Untitled

Annual Report

2021

Contents

2021 at a glance 4

About NX Filtration 6

Report of the Management Board 8

Business review 10

Sustainability report 16

2021 month-by-month 36

Financial performance 44

Risks and Uncertainties 48

Corporate governance 76

Report of the Supervisory Board 88

Financial statements 100

Consolidated nancial statements 102

Company nancial statements 134

Other information 144

Independent auditor’s report 146

3NX Filtration - Annual Report2 Contents

2021

at a glance

281%

gross income

growth

pilot projects

121 billion

liters of clean

water enabled

First externally certied Green IPO

at Euronext Amsterdam

Key leadership additions with

new CCO and CFO

Expanded global presence in

Canada, USA, Singapore,

India and UAE

Step-up in production capacity with

second membrane spinning line

Secured plot of land for the

construction of new high-tech

membrane megafactory

Winner of Frost & Sullivan Global

New Product Innovation Award

5NX Filtration - Annual Report4 2021 at a glance

About NX Filtration

NX Filtration is a provider of direct nanoltration

membrane technology for producing pure and

aordable water to improve quality of life. Its direct

nanoltration 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 oering strong sustainability benets.

NX Filtration sells its ltration membrane modules

in its two business lines: Clean Municipal Water and

Sustainable Industrial Water.

Business lines

Clean Municipal Water

In its Clean Municipal Water business line, NX

Filtration’s membrane technology enables its

customers to produce drinking water from

surface water by removing, amongst others,

micropollutants, nanoplastics and medicine

residues in one single step, to treat wastewa-

ter streams to prevent discharge of polluting

substances in the environment, and to reuse

treated wastewater for purposes that also

include the production of drinking water.

Sustainable Industrial Water

In its Sustainable Industrial Water business line,

NX Filtration’s membrane technology enables

its customers to treat surface or well water to

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.

Environmental Social Governance

Recurring

replacements

Repeat

projects

ReplacementsFull-scale

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

Demo plantsPilots

Clean water

for all

Avoiding

emissions

at our

customers

Our internal

initiatives

Gross income (€ ‘000)

704

2,789

1,301

784

2021 H2

192

1,280

2021 H1

771

317

536

2020 H2

242

237

533

2020 H1

156

249

128

Other

income

Sustainable

Industrial Water

Clean Municipal

Water

Commercialisation strategy

NX Filtration’s scalable commercial model is based on investing in pilot systems that, over time,

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

systems to create a strong basis for recurring revenues from repeat projects and module replace-

ments 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 overall ltration system at the

end-users facilities. Once these OEM customers have been trained and have worked with

NX Filtration’s products, they become an important element in the further commercial roll-out

of NX Filtration’s products.

7NX Filtration - Annual Report6 About NX Filtration

Report of the

Management

Board

9NX Filtration - Annual Report8 Report of the Management Board

Business review

2021 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 nanoltration (dNF) membrane

technology that can produce pure and aordable water

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

pharmaceuticals, medicines and PFAS) whilst oering

our customers strong sustainability benets. Through

our green IPO in June we were able to accelerate our

commercial roll-out, our capacity expansion program

and our innovation agenda.

Strong growth and progress on

our strategic agenda

2021 has been a year of strong growth for NX

Filtration, with an increase of 281% in gross

income and 373% 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, the expansion

of our production capacity and further inno-

vation of our products. At the same time, the

global COVID-19 pandemic clearly 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 468%, driven by

strong traction with customers in, amongst

others, the food & beverage, textile and paper

industries looking to reduce their water foot-

print and optimize their water systems in a sus-

tainable way. Clients in this business line include

PepsiCo, Grundfos (a global water technology

company) and Nijhuis Saur Industries (OEM in

the Netherlands / France).

Revenues in our Clean Municipal Water business

line increased with 260%, primarily driven by

projects in Asia. These include repeat projects

for, amongst others, PT Bayu (Indonesian OEM

partner) and Aquarius H2O Dynamics (Indian

OEM partner). Our current focus in Europe and

North America is on realizing pilot projects with

leading players, amongst whom Veolia (a global

leader in water treatment), Aqualia (the fourth

largest water management company in Europe)

and Aigües de Barcelona (the public-private

company responsible for managing the water

cycle in the metropolitan area of Barcelona,

Spain), with visibility on future large projects.

In January 2021, we signed a contract with

Hydranautics to produce and supply HYDRAcap

ultraltration (UF) modules, with a gradual

ramp-up in volumes during the year. We further

internationalized our presence with additional

sales force in the USA, Canada, UAE, India and

Singapore, on top of the sales force we already

employed in the Netherlands, Belgium and

Spain, and a growing number of OEM relation-

ships. Based on this global expansion we have

been able to grow our share of revenues outside

Europe from 24% in 2020 to 66% in 2021.

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 nd 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

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

Michiel Staatsen

CEO and COO

Erik Roesink

Founder and CTO

11NX Filtration - Annual Report10 Business review

enabled 2,127 ton CO

e savings during the

deployment lifetime of our modules, by

avoiding the use of 3.9 million kg of chem-

icals and saving 49 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 2021, our employee base

has grown from 34 FTE to 69 FTE, which in-

cludes more than 10 nationalities. Key additions

were made to our sales force, team of pilot and

commissioning engineers, R&D employees and

production personnel. The latter facilitated,

amongst others, the transition to a full continu-

ous working schedule for the production of our

membranes in the course of the second half of

2021. In addition to its production, R&D, engi-

neering and sales center in the Netherlands, NX

Filtration employs dedicated sales sta in Bel-

gium, Germany, Spain, India, Singapore, 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. Not only to em-

power 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.

We also successfully strengthened our manage-

ment team. In September, we welcomed Ale-

jandro Roman Fernandez as Chief Commercial

Ocer to our team, bringing a wealth of expe-

rience in commercial roles in the global water

markets. At the start of 2022, Marc Luttikhuis

joined us as our Chief Financial Ocer, bringing

extensive international experience as a CFO

in entrepreneurial and fast-growing settings.

Together with them we are looking forward

further expanding our team and professionalize

our organisation.

Strong progress against strategy

NX Filtration’s key strategic themes center

around the roll-out of pilot 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. Pilots range from

lab-scale Mexplorer pilots to full-scale (contain-

erized) Mexpert pilots. In 2021, NX Filtration

initiated 87 pilot projects compared to 27 in

2020. On 31 December 2021, NX Filtration had

85 pilots in its eet and, to facilitate a growing

demand for its pilot systems, NX Filtration is

further expanding its eet of pilot systems. We

are also broadening our pilot eet with dedicat-

ed systems for the North American and Asian

markets, and are working to add larger-scale

pilot/demo systems (based on 10 membrane

modules) to our eet.

Capacity expansion

NX Filtration is making further progress on

expanding its production capacity. With the

addition of a separate facility (at the Josink

Esweg in Enschede, the Netherlands) for the

production of its membrane modules in the rst

half-year of 2021, the original facility (at the In-

stitutenweg in Enschede, the Netherlands) has

been expanded to accommodate a second spin-

ning line for the production of membranes. This

second spinning line has been commissioned at

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 nanoltration technolo-

gy can play a pivotal role in addressing these

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 nanoltration membrane technology

also oers substantial sustainability benets

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.

Based on research by Frost & Sullivan

, treated

wastewater is increasingly being embraced as

the sustainable alternative to the use of ground

water sources, therewith conserving such fresh-

water resources and reducing the need for cost

and energy-intensive desalination processes.

Various countries have already implemented pol

icies 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 development and population growth.

Another important 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 America and the EU. Most countries in

these regions are exploring various methods to

detect, monitor, and treat these harmful pollut

ants. And nally, circular economy themes are

more and more being adopted by utilities and in

dustries across the globe. Therefore, technology

solutions with circularity benets or those that

enable a circular model are expected to witness

signicant 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. 2021

marked an important year for NX Filtration

in terms of progress on this ESG agenda: we

realized an externally certied green-labelled

IPO, professionalized our CO

emission data

collection in order to be able to report thereon,

prepared for ISO14001 certication (which we

obtained at the start of 2022), realized further

alignment with the UN Sustainable Development

Goals (SDGs) and can already report that all our

dNF sales contribute to the EU Taxonomy, based

on objective 1 on climate change mitigation

We are also strongly committed to contribute to

other objectives of the EU Taxonomy for which

the delegated regulations including the technical

screening are still under development.

