

65NX Filtration - Annual Report64 Risks and Uncertainties

filing date of the respective patent application

with the relevant patent office. Any of the

above, individually or in aggregate, could have

a material adverse effect on NX Filtration’s

business, financial condition, results of

operation or prospects.

To mitigate this risk, NX Filtration regularly

monitors the market and takes steps, when

appropriate, to ensure compliance with its

intellectual property rights which may include

various intellectual property related audits. In

addition, control and governance frameworks

are in place to establish, maintain and protect

NX Filtration’s intellectual property rights

and minimize the risk of data leakage as

far as possible. Furthermore, NX Filtration

has developed all its critical production

processes in-house based on the extensive

industry experience of its team of experts.

NX Filtration benefits from a strong team

of leading membrane technology experts

with technical, operational and commercial

experience with an extensive background

in membrane development, production and

commercialisation. This team has been

instrumental in developing the dNF technology,

bringing this from lab-scale to industrial-scale,

developing the required innovative and patented

production methods and processes and reliably

producing the dNF membranes and modules.

We may be unsuccessful in adequately

protecting our technological know-how

that is not covered by intellectual property

registration.

NX Filtration relies on technology, know-how,

and business and trade secrets, some of which

NX Filtration believes cannot be adequately

protected through registered intellectual

property rights. Consequently, there is a risk

that third parties, in particular competitors,

may copy such technology and know-how or

develop it independently and later challenge

NX Filtration’s use of it, especially considering

that technology is constantly evolving and

that NX Filtration’s competitors are engaged

in significant research and development work

on products that are aimed at competing with

NX Filtration’s products. In addition, employees

who, in the course of their employment with NX

Filtration, have access to important proprietary

information which may or may not be protected

by intellectual property rights may leave to go

work for a competitor.

To mitigate this risk, NX Filtration relies on

confidentiality agreements with suppliers and

customers, noncompete clauses in contracts

with employees and technical precautions to

protect its technology, knowhow and other

proprietary information. Furthermore, we

apply compartmentation in our processes. For

different parts of our production process and

equipment we make sure that no individual

supplier or employee has a full picture of the

total manufacturing process. However, there

is no guarantee that these agreements and

precautions or NX Filtration’s ability to enforce

its contractual rights, will provide sufficient

protection in the case of any unauthorised

access or use, misappropriation or disclosure

of such information. Defending against any

unauthorised access or use, misappropriation

or disclosure of NX Filtration’s technology,

knowhow, and other proprietary information

may result in lengthy and costly litigation or

administrative proceedings and may cause

significant disruption to the business and

operations of NX Filtration. If NX Filtration

is unable to protect or effectively enforce its

proprietary technology and information, this

could have a material adverse effect on NX

Filtration’s business, financial condition, results

of operations and prospects.

New products or technological

improvements by competitors, including

by larger players in the industry investing

in research and development for product

substitution of our dNF products, or

improvements to our dNF technology could

materially adversely affect our business

and our ability to gain market share.

Disruptive changes in technology and product

standards could render NX Filtration’s products

less competitive, or even obsolete. Other

companies that seek to enhance traditional

technologies have recently introduced or

are currently developing products based on

emerging and potential technologies. These

competitors are engaged in significant research

and development work on products that

may be similar to NX Filtration’s products.

New products could be introduced that are

in direct competition with, or superior to, NX

Filtration’s products. Competing technologies

that outperform NX Filtration’s technology

could be developed and successfully introduced

and, as a result, NX Filtration’s existing or

future products may not be able to compete

effectively in its current or future target

markets. If NX Filtration’s technology is not

adopted by its customers, or if its technology

does not meet industry requirements, NX

Filtration’s existing or future products may

not gain or maintain market acceptance. If NX

Filtration cannot adapt to changing market

conditions should customer behaviour change,

or if NX Filtration fails to develop, manufacture

and market products that improve upon

existing technologies, its business, financial

condition, results of operations and prospects

could be materially adversely affected.

To mitigate this risk, NX Filtration continues

to significantly invest in R&D to remain

competitive. NX Filtration monitors and

analyses competitors through various sources

such as trade associations, universities, banks,

employees and their intellectual property

filings, and it actively maintains, protects and

expands its own intellectual property portfolio.

As a result of the limited innovation that has

taken place by competitors, conventional

technologies are not always equipped to cope

with the challenges and demands of today’s

environment. NX Filtration believes its dNF

product provides a number of advantages

over these technologies, including but not

limited to (i) superior filtration characteristics

and performance; (ii) sustainability benefits

throughout the lifetime of the product, as

it typically reduces energy consumption and

avoids the use of pre-treatment chemicals; and

(iii) reduced physical footprint, as it typically

reduces the number of treatment steps.

Furthermore, NX Filtration’s products are

developed and produced in-house, which makes

NX Filtration less vulnerable to new market

developments, resulting in short innovation

cycles, cross leverage of concepts, modularity

of modules and short time to market.

Compliance Risks and

Uncertainties

We are exposed to risks associated with

product liability, warranties, recall claims

or other lawsuits or claims that may be

brought against us.

NX Filtration is exposed to product liability

and warranty claims, as well as reputational

damage, in the normal course of business in

the event that (i) its products fail or allegedly

fail to perform as expected or otherwise do not

conform to the product’s specifications or the

expectations of its customers or (ii) the use of

NX Filtration’s products results, or is alleged to

result, in property damage.

Furthermore, NX Filtration may become subject

to other proceedings alleging violations of due

care, safety provisions and claims arising from

breaches of contract (such as delivery delays)

or fines imposed by government or regulatory

authorities in relation to its products and its

67NX Filtration - Annual Report66 Risks and Uncertainties

operations. Any such lawsuits, proceedings

and other claims could result in significant

increased costs, including costs to defend

against these claims and/or make payments

to compensate for damages. In addition, under

certain circumstances, any such issues could

give rise to an investigation by regulatory

authorities, which could result in the need

for remedial action such as a recall requiring

the repair or replacement of NX Filtration’s

products or even a prohibition of future sales.

Furthermore, any product liability or warranty

issues may damage NX Filtration’s reputation

as a provider of high quality, technologically

advanced and safe products and place a

significant strain on management and divert

management’s attention from other business

concerns. Any litigation or complaints and any

adverse publicity surrounding such allegations

or actions could have a material adverse effect

on NX Filtration’s business, financial condition,

results of operations and prospects.

To mitigate this risk, NX Filtration has insurance

coverage for claims arising from warranty

and product liability lawsuits, proceedings

and other claims, but the insurance coverage

could prove insufficient in individual cases.

NX Filtration aims to have back-to-back

agreements in place with its suppliers, where

possible. Furthermore, throughout the design

and production phases, there is a continuous

focus on quality with quality assurance being

an integral part of NX Filtration’s working

processes. Moreover, NX Filtration will seek

to continuously improve its products through

valuable performance information obtained

from its team of leading membrane experts

and engineers through amongst others the

increasing scale-up of pilots.

We are subject to various laws and

regulations in multiple jurisdictions in which

we operate, and unfavorable changes

or failure by us to comply with these

regulations could have a material adverse

effect on our business.

NX Filtration and its products and business

operations are subject to a broad range of

local, national and multi-national laws and

regulations in the Netherlands and other

jurisdictions in which it operates and markets its

products. For instance, extensive environmental

and product stewardship legislation applies to

NX Filtration’s products and the components

and parts used in manufacturing these

products. Such legislation includes, inter alia,

safety requirements, information requirements

and requirements relating to the hazardous

properties of substances used. NX Filtration

is particularly subject to Regulation (EC) No

1907/2006 of the European Parliament and of

the Council of 18 December 2006 concerning

the Registration, Evaluation, Authorisation

and Restriction of Chemicals (REACH), a

regulation of the European Union adopted

to improve the protection of human health

and the environment from the risks that can

be posed by chemicals. Under REACH, NX

Filtration has to demonstrate to the European

Chemicals Agency how the substances used by

NX Filtration can be safely used. Furthermore,

NX Filtration’s production facilities each

qualify as a facility (inrichting) under the

Dutch Environmental Management Act (Wet

milieubeheer) and need to comply with strict

environmental rules in the Activities Decree

(Activiteitenbesluit).

NX Filtration’s business operations must

therefore comply with laws and regulations

relating to, inter alia, the protection of natural

resources, the management of hazardous

substances and wastes, air emissions, water

discharges, the use, management, storage,

treatment, transportation and disposal of

waste and by-products, the protection and

restoration of plants, wildlife and natural

resources, the investigation and remediation of

contaminated property, public and workplace

health and safety (such as rules regarding the

handling of carcinogenic substances or rules

governing the use of protection equipment)

and data protection. Many new laws and

amendments, as well as amendments to

existing ones, have become more stringent,

particularly in the European Union. NX

Filtration may incur additional costs to ensure

that it operates its business and supplies

products that comply with applicable laws and

regulations, and any failure to comply with

such laws and regulations may lead to fines,

penalties or claims, injunctions which may lead

to disruptions of NX Filtration’s business, or

harm its reputation, which may have a material

adverse effect on NX Filtration’s business,

financial condition, results of operations and

prospects.

To mitigate this risk, the quality of NX

Filtration’s products and compliance to the

relevant safety and quality certificates is

strictly embedded in the process control

and monitored by the QHSE-department.

Additionally, NX Filtration’s legal team

monitors or requests specialist assistance from

external counsel about laws and regulations

across multiple jurisdictions. Finally, in

order to increase the safety awareness and

accreditations of its personnel NX Filtration

uses tailormade education to train its people.

Furthermore, NX Filtration prepares, rolls

out and makes available relevant policies and

procedures which are regularly reviewed and

audited. NX Filtration implements observations

made during inspections by line management,

staff and relevant regulatory parties. NX

Filtration’s management system complies

with ISO 14001. This has resulted in improved

process technologies and people skills, as well

as formalised procedures, checklists, training

and instructions.

We may be exposed to the risk of fraud and

other dishonest activities, which could have

a material adverse effect on our business,

financial condition or results of operations.

We have implemented a set of internal control

measures and compliance policies, including

amongst others, an authorization policy,

sufficient level of segregation of duties,

approval of bank payments, reporting and

monitoring framework, which we believe is

appropriate for NX Filtration. Considering

the size and concentrated locations of NX

Filtration, the existing internal control and

reporting framework, we believe all material

events are timely known to the Management

Board and enable us to take appropriate

actions. However, the risk of fraudulent or other

dishonest activities occurring and affecting

NX Filtration cannot be excluded. Further, as

NX Filtration grows or expands in international

markets, its internal controls may need to be

adapted in order to effectively prevent and

detect fraud and other dishonest activities.

However, there can be no assurance that NX

Filtration will be able to adapt such internal

controls in a timely manner or at all or that they

will be effective. Any fraud incident or dishonest

activity affecting NX Filtration, whether as a

result of the activities of employees, partners,

suppliers or other third parties, may result in

financial losses, a loss of customer trust and

confidence, as well as litigation or financial or

other regulatory penalties being imposed, any

of which could have a material adverse effect

on NX Filtration’s business, financial condition

or results of operations.

We furthermore enforce a comprehensive code

of conduct that outlines expected behavior

and ethical standards for all employees.

We promote a culture of integrity and

transparency, making it clear that fraudulent

activities will not be tolerated. As part of

our regularly held business meetings, senior

management reviews financial statements,

reports, and key performance indicators.

69NX Filtration - Annual Report68 Risks and Uncertainties

This oversight helps identify anomalies or

inconsistencies that may indicate fraudulent

activities. Our financial department

continuously monitors systems to detect

unusual patterns or behaviors in financial

transactions. We started a formalization

project on fraud risks and completed the

formal fraud risk assessment in 2023. A formal

fraud risk management programme fits

our ambitions to grow to a set of defined or

managed internal control measures to mitigate

fraud risks.

Risk management and control

systems

The Management Board is responsible

for the control environment, including risk

management and internal control systems

in order to properly manage the strategic,

operational and other risks and uncertainties

that could have a material adverse effect on NX

Filtration’s business and day-to-day operations.

The applicable risks and uncertainties for NX

Filtration are evaluated on a periodic basis by

the Management Board and discussed with the

Supervisory Board.

The Management Board recognizes the

importance of a formalized approach towards

risk management for a rapidly growing

organisation like NX Filtration. In practice this

means that it is important to maintain the

right balance between formalized systems

and procedures and the informal hands-on

approach that is necessary to further boost

the growth of the company. NX Filtration’s

corporate culture supporting the values of

curiosity, honesty and collaboration is also an

important ‘soft-control’ to mitigate risks and

fraud.

During the financial year 2023, NX Filtration

continued to support its corporate culture

and other foundations of its risk management

and control systems with its Code of

Conduct, Human Rights Policy, Whistle-

blower Policy, Insider Trading Policy, safety

and quality certifications, periodic reports

and meetings, as further described below. NX

Filtration introduced a structured approach to

introducing and maintaining the understanding

of the company’s vision and mission within the

team.

In addition, further consolidation and

professionalization has been achieved in the

financial year 2023. We implemented a new

formal fraud risk framework and a new internal

control framework. These frameworks are

essential pillars in fortifying NX Filtration

against potential risks and ensuring the

integrity of its operations. In the years to come,

NX Filtration will continue to professionalize

and strengthen its organization and control

environment, further optimizing its control

matrix. NX Filtration has implemented a further

segregation of duties, not only to properly

divide responsibility and accountability, improve

the quality of the staff, but also to create a

system of checks and balances. To support

this further, NX Filtration optimized the data

warehouse and reporting system in which our

business processes as well as our day-to-day

working procedures are formally documented.

The Management Board, to the best of its

knowledge, is not aware of any significant

deficiencies in its control environment, including

risk management and internal control systems.

Code of Conduct

NX Filtration has a Code of Conduct that

applies to all employees. The Code of Conduct

is available in Dutch, English, German, French

and Spanish making it easily understandable

for all of our employees. The principles and

best practices established in the Code of

Conduct reflect the corporate culture that the

Management Board wants to embed in the

day-to-day routines of all employees. The core

values of NX Filtration are included in the Code

of Conduct and relate to professional conduct,

flexibility, reliability and integrity and safety.

The Code of Conduct includes topics including

acting with integrity, gifts, anti-bribery,

corporate social responsibility and health and

safety. The Code of Conduct can be found on

NX Filtration’s website. NX Filtration also has a

Supplier Code of Conduct in order to ensure our

supply chain abides by our culture and values.

Part of NX Filtration’s compliance framework

is an annual sign-off by our employees to

acknowledge compliance with our Code of

Conduct and related policies and procedures,

including a commitment to cooperate fully

with any requests for information, documents,

or assistance. No violations of the Code of

Conduct were reported in the financial year

2023.

Business Ethics Policy

NX Filtration has a Business Ethics Policy with

the objective to:

(i) outline the expectations that NX

Filtration has of its employees and their

behaviour relating to ethics & compliance and

corresponding laws and regulations;

(ii) ensure that employees understand the

importance of conducting business in an ethical

way and respecting the principles that are set

out in the Code of Conduct, the Human Rights

Policy and the Customer & Supplier Screening

Policy;

(iii) highlight the role of managers within NX

Filtration in leading ethics & compliance efforts

by creating a business environment in which

employees understand their duties and feel

safe to speak up about issues relating to ethics

& compliance without fear of retaliation; and

(iv) detail the requirements for the Ethics &

Compliance programme and the minimum

standards that apply thereto, including a

training and awareness programme for

employees focused on our corporate culture,

core values and the key ethics & compliance risk

areas that have been identified.

Human Rights

NX Filtration is committed to shape its

activities and operations within a framework

of proper standards and values, while fully

complying with all applicable laws and

regulations. It also means upholding human

rights within NX Filtration and throughout

its supply chain. NX Filtration’s commitment

is embedded in NX Filtration’s Human Rights

Policy, Code of Conduct and Supplier Code

of Conduct, which it applies vis-à-vis its

employees, stakeholders and business partners.

NX Filtration’s approach towards human

rights is based on the Universal Declaration

of Human Rights, the core conventions of

the International Labour Organization and

the UN Guiding Principles on Business and

Human Rights (UNGPs). NX Filtration’s core

Human Rights Standards focus on (i) access

to water, (ii) no child labour and/or hard

work, (iii) non-discrimination, (iv) safe work

conditions, (v) no harassment and violence,

(vi) freedom of association and the right to

collective bargaining, (vii) no forced labour, (viii)

work-life balance, (ix) recognition and reward,

and (x) respect for human rights in high risk

contexts. NX Filtration supports its employees

in converting the Human Rights Policy into

practical tools by developing relevant human

rights guidelines.

NX Filtration is committed to provide remedy

to correct negative impacts of human rights

violations across our value chain. Respect for

human rights includes preventing human rights

issues or addressing them at an early stage

71NX Filtration - Annual Report70 Risks and Uncertainties

or to seek adequate remedy in case human

rights are violated. NX Filtration promotes

an open feedback culture and carries out

human rights due diligence processes and has

not come across any issues in this respect in

2023. Because NX Filtration’s growth strategy

involves the further expansion of its operations

and customer base internationally, human

rights due diligence will require increased

attention.

Whistle-blower Policy

NX Filtration employees are offered the

opportunity to report irregularities or

suspicions with regards to violations of the

Code of Conduct, the law, safety policies,

the environment or any other forms of

misbehaviour without bringing their (legal)

position in jeopardy. Reporting of such

instances by NX Filtration employees can be

either by designated ‘persons of trust’ or in

complete anonymity through a prescribed

website. In 2023, NX Filtration has appointed

an internal and external confidential adviser as

anyone working within NX Filtration should feel

safe and encouraged to speak-up. As far as NX

Filtration is aware, no violations or irregularities

were reported under the Whistle-blower Policy

in the financial year 2023.

Insider trading policy

NX Filtration continues to adhere to its

implemented regulations covering securities

transactions by the members of the

Management Board and Supervisory Board

and other designated employees that have

or may have access to inside information.

The Insider trading policy is published on

NX Filtration’s website. The Insider Trading

Policy aims to promote compliance with the

relevant obligations and restrictions under

applicable securities law, including Regulation

(EU) 596/2014 and intends to limit the risk of

NX Filtration’s good reputation and business

integrity being harmed as a result of prohibited

or undesirable dealing in NX Filtration

securities. No violations or irregularities were

reported in the financial year 2023.

Safety and quality certifications

NX Filtration has been awarded with several

ISO certifications and possesses other relevant

safety and quality certificates. The quality of

NX Filtration’s products and compliance to

the relevant safety and quality certificates is

strictly monitored by the QHSE-department.

73NX Filtration - Annual Report72 Risks and Uncertainties

Corporate Governance

General

NX Filtration N.V. is a public limited

liability company (naamloze vennootschap)

incorporated under the laws of the Netherlands,

with its registered seat in Amsterdam and its

registered office at Josink Esweg 44, 7545 PN

Enschede, the Netherlands (NX Filtration or

the Company). The Company is registered with

the trade register of the Netherlands Chamber

of Commerce (Kamer van Koophandel) under

number 64951030 and its Legal Entity Identifier

(LEI) is 254900YF0PQV9APMA050. For

details regarding NX Filtration’s share capital,

reference is made to Capital Structure.

Corporate governance within NX Filtration is

based on statutory requirements applicable

to public limited liability companies in the

Netherlands, the Dutch Corporate Governance

Code as well as NX Filtration’s articles of

association, which are publicly available on the

Investor Relations section of its website

www.nxfiltration.com (the Articles of

Association).

This section gives an overview of the information

concerning the Management Board, the

Supervisory Board and the General Meeting of

Shareholders. NX Filtration has a two-tier board

structure consisting of the Management Board

and the Supervisory Board. The Management

Board together with one senior manager of

the Company forms the senior management

of the Company (Senior Management) which is

responsible for the day-to-day management of

the Company. The Management Board and the

Supervisory Board are jointly responsible for the

governance structure of NX Filtration.

Management Board

Powers, responsibilities and functioning

The Management Board is the executive body

and is entrusted with the management of the

Company and responsible for the continuity

of the Company, under the supervision of the

Supervisory Board. The Management Board’s

responsibilities include, among other things,

setting the Company’s management agenda,

developing a view on a sustainable long-term

value creation by the Company, enhancing the

performance of the Company, developing a

strategy, identifying, analysing and managing

the risks associated with the Company’s

strategy and activities and establishing and

implementing internal procedures, which

safeguard that all relevant information is known

to the Management Board and the Supervisory

Board in a timely manner. The Management

Board takes into account the impact the

actions of the Company have on people and the

environment and to that end weighs relevant

stakeholder interests. The Management Board

may perform all acts necessary or useful for

achieving the Company’s corporate purposes,

except for those expressly attributed to the

General Meeting or the Supervisory Board as a

matter of Dutch law or pursuant to the Articles

of Association.

The Management Board has informed the

Supervisory Board of the main outlines of the

Company’s strategic policy, the general and

financial risks, and the risk management and

control systems. Each Managing Director,

together with one other Managing Director, is

jointly authorised to represent the Company.

Pursuant to the Articles of Association, the

Management Board may grant one or more

persons, whether or not employed by the

Company, a power of attorney or other form of

continuing authority to represent the Company

or to grant one or more persons such titles as it

sees fit. No such powers of attorney have been

granted.

The General Meeting appoints the Managing

Directors. The Supervisory Board will nominate

one or more candidates for each vacant seat.

A resolution of the General Meeting to appoint

a Managing Director other than in accordance

with a nomination by the Supervisory Board

can be adopted by a majority of the votes

cast representing at least one third of the

Company’s issued capital. If such quorum is

not met, the Company is entitled to convene a

second meeting where no quorum shall apply.

The Articles of Association provide that a

Managing Director may be suspended or

dismissed by the General Meeting at any time.

A resolution of the General Meeting to suspend

or dismiss a Managing Director other than

pursuant to a proposal by the Supervisory

Board can be adopted by a majority of the

votes cast, representing at least one third of

the Company’s issued capital. If such quorum is

not met, the Company is entitled to convene a

second meeting where no quorum shall apply.

The Articles of Association provide that the

number of Managing Directors is determined by

the Supervisory Board after consultation with

the Management Board, but there will be at

least two Managing Directors. The Supervisory

Board has appointed one of the Managing

Directors as CEO.

Members of the Management Board

The Management Board is composed of the

following members:

Name Age Position Member End of

since current

term

Mr H.J.F. 52 CEO 2023 AGM of

(Jeroen) 2027

Pynenburg

Mr M.A. 52 COO 2019 AGM of

(Michiel) 2025

Staatsen

Mr H.D.W. 71 CTO 2016 AGM of

(Erik) Roesink 2025

Mr M.G.H. 48 CFO 2022 AGM of

(Marc) 2026

Luttikhuis

Mr H.J.F. Pynenburg (born 1971, Dutch) is

NX Filtration’s CEO since June 2023. Prior to

joining NX Filtration, Jeroen held the position of

Business Unit Director Electric Vehicle Charging

Equipment at Alfen, leading the growth of

this business. Prior to that, Jeroen was Global

lead Electric Vehicle Infrastructure Service

and Applications at ABB. Mr Pynenburg is a

Dutch national and holds a degree in Economics

and Business Administration from the Vrije

Universiteit in Amsterdam, the Netherlands.

