Untitled

Annual Report

2022

Contents

2022 at a glance 4

About NX Filtration 6

Report of the Management Board 8

Business review 10

Sustainability report 20

2022 month by month 42

Financial performance 48

Risks and Uncertainties 52

Corporate governance 80

Report of the Supervisory Board 92

Financial statements 104

Consolidated financial statements 106

Company financial statements 138

Other information 148

Provision in the Articles of Association relating

to profit appropriation

150

Independent auditor’s report 152

3NX Filtration - Annual Report2 Contents

2022

at a glance

105%

gross income

growth

167

pilot projects

263 billion

liters of clean

water enabled

Successfully converted pilot projects

into 28 demo and full-scale projects

Winner of the Global Water

Intelligence Wastewater Project of

the Year 2022 award

Expanded our global sales presence

with high profile industry leaders

Step-up in production capacity with

second membrane spinning line

Started the construction of

our new megafactory for

nanofiltration membrane modules

Obtained Sustainalytics rating,

ranking best 13% of our global

subindustry peer group

5NX Filtration - Annual Report4 2022 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), colour and selective salts, but also

bacteria, viruses and nanoplastics, from water in one

step 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 res-

idues in one step, to treat wastewater streams

to prevent discharge of polluting substances in

the environment, and to reuse treated waste-

water for purposes that also include the pro-

duction 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

optimise 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 that, over time, con-

vert into demo or full-scale plants. As such, NX Filtration aims to grow its installed base of pilot sys-

tems 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 roll-

out of NX Filtration’s products in repeat projects and module replacements in existing systems.

1225167

Pilot projects Demo projects Full-scale projects

of which 17 repeat

projects

First replacement

order received in

H2 2022

of projects in 2022:#

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)

808

8,354

4,977

2,569

2022

896

4,069

2021

2,072

1,101

Other

income

Sustainable

Industrial Water

Clean Municipal

Water

+105%

Recurring

replacements

Repeat

projects

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

2022 was a very exciting year for NX Filtration in which

we were able to embark on the next stage of our growth

journey. We are experiencing strong traction in the

market with our direct nanofiltration (dNF) membrane

technology that can produce pure and affordable water

in one step by removing micropollutants (including e.g.,

pharmaceuticals, medicines and PFAS) whilst offer-

ing our customers strong sustainability benefits. We

expanded our global blue-chip customer base, further

shaped our global sales and engineering organization

positioning us well for the substantial growth ahead of

us, expanded the capacity at our current facilities and

started the construction of our megafactory combining

the latest membrane production techniques in a

state-of-the-art facility.

Strong growth and progress on

our strategic agenda

2022 has been another year of strong growth

for NX Filtration, with an increase of 105%

in gross income and an increase of 138% in

revenues from the sale of goods. We also made

strong progress on our strategic agenda, that

centers around the roll-out of pilot projects

and converting these into full-scale projects,

the expansion of our production capacity and

further innovation of our products. At the same

time, the global COVID-19 pandemic continued

to impact people’s lives and the wider econ-

omy, including NX Filtration’s employees and

end-markets. We want to thank our employees

and customers for their continued commitment

and dedication, also in these times.

Revenues in our Sustainable Industrial Water

business line increased with 140%, driven by

strong traction with customers in, amongst

others, the food & beverage and textile indus-

tries looking to reduce their water footprint

and optimize their water systems in a sustain-

able way. Clients in this business line include

for example PepsiCo, Aquarius H2O Dynamics

(Indian OEM partner) and Envirogen (UK OEM

partner).

Revenues in our Clean Municipal Water business

line increased with 133%. We realized repeat

projects with PT. Bayu for the production of

drinking water in Indonesia, supplied our dNF

modules to Ekopak for the extension of a water

treatment project in Belgium, and received

repeat orders from EcoAzur for a new drinking

water and wastewater treatment projects in

Mexico. Our current focus in Europe and North

America is on pilot projects with leading play-

ers, amongst whom Veolia (a global leader in

water treatment), Aqualia (one of the largest

water management companies in Europe) and

Suez (global leader in water and waste man-

agement). Although our Sustainable Industrial

Water business line is still the largest today,

larger municipal projects are constituting an

increasing part of our pipeline for future reve-

nues.

Market developments

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 wa

ter scarce for at least one month of the year. By

2025, approximately two-thirds of the world’s

population may face water shortages

. The use

of biologically treated wastewater is generally

seen as an important source for producing high

quality water for industrial use and drinking wa

ter. In addition, the discharge of wastewater in-

creasingly poses challenges for the environment

(for example the presence of antibiotic resistant

bacteria, viruses and PFAS, 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 technolo-

gy can play a pivotal role in addressing these

World Wildlife Fund, https://www.worldwildlife.org/threats/water-scarcity

Michiel Staatsen

CEO and COO

Erik Roesink

Founder and CTO

Marc Luttikhuis

CFO

11NX Filtration - Annual Report10 Business review

avoiding the use of 6.7 million kg of chem-

icals and saving 82 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.

In our Sustainability Report, that forms part

of this Annual Report, we further elaborate on

these and other ESG related aspects.

Strengthening organization

In our journey of fast growth, strengthening

and growing our organization is amongst our

top priorities. During 2022, our employee base

has grown from 69 FTE to 135 FTE, which in-

cludes more than 15 nationalities. Key additions

were made to our sales force, management,

team of pilot and commissioning engineers,

R&D employees and production personnel. NX

Filtration is placing strong emphasis on train-

ing and development. Not only to empower NX

Filtration’s employees, but also for customers,

partners and graduates. We are facilitating in-

ternships, joint research programs and partner-

ships with universities and research institutes.

In 2022, we further shaped a global organi-

zation positioning us well for the substantial

growth ahead of us. In addition to further

strengthening and growing our team at our

headquarters, technology center and produc-

tion facilities in the Netherlands, we significant-

ly strengthened our global sales and engineer-

ing team. This team grew from 17 FTE at the

end of 2021 to 34 FTE at the end of 2022. We

established strong regional clusters across all

continents headed by strong industry hires. In

April 2022, Tsunenobu Katsura (former Chair-

man of Hydranautics) joined us as new Sales

Director for the Asia Pacific region. In May

2022, Tony Fuhrman (former Commercial Di-

rector of LG Water Solutions) joined us as new

Sales Director for the Americas. Recently, at

the start of 2023, Jelena Flokstra (former sales

and business development EMEA at 3D printing

company Hubs) joined us as new Sales Director

for the EMEA region.

Strong progress against strategy

NX Filtration’s key strategic themes center

around the roll-out of pilot projects and con-

verting these into full-scale projects, the ex-

pansion of its production capacity and further

innovation.

Pilot roll-out

Pilots play an important role in NX Filtration’s

commercial roll-out strategy, that is based on

converting pilot projects into larger demo or

full-scale projects, with subsequent repeat or-

ders from existing clients, and periodic module

replacements at existing plants. Pilots range

from lab-scale Mexplorer pilots to full-scale

(containerized) Mexpert pilots. In 2022, NX Fil-

tration initiated 167 pilot projects compared to

87 in 2021. On 31 December 2022, NX Filtration

had 162 pilot systems in its fleet (85 at 31 De-

cember 2021). To facilitate a growing demand

for its pilot systems, NX Filtration had placed

orders to further expand its fleet to 190 pilot

systems, therewith nearing closely to our medi-

um-term objective of 200 pilot systems. We are

also continuing to be successful in turning these

pilot projects into larger projects: in 2022 we

delivered our dNF modules for 5 demo projects

and 23 full-scale projects. Of these full-scale

projects, 17 were repeat orders from custom-

ers who had already worked with NX Filtration

before. 2022 also marks the first replacement

order for NX Filtration, which we supplied to

Hidrofilt in Hungary for industrial wastewater

treatment at the site of an aerospace multina-

tional, that we first supplied in 2019.

issues. Our technology was designed to remove

micropollutants (including pharmaceuticals,

medicines, PFAS and insecticides), colour and

selective salts from (treated) wastewater

and surface water in one single step and also

removes bacteria, viruses and nanoplastics.

The direct nanofiltration membrane 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.

Recent market developments appear favorable

for the further adoption of our dNF technology.

For example, in Asia growing populations and in

creasing water consumption are asking for new

solutions to be implemented. Based on research

by Frost & Sullivan

, treated wastewater is

increasingly being embraced as the sustainable

alternative to the use of groundwater sources,

therewith conserving such freshwater resources

and reducing the need for cost and energy-in

tensive desalination processes. Various countries

have already implemented policies that require

a minimum amount of treated wastewater to be

reused. This is expected to be adopted globally

in the near future to mitigate the water stress

caused by climate change, economic develop

ment and population growth. Another import-

ant trend relates to PFAS and other emerging

pollutants (including antibiotics, hormones and

persistent organic matter), that have become a

key cause for concern, especially in North Ameri

ca and the EU. The market for drinking water re-

lated PFAS treatment in the United States alone

is expected to grow with 58% per year to $10.3

billion in 2026

. Many countries are exploring

various methods to detect, monitor, and treat

these harmful pollutants. And finally, circular

economy themes are more and more being ad

opted by utilities and industries across the globe.

Therefore, technology solutions with circularity

benefits or those that enable a circular model

are expected to witness significant growth.

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. 2022

marked an important year for NX Filtration

in terms of progress on this ESG agenda: we

realized externally certified science-based CO

reduction targets, we obtained an independent

ESG risk rating from Sustainalytics, in which

we rank amongst the 13% best performers in

our global subindustry peer group, we joined the

United Nations Global Compact initiative, and

installed a formal ESG Committee comprised

of the two independent Supervisory Board

members to formalize governance and oversight

responsibilities 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 2022 membrane

sales can enable the production of

263 billion liters of clean water

, which is

equivalent to the drinking water supply for

48 million persons during one year. In 2022,

NX Filtration enabled access to clean water

across 30 countries.

2. Avoiding emissions at our customers: With

our membrane module sales in 2022, we

enabled 3,578 ton CO

e savings during the

deployment lifetime of our modules, by

Frost & Sullivan Global Water and Wastewater Treatment, Outlook 2022

Frost & Sullivan Drinking Water PFAS Treatment United States: Forecast to 2026

Based on NX Filtration’s sales of approximately 2,600 membrane modules (dNF and UF only), multiplied by the expected capacity

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

13NX Filtration - Annual Report12 Business review

pollutants (including PFAS) from water sources.

The project works on a sustainable alternative

for the elimination of emerging pollutants in

the water cycle.

Outlook

Driven by the strong market demand for our

technology and supported by the additional

equity capital that NX Filtration raised with

its IPO in June 2021, we will continue to invest

in our strategic priorities in 2023. In terms of

people, we will continue to build on the strong

global organization that we further shaped in

2022. We will also continue our strong focus on

rolling-out pilot projects and converting these

pilots into demo- and full-scale projects. We are

nearing closely to our medium-term objective

of 200 pilot systems, and therewith gradually

shifting our focus from rapid expansion of our

pilot fleet towards optimal deployment for near,

medium and long-term commercial opportuni

ties. Moreover, we expect to increasingly benefit

from repeat business with our existing (OEM)

relationships. In terms of production, we will

further benefit from the higher capacity and

production efficiencies from our two existing

production lines. In addition, 2023 will be a key

year for the construction of our new megafac

tory. Completion of this megafactory is antici-

pated by the first quarter of 2024 and start-up

during the first half-year of 2024. By then, the

additional capacity is needed to meet expected

demand from our rapidly growing overall pipe

line of opportunities for the short, medium and

long term.

ESG will undoubtedly remain a key part of our

overall mission while scaling up. NX Filtration

considers high ESG standards of great impor

tance for its long-term success, its workforce,

its customers, the environment and society as a

whole. The strong growth that NX Filtration is

currently experiencing provides many opportu

nities to organize ESG aspects with the highest

standards and impact from the outset.

We are well-positioned for further growth in

2023, with various recent breakthrough orders

with our dNF technology in Australia, China and

Indonesia. We have an outlook on total revenues

of €18m to €22m for 2023, driven by strong

market demand and our expanding global sales

presence. This targeted growth is largely driven

by further roll-out of full-scale projects and by

repeat business with our existing (OEM) rela

tionships.

We remain fully committed to make an impact

based on our mission ‘clean and affordable wa

ter for all’, whilst offering strong sustainability

benefits to our customers and providing an in

spiring working environment for our employees.

Management Board

Michiel Erik Marc

Staatsen Roesink Luttikhuis

CEO and CTO CFO

COO

Capacity expansion

During 2022, NX Filtration started to benefit

from its expanded capacity in its existing facil-

ities. The commissioning of its second spinning

line in the first half-year of 2022 resulted in a

higher capacity (combined total capacity of

approximately 10,000 membrane modules per

year

, compared to the capacity of approxi-

mately 2,500 membrane modules per year in

2021) and production efficiency improvements.