We have developed a targeted ESG framework

in which we address and monitor our impact

along three pillars:

1. Clean water for all: Our 2021 membrane

sales can enable the production of 121

billion liters of clean water

, which is equiva-

lent to the drinking water supply for 22

million persons during one year. In 2021, NX

Filtration enabled access to clean water

across 28 countries.

2. Avoiding emissions at our customers: With

our membrane module sales in 2021, we

Frost & Sullivan Global Water and Wastewater Treatment, Outlook 2022

dNF sales represent 65% of total revenues from sale of goods. See Sustainability Report for details, assumptions and methodologies

Based on NX Filtration’s sales of approximately 1,200 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

predictions of design parameters and calcula-

tions of energy consumption, process ows and

cleaning intervals.

We also worked on a new, more open dNF

membrane that we anticipate to launch to the

market in the course of 2022. This membrane is

ideally suited for processes where the priority is

to retain colour and pathogens. The new mem-

brane will complement our current portfolio of

dNF40 and dNF80 membranes. NX Filtration’s

dNF40 and dNF80 membranes oer the high-

est selectivity in the market and are therefore

uniquely suited to remove small micropollutants

such as PFAS in a sustainable process. The new

membrane oers higher ow rates than the

dNF40 and dNF80 membranes, with better

selectivity than conventional technologies such

as ultraltration. In line with NX Filtration’s

existing products, the new membrane enables

operational simplicity and sustainable process-

es, reducing energy consumption and prevent-

ing the use of pretreatment chemicals.

Outlook

Boosted by the additional equity capital that

NX Filtration raised with its IPO in June 2021,

we continue to invest in our strategic priorities

in 2022. A further ramp-up of our commercial

roll-out program will be enabled by a growing

eet of pilot systems and an increase in the

number of pilot engineers.

With the addition of our second spinning line for

the dedicated production of dNF membranes

we will unlock further growth opportunities and

enable production eciencies. In 2022, we will

take important steps in the development of our

new large-scale production plant, with con-

struction expected to start in the second half of

the year. Furthermore, we continue to expand

NX Filtration’s organization, specically on

international sales, pilot engineering, R&D and

production personnel.

ESG will remain at the heart of NX Filtration’s

business on which we 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 and impact from

the outset. Furthermore, we will follow the

development regarding the EU Taxonomy Reg-

ulation closely, in particular the details around

objectives for which the delegated regulations

including the technical screening are still under

development.

In 2022, we aim to continue the strong growth

of our business and further accelerate the roll-

out of our strategy. We remain committed to

make an impact based on our mission ‘clean

and aordable water for all’, whilst oering

strong sustainability benets to our customers

and providing an inspiring working environment

for our employees.

Management Board

Michiel Staatsen, CEO and COO

Erik Roesink, Founder and CTO

the end of 2021, resulting in a combined total

capacity of approximately 10,000 membrane

modules per year

(compared to the capacity

of approximately 2,500 membrane modules per

year

in 2021).

In parallel, further progress has been made with

the development of a new large-scale manufac-

turing facility, which is expected to be commis-

sioned at the end of 2023. We secured a 24,000

square meters plot of land at the High Tech

Systems Park in Hengelo, the Netherlands, ap-

proximately 10 kilometres from the current fa-

cilities. We also staed our project organization

for the construction of our new manufacturing

facility, responsible for construction, installa-

tion and automation. Construction works are

expected to start in the second half of 2022.

Upon completion, this facility can be expanded

to a targeted total capacity of approximately

80,000 membrane modules per year

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. In August 2021,

NX Filtration received the 2021 Frost & Sullivan

Global New Product Innovation Award in the

water and wastewater treatment membrane

industry. Their commentary on this prize includ-

ed: “Climate change today leads to increasing

water scarcity and water contamination. Frost &

Sullivan recognizes NX Filtration’s direct nano-

ltration membranes’ ability to address such

challenges. The company displays highly eec-

tive and resilient properties that allow users to

achieve high selectivity at nanoscale. By utilizing

NX Filtration’s membrane solutions, companies

can achieve higher eciency in a sustainable

process unmatched by the competition.”

In June 2021, NX Filtration received a distinc-

tion from the Global Water Intelligence in the

category Breakthrough Technology Company

of the Year. Their commentary on our company

included: “NX Filtration’s membrane provides

a step change in water treatment, disrupting

traditional treatment trains such as UF-RO in

surface water treatment and wastewater reuse

applications.” and “By controlling membrane

properties on a nanometre level via polyelectro-

lyte layers, NX Filtration is uniquely positioned to

meet the growing challenge of treating micropol-

lutants in dierent feedwaters.”

In 2021, we made great progress on our patent

portfolio, through the grants of 10 patents in

various countries and through adding two new

patent applications to our portfolio. One such

new patent application relates to further per-

formance improvements on our dNF technology

(‘dNF regeneration’) whilst the other relates to

new membrane inserts (‘innovative membrane

holder’).

An important part of our innovation activity

is related to the optimal deployment of our

membrane modules at our customers. In the

second half of the year we therefore released

a new version of our projection tool, allowing

our customers to optimally design their system

parameters to operate our membrane modules.

Key features of this new release include accu-

rate estimations of micropollutants retention,

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

Theoretical capacity (as the current spinning line is incurring downtime with changes in products being

produced and because spinning line is also used for R&D activities), estimation based on 3-shift production

and depending on product mix

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

15NX Filtration - Annual Report14 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

nanoltration technology that enables

customers to, amongst others, produce pure

and aordable water, treat wastewater,

reduce their water footprint and achieve strong

sustainability benets. 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 nd 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 nanoltration 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 nanoltration

technology also oers substantial sustainability

benets 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. 2021 marked

an important year for NX Filtration in terms

of progress on our ESG agenda: we realized

an externally certied green-labelled IPO,

professionalized our CO

emission data

collection in order to be able to report thereon,

prepared for ISO14001 certication (which

we obtained at the start of 2022), realized

further alignment with the UN Sustainable

Development Goals (SDGs) and further

progressed on our ESG agenda.

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 eciency by the use of its products.

Social factors for example include human

rights, labour 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 dening rights,

responsibilities and expectations between

dierent stakeholders in NX Filtration’s

governance.

Green labelled IPO

In June 2021, NX Filtration became a publicly

traded company when it listed its shares on

Euronext Amsterdam, raising €165 million

for the acceleration of its business plan,

including investing in pilot systems, expanding

its organization, expanding its production

capacity, fast-tracking its innovation agenda

and acquiring regional or industry specic

distribution platforms to accelerate its growth

plan. The IPO attracted a wide variety of

shareholders that value companies with a

strong sustainability angle.

The IPO was externally certied by CICERO

Green as a green labelled IPO. CICERO Green

provided a Shades of Green assessment of NX

Filtration’s revenue and investments.

CICERO Green assigned its Dark Green shading

to 95% of the Group’s annual revenue in 2020

and 98% of the Group’s investments in 2020,

its Medium Green shading to 5% of the Group’s

annual revenue in 2020, and its Light Green

shading to 2% of the Group’s investments in

2020. Dark Green is allocated to projects and

solutions that correspond to the long-term

vision of a low carbon and climate resilient

future. Medium Green is allocated to projects

and solutions that represent steps towards

this long-term vision but do not correspond

to such vision yet. Light Green is allocated

to transition activities that could have lower

emissions, but do not by themselves represent

or contribute to this long-term vision. Although

CICERO based its conclusions on nancial

information for 2020, NX Filtration is condent

that the assessment of NX Filtration’s activities

materially hold true for 2021 as well.

According to CICERO Green, revenue

associated with the Group’s dNF and MF

membranes has been allocated the Dark Green

shade due to its contributions to a climate

resilient future by providing clean water

solutions and at the same time reducing the

need for energy and chemicals during operation

of the membranes compared to conventional

technologies.