Mr M.A. (Michiel) Staatsen (born 1971, Dutch)

is NX Filtration’s COO. Between May 2019 and

June 2023, he held the position of both CEO

and COO of NX Filtration. Prior to joining NX

Filtration, he held various positions related

to the food and water markets. He held the

position of chief operating officer at Pré Pain, a

leading manufacturer of frozen bake off bread

75NX Filtration - Annual Report74 Corporate Governance

in North-West Europe. Michiel Staatsen was

the chief operating officer and chief financial

officer of Grand Duet B.V., an industrial bake-

off bread bakery. He holds a master’s degree

in civil engineering from Delft University of

Technology in Delft, the Netherlands.

Mr H.D.W. (Erik) Roesink (born 1952, Dutch)

founded NX Filtration in 2016 and held the

position of CEO between 2016 and 2019. Since

2019 he focuses on business and technology

development and currently holds the role of

CTO. He is also a Emeritus Professor advanced

membranes for aqueous applications in

the research cluster membrane science &

technology at the University of Twente in

Enschede, the Netherlands since 2013. Prior

to joining NX Filtration, Erik Roesink worked

in various director roles in research and

development, strategic innovation and business

development at Pentair and Norit X-Flow.

Mr M.G.H. (Marc) Luttikhuis (born 1975, Dutch)

is NX Filtration’s CFO since 1 January 2022.

Marc Luttikhuis previously held CFO positions

at Brink Group (leading global manufacturer

of towing systems in the automotive industry)

and Heuver (leading European tyre wholesaler),

with responsibility for finance, IT, HR and

procurement functions. Marc holds a degree

in Business Economics, Management &

Organization from the University of Groningen,

the Netherlands.

Senior Management

The members of the Management Board

comprise the Senior Management of the

Company together with the following non-

statutory member:

Name Age Position Member

since

Mr A.M. 47 Chief 2021

(Alejandro) Commercial

Roman Fernandez Officer

Mr A.M. (Alejandro) Roman Fernandez

(born 1977, Spain) is NX Filtration’s Chief

Commercial Officer. Prior to joining NX

Filtration, Alejandro was a Vice President and

Global Commercial Head at Organica Water

where he was responsible for all sales activities

globally, managing the regional sales teams

and expanding the global partner network.

Prior to that, Alejandro held various roles

at Pentair (Netherlands), Xylem (Spain and

United Kingdom) and Thames Water (United

Kingdom). Alejandro holds a degree in Chemical

Engineering from the University of Cadiz (Spain)

and a degree in Environmental Science from

Kingston University in London (United Kingdom).

The business address of the Senior

Management of the Company is Josink Esweg

44, 7545 PN Enschede, the Netherlands.

Supervisory Board

Powers, responsibilities and functioning

The Supervisory Board supervises the

Management Board and the general course of

affairs of the Company, its subsidiaries and the

business affiliated therewith. The Supervisory

Board is accountable for these matters to the

General Meeting. The Supervisory Board also

provides advice to the Management Board.

In performing its duties, the Supervisory

Board focuses on the effectiveness of the

NX Filtration’s internal risk management and

control systems and the integrity and quality of

the financial reporting. The Supervisory Board

assists the Management Board with advice

on general policies related to the activities of

NX Filtration. In the fulfilment of its duty, the

Supervisory Board focusses on the interests of

the Company and its related business.

Members of the Supervisory Board

The Supervisory Board is composed of the

following members:

Name Age Position End of current

term

Ms C. 53 Member AGM of 2025

(Carolina) Wielinga (chair)

Mr B.A.M. 59 Member AGM of 2025

(Benno) van Dongen

Mr J.G. 44 Member AGM of 2027

(Hans) Slootweg

The business address of the Supervisory Board

of the Company is Josink Esweg 44, 7545 PN

Enschede, the Netherlands. Reference is made

to the Supervisory Board Report in this annual

report for their professional bio’s.

Remuneration

The remuneration policy applicable to the

Management Board was determined by

the General Meeting on 8 June 2021. Any

subsequent amendments to this remuneration

policy are subject to adoption by the General

Meeting, which resolution can only be adopted

by a majority of the votes cast. The Supervisory

Board shall make a proposal to this effect. The

remuneration of, and other agreements with,

the Managing Directors are required to be

determined by the Supervisory Board, with due

observance of the remuneration policy.

The Company’s remuneration policy aims

to attract, motivate and retain qualified

individuals and reward them with a market

competitive remuneration package that

focuses on achieving sustainable financial

results aligned with the sustainable long-term

strategy of the Company and fosters alignment

of interests of Managing Directors with

shareholders.

Based on the remuneration policy, the

remuneration of the current Managing

Directors consists of the following components:

• annual base pay;

• pension and other benefits; and

• only for Mr H.J.F. Pynenburg and Mr M.G.H.

Luttikhuis, a short-term incentive in cash

and a conditional award under the Long-

Term Incentive Plan.

A summary of the remuneration of the

Management Board is set out in the

Remuneration Report of the Supervisory Board

in this annual report.

Short-term incentive

The remuneration policy enables the

Supervisory Board to determine at its sole

discretion that newly appointed Managing

Directors become entitled to a short-term

incentive, which consists of cash only. In setting

the performance targets of the future short-

term incentives (if any), the Supervisory Board

will take into account the Company’s strategy

and medium- and long-term objectives,

amongst which revenue growth, scale-up of

production, market penetration and increasing

profitability, and ESG-criteria.

Long-Term Incentive Plan

The Company has implemented a participation

plan in order to attract and retain the best

available personnel to serve as Managing

Director and to align the economic interests of

the Managing Directors directly with those of

the Company’s shareholders. It is anticipated

that newly appointed Managing Directors will

be invited to receive a conditional award of

Ordinary Shares under the plan, at the sole

discretion of the Supervisory Board. The vesting

of an award is subject to the achievement of

predetermined financial and non-financial

(including ESG) performance conditions set

by the Supervisory Board on a yearly basis.

77NX Filtration - Annual Report76 Corporate Governance

Following the vesting of an award the Ordinary

Shares subject to the award are subject to a

holding period of two years as of the date of

vesting (or any different holding period as the

Supervisory Board may determine at the time

of grant) subject to continued engagement to

the Company.

Related Party Transactions

All legal entities that can be controlled, jointly

controlled or significantly influenced are

considered to be a related party. Also, entities

which can control, jointly control or significantly

influence the Company are considered a related

party. In addition, statutory and supervisory

directors and close relatives are regarded as

related parties. The following transactions were

carried out with related parties:

• Key management compensation, as

further disclosed in note 16 to the financial

statements;

• Management fee to Infestos Holding E

B.V, based on the consultancy agreement

between Infestos Holding E B.V. and NX

Filtration as entered into on the date of IPO

in the amount of €150 thousand;

• The agreement with Polymer Filtration

Solutions GmbH (PFS) which is a long-term

supplier of sulfonated poly (ether sulfone)

to NX Filtration. PFS is under the (indirect)

control of Infestos Nederland B.V.

All these transactions are made on terms

equivalent to those that prevail in arm’s length

transactions.

General Meeting

According to the Articles of Association,

General Meetings can be held in Amsterdam,

in the Netherlands, or any other place in the

Netherlands, at the choice of those who call the

meeting.

The annual General Meeting must be held at

least once a year, within six months after the

close of each financial year. An extraordinary

General Meeting may be convened, whenever

the Company’s interests so require, by the

Supervisory Board or the Management Board.

In addition, shareholders or others with meeting

rights under Dutch law representing jointly at

least one-tenth of the issued and outstanding

share capital may, pursuant to the Dutch

Civil Code, request that a General Meeting be

convened. If no General Meeting has been held

within eight weeks of the shareholders making

such request, the shareholders making such

request may, upon their request, be authorised

by the competent Dutch court in preliminary

relief proceedings to convene a General Meeting.

The convocation of the General Meeting must

be published through an announcement by

electronic means. Notice of a General Meeting

must be given by at least such number of days

prior to the day of the meeting as required

by Dutch law, which, at the date of this

annual report, is 42 calendar days. The notice

convening any General Meeting must include,

among other items, the agenda stating the

items to be discussed, the venue and time

of the General Meeting, the requirements

for admittance to the General Meeting, the

address of the Company’s website, and such

other information as may be required by

Dutch law. The agenda for the annual General

Meeting must contain specific subjects,

including, among other things, the adoption

of the annual accounts, the discussion of any

substantial change in the corporate governance

structure of the Company and the allocation

of the profits, insofar as these are at the

disposal of the General Meeting. In addition,

the agenda must include such items as have

been included in it by the Management Board,

the Supervisory Board or the shareholders and

others with meeting rights under Dutch law

(with due observance of Dutch law as described

below). If the agenda of the General Meeting

contains the item of granting discharge to

the Managing Directors and the Supervisory

Directors concerning the performance of their

duties in the financial year in question, the

discharge must be mentioned on the agenda as

separate items for the Management Board and

the Supervisory Board, respectively.

Shareholders and others with meeting rights

under Dutch law representing jointly at least

3% of the Company’s issued and outstanding

share capital may request, by a motivated

request, that an item is added to the agenda.

Such requests must be made in writing, must

either be substantiated or include a proposal

for a resolution, and must be received by the

Company at least 60 days before the day

of the General Meeting. No resolutions may

be adopted on items other than those that

have been included in the agenda (unless the

resolution would be adopted unanimously

during a meeting where the entire issued capital

of the Company is present or represented).

Shareholders who, individually or with other

shareholders, hold Ordinary Shares that

represent at least 1% of the issued and

outstanding share capital or a market value of

at least €250,000 may request the Company

to disseminate information that is prepared by

them in connection with an agenda item for a

General Meeting, provided that the Company

has done a so-called “identification round” in

accordance with the provisions of the Dutch

Securities Transactions Act. The Company can

only refuse disseminating such information,

if received less than seven business days prior

to the day of the General Meeting, if the

information gives or could give an incorrect or

misleading signal or if, in light of the nature

of the information, the Company cannot

reasonably be required to disseminate it.

More information about the authority of the

General Meeting and the articles of association

can be found on NX Filtration’s website.

Special provisions relating to

Unless indicated otherwise, there are no

restrictions on the transfer of shares, the

exercise of voting rights or the term for

exercising those rights, and there are no

special controlling rights attached to shares.

Pursuant to a resolution adopted by the General

Meeting, the Management Board has been

authorised, for a period of three years following

6 April 2023, subject to the approval of the

Supervisory Board, to resolve to issue Ordinary

Shares (either in the form of stock dividend

or otherwise) and/or grant rights to acquire

Ordinary Shares up to a maximum of 20% of the

number of Ordinary Shares issued immediately

following 6 April 2023, and to exclude pre-

emptive rights in relation thereto. In addition,

the Management Board has been, pursuant to

a resolution of the General Meeting, authorised

for a period of 18 months following 6 April 2023

(i.e. until and including 6 October 2024), subject

to the approval of the Supervisory Board, to

acquire its own Ordinary Shares (including

Ordinary Shares issued as stock dividend), up

to a maximum of 10% of the issued capital at

the date of acquisition, provided that Company

will hold no more Ordinary Shares in stock

than a maximum of 50% of the issued capital,

either through purchase on a stock exchange or

otherwise, at a price, excluding expenses, not

lower than the nominal value of the Ordinary

Shares and not higher than the opening price

on Euronext Amsterdam on the day of the

repurchase plus 10%.

Dutch Corporate Governance

Code

The Dutch Corporate Governance Code, as

amended in 2022, finds its statutory basis

in Book 2 of the Dutch Civil Code (the Dutch

Corporate Governance Code). The Dutch

Corporate Governance Code applies to the

79NX Filtration - Annual Report78 Corporate Governance

Company as the Company has its statutory

seat in the Netherlands and its Ordinary Shares

are admitted to listing and trading on Euronext

Amsterdam.

The Dutch Corporate Governance Code is based

on a ‘comply or explain’ principle. Accordingly,

companies are required to disclose in their

management report whether or not they

are complying with the various best practice

principles of the Dutch Corporate Governance

Code that are addressed to the management

board or, if applicable, the supervisory board

of the company. If a company deviates from a

best practice principle in the Dutch Corporate

Governance Code, the reason for such deviation

must be properly explained in its management

report.

Deviations from the Best Practice

Principles of the Dutch Corporate

Governance Code

The Company acknowledges the importance

of good corporate governance. The Company

agrees with the general approach and is

committed to adhering to the best practices of

the Dutch Corporate Governance Code as much

as possible. The Company fully complies with the

Dutch Corporate Governance Code, except for

best practice provisions set out below.

- The Company is not fully compliant with best

practice provisions 2.1.5-2.1.6 that requires

that the D&I policy of the Company should

in any case set specific, appropriate and

ambitious targets in order to achieve a good

balance in gender diversity and the other

D&I aspects of relevance to the Company

with regard to the composition of the

Management Board, the Supervisory Board

and sub-top management.

In 2023, we have made significant

improvements as regards D&I following the

introduction of the Company’s D&I Policy and

the signed CEO statement. In the following

paragraph of this annual report we elaborate

extensively on our D&I efforts and report

on gender data for the Management Board,

Supervisory Board and sub-top management.

However, given the early-stage nature of

the Company, we had also other challenges

and priorities to deal with, but we expect to

comply with these best practice provisions in

respect of the financial year 2024.

- The Company is not in compliance with

best practice provisions in principle 1.3 that

requires an internal auditor. The current

size of the Company does not justify the

appointment of an internal auditor. In 2023

the Supervisory Board has reassessed

the need for an internal auditor. Based

on this review, the Supervisory Board has

recommended the Management Board that

the current size of the Company still does

not justify the appointment of an internal

auditor.

Diversity Policy Supervisory

Board

The diversity policy of NX Filtration has been

in effect since its adoption by the Supervisory

Board on 11 June 2021 (the Policy).

The Supervisory Board values and promotes

diversity in the Management Board and

the Supervisory Board, and also in the

Company as a whole. The Supervisory Board

recognises that differences in skills, experience,

background, nationality, age, race, gender,

sexual orientation, religious beliefs, physical

ability and other characteristics of people are

important and enable both the Management

Board and the Supervisory Board as well as

the Company as a whole to look at issues

and to solve problems in a different way, to

respond differently to challenges and to take

more robust decisions. All these different skills

and backgrounds reflect the diverse nature of

the environment in which the Company and

its stakeholders operate, and improve the

effectiveness through diversity of approach

and thought. Diversity furthermore drives

innovation, and accelerates growth. It enables

the Company to attract and maintain the best

talented people.

The Management Board and the Supervisory

Board collectively are considered diverse and

balanced from an educational background

and work experience. The Management Board

and the Supervisory Board consist of people

with a good mix of sector knowledge, financial

expertise and management capabilities.

Annually, the Supervisory Board assesses the

composition of the Supervisory Board and

of the Management Board, and agrees to

measurable objectives for achieving diversity on

the Boards. At the date of this annual report,

the Supervisory Board meets the quota as

prescribed by law.

Diversity & Inclusion (D&I) within

NX Filtration

In this paragraph we explain our D&I policy and

the way in which it is implemented in practice,

(i) the goals of the D&I policy; (ii) the plan to

achieve the goals of the D&I policy; (iii) the

results of the D&I policy in the past financial

year and – where relevant and applicable

– insight into the inflow, progression and

retention of employees; and (iv) the gender

composition of the Management Board, the

Supervisory Board, and senior management at

the end of 2023.

NX Filtration recognizes that for the success

of the company, a culture of diversity, equity

and inclusion is essential and therefore NX

Filtration fosters such a culture. As we continue

to grow rapidly, we truly want to keep building

our diverse and inclusive workplace. Our human

capital is the most valuable asset we have. The

collective sum of the individual differences,

life experiences, knowledge, inventiveness,

innovation, self-expression, unique capabilities

and talent that our employees invest in

their work represents a significant part of

not only our culture, but our reputation and

company’s achievement as well. We embrace

and encourage our employees’ differences

in age, color, disability, ethnicity, family or

marital status, gender identity or expression,

language, national origin, physical and mental

ability, political affiliation, race, religion, sexual

orientation, socio-economic status, and other

characteristics that make our employees

unique.

Please also refer to the Diversity and Inclusion

Policy Statement signed by our CEO.

Creating Awareness and Training

We strongly believe that in any organization,

addressing bias is an ongoing journey that

needs structural changes to policies and

operations. Increasing awareness within

NX Filtration is vital, but training people to

manage their biases, change their behaviors

and monitor how they are doing business takes

it to the next level. Therefore we offer various

trainings on topics such as:

• Cultural Diversity: how to deal with cultural

differences in the workplace.

• Social Intelligence: open communication to

create a trusting work environment that

will enable that Personnel can be their true

self.

• Giving and asking for feedback: helps

Personnel to better formulate their

arguments and therefore be able to subtly

put an (unbiased) opinion on the table.

Recruitment

Bias in the workplace limits diversity,

recruitment, promotion and retention. It can

shape a company’s culture and standards if

81NX Filtration - Annual Report80 Corporate Governance

left to languish. NX Filtration seeks to break

biases to become more diverse, equitable, and

inclusive. Identifying how bias shows in talent

management, training and development,

performance management and talent

acquisition plays a major role. All our recruiters

go through interactive bias-at-work training

to help them identify their own biases and

how to reduce the risk of bias in recruitment.

The training helps our recruiters support

their managers in minimizing bias during the

hiring process. Other practices that we make

use of to reduce bias include, to the extent

appropriate, anonymized C.V. screenings, round

table discussions, assessing competency rather

than specific experience and diverse interview

panels.

An international workforce

We are committed to fostering an international

work environment where every employee

can thrive. We promote diversity by offering

opportunities for international mobility as well

as intercultural training and cross-cultural work

teams, which are major factors of individual

and career development.

Equal opportunity globally

At NX Filtration, equality across the board is

key. We strongly believe that diversity is vital to

our business and we are committed to creating

an atmosphere where everyone can feel like

they belong. We nurture an environment

comprising of a group of people who are not

only diverse in skillset, but also in (cultural)

backgrounds, perspectives and experience,

disability status, ethnicity, age, gender identity

and sexual orientation among others, in all

countries we operate.

Gender balance

We empower the women in our organisation

and are committed to promoting equal

opportunities. We seek to increase the share

of women in senior management positions. As

we reflect on the achievements and progress

made throughout the previous year, we find it

important to transparently address a challenge

that has been prevalent in our industry. At the

end of the year, our gender balance stands

at 15% women and 85% men. This ratio is

not unique to our organization; it is a broader

concern within the industry. It is crucial

to recognize that we continue to focus on

initiatives towards achieving a more balanced

and sustainable gender balance.

Disability and accessibility

We have made good progress over the years

towards better accessibility for disabled people.

In our production facilities we take into account

the diverse nature of disability (including hidden

or invisible impairments) and how to support

different needs.

Zero tolerance for harassment, bullying

and racism

Our Code of Conduct, Business Ethics Policy,

and Human Rights Policy describe values and

principles that every employee of NX Filtration

must observe in the course of their work. These

rules of conduct guide our behaviour when

acting within or on behalf of NX Filtration.

In particular, we are committed to fostering

respect for human dignity and for employees’

work, and to a zero tolerance policy for

harassment, bullying and racism. In doing

this, we stand against racism, discrimination,

and bias of any kind, striving to ensure that

everyone feels equally welcome and embraced.

Wet ingroeiquotum en

streefcijfers (Dutch Diversity Act)

NX Filtration is bound by the obligations laid

down in the Wet ingroeiquotum en streefcijfers

(Dutch Diversity Act), which came into force on

1 January 2022.

Supervisory Board

Our Supervisory Board consists of 1 woman

and 2 men. NX Filtration thereby meets the

diversity quota of at least one-third female and

one-third male on the Supervisory Board and

will continue to do so.

Management Board

NX Filtration’s Management Board consists of

4 men. NX Filtration thereby does not meet the

diversity quota of at least one-third female and

one-third male on the Management Board.

Sub-top management

This sub-top management group consisted

of 11 employees as of 1 January 2023, and

reached a total number of 13 employees per 31

December 2023.

Date # # % %

Women Men Women Men

1 January 2023 4 7 36% 64%

31 December 2023 4 9 31% 69%

Sub-top objective

For the purpose of the Dutch Diversity Act,

NX Filtration has defined the sub-top as

those executives who report directly to the

management board. This includes all entities

within NX Filtration, therefore also including all

countries in which NX Filtration is based.

Plans to promote a proportionate split

between women and men

In order to ensure a proportionate split, i.e. a

larger share of women, we mainly focus on the

new employees, which, given NX Filtration’s

growth, involves a considerable number of

employees every year.

For increasing the number of women in our

organisation we will focus for the coming years

on the following pillars:

1. Inflow and internal promotions;

2. Cooperation with educational institutions;

and

3. External appearance.

Re 1. Inflow and internal promotions

Given NX Filtration’s growth, many employees

are recruited every year. Both by our internal

recruitment team and with the help of external

parties. The value of diversity is explicitly

discussed within the recruitment team and

with external parties and targets are set for

the supply of female candidates. For internal

promotion, the possibility of promoting women

to management positions is explicitly discussed

and stimulated.

Re 2. Cooperation with educational institutions

We strongly believe that, in order to show

the attractiveness of technology in general,

one needs to focus on the employees of the

future. Therefore it is essential that we provide

children with the guidance and resources

they need to make informed decisions about

their future (education). We will intensify

the cooperation with schools (ranging from

vocational education to universities) to offer

interesting insights in our organisation as well

as technology in general. This includes offering

internships as well as graduation assignments.

Doing so, we will specifically focus on attracting

female students for our organisation.

Re 3. External appearance

We will focus on increasing the visibility of

women in our company in recruitment activities

and social media activities, among others.

Female speakers at conferences and events

will also contribute to the desired image of our

Company.

Gender balance targets

During 2023, the Management Board set a

gender balance target for the Management

Board to have at least one female in 2028.

When setting the gender balance target for

the Management Board, the Supervisory Board

has considered the technology environment NX

Filtration operates in, with a thinly populated

83NX Filtration - Annual Report82 Corporate Governance

global STEM (science, technology, engineering

and math) talent pool, making it challenging

to recruit female talent. Furthermore, during

2023 a gender balance target was set to reach

a representation of women at sub-top level of

40% by 2028, the current level being 31%.

Takeover Directive (Article 10)

In the context of the EU Takeover Directive

(Article 10) Decree, the following notifications

must be given insofar as they are not included

in this Annual Report.

Capital Structure

As at 31 December 2023, the issued

share capital of the Company amounts to

€500,251.90 divided into 50,025,190 Ordinary

Shares, each with a nominal value of €0.01.

Each Ordinary Share confers the right to cast

one vote.

Limitations on the transfer of shares

NX Filtration has not imposed any limitations on

the transfer of its shares and therefore there are

no outstanding or potential protection measures

against a takeover of control of the company.

Substantial holdings

On the date hereof, NX Filtration has

50,025,190 Ordinary Shares outstanding in

the market. Pursuant to the Dutch Financial

Supervision Act (Wet op het financieel toezicht),

interests in the issued capital of NX Filtration

of 3% or more are required to be disclosed to

the Netherlands Authority for the Financial

Markets (AFM). At year-end 2023, the following

shareholders were known to hold interests of

at least 3% directly in the Company (as per

AFM disclosure on 31 December 2023, actual

substantial holdings may differ):

Shareholder Number of Percentage of the

Ordinary issued share capital

Shares of the Company

B.H.F. 29.402.463 58.80%

ten Doeschot

(1)

B.V. 5.030.020 10.06%

Beleggingsfonds

Hoogh Blarick

Teslin 2.932.954 5.87%

Participaties

Coöperatief U.A.