We also started the construction of a new large-

scale manufacturing facility. NX Filtration decid

ed to upsize the design of this megafactory with

a higher initial capacity and allowing more space

for future capacity additions. Improvements

and lessons learned from our second spinning

line have resulted in higher capacity estimates

per spinning line. In addition, to create optimal

flexibility for the future, we have decided to build

a larger (more than 26,500 m2 production and

more than 6,000 m2 office space) facility from

the outset. These two factors allow us to start-

up with a higher initial capacity (approximately

50k

membrane modules based on 4 spinning

lines), whilst leaving space for further capacity

additions within the same facility (total target

ed annual capacity of >120k

membrane mod-

ules), in addition to the existing capacity at the

current locations. Total expected capex is higher

than foreseen at our IPO as a result of the larger

plant design and current views on costs, but esti

mated capex per module capacity remains in line

with previous estimates.

Construction has started with involvement

of key specialist contractors including Aan de

Stegge Twello (construction contractor), Baten-

burg (mechanical and electrical contractor) and

Ekopak (water treatment plant). Completion

of the megafactory is anticipated by the first

quarter of 2024 and start-up in during the first

half-year of 2024.

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 membranes is also being recognized

by various industry observers. NX Filtration

supplied its technology to the Recolab project in

Sweden, which received the 2022 Global Water

Intelligence award for Wastewater Project of

the Year. Recolab is the largest source-separat-

ed sanitation plant in the world using circular

treatment. Key highlights recognized by the

award were the energy-efficiency of the plant

and the circular processes that recycles waste-

water to drinking water quality. Also Bluetech

Research recognizes NX Filtration’s technology,

awarding it with the highest scores across its

five rating categories, being large addressable

market, strong management team, strong IP

position, innovative technology and BlueTech

Research opinion. Finally, NX Filtration was

included in the new Euronext Tech Leaders

initiative for high-growth and leading tech com-

panies, as the only water technology company

out of the more than 100 included companies.

In 2022, we also made further progress on our

patent portfolio, by adding a new patent family

‘Method for creating a porous film through

aqueous phase separation’ that concerns an

innovative application of nanolayers on our

membranes.

An important part of our innovation activity is

related to the optimal deployment of our mem-

brane modules at our customers. During 2022

we conducted a research project with PepsiCo

on additional opportunities for dNF membranes

within PepsiCo’s facilities. We also participate

in the European innovation project LIFE PRIS-

TINE, led by Acciona, to eliminate emerging

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

15NX Filtration - Annual Report14 Business review

We are building a new state-of-the art

megafactory for the production of our direct

nanofiltration membranes

17NX Filtration - Annual Report16 Business review

>26,500 m2 production and >6,000 m2 office space at the High Tech

Systems Park Twente, the high tech company hub in the Hengelo

(Netherlands) region and very close to our current facilities

Combining ultra-modern membrane production techniques in a

state-of-the-art facility

Enabling significant increase in production capacity, from 10k membrane

modules per year today to approximately 50k in the initial phase in 2024

with room to expand to >120k in the same facility

Construction started and completion is anticipated by Q1 2024 and

start-up in H1 2024

We are building a new state-of-the art

megafactory for the production of our direct

nanofiltration membranes

19NX Filtration - Annual Report18 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. This technology was 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. 2022 marked

an important year for NX Filtration in terms

of progress on our ESG agenda: we realized

externally certified science-based CO

reduction targets, we obtained an independent

ESG risk rating from Sustainalytics, in which

we rank amongst the 13% best performers in

our global subindustry peer group, we joined

the United Nations Global Compact initiative,

and installed a formal ESG Committee

comprised of the two independent Supervisory

Board members to formalize 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 2022 on various topics such as code of

conduct compliance, business ethics and human

rights; and the United Nations Global Compact

(UNGC) Communication on Progress 2022 at

the end of this Sustainability Report.

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 the below

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

21NX Filtration - Annual Report20 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 paragraphs NX

Filtration’s integrated ESG framework and Our

impact in 2022.

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. In 2022, 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, to: (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 (vi) 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)

In 2022, 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

23NX Filtration - Annual Report22 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 can report that 41% of its revenues

(dNF sales as percentage of total revenues

from sale of goods) align with objective 1

‘climate change mitigation’, as these revenues

contribute to reducing energy consumption and

avoiding chemicals.

Approximately 94% of 2022 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 2022

operating expenses that are associated with

its dNF products represent approximately

41% of its total operating expenses (assumed

proportional to the share of dNF as part of

total revenues).

EU Taxonomy

Introduction

Regulation (EU) 2020/852 (Taxonomy) on the

establishment of a framework to facilitate

sustainable investment (the EU Taxonomy

Regulation) has introduced a classification

system for environmentally sustainable

economic activities.

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 technical

screening criteria specify the performance

requirements for any economic activity that

determine under what conditions that activity

(i) makes a substantial contribution to a given

environmental objective; and (ii) does not

significantly harm the other objectives.

The six environmental objectives are 1)

climate change mitigation, 2) climate change

adaptation, 3) the sustainable use and

protection of water and marine resources, 4)

the transition to a circular economy, 5) pollution

prevention and control and 6) the protection

and restoration of biodiversity and ecosystems.

A final set of rules and delegated regulations

for objective three to six has not been formally

approved yet by the European regulator, but NX

Filtration closely monitors any developments

in this respect. This also includes new

requirements that are part of the proposed

Corporate Sustainability Reporting Directive

(CSRD) in particular. NX Filtration will benefit

from a proportionate reporting regime and will

only have to start reporting in this respect in

2027 over the financial year 2026.

NX Filtration aims to contribute to the vast

majority of the objectives of the EU Taxonomy

Regulation, supporting its strong ESG profile.

First and foremost due to the vision of NX

Filtration to be a leading global provider of

breakthrough nanofiltration technology that

enables customers to, amongst others, produce

pure and affordable water, treat wastewater

and reduce their water footprint, NX Filtration

aims to substantially contribute to the third

objective of the EU Taxonomy Regulation, being

‘the sustainable use and protection of water

and marine resources’, which was confirmed by

an external assessment by consultancy firm MJ

Hudson. Whilst NX Filtration’s key contribution

in terms of EU Taxonomy Regulation alignment

is expected to center around objective 3,

NX Filtration expects its activities also to

contribute to, and is committed to achieve

voluntarily alignment with the other objectives

to the extent possible.

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), ad-

sorption (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/m3 (including pre- and post-treat-

ment steps), as compared to approximately 1.7 kWh/m3 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.

25NX Filtration - Annual Report24 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 2023, 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, which received the 2022 Global Water

Intelligence award for Wastewater Project

of the Year. 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.

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.

Final technical screening criteria expected to be published in 2023

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 in 2022 and found comparable, high removal

rates for e.g. PFOA, which is a perfluorinated carboxylic acid produced and used worldwide as

an industrial surfactant in chemical processes and as a material feedstock, and is a product of

health concern and one of many PFAS compounds.

27Sustainability 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 135 FTEs at 31 December 2022

represented more than 15 nationalities. We

also joined the UN Global Compact, see our

first Communication on Progress report 2022

below.

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 SGD 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.

1225167

Pilot projects Demo projects Full-scale projects

of which 17 repeat

projects

First replacement

order received in

H2 2022

of projects in 2022:#

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)

808

8,354

4,977

2,569

2022

896

4,069

2021

2,072

1,101

Other

income

Sustainable

Industrial Water

Clean Municipal

Water

+105%

Recurring

replacements

Repeat

projects

ReplacementsFull-scaleDemo plantsPilots

29NX Filtration - Annual Report28 Sustainability report

drinking water supply for persons

million

Clean water for all

Our impact in 2022

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

2022 membrane sales could

enable the production of:

263 billion liters

of clean water

Based on NX Filtration’s sales of approximately

2569 membrane modules (dNF and UF),

multiplied by the expected capacity and

lifetime of such modules.

…which is equivalent to:

during

1 year

In 2022

enabled clean water across 30 countries worldwide

Europe

2022 revenue of sale

of goods by region

Rest of the World

Europe

North America

Asia

20.1%

39.8%

30.0%

10.1%

31Sustainability report

Avoiding emissions

Our impact in 2022

NX Filtration’s GHG

footprint in 2022

amounted to:

642

ton CO

versus:

3578 ton

e savings

enabled during the deployment

of NX Filtration’s

membrane modules

avoidance of 6.7 million kg of chemicals

81.6 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 3578 ton 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 ramp-up of the

second spinning line in the first half of 2022,

we will be able to realise 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. Additional

programs, such as heat recovery, are being

taken into account with the realization of the

new factory that is planned for the coming

years.

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

organisation 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.

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. and NX

Filtration Real Estate B.V. 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.

Verification

In 2022, NX Filtration’s CO

reduction targets

for Scope 1 and Scope 2 emissions have been

officially validated by the SBTi.

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 2022

amounted to 642 ton CO

e (CO

equivalent).

Scope 1 CO

e emissions amounted to 114 ton,

of which 17% related to lease cars and 83% to

natural gas combustion). The natural gas usage

(46,920 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 14 grams of

e per kWh meaning 25.1 ton CO

e emission

for electricity (based on 1790 MWh). These

Scope 2 emissions were all off-set as 100%

of the purchased electricity (1790 MWh) was

sourced from European wind projects. Reported

Scope 3 CO

e emissions related to business

travel amounted to 528 ton CO

e in 2022.

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 3578 ton CO

e saved over the

typical lifetime of a module.

33NX Filtration - Annual Report32 Sustainability report

Our internal initiatives

Employees

growth in the number of employees

Our employee base grew from 69 FTE at the end of 2021 to 135 FTE at the end of 2022, representing

more than 15 nationalities. NX Filtration employs staff in the Netherlands, Belgium, Germany, France,

Spain, India, Singapore, China, Japan, Indonesia, UAE, the United States and Canada, 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 2022

96%

Safety

lost time injuries and

fatalities in 2022

NX Filtration harnesses a culture of safety,

where health and safety risks are minimized

with a methodology based on the safety aware-

ness 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 the produc-

tion, quality control and R&D employees. Upon

joining NX Filtration, each employee receives a

safety training and each department meeting

starts with a health and safety topic.

During the year we invested, amongst others, in

safe storage solutions in our laboratory, lifting

aids in the production and improved air circula-

tion in our offices. 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 and 2022. NX Filtration

has a safety policy, conducted safety trainings

and is pro-actively sharing alerts and perfor-

mance.

NX Filtration actively engages with its suppliers

about its Supplier Code of Conduct.

Compliance therewith is included in legally

binding agreements with our suppliers and

contractors for our new megafactory. We also

conducted 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 new

megafactory

100%

Our patent portfolio included 36 granted

patents as per 31 December 2022. Additions

in 2022 included patent application Method

for creating a porous film through aqueous

phase separation 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.

Academic

network

Research &

development

partnerships with

universities and research

institutes around the world

patents as per

31 December 2022

In total, our people authored in approximately

36 peer reviewed scientific publications since

2016. In 2022, our people authored in 6 peer

reviewed scientific publications, amongst

others, in the Journal of Membrane Science

and ACS Applied Polymer Materials.

Throughout 2022 a total of 16 students were

part of the NX Filtration’s team as an intern

of for their BSc or MSc thesis. NX Filtration

also launched a trainee program for young

talent. More than 10 educational or scientific

lectures were given by NX Filtration’s team,

amongst which at the International Water

Conference in Orlando, Florida (USA), the

Nanofiltration 2022 Conference in Achalm

(Germany) and the AMTA Membrane

Technology Conference in Las Vegas, Nevada

(USA).

NX Filtration actively supports the projects of

14 PhD students spread across various

universities.

Knowledge

sharing

scientific publications

authored by NX

Filtration employees

35NX Filtration - Annual Report34 Sustainability report

Looking ahead

Looking ahead, NX Filtration anticipates

to further grow its business strongly.

Environmental, Social and Governance will

remain aspects on which it will not compromise

while scaling up. NX Filtration considers high

ESG standards of great importance for its long-

term success, its customers, the environment

and society as a whole. The strong growth that

NX Filtration is currently experiencing provides

many opportunities to organize ESG aspects

with the highest standards from the outset.

The development and construction of our new

manufacturing plant, for which we have started

construction at the High Tech Systems Park

in Hengelo, the Netherlands, will also provide

ample opportunities to implement measures for

further progress on ESG themes.

In 2023, NX Filtration aims to continue to grow

its business, therewith also growing the impact

it can make with the sale of its membrane

products. This will contribute to the global

availability of clean and safe water and the

reduction of energy and chemicals usage in

water treatment processes.

With the further scale-up of our business, we

aim to reduce our energy consumption even

further and deploy measures to limit our GHG

emissions such as procuring green electricity,

continuing the switch to electric vehicles, and

further electrify its operations. Other key

contributing factors to this objective include the

increase in efficiency with our new production

lines, the transitioning to more energy-efficient

production methods and moving towards low-

carbon distribution and logistics by actively

engaging with our suppliers.

United Nations Global Compact

(UNGC) Communication on

Progress 2022

Introduction and reaffirmation of our

support

As part of our corporate social responsibility,

we joined the UNGC on 30 May 2022. By

committing to the UNGC, we have undertaken

to embrace, support and implement within

our sphere of influence their principles relating

to human rights, labour standards, the

environment and anti-corruption. In this first

Communication on Progress we refer to sources

that describe our actions to integrate the

UNGC and its ten principles into our business

strategy, culture and daily operations. With this

Communication on Progress we also reaffirm

our full support of the Ten Principles of the

UNGC. We have also committed to sharing this

information with our stakeholders using our

primary channels of communication.