Revenue associated with UF membranes have

been allocated the Medium Green shade. This

shading is based on an increased need for clean

water as the eects of climate change are

increasing. However, UF is viewed as a bridging

technology, presenting improved environmental

performance, but not at the same scale as the

Company’s dNF and MF technology.

According to CICERO Green, all of the Group’s

investments support NX Filtration’s core

innovation, the dNF technology. Investments

have been screened for fossil fuel usage and,

except for those investments that can directly

be linked to the use of fossil fuel, all investments

have been allocated the Dark Green shading.

CICERO Green has allocated a Light Green

shading to the purchase of a transport vehicle

supporting the Group. Recognizing this Light

Green shading, NX Filtration purchased a

more sustainable, electric transport vehicle

demonstrating the commitment to improve its

business operations.

CICERO did not shade any of NX Filtration’s

revenue or investments Yellow or Red,

representing respectively projects and activities

that do not contribute to transition (Yellow) and

projects and activities that have no role to play in

a low-carbon and climate resilient future (Red).

17NX Filtration - Annual Report16 Sustainability report

In addition to shading from Dark Green

to Red, CICERO Green also includes a

governance score to show the robustness of

the environmental governance structure (on

a scale including the gradings Fair, Good and

Excellent). When assessing the governance

of the Group, CICERO Green looked at ve

elements: (i) strategy, policies and governance

structure; (ii) lifecycle considerations including

supply chain policies and environmental

considerations towards customers; (iii) the

integration of climate considerations into

their business and the handling of resilience

issues; (iv) the awareness of social risks and

the management of these; and (v) reporting.

Based on these aspects, an overall grading of

Good was given. CICERO Green has provided

recommendations around strengthening

or improving the Group’s environmental

governance by actively identifying supply

chain improvements, conducting climate risk

assessments, nalising and implementing

targets towards climate and environment and

starting to report on greenhouse gas emissions.

Part of these recommendations have been

incorporated by NX Filtration in the second half

of 2021 and are included in this sustainability

report. It is beyond any doubt that NX

Filtration acknowledges the importance of

good corporate governance. NX Filtration fully

complies with the Dutch Corporate Governance

Code, except as set out in the Corporate

Governance section of this Annual Report.

Alignment with UN Sustainable

Development Goals

To obtain input on material topics on

environmental, social and economic

parameters, NX Filtration performed a broad

stakeholder survey amongst employees,

customers, suppliers, communities and

partners. These material topics formed the

basis for the development of a materiality

matrix and the mapping to the UN SDGs.

The SDGs are guiding NX Filtration’s ESG

agenda, by way of which NX Filtration supports

society. NX Filtration has selected ve 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 currently

starting to monitor these KPIs and initiating

improvement actions. These KPIs are described

in the paragraph NX Filtration’s integrated ESG

framework.

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

19NX Filtration - Annual Report18 Sustainability report

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

EU Taxonomy Objective 1

The European Commission has established

technical screening criteria to determine if

an economic activity makes a substantial

contribution to objective 1 of the EU Taxonomy

Regulation and causes no signicant harm

to any of the other environmental objectives.

In this respect, 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 already report that 65%

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 85% of 2021 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 2021

operating expenses that are associated with

its dNF products represent approximately

65% of its total operating expenses (assumed

proportional to the share of dNF as part of

total revenues).

EU Taxonomy alignment

Introduction

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

establishment of a framework to facilitate

sustainable investment (the EU Taxonomy

Regulation) has introduced a classication

system for environmentally sustainable

economic activities that will create a common

language that investors and businesses can

use when investing in projects and economic

activities that have a substantial positive

impact on the climate and the environment.

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 environmental objectives as described in

more detail below, (ii) not signicantly harm

any of the other environmental objectives; (iii)

be carried out in compliance with minimum

(social) safeguards laid down in the OECD

Guidelines for Multinational Enterprises and the

UN Guiding Principles on Business and Human

Rights, including the principles and rights set

out in the eight fundamental conventions

identied in the Declaration of the International

Labour Organisation on Fundamental Principles

and Rights at Work and the International Bill of

Human Rights, 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 signicantly harm the other

objectives.

The EU Taxonomy Regulation sets, or will set,

as the case may be, performance thresholds

and screening criteria for economic activities

that make a substantive contribution to six

environmental objectives, being 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 complete set of rules and

delegated regulations for each of the six

objectives has not been developed yet, but NX

Filtration closely monitors any developments

in this respect. This includes new requirements

that are part of the proposed Corporate

Sustainability Reporting Directive (CSRD) in

particular, which still needs to be approved by

the European Parliament and Member States

in the Council. NX Filtration will however likely

benet from a proportionate reporting regime

and will only have to start reporting three years

after the entry into application of the CSRD.

NX Filtration aims to contribute to the vast

majority of the objectives of the EU Taxonomy

Regulation, supporting its strong ESG prole.

First and foremost due to the vision of NX

Filtration to be a leading global provider of

breakthrough nanoltration technology that

enables customers to, amongst others, produce

pure and aordable water, treat wastewater

and reduce their water footprint, NX Filtration

expects 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 conrmed by

an external assessment by consultancy rm 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

maximum possible alignment with, objectives 1

(climate change mitigation), 4 (the transition to

a circular economy), 5 (pollution prevention and

control) and 6 (the protection and restoration

of biodiversity and ecosystems) as well, as set

out in more detail below. At the date of this

Annual Report, the technical screening criteria

for objectives three up to and including six are

still to be published.

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 signicant 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 signicant CO

footprint reduction compared to water treatment

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

tion (activated carbon) and oxidation. In research by the Energie en Grondstoenfabriek, 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 nanoltration are approximately 0.5 kWh/m3 , as compared to approximately 1.7 kWh/

m3 for a combination of ultraltration and reverse osmosis.

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

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

for traditional ltration 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 ve-year

lifetime, that would be required for conventional technologies such as the combination of ultral-

tration and reverse osmosis.

21NX Filtration - Annual Report20 Sustainability report

In its Green IPO assessment, CICERO Green

has identied NX Filtration’s ultraltration

(UF) membranes as a bridging technology,

contributing to clean water production

and presenting improved environmental

performance, but not at the same scale as

the dNF technology. Therefore, we consider

revenues associated with the sale of UF

products not to be aligned with objective 1.

NX Filtration’s microltration (MF) products

also oer signicant contributions towards

climate change mitigation in the food &

beverage industry. Compared to traditional

diatomaceous earth ltration that is commonly

applied in beer breweries, MF membranes have

demonstrated to reduce energy consumption by

approximately 30%, reduce water consumption

with approximately 35% and generate

approximately 50% less solid waste. As these

savings percentages are derived from practical

examples, and not from publicly available

research, NX Filtration has chosen not to

include the revenues from its MF product in the

alignment with objective 1.

As part of its proactive approach to seek full

alignment with the EU Taxonomy Regulation,

NX Filtration has assessed whether it complies

with the published DNSH-criteria for objective

1. NX Filtration already complies with almost

all of the DNSH-criteria and, although it needs

to seek some further alignment with a few

of such criteria as set out in this paragraph,

NX Filtration has no reason to believe it will

not be able to meet those. As part of the

assessment, NX Filtration can report that:

(i) it has assessed that its eligible activities

as such cannot be materially impacted by

physical climate risks (ii) it is currently not

obliged to identify and address environmental

degradation risks in accordance with Directive

2000/60/EC (as implemented under Dutch

law), (iii) its 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) its 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 2022, 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

at a pilot for Industriewater Eerbeek, a

subsidiary of three Dutch paper mills focusing

on wastewater treatment, for the reuse of

wastewater, therewith reducing the extraction

of groundwater and the overall water footprint

of the paper mills.

Another example is a project in Dumai,

Indonesia, in which NX Filtration contributed

to the goal of providing access to improved

water sources. NX Filtration delivered its dNF

membrane modules that turned the local

Masjid river into a valuable source for the

supply of drinking water to the city of Dumai.