M&G Plc 1.432.918 2.86%

Notes:

(1)

Through Infestos Holding E B.V. and Stichting

Administratiekantoor NX Filtration Holding.

These entities are ultimately controlled by

Mr B.H.F. ten Doeschot.

Material Subsidiaries

NX Filtration B.V., NX Filtration International

B.V., NX Filtration Real Estate B.V. (each

incorporated in the Netherlands), NX

Filtration (Beijing) Membrane Technology Co.

(incorporated under Chinese law), Ltd., NX

Filtration India Private Limited (incorporated

under Indian law), and NX Filtration Americas,

LLC (incorporated under United States law) are

the only (material) subsidiaries of the Company.

The Company holds, either directly or indirectly,

100% of the ownership interest therein.

Special controlling rights

No special controlling rights are attached to the

shares in the Company.

Employee equity plans

See above under Long-Term Incentive Plan and

Short-term incentive.

Limitations on voting rights

Each share confers the right to cast one vote.

The voting rights attached to the shares in the

Company are not restricted, and neither are the

terms in which voting rights may be exercised

restricted.

Agreements on limitations on the transfer

of shares

The Senior Management and certain other key

employees of the Company hold depository

receipts in Stichting Administratiekantoor NX

Filtration Holding (DRs) as they have been

given the opportunity to indirectly participate

in the capital of the Company. The larger part

of these DRs is subject to lock-up restrictions.

One-third of the DRs held by a member at such

time (the Shareholding Reference Date) have

been unconditionally released from the lock-up

restrictions on 11 June 2022, one-third of the

DRs held by a member on the Shareholding

Reference Date have been unconditionally

released from the lock-up restrictions on 11

June 2023, and the remaining one-third of the

DRs held by a member on the Shareholding

Reference Date will be unconditionally released

from the lock-up restrictions on 11 June 2024,

in each case on the condition that the relevant

member of the Senior Management or relevant

key manager of the Company continues to be

employed by the Company on these dates.

Appointment and dismissal of

Management Board members and

Supervisory Directors and amendment of

the Articles of Association

The General Meeting appoints the Managing

Directors. The Supervisory Board will nominate

one or more candidates for each vacant seat.

A resolution of the General Meeting to appoint

a Managing Director other than in accordance

with a nomination by the Supervisory Board

can be adopted by a majority of the votes

cast representing at least one third of the

Company’s issued capital. If such quorum is

not met, the Company is entitled to convene a

second meeting where no quorum shall apply.

The Articles of Association provide that a

Managing Director may be suspended or

dismissed by the General Meeting at any time.

A resolution of the General Meeting to suspend

or dismiss a Managing Director other than

pursuant to a proposal by the Supervisory

Board can be adopted by a majority of the

votes cast, representing at least one third of

the Company’s issued capital. If such quorum is

not met, the Company is entitled to convene a

second meeting where no quorum shall apply.

The Articles of Association provide that the

number of Managing Directors is determined by

the Supervisory Board after consultation with

the Management Board, but there will be at

least two Managing Directors. The Supervisory

Board has appointed one of the Managing

Directors as CEO. In addition, the Supervisory

Board has appointed one of the Managing

Directors as CFO (chief financial officer) to

specifically oversee the Company’s financial

affairs.

The Supervisory Board Rules provide that the

Supervisory Board must consist of a minimum

of three members. The exact number of

Supervisory Directors shall be determined by

the Supervisory Board. The Supervisory Board

will consists of three members. Only natural

persons may be appointed as Supervisory

Directors.

In accordance with the Articles of Association,

the Supervisory Board has prepared a profile

(profielschets) for its size and composition,

taking account of the nature and activities

of the business, the desired expertise and

background of the Supervisory Directors, the

desired mixed composition and the size of the

Supervisory Board and the independence of the

Supervisory Directors. The Company’s diversity

policy is also taken into account.

The General Meeting appoints the Supervisory

Directors. The Supervisory Board will nominate

one or more candidates for each vacant seat. A

resolution of the General Meeting to appoint a

Supervisory Director other than in accordance

85NX Filtration - Annual Report84 Corporate Governance

with a nomination by the Supervisory Board

can be adopted by a majority of the votes

cast representing at least one third of the

Company’s issued capital. If such quorum is

not met, the Company is entitled to convene a

second meeting where no quorum shall apply.

The Articles of Association provide that a

Supervisory Director may be suspended or

dismissed by the General Meeting at any time.

A resolution of the General Meeting to suspend

or dismiss a Supervisory Director other than

pursuant to a proposal by the Supervisory

Board can be adopted by a majority of the

votes cast, representing at least one third of

the Company’s issued capital. If such quorum is

not met, the Company is entitled to convene a

second meeting where no quorum shall apply.

The General Meeting may pass a resolution

to amend the Articles of Association with an

absolute majority of the votes validly cast in

the General Meeting, but only (i) on a proposal

of the Management Board that has been

approved by the Supervisory Board or (ii) in the

absence of such a proposal, with the explicit

approval of the Management Board and the

Supervisory Board or (iii) on the proposal of

a Shareholder, or shareholders acting jointly

provided that they belong to the same group,

for as long as they solely or jointly represent at

least 30% of the issued capital of the Company.

Any such proposal must be stated in the notice

of the General Meeting.

In the event of a proposal to the General

Meeting to amend the Articles of Association,

a copy of such proposal containing the

verbatim text of the proposed amendment

will be deposited at the Company’s office,

for inspection by shareholders and other

persons holding meeting rights, until the end

of the meeting. Furthermore, a copy of the

proposal will be made available free of charge

to shareholders and other persons holding

meeting rights from the day it was deposited

until the day of the meeting. A resolution by

the General Meeting to amend the Articles of

Association requires an absolute majority of the

votes cast. A resolution of the General Meeting

to amend the Articles of Association that has

the effect of reducing the rights attributable to

holders of share of a particular class, is subject

to approval of the meeting of holders of shares

of that class.

The Management Board’s powers

especially to issue shares

Pursuant to a resolution adopted by the

General Meeting, the Management Board has

been authorised, for a period of three years

following 6 April 2023, subject to the approval

of the Supervisory Board, to resolve to issue

Ordinary Shares (either in the form of stock

dividend or otherwise) and/or grant rights to

acquire Ordinary Shares up to a maximum of

20% of the number of Ordinary Shares issued

immediately following 6 April 2023, and to

exclude pre-emptive rights in relation thereto.

Significant agreements and changes in the

control of the company

NX Filtration does not have any such

agreements.

Redundancy agreements in the event of a

public takeover bid

NX Filtration has not concluded any agreements

with a Management Board member or employee

that provides for any severance pay in the case

of a termination of employment in connection

with a public bid within the meaning of Article

5:70 of the Dutch Financial Supervision Act.

Shareholders

See Substantial Holdings.

Dividend Policy

The dividend policy is to reserve all profits (if

any) until the policy is revised. NX Filtration

does not pay dividends to its shareholders at

this moment in time.

Financial calendar

Date Event

9 February 2024 Publication full year results 2023

9 April 2024 Annual General Meeting

28 August 2024 Publication half-year results 2024

NX Filtration applied the following closed

periods for transactions directly or indirectly,

relating, to shares and other financial

instruments in NX Filtration:

• 1 May 2023 until 30 August 2023

• 1 November 2023 until 9 February 2024

In accordance with best practice provision

1.4.3. of the Dutch Corporate Governance

Code, the Management Board states to the

best of its knowledge that:

• the report of the Management Board

provides sufficient insight into any

shortcomings in the effectiveness of the

internal risk management and control

systems;

• those systems provide reasonable

assurance that the financial report does

not contain any material misstatements;

• in the current situation, it is appropriate

for the financial report to be prepared on a

going concern basis; and

• the report states those material risks

and uncertainties that are relevant to the

expectation of the company’s continuity

for the period of twelve months after the

preparation of the report.

As required by the relevant statutory provisions,

the Management Board hereby declares that to

the best of its knowledge:

• the report of the Management Board

provides a true and fair view of the position

of NX Filtration and its subsidiaries

included in the consolidation on the

reporting date and of the course of their

affairs during the financial year. The

report of the Management Board provides

information on any material risks to which

NX Filtration is exposed;

• The Consolidated Financial Statements

as at and for the year ended 31 December

2023, give a true and fair view of the

assets, liabilities, financial position and

result of the financial year of NX Filtration

and its subsidiaries included in the

consolidation as a whole.

Enschede, 9 February 2024

Management Board

Jeroen Marc Michiel Erik

Pynenburg Luttikhuis Staatsen Roesink

CEO CFO COO CTO

87NX Filtration - Annual Report86 Corporate Governance

Report of the

Supervisory

Board

89NX Filtration - Annual Report88 Report of the Supervisory Board

Hans SlootwegBenno van DongenCarolina Wielinga

Chair

Report of the

Supervisory Board

The Supervisory Board’s main responsibility

is to supervise and advise the Management

Board, in particular regarding the strategy for

realising sustainable long-term value and the

manner in which the strategy is implemented.

The Supervisory Board supervises the

Management Board on actions that have

an impact on people and the environment

and to that end it weighs the interests of all

relevant stakeholders involved. The Supervisory

Board also focuses on the effectiveness of

the Company’s internal risk management and

control systems and the integrity and quality

of the financial reporting. In 2023, we were

therefore pleased to see a demonstration of NX

Filtration’s commitment to enhanced corporate

governance and risk management. We

approved a new formal fraud risk framework

and a new internal control framework. These

frameworks are essential pillars in fortifying NX

Filtration against potential risks and ensuring

the integrity of its operations.

Activities and priorities 2023

As we reflect on the events of 2023, the

Supervisory Board acknowledges the challenges

faced by NX Filtration that significantly

influenced its operational environment. While

NX Filtration communicated lower than

anticipated top line growth, the Supervisory

Board engaged in a constructive dialogue

with the Management Board to gain insights

into the underlying factors. This collaborative

approach reflects our commitment to fostering

transparency and accountability throughout

the Company.

Despite several challenges on the commercial

side, NX Filtration made major steps forward

with key OEMs that further intensified their

pilot programs, entered into cooperation

agreements with NX Filtration, and started

offering NX Filtrations’s products in full-scale

projects. We believe that NX Filtration’s strong

technological position is underscored by a

sustained high gross margin and a continuation

of repeat orders from existing partners across

Europe, the Americas and Asia.

Furthermore, the Supervisory Board monitored

the expansion of NX Filtration production

capabilities and it is pleased to note that

NX Filtration is fully on-track with its new

megafactory.

In 2023, monitoring of top-line development,

operations and the potential need for additional

funding and financing of NX Filtration going

forward remained priority for us.

The formulation and execution of an effective

strategy are paramount in sustaining long-

term growth. The Supervisory Board has

closely monitored the development and

implementation of NX Filtration’s strategy,

offering constructive input to enhance its

effectiveness. We believe that this strategy

will position NX Filtration for continued success

in a competitive market. One other key point

of attention was the effectiveness of NX

Filtration’s sales organization. The Supervisory

Board acknowledges the diligent efforts

undertaken by the Management Board to

optimize the sales structure.

We determined that NX Filtration has

sound processes in place of achieving

sustainable long-term value for its customers

and shareholders, its people and society.

Furthermore, we continued to work in our

ESG Committee regarding sustainability,

environmental, social, corporate governance

and human capital matters.

91NX Filtration - Annual Report90 Report of the Supervisory Board

Strategy and sustainable

long-term value creation

The Supervisory Board fully supports NX

Filtration’s strategy. During 2023, the

Supervisory Board devoted a considerable

amount of time discussing strategic topics.

We performed the recurring annual review

of NX Filtration’s corporate strategy and the

long-term financial plan. Some of the main

challenges concern realizing NX Filtration’s

ambitious top line growth and timing thereof,

also in relation to the planned capacity

additions to facilitate this growth, and ensure

that costs remain under control. The growth of

the organization has been very-well managed,

but should continue to be managed, with a solid

onboarding process. The supply-chain is under

control but requires attention given inflationary

developments.

With increasing demand for NX Filtration’s

products in combination with its focus on

execution of its strategic priorities, the

Supervisory Board has confidence in NX

Filtration’s long-term growth opportunities

and the continued delivery of value to its

stakeholders. As part of several deep dive

strategy reviews, we focused on long-term

water market developments and external

global forces, including geopolitics and ESG

topics.

Composition and diversity

Ms C. (Carolina) Wielinga (born 1970, Dutch)

is the chief financial officer of BDR Thermea

Group, a global manufacturing company

in smart thermal heating solutions. She is

supervisory board member and chair of the

audit committee at Gasunie and has been a

supervisory board member of Darlin N.V. (part

of Teslin) (2010-2017). Ms Carolina Wielinga

is an all-round finance business executive with

over 25 years of experience. Prior to joining the

BDR Thermea Group, Ms Carolina Wielinga

had several functions at Rabobank and its

subsidiaries, as head of financial restructuring

and recovery at Rabobank Group (2016-2018),

chief financial risk officer/chief operating

officer at FGH Bank (2015-2016) and chief

financial risk officer at Rabo Real Estate

Group (2013-2015). In the period 2011-2013,

she was senior director finance at Vion Food

Group, an international supplier of meat, meat

products and plant-based alternatives. Ms

Carolina Wielinga started her career at Arthur

Andersen (1993-2002), followed by roles as

director business advisory services at KPMG

(2002-2005) and country market leader and

managing director of Protivi in the Netherlands

(2005-2010). Ms Carolina Wielinga holds a

master’s degree in business administration

from University of Groningen in Groningen,

the Netherlands and is also a chartered

accountant.

Mr B.A.M. (Benno) van Dongen (born 1964,

Dutch) is a senior partner at Roland Berger,

for which he co founded the Amsterdam office

in 2002. At Roland Berger, Mr Benno van

Dongen is focusing on technology intensive

industries and life sciences, public private

partnerships and academia. He supports

these groups in innovation management,

growth strategy, business model development

and creating business plans. Prior to joining

Roland Berger, Mr Benno van Dongen was an

associate director at Arthur D. Little, where

he focused on, amongst others, advising

companies in the water markets as head of

the engineering, manufacturing and resources

practice. Mr Benno van Dongen studied

chemical engineering and materials science

at Delft University of Technology in Delft, the

Netherlands and has an MBA degree from

INSEAD in Fontainebleau, France. He is a

member of the advisory board of Kalmeijer, a

manufacturer of bakery machinery, a selected

member of advisory platform AcTI (Netherlands

Academy for Technology and Innovation) and

a director of academic society Royal Holland

Society of Sciences and Humanities (Koninklijke

Hollandsche Maatschappij der Wetenschappen).

Mr J.G. (Hans) Slootweg (born 1979, Dutch)

works at Infestos Nederland B.V., where he

currently holds the role of investment director.

Mr J.G. Slootweg’s expertise is in supporting

companies on areas including technology, R&D,

finance and accounting. This expertise will be

of added value to the Supervisory Board of

the Company. Prior to joining Infestos, Mr J.G.

Slootweg worked as manager at Scotch & Soda

(2012-2014) and as senior manager at KPMG

(2003-2012). He holds a master’s degree in

accountancy from Nyenrode University in the

Netherlands.

The business address of the Supervisory Board

is Josink Esweg 44, 7545 PN Enschede, the

Netherlands.

The Supervisory Board operates independently

of the Management Board, any other

participating interests and each other. Each

of the Supervisory Board members has

the necessary expertise, experience and

background to perform his or her tasks and

responsibilities. Two of the three members

of the Supervisory Board are independent

within the meaning of the Dutch Corporate

Governance Code as, in the opinion of the

Supervisory Board, the requirements referred

to in best practice provisions 2.1.7 to 2.1.9

inclusive of the Dutch Corporate Governance

Code have been fulfilled.

One of the Supervisory Board members is not

independent within the meaning of the Dutch

Corporate Governance Code. Pursuant to

the relationship agreement between Infestos

Holding E B.V., Stichting Administratiekantoor

NX Filtration Holding and NX Filtration dated

8 June 2021, Infestos Holding E B.V. has the

right to designate for nomination, and propose

replacements for, two Supervisory Directors

on the Supervisory Board. One out of three

Supervisory Directors is a representative of

Infestos: Mr Hans Slootweg.

The Management Board and the Supervisory

Board collectively are considered diverse and

balanced from an educational background

and work experience. The Management Board

and the Supervisory Board consist of people

with a good mix of sector knowledge, financial

expertise and management capabilities.

Annually, the Supervisory Board assesses the

composition of the Supervisory Board and

of the Management Board, and agrees to

measurable objectives for achieving diversity on

the Boards.

At the date of this annual report, the

Supervisory Board meets the diversity quota as

prescribed by law.

The Supervisory Board consists of the following

three members:

Name Gender Age Position Initial appointment End of current term

Ms C. (Carolina) Wielinga Female 53 Member and Chair 11 June 2021 AGM 2025

Mr B.A.M. (Benno) van Dongen Male 59 Member 11 June 2021 AGM 2025

Mr J.G. (Hans) Slootweg Male 44 Member 6 April 2023 AGM 2027

NX Filtration - Annual Report92 Report of the Supervisory Board

Where searches for appointment to any of

the Boards or to senior management are

conducted by NX Filtration or by search firms,

they will identify and present a long list of

candidates who are considered to meet the

essential criteria for the relevant vacancy,

including qualified females and people of colour.

The Boards will consider suitably qualified

candidates for positions from as wide a pool as

appropriate, including candidates with little or

no previous listed company board experience

but whose skills and experience will add value to

the relevant Board.

Meetings and attendance

The Supervisory Board held five meetings

in 2023, which were all regular scheduled

meetings. All such meetings were attended by

the members of the Management Board. In

addition, several meetings were held without

the members of the Management Board, such

as the meeting where the Supervisory Board

discussed its own functioning. All members

of the Supervisory Board attended all the

meetings, as such the absenteeism rate is zero.

Other than the Audit Committee and the

ESG Committee, the Supervisory Board has

not installed any standing committees as

this is not required under Dutch law or the

Dutch Corporate Governance Code based on

the current composition of the Supervisory

Board. If the Supervisory Board would in the

future consist of more than four members,

it should, in addition to the existing Audit

Committee, appoint from among its members

a remuneration committee and a selection

and appointment committee to remain

in compliance with the Dutch Corporate

Governance Code.

The Chair speaks with the CEO on a monthly

basis. Next to the key priorities mentioned

earlier the Supervisory Board agenda contained

the financials, risk management, audit plan

of the external auditor, financing structure,

Long Term Incentive Plan for key management,

HR overviews, development and diversity, and

budget 2024.

Audit Committee

NX Filtration has an Audit Committee,

consisting of Mr Benno van Dongen and Ms

Carolina Wielinga, the independent members

of the Supervisory Board. The Audit Committee

held two meetings in 2023. The duties of the

Audit Committee include:

• informing the Supervisory Board of

the results of the statutory audit and

explaining how the statutory audit has

contributed to the integrity of the financial

reporting and how the Audit Committee

has fulfilled this process;

• monitoring the financial and sustainability

reporting process and making proposals to

safeguard the integrity of the process;

• monitoring the effectiveness of the internal

control systems, the internal audit system

and the risk management system with

respect to financial and sustainability

reporting;

• monitoring the statutory audit of the

annual accounts, and in particular the

process of such audit

• monitoring the independence of the

external auditor; and

• adopting procedures with respect to the

selection of the external auditor.

ESG Committee

NX Filtration has an ESG Committee,

consisting of Mr Benno van Dongen and Ms

Carolina Wielinga, the independent members of

the Supervisory Board. See for disclosure on NX

Filtration’s ESG Committee, the Sustainability

report included in this annual report.

Remuneration report

The remuneration of, and other agreements

with, the Managing Directors are required to

be determined by the Supervisory Board in

any given year, with due observance of the

remuneration policy of the Company (the

Remuneration Policy). Any amendments to the

Remuneration Policy are subject to adoption by

the General Meeting.

The Remuneration Policy is designed taking

into account the Company’s vision (“pure

and affordable water across the globe’’),

mission (“to be a leading global provider of

breakthrough nano-filtration technology

that enables customers to, amongst others,

produce pure and affordable water, treat

wastewater and reduce their water footprint,

and achieve strong sustainability benefits’’)

and values (“Sustainable, Adaptive, Reliable,

Knowledgeable”) through performance targets

related to for example growth, innovation

and sustainability. The Remuneration Policy

contributes to long-term value creation because

variable remuneration is higher when targets

are exceeded and no variable remuneration is

payable if threshold targets are not met. This

helps to ensure the alignment of the Managing

Directors’ interests with that of the Company’s

stakeholders and create a true pay-for-

performance culture. The Remuneration Policy

fosters alignment of interests of the Managing

Directors with its shareholders and other

stakeholders. Furthermore, the Remuneration

Policy is designed in a way that Managing

Directors and Supervisory Directors are not

encouraged to take or stimulate inappropriate

risks.

The Remuneration Policy aims to attract,

motivate and retain qualified individuals

and reward them with a market competitive

remuneration package that focuses on

achieving sustainable financial results aligned

with the long-term strategy of NX Filtration

and fosters alignment of interests of Managing

Directors with shareholders. Based on the

Remuneration Policy, the remuneration of the

Managing Directors consists at least of the

following components: annual base pay and

pension and other benefits. Managing Directors

Jeroen Pynenburg and Marc Luttikhuis each are

entitled to a short-term incentive in cash and

a conditional award of shares under the Long-

Term Incentive Plan next to the annual base pay

and pension and other benefits.

Annual base pay

This represents a fixed cash remuneration

consisting of the base salary including holiday

allowance that is set based on the level of

responsibility of the Managing Directors.

Pension and other benefits

Managing Directors are generally eligible to

participate in a pension plan at the level of NX

Filtration B.V., a wholly-owned subsidiary of

NX Filtration, but they may waive their pension

rights. The Managing Directors contribute

to the pension plan (eigen bijdrage) if they

participate in the pension plan.

Managing Directors are generally eligible for a

range of other emoluments, such as the use of

a company car (except for Mr M.A. Staatsen

and Mr. H.D.W. Roesink), an expense allowance

reflective of the position of the Managing

Director, a collective health insurance, and

housing (for Jeroen Pynenburg). NX Filtration

has arranged and paid for a directors and

officers liability insurance for the members of

the Management Board.

Notice period

The management agreements for the

Managing Directors are entered into for an

indefinite term. The notice period for the

Managing Directors is three months and for NX

Filtration six months.

95NX Filtration - Annual Report94 Report of the Supervisory Board

Severance

The service agreement of each of Mr Jeroen

Pynenburg and Mr Michiel Staatsen contains

severance provisions which provide for

compensation for the loss of income resulting

from a termination of employment at the

initiative of the Company, of respectively

nine and six months’ base compensation,

subject to certain conditions such as that the

termination is not based on seriously culpable

acts or negligence of the Managing Director.

The contractual severance amount will replace

or be subtracted from any statutory or other

severance payments.

The service agreement of Mr Marc Luttikhuis

contains severance provisions which provide

for compensation for the loss of income

resulting from a termination of employment

at the initiative of the Company, of three

months’ base compensation, subject to certain

conditions such as that the termination is not

based on seriously culpable acts or negligence

of the Managing Director. The contractual

severance amount will replace or be subtracted

from any statutory or other severance

payments.