The reference table below explains where to

find the relevant information for each principle

of the UNGC. All mentions of page numbers

refer to this annual report, unless indicated

otherwise.

UNGC Principle Our efforts and certain references to annual report section

Human Rights

1. We should

support and

respect the

protection of

internationally

proclaimed

human rights.

At NX Filtration we do business with respect for fundamental human

rights. This is reflected in our Human Rights Policy, Code of Conduct, Sup-

plier Code of Conduct and various other policies, available on our corpo-

rate website.

These policies help us understand, avoid and address human rights related

risks. We are committed to comply with international standards and comply

with: the Universal Declaration of Human Rights; the Declaration on Funda

mental Principles and Rights at Work of the International Labour Organiza-

tion (ILO); the Guidelines for Multinational Enterprises of the Organisation

for Economic Cooperation and Development (OECD); the United Nations

(UN) Guiding Principles on Business and Human Rights implementing the

UN Protect, Respect and Remedy Framework; and the Ten Principles of the

UN Global Compact (as set out in this Communication on Progress).

Our Human Rights Policy includes a clear commitment on remedy and

grievance procedures.

- Risks and Uncertainties – Human Rights, p. 78.

- Sustainability Report – our impact in 2022 – our internal initiatives -

Suppliers, p. 34.

Our policies are circulated annually to each employee, officer and director

as part of NX Filtration’s request to them for sign-off on compliance with

NX Filtration’s policies, including our Human Rights Policy. Our external

stakeholders may obtain copies of our policies through our corporate web

site and are generally provided a copy at the start of our joint engagement.

2. We should

make sure that

we are not

complicit in

human rights

abuses.

37NX Filtration - Annual Report36 Sustainability report

UNGC Principle Our efforts and certain references to annual report section

Labour

3. We should

uphold the

freedom of as-

sociation and

the effective

recognition of

the right to

collective bar-

gaining.

We respect our employees’ freedom of choice to be legally represented by

a labour union without fear of retaliation. Where employees are represent-

ed by a legally recognised labour union, we will establish a constructive

dialogue with this labour union. Where local laws and practices restrict the

right to freedom of association and collective bargaining, we will endeavor

to develop other ways to have a meaningful dialogue with employee repre-

sentatives, without breaking local law.

We create opportunities that enable each employee to increase its chanc-

es on the labour market. Having an expert, qualified and healthy work-

force is a key factor in our success in achieving its objectives. That is why

NX Filtration is committed to attracting, retaining and captivating the

right people, offering them extensive scope for training and development,

and facilitating a healthy work/life balance.

- Sustainability Report – our impact in 2022 – our internal initiatives -

Employees, p. 34.

- Sustainability Report – our impact in 2022 – our internal initiatives -

Safety, p. 34.

- Sustainability Report – our impact in 2022 – our internal initiatives –

Knowledge Sharing, p. 35.

4. We eliminate

all forms of

forced and

compulsory

labour.

Further reference is made to our Human Rights Policy available on our

corporate website that includes our policy on forced labour.

5. The effective

abolition of

child labour.

Further reference is made to our Human Rights Policy available on our

corporate website that includes our policy on child labour.

6. The elimination

of discrimina-

tion in respect

of employment

and occupa-

tion.

Further reference is made to our Human Rights Policy and Whistleblower

Policies (including Dutch, French, German and Spanish translations) avail-

able on our corporate website that includes our policy on discrimination.

UNGC Principle Our efforts and certain references to annual report section

Environment

7. We should

support a

precautionary

approach to

environmental

challenges.

NX Filtration strives to be a good steward of nature and the environment

by preventing waste and limiting negative impacts. To achieve this, NX

Filtation works with an environmental management system certified by

ISO14001. This has resulted in improved process technologies and people

skills, as well as formalized procedures, checklists, training and instruc-

tions.

In 2022, 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.

Furthermore, NX Filtration believes it is important that customers and

suppliers become more aware of the consequences of climate change.

They should recognise that they can contribute to mitigate the effects of

climate change.

8. We undertake

initiatives to

promote great-

er environmen-

tal responsibili-

ty.

- 2022 Month by Month – p. 42-47.

- Sustainability Report – p. 20-36.

- Sustainability Report – Our impact in 2022 – Avoiding Emissions p. 32-33.

9. We encourage

the devel-

opment and

diffusion of

environmen-

tally friendly

technologies.

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),

adsorption (activated carbon) and oxidation. In addition, NX Filtration’s

dNF solution avoids or significantly reduces the use of chemicals in oper-

ations, as it prevents the use of flocculants and coagulants in pre-treat-

ment (which is required for traditional filtration processes) and requires a

very low cleaning frequency, thus considerably reducing the CO

footprint

related to these chemicals.

- About NX Filtration – Business Lines, p. 7.

- Business Review – Sustainability and ESG impact, p. 12-13.

- Sustainability Report – p. 20-36.

39NX Filtration - Annual Report38 Sustainability report

UNGC Principle Our efforts and certain references to annual report section

Anti-Corruption

10. We should

work against

corruption in

all its forms,

including

extortion and

briber y.

We deploy policies, processes and trainings on conflict-of-interest situa-

tions, anti-bribery and corruption, gifts, entertainment and hospitality,

export and sanctions compliance and anti-money laundering. We encour-

age speaking up and raising concerns about any such issues.

- Risks and Uncertainties, Business Ethics Policy, p. 77-78.

- Risks and Uncertainties, Code of Conduct, p. 77.

- Supplier Code of Conduct available on our corporate website.

Our policies are circulated annually to each employee, officer and director

as part of NX Filtration’s request to them for sign-off on compliance with

NX Filtration’s policies, including our Code of Conduct (including anti-brib-

ery, anti-corruption and anti-money laundering provisions).

41NX Filtration - Annual Report40 Sustainability report

January

Aigües de Barcelona starts river water

treatment pilot in Barcelona

Aigües de Barcelona, the public-private compa-

ny responsible for managing the water cycle in

the metropolitan area of Bar-

celona, Spain, starts a

series of pilot projects

with NX Filtration’s

dNF membranes.

The objective of

the first pilot

project is to

treat water from

the Llobregat

river in Barcelona

to produce drinking

water.

January

GreenTech starts pilots with NX Filtration

for drinking water production in China

GreenTech Environmental, a leading publicly

listed company in advanced water treatment

and wastewater recycling, headquartered in

Beijing, starts a pilot program with NX Fil-

tration’s dNF membranes for the production

of drinking water in the Chinese provinces of

JiangSu and Zhejiang.

March

Service de l’Eau – Ville de Lausanne starts

pilot with NX Filtration to remove Chloro-

thalonil in Switzerland

Service de l’Eau, the drinking and wastewater

utility of the city of Lausanne in Switzerland,

initiated a pilot program with NX Filtration’s

dNF technology with the objective to remove

Chlorothalonil from its water sources. Chloro-

thalonil is an agricultural fungicide affecting

two water sources of Service de l’Eau, which

have therefore been put out of operation.

April

NX Filtration wins project for wastewater

reuse at Cross Textiles

Cross Textiles, a denim & lifestyle brand and

producer with customers such as Jack & Jones,

H&M, Inditex, Ralph Lauren and Mango, select-

ed NX Filtration for the delivery of

its dNF membranes for waste-

water treatment and reuse

at its production facil-

ities in Çorlu, Turkey.

The dNF technology

enables the removal

of colour and organ-

ics from the textile

wastewater stream,

making this water

suitable for reuse in

Cross Textiles’ facilities.

April

Former Hydranautics Chairman Mr.

Tsunenobu Katsura joins NX Filtration

Mr. Tsunenobu (Tsune) Katsura joined NX Fil-

tration as per April 2022. Tsune Katsura brings

a wealth of international membrane experience

from his 20 years’ career at Hydranautics, one

of the global leaders in membrane technolo-

gy and part of the Nitto Denko Corporation,

where he held the position of Chairman be-

tween 2018 and 2021. At NX Filtration, Tsune

Katsura is responsible for sales and business

development in East Asia, with specific focus

on Japan, Taiwan and South Korea, as well as

the global microelectronics sector.

April

NX Filtration successfully extends pilot

test of Jacobs Engineering in Florida, USA

Jacobs Engineering, a leading technical

professional services company headquartered

in Dallas, completed a pilot program with NX

Filtration’s dNF membrane technology at

the City of Melbourne WTP in Florida, USA.

Excellent results were achieved

in terms of stable operation,

high operating recovery,

quality of the permeate

produced, reduced

energy consumption,

and avoidance of pre-

treatment chemicals.

May

Strategic expansion of NX Filtration’s pres-

ence in the Americas and China

To further strengthen its position in the glob-

al water markets, NX Filtration expanded its

global sales team with country managers for

the Americas and China. Tony Fuhrman, NX

Filtration’s country manager for the Americas,

has extensive experience in water and waste

water treatment technology sectors through his

previous roles as Commercial Director and Area

Market Director for LG Water Solutions and

various key positions at Hydranautics and Suez.

Shoahua Hu, NX Filtration’s country manager

for China, has over 25 years of experience in

membranes for water treatment, with his last

role being Head of Inge (currently part of Du-

Pont Water Solutions) in China.

May

NX Filtration

exhibits at the

IFAT worldwide

in Munich

From 30 May to

3 June, NX Filtra-

tion presented the

application and bene-

fits of our hollow fiber dNF

membrane technology at the IFAT worldwide

Munich, the world’s leading trade fair for water,

sewage, waste and raw materials manage-

2022 month by month

311

43NX Filtration - Annual Report42 2022 month by month

June

NX Filtration delivers its direct nanofiltra-

tion technology to SAPAL in Mexico

SAPAL (Sistema de Agua Potable y Alcantaril-

lado de Leon), a Mexican drinking and waste-

water utility, selected NX Filtration to supply its

dNF membrane modules for a new wastewater

recovery project. SAPAL will deploy NX Fil-

trations dNF membrane modules

to treat municipal wastewater

in order to achieve a drink-

ing water quality per-

meate that complies

with local drinking

water standards.

This permeate will

be reinjected in one

of its key groundwa-

ter reservoirs that is

used for drinking water

production. The proj-

ect is delivered through

EcoAzur, distributor of NX

Filtration’s products in Mexico.

September

NX Filtration exhibits at IFAT India

From 28 to 30 September, NX Filtration exhib-

ited at IFAT India, demonstrating how its dNF

technology delivers superior water quality in a

sustainable way with low energy and very low

chemical consumption.

October

NX Filtration joins WEFTEC in New Orleans

from October 8-12

Our North American team exhibits at WEFTEC

(the Water Environment Federation’s Technical

Exhibition and Conference), the largest water

conference in North America. At the conference

NX Filtration showcased its dNF technology

introducing key applications to its North Ameri-

can partners and customers.

October

NX Filtration part of ACCIONA-led initia-

tive to eliminate emerging pollutants from

water sources

NX Filtration announces its participation in the

European innovation project LIFE PRISTINE, led

by ACCIONA S.A. The project’s objective is to

eliminate emerging contaminants in the inte-

gral water cycle, one of the essential measures

to promote alternative water resources in the

face of water scarcity, which affects more than

2.8 billion people

worldwide.

ment. We also served our ‘own’ beer, brewed

from purified Rhine river water with our dNF

technology!

June

NX Filtration supplies its direct nanofiltra-

tion membrane modules to Envirogen for

industrial water recycling in the UK

Envirogen, a leading international provider

of industrial water treatment solutions and

process filtration, selected NX Filtration for the

delivery of its dNF membrane modules for an

industrial water recycling project for a leading

manufacturer of advanced

materials and compo-

nents in the North of

England. This proj-

ect follows previ-

ous deliveries of

microfiltration

and ultrafiltra-

tion membrane

modules from NX

Filtration to Envi-

rogen.

June

Geert-Henk Koops (formerly SUEZ) joins

NX Filtration as Technology Director

Geert-Henk Koops (former Global Technology

Leader at Suez Equipment and Systems) joined

NX Filtration as per June 2022 in the role of

Technical Director. Geert-Henk brings a wealth

of international membrane technology expe-

rience from his long career at, among others,

Suez, where he led a global team of approxi-

mately 100 researchers and engineers respon-

sible for product development in the field of

water treatment. Prior to that, Geert-Henk

worked at GE Water & Process Technologies,

where he was responsible for R&D and led the

global technology team of their ultrafiltration

and membrane bioreactor division.

June

NX Filtration is included in the new

Euronext initiative for high-growth and

leading tech companies

NX Filtration becomes part of the Euronext

Tech Leaders, the new initiative dedicated

to high-growth and leading Tech companies.

Partners of this initiative include BNP, Goldman

Sachs, HSBC, JP Morgan, McKinsey, SocGen

and a variety of local partners. Based on sev-

eral criteria, including market cap, growth and

strong tech DNA, Euronext selected 100+ high-

growth and leading companies to be included in

its Tech Leaders initiative. It aims to strengthen

the European Tech sector and be a catalyst for

the next generation of Tech leaders.

June

NX Filtration joins the United Nations

Global Compact initiative

NX Filtration has joined the United Nations

Global Compact initiative — a voluntary leader

ship platform for the development, implemen-

tation and disclosure of responsible business

practices – as part of our commitment to be a

responsible company. The UN Global Compact is

a call to companies to align their operations and

strategies with ten universally accepted princi

ples in the areas of human rights, labour, envi-

ronment and anti-corruption, and to take action

in support of UN goals and issues embodied in

the Sustainable Development Goals (SDGs).