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 eects of urban and industrial waste water dis-

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

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

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

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

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

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

Technical screening criteria expected to be published in 2022

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, a water research institute (Ghent Uni-

versity, 2019) also researched our dNF membranes and found comparable, high removal rates for

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

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

concern and one of many PFAS compounds).

23Sustainability report

EU Taxonomy Objective 4

An example of NX Filtration’s potential

contribution to objective 4 of the EU Taxonomy

Regulation (the transition to a circular

economy) can be found in its contribution to the

RecoLab project in the City of Helsingborg in

Sweden, where NX Filtration’s dNF membranes

are part of a system that recovers nutrients

from an urban waste stream.

Another example, from NX Filtration’s

Sustainable Industrial Water business line, can

be found in the use of its dNF membranes for

a water recycling application at Kewal Kiran

Clothing Limited (KKCL), a leading denim jeans

company in India. Here, our dNF membranes

remove colour completely and reduce large

parts of COD (Chemical Oxygen Demand) and

TDS (Total Dissolved Solids) partially from

wastewater.

EU Taxonomy Objective 5

An example of NX Filtration’s potential

contribution to objective 5 of the EU Taxonomy

Regulation (pollution prevention and control)

can be found in its pilot project for Dutch

water board Aa & Maas. This pilot project

demonstrated the benets dNF membranes

in combination with ultra violet (UV) and

hydrogen peroxide post-treatment, to

eciently remove organic micropollutants

under optimal circumstances from a

wastewater stream.

Another example can be found in India, where

NX Filtration’s dNF membranes ensure

compliance with discharge regulations at the

Jetpur common euent treatment plant.

The membrane ltration system enables the

recovery of caustic from wastewater streams

for reuse in the textile industry. This not only

saves spending on caustic for the textile

industry, it also reduces treatment cost of

caustic wastewater and ensures compliance with

increasingly stringent discharge regulations.

In research by the KWR water research institute

(Ghent University, 2019), NX Filtration’s dNF40

membranes (with a MWCO - molecular weight

cut-o - of 400 Dalton) have been compared

to a traditional spiral wound nanoltration

membrane on the rejection of a wide range of

micropollutants and PFAS. The study found

that dNF40 membranes displayed comparable

rejections as the spiral wound nanoltration

membranes on various micropollutants with a

MWCO larger than 400 Dalton, and displayed

signicantly higher rejections than the spiral

wound nanoltration membranes on various

micropollutants with a very small MWCO

(between 88 and 130 Dalton).

EU Taxonomy Objective 4 - the transition to a circular economy

Taxonomy requirement:

An economic activity shall qualify as contributing substantially to the transition to a circular

economy if such activity increases waste prevention and the reuse and recycling of products.

Technical screening criteria expected to be published in 2022

NX Filtration’s activities:

In its Clean Municipal Water business line, NX Filtration’s membrane technology enables its

customers to treat wastewater streams to prevent discharge of polluting substances in the

environment. The application of dNF membranes for biologically treated municipal wastewater

enables the reuse of water for various high quality applications, up to the reuse of wastewater as

drinking water.

In its Sustainable Industrial Water business line, NX Filtration’s membrane technology enables

its customers to reuse wastewater for industrial processes and recover and recycle valuable raw

materials from wastewater streams, such as indigo in the textile industry or cleaning chemicals

in beer breweries.

EU Taxonomy Objective 5 - pollution prevention and control

Taxonomy requirement:

An economic activity shall qualify as contributing substantially to pollution prevention and con-

trol where that activity contributes substantially to environmental protection from pollution by

inter alia:

• preventing or, where that is not practicable, reducing pollutant emissions into air, water or

land, other than greenhouse gasses;

• improving levels of air, water or soil quality in the areas in which the economic activity takes

place whilst minimising any adverse impact on, human health and the environment or the risk

thereof; and

• preventing or minimising any adverse impact on human health and the environment of the

production, use or disposal of chemicals.

Technical screening criteria expected to be published in 2022

NX Filtration’s activities:

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. NX

Filtration’s products address these concerns as they are capable of removing micropollutants

(including pharmaceuticals, medicines, PFAS and insecticides), colour and selective salts, but

also bacteria, viruses and nanoplastics, from water in one ltration step whilst oering strong

sustainability benets.

Additionally, NX Filtration’s dNF solution avoids or signicantly reduces the use of chemicals in

operations, as it avoids the use of occulants and coagulants in pre-treatment (which is required

for traditional ltration processes) and requires a very low cleaning frequency.

25NX Filtration - Annual Report24 Sustainability report

EU Taxonomy Objective 6

Examples of NX Filtration’s potential

contribution to objective 6 of the EU Taxonomy

Regulation (the protection and restoration of

biodiversity and ecosystems) can be found in

similar projects as described under objective

5. By removing micropollutants (including

pharmaceuticals, medicines, PFAS and

insecticides), bacteria, viruses and nanoplastics

from wastewater streams, we can ensure that

such contaminations do not enter ecosystems

with potential subsequent eects. An example

of such eects can be found in male sh

that are turning into females due to chemical

pollution, specically estrogenic endocrine

disrupting chemicals.

Conclusion

Awaiting the delegated regulations including

the technical screening and DNSH criteria under

the EU Taxonomy Regulation on objectives 3 to

6 , NX Filtration can already report that 65%

of NX Filtration’s revenues align with objective

1 ‘climate change mitigation’. NX Filtration

complies with almost all of the published

DNSH-criteria of objective 1 and will continue

to take a protective approach in 2022 to seek

full alignment. NX Filtration will closely monitor

any upcoming legislation in this respect to

continuously test its (voluntary) alignment with

the EU Taxonomy Regulation.

EU Taxonomy Objective 6 - the protection and restoration of biodiversity and ecosystems

Taxonomy requirement:

An economic activity shall qualify as contributing substantially to the protection and restoration

of biodiversity and ecosystems where that activity contributes substantially to protecting, con-

serving or restoring biodiversity or to achieving the good condition of ecosystems, or to protect-

ing ecosystems that are already in good condition, through inter alia nature and biodiversity con-

servation, including achieving favorable conservation status of natural and semi-natural habitats

and species, or preventing their deterioration where they already have favorable conservation

status, and protecting and restoring terrestrial, marine and other aquatic ecosystems in order to

improve their condition and enhance their capacity to provide ecosystem services.

Technical screening criteria expected to be published in 2022

NX Filtration’s activities:

NX Filtration’s products contribute to the protection of natural resources and wildlife due to

eliminating micropollutants (including pharmaceuticals, medicines, PFAS and insecticides), bac-

teria, viruses and nanoplastics from aquatic ecosystems on the one hand, and preventing these

contaminants from owing into nature on the other hand.

27NX Filtration - Annual Report26 Sustainability 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 rst 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 aordable 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

ecient 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 occulants and

coagulants in pre-treatment (that is required

for traditional ltration 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

ecient membrane spinning process based

on a unique in-line polymer mixing concept.

NX Filtration is valuing a diverse workforce.

For example, its 69 FTEs at 31 December 2021

represented more than 10 nationalities.

Key KPIs in this respect mainly relate to SDG 8

(decent work and economic growth) including i)

growth in the number of employees and ii) lost

time injury rate, SDG 9 (Industry, innovation

and infrastructure) including i) the number of

patents led and granted and ii) the number of

scientic 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.

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 secured a plot of land

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 2022, NX Filtration aims to continue the

growth of 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. Furthermore, we

will follow the development regarding the EU

Taxonomy Regulation closely, in particular the

details around objectives 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).

With the further scale-up of our business,

we aim to reduce our energy consumption

relative to our revenues and deploy measures

to limit our GHG emissions. Key contributing

factors to this objective include the increase

in eciency with our second production line,

the transitioning to even more energy-ecient

production methods and moving towards

low-carbon distribution and logistics. In 2022,

we also aim to establish an action plan that is

compatible with the transition to a net-zero

emissions economy, containing short, medium

and long-term science-based CO

emission

reduction targets.