The service agreement of Mr Erik Roesink

does not contain any provisions providing for

benefits upon termination of employment.

None of the Supervisory Directors does enjoy

contractual severance provisions.

Variable remuneration

Mr Michiel Staatsen and Mr Erik Roesink were

not entitled to any variable remuneration

in 2023. Each of Mr Jeroen Pynenburg and

Mr Marc Luttikhuis was entitled to variable

remuneration, as set out below.

Management Board remuneration over

2023

The total amount of remuneration of the

Managing Directors for the financial year

2023 comprised € 1,108,058 (2022: €649,281).

For the financial year 2023, the gross annual

base salary of Mr Michiel Staatsen comprised

€198,980 (2022: €179,577) (including holiday

allowance and social charges) and the total

gross annual base salary of Mr Erik Roesink

comprised 175,225 (2022: €166,894) (including

holiday allowance and social charges).

For the financial year 2023 and as from his

appointment as CEO and member of the

Management Board, Mr Jeroen Pynenburg

was paid a gross salary of €225,174 including

housing, holiday allowance, social charges and

company car). His short-term incentive in cash

amounted to €22,083 and he has not received

a conditional award under the Long-Term

Incentive Plan. The sign-on equity incentive has

been valued at €104,266.

For the financial year 2023, the gross annual

base salary of Mr Marc Luttikhuis comprised

€321,080 (2022: €302,810) (including holiday

allowance, social charges and company car).

His short-term incentive in cash amounted to

€31,250 (2022: €57,500) and the conditional

award under the Long-Term Incentive Plan

amounted to €5,339 (2022: €18,939). The sign-

on equity incentive granted in 2022 has been

valued at €83,333.

Shareholdings of Mr Michiel Staatsen and

Mr Erik Roesink

Mr Michiel Staatsen and Mr Erik Roesink

indirectly participate in the share capital of the

Company. These indirect investments are held

through the STAK, which has issued depositary

receipts of shares (certificaten van aandelen)

in the capital of the Company for Ordinary

Shares (the DRs) to them. In this manner and

on the date hereof, Erik Roesink indirectly holds

1,611,750 Ordinary Shares (3.22%) and Michiel

Staatsen indirectly holds 967,050 Ordinary

Shares (1.93%) in the capital of the Company.

Some of these DRs are still subject to lock-up

restrictions, as described in the paragraph

Agreements on limitations on the transfer of

shares of the Corporate Governance chapter in

this annual report.

Shareholdings of Mr Jeroen Pynenburg and

Mr Marc Luttikhuis

On the date hereof, Jeroen Pynenburg is

entitled to 25,390 Ordinary Shares (0.05%) in

the capital of the Company and Marc Luttikhuis

is entitled to 27,051 Ordinary Shares (0.05%) in

the capital of the Company.

Remuneration information for the

Supervisory Board

The General Meeting determines the

remuneration of the Supervisory Directors. The

Supervisory Board submits from time to time

proposals to the General Meeting in respect of

the remuneration of the Supervisory Directors.

The remuneration of the Supervisory Board

may not be made dependent on the Company’s

results. Supervisory Directors will not receive

Ordinary Shares and/or rights to Ordinary

Shares as remuneration. The compensation for

the chair of the Supervisory Board has been

set at €50,000 per year and the compensation

for Mr Benno van Dongen has been set at

€30,000 per year. Mr Hans Slootweg is

employed by Infestos Nederland and does not

receive compensation for his Supervisory Board

activities. NX Filtration has arranged and paid

for a directors and officers liability insurance

for the members of the Supervisory Board.

The Supervisory Board will reconsider the

remuneration of the individual members of the

Management Board and the Remuneration

Policy during the financial year 2024, whilst – to

the extent possible and reasonable – adhering

to the principle of maintaining the overall value

of the remuneration packages of the members

of the Management Board. At this time a peer

group will be established for the Management

Board.

Internal pay ratio

Management Board Compensation 2023 2022

Salaries and wages 775,911 564,795

Short-term incentive plan 53,333 36,550

Social security distributions 33,384 24,130

Pension contributions (DC) 13,552 4,867

Share-based payments 192,938 18,939

Fringe benefits 38,940 -

Total 1,108,058 649,281

Average number of FTE’s 3.6 3.0

Average compensation 304,412 216,427

Employee compensation 2023 2022

Salaries and wages 7,631,639 4,948,344

Short-term incentive plan 120,426 -

Social security distributions 1,352,131 803,148

Pension contributions (DC) 345,309 216,688

Share-based payments 12,931 17,752

Fringe benefits 225,753 -

Total 9,688,190 5,985,932

Average number of FTE’s 156 107

Average compensation 62,243 55,891

Internal Pay Ratio 4.9 3.9

The Remuneration Policy takes into account

the pay ratio within the organisation. The

NX Filtration internal pay ratio is calculated

by dividing the average total Management

Board compensation by the average employee

compensation. The average employee

compensation is based on the total personnel

cost (defined as salaries and wages, social

security contributions, pension contributions

and share-based payment costs) and the

average number of FTEs excluding the

Management Board (see also the relevant notes

to the Consolidated Financial Statements.

Internal audit function

NX Filtration does not have an internal audit

function. The need for an internal audit function

is assessed on a yearly basis by the Supervisory

Board. The Supervisory Board concluded that

97NX Filtration - Annual Report96 Report of the Supervisory Board

the size of the Company and the combination

of a finance and control department with

accounting and audit knowledge, are presently

covering the requirements sufficiently.

External independent auditor

The Management Board and the Supervisory

Board have evaluated the activities performed

for the Company by PricewaterhouseCoopers

Accountants N.V. It is apparent that

PricewaterhouseCoopers Accountants N.V. is

capable of forming an independent judgment

concerning all matters that fall within the scope

of its auditing task; there is a good balance

between the effectiveness and efficiency of

their actions, for example in relation to auditing

costs, risk management and reliability.

Functioning of the Supervisory

Board and the Management

Board (evaluation accountability)

The Supervisory Board discussed, in the

absence of the Management Board, its own

functioning. The evaluation was performed

by the Chair of the Supervisory Board, by

means of a structured questionnaire, which

was subsequently discussed with the rest

of the Supervisory Board. The Supervisory

Board also filled in a questionnaire and

addressed items such as: team effectiveness,

interaction, transparency, composition and

profile, competences, effectiveness of individual

members, quality of information and the

relationship with the Management Board

and others, which is meant to also include the

relationship with key managers. The outcome

of the evaluation is positive. It was found that

the Supervisory Board organizes itself in an

effective and efficient manner and considers

the contributions of each Supervisory Board

member to be complementary in nature.

The replacement of Supervisory Director

John Glorie with Supervisory Director Hans

Slootweg occurred smoothly. There is a good

level of transparency amongst both the

Management Board and Supervisory Board.

The Supervisory Board evaluation delivered

areas for improvement and key topics for 2024:

(i) the Supervisory Board intends to intensify

discussions with the Management Board on

the effectiveness of NX Filtration’s sustainable

strategy, (ii) cost control measures and

possibilities to increase NX Filtration’s financial

flexibility, and (iii) the development of the sales

funnel.

The Supervisory Board has conducted an

annual review to identify any aspects with

regard to which the Supervisory Board

members require further training or education

during their term of office. For all members in

the Supervisory Board this continues to relate

to business dynamics, competitive arena, and

innovations in the water filtration industry.

We shared our reflections with the

Management Board members and had an

individual discussion with each to discuss last

year’s performance, area of improvement and/

or development and key priorities for 2024.

Financial statements and

auditor’s opinion

The financial statements 2023 included in this

annual report have been audited and PWC

has issued an unqualified opinion on them. The

financial statements were extensively discussed

with the Supervisory Board, in the presence

of the external auditor, and the Management

Board. The Supervisory Board is of the

opinion that the financial statements meet all

requirements for transparency and correctness.

Therefore, the Supervisory Board recommends

that the General Meeting of Shareholders to

be held on 9 April 2024 adopts the financial

statements and the appropriation of the result.

Result appropriation

NX Filtration realised a loss of €23.3 million.

The proposal to the General Meeting is to

recognise this loss in retained earnings. The

members of the Supervisory Board have signed

the financial statements to comply with their

statutory obligation pursuant to article 2:101,

paragraph 2, of the Dutch Civil Code.

Gratitude & looking forward

First and foremost, we want to thank

NX Filtration’s partners, customers and

shareholders for their continued support,

confidence and loyalty, and our employees for

their continued involvement and dedication.

2023 was a challenging year for NX Filtration

yet it made also major steps forward with key

OEMs and it sustained high gross margins.

The Supervisory Board is confident that the

measures being taken by the Management

Board will address the challenges and position

the company for sustained growth in the future.

Together, we remain committed to overcoming

obstacles and steering the company toward a

future of continued success.

Enschede, 9 February 2024

The Supervisory Board

Carolina Wielinga (Chair)

Benno van Dongen

Hans Slootweg

99NX Filtration - Annual Report98 Report of the Supervisory Board

Financial

statements

101NX Filtration - Annual Report100 Financial statements

Consolidated

financial statements

for the year ended

31 December 2023

Consolidated statement of comprehensive income

In EUR ‘000 Notes 2023 2022

Revenue from sale of goods 7 7,238 7,546

Other income 8 815 808

Gross income 8,053 8,354

Operating expenses

Costs of raw materials and consumables (2,926) (3,229)

Changes in inventories of finished goods

and work in progress 3,669 1,134

Personnel expenses 9 (12,868) (8,363)

Amortization on intangible assets 17 (679) (490)

Depreciation on property, plant and equipment

and right-of-use assets 18,19 (3,671) (2,567)

Operating costs 10 (7,268) (5,602)

External research & development costs 11 (596) (843)

Operating expenses (24,339) (19,960)

Operating Loss (16,286) (11,606)

Finance income (expenses) 13 1,939 (289)

Loss before income tax (14,347) (11,895)

Income tax benefit (expense) 14 (8,945) 3,253

Net loss for the period (23,292) (8,642)

Other comprehensive result for the period - -

Total comprehensive loss for the period (23,292) (8,642)

(attributable to the owners of the Company)

Earnings per share

Basic earnings per share (EUR) 15 (0.47) (0.17)

Diluted earnings per share (EUR) 15 (0.47) (0.17)

103NX Filtration - Annual Report102 Consolidated financial statements

Consolidated statement of financial position Consolidated statements of changes in equity

In EUR ‘000 Notes 31 December 2023 31 December 2022

Assets

Non-current assets

Intangible assets 17 2,637 2,353

Property, plant and equipment 18 57,890 18,535

Right-of-use assets 19 1,448 1,753

Deferred tax assets 20 16 8,960

Total non-current assets 61,991 31,601

Current assets

Inventories 21 15,063 6,305

Trade and other receivables 22 9,057 7,154

Cash and cash equivalents 23 49,928 104,274

Total current assets 74,048 117,733

Total assets 136,039 149,334

Group equity

Share capital 24 500 500

Share premium 24 170,450 170,450

Retained earnings (51,498) (28,412)

Total equity 119,452 142,538

Liabilities

Non-current liabilities

Lease liabilities 25 951 1,311

Total non-current liabilities 951 1,311

Current liabilities

Trade and other payables 26 15,074 4,988

Lease liabilities 25 562 497

Total current liabilities 15,636 5,485

Total liabilities 16,587 6,796

Total equity and liabilities 136,039 149,334

In EUR ‘000 Notes Attributable to equity owners of NX Filtration N.V.

Share Share Retained Total

capital premium earnings equity

Balance - 1 January 2022 500 170,450 (19,806) 151,144

Loss for the period - - (8,642) (8,642)

Other comprehensive result - - - -

Total comprehensive loss for the period - - (8,642) (8,642)

Transactions with owners in their capacity as owners

Issuance of ordinary shares 24 - - - -

Share-based payment transactions 12 - - 36 36

Dividend - - - -

Balance - 31 December 2022 500 170,450 (28,412) 142,538

Balance - 1 January 2023 500 170,450 (28,412) 142,538

Loss for the period - - (23,292) (23,292)

Other comprehensive income (loss) - - - -

Total comprehensive loss for the period - - (23,292) (23,292)

Transactions with owners in their capacity as owners

Issuance of ordinary shares 24 - - 0 0

Share-based payment transactions 12 - - 206 206

Dividend - - - -

Balance - 31 December 2023 500 170,450 (51,498) 119,452

105

NX Filtration - Annual Report104 Consolidated financial statements

Consolidated statement of cash flows

General information

NX Filtration N.V. (NX Filtration or the

Company) is a public company with limited

liability (naamloze vennootschap), incorporated

under Dutch law, and the leading provider

of nanofiltration membrane technology for

producing pure and affordable water to

improve quality of life. NX Filtration obtained

its listing on Euronext Amsterdam in June 2021

through an IPO raising €165 million to enable

the Company’s commercial roll-out, capacity

expansion program and innovation agenda.

NX Filtration is the holding company of

the Group, which consists of NX Filtration

and, as at 31 December 2023, the following

subsidiaries:

Subsidiary Domicile Participation and country NX Filtration B.V. Enschede, 100% the Netherlands NX Filtration Enschede, 100% Real Estate B.V. the Netherlands NX Filtration Enschede, 100% International B.V. the Netherlands- NX Filtration Delaware, 100% Americas LLC United States of America- NX Filtration Bangalore, 100% India Private Ltd Republic of India - NX Filtration Beijing, 100% (Beijing) People’s Republic Membrane of China Technology Co Ltd.

NX Filtration is registered with the Chamber of

Commerce under number 64951030 and has its

registered office at Josink Esweg 44, 7545 PN,

Enschede, the Netherlands. Both NX Filtration

Real Estate B.V. and NX Filtration International

B.V. are incorporated and part of the Group

per 22 June 2022. The subsidiaries in the United

States of America, India and China have been

incorporated in the course of 2023.

The Company’s financial year covers the first

day of January and ends on the last day of

December of each year.

On 9 February 2024, the management board of

NX Filtration (Management Board) authorized

the financial statements for publication. The

financial statements as presented in this report

are subject to adoption by the Annual General

Meeting of shareholders to be held on 9 April

2024.

Summary of significant

accounting policies

The principal accounting policies applied in the

preparation of these consolidated financial

statements are set out below. These policies

have been consistently applied to all the years

presented, unless otherwise stated.

Basis of preparation

These consolidated financial statements

have been prepared in accordance, and

comply with International Financial Reporting

Standards (IFRS) and interpretations adopted

by the European Union, where effective, for

In EUR ‘000 Notes 2023 2022

Cash flows from operating activities

Operating loss (16,286) (11,606)

Adjustments to reconcile profit before taxation to net cash flows:

Depreciation, amortisation and impairment expenses 17,18,19 4,350 3,057

Non cash items in operating loss 0 126

Income taxes (paid)/received - -

Share-based payment expenses 12 206 36

(Increase)/Decrease in working capital:

- Increase inventories (8,263) (3,093)

- Increase trade and other receivables (1,903) (4,350)

- Increase trade and other payables 10,152 128

Net cash inflow/(outflow) from operating activities (11,744) (15,702)

Cash flows from investing activities

Payment for property, plant and equipment 18 (42,977) (11,653)

Payment for intangible assets 17 (963) (1,017)

Net cash inflow/(outflow) from investing activities (43,940) (12,670)

Cash flows from financing activities

Proceeds from share premium contribution and issuance of shares 24 0 -

Principal elements of lease payments (600) (465)

Interest received (paid) 1,938 (322)

Net cash inflow (outflow) from financing activities 1,338 (787)

Net increase (decrease) in cash and cash equivalents (54,346) (29,159)

Cash and cash equivalents at the beginning of the financial year 104,274 133,433

Effects of exchange rate changes on cash and cash equivalents - -

Cash and cash equivalents at the end of the financial year 49,928 104,274

Notes

107NX Filtration - Annual Report106 Consolidated financial statements

financial years beginning 1 January 2023

and also comply with the financial reporting

requirements included in Part 9 of Book 2 of the

Dutch Civil Code.

The preparation of these consolidated financial

statements in conformity with IFRS requires

the use of certain critical accounting estimates.

It also requires management to exercise

its judgment in the process of applying the

Company’s accounting policies. The areas

involving a higher degree of judgement or

complexity, or areas where assumptions and

estimates are significant to the financial

statements are disclosed in note 6 ‘Critical

accounting estimates and judgements’.

These consolidated financial statements have

been prepared on a going concern basis. In June

2021, NX Filtration became a publicly traded

company when it listed its ordinary shares on

Euronext Amsterdam, raising €165 million for

inter alia the acceleration of its business plan

including a medium-term objective to realize

a positive EBITDA margin by reaching a larger

scale of operations and realizing purchasing

benefits based on increasing volumes and

optimizing product designs.

Going Concern assessment

The Company is a global provider of direct

nanofiltration membrane technology,

focused on the discovery, development and

commercialization of innovative technologies

to remove micropollutants, color and selective

salts, but also bacteria, viruses and nano

plastic, from water. In recent years, the

Company has been incurring losses mainly due

to ahead of the curve investments to roll out

their commercial strategy, create global sales

presence, further develop the disruptive dNF

technology and extend the production capacity

to facilitate the expected growth in revenue.

The Company relies on the capital raised to

finance the roll out of the business strategy and

ahead of the curve investments.

The Company incurred net losses of € 23.3

million (2022: € 8.6 million) and negative

operating cash flows of € 11.7 million (2022:

€ 15.7 million). Per 31 December 2023, the cash

balance amounts € 49.9 million (2022: € 104.3

million).

Although Management expects that the cash

balance is sufficient to finance the required

capital expenditure and operations for the

next twelve months period after the date of

this report, it considered scenarios where the

current financial position may not be sufficient

to finance its operations. The Company’s

ability to continue as a going concern is highly

contingent upon its ability to execute on the

successful roll out of its business strategy

and to remain flexible in order to mitigate

unforeseen circumstances that will impact the

profitability of the Company. Management

performed a sensitivity analyses on sales

forecasts and options for cost reductions and

savings on capital expenditure.

2024 is considered to be a year where the

business model of the Company further

matures and the Company will start benefitting

from the investment made in pilot trajectories,

growing OEM customer base, investment in

technology and sales organization. The business

and sales developments are progressing

and are converting opportunities into new

agreements with OEM’s for the sale of

membranes which could potentially result to

additional operating cash inflows.

The Company has a clear plan to become

cash-flow positive on medium term. Although

management expects that there is sufficient

cash available to fund the activities for the

twelve months period after signing these

financial statements, additional financing

needs to be attracted to bridge the period

until the Company becomes cash flow positive.

Therefore, management is actively engaged

in exploring various funding sources such as

an asset-based financing plan. Management

is confident that it will be able to attract this

funding, as currently the Company has no

external funding on their large asset-base.

Based on progress of ongoing initiatives above,

the accounting policies used in the financial

statements are based on the expectation that

the Company will be able to continue as a going

concern.

Basis of measurement

These consolidated financial statements have

been prepared on a historical cost basis, unless

stated otherwise. These consolidated financial

statements are presented in euro, which is the

Company’s functional currency. All amounts

have been rounded to the nearest thousand,

unless otherwise indicated.

New and amended standards not adopted

by the Group

Certain new accounting standards and

interpretations have been published that are

not mandatory for 31 December 2023 reporting

periods and have not been early adopted by

the Group. These standards are not expected

to have a material impact on the entity in the

current or future reporting periods and on

foreseeable future transactions.

Critical accounting policies

Consolidation

Subsidiaries are all entities over which the

Company has control. The Company controls an

entity where the Company is exposed to, or has

rights to, variable returns from its involvement

with the entity and has the ability to affect

those returns through its power to direct the

activities of the entity. Subsidiaries are fully

consolidated from the date on which control

is transferred to the Company. Subsidiaries

are deconsolidated from the date that control

ceases.

Inter-company transactions, balances and

unrealized gains on transactions between group

companies are eliminated. Unrealized losses are

also eliminated unless the transaction provides

evidence of an impairment of the transferred

asset. Accounting policies of subsidiaries have

been changed where necessary to ensure

consistency with the policies adopted by the

Group.

Foreign currency transactions and

translations

Foreign currency transactions are translated

into the functional currency of the Company

using the exchange rates at the dates of the

transactions. Foreign exchange gains and

losses resulting from the settlement of such

transactions, and from the translation of

monetary assets and liabilities denominated in

foreign currencies at year-end exchange rates,

are generally recognized in profit or loss.

The assets and liabilities of foreign operations

are translated into euro at the exchange

rates on the reporting date. The income and

expenses of foreign operations are translated

into euro at the exchange rates on the date of

transactions.

Revenue

The Company manufactures and sells a range

of water filtration solutions to companies

serving the industrial and municipal sectors.

Sales are recognized when control of the

products has transferred, being when the

products are delivered or risks are transferred

to the customers, the customer has full

discretion over the use of the products, and

there is no unfulfilled obligation that could

affect the customer’s acceptance of the

products. Delivery occurs when the products

have been shipped to the specific location,

the risks of obsolescence and loss have been

transferred to the customer, and either

the customer has accepted the products

in accordance with the sales contract, the

109NX Filtration - Annual Report108 Consolidated financial statements

acceptance provisions have lapsed, or the

Company has objective evidence that all criteria

for acceptance have been satisfied.

Revenue is measured based on the

consideration specified in a contract with

a customer. The Company has no specific

obligations for returns, refund clauses nor

any other similar obligations specified in the

contract with customers. However, standard

product compliance warranty is provided to

customers, which is not considered a separate

performance obligation.

Government grants

Grants from the government are recognized

at their fair value where there is a reasonable

assurance that the grant will be received, and

the Company will comply with all attached

conditions. Government grants relating to costs

are deferred and recognized in the statement

of comprehensive income over the period

necessary to match them with the costs they

are intended to compensate.

Employee benefits

Short-term obligations

Liabilities for wages and salaries, including

non-monetary benefits, annual leave and

accumulating sick leave that are expected

to be settled fully within 12 months after

the end of the period in which the employees

render the related service are recognized in

respect of employees’ services up to the end

of the reporting period and are measured

at the amounts expected to be paid when

the liabilities are settled. The liabilities are

presented as current employee benefit

obligations in the balance sheet.

Salaries, wages and social security

contributions are charged to the consolidated

statement of comprehensive income based on

the terms of employment, when they are due to

employees and the tax authorities respectively.

Pension obligations

For defined contribution plans, the Company

pays contributions to publicly or privately

administered pension insurance plans on a

mandatory, contractual or voluntary basis. The

Company has no further payment obligations

once the contributions have been paid. The

contributions are recognized as employee

benefit expense when they are due. Prepaid

contributions are recognized as an asset to the

extent that a cash refund or a reduction in the

future payments is available.

Termination benefits are expensed at the earlier

of when the Company can no longer withdraw

the offer of those benefits and when the

Company recognizes costs for a restructuring.

Shared-based payments

The grant-date fair value of equity-settled

share-based payment awards granted to

employees is recognized as an expense, with

a corresponding increase in equity, over the

vesting period of the awards.

The amount recognized as an expense is

adjusted to reflect the number of awards for

which the related service and non-market

performance conditions are expected to

be met, such that the amount ultimately

recognized is based on the number of awards

that meet the related service and non-market

performance conditions at the vesting date.

The Company has no share-based payment

awards with non-vesting conditions nor with

market performance conditions.

Expenses

Expenses arising from the Company’s business

operations are accounted for in the year incurred.