821

45NX Filtration - Annual Report44 2022 month by month

November

NX Filtration and Transcend partner to

showcase the benefits of dNF membranes

through generative design software

The collaboration between Transcend, a pro-

vider of generative design SaaS tools, and

NX Filtration brings NX Filtration’s advanced

projection tool online through the Transcend

platform. This will enable asset owners and

engineering companies to make their own pro-

jections and system designs which include NX

Filtration’s dNF membranes.

October

Independent Dutch water research insti-

tute KWR demonstrates NX Filtration’s

membranes retention of PFAS

Dutch water research institute KWR conduct-

ed a series of tests with NX Filtration’s dNF

membranes on the retention of representative

subsets of PFAS that are commonly seen in real

life situations. KWR based it tests on both sur-

face water (from the Lekkanaal in the Nether-

lands) and on biologically treated effluent from

a municipal wastewater treatment plant. These

tests demonstrate that NX Filtration’s dNF

membranes are a very effective and sustain-

able solution to facilitate the removal of PFAS.

The average retention of PFAS20, a group of

substances on the EU monitor to be regulated,

was 94.7%. The average retention of PFAS4, a

group of substances that Sweden will be using

in its legislation, was 94.6%.

October

Vitens and NX Filtration start pilot for

testing IJssel river water as potential

source for drinking water

Vitens, the largest drinking water utility in the

Netherlands, started a pilot program with NX

Filtration. In the pilot program, Vitens will use

NX Filtration’s dNF membrane technology to

produce drinking or industrial process water

from the Dutch IJssel river. The pilot program

of Vitens is expected to run from October 2022

to Fall 2024.

October

NX Filtration signs Channel Partnership

Agreement with Hydroflux in Australia

Hydroflux is one of Australia’s fastest growing

water and wastewater technology and solu-

tions businesses in the municipal and industrial

markets. Hydroflux has conducted

a series of pilot trials across

a range of applications

that demonstrate

the outstanding

benefits of NX

Filtration’s dNF

technology, po-

sitioning this as

the ideal solution

for the removal

of micro-pollut-

ants, including

the residues from

antibiotics, hor-

mones, pesticides,

pharmaceuticals and

nano-plastics.

October

NX Filtration starts pilot with IWE for

water reuse from paper mills

Fort Island Pampus in the Netherlands seeks

to turn the surrounding water from the IJmeer

into its own drinking water. After a series of

pilots it will now install a larger installation

that includes NX Filtration’s dNF technology.

With this installation it can replace the current

importing of drinking water from the mainland

by early 2023.

18 24 10

47NX Filtration - Annual Report46 2022 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 phar-

maceuticals, medicines, PFAS and insecticides), colour

and selective salts, but also bacteria, viruses and nano-

plastics, from water in one step 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, manage-

ment reviews the profitability of the Company on an

aggregate level.

All financial information can be found in the consolidat-

ed financial statements.

Gross income

Gross income increased by 105% from €4,069

thousand in 2021 to €8,354 thousand in 2022.

Revenues from the sale of goods increased

by 138% from €3,173 thousand in 2021 to

€7,546 thousand in 2022. Other income slightly

declined from €896 thousand in 2021 to €808

thousand in 2022. This decline was driven by

reduced government grants for innovation

projects, partly offset by rental income from

pilots growing from €192 thousand in 2021 to

€400 thousand in 2022.

Key drivers for the growth in gross income were

a strong market demand, an increase in the

number of full-scale projects that resulted from

preceding pilot projects, as well as global sales

force expansions and a growing number of OEM

relationships, that are increasingly resulting in

repeat projects for existing clients.

1225167

Pilot projects Demo projects Full-scale projects

of which 17 repeat

projects

First replacement

order received in

H2 2022

of projects in 2022:#

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)

808

8,354

4,977

2,569

2022

896

4,069

2021

2,072

1,101

Other

income

Sustainable

Industrial Water

Clean Municipal

Water

+105%

Recurring

replacements

Repeat

projects

ReplacementsFull-scaleDemo plantsPilots

49NX Filtration - Annual Report48 Financial performance

We experienced strongest growth in our

Sustainable Industrial Water business line,

with revenues from the sale of goods of €4,977

thousand in 2022, a growth of 140% compared

to €2,072 thousand in 2021. NX Filtration

benefitted from the pilots it had initiated since

mid-2020, as well as from repeat projects from

existing customers. We experienced strong

traction with customers in, amongst others,

the food & beverage and textile industries

looking to reduce their water footprint and

optimise their water systems in a sustainable

way. Key projects in our Sustainable Industrial

Water business line included wastewater reuse

projects for, amongst others, Aquarius H2O

Dynamics in India, Cross Textiles in Turkey

and Practical Water Solutions in South Africa.

Our commercial roll-out model is based on

converting pilot projects into larger demo or

full-scale projects, with subsequent repeat

orders from existing clients, and periodic

module replacements at existing plants. 2022

also marks the first replacement order for NX

Filtration, which we supplied to Hidrofilt in

Hungary for industrial wastewater treatment

at the site of an aerospace multinational, that

we first supplied in 2019.

In the Clean Municipal Water business line,

revenues from the sale of goods in 2022 were

€2,569 thousand, a growth of 133% compared

to €1,101 thousand in 2021. This growth was

primarily driven by full-scale projects in Asia,

whereas the focus in Europe and North America

has been on pilots with leading players, with

visibility on future large projects. Although our

Sustainable Industrial Water business line is

still the largest today, larger municipal projects

are constituting an increasing part of our

pipeline for future revenues.

In our Clean Municipal Water business line,

we realised repeat dNF projects with PT.

Bayu for the production of drinking water

in Indonesia, supplied our dNF modules

to Ekopak for the extension of a water

treatment project in Belgium, and received

repeat orders from EcoAzur for drinking and

wastewater treatment projects in Mexico. In

the European and North American market,

where the conversion time from pilot to demo

or full-scale project typically takes longer, NX

Filtration started various new pilot projects,

amongst others with Suez in France related

to micropollutants removal with our dNF

technology and Vitens in the Netherlands,

related to drinking water production from the

IJssel river. We also continued our pilot projects

with leading players such as Veolia in France,

Aqualia and Aigües de Barcelona in Spain and

Service de l’Eau de Lausanne in Switzerland.

Gross margin, EBITDA and Net

result

Gross margin increased from 55.0% in 2021

to 57.3% in 2022. Gross margin was positively

impacted by efficiencies resulting from the

second spinning line that was started-up during

the first half of 2022 and positive product mix

effects.

EBITDA loss was €8,549 thousand in 2022

compared to a loss of €3,738 thousand in 2021

(excluding IPO transaction costs). Including IPO

transaction costs, 2021 EBITDA loss amounted

to €13,323 thousand.

Net loss was €8,642 thousand in 2022

compared to a net loss of €4,103 thousand in

2021 (excluding IPO transaction costs). Net loss

including IPO transaction cost for 2021 was

€11,354 thousand.

Cash flows and investments

The net cash position at 31 December 2022

amounted to €104.3 million, compared to a net

cash position of €133.4 million at 31 December

2021.

Operating cash flow is €15,702 thousand

negative, compared to €3,630 thousand

negative in 2021 (€13,215 thousand negative

including IPO transaction costs). Working

capital

increased to €8,626 thousand at 31

December 2022 versus €1,062 thousand at 31

December 2021, as a result of higher account

receivables due to increasing sales volumes as

well as increased inventory levels to meet the

growing demand in 2023.

Capital expenditures amounted to €12,670

thousand in 2022 as compared to €8,616

thousand in 2021. Capex included investments

in the ongoing capacity expansion at the

existing locations, the purchase of land and

development cost for the new megafactory and

the expansion of NX Filtration’s fleet of pilot

systems. Additionally, NX Filtration capitalised

€914 thousand of development costs which

demonstrates the company’s continued efforts

to invest in innovations for the future.

Total FTE increased from 69 at 31 December

2021 (104 at 30 June 2022) to 135 at 31

December 2022, further shaping our global

organization positioning us well for the growth

ahead of us. Key additions were made in our

sales teams, management, pilot engineers,

R&D employees and production personnel.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

51NX Filtration - Annual Report50 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

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 Low High

Unsuccessful pilot projects or

inconsistent performance of our

products could harm the customer

support for our products.

High Low 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 Low 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 Low

The COVID-19 pandemic has had

and may continue to have an adverse

impact on our business, operations

and the markets in which we, our

partners and customers operate.

Medium High Medium

Risks and

Uncertainties

53NX Filtration - Annual Report52 Risks and Uncertainties

Risk category Risk description

Risk appetite Likelihood Potential impact

Operational

If we experience significant delays in

the planned scale-up of our production

and the build of our planned

manufacturing facility, or if such

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.

Medium 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.

Medium 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

55NX Filtration - Annual Report54 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 amount of estimates in the financial

statements, and because NX Filtration was

not faced with any indication for impairment in

financial year 2022.

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.

Strategic and Commercial Risks

and Uncertainties

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

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 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. Over the past year this has led

to an increase in conversions of pilot systems

to full-scale installations. 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

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.

57NX Filtration - Annual Report56 Risks and Uncertainties

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

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 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

59NX Filtration - Annual Report58 Risks and Uncertainties

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 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

61NX Filtration - Annual Report60 Risks and Uncertainties

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.

The COVID-19 pandemic has had and may

continue to have an adverse impact on

our business, operations and the markets

in which we, our partners and customers

operate.

The outbreak of COVID-19 had an impact on

economies, financial markets and business

activities worldwide. Since early 2020,

governments around the world implemented

measures which effectively halted normal

activities, such as travel bans and restrictions,

lockdowns, curfews, quarantines and

shutdowns of business and workplaces. While in

most countries in which NX Filtration operates,

the government restrictions have been lifted,

certain effects from the COVID-19 pandemic

still remain. In countries where government

restrictions remain and in case the COVID-19

pandemic continues or worsens, or in the case

of future pandemics, NX Filtration may be

exposed to the effects of the pandemic itself as

well as additional local government regulations

and closure orders in the countries in which it

will operate.

The outbreak of COVID-19 has impacted and

may impact NX Filtration mainly due to (i)

limitations in sales and marketing activities

as there were, and there may be (as the case

may be), less trade fairs, which are important

to further commercialise the NX Filtration’s

products, (ii) the inability to be present at

the start-up of pilot systems and full-scale

projects (where required), and (iii) customers

facing cost savings and budget constraints,

especially with regard to new technology, and

as a consequence may choose to postpone a

year or more. Additionally, any interruptions

at NX Filtration’s manufacturing facilities as

a result of (a worsening of) COVID-19 or any

future pandemics in the future could result in

interruptions to NX Filtration’s supply chains,

its ability to conduct production activities and

ultimately reduce the amount of products

available for NX Filtration to offer to its

customers.

The long-term effects of the COVID-19

pandemic on the global economy are still

unclear. The degree to which COVID-19

continues to impact NX Filtration, its

partners and customers will depend on future

developments, including, but not limited to,

further actions taken to contain the virus or

treat its impact, the effectiveness and rate

of deployment of vaccines, the extent and

effectiveness of economic stimulus and the

speed at which and to what extent normal

economic and business activity can resume

globally. If NX Filtration’s existing or potential

customers experience slowdowns in their

businesses or if governments and municipality

companies face stringent budget constraints

due to the consequences of COVID-19, or

if they are otherwise negatively impacted

by the COVID-19 pandemic or any resulting

economic downturn, they may have reduced

capital expenditure available, which may lead

them to delay their projects to employ NX

Filtration’s products. As a result, NX Filtration

may experience a lengthening of pilot system

cycles or the loss of existing or potential

customers. NX Filtration may also experience

disruptions to its growth objectives, including

with respect to international expansion, or

disruptions to its supply chain as a result of

the ongoing COVID-19 pandemic. Any of the

foregoing factors, individually or in aggregate,

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 diversifying its customer

base. Not only in the markets NX Filtration

currently operates in, but also by further

internationalising globally. To safeguard

the health and safety of its employees, NX

Filtration complies to all relevant national and

international guidelines, standards and policies

for health and safety. Also, NX Filtration can

implement additional safety measures, if and

when required, to continue safe and responsible

operations during a pandemic, as evidenced

during the COVID-19 pandemic.

63NX Filtration - Annual Report62 Risks and Uncertainties

Operational Risks and Uncertainties

If we experience significant delays in the planned scale-up of

our production and the build of our planned manufacturing

facility, or if such 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 intended

addition of a new manufacturing facility in the Netherlands within

the next two years that will primarily focus on the increased

production of NX Filtration’s products. It may take considerable

time to scale-up production and commence operations at NX

Filtration’s manufacturing facility before NX Filtration is able to

meet any increase in the commercial demand for its 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. Any delay in the

scale-up of its production could also materially adversely affect

NX Filtration’s growth prospects as NX Filtration may fail to grow

its market share. NX Filtration may also face unexpected delays in

obtaining the required permits and approvals in connection with

its planned manufacturing facility, which could require significant

time and financial resources and delay NX Filtration’s ability to

operate the facility. This is particularly relevant to NX Filtration

as it will heavily rely on this new manufacturing facility to achieve

its growth strategy. Opening the new manufacturing facility will

require the efforts and attention of NX Filtration’s management

and other personnel, which will divert resources from the existing

business or operations and, in the longer term, additional capital

expenditures will be required as NX Filtration will likely seek further

expansion. In addition, NX Filtration will need to hire and retain

more skilled employees to develop and operate the expanded

facility. 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.