Environmental Social Governance

Recurring

replacements

Repeat

projects

ReplacementsFull-scale

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

Demo plantsPilots

Clean water

for all

Avoiding

emissions

at our

customers

Our internal

initiatives

Gross income (€ ‘000)

704

2,789

1,301

784

2021 H2

192

1,280

2021 H1

771

317

536

2020 H2

242

237

533

2020 H1

156

249

128

Other

income

Sustainable

Industrial Water

Clean Municipal

Water

29NX Filtration - Annual Report28 Sustainability report

drinking water supply for persons

million

Clean water for all

Our impact in 2021

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.

or 48,400 filled

olympic size

swimming pools

x 100,000

2021 membrane sales could

enable the production of:

121 billion liters

of clean water

Based on NX Filtration’s sales of approximately

1,200 membrane modules (dNF and UF),

multiplied by the expected capacity and

lifetime of such modules.

…which is equivalent to:

during

1 year

In 2021

enabled clean water across 28 countries worldwide

Revenue split

Europe

Rest of

the World

Europe

North

America

Asia

42%

34%

18%

31Sustainability report

Avoiding emissions

Our impact in 2021

NX Filtration’s GHG

footprint in 2021

amounted to:

170

ton CO

versus:

2,127 ton

e savings

during the deployment of NX

Filtration’s dNF membrane

modules through:

3.9 million kg of chemicals avoided

49 GWh energy savings

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

Grondstoenfabriek). 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 have 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 rst half of 2022, we will be

able to realise signicant reductions of waste

in production. Other ongoing programs to

reduce our CO

footprint include the recovery

of products used in the production process

and further production eciencies. 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)

denes 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 of energy

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, ight

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 nancial or operational control.

Using this approach, this section includes

emissions from the only subsidiary of NX

Filtration, NX Filtration B.V., so the reported

GHG-data is on a fully consolidated basis.

Base year

NX Filtration has set the base year at 2021

as this is the rst year that NX Filtration has

veriable emission data available on essentially

all scopes.

Verication

The information in this Annual Report on GHG-

data has not been veried by any third party,

but NX Filtration is exploring options to do so in

the near term.

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 2021 amounted to 170 ton CO

e (CO

equivalent). Scope 1 CO

e emissions amounted

to 109 ton, of which 35% related to lease

cars and 65% to refrigerants). Scope 2 CO

emissions amounted to 0 ton, as 100% of the

purchased electricity (926 MWh) was sourced

from European wind projects and 100% of the

natural gas usage (32,000 cubic Nm3) was CO

compensated through NX Filtration’s energy

supplier by investments in Veried Emission

Reduction units. Reported Scope 3 CO

emissions related to business travel amounted

to 61 ton CO

e in 2021.

Downstream CO

e savings of NX

Filtration’s products

The downstream CO

e savings that NX

Filtration enables through oering its dNF

membrane modules as an alternative to

conventional water treatment technologies,

such as activated carbon or a combination of

ultraltration and reverse osmosis, add up to

approximately 2,127 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

33NX Filtration - Annual Report32 Sustainability report

Our internal initiatives

Employees

growth in the number of employees

Our employee base grew from 34 FTE at the end of 2020 to 69 FTE at the end of 2021, representing

more than 10 nationalities. NX Filtration employs staff in the Netherlands, Belgium, Germany, Spain,

India, Singapore, UAE, the United States and Canada, and works with commercial and technical

partners in various other parts of the world. In response to COVID-19, NX Filtration implemented

additional protective procedures, including equipping employees with sanitising equipment (e.g.

disinfectants and hand sanitisers), implementing social distancing, adjusting employees working hours

as required to comply with restrictions and increasing the frequency of cleaning in the facilities.

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 2021

100%

Safety

lost time injuries in 2021

NX Filtration harnesses a culture of safety,

where health and safety risks are minimized

with a methodology based on the safety

awareness model. The management of NX

Filtration is highly committed to improving

health and safety conditions. This commitment

is shown, amongst others, by a clear communi-

cation to the production, 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. In November, we welcomed a

QSHE manager to our team, who will further

manage and improve our health and safety

agenda.

In the second half of 2021, NX Filtration has

reached out to the vast majority of its suppliers

to actively engage about its Supplier Code of

Conduct. It 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 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

95%

Our patent portfolio included 35 granted

patents as per 31 December 2021. Additions

in 2021 included patent grants in the US,

Canada, Australia and China for our

‘Positively charged membranes’ patent, a

patent grant in Brazil for our ‘Hollow-fibre

membrane’ patent and patent grants in the

US, China, Australia, Singapore and South

Korea for our ‘PEM membranes’ patent. In

addition, NX Filtration added two new patent

family applications to its portfolio: ‘dNF

regeneration’ in June 2021 related to further

performance improvements on its dNF

technology, and ‘Innovative membrane holder’

in December 2021 related to novel membrane

inserts.

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

patent grants added to

our patent portfolio

Knowledge sharing

scientific publications authored by NX Filtration employees

In total, our people authored in approximately 30 peer reviewed scientific publications since 2016. In

2021, our people authored in 9 peer reviewed scientific publications, amongst others, in the Journal of

Membrane Science, Membranes and ACS Applied Polymer Materials. In November 2021, NX Filtration

published a joint research together with PepsiCo, LEITAT Technological Center and the MESA+

Institute for Nanotechnology on the advances and applications of hollow fiber nanofiltration

membranes that was published in the peer reviewed journal Membranes (MDPI).

Throughout 2021 a total of 16 students were part of the NX Filtration’s team as an intern for their

BSc or MSc thesis. A total of 7 educational or scientific lectures were given by NX Filtration’s team,

amongst which at the International Water Conference in Scottsdale, Arizona, USA and the IDA 2021

International Water Reuse and Recycling Conference in Rome, Italy.

NX Filtration actively supports the projects of 13 PhD students spread across various universities,

whose work was presented throughout 6 scientific lectures at the EuroMembrane 2021 Conference in

Copenhagen, Denmark.

35NX Filtration - Annual Report34 Sustainability report

January

NX Filtration adds second production

facility for its capacity expansion

To enable the expansion of its production ca-

pacity, NX Filtration added a second production

facility in Enschede, the Netherlands, for the

production of its membrane modules. This new

location freed up space in its original produc-

tion plant, where, at the end of 2021, a second

membrane production line was added.

February

Royal Grolsch (Asahi) starts water

treatment pilot with NX Filtration’s

nanoltration membranes

The Grolsch brewery in Enschede, the Nether-

lands has a long history of further improving

reliability and robustness of its processes and

minimizing impact on the environment. Grolsch

launched a full-scale water treatment pilot

trajectory to compare NX Filtration’s direct

nanoltration membranes with conventional

water treatment solutions on factors such as

the retention of micropollutants and hardness,

energy usage and the need for cleaning agents.

NX Filtration supplies its nanoltration

membranes to Forsmark power plant in

Sweden

For the local production of

drinking and process water

for the Forsmark power

plant in Sweden,

ProMinent, a

multinational water

treatment systems

supplier, installed

an innovative

water treatment

system based on 74

direct nanoltration

membrane modules

of NX Filtration. The

feed water is taken from

a local, highly colored lake

with temperatures close to zero

degrees Celsius in the winter.

March

Our employees plant trees at Kennispark

Twente

Trees and water: don’t underestimate the con-

nection. Trees retain water and contribute in

combating draughts. Together with other local

companies, NX Filtration’s employees planted

trees at the ‘innovation lane’ at Kennispark

Twente, the location of our membrane produc-

tion plant.

Global Water Intelligence: Breakthrough

Technology Company of the Year award

nomination

GWI: “2020 saw NX Filtration’s ground-breaking

one-step membrane process excel in a dizzying

number of applications including dirty surface

water treatment, wastewater reuse and the

removal of micropollutants for both municipal

and industrial customers. Major project wins in

Indonesia and Sweden were complemented by

a rapid global expansion of pilot trials, a huge

ramp up in production capacity and the expan-

sion of the sales force to bring a game-changing

technology to the world.”