Finance income & expenses

Finance income include interest where it is

earned from financial assets that are held

for cash management purposes. Finance

expenses include interest incurred on financial

instruments measured at amortized cost.

Finance income or expenses are recognized

as they accrue, using the effective interest

method.

Corporate income tax

The income tax expense or credit for the period

is the tax payable on the current period’s taxable

income, based on the applicable income tax rate

for each jurisdiction, adjusted by changes in

deferred tax assets and liabilities attributable to

temporary differences and to unused tax losses.

The current income tax charge (if applicable) is

calculated on the basis of the tax laws enacted

or substantively enacted at the end of the

reporting period in the countries where the group

companies operate and generate taxable income.

Management periodically evaluates positions

taken in tax returns with respect to situations

in which applicable tax regulation is subject

to interpretation and considers whether it is

probable that a taxation authority will accept an

uncertain tax treatment. The Company measures

its tax balances either based on the most likely

amount or the expected value, depending on

which method provides a better prediction of the

resolution of the uncertainty.

Deferred income tax is provided in full, using

the liability method, on temporary differences

arising between the tax bases of assets and

liabilities and their carrying amounts in the

consolidated financial statements. Deferred

income tax is determined using tax rates (and

laws) that have been enacted or substantively

enacted by the end of the reporting period and

are expected to apply when the related deferred

income tax asset is realized, or the deferred

income tax liability is settled. Deferred tax assets

are recognized only if it is probable that future

taxable amounts will be available to utilize those

temporary differences and losses.

Current and deferred tax is recognized in profit

or loss, except to the extent that it relates to

items recognized in other comprehensive income

or directly in equity. In this case, the tax is also

recognized in other comprehensive income or

directly in equity, respectively.

Intangible assets

Research and development

Development costs that are directly

attributable to the design and testing of

identifiable and unique products controlled

by the Company are recognized as intangible

assets where the following criteria are met:

• it is technically feasible to complete

the product or system so that it will be

available for use;

• management intends to complete the

product or system and use or sell it;

• there is an ability to use or sell the product

or system;

• it can be demonstrated how the product

or system will generate probable future

economic benefits;

• adequate technical, financial and other

resources to complete the development

and to use or sell the product or system are

available; and

• the expenditure attributable to the product

or system during its development can be

reliably measured.

Directly attributable costs that are capitalized

as part of the product include amongst

others payroll costs and other costs related

to creating or improving the existing product

portfolio in the development phase.

Capitalized development costs are recorded

as intangible assets and amortized in 5 years

from the point at which the asset is ready for

use. Other development expenditures that

do not meet these criteria are recognized as

an expense as incurred. Development costs

previously recognized as an expense are not

recognized as an asset in a subsequent period.

Expenditure on research activities is recognized

as expense in the period in which it is incurred.

111NX Filtration - Annual Report110 Consolidated financial statements

Concessions, licenses and rights to intellectual

property

Concessions, licenses and rights to intellectual

property are capitalized at historical cost. They

have a finite useful life and are subsequently

carried at cost less accumulated amortization

and impairment losses. These assets are

amortized over a period of 10 years.

Software

Software are capitalized at historical cost and

amortized on a straight-line basis over the

estimated useful life of the assets, typically

3 years. Cost associated with maintaining

software programs are recognized as an

expense as incurred.

Property, plant and equipment

All property, plant and equipment is stated

at historical cost less depreciation. Historical

cost includes expenditure that is directly

attributable to the acquisition of the items.

Subsequent costs are included in the asset’s

carrying amount or recognized as a separate

asset, as appropriate, only when it is probable

that future economic benefits associated with

the item will flow to the Company and the

cost of the item can be measured reliably. The

carrying amount of any component accounted

for as a separate asset is derecognized when

replaced. All other repairs and maintenance are

charged to profit or loss during the reporting

period in which they are incurred.

Depreciation on assets is calculated by

recognizing the difference between historical

cost and the estimated residual values using

the straight-line method over their estimated

useful life in profit or loss.

The estimated useful lives of property, plant

and equipment for current and comparable

periods are as follows:

Buildings 10 - 30 yearsMachinery and equipment 5 - 10 years Right-of-use assets 1 - 9 years Pilot equipment 5 years

The assets’ residual values and useful lives

are reviewed, and adjusted if appropriate, at

the end of each reporting period. The costs of

future replacement are capitalized based on

the component approach. Under this approach

the total costs are allocated to the ‘component

assets’. Government grants on investments,

if applicable, are deducted from the purchase

price or manufacturing price of the assets to

which the government grants relate.

An asset’s carrying amount is written down

immediately to its recoverable amount if the

asset’s carrying amount is greater than its

estimated recoverable amount.

Gains and losses on disposals are determined

by comparing proceeds with the carrying

amount and are recognized within the

consolidated statement of comprehensive

income.

Leases

As a lessee

At the inception of an agreement, the Company

assesses whether a contract is, or contains, a

lease. A contract is, or contains, a lease if the

contract conveys the right to control the use

of an identified asset for a period of time in

exchange for consideration. To assess whether

a contract conveys the right to control the use

of an identified asset, the Company uses the

definition of a lease in IFRS 16.

The Company, as a lessee, recognizes a

right-of-use asset representing its right to

use the underlying asset and a lease liability

representing its obligation to make lease

payments at the lease commencement date.

The Company elected to apply the recognition

exemption for both short-term and low value

leases – e.g. office equipment. As such, the

Company recognizes lease payments associated

with these leases as an expense on a straight-

line basis over the lease term.

The right-of-use asset is initially measured at

cost, which comprises the initial amount of the

lease liability adjusted for any lease payments

made at or before the commencement date,

plus any initial direct costs incurred and an

estimate of costs to dismantle and remove the

underlying asset or to restore the underlying

asset or the site on which it is located, less any

lease incentives received.

The right-of-use asset is subsequently

depreciated using the straight-line method from

the commencement date to the end of the lease

term, unless the lease transfers ownership of

the underlying asset to the Company by the end

of the lease term or the cost of the right-of-use

asset reflects that the Company will exercise a

purchase option. In that case the right-of-use

asset will be depreciated over the useful life of

the underlying asset, which is determined on

the same basis as those of property, plant and

equipment. In addition, the right-of- use asset

is periodically reduced by impairment losses, if

any, and adjusted for certain remeasurements

of the lease liability.

The lease liability is initially measured at the

present value of the lease payments that

are not paid at the commencement date,

discounted using the interest rate implicit

in the lease or, if that rate cannot be readily

determined, the Company’s incremental

borrowing rate. Subsequently, the lease liability

is increased by the interest costs on the lease

liability and decreased by lease payments made.

Lease payments included in the measurement

of the lease liability comprise the following:

• fixed payments, including in-substance

fixed payments;

• variable lease payments that depend on

an index or a rate, initially measured using

the index or rate as at the commencement

date;

• amounts expected to be payable under a

residual value guarantee; and

• the exercise price under a purchase

option that the Company is reasonably

certain to exercise, lease payments in an

optional renewal period if the Company

is reasonably certain to exercise an

extension option, and penalties for early

termination of a lease unless the Company

is reasonably certain not to terminate early.

The lease liability is measured at amortized

cost using the effective interest method.

The lease liability is remeasured when there

is a change in future lease payments arising

from a change in index or rate, a change in

the estimate of the amount expected to be

payable under a residual value guarantee, or

as appropriate, changes in the assessment

whether a purchase or renewal option is

reasonably certain to be exercised or a

termination option is reasonably certain not to

be exercised.

When the lease liability is remeasured as

abovementioned, a corresponding adjustment

is made to the carrying amount of the right-of-

use asset or is recorded in profit or loss if the

carrying amount of the right-of-use asset has

been reduced to zero.

The Company’s right-of-use assets and lease

liabilities are presented under Property,

plant and equipment and Lease liabilities,

respectively.

113NX Filtration - Annual Report112 Consolidated financial statements

As a lessor

Leases in which the Company does not transfer

substantially all the risks and rewards incidental

to ownership of an asset are classified as

operating leases. The Company has rental

income from the lease of pilot equipment.

This rental income is accounted for on a

straight-line basis over the lease terms and

is included in gross income in the statement

of comprehensive income. Initial direct costs

incurred in negotiating and arranging an

operating lease are added to the carrying

amount of the leased asset and recognized

over the lease term on the same basis as rental

income. Contingent rents are recognized as

gross income in the period in which they are

earned.

Impairment of non-financial assets

Non-financial assets with a definite useful life

are tested for impairment whenever events

or changes in circumstances indicate that the

carrying amount may not be recoverable. An

impairment loss is recognized for the amount

by which the asset’s carrying amount exceeds

its recoverable amount. The recoverable

amount is the higher of an asset’s fair value

less costs of disposal and value in use. For the

purposes of assessing impairment, assets are

grouped at the lowest levels for which there

are separately identifiable cash inflows which

are largely independent of the cash inflows

from other assets or groups of assets (cash-

generating units). Non-financial assets that

suffered an impairment are reviewed for

possible reversal of the impairment at the end

of each reporting period.

Inventories

Inventories mainly relate to raw materials, semi-

finished goods, work in progress and finished

goods and are valued at the lower of cost and

net realizable value. Cost comprises direct

materials, direct labour and an appropriate

proportion of variable and fixed overhead

expenditure, the latter being allocated on the

basis of normal operating capacity. Costs of

purchased inventory are determined after

deducting rebates and discounts. Costs are

determined using the first in first out method.

Net realizable value is the estimated selling

price in the ordinary course of business less

the estimated costs of completion and the

estimated costs necessary to make the sale.

Financial instruments

Financial assets – Classification and

measurement

The Company classifies its financial assets in

the following measurement categories:

• those to be measured subsequently at fair

value (either through other comprehensive

Income (OCI) or through profit or loss), and

• those to be measured at amortized cost.

The classification depends on the entity’s

business model for managing the financial

assets and the contractual terms of the cash

flows.

Financial assets - Recognition and derecognition

Regular purchases and sales of financial assets

are recognized on the trade-date, the date on

which the Company commits to purchase or sell

the asset. Financial assets are derecognized

when the rights to receive cash flows from

the financial assets have expired or have been

transferred and the Company has transferred

substantially all the risks and rewards of

ownership.

Financial assets – Initial recognition

At initial recognition the Company measures

a financial asset at its fair value. Except

for cash and cash equivalents, the initial

measurement of a financial asset is adjusted

for directly attributable transaction cost.

Transaction costs of financial assets carried at

fair value through profit or loss (cash and cash

equivalents) are expensed in profit or loss.

Financial assets – Subsequent Measurements

Subsequent measurement depends on the

Company’s business model for managing

the asset and the cash flow characteristics

of the asset. There are three measurement

categories into which the Company classifies its

debt instruments: (i) Amortized cost, (ii) Fair

value through profit or loss; and (iii) Fair value

through other comprehensive income.

The Company makes no use of derivative

financial instruments. Besides cash and

cash equivalents that are measured at fair

value through profit or loss, the Company’s

receivables are measured at amortized costs.

Interest income (if any) from these financial

assets is included in finance income using the

effective interest rate method. Any gain or loss

arising on derecognition is recognized directly in

profit or loss.

Financial assets – Impairment

The Company assesses on a forward-looking

basis the expected credit losses associated

with its financial instruments carried at

amortized cost. The impairment methodology

applied depends on whether there has been a

significant increase in credit risk. The Company

has no trade receivables nor amounts due

from customers for contract work including a

significant finance component and is therefore

allowed to apply the simplified approach under

IFRS 9, in which the credit losses are measured

using a lifetime expected loss allowance for all

trade receivables.

Financial liabilities - Recognition and

measurement

Financial liabilities are recognized when the

Company becomes a party to the contractual

provisions of the financial instrument. The

Company only has financial liabilities at

amortized cost and makes no use of derivative

financial instruments.

Financial liabilities at amortized costs

Financial liabilities at amortized cost include

trade and other payables. Trade and other

payables are initially recognized at fair value

equaling the amount required to be paid,

less, when material, a discount to reduce the

payables to fair value. Subsequently, trade and

other payables are measured at amortized cost

using the effective interest method.

Trade and other payables are classified as

current liabilities due to their short-term nature,

except for maturities greater than 12 months

after the end of the reporting period. These are

classified as non-current liabilities.

Financial liabilities – Derecognition

The Company derecognizes a financial liability

when its contractual obligations are discharged

or cancelled or expire. On derecognition of

a financial liability, the difference between

the carrying amount extinguished and the

consideration paid (including any non-cash

assets transferred or liabilities assumed) is

recognized in the consolidated statement of

comprehensive income.

The Company also derecognizes a financial

liability when its terms are modified and

the cash flows of the modified liability are

substantially different, in which case a new

financial liability based on the modified terms

is recognized at fair value. However, when

the cash flows of the modified liability are

not substantially different, the Company (i)

recalculates the amortized cost of the modified

financial liability by discounting the modified

contractual cash flows using the original

effective interest rate and (ii) recognizes any

adjustment in the consolidated statement of

comprehensive income.

Offsetting financial instruments

Financial assets and liabilities are offset and

the net amount reported in the balance sheet

when there is a legally enforceable right to

115NX Filtration - Annual Report114 Consolidated financial statements

offset the recognized amounts and there is an

intention to settle on a net basis or realize the

asset and settle the liability simultaneously. The

Company does not have any legally enforceable

right to offset the recognized amounts in the

balance sheet.

Trade and other receivables

Trade and other receivables are amounts due

from customers for products delivered and

services performed in the ordinary course of

business. If collection is expected in one year or

less, they are classified as current assets. If not,

they are presented as non-current assets. Trade

receivables are generally due for settlement

immediately and therefore all classified as

current assets.

Trade receivables are recognized initially

at their transaction price, the amount of

consideration that is unconditional, unless

they contain significant financing components

when they are recognized at fair value. They

are subsequently measured at amortized cost

using the effective interest method, less loss

allowance.

Cash and cash equivalents

For the purpose of presentation in the

statement of cash flows, cash and cash

equivalents includes cash on hand, deposits held

at call with financial institutions, other short-

term, highly liquid investments with original

maturities of three months or less that are

readily convertible to known amounts of cash

and which are subject to an insignificant risk of

changes in value. Cash and cash equivalents are

measured at fair value.

Share capital – Ordinary shares

An ordinary share entitles its owner to a voting

right and, only to extent so ultimately decided

by the general meeting of the Company (the

General Meeting), to dividends.

Trade and other payables

These amounts represent liabilities provided to

the Company prior to the end of the financial

year which are unpaid. Trade and other

payables are presented as current liabilities

unless payment is not due within 12 months

after the reporting period. They are recognized

initially at their fair value. And subsequent

measurement at amortized cost using the

effective interest method.

Cash flow statement

The cash flow statement has been prepared

using the indirect method, whereby profit or

loss is adjusted for the effects of transactions

of a non-cash nature, any deferrals or accruals

of past or future operating cash receipts or

payments, and items of income or expense

associated with investing or financing cash flows.

Segment reporting

The Company is engaged in the business of

developing, producing and selling hollow fiber

membrane modules. NX Filtration sells its

filtration membranes in the form of modules

in its two business lines: Clean Municipal

Water and Sustainable Industrial Water. As

there is a strong interrelationship between NX

Filtration’s activities and these business lines,

management reviews the profitability and

monitors the performance of the two business

lines, despite the split in revenue, solely on an

aggregated basis for resource allocation and

overall performance measurement. All financial

segment information can therefore be found in

the consolidated financial statements.

Financial instruments and

risk management

Financial Instrument classification

As result of regular business practices, the

Company holds positions in a variety of

financial instruments. The financial instruments

are presented in the balance sheet and consists

of cash and cash equivalents, trade receivables

and other receivables, trade payables and other

payables.

The Company does not use foreign exchange

contracts and/or foreign exchange options and

does not deal with such financial derivatives.

On each balance date, financial instruments

are reviewed to see whether or not an objective

indication exists for the impairment of a

financial asset or a group of financial assets.

If an objective indication for impairment

exists, the Company determines the amount of

impairment losses and charges this amount to

the consolidated statement of comprehensive

income. As a result of the use of financial

instruments, the Company incurs credit risks,

liquidity risks and market risks.

Risk management

The Management Board has the overall

responsibility for the establishment and

oversight of the Group’s risk management

framework. The Group’s risk management

policies are established to identify and analyze

the risks faced by the Group, to set appropriate

risk limits and controls and to monitor risks and

adherence to limits. Risk management policies

and systems are reviewed regularly to reflect

changes in market conditions.

Credit risk

Credit risk is the risk of a financial loss in case a

customer does not comply with the contractual

obligations. Credit risks are mainly incurred

from receivables from customers. The Company

executes a strict policy to minimize credit risks.

To control these risks, the Company makes use

of information from licensed credit agencies.

If necessary, credit risks will be mitigated by

the use of credit insurances, bank guarantees,

prepayments and other insurances.

Cash- and cash equivalents are placed by a

number of banks. The Company determines the

credit risk of cash- and cash equivalents that

are placed with these banks, by solely doing

business with highly respectable banks.

The Company evaluates the concentration risk

with respect to trade receivables as medium.

For the financial year 2023, one customer

accounted for approximately 12% (2022: 19%)

of the revenue of the sale of goods.

Expected credit losses

The Company has the following types of

financial assets that are subject to the

expected credit loss model:

• Trade and other receivables

The Company applies the IFRS 9 simplified

approach to measuring expected credit losses

which uses a lifetime expected loss allowance

for all trade and other receivables.

To measure the expected credit losses, trade

and other receivables have been grouped based

on shared credit risk characteristics and the

days past due.

The expected loss rates used at 31 December

2023 and 31 December 2022 are based on

the payment profiles of sales over a period

of 12 months of the preceding financial

year and the corresponding historical credit

losses experienced related to these sales. The

historical loss rates are adjusted to reflect

current and forward-looking information

based on macro-economic factors affecting

the ability of the customers to settle the

receivables. The Company retrieves the latter

from externally available information from

credit rating agencies. Credit insured amounts

are excluded from the determination of the loss

allowance.

117NX Filtration - Annual Report116 Consolidated financial statements

The tables below analyses the Company’s

financial liabilities on their contractual

maturities for all non- derivative financial

liabilities for which the contractual maturities

are essential for an understanding of the timing

of the cash flows.

Note that the interest component of the

lease liabilities in the table below reflects

the undiscounted value of the future lease

payments.

Market risk

Foreign exchange risk

The Company does predominately business in

the euro currency. Therefore, the currency risk

is limited and largely concerns positions and

(future) transactions in euros. Management has

determined, based on a risk assessment, that

these currency risks do not need to be hedged.

The Company’s exposure to other foreign

exchange movements is not significant and

therefore no sensitivity analysis is included. The

concentration risk is therefore considered low.

Price risk

The Company incurs price risks on the purchase

of (raw) materials for the difference between

the market price at the time of the purchase

and during the actual performance. Price risk is

currently managed by agreeing on (long term)

framework agreements with its suppliers. With

the expected growing volume of purchase, the

Company expects to be able to negotiate lower

prices for raw materials.

In case the costs of raw materials and

consumables increase with 2%, the impact on

profit before tax is €59 thousand.

Interest risk

The Company is exposed to interest rate risk

and cash flow risk on its current accounts. If

interest rates on its cash and cash equivalent

balances would increase by 0.5%, the impact on

profit before tax is €0.3 million.

On that basis, the loss allowance as of 31

December 2023 and 31 December 2022 was

determined as follows for both trade and other

receivables:

Trade and other receivables are written off

when there is no reasonable expectation of

recovery. Indicators that there is no reasonable

expectation of recovery include, amongst

others, the failure of a debtor to engage in a

repayment plan with the Company and a failure

to make contractual payments. We are in close

consultation with our customers regarding

the overdue invoices and don’t foresee any

significant losses.

Impairment losses on trade and other

receivables are recognized in the consolidated

statement of comprehensive income as a

separate line item. Subsequent recoveries of

amounts previously written off are credited

against the same line item.

Liquidity risk

Liquidity risk is the risk that the Company will

not be able to meet its financial obligations.

The Company’s approach to managing liquidity

is to ensure that, as far as possible, it will

always have sufficient liquidity to meet its

obligations when they become due, avoiding

unacceptable losses or damages to the

Company’s reputation. The Company monitors

its liquidity risk on an ongoing basis.

In June 2021, NX Filtration became a publicly

traded company when it listed its ordinary

shares on Euronext Amsterdam, raising €165

million for inter alia the acceleration of its

business plan. This provided the necessary

funds for amongst others investing in

pilot systems, expanding the organization,

expanding the production capacity and

supporting its innovation agenda. As per 31

December 2023, the Company has €50 million

cash available.

In EUR ‘000 31 December 2023 Current Overdue Overdue Overdue Overdue > amount < 30 days 31 - 60 days 61 - 90 days 90 days Expected loss rate 0% 0% 0% 0% 2%Gross carrying amount - trade receivables and other receivables 6,864 35 50 4 2,147 Loss allowance - - - - 42 In EUR ‘000 31 December 2022 Current Overdue Overdue Overdue Overdue > amount < 30 days 31 - 60 days 61 - 90 days 90 days Expected loss rate 0% 0% 0% 0% 38%Gross carrying amount - trade receivables and other receivables 6,824 108 17 137 110 Loss allowance - - - - 42

In EUR ‘000 31 December 2023 Less than 3 months Between 1 Over 3 months to 1 year and 5 years 5 years TotalTrade and other payables 15,006 68 - - 15,074 Lease liabilities 140 422 951 - 1,513 Lease liabilities - Interest component 17 44 82 - 143 Total non-derivatives 15,163 534 1,033 - 16,730 In EUR ‘000 31 December 2022 Less than 3 months Between 1 Over 3 months to 1 year and 5 years 5 years TotalTrade and other payables 4,988 - - - 4,988 Lease liabilities 121 376 1,310 1 1,808 Lease liabilities - Interest component 17 44 82 - 143 Total non-derivatives 5,126 420 1,392 1 6,939

119

NX Filtration - Annual Report118 Consolidated financial statements

Deferred tax assets

Deferred tax assets are recognized for the

future tax consequences attributable to

temporary differences between the financial

statement carrying amounts of existing assets

and liabilities and their respective tax bases,

unused tax losses and unused tax credits.

Deferred tax assets are recognized only to

the extent that it is probable that sufficient

taxable profit will be available against which

those unused tax losses, unused tax credits

or deductible temporary differences can be

utilised. This assessment requires significant

management judgements and assumptions and

is inherently uncertain.

Revenue from sale of goods

The Company’s revenue originates from sale

of products. The Company recognizes all its

revenue at a point in time, when control over

the goods is transferred to the customer.

Set out below is the disaggregation of the

Company’s revenue from sale of goods based

on the Company’s two business lines.

In EUR ‘000 2023 2022Type of markets Sustainable Industrial Water 4,625 4,977 Clean Municipal Water 2,613 2,569 Total revenues from sale of goods 7,238 7,546

Set out below is the disaggregation of the

Company’s revenue from sale of goods by

region based on the destination of products.

In EUR ‘000 2023 2022

Geographical split

The Netherlands 606 154

Europe (excluding the Netherlands) 3,711 2,849

North America 885 1,518

Asia 1,888 2,262

Rest of World 148 763

Total revenues from sale of goods 7,238 7,546

Other income

Set out below is the disaggregation of the

Company’s other income.