65NX Filtration - Annual Report64 Risks and Uncertainties

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 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. On a

dedicated plot of land that has been secured

already, NX Filtration aims to develop a new

production facility within the next two years,

giving it considerable time to limit the risks and

uncertainties set out above.

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 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). In particular, NX Filtration’s

business plan is dependent upon the successful

reduction of raw material prices, for example

due to volume-discounts. The cost of processed

raw materials, components and finished goods

historically has represented a significant

portion of NX Filtration’s cost of raw materials

and consumables used. 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.

67NX Filtration - Annual Report66 Risks and Uncertainties

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 that has increased

after the IPO in 2021 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 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 strengthen its IT

focus in 2022. To further mitigate the risks

related to privacy related information as well

as data protection in general several actions

have been taken. For 2022, 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 are also centralizing our quality

organization to report directly to the CEO to

bolster cross functional focus.

69NX Filtration - Annual Report68 Risks and Uncertainties

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; (vii) 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 (viii) 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.

71NX Filtration - Annual Report70 Risks and Uncertainties

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

(e.g. COVID-19).

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-

party nondisclosure agreements, trademarks,

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

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, different

suppliers are used for different parts of its

production equipment to make sure that no

individual supplier 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.

73NX Filtration - Annual Report72 Risks and Uncertainties

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

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

75NX Filtration - Annual Report74 Risks and Uncertainties

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 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.

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 is also an important ‘soft-

control’ to mitigate risks and fraud.

During the financial year 2022, 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.

In addition, further consolidation and

professionalization has been achieved in the

financial year 2022. In 2022 a new internal

control framework was implemented to further

formalize NX Filtration’s internal processes and

controls. 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

2022.

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

77NX Filtration - Annual Report76 Risks and Uncertainties

(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

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

2022. 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. The Code of Conduct is available in

Dutch, English, German, French and Spanish

making it easily understandable for all of our

employees. In 2022, 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 financial year 2022.

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 financial year 2022.

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.

79NX Filtration - Annual Report78 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 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

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 M.A. 51 CEO 2019 AGM of

(Michiel) and COO 2025

Staatsen

Mr H.D.W. 70 CTO 2016 AGM of

(Erik) Roesink 2025

Mr M.G.H. 47 CFO 2022 AGM of

(Marc) 2026

Luttikhuis

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

is NX Filtration’s CEO and COO since May

2019. 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 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 part-time professor

advanced membranes for aqueous applications

in the research cluster membrane science

81NX Filtration - Annual Report80 Corporate Governance

& 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. 46 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. 52 Member AGM of 2025

(Carolina) Wielinga (chair)

Mr B.A.M. 58 Member AGM of 2025

(Benno) van Dongen

Mr J.T.P. 49 Member AGM of 2025

(John) Glorie

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 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 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.

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 of the Financial

Statements;

• Management fee to Infestos Holding E

B.V, based on the consultancy agreement

83NX Filtration - Annual Report82 Corporate Governance

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 between Infestos Holding E

B.V. and the Company on a sign-on equity

incentive with Mr Marc Luttikhuis.

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

5 April 2022, 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 5 April 2022, 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 5 April 2022

(i.e. until and including 5 October 2023), 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%.

Diversity Policy

The diversity policy of NX Filtration has been

in effect since its adoption by the Supervisory

Board on 11 June 2021 and is in accordance

with best practice provision 2.1.5 of the Dutch

Corporate Governance Code (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.

85NX Filtration - Annual Report84 Corporate Governance

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.

In a broader sense, NX Filtration has a very

diverse group of employees with men and

women from different backgrounds, cultures

and religions.

Dutch Corporate Governance

Code

The Dutch Corporate Governance Code, as

amended, entered into force on, and applies

to any financial year starting on or after, 1

January 2017, and 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

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 provision 3.3.3: Shares

held by a Supervisory Director in the company

on whose supervisory board they serve should

be long-term investments. The securities of

the Company indirectly held by Supervisory

Director Mr John Glorie are not necessarily held

on behalf of him as long-term investments as

his investment horizon shall be determined on a

case-by-case basis.

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 2022, the issued share

capital of the Company amounts to €500,000

divided into 50,000,000 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

50,000,000 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 2022,

the following shareholders were known to hold

interests of at least 3% directly in the Company

(as per AFM disclosure on 31 December 2022,

actual substantial holdings may differ):

Shareholder Number of Percentage of the

Ordinary issued share capital

Shares of the Company

B.H.F. 31.968.448 63.94%

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 2.473.317 4.95%

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

incorporated in the Netherlands, 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 will be 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

87NX Filtration - Annual Report86 Corporate Governance

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

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 5 April 2022, 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 5 April 2022, 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

10 February 2023 Publication full year results 2022

6 April 2023 Annual General Meeting

29 August 2023 Publication half-year results 2023

NX Filtration applied the following closed

periods for transactions directly or indirectly,

relating, to shares and other financial

instruments in NX Filtration:

• 1 May 2022 until 30 August 2022

• 1 November 2022 until 10 February 2023

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:

89NX Filtration - Annual Report88 Corporate Governance

• 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

2022, 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, 10 February 2023

Management Board

Michiel Erik Marc

Staatsen Roesink Luttikhuis

CEO and CTO CFO

COO

91NX Filtration - Annual Report90 Corporate Governance

Report of the

Supervisory

Board

93NX Filtration - Annual Report92 Report of the Supervisory Board

John GlorieBenno 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 long-term value and the manner

in which the strategy is implemented. 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.

For NX Filtration, 2022 was an eventful

year with highly promising progress on, and

recognition of, its business. We are proud to see

that NX Filtration has again made significant

steps in line with its strategy, amongst which

further broadening its international customer

base, the further roll-out of its pilot program,

adding high profile industry leaders to its

organization, starting construction of its new

megafactory for nanofiltration membrane

modules, and making other significant steps

in the ramp-up of its production capacity

(such as the commissioning of its second

production line). NX Filtration has received

further recognition within the industry, as

inter alia demonstrated by winning the Global

Water Intelligence Wastewater Project of the

Year 2022 award and being the only water

technology company that has been included in

the new Euronext Tech Leaders initiative, which

was launched in 2022.

Activities and priorities 2022

In 2022, monitoring of the strong growth plan

both commercially and operationally remained

priority for us. Key attention points were the

recruitment of personnel and strengthening the

organisation in skills and leadership positions

to facilitate the current business and prepare

for further growth. Part of the monitoring and

sounding board role was the dialogue with key

management in various Supervisory Board

meetings. We determined that NX Filtration

has sound processes in place of achieving long-

term value for its customers and shareholders,

its people and society. Furthermore, we

increased focus on NX Filtration’s ESG

agenda. We installed a formal ESG Committee

to formalize governance and oversight

responsibilities with regard to sustainability,

environmental, social, corporate governance

and human capital matters.

Strategy and long-term value

creation

The Supervisory Board fully supports NX

Filtration’s strategy. During 2022, 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.

95NX Filtration - Annual Report94 Report of the Supervisory Board

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.T.P. (John) Glorie (born 1973, Dutch) works

at Infestos Nederland B.V. since 2016, where he

currently holds the role of investment director.

Mr John Glorie’s expertise is in supporting

companies on areas including production

management, logistics, operational processes

and ICT. Mr John Glorie started his career in

the water markets as quality manager at Norit

Process Technology (1996-1999), followed by a

role as logistics manager at Sollas Holland, an

international company for packaging machinery

(1999-2004). In the period 2004-2010, he

was managing director of BOA Recycling

Equipment, after which he became chief

executive officer of Webprint (2010-2015), an

online photo service that was part of Infestos

Nederland’s portfolio and which was sold to

Smartphoto Group, a Belgian listed company.

Mr John Glorie holds a master’s degree in

industrial engineering & management from

University of Twente of Technology in Enschede,

the Netherlands, with a specialisation in

process technology.

It is expected that Mr J.G. (Hans) Slootweg

(born 1979, Dutch) will replace John Glorie

as member of the Supervisory Board. The

Supervisory Board will nominate Hans for

appointment as member of the Supervisory

Board at the general meeting of shareholders

of the Company to be held on 6 april 2023.

Since 2014, Mr Hans Slootweg works at

Infestos Nederland B.V., where he currently

holds the role of investment director. Mr Hans

Slootweg’s expertise is in supporting companies

on areas including technology, R&D, finance

and accounting. Mr Hans Slootweg played an

instrumental role in the value creation, related

to, amongst others, the abovementioned areas

of support, of Infestos’ portfolio companies.

Prior to joining Infestos, Mr Hans Slootweg

worked as manager at Scotch & Soda (2012-

2014) and as senior manager at KPMG (2003-

2012). Mr Hans Slootweg 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 John Glorie. Mr Hans Slootweg,

expected to replace Mr John Glorie immediately

after the general meeting of shareholders of

the Company to be held on 6 april 2023, will

also be a representative of Infestos.

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 Age Position Initial appointment End of current term

Ms C. (Carolina) Wielinga 52 Member and Chair 11 June 2021 AGM 2025

Mr B.A.M. (Benno) van Dongen 58 Member 11 June 2021 AGM 2025

Mr J.T.P. (John) Glorie 49 Member 11 June 2021 AGM 2025 – expected to be

replaced at the AGM 2023

NX Filtration - Annual Report96 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 2022, 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 independent auditor, financing

structure, Long Term Incentive Plan for key

management, HR overviews, development and

diversity, and budget 2023.

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 2022. 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 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 reporting;

• monitoring the statutory audit of the

annual accounts, and in particular the

process of such audit

• monitoring the independence of the

external independent auditor; and

• adopting procedures with respect to the

selection of the external independent

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 Director

Mr M.G.H. Luttikhuis received 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 and a collective health insurance. 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.

99NX Filtration - Annual Report98 Report of the Supervisory Board

Severance

The service agreement of 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 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 2022. Mr Marc Luttikhuis was entitled to

variable remuneration, as set out below.

Management Board remuneration over

2022

The total amount of remuneration of the

Managing Directors for the financial year

2022 comprised €649,281 (2021: €302,971).

For the financial year 2022, the total amount

of remuneration of Mr Michiel Staatsen

comprised €179,577 (2021: €153,023). For the

financial year 2022, the total remuneration of

Mr Erik Roesink comprised €166,894 (2021:

€143,253). For the financial year 2022, the total

remuneration of Mr Marc Luttikhuis comprised

€302,810. His short-term incentive in cash

amounted to €36,550 and the conditional

award under the Long-Term Incentive Plan

amounted to €18,939.

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

1,750,000 Ordinary Shares (3.5%) and Michiel

Staatsen indirectly holds 1,050,000 Ordinary

Shares (2.1%) in the capital of the Company.

The larger part of these DRs is 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 Marc Luttikhuis

On the date hereof, Marc Luttikhuis indirectly

holds 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 John Glorie is employed by Infestos

Nederland and does not receive compensation

for his Supervisory Board activities. Mr Hans

Slootweg, expected to replace Mr John Glorie

immediately after the general meeting of

shareholders of the Company to be held on 6

april 2023, is employed by Infestos Nederland

and will 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 2023, 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

In EUR ‘000 2022

Management Board compensation

Salaries and wages 564,795

Short-term incentive plan 36,550

Social security distributions 24,130

Pension contributions (DC) 4,867

Share-based payments 18,939

Total 649,281

Average number of FTEs 3

Average compensation 216,427

Employee compensation

Salaries and wages 4,948,344

Short-term incentive plan -

Social security distributions 803,148

Pension contributions (DC) 216,688

Share-based payments 17,752

Total 5,985,931

Average number of FTEs 107

Average compensation 55,891

Internal Pay Ratio 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

the size of the Company and the combination

of a finance and control department with

101NX Filtration - Annual Report100 Report of the Supervisory Board

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. There

is a good level of transparency amongst both

the Management Board and Supervisory Board.

The latter has further improved in 2022 as

the Supervisory Board has requested monthly

reporting packs with the intention to put focus

topics on the agenda of the combined board

meetings. The Supervisory Board evaluation

delivered areas for improvement and key topics

for 2023: (i) the Supervisory Board intends

to spend more time on discussing the longer

term strategy of the Company (including on

the sales funnel), (ii) the Supervisory Board

intends to regularly discuss progress on the

construction of the new manufacturing facility,

and (iii) the Supervisory Board intends to

seek some possibilities to further strengthen

the interpersonal relationship amongst its

members.

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 2023.

Financial statements and

independent auditor’s opinion

The financial statements 2022 included in

this annual report have been audited and

PricewaterhouseCoopers Accountants N.V.

has issued an unqualified opinion on them. The

financial statements were extensively discussed

with the Supervisory Board, in the presence

of the external independent 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 6 April 2023 adopts

the financial statements and the appropriation

of the result.