April

NX Filtration starts nanoltration pilot

with drinking water company PWN

PWN, responsible for the production and sup-

ply of drinking water in the Dutch province of

Noord-Holland, selected NX Filtration to start

a pilot for the sustainable production of drink-

ing water based on its direct nanoltration

membranes.

May

Water Board Aa & Maas starts pilot with

a combination of direct nanoltration and

UV technology for the reuse of municipal

wastewater

To turn municipal wastewater into a valuable

source for high quality process water, Water

Board Aa & Maas, NX Filtration, Van Remmen

UV Technology and Jotem Watertreatment

started a pilot project with the objective

to demonstrate the viability of clean water

production from municipal euent from Aa &

Maas’ wastewater treatment plant in Asten,

The Netherlands.

June

Green-labelled IPO on Euronext

Amsterdam

Successful listing of NX Filtration on Euronext

Amsterdam as the rst Green-labelled IPO,

with over 95% of NX Filtration’s revenue and

investments externally certied by CICERO

Green as ‘Dark Green’, their highest

green ranking corresponding

to the long-term vision of

a low carbon and cli-

mate resilient future.

2021 month by month

37NX Filtration - Annual Report36 2021 month by month

NX Filtration secures land for high-tech

megafactory for nanoltration membrane

production in Hengelo, the Netherlands

NX Filtration signed a purchase option for a

plot of land of approximately 24,000 square

meters at the High Tech Systems Park in Hen-

gelo, the Netherlands, on which NX Filtration

plans to build a new plant for the production of

its innovative nanoltration membranes in the

next two to three years. The High Tech Systems

Park is the innovation campus that is evolving

around the Thales site in Hengelo,

the Netherlands. Companies

located at the High Tech

Systems Park share

the mission of

innovating faster

through cooper-

ation.

August

NX Filtration receives order to supply

direct nanoltration membranes for Jetpur

wastewater treatment plant in India

Aquarius H2O Dynamics, an Indian OEM fo-

cusing on wastewater treatment, selected NX

Filtration to supply its direct nanoltration

membranes for wastewater treatment at the

common euent treatment plant (CETP) in

Jetpur in the Gujarat province of India. This was

NX Filtration’s second project for Aquarius H2O

Dynamics in 2021. The new membrane ltra-

tion system enables CETP Jetpur to recover

caustic from its wastewater streams for reuse

in the textile industry, ensuring compliance with

increasingly stringent discharge regulations.

NX Filtration wins 2021

Frost & Sullivan Global

New Product Innova-

tion Award

Paul Hudson, in-

dustry analyst at

Frost & Sullivan,

comments: “Climate

change today leads

to increasing water

scarcity and water

contamination. Frost &

Sullivan recognizes NX Filtra-

tion’s direct nanoltration membranes’ abil-

ity to address such challenges. The company

displays highly eective and resilient properties

that allow users to achieve high selectivity at

nanoscale. By utilizing NX Filtration’s mem-

brane solutions, companies can achieve higher

eciency in a sustainable process unmatched

by the competition.”

NX Filtration extends executive team with

a Chief Commercial Ocer

NX Filtration announced the appointment of

Alejandro Roman Fernandez as Chief Commer-

cial Ocer of NX Filtration. In this newly creat-

ed role, Alejandro is responsible for managing

and expanding NX Filtration’s global sales force

and network of distributors and Original Equip-

ment Manufacturer (OEM) partners. Alejandro

brings a wealth of experience in commercial

roles in the global water markets at amongst

others Organica Water, Pentair and Xylem.

NX Filtration donates to the Water for Life

Foundation at the occasion of its Euronext

listing

To mark the occasion of its Euronext listing, NX

Filtration donated €15,000 to the Water for

Life Foundation on behalf of Infestos Founda-

tion. Water for Life, together with local water

companies, sets up projects in poor neighbor-

hoods in Africa and Asia to build drinking water

and sanitation facilities. Worldwide there are

still millions of people without access to water.

NX Filtration provides direct nanoltration

membranes for textile water recycling in

India

Aquarius H2O Dynamics, an Indian OEM fo-

cusing on wastewater treatment, selected NX

Filtration to supply its direct nanoltration

membranes for a water recycling application at

Kewal Kiran Clothing Limited (KKCL), a leading

denim jeans company in India. This order fol-

lowed after a pilot project that demonstrated

the performance and benets of NX Filtration’s

membranes.

NX Filtration to deliver pilot system to

produce clean drinking water from the

Mekong river in Vietnam

With an abundant average precipitation rate,

Vietnam could be considered a water-rich coun-

try. However, the non-uniform rainfall, coupled

with strong demographic and industrial devel-

opments, makes its water resources extremely

vulnerable. In several areas groundwater is ex-

ploited beyond the recharge capacity, resulting

in falling water tables, causing land subsidence

and salinity intrusion, especially in the Mekong

river delta. Therefore, there is an increasing

need for alternative solutions for water supply

in the country, to which NX Filtration’s technol-

ogy could contribute.

July

New initiative to brew beer

from local canal water

Brouwersnös, a local

beer brewer in Groen-

lo, the Netherlands,

started the produc-

tion of a new beer,

Tweach, from local

canal water based

on NX ltration’s

direct nanoltration

membranes together

with Jotem Waterbehan-

deling.

First live event in a year: Membrane

Technology Conference & Exposition

NX Filtration participated in the 2021 Mem-

brane Technology Conference & Exposition

presented by American Membrane Technology

Association and American Water Works As-

sociation, where it presented its direct nano-

ltration membrane technology for clean and

aordable water.

NX Filtration supplies hollow ber nano-

ltration membranes for potable water

production at Indonesian hospital

NX Filtration was selected by PT. Bayu, an

Indonesian specialist in constructing water and

wastewater treatment plants, to supply its hol-

low ber nanoltration membranes for potable

water production for Rumah Sakit Cipto Ma-

ngunkusomo, Indonesia’s biggest state owned

hospital in Jakarta. This was NX Filtration’s

second project for PT. Bayu, to whom NX Filtra-

tion supplied its membrane modules earlier this

year for the production of drinking water for

the city of Dumai based on local river water.

39NX Filtration - Annual Report38 2021 month by month

NX Filtration extends executive team with

Chief Financial Ocer

NX Filtration proudly announces the appoint-

ment of Marc Luttikhuis (46 years) as Chief

Financial Ocer (CFO) of NX Filtration. Marc

joined NX Filtration at the beginning of 2022

at NX Filtration’s headquarters in Enschede,

the Netherlands. The Supervisory Board will

nominate Marc for appointment as member of

the Management Board at the regular general

meeting of shareholders in 2022.

November

NX Filtration expands to the Middle East

To further strengthen its position in the global

water markets, NX Filtration expanded its sales

team with Usama Patel. Usama supports NX

Filtration in further rolling out its innovative

and sustainable direct nanoltration technol-

ogy for municipal and industrial applications in

the Middle East and North Africa region.

Practical Water Solutions starts various

pilot projects with NX Filtration’s direct

nanoltration technology in South Africa

Practical Water Solutions, a water as a service

company in South Africa, has started various

pilot projects to test NX Filtration’s dNF mem-

branes for the reuse of industrial waste-

water at various industrial clients across

South Africa.

Envirogen orders NX Filtration’s

Mexperience pilot at Aquatech

Amsterdam

Envirogen, a UK based special-

ist in industrial water treatment

and process ltration, ordered a

Mexperience pilot system from NX

Filtration. The order was placed

during the Aquatech Amsterdam, the

world’s leading trade exhibition for

process, drinking and wastewater. Envirogen

will be using the Mexperience pilot system for

testing NX Filtration’s innovative and sustain-

able direct hollow ber nanoltration tech-

nology across various applications in the food

and beverage, healthcare and industrial water

treatment sectors.

December

Joint publication in the Membranes Journal

with PepsiCo, MESA+ Institute for Nano-

technology and Leitat Technological Center

NX Filtration, together with PepsiCo, the

MESA+ Institute for Nanotechnology of the

University of Twente and the Leitat Technolog-

ical Center in Barcelona, published an article

providing a holistic overview of the applications

of hollow ber nanoltration membranes.