In EUR ‘000 2023 2022Government grants 174 338 Pilot income 641 400 Other 0 70 Total other income 815 808

Government grants comprises of the several

government grants received for the Company’s

research & development activities in the field

of water filtration. NX Filtration has fulfilled

all conditions relating to government grants

at time of recognition. Pilot income relates to

rental income from pilot equipment.

Personnel expenses

In EUR ‘000 2023 2022Salaries and wages 11,423 7,937 Social security contributions 1,457 716 Pension contributions 359 222 External personnel cost 497 578 Capitalised personnel expenses (868) (1,090)Total personnel expenses 12,868 8,363

Capital management

The Company’s objectives when managing

capital is to safeguard the Company’s ability

to continue as a going concern and maintain an

optimal capital structure to reduce the cost of

capital. The table below provides an analysis

of net debt and the movements in net debt for

each of the periods presented.

Other changes comprises a cash movement

van €600 thousand and a negative non-cash

movement of €65 thousand which relates to

effective interest accounting on lease liabilities.

Fair value estimation

At 31 December 2023 and 31 December 2022,

the Company’s cash and cash equivalents are

measured at fair value. The carrying amounts

of trade and other receivables and trade and

other payables approximated their fair values

due to the short-term maturities of these

assets and liabilities.

Fair value is defined as the price that would be

received for sale of an asset or paid for transfer

of a liability, in an orderly transaction between

market participants at the measurement

date. IFRS establishes a three tier fair value

hierarchy, which prioritizes the inputs used in

measuring fair value. The hierarchy gives the

highest priority to unadjusted quoted prices in

active markets for identical assets or liabilities

(Level 1 measurements) and the lowest priority

to unobservable inputs (Level 3 measurements).

Critical accounting

estimates and judgements

The preparation of the financial statements

requires management to make judgements,

estimates and assumptions that affect the

reported amounts of assets and liabilities

and the reported amounts of revenues and

expenses during the reported periods.

The estimates and associated assumptions

are based on historical experiences and various

other factors that are believed to be reasonable

under the circumstances. Actual results may

differ from these estimates.

Development costs

The capitalized development costs are based on

management judgements taken into account:

• the technical feasibility to complete

the product or system so that it will be

available for use;

• management intends to complete the

product or system and use or sell it;

• the ability to use or sell the product or

system;

• the availability of adequate technical,

financial and other resources to complete

the development.

In determining the development costs to

be capitalized, the Company estimates the

expected future economic benefits of the

respective product or system that is the

result of a development project. Furthermore,

management estimates the useful life of such

product or system (note 2).

Cash and cash Lease Net In EUR ‘000 equivalents liabilities debt At 1 January 2022: 133,433 (1,394) 132,039 Cash flows (29,159) - (29,159)New leases - (655) (655)Other changes - 241 241 Net debt - 31 December 2022 104,274 (1,808) 102,466

Cash flows (54,346) - (54,346)New leases - (240) (240)Other changes - 535 535 Net debt - 31 December 2023 49,928 (1,513) 48,415

121NX Filtration - Annual Report120 Consolidated financial statements

Capitalised personnel expenses relate for €184

thousand to development costs (intangible

assets) and €684 thousand to property plant &

equipment (2022 mainly relates to development

costs).

The number of FTEs per year-end are:

2023 2022Direct employees 67 52 Indirect employees 99 83 Total FTE 166 135

A total of 24 (2022:18) employees are employed

outside the Netherlands. This includes 12

employees which are hired through an external

human resource service provider (2022: 15). The

average number of FTEs during 2023 was 159

(2022: 110).

Pensions

The Company has a defined contribution

scheme for certain key employees, in which

the pension contribution is predetermined and

based on the gross salary and the age of the

individual employee. Furthermore, the Company

has a defined contribution scheme for the other

employees, in which the pension contribution is

predetermined and based on the gross salary

only. Both schemes limit the Group’s legal

obligation to the amount it agrees to contribute

during the period of employment. The assets of

the plans are held separately from those of the

Company in funds under the control of pension

insurance companies.

The average annual net premium contribution

for 2023 is 4.0% (2022: 3.8%). The pension

contributions are paid on a monthly basis to

the pension fund. The net contribution for 2023

amounts to €359 thousand (€222 thousand

in 2022). The premium payable during the

financial year is charged to the consolidated

statement of comprehensive income and is

classified as costs of personnel.

Aside from premium payables, the Company

does not have any additional obligations in

respect to the pension schemes.

Operating costs

The operating costs can be divided into the

following cost categories:

In EUR ‘000 2023 2022Housing expenses 1,534 998 Other personnel expenses 1,006 1,077 Administrative expenses 1,888 1,277 Selling expenses 1,699 1,450 Operating expenses 1,141 800 Total operating costs 7,268 5,602

In 2023 additional costs were mainly made

for IT and software improvements, energy

consumption, advisory, consultancy and rental/

warehouse costs to accommodate the increase

in inventory.

External research &

development costs

In EUR ‘000 2023 2022Gross external R&D Costs 1,233 1,059 Capitalized external R&D costs (637) (216)Total external research & development cost (net) 596 843

Capitalised external R&D costs relate for €546

thousand to development costs (intangible

assets) and for €90 thousand to property

plant and equipment (2022 mainly relates to

development costs).

To maintain its technological leadership

position, NX Filtration continuously invests in

its research and development activities for

further improvement of existing products and

development of new products. Gross research

and development costs, including R&D salaries

in 2023 amounted to €4.2 million (2022: €2.5

million).

Development costs that are directly

attributable to the design and testing of

identifiable and unique products and systems

controlled by the Company are recognized as

intangible assets and are capitalized as part of

the product. Other research and development

expenditures are recognized as an expense as

incurred.

NX Filtration currently relies on its commercially

ready and available product ranges with proven

applications. Going forward, the Company’s

strategy is to build further on this technology

and make the technology available towards

different applications and markets, which may

require additional product development costs in

future periods.

Share based payments

Depositary Receipts

Since the incorporation of the Company

in 2016, eligible and selected employees

and directors have been provided with the

opportunity to invest indirectly in ordinary

shares in the capital of the Company by

acquiring Depositary Receipts (“DRs”) issued

by a foundation that is controlled by the

majority shareholder. The DRs are not freely

transferable and, under certain circumstances,

the majority shareholder may require a

participant to sell DRs to a party designated

by the majority shareholder. If a participant

voluntarily leaves the Company prior to the end

of the vesting period, he/she is not entitled to

the full fair market value. As a result, the IFRS

2 fair value will have to be allocated to the

vesting tranches.

The share participation arrangement is

accounted for as an equity-settled share-

based arrangement since the Company and

its subsidiaries do not have an obligation to

settle or to repurchase any DRs from the

participants. Each DR issued by the foundation

represents one ordinary share in the capital of

the Company.

The number of outstanding DRs held by

employees of the Group are as follows:

2023 2022Outstanding at 1 January 3,792,094 3,792,094 Granted (purchased) during the year - - Exercised (325,626) - Outstanding shares at 31 December 3,466,468 3,792,094

As the Company’s ordinary shares were not

listed at the grant date, the fair value of

the ordinary shares has been estimated by

the Company as of each date a participant

indirectly acquired shares in the Company.

For accounting purposes, the fair value of an

award is equal to the fair market value of the

underlying ordinary shares at the grant date

less the acquisition price paid by a participant

for the DRs. Given that the participants have

paid the estimated fair market value of the

underlying shares as of each grant date, the fair

value of the share-based payment awards is nil.

Long-term incentive plan – Key employees

The Management Board recognises the

importance of its key employees to the future

success of the Company. Therefore, on 26 May

2021, a long-term incentive plan (‘LTIP Key

employees’) was introduced for a number of

designated employees within the group of the

Company.

The following grants, comprising of Ordinary

Shares in the Company, have been made under

this plan: Number of Exercise Grant date Awards granted Price1 January 2022 6,982 Nil 1 February 2022 788 Nil 1 January 2023 4,425 Nil

123NX Filtration - Annual Report122 Consolidated financial statements

The conditional rights to acquire existing

Ordinary Shares granted will be exercisable

in exchange for Ordinary Shares on the day

that is four years after the grant date, on

the condition that the relevant employee

continues to be employed by the Company on

this date (subject to certain arrangements for

exceptional circumstances, such as death of the

employee). Besides the aforementioned service

vesting condition no other vesting conditions

are applicable for the LTIP Key employees.

Long-term incentive plan – Management Board

As part of the newly introduced remuneration

policy, which has been adopted by the general

meeting of shareholders on 11 June 2021, a

long-term incentive plan for the Management

Board (‘LTIP Management Board’) was

introduced in order to increase the alignment

between shareholder’s interest and the interest

of the Management Board.

The following grants, comprising of Ordinary

Shares in the Company, have been made under

this plan:

Grant date Number of Exercise Awards granted Price20 May 2022 8,296 Nil 7 April 2023 9,091 Nil

The conditional rights to acquire existing

Ordinary Shares granted will be exercisable in

exchange for Ordinary Shares on the day that

is three years after inception of the service

and performance period, subject to continued

employment as a member of the Management

Board and certain non-market based

performance vesting conditions.

The service and performance period are

starting on the 1st of January of the applicable

financial year, in which the grant has been

made. Besides the aforementioned service and

performance vesting conditions there is one

additional condition in place, which is an two

year holding period for the Management Board

after vesting date.

Summary of changes in outstanding shares

Changes in outstanding shares for the period:

LTIP Key LTIP Management employees Board1 January 2023 7,343 8,296 Granted 4,425 9,091 Forfeited (783) - Exercised - - Expired - - 31 December 2023 10,985 17,387

None of the outstanding shares related to the

LTIP Key employees and LTIP Management

Board are exercisable at 31 December 2023.

Fair value measurement

The Company used the Black & Scholes model

to determine the fair value of the share-based

payments plans at grant date. The fair value

of the Company’s Ordinary Shares for the

different plans at grant date was:

Grant date Share award plan Grant date fair valueLTIP Key employees 1 January 2022 10.84 LTIP Key employees 1 February 2022 10.84 LTIP Management Board 20 May 2022 11.08 LTIP Key employees 1 January 2023 11.00 LTIP Management Board 7 April 2023 11.10

The present value for expected dividend over

the vesting period for all plans is nil because

the Company has currently no intention to

distribute dividends in the foreseeable future

in order to be able to further invest in the

growth of the Company. Consequently and in

conjunction with an exercise price of nil, both

the expected volatility and risk-free-rate have

no impact on the fair value determination at

grant date.

Share-based payment expenses

Share-based payment expenses recognized

as other operating costs in the statement of

comprehensive income:

In EUR ‘000 2023 2022LTIP Key employees 13 18 LTIP Management Board 5 18 Sign-on equity incentive 188 - Total share-based payment expenses 206 36

For further information about the sign-on

equity incentive we refer to note 16.

Finance income and

expenses

In EUR ‘000 2023 2022Interest expenses related to lease liabilities 65 61 Other interest (income) expenses (2,004) 228 Finance (income) expenses (1,939) 289

Interest expense related to lease liabilities is

the result of application of IFRS 16. The other

interest income is resulting from our cash and

cash equivalents.

Income tax benefit

(expense)

This note provides an analysis of the Company’s

income tax, showing how the tax benefit or

expense is affected by non-deductible items.

The tax on the Company’s loss before tax

differs from the statutory amount that would

arise using the tax rate applicable to losses of

the entity. The reconciliation of the effective

tax rate is as follows:

In EUR ‘000 2023 2022Deferred income tax Income tax (8,945) 3,071 Change in tax rates - 182 Total deferred tax benefit (expense) (8,945) 3,253 Total income tax benefit (expense) (8,945) 3,253

In EUR ‘000 2023 2022Result from operations (23,292) (8,642)Total income tax (8,945) 3,253 Loss before income tax (14,347) (11,895)Tax calculated based on Dutch tax rate 25.8% 25.8%

Tax effect of: Adjustments for previous years -0.2% 0.0%Non-taxable expenses -0.3% 0.0%Derecognition of deferred tax asset prior years -62.4% 0.0%Derecognition of deferred tax asset current-year -11.8% 0.0%Current-year losses for which no deferred tax asset is recognised -13.5% 0.0%Change in tax rates 0.0% 1.5%Other differences 0.0% 0.0%Effective tax rate -62.3% 27.3%

The change in tax rates in 2022 is driven by

change in the enacted Dutch tax rates for the

fiscal years 2023 and further. The deferred tax

assets resulting from carry-forward losses in

the Netherlands have been fully derecognized in

2023 (see note 20).

125NX Filtration - Annual Report124 Consolidated financial statements

Remuneration of the

Management Board and

the Supervisory Board

The total amount of remuneration of the

Managing Directors for the financial year 2023

comprised €1,108,058 (2022: €649,281).

For the financial year 2023; The total amount

of remuneration of Mr Jeroen Pynenburg

comprised €329,440. His short-term

incentive in cash amounted to €22,083. The

total remuneration of Mr Michiel Staatsen

comprised €198,980 (2022: €179,577).

The total remuneration of Mr Erik Roesink

comprised €175,225 (2022: €166,894). The total

remuneration of Mr Marc Luttikhuis comprised

€404,413 (2022: €302,810). His short-term

incentive in cash amounted to €31,250 and

the conditional award under the Long-Term

Incentive Plan was €5,339.

Both Mr Jeroen Pynenburg and Mr Marc

Luttikhuis received a sign-on equity incentive

with a value for 2023 of €104,266 respectively

€83,333 which are included in the total amount

of renumeration. The characteristics of this

incentive are described below.

In 2022, majority shareholder Infestos Holding

E B.V. (an Infestos affiliate) has facilitated

a sign-on equity incentive with Mr Marc

Luttikhuis. For these purposes, Infestos Holding

E B.V. has transferred a number of ordinary

shares in the Company to the Company for no

consideration, with a value of EUR 300,000.

These ordinary shares have been delivered to a

designated securities account and are subject

to customary lock-up provisions. The lock-up of

the ordinary shares under the sign-on equity

incentive will be three years where 1/3 of the

ordinary shares will be released each year and

the leaver provisions provide for a re-delivery of

the ordinary shares in case of a bad-leaver.

In 2023, the Company has facilitated a sign-

on equity incentive with Mr Jeroen Pynenburg

and issued 25,190 ordinary shares to Stichting

Bewaarneming Aandelen NX Filtration, with

a value of €265,000. These ordinary shares

have been delivered to a designated securities

account and are subject to customary lock-up

provisions. The lock-up of the ordinary shares

under the sign-on equity incentive will be three

years where 1/3 of the ordinary shares will be

released each year and the leaver provisions

provide for a re-delivery of the ordinary shares

in case of a bad-leaver.

The Management Board collectively holds

2,578,800 DRs (see note 12) in the share

capital of the Company, of which Mr Michiel

Staatsen holds 967,050 DRs and Mr Erik

Roesink 1,611,750 DRs. These DRs are subject

to lock-up restrictions. One-third of the DRs

have been unconditionally released from the

lock-up restrictions on 11 June 2022, one-third

of the DRs have been unconditionally released

from the lock-up restrictions on 11 June 2023,

and the remaining one-third of the DRs will

be unconditionally released from the lock-up

restrictions on 11 June 2024, in each case on

the condition that the relevant board member

continues to be employed by the Company.

The compensation for Ms Carolina Wielinga,

chair of the Supervisory Board for the financial

year 2023 amounts to €50,000 (2022: €50,000)

and the compensation for Mr Benno van

Dongen amounts to €30,000 (2022: €30,000).

Mr Hans Slootweg is employed by Infestos

Nederland and does not receive compensation

for his Supervisory Board activities.

2023 2022 Net loss attributable to equity holders (in EUR ‘000) (23,292) (8,642)Outstanding number of shares for the basic earnings per share as at 1 January 50,000,000 50,000,000 Effect of issued ordinary shares 13,010 Weighted-average number of shares outstanding for the purpose of basic earnings per share 50,013,010 50,000,000 Weighted-average number of shares outstanding for the purpose of diluted earnings per share 50,013,010 50,000,000 Earnings per share Basic earnings per share (EUR) (0.47) (0.17)Diluted earnings per share (EUR) (0.47) (0.17)

Earnings per share

127NX Filtration - Annual Report126 Consolidated financial statements

Intangible assets

The movement in intangible assets during the years was as follows:Concessions and rights ofIn EUR ‘000 Development costs intellectual property Software Total At 1 January 2022 Cost 2,167 264 72 2,503 Accumulated impairments and amortisation (585) (89) - (674)Net book value 1,582 175 72 1,829 Year ended 31 December 2022 Opening net book value 1,582 175 72 1,829 Additions 912 11 92 1,015 Acquisitions - - - - Amortisation for the year (435) (28) (27) (490)Closing net book value 2,058 158 137 2,353 At 31 December 2022 Cost 3,078 275 164 3,517 Accumulated impairments and amortization (1,020) (117) (27) (1,164)Net book value 2,058 158 137 2,353 Year ended 31 December 2023 Opening net book value 2,058 158 137 2,353 Additions 730 65 167 962 Acquisitions - - - - Amortisation for the year (601) (32) (45) (678)Closing net book value 2,187 191 259 2,637 At 31 December 2023 Cost 3,808 340 332 4,480 Accumulated impairments and amortization (1,621) (149) (73) (1,843)Net book value 2,187 191 259 2,637

Development costs

Additions to intangible fixed assets relate to

internal development projects for new products

or systems or development projects for new

features to existing products and systems.

Concessions and rights of intellectual

property

Additions for concessions and rights of

intellectual property relate to payments made

to the patent office for the filing process of the

Company’s patents and intellectual property

rights.

Software

Additions to software relate to externally

acquired programs and software for amongst

others sales, engineering and data management.

17 Property, plant and

equipment

The movement in property, plant and

equipment during the years was as follows:

The Company’s additions to the assets under

construction mainly relates to the realization

of a new state-of-the art megafactory for

the production of our direct nanofiltration

membranes. The additions to machinery

and equipment mainly relate to expansion

of the Company’s production capacity. The

additions to pilot equipment mainly relate to

the expansion of its pilot fleet. The depreciation

accounting policies for PP&E are included in the

section accounting policies of the Company.

Machinery and Pilot Assets underIn EUR ‘000 Land & buildings equipment equipment construction Total At 1 January 2022 Cost 223 5,372 2,640 2,985 11,220 Accumulated impairments and depreciation - (1,853) (217) - (2,070)Net book value 223 3,519 2,423 2,985 9,150 Year ended 31 December 2022 Opening net book value 223 3,519 2,423 2,985 9,150 Additions - 513 - 11,140 11,653 Reclassification assets under construction 3,825 3,591 4,568 (11,984) - Disposal - (75) (177) - (252)Depreciation for the year (47) (1,216) (834) - (2,097)Depreciation of disposal - 58 23 - 81 Closing net book value 4,001 6,390 6,003 2,141 18,535 At 31 December 2022 Cost 4,048 9,401 7,031 2,141 22,621 Accumulated impairments and depreciation (47) (3,011) (1,028) - (4,086)Net book value 4,001 6,390 6,003 2,141 18,535 Year ended 31 December 2023 Opening net book value 4,001 6,390 6,003 2,141 18,535 Additions - - - 42,977 42,977 Reclassification assets under construction 8 884 724 (1,616) - Reclassification to inventories - - (484) - (484)Disposal - (237) - - (237)Depreciation for the year (56) (1,596) (1,474) - (3,126)Depreciation of disposal (9) 234 - - 225 Closing net book value 3,944 5,675 4,769 43,502 57,890 At 31 December 2023 Cost 4,056 10,049 7,271 43,502 64,878 Accumulated impairments and depreciation (112) (4,374) (2,502) - (6,988)Net book value 3,944 5,675 4,769 43,502 57,890

129

NX Filtration - Annual Report128 Consolidated financial statements

Right-of-use assets

The movement in the right-of-use assets during

the years was as follows:

In EUR ‘000 2023 2022At 1 January Cost 2,585 1,782 Accumulated depreciation (832) (426)Net book value 1,753 1,356

Additions 240 655 Other / remeasurement - 166 Disposals - (18)Depreciation of disposals - 18 Depreciation for the year (545) (424)Net book value at 31 December 1,448 1,753

Total gross right-of-use assets:

31 December 31 DecemberIn EUR ‘000 2023 2022Buildings 1,863 1,863 Vehicles 922 682 Fork-life truck 40 40 Total gross right-of-use assets 2,825 2,585

Total depreciation charge right-of-use assets:

In EUR ‘000 2023 2022Buildings 333 267 Vehicles 208 152 Fork-life truck 4 5 Total depreciation charge 545 424 Interest expense (included in finance cost) 65 61

The total cash outflow for leases in 2023 was

€600 thousand (2022: €462 thousand).

Deferred tax assets

31 December 31 DecemberIn EUR ‘000 2023 2022Deferred tax assets Timing differences 16 13 Carry forward losses 0 8,947 Total 16 8,960 Of which: Current (<1 year) 16 13 Non-current (>1 year) 0 8,947

31 December 31 DecemberIn EUR ‘000 2023 2022Deferred tax assets At 1 January 8,960 5,708 Change in timing differences 3 4 Movement in loss compensation (8,947) 3,248 At 31 December 16 8,960

As of December 31, 2023, the amount of tax

losses that can be offset in the future amounts

to €48.7 million (€34.7 million per December

31, 2022). At 31 December 2023, the deferred

tax assets have been fully derecognized. The

remaining €16 thousand temporary difference

is related to leases (right-of-use assets).

In line with IFRS regulations and

interpretations, management evaluated

positive and negative evidence supporting the

valuation of deferred tax assets for tax losses.

The one and half year delay in the business plan,

that the Company is currently anticipating,

changed the balance in this assessment

resulting in the derecognition of the deferred

tax assets. Management emphasis that this

assessment is not a change in its medium and

long term targets. This derecognition has no

cash implications and the tax losses remain

available for the Company at the moment it

starts to generate profits.

Inventories

31 December 31 DecemberIn EUR ‘000 2023 2022Raw materials 5,114 2,186 Semi finished goods 3,189 1,428 Finished goods 6,409 1,976 Work in progress 351 715 Total 15,063 6,305

During 2023 no inventories were written down to

net realizable value (31 December 2022: € nil).

Trade and other

receivables

31 December 31 DecemberIn EUR ‘000 2023 2022Trade receivables 4,722 3,989 Less: loss allowance (42) (42)Trade receivables - net 4,680 3,947 Prepaid expenses 498 1,013 Other taxes 3,491 1,035 Other receivables 388 1,159 9,057 7,154 Less non-current portion - - Current portion 9,057 7,154

The fair value of the receivables approximates

the carrying amounts. As at 31 December 2023

and 31 December 2022 mainly all receivables

are denominated in euro currency. Information

about the Company’s exposure to credit and

market risks, and impairment losses for trade

and other receivables is included in note 3

‘Financial instruments and risk management’.

Cash and cash equivalents

31 December 31 DecemberIn EUR ‘000 2023 2022Cash and cash equivalents 49,928 104,274 Total 49,928 104,274

The cash and cash equivalents are freely

disposable to the Company.

19 20

131NX Filtration - Annual Report130 Consolidated financial statements

Equity

Ordinary shares

The movement of the ordinary shares in 2023

and 2022 is outlined in the tables below.

The Company’s issued capital amounted to

€500,000 end of 2022, divided into 50,000,000

Ordinary Shares, The authorized capital

(maatschappelijk kapitaal) of NX Filtration

N.V. amounts to €1,750,000 divided into

175,000,000 ordinary shares.