Result appropriation

NX Filtration realised a loss

of €8.6 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 involvement and dedication in this stage

of rapid growth. 2022 was an eventful year for

NX Filtration with highly promising progress on,

and recognition of, its business. NX Filtration

experienced a top-line growth of 105% and

added 66 FTE to its global workforce. We

are looking forward with confidence, and we

strongly believe that NX Filtration is on the

right path to continue enabling groundbreaking

technology to solve global water challenges.

Enschede, 10 February 2023

The Supervisory Board

Carolina Wielinga (Chair)

Benno van Dongen

John Glorie

103NX Filtration - Annual Report102 Report of the Supervisory Board

Financial

statements

105NX Filtration - Annual Report104 Financial statements

Consolidated

financial statements

for the year ended

31 December 2022

Consolidated statement of comprehensive income

In EUR ‘000 Notes 2022 2021

Revenue from sale of goods 7 7,546 3,173

Other income 8 808 896

Gross income 8,354 4,069

Operating expenses

Costs of raw materials and consumables (3,229) (1,428)

Changes in inventories of finished goods

and work in progress 1,134 218

Personnel expenses 9 (8,363) (3,833)

Amortization on intangible assets 17 (490) (315)

Depreciation on property, plant and equipment

and right-of-use assets 18,19 (2,567) (1,076)

Operating costs 10 (5,602) (12,102)

External research & development costs 11 (843) (247)

Operating expenses (19,960) (18,783)

Operating loss (11,606) (14,714)

Finance expenses 13 (289) (427)

Loss before income tax (11,895) (15,141)

Income tax benefit 14 3,253 3,787

Net loss for the period (8,642) (11,354)

Other comprehensive result for the period - -

Total comprehensive loss for the period (8,642) (11,354)

Total comprehensive loss for the period

(attributable to the owners of the Company) (8,642) (11,354)

Earnings per share

Basic earnings per share (EUR) 15 (0.17) (0.26)

Diluted earnings per share (EUR) 15 (0.17) (0.26)

107NX Filtration - Annual Report106 Consolidated financial statements

Consolidated statement of financial position Consolidated statements of changes in equity

In EUR ‘000 Notes 31 December 2022 31 December 2021

Assets

Non-current assets

Intangible assets 17 2,353 1,829

Property, plant and equipment 18 18,535 9,150

Right-of-use assets 19 1,753 1,356

Deferred tax assets 20 8,960 5,708

Total non-current assets 31,601 18,043

Current assets

Inventories 21 6,305 3,212

Trade and other receivables 22 7,154 2,804

Cash and cash equivalents 23 104,274 133,433

Total current assets 117,733 139,449

Total assets 149,334 157,492

Group equity

Share capital 24 500 500

Share premium 24 170,450 170,450

Retained earnings (28,412) (19,806)

Total equity 142,538 151,144

Liabilities

Non-current liabilities

Lease liabilities 25 1,311 1,076

Total non-current liabilities 1,311 1,076

Current liabilities

Trade and other payables 26 4,988 4,954

Lease liabilities 25 497 318

Total current liabilities 5,485 5,272

Total liabilities 6,796 6,348

Total equity and liabilities 149,334 157,492

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

Share Share Retained Total

capital premium earnings equity

Balance - 1 January 2021 5,997 13,378 (6,031) 13,344

Loss for the period - - (11,354) (11,354)

Other comprehensive result - - - -

Total comprehensive loss for the period - - (11,354) (11,354)

Transactions with owners in their capacity as owners

Stock split transaction 24 (5,600) 5,600 - -

Repayment and cancellation of preference share capital

24 (47) (13,378) (2,421) (15,846)

Issuance of ordinary shares 24 150 164,850 - 165,000

Share-based payment transactions - - - -

Dividend - - - -

Balance - 31 December 2021 500 170,450 (19,806) 151,144

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

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

Other comprehensive income (loss) - - - -

Other comprehensive result - - (8,642) (8,642)

Transactions with owners in their capacity as owners

Stock split transaction 24 - - - -

Repayment and cancellation of preference share capital

24 - - - -

Issuance of ordinary shares 24 - - - -

Share-based payment transactions 12 - - 36 36

Dividend - - - -

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

109

NX Filtration - Annual Report108 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 accelerated 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 2022, 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 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

June 22, 2022.

The Company’s financial year covers the first

day of January and ends on the last day of

December of each year.

On 10 February 2023, the 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

on 6 April 2023.

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

financial years beginning 1 January 2022

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

In EUR ‘000 Notes 2022 2021

Cash flows from operating activities

Operating loss (11,606) (14,714)

Adjustments to reconcile profit before taxation to net cash flows:

Depreciation, amortisation and impairment expenses 17,18,19 3,057 1,391

Non cash items in operating loss 126 30

Increase/(decrease) provisions - -

Income taxes (paid)/received - -

Share-based payment expenses 12 36 -

(Increase)/Decrease in working capital:

- Increase inventories (3,093) (1,135)

- Increase trade and other receivables (4,350) (2,178)

- Increase trade and other payables 128 3,391

Net cash inflow/(outflow) from operating activities (15,702) (13,215)

Cash flows from investing activities

Payment for property, plant and equipment 18 (11,653) (7,772)

Payment for intangible assets 17 (1,017) (844)

Net cash inflow/(outflow) from investing activities (12,670) (8,616)

Cash flows from financing activities

Proceeds from share premium contribution and issuance of shares 24 - 165,000

Repayment and cancellation of preference shares 24 - (15,846)

Principal elements of lease payments (465) (268)

Interest paid (322) (221)

Net cash (outflow)/inflow from financing activities (787) 148,665

Net (decrease)/increase in cash and cash equivalents (29,159) 126,834

Cash and cash equivalents at the beginning of the financial year 133,433 6.599

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

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

Notes

111NX Filtration - Annual Report110 Consolidated financial statements

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. In managements

opinion, the cash balance per 31 December

2022 of €104 million is sufficient to fund NX

Filtration’s planned investments and the

upscaling of the operations.

Basis of measurement

These consolidated financial statements have

been prepared on a historical cost convention,

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 2022 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 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.

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

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.

Share-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 recognised 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

recognised 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.

113NX Filtration - Annual Report112 Consolidated financial statements

Finance expenses

Finance expenses include interest incurred on

financial instruments measured at amortized

cost using the effective interest method (if any)

and interest expenses on the Company’s cash

and cash equivalent balances.

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.

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:

Land and buildings 10 - 30 years

Machinery 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.

115NX Filtration - Annual Report114 Consolidated financial statements

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.

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

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.

117NX Filtration - Annual Report116 Consolidated financial statements

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 recognised 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

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. There is a strong

interrelationship between the Company’s

different activities, hence Management reviews

the overall business based on the Group’s

profitability.

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.

119NX Filtration - Annual Report118 Consolidated financial statements

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 Company’s 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 to 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 2022, one customer

accounted for approximately 12% (2021: 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

2022 and 31 December 2021 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.

On that basis, the loss allowance as of 31

December 2022 and 31 December 2021 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.

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 fast-

tracking its innovation agenda. As per 31

December 2022, the Company has €104.3

million cash available.

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 2021

Current Overdue Overdue Overdue Overdue >

amount < 30 days 31 - 60 days 61 - 90 days 90 days

Expected loss rate 0% 0% 0% 0% 0%

Gross carrying amount - trade receivables

and other receivables 2,279 366 38 67 54

Loss allowance - - - - -

121

NX Filtration - Annual Report120 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 above 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 €61 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 decrease by 0.5%, the impact

on profit before tax is €333 thousand.

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 comprise a non-cash movement

and relates to effective interest accounting on

lease liabilities.

Fair value estimation

At 31 December 2022 and 31 December 2021,

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.

In EUR ‘000 31 December 2022

Less than 3 months Between 1 Over

3 months to 1 year and 5 years 5 years Total

Trade 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

In EUR ‘000 31 December 2021

Less than 3 months Between 1 Over

3 months to 1 year and 5 years 5 years Total

Trade and other payables 4,748 206 - - 4,954

Lease liabilities 78 240 994 82 1,394

Lease liabilities - Interest component 13 35 77 2 127

Total non-derivatives 4,839 481 1,071 84 6,475

In EUR ‘000 Cash and bank overdrafts Lease liabilities Net debt

At 1 January 2021: 6,599 (1,186) 5,413

Cash flows 126,834 - 126,834

New leases - (430) (430)

Other changes - 222 222

Net debt - 31 December 2021 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

5 6

123NX Filtration - Annual Report122 Consolidated financial statements

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.

Deferred tax assets

Deferred tax assets are recognised 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. The

Group’s deferred tax assets mainly relate to net

operating losses (tax losses) in the Netherlands.

Deferred tax assets are recognised 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 are inherently uncertain. The Management

Board considered both negative and positive

evidence in its evaluation of the probability that

sufficient taxable profits will be available in the

medium-term. Under IAS 12 – Income taxes,

the existence of unused tax losses is strong

evidence that future taxable profit may not be

available. In addition to that the Management

Board also considered the fact that the Group

does not expect to be profitable for the next

few years. However, the Management Board

considers the negative evidence for these

purposes to be outweighed by positive evidence

evaluated. The Group expects to utilise its

unused tax losses in the medium-term. The

Group has no unrecognised deferred tax assets.

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 asset is transferred to the customer.

Set out below is the disaggregation of the

Company’s revenue with customers:

In EUR ‘000 2022 2021

Type of markets

Sustainable Industrial Water 4,977 2,072

Clean Municipal Water 2,569 1,101

Total revenues from sale of goods 7,546 3,173

Revenue from sale of goods by region based

on the destination of products and location of

projects:

In EUR ‘000 2022 2021

Geographical split

The Netherlands 154 189

Europe (excluding the Netherlands) 2,849 893

North America 1,518 575

Asia 2,262 1,325

Rest of World 763 191

Total revenues from sale of goods 7,546 3,173

Other income

Set out below is the disaggregation of the

Company’s other income:

In EUR ‘000 2022 2021

Government grants 338 616

Pilot income 400 192

Other 70 88

Total other income 808 896

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 2022 2021

Salaries and wages 7,937 3,023

Social security contributions 716 116

Pension contributions 222 104

External personnel cost 578 821

Capitalised personnel expenses (1,090) (231)

Total personnel expenses 8,363 3,833

The number of FTEs per year-end are:

2022 2021

Direct employees 52 31

Indirect employees 83 38

Total FTE 135 69

A total of 18 (2021: 8) employees are employed

outside the Netherlands.

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 2022 is 3.8% (2021: 4.3%). The pension

contributions are paid on a monthly basis to

the pension fund. The net contribution for 2022

amounts to €222 thousand (€97 thousand

in 2021). 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 2022 2021

Housing expenses 998 500

Other personnel expenses 1,077 347

Administrative expenses 1,277 10,177

Selling expenses 1,450 747

Operating expenses 800 331

Total operating costs 5,602 12,102

In 2021, administrative expenses include €9,585

thousand IPO related transaction costs.

125NX Filtration - Annual Report124 Consolidated financial statements

External research &

development costs

In EUR ‘000 2022 2021

Gross external R&D costs 1,059 740

Capitalized external R&D costs (216) (493)

Total external research & development

costs (net) 843 247

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 2022 amounted to €2.5 million (2021: €1.7

million). Development costs that are directly

attributable to the design and testing of

identifiable and unique products and systems

controlled by the Company are recognised as

intangible assets and are capitalised as part of

the product. Other research and development

expenditures are recognised 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 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:

2022 2021

Outstanding at 1 January 3,792,094 644,656

Granted (purchased) during

the year - -

Ordinary share split per

26 May 2021 - 3,147,438

Forfeited (repurchased)

during the year - -

Outstanding shares at

31 December 3,792,094 3,792,094

See note 24 for further details in respect of

the ordinary share split at 26 May 2021. 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 of NX 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 Price

1 January 2022 6,982 Nil

1 February 2022 788 Nil

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 of

NX Filtration 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 – Board of Directors

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 Board of

Directors (‘LTIP Board of Directors’) was

introduced in order to increase the alignment

between shareholder’s interest and the interest

of the Board of Directors.

The following grants, comprising of Ordinary

Shares in the Company, have been made under

this plan:

Grant date Number of Exercise

Awards granted Price

20 May 2022 8,296 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 Board of

Directors 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 Board of Directors

after vesting date.

Summary of changes in outstanding shares

Changes in outstanding shares for the period:

LTIP Key LTIP Management

employees Board

1 January 2022 - -

Granted 7,770 8,296

Forfeited (427) -

Exercised - -

Expired - -

31 December 2022 7,343 8,296

None of the outstanding shares related to the

LTIP Key employees and LTIP Board of Directors

are exercisable at 31 December 2022.

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 market

price of the Company’s Ordinary Shares for the

different plans at grant date was:

127NX Filtration - Annual Report126 Consolidated financial statements

Grant date

Share award plan Grant date fair value

LTIP Key employees 1 January 2022 10,84

LTIP Key employees 1 February 2022 10,84

LTIP Management

Board 20 May 2022 11,08

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 recognised

as other operating costs in the statement of

comprehensive income:

In EUR ‘000 2022 2021

LTIP Key employees 18 -

LTIP Management Board 18 -

Finance expenses 36 -

Finance expenses

In EUR ‘000 2022 2021

Interest expenses related to

lease liabilities 61 46

Other interest expenses 228 381

Finance expenses 289 427

Interest expense related to lease liabilities is the

result of application of IFRS 16.