Applications include the removal of micropollut-

ants and nanoplastics, wastewater reuse and

various industrial applications for the recovery

of raw materials.

September

Attending Aquatech Mexico

NX Filtration attended Aquatech Mexico in

Centro Citibanamex, Mexico City. NX Filtra-

tion presented its breakthrough direct nano-

ltration membrane technology for clean and

aordable water.

Launch of projection tool 3.0

NX Filtration launched the third generation of

its projection tool for optimal performance of

hollow ber nanoltration membrane systems.

Key features include accurate estimations of

micropollutants retention, predictions of design

parameters and calculations of energy con-

sumption, process ows and cleaning intervals.

NX Filtration starts pilot with IWE for

water reuse from paper mills

NX Filtration started a pilot project with

Industriewater Eerbeek (IWE), a subsidiary of

three Dutch paper mills focusing on waste-

water treatment. The objective of the pilot is

to enable the reuse of wastewater, therewith

reducing the extraction of groundwater and the

overall water footprint of the paper mills.

A worldwide unique system for source sep-

arated wastewater inaugurated

In the City of Helsingborg a recovery plant for

wastewater, RecoLab, has been inaugurated.

The facility includes a testbed for re-

search and a showroom for visitors.

RecoLab is a world unique system

for source-separated waste-

water that recycles resources

from domestic wastewater

and food waste. NX Fil-

tration delivered its direct

nanoltration technology

as an important part of

this innovative wastewater

recovery concept.

October

Veolia expands pilot

testing with NX

Filtration’s hollow

ber nanoltration

technology

Veolia, a global

leader in optimized

resource manage-

ment, expanded its

pilot testing pro-

gram based on NX

Filtration’s innovative

hollow ber nanoltration

membranes. In a series of two

new pilot programs, NX Filtration’s

nanoltration membranes will be tested for the

reuse of euent from a municipal wastewater

treatment plant as well as for the treatment

of surface water. These pilots follow a series

of lab-scale tests, that Veolia conducted at

its Scientic & Technological Expertise De-

partment, where Veolia works with innovative

technologies to meet the global environmental

challenges and help its customers move to-

wards sustainable solutions.

41NX Filtration - Annual Report40

NX Filtration included in the AScX index at

Euronext Amsterdam

NX Filtration was included in the Amsterdam

Small cap Index (AScX) on Euronext Am-

sterdam as per 20 December 2021. This was

announced by Euronext, following its quarterly

review, based on free-oat adjusted market

capitalisation and liquidity. The AScX is a free-

oat market capitalisation weighted index

composed of 25 Dutch funds that are listed on

Euronext Amsterdam.

NX Filtration starts pilot

with drinking water

utility WMD in the

Netherlands

WMD, the drinking

water utility of the

province of Dren-

the in the Nether-

lands, initiated a

pilot project with

NX Filtration to test

dNF technology on

the removal of various

micropollutants from

WMD’s groundwater sources.

Initial lab-scale tests (based on

NX Filtration’s ‘Mexplorer’ test unit)

demonstrated high removal of Ni/Fe, EDTA

and other micropollutants. Therefore, WMD

decided to expand its pilot program to test dNF

technology in a full-scale setting, based on NX

Filtration’s large scale ‘Mexpert’ pilot system.

43NX Filtration - Annual Report42 2021 month by month

Financial performance

NX Filtration is a provider of direct nanoltration mem-

brane technology for producing pure and aordable

water to improve quality of life. Its direct nanoltration

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 oering strong

sustainability benets. NX Filtration sells its ltration

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 dierent business activities, manage-

ment reviews the protability of the Company on an

aggregate level.

All nancial information can be found in the consolidated

nancial statements.

Gross income

Gross income increased by 281% from €1,069

thousand in 2020 to €4,069 thousand in 2021.

Revenues from the sale of goods increased by

373% from €671 thousand in 2020 to €3,173

thousand in 2021. Especially the second half of

2021 saw a rapid acceleration of growth. Gross

income in the second half of 2021 increased

by 420% from €536 thousand in H2 2020 to

€2,789 thousand in H2 2021. Revenues from

the sale of goods in the second half of 2021

increased by 609% from €294 thousand in H2

2020 to €2,085 thousand in H2 2021.

Key drivers for this growth were an increase in

the number of pilot projects as well as full-

scale projects that resulted from preceding

pilot projects. In addition, we benetted from

the start of our contract with Hydranautics to

produce and supply HYDRAcap ultraltration

(UF) modules (with a gradual ramp-up in

volumes during 2021), the expansion of our

sales force to new countries (USA, Canada,

India, Singapore and UAE) and a growing

number of (repeat projects from our) OEM

relationships.

Environmental Social Governance

Recurring

replacements

Repeat

projects

ReplacementsFull-scale

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

Demo plantsPilots

Clean water

for all

Avoiding

emissions

at our

customers

Our internal

initiatives

Gross income (€ ‘000)

704

2,789

1,301

784

2021 H2

192

1,280

2021 H1

771

317

536

2020 H2

242

237

533

2020 H1

156

249

128

Other

income

Sustainable

Industrial Water

Clean Municipal

Water

45NX Filtration - Annual Report44 Financial performance

We experienced strongest growth in our

Sustainable Industrial Water business line,

with revenues from the sale of goods of €2,072

thousand in 2021 (€771 thousand in H1 2021

and €1,301 thousand in H2 2021), a growth

of 468% compared to €365 thousand in 2020.

NX Filtration benetted from the pilots it had

initiated since mid-2020 and the relatively short

pilot to full-scale conversion lead-time. We

experienced strong traction with customers

in, amongst others, the food & beverage,

textile and paper industries looking to reduce

their water footprint and optimise their water

systems in a sustainable way.

Key projects included a repeat project for

Nijhuis Saur Industries for industrial water

treatment in France, multiple projects for

Aquarius H2O Dynamics for wastewater reuse

in the textile industry in India and the supply

of our dNF modules to Grundfos focusing

on industrial water footprint reduction. In

addition, NX Filtration worked with PepsiCo

to investigate additional opportunities

for deployment of dNF membranes within

PepsiCo’s facilities, following previous use of

dNF technology at two PepsiCo facilities in

North America.

In the Clean Municipal Water business line,

revenues from the sale of goods in 2021 were

€1,101 thousand (€317 thousand in H1 2021

and €784 thousand in H2 2021), a growth of

260% compared to €306 thousand in 2020.

This growth was primarily driven by full-scale

projects in Asia, whereas the focus in Europe

and North America has been on realising pilots

with leading players, with visibility on future

large projects.

We realised repeat projects with PT. Bayu for

the production of drinking water in Indonesia,

supplied our dNF modules to Aquarius H2O

Dynamics for caustic clarication at an euent

treatment plant in India, and received an order

from EcoAzur for a new wastewater treatment

project 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 Veolia in

France, Aigües de Barcelona in Spain, Service

de l’Eau de Lausanne in Switzerland, Jacobs

for the City of Melbourne in Florida, USA and

various water utilities, amongst whom PWN, Aa

& Maas and WMD, in the Netherlands.

Gross margin, EBITDA and Net

result

Gross margin increased from 47.9% in H1 2021

to 58.7% in H2 2021. H1 2021 gross margin

was negatively impacted by waste resulting

from the HYDRAcap UF product introduction

at the start of the year. Gross margin for the

full year 2021 was 55.0%, slightly lower than in

2020 (56.9%) as a result of a changing product

mix with a growing share of UF products and

production ineciencies related to a relatively

high number of product switches on a single

membrane spinning line.

EBITDA loss was €13,323 thousand in 2021

compared to a loss of €1,972 thousand in 2020.

EBITDA loss excluding IPO transaction costs for

2021 was €3,738 thousand.

In EUR ‘000 2021 2020

Operating loss (14,714) (2,775)

Depreciation and amortization 1,391 803

EBITDA (13,323) (1,972)

IPO transaction cost 9,585 -

EBITDA excluding IPO

transaction costs (3,738) (1,972)

Net loss was €11,354 thousand compared to a

net loss of €2,092 thousand in 2020. Net loss

excluding IPO transaction cost for 2021 was

€ 4,103 thousand.