On 28 June 2023, the Company issued 25,190

ordinary shares to Stichting Bewaarneming

Aandelen NX Filtration, for the purposes of

a sign-on equity incentive for Mr. Pynenburg,

as a result of which the Company’s issued

capital amounts to €500,251.90 divided into

50,025,190 Ordinary Shares.

The share premium reserve relates to

contribution on issued shares in excess of the

nominal value of the shares (above par value).

Retained earnings

The retained earnings are restricted due to a

legal reserve for capitalized development costs

of €2.2 million (31 December 2022: €2.1 million)

which is not available for distribution.

Loss for the period

The proposal to the General Meeting is that the

2023 loss for the period will be recognized in

retained earnings.

Lease liabilities

The Company leases several assets, which

can be combined into the asset classes: (i)

Buildings, (ii) Equipment and (iii) Vehicles.

These contracts are typically entered into

for a period between 3 to 5 years, but some

leases may include renewal and/or termination

options.

31 December 31 December

In EUR ‘000 2023 2022

Buildings 987 1,313

Equipment 18 22

Vehicles 508 473

Total 1,513 1,808

The maturity of the lease liabilities can be

specified as follows:

Right-of-use assets

Right-of-use assets related to leases that

do not meet the definition of investment

property are presented as property, plant and

equipment. The Company has no right-of-use

assets that meet the definition of investment

property.

Amounts recognized in the statement of

comprehensive income and cash flows

Besides the interest expenses related to lease

liabilities and depreciation charges on right-of-

use assets as disclosed in Note 13 and Note 19,

respectively, the Company recognized in 2023

within the statement of comprehensive income

€13 thousand (2022: €7 thousand) relating to

low value leases.

Extension and termination options

The Company has contracts within the

building asset class that include renewal

and termination options or a combination of

both. At 31 December 2023 and 31 December

2022 the renewal options are included in

the measurement of the lease liabilities, no

termination options are included.

Number of Par value Share premium Total ordinary shares EUR ‘000 EUR ‘000 EUR ‘000Opening balance 1 January 2022 50,000,000 500 170,450 170,950 Share issuance - - - - Balance 31 December 2022 50,000,000 500 170,450 170,950 Share issuance 25,190 0 - - Balance 31 December 2023 50,025,190 500 170,450 170,950

Repayment Remaining term Remaining

obligation in >1 year term

In EUR ‘000 31 December 2023 2024 and <5 year >5 years

Buildings 987 341 646 -

Equipment 18 4 14 -

Vehicles 508 217 291 -

Total 1,513 562 951 -

133NX Filtration - Annual Report132 Consolidated financial statements

Trade and other payables

31 December 31 DecemberIn EUR ‘000 2023 2022Trade payables 13,039 3,029 Tax payables 316 231 Employee benefits 631 449 Payments received in advance 279 159 Other liabilities 809 1,120 Total 15,074 4,988

All current liabilities fall due in less than one

year. The fair value of the current liabilities

approximates the carrying amount due to

its short-term character. The entire amount

of payments received in advance has been

recognized as income in the subsequent period.

As at 31 December 2023 and 31 December

2022 the payables are mainly denominated in

euro currency. The increase in trade payables is

related to received invoices for our assets under

construction.

Contingencies and

commitments

Capital Expenditure Commitments

NX Filtration B.V. and NX Filtration Real

Estate B.V. have signed a number of purchase

contracts related to buildings, machinery and

equipment capital expenditures, amounting to

€20 million (2022: €45.9 million).

Purchase commitments

Outstanding commitments related to operating

activities and the purchase of raw materials are

amounting to €1.5 million.

Related party transactions

All legal entities that can be controlled, jointly

controlled or significantly influenced are

considered to be a related party. Also, entities

which can control, jointly control or significantly

influence the Company are considered a related

party. In addition, statutory and supervisory

directors and close relatives are regarded as

related parties.

The following transactions were carried out

with related parties:

• Key management compensation, as further

disclosed in note 16 above;

• Management fee to Infestos Holding E

B.V, based on the consultancy agreement

between Infestos Holding E B.V. and NX

Filtration as entered into on the date of IPO

in the amount of €150 thousand;

• The agreement with Polymer Filtration

Solutions GmbH (PFS) which is a long-term

supplier of sulfonated poly (ether sulfone)

to NX Filtration. PFS is under the (indirect)

control of Infestos Nederland B.V.

All these transactions are made on terms

equivalent to those that prevail in arm’s length

transactions.

Events after the end of the

reporting period

No such events to report.

135NX Filtration - Annual Report134 Consolidated financial statements

Company financial

statements

Company balance sheet as at 31 December 2023

Before profit allocation

In EUR ‘000 Notes 31 December 2023 31 December 2022

Assets

Non-current assets

Intangible Assets 3 2,379 2,216

Financial fixed assets 4 50,914 47,813

Deferred tax assets 5 - 8,947

Total non-current assets 53,293 58,976

Current assets

Receivables 157 92

Receivable from group companies 6 17,964 -

Cash and Cash Equivalents 7 48,309 90,370

Total current assets 66,430 90,462

Total assets 119,723 149,438

Equity and liabilities

Shareholders’ equity

Issued share capital 500 500

Share premium 170,450 170,450

Legal and statutory reserves 8 2,188 2,058

Other reserves 8 (30,394) (21,828)

Result for the period (23,292) (8,642)

Total equity 119,452 142,538

Current liabilities

Trade and other payables - 31

Payable to group companies - 6,647

Other payables 271 222

Total current liabilities 271 6,900

Total equity and liabilities 119,723 149,438

137NX Filtration - Annual Report136 Company financial statements

Company income statement for the year ended 31 December 2023

General information

The company financial statements are part of

the consolidated financial statements of NX

Filtration N.V. (the Company).

Basis of preparation

The Company financial statements of

NX Filtration N.V. have been prepared in

accordance with Part 9, Book 2 of the Dutch

Civil Code. In accordance with sub 8 of article

362, Book 2 of the Dutch Civil Code, the

Company financial statements are prepared

based on the accounting principles of

recognition, measurement and determination

of profit, as applied in the consolidated

financial statements. These principles also

include the classification and presentation of

financial instruments, being equity instruments

or financial liabilities.

In case no other policies are mentioned, refer

to the accounting policies as described in

the accounting policies in the consolidated

financial statements of this Annual report.

For an appropriate interpretation, the

company financial statements of NX Filtration

N.V. should be read in conjunction with the

consolidated financial statements.

All amounts are presented in euro and have

been rounded to the nearest thousand, unless

stated otherwise. The balance sheet and

income statement include references. These

refer to the notes.

The current financial year covers the period

1 January 2023 until 31 December 2023. The

previous financial year covers the period

1 January 2022 until 31 December 2022.

Critical accounting policies

Investments in subsidiaries

Subsidiaries are all entities (including

intermediate subsidiaries) over which the

Company has control. The Company controls

an entity when it is exposed, or has rights, to

variable returns from its involvement with the

subsidiary and has the ability to affect those

returns through its power over the subsidiary.

Subsidiaries are recognized from the date on

which control is transferred to the Company

or its intermediate holding entities. They

are derecognized from the date that control

ceases.

Investments in subsidiaries are measured at

net asset value. Net asset value is based on

the measurement of assets, provisions and

liabilities and determination of profit based

on the principles applied in the consolidated

financial statements. In case of a negative net

equity value of a subsidiary, the negative value

is initially deducted from loans due from the

respective subsidiary.

In EUR ‘000 Notes 2023 2022

Revenue 9 53 53

Amortization of intangible assets 3 (633) (463)

Personnel expenses (1,136) (751)

General expenses 11 (972) (577)

Operating loss (2,688) (1,738)

Finance income 12 2,421 140

Finance expenses 13 - (199)

Finance income (expense) 2,421 (59)

Loss before income tax (267) (1,797)

Income tax benefit (expense) 5 (12,581) 646

Share of net loss of investments in subsidiaries 4 (10,444) (7,491)

Loss for the period after income tax (23,292) (8,642)

Notes

139NX Filtration - Annual Report138 Company financial statements

Intangible assets

The movement in intangible assets during the

year was as follows:

Amortization rates:

Development costs 20%

Concessions and rights of intellectual property 10%

Financial fixed assets

The movement in the financial fixed assets

during the years was as follows:

The loan receivable in 2022 relates to a loan

issued to NX Filtration B.V. On 11 October 2022

the loan receivable in the amount of €9.8m

was converted into equity as share premium

in accordance with a free share premium

contribution agreement and settlement

agreement, without the issuance of new shares.

The receivables from group companies end of

2023 are considered as long-term financing

and are interest-bearing, based on a 3-month

Euribor plus margin, with no fixed repayment

schedule.

The reclassification relates to the negative

equity value of NX Filtration International B.V.,

which has been deducted from the receivable

from group companies.

Investment Loans / receivables

In EUR ‘000 in subsidiaries from group companies Total

At 1 January 2022 (9,234) 9,750 516

Investment/ changes 64,541 (9,750) 54,791

Share of net loss (7,491) - (7,491)

Other movements (3) - (3)

47,813 - 47,813

Provision - -

At 31 December 2022 47,813 - 47,813

At 1 January 2023 47,813 - 47,813

Investment/ changes - 13,545 13,545

Share of net loss (10,444) - (10,444)

Other movements - - -

37,369 13,545 50,914

Reclassification 298 (298) -

At 31 December 2023 37,667 13,247 50,914

Share in issued share capital at Share in issued share capital at

31 December 2023 31 December 2022

NX Filtration B.V. 100% 100%

NX Filtration Real Estate B.V. 100% 0%

NX Filtration International B.V. 100% 0%

3 4

Concessions

and rights of

In EUR ‘000 Development costs intellectual property Total

At 1 January 2022

Cost 2,167 264 2,431

Accumulated impairments and amortisation (585) (89) (674)

Net book value 1,582 175 1,757

Year ended 31 December 2022

Opening net book value 1,582 175 1,757

Additions 914 11 925

Acquisitions - - -

Amortisation for the year (435) (28) (463)

Consolidation and deconsolidation (3) - (3)

Closing net book value 2,058 158 2,216

At 31 December 2022

Cost 3,078 275 3,353

Accumulated impairments and amortization (1,020) (117) (1,137)

Net book value 2,058 158 2,216

Year ended 31 December 2023

Opening net book value 2,058 158 2,216

Additions 731 65 796

Acquisitions - - -

Amortisation for the year (601) (32) (633)

Consolidation and deconsolidation - -

Closing net book value 2,188 191 2,379

At 31 December 2023

Cost 3,809 340 4,149

Accumulated impairments and amortization (1,621) (149) (1,770)

Net book value 2,188 191 2,379

141

NX Filtration - Annual Report140 Company financial statements

Deferred tax assets

The deferred tax assets can be specified as

follows:

31 December 31 December

In EUR ‘000 2023 2022

At 1 January 8,947 5,699

Tax benefit subsidiaries

through fiscal unit 3,634 2,602

Tax benefit (expense)

NX Filtration N.V. (12,581) 646

At 31 December - 8,947

31 December 31 December

In EUR ‘000 2023 2022

Deferred tax assets

Carry forward losses - 8,947

Total - 8,947

Of which:

Non-current (>1 year) - 8,947

As of December 31, 2023, the total amount of

recognized tax losses amounts to €48.7 million

(€34.7 million as per December 31, 2022). The

deferred tax assets resulting from these carry-

forward losses in the Netherlands have been

fully derecognized in 2023.

Receivable from group

companies

The receivables from group companies are

considered as short-term financing and are

interest-bearing, based on a 3-month Euribor

plus margin, with no fixed repayment schedule.

Cash and cash equivalents

31 December 31 December

In EUR ‘000 2023 2022

ABN AMRO bank 204 45,867

Van lanschot bank 130 32,781

HSBC 20,743 -

Goldman Sachs 7,621 -

Barclays 17,795 -

Rabobank 1,816 11,722

Total 48,309 90,370

The cash and cash equivalents are freely

disposable to the Company.

Shareholders’ equity

Reference is made to note 24 of the

consolidated financial statements for an

explanation of the equity composition of the

Company.

Legal and statutory reserves

The legal reserve relates to a reserve for

capitalized development costs.

In EUR ‘000 2023 2022

At 1 January 2,058 1,582

Movement in legal reserve 130 476

At 31 December 2,188 2,058

Other reserves

The other reserves can be specified as follows:

In EUR ‘000 2023 2022

At 1 January (21,828) (10,034)

Allocation of previous

year loss (8,642) (11,354)

Share-based payment

transactions 206 36

Movement in legal reserve (130) (476)

At 31 December (30,394) (21,828)

Revenue

In EUR ‘000 2023 2022

Charged patent rights 48 48

Management fee 5 5

Total 53 53

Average numbers of

employees

In 2023, the company had 4 employees (2022:

3 employees). None of these employees works

abroad.

General expenses

In EUR ‘000 2023 2022

Audit fees 150 143

Legal fees 116 31

Consultancy fee

Infestos Holding E B.V. 150 152

Listing costs 194 137

Other general costs 362 114

Total 972 577

The following audit fees were expensed in the

income statement in the reporting period.

The fees listed above relate to the services

provided to the Company by accounting firms

and external independent auditors as referred

to in Section 1(a) of the Dutch Accounting

Firms Oversight Act (Wta).

PricewaterhouseCoopers

In EUR ‘000 Accountants N.V. Other network Total network

2023 2022 2023 2022 2023 2022

Audit of the financial statements 150 143 - - 150 143

Other audit procedures - - - - - -

Tax services - - - - - -

Other non-audit services - - - - - -

Total 150 143 - - 150 143

7 9

143NX Filtration - Annual Report142 Company financial statements

Finance income

In EUR ‘000 2023 2022

Interest from cash (equivalents)

and deposits 2,000 0

Interest on receivables from

group companies 421 140

Total 2,421 140

Finance expense

In EUR ‘000 2023 2022

Interest on cash balances

(negative interest) - (199)

Total - (199)

Contingencies and

commitments

Fiscal Unity

The Company constitutes the fiscal unity ‘NX

Filtration N.V.’ with its Dutch subsidiaries

for corporate income tax purposes and value

Added Tax. The standard conditions prescribe

that each of the companies is liable for the

corporate income tax payable by all companies

belonging to the fiscal unity. The corporate

income tax (liable or receivable) positions of

the Dutch subsidiaries are offset and settled

against the current account of the parent

company NX Filtration N.V.

Events after the reporting

period

Nothing to report.

Authorisation of the financial statements

Enschede, 9 February 2024

Management Board

Jeroen Marc Michiel Erik

Pynenburg Luttikhuis Staatsen Roesink

CEO CFO COO CTO

145NX Filtration - Annual Report144 Company financial statements

Other

information

147NX Filtration - Annual Report146 Other information

Provision in the Articles of

Association relating to profit

appropriation

Article 31. Profits and Distributions.

31.1 The Management Board, with the

approval of the Supervisory Board, may

decide that the profits realised during

a financial year fully or partially be

appropriated to increase and/or form

reserves.

31.2 The profits remaining after application of

Article 31.1 shall be put at the disposal of

the General Meeting. The Management

Board, with the approval of the

Supervisory Board, shall make a proposal

for that purpose. A proposal to pay a

dividend shall be dealt with as a separate

agenda item at the General Meeting of

Shareholders.

31.3 Distributions from the Company’s

distributable reserves are made pursuant

to a resolution of the Management

Board, with the approval of the

Supervisory Board.

31.4 Provided it appears from an interim

statement of assets signed by

the Management Board that the

requirement mentioned in Article

31.7 concerning the position of the

Company’s assets has been fulfilled,

the Management Board may, with the

approval of the Supervisory Board, make

one or more interim distributions to the

holders of Shares.

31.5 The Management Board may, with the

approval of the Supervisory Board,

decide that a distribution on Shares

shall not take place as a cash payment

but as a payment in Shares, or decide

that holders of Shares shall have the

option to receive a distribution as a

cash payment and/or as a payment in

Shares, out of the profit and/or at the

expense of reserves, provided that the

Management Board is designated by the

General Meeting pursuant to Articles 6.2.

With the approval of the Supervisory

Board, the Management Board shall

determine the conditions applicable to

the aforementioned choices.

31.6 The Company’s policy on reserves and

dividends shall be determined and

can be amended by the Management

Board, subject to the approval of the

Supervisory Board. The adoption and

thereafter each amendment of the

policy on reserves and dividends shall

be discussed and accounted for at the

General Meeting of Shareholders under a

separate agenda item.

31.7 Distributions may be made only insofar

as the Company’s equity exceeds the

amount of the paid in and called up part

of the issued capital, increased by the

reserves which must be kept by virtue of

the law or these Articles of Association.

Article 32. Payment of and Entitlement to

Distributions.

32.1 Dividends and other distributions will be

made payable pursuant to a resolution

of the Management Board within

four weeks after adoption, unless the

Management Board sets another date

for payment.

32.2 A claim of a Shareholder for payment

of a distribution shall be barred after

five years have elapsed after the day of

payment.

32.3 For all dividends and other distributions

in respect of Shares included in the

Statutory Giro System the Company

will be discharged from all obligations

towards the relevant Shareholders

by placing those dividends or other

distributions at the disposal of, or in

accordance with the regulations of,

Euroclear Netherlands.

149NX Filtration - Annual Report148 Profit appropriation

Our opinion

In our opinion:

• • the consolidated financial statements

of NX Filtration N.V. together with its

subsidiaries (‘the Group’) give a true and

fair view of the financial position of the

Group as at 31 December 2023 and of its

result and cash flows for the year then

ended in accordance with International

Financial Reporting Standards as adopted

in the European Union (‘EU-IFRS’) and with

Part 9 of Book 2 of the Dutch Civil Code;

• • the company financial statements of

NX Filtration N.V. (‘the Company’) give a

true and fair view of the financial position

of the Company as at 31 December 2023

and of its result for the year then ended

in accordance with Part 9 of Book 2 of the

Dutch Civil Code.

What we have audited

We have audited the accompanying financial

statements 2023 of NX Filtration N.V.,

Amsterdam. The financial statements comprise

the consolidated financial statements of the

Group and the company financial statements.

The consolidated financial statements

comprise:

• the consolidated statement of financial

position as at 31 December 2023;

• the following statements for 2023: the

consolidated statements of comprehensive

income, changes in equity and cash flows;

and

• the notes, comprising a summary of the

accounting policies applied and other

explanatory information.

The company financial statements comprise:

• the company balance sheet as at 31

December 2023;

• the company income statement for the

year then ended; and

• the notes, comprising a summary of the

accounting policies applied and other

explanatory information.

The financial reporting framework applied in

the preparation of the financial statements

is EU-IFRS and the relevant provisions of Part

9 of Book 2 of the Dutch Civil Code for the

consolidated financial statements and Part 9 of

Book 2 of the Dutch Civil Code for the company

financial statements.

The basis for our opinion

We conducted our audit in accordance with

Dutch law, including the Dutch Standards

on Auditing. We have further described our

responsibilities under those standards in the

section ‘Our responsibilities for the audit of the

financial statements’ of our report.

We believe that the audit evidence we have

obtained is sufficient and appropriate to

provide a basis for our opinion.

Independence

We are independent of NX Filtration N.V.

in accordance with the European Union

Regulation on specific requirements regarding

statutory audit of public-interest entities, the

‘Wet toezicht accountantsorganisaties’ (Wta,

Audit firms supervision act), the ‘Verordening

inzake de onafhankelijkheid van accountants

Independent

auditor’s report

To: the general meeting and the supervisory board of NX Filtration N.V.

Report on the audit of the

financial statements 2023

151NX Filtration - Annual Report150 Independent auditor’s report

bij assuranceopdrachten’ (ViO, Code of Ethics

for Professional Accountants, a regulation with

respect to independence) and other relevant

independence regulations in the Netherlands.

Furthermore, we have complied with the

‘Verordening gedrags- en beroepsregels

accountants’ (VGBA, Dutch Code of Ethics).

Our audit approach

We designed our audit procedures with respect

to the key audit matters, fraud and going

concern, and the matters resulting from that,

in the context of our audit of the financial

statements as a whole and in forming our

opinion thereon. The information in support

of our opinion, such as our findings and

observations related to individual key audit

matters, the audit approach fraud risk and the

audit approach going concern was addressed

in this context, and we do not provide separate

opinions or conclusions on these matters.

Overview and context

NX Filtration N.V. is a public limited liability

company (N.V.) which is specialised in the

production of advanced hollow fibre membrane

modules for nanofiltration, ultrafiltration and

microfiltration applications. NX Filtration N.V.

forms a group together with subsidiaries in

the Netherlands, China, India and the USA. We

considered our group audit scope and approach

as set out in the section ‘The scope of our group

audit’. We paid specific attention to the areas

of focus driven by the operations of the Group,

as set out below.

The construction of the new megafactory and

the delay in the realization of the business plan

of NX Filtration N.V. impacted the financial year

2023. This affected our audit procedures as

described in the section ‘Key audit matters’.

As part of designing our audit, we determined

materiality and assessed the risks of material

misstatement of the financial statements.

In particular, we considered where the

management board made important

judgements, for example, in respect of

significant accounting estimates that involved

making assumptions and considering future

events that are inherently uncertain. In these

considerations, we paid attention to, amongst

others, the assumptions underlying the physical

and transition risk related to climate change. In

note 6 to the consolidated financial statements,

the Company describes the areas of judgement

in applying accounting policies and the key

sources of estimation uncertainty.

Given the delay in the realization of the

business plan, the cash outflow on operating

activities, the decreased net cash position as

a result of significant capital expenditures

and forecasted capital expenditures in 2024

we considered going concern to be a key audit

matter as set out in the section ‘Key audit

matters’ of this report. Furthermore, taking

into consideration the anticipated growth in

revenues we considered the risk of fraudulent

reporting due to overstating the revenues to

be a key audit matter. Finally, we identified the

capitalisation of tangible fixed assets as key

audit matter, given the significance of capital

expenditures related to the construction of the

new megafactory and the transaction being

outside the normal course of business.

NX Filtration N.V. assessed the possible effects

of climate change on its financial position, refer

to the ‘sustainability report’ in the Report of the

Management Board. We discussed NX Filtration

N.V.’s assessment and governance thereof

with the management board and evaluated

the potential impact on the financial position

including underlying assumptions and estimates.

While the impact of climate change and the

Group’s commitments to reach their targets are

of significant importance to the group and its

stakeholders, the expected effects of climate

change are not considered a key audit matter.

We ensured that the audit team included the

appropriate skills and competences needed for

the audit of NX Filtration N.V.

The outline of our audit approach was as follows:

Materiality

• Overall materiality: €861,000

Audit scope

• We performed a full scope audit on

NX Filtration N.V., NX Filtration B.V. and

NX Filtration Real Estate B.V.

• Audit coverage obtained was 100% on

consolidated revenue and total assets and

97% on profit before tax.

Key audit matters

• Going concern

• The risk of fraudulent reporting due to

overstating revenues

• Capitalisation of tangible fixed assets

Materiality

Audit scope

Key audit

matters

153NX Filtration - Annual Report152 Independent auditor’s report

Materiality

The scope of our audit was influenced by the

application of materiality, which is further

explained in the section ‘Our responsibilities for

the audit of the financial statements’.