Income tax benefit

This note provides an analysis of the Company’s

income tax expense, showing how the tax

expense is affected by non-deductible items.

In EUR ‘000 2022 2021

Current tax

Current tax on profits for the year - -

Adjustments for previous years - -

Total current tax (expense) benefit - -

Deferred income tax

Income tax on operations 3,071 3,708

Change in tax rates 182 79

Total deferred tax benefit 3,253 3,787

Total income tax benefit 3,253 3,787

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 2022 2021

Result from operations (8,642) (11,354)

Total income tax 3,253 3,787

Loss before income tax (11,895) (15,141)

Tax calculated based on

Dutch tax rate 25.8% 25.0%

Tax effect of:

Adjustments for previous years 0.0% -0.1%

Effect of tax rates in other countries 0.0% 0.0%

Non-taxable expenses 0.0% -0.4%

Change in tax rates 1.5% 0.5%

Other differences 0.0% 0.0%

Effective tax rate 27. 3% 25.0%

The change in tax rates is driven by change in

the enacted Dutch tax rates for the fiscal years

2022 and further.

Earnings per share

Note that the 2021 opening balance and prior

year number of outstanding shares have been

adjusted to reflect the impact of the ordinary

share split as per 26 May 2021 as disclosed in

note 24.

Remuneration of the

Management Board and

the Supervisory Board

The total amount of remuneration of the

Managing Directors for the financial year

2022 comprised €649,281 (2021: €302,971).

For the financial year 2022, the total amount

of remuneration of Mr Michiel Staatsen

comprised €179,577 (2021: €153,023). For the

financial year 2022, the total remuneration of

Mr Erik Roesink comprised €166,894 (2021:

€143,253). For the financial year 2022, the total

remuneration of Mr Marc Luttikhuis comprised

€302,810. His short-term incentive in cash

amounted to €36,550 and the conditional

award under the Long-Term Incentive Plan

amounted to €18,939.

In addition, 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.

The Management Board collectively holds

2,800,000 DRs (see note 12) in the share capital

of the Company, of which Mr Michiel Staatsen

holds 1,050,000 DRs and Mr Erik Roesink

1,750,000 DRs. These DRs are subject to lock-

up restrictions. The DRs will be released from

the lock-up restrictions as follows: one-third of

the DRs will be unconditionally released from

the lock-up restrictions on the day that is one

year after the IPO date which is 11 June 2021,

one-third of the DRs on the day that is two

years after the IPO date, and the remaining

one-third of the DRs on the day that is three

years after the IPO date, 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 2022 amounts to €50,000 (2021: €27,652)

and the compensation for Mr Benno van

Dongen amounts to €30,000 (2021: €16,591).

Mr John Glorie is employed by Infestos

Nederland and does not receive compensation

for his Supervisory Board activities.

2022 2021

Net loss attributable to equity holders (in EUR ‘000) (8,642) (11,354)

Outstanding number of shares for the basic earnings per share as at 1 January 50,000,000 35,000,000

Effect of issued ordinary shares in 2021 8,095,890

Weighted-average number of shares outstanding for the purpose of basic earnings

per share 50,000,000 43,095,890

Incremental shares fror assumed conversion - -

Weighted-average number of shares outstanding for the purpose of diluted earnings

per share 50,000,000 43,095,890

129

NX Filtration - Annual Report128 Consolidated financial statements

Intangible assets

The movement in intangible assets during the

years was as follows:

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.

Property, plant and

equipment

The movement in property, plant and

equipment during the years was as follows:

Machinery and Pilot Assets under

In EUR ‘000 Land & buildings equipment equipment construction Total

At 1 January 2021

Cost - 3,272 243 - 3,515

Accumulated impairments and depreciation - (1,226) (43) - (1,269)

Net book value - 2,046 200 - 2,246

Year ended 31 December 2021

Opening net book value - 2,046 200 - 2,246

Additions 223 2,136 2,428 2,985 7,772

Disposal - (36) (31) - (67)

Depreciation for the year - (658) (179) - (837)

Depreciation of disposal - 31 5 - 36

Closing net book value 223 3,519 2,423 2,985 9,150

At 31 December 2021

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 amortization (47) (3,011) (1,028) - (4,086)

Net book value 4,001 6,390 6,003 2,141 18,535

Concessions

and rights of

In EUR ‘000 Development costs intellectual property Software Total

At 1 January 2021

Cost 1,426 233 - 1,659

Accumulated impairments

and amortisation (295) (64) - (359)

Net book value 1,131 169 - 1,300

Year ended 31 December 2021

Opening net book value 1,131 169 - 1,300

Additions 741 31 72 844

Acquisitions - - - -

Amortisation for the year (290) (25) - (315)

Consolidation and deconsolidation - - - -

Closing net book value 1,582 175 72 1,829

At 31 December 2021

Cost 2,167 264 72 2,503

Accumulated impairments

and amortization (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 914 11 92 1,017

Acquisitions - - - -

Amortisation for the year (435) (28) (27) (490)

Consolidation and deconsolidation (3) - - (3)

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

The Company’s additions to Land & Buildings

mainly relate to the purchase of a plot of land

in Hengelo, the Netherlands for 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.

131NX Filtration - Annual Report130 Consolidated financial statements

Right-of-use assets

The movement in the right-of-use assets during

the years was as follows:

In EUR ‘000 2022 2021

At 1 January

Cost 1,782 1,352

Accumulated depreciation (426) (188)

Net book value 1,356 1,164

Additions 655 430

Other / remeasurement 166 -

Disposals (18) -

Depreciation of disposals 18 -

Depreciation for the year (424) (238)

Net book value at 31 December 1,753 1,356

Total gross right-of-use assets:

31 December 31 December

In EUR ‘000 2022 2021

Buildings 1,863 1,320

Vehicles 682 448

Fork-lift truck 40 14

Total gross right-of-use assets 2,585 1,782

Total depreciation charge right-of-use assets:

In EUR ‘000 2022 2021

Buildings 267 177

Vehicles 152 57

Fork-lift truck 5 4

Total depreciation charge 424 238

Interest expense

(included in finance cost) 61 46

The total cash outflow for leases in 2022 was

€462 thousand (2021: €268 thousand).

Deferred tax assets

31 December 31 December

In EUR ‘000 2022 2021

Deferred tax assets

Timing differences 13 9

Carry forward losses 8,947 5,699

Total 8,960 5,708

Of which:

Current (<1 year) 13 9

Non-current (>1 year) 8,947 5,699

As of December 31, 2022, the amount of tax

losses that can be offset in the future amounts

to €34.7 million (€22.8 million per December

31, 2021). There are no tax losses for which no

deferred tax asset has been recognized.

A deferred tax asset has been recognized for

these tax losses that have been valued at the

nominal tax rate of 25.8% (being the estimated

blended rate as from 2022).

Inventories

31 December 31 December

In EUR ‘000 2022 2021

Raw materials 2,186 1,503

Semi finished goods 1,428 738

Finished goods 1,976 898

Work in progress 715 73

Total 6,305 3,212

During 2022 no inventories were written down to

net realizable value (31 December 2021: € nil).

Trade and other

receivables

31 December 31 December

In EUR ‘000 2022 2021

Trade receivables 3,989 833

Less: loss allowance (42) -

Trade receivables - net 3,947 833

Prepaid expenses 1,013 318

Other taxes 1,035 1,080

Other receivables 1,159 573

7,154 2,804

Less non-current portion - -

Current portion 7,154 2,804

The fair value of the receivables approximates

the carrying amounts. No breakdown of the

fair values of trade and other receivables and

the non-current portion of the receivables

has been included as the differences between

the carrying amounts and the fair values are

insignificant.

As at 31 December 2022 and 31 December

2021 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 December

In EUR ‘000 2022 2021

Cash and cash equivalents 104,274 133,433

Total 104,274 133,433

The cash and cash equivalents are freely

disposable to the Company.

19 20

22 23

133NX Filtration - Annual Report132 Consolidated financial statements

Equity

Ordinary shares

The movement of the ordinary shares in 2022

and 2021 is outlined in the tables below.

On 26 May 2021 and pursuant to a notarial

deed of amendment of the Articles of

Association, the ordinary shares with a value

of €1.00 have been split into an aggregate

amount of 35,000,000 ordinary shares, each

with a nominal value €0.01, as a result of which

the Company’s issued capital amounted to

€350,000 divided into 35,000,000 ordinary

shares, at such time. The difference between

the aggregate nominal value of the ordinary

shares before and after this stock split was

added to the share premium reserve of the

Company. These outstanding ordinary shares

are fully paid-up.

Pursuant to a deed of amendment and

conversion executed on 11 June 2021, the

authorized capital (maatschappelijk kapitaal)

of NX Filtration N.V. amounts to €1,750,000

divided into 175,000,000 ordinary shares.

On 15 June 2021, the Company issued

15,000,000 ordinary shares against an issue

price of €11.00, each with a nominal value

of €0.01, as a result of which the Company’s

current issued capital amounts to €500,000

divided into 50,000,000 Ordinary Shares.

The share premium reserve relates to

contribution on issued shares in excess of the

nominal value of the shares (above par value).

Preference shares

The movement of the preference shares in 2022

and 2021 is outlined in the tables below.

On 15 June 2021, the Company repaid and

cancelled all of the outstanding preference

shares including payment of the cumulative

interest accrued thereon. The total repaid

amounts to €15.8 million, including €2.4 million

of accrued interest. Preference shares were

shares with voting rights that entitled their

owners to a fixed 7% dividend per annum for

Preference Shares A and a fixed 9% per annum

for the other Preference Share classes.

Preference shares are considered as a part of

equity, since holders of ordinary shares decide

at the General Meeting whether dividends

will be paid out to preference shareholders or

not. Only in case of a dividend distribution,

preference shareholders first receive a return

on their investment. Subsequently the ordinary

shareholders receive a return, therefore the

dividend on preference shares are discretionary

and non-contractual in nature.

Provision is made for the amount of any

dividend declared, being appropriately

authorized and no longer at the discretion of

the entity, on or before the end of the reporting

period but not distributed at the end of the

reporting period.

Retained earnings

The retained earnings are restricted due to a

legal reserve for capitalized development costs

of €2.1 million (31 December 2021: €1.6 million)

which is not available for distribution.

Loss for the period

The proposal to the General Meeting is that the

2022 loss for the period will be recognized in

retained earnings.

Number of Par value Share premium Total

ordinary shares EUR ‘000 EUR ‘000 EUR ‘000

Opening balance 1 January 2021 5,950,000 5,950 - 5,950

Share split 29,050,000 (5,600) 5,600 -

Share issuance 15,000,000 150 164,850 165,000

Balance 31 December 2021 50,000,000 500 170,450 170,950

Share split - - - -

Share issuance - - - -

Balance 31 December 2022 50,000,000 500 170,450 170,950

Number of Par value Share premium Total

preference shares EUR ‘000 EUR ‘000 EUR ‘000

Opening balance 1 January 2021 46,902 47 13,378 13,425

Shares cancellation (46,902) (47) (13,378) (13,425)

Balance 31 December 2021 - - - -

Shares cancellation - - - -

Balance 31 December 2022 - - - -

135NX Filtration - Annual Report134 Consolidated financial statements

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 2022 2021

Buildings 1,313 1,042

Equipment 22 -

Vehicles 473 352

Total 1,808 1,394

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 2022

within the statement of comprehensive income

€7 thousand (2021: €11 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 2022 and 31 December

2021 the renewal options are included in

the measurement of the lease liabilities, no

termination options are included.

Trade and other payables

31 December 31 December

In EUR ‘000 2022 2021

Trade payables 3,029 3,677

Tax payables 231 125

Employee benefits 449 203

Payments received in advance 159 162

Other liabilities 1,120 787

Total 4,988 4,954

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 2022 and 31 December 2021

all payables are denominated in euro currency.

Contingencies and

commitments

Capital Expenditure Commitments

NX Filtration B.V. and NX Filtration Real Estate

B.V. has signed a number of purchase contracts

related to buildings, machinery and equipment

capital expenditures, amounting to €45.9 million

(2021: €1.7 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 between Infestos Holding E

B.V. and the Company on a sign-on equity

incentive with Mr Marc Luttikhuis.

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.

25 26

Repayment Remaining term Remaining

obligation in >1 year term

In EUR ‘000 31 December 2022 2023 and <5 year >5 years

Buildings 1,313 326 987 -

Equipment 22 4 17 1

Vehicles 473 167 306 -

Total 1,808 497 1,310 1

137

NX Filtration - Annual Report136 Consolidated financial statements

Company financial

statements

Company balance sheet as at 31 December 2022

Before profit allocation

In EUR ‘000 Notes 31 December 2022 31 December 2021

Assets

Non-current assets

Intangible assets 3 2,216 1,757

Financial fixed assets 4 47,813 516

Deferred tax assets 5 8,947 5,699

Total non-current assets 58,976 7,972

Current assets

Receivables 92 35

Receivable from group companies - 32,065

Cash and Cash Equivalents 6 90,370 111,617

Total current assets 90,462 143,717

Total assets 149,438 151,689

Equity and liabilities

Shareholders’ equity

Issued share capital 500 500

Share premium 170,450 170,450

Legal and statutory reserves 7 2,058 1,582

Other reserves 7 (21,828) (10,034)

Result for the period (8,642) (11,354)

Total equity 142,538 151,144

Current liabilities

Trade and other payables 31 320

Payable to group companies 6,647 -

Other payables 222 225

Total current liabilities 6,900 545

Total equity and liabilities 149,438 151,689

139NX Filtration - Annual Report138 Company financial statements

Company income statement for the year ended 31 December 2022

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 2022 until 31 December 2022. The

previous financial year covers the period 1

January 2021 until 31 December 2021.