Based on our professional judgement we

determined certain quantitative thresholds for

materiality, including the overall materiality for

the financial statements as a whole as set out in

the table below. These, together with qualitative

considerations, helped us to determine

the nature, timing and extent of our audit

procedures on the individual financial statement

line items and disclosures and to evaluate

the effect of identified misstatements, both

individually and in aggregate, on the financial

statements as a whole and on our opinion.

We also take misstatements and/or possible

misstatements into account that, in our

judgement, are material for qualitative reasons.

We agreed with the supervisory board that

we would report to them any misstatement

identified during our audit above €86,000

(2022: €43,000) as well as misstatements

below that amount that, in our view, warranted

reporting for qualitative reasons.

The scope of our group audit

NX Filtration N.V. is the parent company of

a group of entities. The financial information

of this group is included in the consolidated

financial statements of NX Filtration N.V.

We tailored the scope of our audit to ensure

that we, in aggregate, performed sufficient

work on the financial statements to enable

us to provide an opinion on the financial

statements as a whole, taking into account

the management structure of the Group, the

nature of operations of its components, the

accounting processes and controls, and the

markets in which the components of the Group

operate. In establishing the overall group audit

strategy and plan, we determined the type of

work required to be performed at component

level.

Our audit primarily focused on the significant

components NX Filtration N.V. which holds

the cash position obtained from the listing

and the group’s tax positions, NX Filtration

B.V. which accounts for the majority of the

operations of the group and NX Filtration Real

Estate B.V. which holds the investment in the

new megafactory. All these group entities have

a similar internal control environment and a

centralised management structure. Therefore,

we were able to perform all audit work for the

Group at one location in the Netherlands.

In total, in performing these procedures, we

achieved the following coverage on the financial

line items:

Revenue 100%

Total assets 100%

Profit before tax 97%

None of the remaining components represented

more than 1% of total group revenue or total

group assets. For those remaining components

we performed, among other things, analytical

procedures to corroborate our assessment

that there were no significant risks of material

misstatements within those components.

Audit approach fraud risks

We identified and assessed the risks of material

misstatements of the financial statements

due to fraud. During our audit we obtained an

understanding of the entity and its environment

and the components of the internal control

system. This included the management board’s

risk assessment process, the management

board’s process for responding to the risks

of fraud and monitoring the internal control

system and how the supervisory board

exercised oversight, as well as the outcomes.

We refer to the section ‘risks and uncertainties’

of the Report of the Management Board for

management’s fraud risk assessment. We note

that management does consider fraud risk on

a regular basis as part of its formalised risk

assessment process.

We evaluated the design and relevant aspects

of the internal control system and in particular

the fraud risk assessment, as well as the code

of conduct and whistle blower procedures. We

evaluated the design and the implementation

and, where considered appropriate, tested the

operating effectiveness of internal controls

designed to mitigate fraud risks.

We asked members of the management board

and the supervisory board whether they are

aware of any actual or suspected fraud. This did

not result in signals of actual or suspected fraud

that may lead to a material misstatement.

As part of our process of identifying fraud risks,

we evaluated fraud risk factors with respect

to financial reporting fraud, misappropriation

of assets and bribery and corruption. We

evaluated whether these factors indicate that

a risk of material misstatement due to fraud is

present.

Independent auditor’s report

Overall group materiality €861,000 (2022: €430,000).

Basis for determining materiality We used our professional judgement to determine overall materiality. As a

basis for our judgement we used 1% of the benchmark ‘Total assets minus

Cash’.

Rationale for benchmark applied We used ‘Total assets minus Cash’ as the primary benchmark, based on

our analysis of the common information needs of users of the financial

statements. On this basis, we believe that ‘Total assets minus Cash’ is an

important metric for the financial performance of the Company, as this

shows the total asset base that can be used to generate future revenues.

Component materiality We applied one materiality to the audit of the different components in

scope. We performed the audit procedures on a consolidated level and did

not allocate materiality levels amongst the components.

155

NX Filtration - Annual Report154

We identified the following fraud risks and

performed the following specific procedures:

We incorporated an element of unpredictability

in our audit. During the audit we remained alert

to indications of fraud. We also considered

the outcome of our other audit procedures

and evaluated whether any findings were

indicative of fraud or non-compliance of laws

and regulations. Whenever we identify any

indications of fraud, we re-evaluate our fraud

risk assessment and its impact on our audit

procedures.

Audit approach going concern

We refer to key audit matter going concern as

included in the section ‘Key audit matters’ for

further information on our audit procedures

regarding the going concern assumption.

Key audit matters

Key audit matters are those matters that,

in our professional judgement, were of most

significance in the audit of the financial

statements. We have communicated the key

audit matters to the supervisory board. The

key audit matters are not a comprehensive

reflection of all matters identified by our

audit and that we discussed. In this section,

we described the key audit matters and

included a summary of the audit procedures we

performed on those matters.

Compared to prior year, we no longer

considered the accuracy of outgoing payments

a key audit matter, due to improvements

made by NX Filtration N.V. in the process

regarding changes in creditor master data in

the second half year of 2022. Given the delay

in the realization of the business plan, the cash

outflow on operating activities, the decreased

net cash position as a result of significant

capital expenditures and forecasted capital

expenditures in 2024 we considered going

concern to be a new key audit matter. Lastly,

we have included the capitalisation of tangible

fixed assets as a new key audit matter, as a

result of the significant additions in tangible

fixed assets related to the construction of

the new megafactory in Hengelo and the

transactions being outside the normal course of

business.

Identified fraud risks Our audit work and observations

The risk of management override of controls

As with all our audits, we addressed the risk

of management override of controls, including

whether there was evidence of management bias

that may represent a risk of material misstate-

ment due to fraud.

In this context, we paid particular attention to

revenue recognition, significant transactions

outside the normal course of business and ac-

counting estimates. We paid specific attention

to the appropriateness of the capitalized cost in

tangible fixed assets, given the significance of

capital expenditures related to the construction

of the new megafactory and the transactions

being outside the normal course of business.

Where relevant to our audit, we evaluated the

design of the internal control measures that are

intended to mitigate the risk of management

override of controls and assessed the

effectiveness of those measures in the processes

of generating and processing journal entries

and making estimates. We also paid specific

attention to access safeguards in the IT system

and the possibility of functional segregation as

a result and reported our observations to the

management board and the persons charged with

governance.

We performed data analysis on high-risk

journal entries, including unexpected account

combinations of increasing revenues or total

results and unexpected account combinations

with respect to cash.

Where we identified instances of unexpected

journal entries or other risks through our

data analysis, we performed additional audit

procedures to address each identified risk. These

procedures include, amongst others, inspection

of source documentation supporting the journal

entries.

We also performed specific audit procedures

related to important estimates of management,

including the recoverability of the deferred tax

assets and the capitalisation of development

costs. We specifically paid attention to the

inherent risk of management bias in estimates.

For our audit procedures, performed with respect

to the capitalisation of tangible fixed assets for

the new megafactory in Hengelo, we refer to our

key audit matter ‘Capitalisation of tangible fixed

assets’.

Our procedures did not reveal any material

misstatement in the information provided by

management in the financial statements and the

management report compared with the financial

statements.

Our work did not reveal any specific indications

of fraud or suspicion of fraud in respect of

management override of controls.

Identified fraud risk Our audit work and observations

Risk of fraudulent reporting due to overstating the

revenues

NX Filtration N.V. aims for growth through the

commercialisation of its hollow fibre nano filtra-

tion membrane technology and to realise in-

crease in turnover and profitability in the future

in order to increase shareholder value. In general,

this may cause pressure on management to

show growth in both sales and profitability.

For our audit procedures, performed with respect

to revenue recognition, we refer to our key audit

matter ‘risk of fraudulent reporting due to

overstating the revenues’.

Our procedures did not lead to specific indications

of fraud or suspicions of fraud with respect to the

revenue recognition of NX Filtration N.V.

157NX Filtration - Annual Report156 Independent auditor’s report

Key audit matter Our audit work and observations

Due to the possible pervasive impact on the

financial statements, we considered manage-

ment’s assumption that NX Filtration N.V. is a

going concern and will continue its operations for

at least twelve months from the date of prepa-

ration of the financial statements as a key audit

matter.

We evaluated whether the going concern risk

including management’s plans to address the

identified risk and the most significant underlying

assumptions have been sufficiently described in

the notes to the financial statements. We found

the disclosure in section ‘Summary of significant

accounting policies’ paragraph ‘Going Concern

assessment’ in the financial statements to be

adequate.

We concluded that management’s use of the

going concern basis of accounting is appropriate,

and based on the audit evidence obtained, that no

material uncertainty exists related to events or

conditions that may cast significant doubt on the

entity’s ability to continue as a going concern.

The risk of fraudulent reporting due to

overstating revenues

Refer to note 7 to the consolidated financial

statements

NX Filtration N.V. aims for growth through

the commercialisation of its hollow fibre nano

filtration membrane technology and to realise

increase in turnover and profitability in the future

in order to increase shareholder value. In general,

this may cause pressure on management to show

growth in both sales and profitability.

During 2023, NX Filtration N.V.’s revenues de

creased from € 8.4 million in 2022 to €8.1 million.

Given the delay in the realization of the busi

ness plan, the entity is facing pressure to meet

revenue and profit targets. Therefore, there is an

increased risk of overstating revenue. In addition,

we noted that a material part of the revenues

was realised in December 2023.

Therefore, we considered revenue recognition as

a key audit matter, with specific attention for the

existence and occurrence and the cut off of the

revenues.

Where relevant to our audit, we evaluated the

design and effectiveness of the internal control

measures related to revenue recognition and

reported our observations to the management

board and the persons charged with governance.

We tested, on a sample basis, whether revenues

were recognized in the correct period and for the

correct amount, by reconciling the transactions

to contracts or orders, sales invoice, shipping

document and receipt in the bank account.

Furthermore, we performed audit procedures to

determine whether credit notes were issued after

year-end that indicate incorrectly recognised

revenue in the current financial year.

We tested, on a sample basis, for products

delivered just before year end, whether revenues

were recognised in the correct period by reconciling

these transactions to shipping documents and

acceptance documents of the customers.

We performed data analysis on high-risk

journal entries, including unexpected account

combinations increasing revenues. No such

transactions were identified.

Our procedures did not identify any material

misstatement in the information provided by the

management board in the financial statements

and the report of the management board

compared with the financial statements.

Our procedures did not lead to specific indications

of fraud or suspicions of fraud with respect to the

existence of the revenue accounted for.

Key audit matter Our audit work and observations

Going concern

Refer to section ‘Summary of significant account-

ing policies’ paragraph ‘Going Concern assessment’

As disclosed in the section ‘Summary of sig-

nificant accounting policies’ paragraph ‘Going

Concern assessment’ in the financial statements,

management performed their assessment of the

entity’s ability to continue as a going concern for

the foreseeable future and concluded that the

Company was able to continue as a going con

cern.

Management considered the effect of the slower

than anticipated sales growth of the Company

but expects that the 2023 year-end cash balance

of €49.9 million will be sufficient to finance the

remaining construction of the new megafactory

and the operations for at least one year after the

financial statements signing date. However, on

the medium-term, management is anticipating

that NX Filtration will need additional funding

until the moment that the company will be cash

generating and is exploring various funding sourc

es such as an asset-based financing plan. Based

on their assessment, management considers it

likely that the additional funding will be conclud

ed in 2024.

Management assessed the possibility that actual

cash inflows might be less, and/or actual cash

outflows might be higher than projected.

Management assessed these scenarios and the

most significant assumptions underlying their

scenarios are:

• The ability to realise cost reductions;

• The ability to realise savings on capital ex-

penditures;

• The possibility to attract external bank fi-

nancing.

For the medium term, management is projecting

increasing sales and positive operational cash-

flows.

Where relevant to our audit, we evaluated

the design and effectiveness of the internal

control measures related to the preparation

and monitoring of the budget and reported our

observations to the management board and the

persons charged with governance.

Our procedures regarding the evaluation of the

appropriateness of management’s use of the

going concern basis of accounting for at least

twelve months after the date of preparation of

the financial statements, including management’s

plans to address the identified going concern

risk and the adequacy of the related disclosures

included, amongst others the following:

• Considered whether management’s going

concern assessment includes all relevant

information of which we are aware as a result

of our audit and inquiring with management

regarding management’s most important

assumptions underlying its going concern

assessment.

• For the period of at least 12 months after the

date of the annual accounts, we:

- Analysed the financial position per

balance sheet date as well as the liquidity

scenarios and sensitivity analysis, including

the assessment of the progress of the

construction of the megafactory.

- We traced the forecasted revenues,

expenses and capital expenditures back to

the approved budget by the supervisory

board.

- Challenged management on the cash

management measures that can be taken

if the financial performance would be lower

than anticipated in the budget for 2024.

For the period thereafter and until the company

expects to be cash generating, we assessed the

reasonableness of management’s expectation

that additional funding will be concluded in 2024.

Amongst others, we assessed the status of the

funding process and communication thereon.

159NX Filtration - Annual Report158 Independent auditor’s report

Report on the other information

included in the annual report

The annual report contains other information.

This includes all information in the annual

report in addition to the financial statements

and our auditor’s report thereon.

Based on the procedures performed as set out

below, we conclude that the other information:

• is consistent with the financial

statements and does not contain material

misstatements; and

• contains all the information regarding the

directors’ report and the other information

that is required by Part 9 of Book 2 and

regarding the remuneration report required

by the sections 2:135b and 2:145 subsection

2 of the Dutch Civil Code.

We have read the other information. Based on

our knowledge and the understanding obtained

in our audit of the financial statements or

otherwise, we have considered whether

the other information contains material

misstatements.

By performing our procedures, we comply

with the requirements of Part 9 of Book 2 and

section 2:135b subsection 7 of the Dutch Civil

Code and the Dutch Standard 720. The scope

of such procedures was substantially less than

the scope of those procedures performed in our

audit of the financial statements.

The management board is responsible for the

preparation of the other information, including

the directors’ report and the other information

in accordance with Part 9 of Book 2 of the

Dutch Civil Code. The management board

and the supervisory board are responsible for

ensuring that the remuneration report is drawn

up and published in accordance with sections

2:135b and 2:145 subsection 2 of the Dutch

Civil Code.

Report on other legal and

regulatory requirements and

ESEF

Our appointment

We were appointed as auditors of NX Filtration

N.V. on 5 April 2022 by the supervisory board.

This followed the passing of a resolution by the

shareholders at the annual general meeting

held on 5 April 2022. Our appointment has

been renewed annually by shareholders and

now represents a total period of uninterrupted

engagement of four years.

European Single Electronic Format (ESEF)

NX Filtration N.V. has prepared the annual

report in ESEF. The requirements for this

are set out in the Delegated Regulation (EU)

2019/815 with regard to regulatory technical

standards on the specification of a single

electronic reporting format (hereinafter: the

RTS on ESEF).

In our opinion, the annual report prepared

in XHTML format, including the (partially)

marked-up consolidated financial statements,

as included in the reporting package by NX

Filtration N.V., complies in all material respects

with the RTS on ESEF.

The management board is responsible for

preparing the annual report, including the

financial statements in accordance with the

RTS on ESEF, whereby the management board

combines the various components into a single

reporting package.

Our responsibility is to obtain reasonable

assurance for our opinion whether the annual

report in this reporting package complies with

the RTS on ESEF.

We performed our examination in accordance

with Dutch law, including Dutch Standard

3950N ‘Assuranceopdrachten inzake het

voldoen aan de criteria voor het opstellen

van een digitaal verantwoordingsdocument’

(assurance engagements relating to compliance

with criteria for digital reporting).

Our examination included amongst others:

• Obtaining an understanding of the entity’s

financial reporting process, including the

preparation of the reporting package.

• Identifying and assessing the risks that

the annual report does not comply in all

material respects with the RTS on ESEF

and designing and performing further

assurance procedures responsive to those

risks to provide a basis for our opinion,

including:

- obtaining the reporting package and

performing validations to determine

whether the reporting package

containing the Inline XBRL instance

document and the XBRL extension

taxonomy files have been prepared

in accordance with the technical

specifications as included in the RTS on

ESEF;

- examining the information related to the

consolidated financial statements in the

reporting package to determine whether

all required mark-ups have been applied

and whether these are in accordance

with the RTS on ESEF.

No prohibited non-audit services

To the best of our knowledge and belief, we

have not provided prohibited non-audit services

as referred to in article 5(1) of the European

Regulation on specific requirements regarding

statutory audit of public-interest entities.

Services rendered

The services, in addition to the audit, that we

have provided to the Company or its controlled

entities, for the period to which our statutory

audit relates, are disclosed in note 10 to the

company financial statements.

Key audit matter Our audit work and observations

Capitalisation of tangible fixed assets

Refer to note 18 to the consolidated financial

statements

NX Filtration N.V. is building a new megafactory

in Hengelo during 2023. Management expects

to complete the construction in first half-year of

2024. During 2023, the amount of additions relat

ed to this new megafactory is € 41.5 million.

Due to the significance of capital expenditures

and the transactions being outside the normal

course of business, we consider the capital ex

penditures related to the construction of the new

megafactory a key audit matter, with specific

attention for the accuracy of the amounts capi

talised.

Where relevant to our audit, we evaluated the

design and existence of the internal control

measures related to the construction of the

megafactory in Hengelo.

We tested the operating effectiveness of the

controls related to the bidding and contracting

process and the segregation of duties in the

payment process.

We tested, on a sample basis, the additions to

the tangible fixed assets by agreeing them to the

purchase orders, contracts and invoices.

Based on the procedures set out above, we

did not note any material exceptions. Our

procedures did not lead to specific indications of

fraud or suspicions of fraud with respect to the

capitalisation of tangible fixed assets.

161NX Filtration - Annual Report160 Independent auditor’s report

Responsibilities for the financial

statements and the audit

Responsibilities of the management board

and the supervisory board for the financial

statements

The management board is responsible for:

• the preparation and fair presentation of

the financial statements in accordance with

EU-IFRS and Part 9 of Book 2 of the Dutch

Civil Code; and for

• such internal control as the management

board determines is necessary to enable

the preparation of the financial statements

that are free from material misstatement,

whether due to fraud or error.

In preparing the financial statements, the

management board is responsible for assessing

the Company’s ability to continue as a going

concern. Based on the financial reporting

frameworks mentioned, the management

board should prepare the financial statements

using the going-concern basis of accounting

unless the management board either intends to

liquidate the Company or to cease operations

or has no realistic alternative but to do so.

The management board should disclose

in the financial statements any event and

circumstances that may cast significant doubt

on the Company’s ability to continue as a going

concern.

The supervisory board is responsible for

overseeing the Company’s financial reporting

process.

Our responsibilities for the audit of the

financial statements

Our responsibility is to plan and perform an

audit engagement in a manner that allows

us to obtain sufficient and appropriate audit

evidence to provide a basis for our opinion. Our

objectives are to obtain reasonable assurance

about whether the financial statements as a

whole are free from material misstatement,

whether due to fraud or error and to issue

an auditor’s report that includes our opinion.

Reasonable assurance is a high but not absolute

level of assurance, and is not a guarantee

that an audit conducted in accordance with

the Dutch Standards on Auditing will always

detect a material misstatement when it exists.

Misstatements may arise due to fraud or error.

They are considered material if, individually

or in the aggregate, they could reasonably be

expected to influence the economic decisions

of users taken on the basis of the financial

statements.

Materiality affects the nature, timing

and extent of our audit procedures and

the evaluation of the effect of identified

misstatements on our opinion.

A more detailed description of our

responsibilities is set out in the appendix to our

report.

Zwolle, 9 February 2024

PricewaterhouseCoopers Accountants N.V.

F.S. van der Ploeg RA

Appendix to our auditor’s report

on the financial statements 2023

of NX Filtration N.V.

In addition to what is included in our auditor’s

report, we have further set out in this appendix

our responsibilities for the audit of the financial

statements and explained what an audit

involves.

The auditor’s responsibilities for the audit

of the financial statements

We have exercised professional judgement

and have maintained professional scepticism

throughout the audit in accordance with Dutch

Standards on Auditing, ethical requirements

and independence requirements. Our audit

consisted, among other things of the following:

• Identifying and assessing the risks of

material misstatement of the financial

statements, whether due to fraud or

error, designing and performing audit

procedures responsive to those risks, and

obtaining audit evidence that is sufficient

and appropriate to provide a basis for our

opinion. The risk of not detecting a material

misstatement resulting from fraud is higher

than for one resulting from error, as fraud

may involve collusion, forgery, intentional

omissions, misrepresentations, or the

intentional override of internal control.

• Obtaining an understanding of internal

control relevant to the audit in order

to design audit procedures that are

appropriate in the circumstances, but not

for the purpose of expressing an opinion on

the effectiveness of the Company’s internal

control.

• Evaluating the appropriateness of

accounting policies used and the

reasonableness of accounting estimates

and related disclosures made by the

management board.

• Concluding on the appropriateness of

the management board’s use of the

going-concern basis of accounting, and

based on the audit evidence obtained,

concluding whether a material uncertainty

exists related to events and/or conditions

that may cast significant doubt on the

Company’s ability to continue as a going

concern. If we conclude that a material

uncertainty exists, we are required to

draw attention in our auditor’s report to

the related disclosures in the financial

statements or, if such disclosures are

inadequate, to modify our opinion. Our

conclusions are based on the audit evidence

obtained up to the date of our auditor’s

report and are made in the context of our

opinion on the financial statements as a

whole. However, future events or conditions

may cause the Company to cease to

continue as a going concern.

• Evaluating the overall presentation,

structure and content of the financial

statements, including the disclosures,

and evaluating whether the financial

statements represent the underlying

transactions and events in a manner that

achieves fair presentation.

Considering our ultimate responsibility for

the opinion on the consolidated financial

statements, we are responsible for the

direction, supervision and performance of

the group audit. In this context, we have

determined the nature and extent of the audit

procedures for components of the Group to

ensure that we performed enough work to

be able to give an opinion on the financial

statements as a whole. Determining factors

are the geographic structure of the Group, the

significance and/or risk profile of group entities

or activities, the accounting processes and

controls, and the industry in which the Group

operates. On this basis, we selected group

entities for which an audit or review of financial

information or specific balances was considered

necessary.

163NX Filtration - Annual Report162 Independent auditor’s report

We communicate with the supervisory board

regarding, among other matters, the planned

scope and timing of the audit and significant

audit findings, including any significant

deficiencies in internal control that we identify

during our audit. In this respect, we also issue

an additional report to the audit committee

in accordance with article 11 of the EU

Regulation on specific requirements regarding

statutory audit of public-interest entities. The

information included in this additional report

is consistent with our audit opinion in this

auditor’s report.

We provide the supervisory board with a

statement that we have complied with relevant

ethical requirements regarding independence,

and to communicate with them all relationships

and other matters that may reasonably be

thought to bear on our independence, and

where applicable, related actions taken to

eliminate threats or safeguards applied.

From the matters communicated with the

supervisory board, we determine those matters

that were of most significance in the audit of

the financial statements of the current period

and are therefore the key audit matters.

We describe these matters in our auditor’s

report unless law or regulation precludes

public disclosure about the matter or when, in

extremely rare circumstances, we determine

that a matter should not be communicated in

our report because the adverse consequences

of doing so would reasonably be expected to

outweigh the public interest benefits of such

communication.

165NX Filtration - Annual Report164 Independent auditor’s report