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, if any, and subsequently

accounted for as a provision for loss making

subsidiaries.

In EUR ‘000 Notes 2022 2021

Revenue 8 53 53

Amortization of intangible assets 3 (463) (315)

Personnel expenses (751) (236)

General expenses 10 (577) (9,841)

Operating loss (1,738) (10,339)

Finance income 11 140 124

Finance expenses 12 (199) (352)

Finance expenses (net) (59) (228)

Loss before income tax (1,797) (10,567)

Income tax benefit 5 646 2.653

Share of net loss of investments in subsidiaries 4 (7,491) (3,440)

Loss for the period after income tax (8,642) (11,354)

Notes

141NX Filtration - Annual Report140 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 Company is wholly and severally liable for

the loans of NX Filtration B.V. Consequently,

a provision for loss making subsidiaries is

recognised related to the negative equity value

of NX Filtration B.V. in 2021.

The loan receivable 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 to equity as share premium

in accordance with a free share premium

contribution agreement and settlement

agreement, without the issuance of new shares.

In addition, a €51.3m intercompany receivable

towards NX Filtration B.V. was converted to

equity as share premium in accordance with a

free share premium contribution agreement

and settlement agreement, without the

issuance of new shares. Furthermore, on 11

October 2022, NX Filtration N.V. made a share

premium contribution of €3.5m towards NX

Filtration Real Estate B.V.

Investment

In EUR ‘000 in subsidiaries Loans receivable Total

At 1 January 2021 (5,794) 9,750 3,956

Investment/ changes - - -

Share of net loss (3,440) - (3,440)

(9,234) 9,750 516

Provision 9,234 (9,234) -

At 31 December 2021 - 516 516

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

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

31 December 2022 31 December 2021

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 2021

Cost 1,426 233 1,659

Accumulated impairments and amortisation (295) (64) (359)

Net book value 1,131 169 1,300

Year ended 31 December 2021

Opening net book value 1,131 169 1,300

Additions 741 31 772

Acquisitions - - -

Amortisation for the year (290) (25) (315)

Consolidation and deconsolidation - - -

Closing net book value 1,582 175 1,757

At 31 December 2021

Cost 2,167 264 2,431

Accumulated impairments and amortization (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

143

NX Filtration - Annual Report142 Company financial statements

Deferred tax assets

31 December 31 December

In EUR ‘000 2022 2021

At 1 January 5,699 1,903

Tax benefit subsidiaries

through fiscal unit 2,602 1,143

Tax benefit NX Filtration N.V. 646 2,653

At 31 December 8,947 5,699

The deferred tax assets can be specified as

follows:

31 December 31 December

In EUR ‘000 2022 2021

Deferred tax assets

Timing differences - -

Carry forward losses 8,947 5,699

Total 8,947 5,699

Of which:

Current (<1 year) - -

Non-current (>1 year) 8,947 5,699

As of December 31, 2022, the total amount of

recognized tax losses amounts to €34.7 million

(€22.8 million as per December 31, 2021). A

deferred tax asset has been recognized at the

nominal tax rate of 25.8% (being the estimated

blended rate as from 2022).

Cash and cash equivalents

31 December 31 December

In EUR ‘000 2022 2021

ABN AMRO bank 45,867 45,992

Van Lanschot bank 32,781 25,000

Rabobank 11,722 40,625

Total 90,370 111,617

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 of the

subsidiaries.

In EUR ‘000 2022 2021

At 1 January 1,582 1,132

Movement in legal reserve 476 450

At 31 December 2,058 1,582

Other reserves

The other reserves can be specified as follows:

In EUR ‘000 2022 2021

At 1 January (10,034) (5,071)

Allocation of previous

year loss (11,354) (2,092)

Interest on repayment

and cancellation of

preference share capital - (2,421)

Share-based payment

transactions 36 -

Movement in legal reserve (476) (450)

At 31 December (21,828) (10,034)

Revenue

In EUR ‘000 2022 2021

Charged patent rights 48 48

Management fee 5 5

Total 53 53

Average numbers of

employees

In 2022, the company had 3 employees (2021:

2 employees). None of these employees works

abroad.

General expenses

In EUR ‘000 2022 2021

Audit fees 143 150

Legal fees 31 35

Consultancy fee

Infestos Holding E B.V. 152 84

Patent renewal fees - 47

Management fee

lnfestos Management B.V. - 2

Listing costs 137 9,465

Other general costs 114 58

Total 577 9,841

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

2022 2021 2022 2021 2022 2021

Audit of the financial statements 143 150 - - 143 150

Other audit procedures - 213 - - - 213

Tax services - - - - -

Other non-audit services - - - - - -

Total 143 363 - - 143 363

7 9

145NX Filtration - Annual Report144 Company financial statements

Finance income

In EUR ‘000 2022 2021

Interest on receivables from

group companies 140 124

Total 140 124

Finance expense

In EUR ‘000 2022 2021

Interest on cash balances

(negative interest) (199) (352)

Total (199) (352)

Contingencies and

commitments

Fiscal unity

The Company is the head of the fiscal unity for

the Corporate Income Tax and Value Added

Tax of the Group. As such the Company is fully

liable for any tax liability resulting from this.

Events after the reporting

period

Nothing to report.

Authorisation of the financial statements

Enschede, 10 February 2023

Management Board

Michiel Erik Marc

Staatsen Roesink Luttikhuis

CEO and CTO CFO

COO

147NX Filtration - Annual Report146 Company financial statements

Other

information

149NX Filtration - Annual Report148 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.

151NX Filtration - Annual Report150 Profit appropriation

Independent

auditor’s report

Report on the financial

statements 2022

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

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 2022 and of its

result and cash flows for the year then

ended in accordance with International

Financial Reporting Standards as adopted

by 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 2022

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 2022 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 the financial

position as at 31 December 2022;

• the following statements for 2022: the

consolidated statements of comprehensive

income, changes in equity and cash flows;

and

• the notes, comprising a summary of the

significant accounting policies and other

explanatory information.

The company financial statements comprise:

• the company balance sheet as at 31

December 2022;

• 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

153NX Filtration - Annual Report152 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, like 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 a separate

opinion or conclusion 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 NX Filtration B.V.,

NX Filtration Real Estate B.V. and NX Filtration

International B.V. where NX Filtration N.V. is

the holding company. 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 availability of the funds obtained during

the listing in 2021, the utilisation of those

funds and the expansion of the activities of NX

Filtration N.V. in the Netherlands and abroad

characterised the financial year 2022. 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 increased significance and complexity

in the revenue streams we considered this to be

a key audit matter as set out in the section ‘Key

audit matters’ of this report. Furthermore, we

identified the accuracy of outgoing payments

as key audit matter, given the utilisation of

funds received from the IPO and the limitations

we noted in the segregations of duties in the

process for changes in creditor master date in

the first half year of 2022.

NX Filtration N.V. assessed the possible effects

of climate change on its financial position, refer

to 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. 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

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.

Materiality

Audit scope

Key audit

matters

Overall group materiality €430,000 (2021: €241,000).

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 – 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 – 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. We

performed the audit procedures on a consolidated level and did not allocate

materiality levels amongst the components.

Materiality

• Overall materiality: €430,000.

Audit scope

• We performed a full scope audit on

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

NX Filtration Real Estate B.V. and NX

Filtration International B.V. Audit coverage

obtained was 100% on consolidated

revenue, total assets and profit before tax.

Key audit matters

• Risk of fraudulent reporting due to

overstating revenues.

• Accuracy of outgoing payments.

155NX Filtration - Annual Report154 Independent auditor’s report

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 €43,000

(2021: €24,100) 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, which are all incorporated

in the Netherlands. The financial information

of this group is included in the consolidated

financial statements of NX Filtration N.V. All

the 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.

Our audit scope covered all subsidiaries of NX

Filtration N.V. As a result we obtained an audit

coverage of 100% on total revenues, total

assets and profit before tax.

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 but has not formalised its fraud

risk assessment.

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.

We identified the following fraud risks and

performed the following specific procedures:

Identified fraud risk 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 mis-

statement due to fraud. In this context, we paid

particular attention to the accuracy of outgoing

payments and revenue recognition.

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 entries in source

documentation. 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. 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.

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 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.

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.

Independent auditor’s report 157NX Filtration - Annual Report156

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

The management board prepared the financial

statements on the assumption that the entity

is a going concern and that it will continue

all its operations for at least twelve months

from the date of preparation of the financial

statements. Our procedures to evaluate

the management board’s going-concern

assessment included, amongst others:

• considering whether the management

board identified events or conditions that

may cast significant doubt on the entity’s

ability to continue as a going concern

(hereafter: going-concern risks);

• considering whether the management

board’s going-concern assessment includes

all relevant information of which we are

aware as a result of our audit and inquiring

with the management board regarding

the management board’s most important

assumptions underlying its going-concern

assessment. Amongst others, the

management board took into consideration

the developments in the membrane

industry and the budgeted expenses to be

made to finance the growth strategy of the

Company;

• evaluating the management board’s

current budget including cash flows for

at least twelve months from the date of

preparation of the financial statements,

taking into account current developments

in the membrane industry, the cash balance

as at the balance sheet date of €104.3

million and the Company’s existing on-

balance and off-balance sheet obligations,

and all other relevant information of which

we are aware as a result of our audit;

• performing inquiries of the management

board about its knowledge of going-

concern risks beyond the period of the

management board’s assessment.

Our procedures did not result in outcomes

contrary to the management board’s

assumptions and judgements used in the

application of 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.

Identified fraud risk Audit procedures and observations

Accuracy of outgoing payments

In our audit, we identified the risk of unauthorised

payments from the Company’s cash balances,

given the large amount of cash received from the

IPO and the limitations in segregation of duties in

the process regarding changes in creditor master

data in the first half of 2022.

For our audit procedures, performed with respect

to the accuracy of the outgoing payments,

we refer to our key audit matter ‘accuracy of

outgoing payments’.

Our procedures did not lead to specific indications

of fraud or suspicions of fraud with respect to the

accuracy of outgoing payments.

Key audit matter Our audit procedures and observations

The risk of fraudulent reporting due to overstat-

ing revenues

Refer to note 7 to the consolidated financial state-

ments

NX Filtration N.V. aims for growth through the

commercialisation of its hollow fibre nano filtra-

tion 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 2022, NX Filtration N.V. increased reve-

nues to €8.4 million. Especially as the entity is

facing pressure to meet revenue and profit tar-

gets, there is an increased risk of overstating rev-

enue. In addition, we noted that a material part

of the revenues was realised in December 2022.

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.

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.

Accuracy of outgoing payments

Refer to the consolidated statement of cash flows

of the financial statements

During 2022, NX Filtration N.V. realised a net cash

outflow from operations of €15.7 million, a net

cash outflow from investing activities of €12.7

million and a net cash outflow from financing

activities of €0.8 million. The cash balance as at

31 December 2022 amounts €104.3 million.

Given the large amount of cash received from the

IPO and the lack of segregation of duties identi-

fied in the process regarding changes in creditor

master data in the first half of 2022, we consid-

ered this area to be a key audit matter.

We gained an understanding of and evaluated

NX Filtration N.V.’s process with regard to the

authorisation of outgoing payments and reported

our observations to the management board and

the persons charged with governance.

We obtained an overview of all outgoing

payments and tested a selection by performing

the following procedures:

• verifying that the payments reconciled to the

invoices and the invoices were addressed to

NX Filtration N.V.;

• reconciling the bank account number to which

the amount was transferred to the bank

account number included on the invoice;

• verifying that the expenses made were in line

with the business activities and rationale of

the entity and that the outgoing payments

were approved by two authorised employees.

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 outgoing

payments.

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. by the passing of a resolution of 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 three years.

European Single Electronic Format (ESEF)

NX Filtration N.V. has prepared the annual

report, including the financial statements, in

ESEF. The requirements for this format are set

out in the Commission Delegated Regulation

(EU) 2019/815 with regard to regulatory

technical standards on the specification of

a single electronic reporting format (these

requirements are hereinafter referred to as: 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

on 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 ‘Assurance-opdrachten 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 among 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, has been prepared, in all

material respects, 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.

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.

As part of the preparation of 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.

161NX Filtration - Annual Report160 Independent auditor’s report

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, which makes it possible that

we may not detect all material misstatements.

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, 10 February 2023

PricewaterhouseCoopers Accountants N.V.

F.S. van der Ploeg RA

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.

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, not

communicating the matter is in the public

interest.

163NX Filtration - Annual Report162 Independent auditor’s report