In EUR ‘000 2021 2020

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

IPO transaction cost (net of tax) 7,251 -

Net loss excluding IPO

transaction costs (4,103) (2,092)

Cash ows and investments

The net cash position at 31 December 2021

amounted to €133.4 million, compared to a

net cash position of €6,599 thousand at 31

December 2020. This increase is the result of

the equity capital that NX Filtration raised

through its IPO in June 2021.

Operating cash ow is €13,215 thousand

negative (excluding IPO transaction costs

€3,630 thousand negative), compared to

€2,620 thousand negative in 2020. Working

capital

decreased to €1,062 thousand versus

€1,300 thousand at 31 December 2020.

Capital expenditures amounted to €8,616

thousand as compared to €1,454 thousand

in 2020. Capex included investments in the

ongoing capacity expansion (new production

facility for module production and expansion

of the production facility for membrane

production) and the expansion of NX

Filtration’s eet of pilot systems. Additionally,

NX Filtration capitalised €741 thousand of

development costs which demonstrates the

company’s continued eorts to invest in

innovations for the future.

Total FTE increased from 34 at 31 December

2020 (43 at 30 June 2021) to 69 at 31

December 2021, with key additions in sales

force, pilot engineers, R&D employees and

production personnel.

The Company does not pay any dividend for the

year.

Working capital dened as inventories plus trade and other

receivables minus trade and other payables

NX Filtration - Annual Report 47NX Filtration - Annual Report46

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

description of these risks and what we do to mitigate these risks we refer to page 52 to 74 of this

Annual Report. 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 aect our ability

to gain market share.

High Medium Medium

Our business and strategy depends,

in part, on signicant customers and

our relationship with OEMs. If such

relationships fail to develop this could

have a materially adverse eect 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

49NX Filtration - Annual Report48 Risks and Uncertainties

Risk category Risk description

Risk appetite Likelihood Potential impact

Operational

If we experience signicant 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 sucient

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

Signicant increases in the cost of raw

materials, components and nished

goods may materially adversely aect

our business.

Medium Medium Low

We depend on the ability to hire and

retain management, key employees

and other qualied 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 eect on our

business.

Low Medium High

Any diculties we encounter

while we expand or transition our

manufacturing operations in-house,

now or in the future, could materially

and adversely aect 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 aect 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 eect 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 eect

on our business, nancial condition or

results of operations.

Low Medium Medium

51NX Filtration - Annual Report50 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 nancial

statements, and because NX Filtration was

not faced with any indication for impairment in

nancial year 2021.

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 eectively. If

circumstances occur or are not suciently

mitigated, our business, nancial condition,

results of operations and prospects could be

material adversely aected. 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 nancial 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 ber dNF

membranes that are based on patented

production methods. Historically, governments,

municipal and industrial companies have

fully relied on water ltration 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 eectiveness 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, protable

business.

The market for dNF is at a relatively early

stage of operation and customers may not

recognise the need for, or the benets of,

the dNF products. Therefore, the extent to

which the dNF products will be able to meet

its customers’ requirements and achieve

signicant market acceptance is uncertain.

By contrast, the markets for UF, traditional

nanoltration 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 ltration

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 ltration

methods; (iii) lack of cost-eectiveness; (iv)

timing of market introduction of competitive

products; (v) process economics in realising

economies of scale; (vi) incompatibility with

required product specications; (vii) lack of

t 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 market

acceptance for its products to replace

or compete with current UF, traditional

nanoltration 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 signicant revenue,

which could have a material adverse eect

on its business, nancial condition, results of

operations and prospects.

To mitigate this risk, NX Filtration is actively

developing, piloting and investing in its

technology. NX Filtration benets 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

signicantly 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 ltration

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

aect NX Filtration’s business, nancial

condition, results of operations and prospects.

To mitigate this risk, NX Filtration generally

oers on-site commissioning, technical support

and training by its engineers. NX Filtration

generally 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

53NX Filtration - Annual Report52 Risks and Uncertainties

the demand for our products could be

reduced.

The present and projected demand for NX

Filtration’s products is driven by the need to

address global and structural water scarcity

and water quality issues. Such issues include,

but are not limited to, people not having daily

access to clean, drinkable water, the fact

that 80% of global wastewater ows back in

nature without being treated, the fact that

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 NX Filtration’s control, including

the modication 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 signicantly, which

could, in turn, have a material adverse eect

on its business, nancial condition, results of

operations and prospects.

To mitigate this risk, NX Filtration continuously

monitors trends and initiates R&D eorts

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 aect our ability to gain market

share.

The water treatment solution market is

highly competitive, and NX Filtration faces

signicant 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

oer conventional water treatment solutions

(such as reverse osmosis, adsorption and

oxidation processes), organisations that

develop products similar to those oered by

NX Filtration and organisations that oer

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

nancial resources, may enter the market and

disrupt the competitive environment, which

may inuence 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 inuence 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 benets,

exibility, 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 aected 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 nancial 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 ber

direct nanoltration (dNF), ultraltration

(UF) or microltration (MF) technology; (iv)

competitors having lower production costs (due

to geographic location, currency uctuations

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 oering

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 oering their products and services

at signicant discounts in order to enter the

market or to increase their market share,

thereby impacting protability throughout the

sector. If NX Filtration is unable to compete

successfully for any of the above reasons,

its business, nancial condition, results of

operations and prospects could be materially

adversely aected.

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 signicantly 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

has increased brand awareness and global

reputation to drive future sales. Finally,

55NX Filtration - Annual Report54 Risks and Uncertainties

NX Filtration is building its global sales and distribution network

along its geographical markets. This network allows NX Filtration to

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

Our business and strategy depends, in part, on signicant

customers and our relationship with OEMs. If such relationships

fail to develop this could have a materially adverse eect on our

business.

NX Filtration’s business and strategy depends, in part, on signicant

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 aect NX Filtration’s commercialisation eorts. Although

NX Filtration seeks to penetrate a market in which a wide and

diversied 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 prots 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 prots.

Failure by NX Filtration to win, renew or extend larger customer

contracts could have a material adverse eect on NX Filtration’s

business, nancial 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

57NX Filtration - Annual Report56 Risks and Uncertainties

practices. NX Filtration seeks to grow its

relationships with OEM customers, mainly

by the eorts of its commercial sta 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 ltration 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 conicts. 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 signicant

upfront time and expense without any

assurance that these eorts 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 scal 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 aect 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 eorts 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 COVID-19 pandemic has resulted, and

other adverse global health events could

result, in widespread health crises that could

adversely aect the economies and nancial

markets worldwide. The COVID-19 pandemic

has resulted in governments in the Netherlands

and other countries in which NX Filtration

operates, implementing numerous measures to

try to contain the virus, such as travel bans and

restrictions, lockdowns, curfews, quarantines

and shutdowns of business and workplaces.

The outbreak of COVID-19 has impacted and

may impact NX Filtration mainly due to (i)

limitations in sales and marketing activities

as there are generally 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 COVID-19 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 oer to

its customers.

The COVID-19 pandemic is ongoing and there

is a risk of recurring outbreaks in aected

countries, including the Netherlands and other

countries in which NX Filtration operates,

and further mutations in the virus, which

may prove dicult to contain. The long-term

eects 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 eectiveness

and rate of deployment of vaccines, the extent

and eectiveness 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 eect on NX

Filtration’s business, nancial 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 crisis.

59NX Filtration - Annual Report58 Risks and Uncertainties

Operational Risks and Uncertainties

If we experience signicant 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 sucient 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 in

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, nancial condition and operating results. Any delay in the

scale-up of its production could also materially adversely aect

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 signicant

time and nancial 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 eorts 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 nancial benets it expects to receive.

61NX Filtration - Annual Report60 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 eect on NX

Filtration’s business, nancial 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 over the next two to three 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 nished

goods from third-party suppliers. NX Filtration

obtains a signicant 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 specic 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

signicant increased demand for its products,

there can be no assurance that additional

supplies of raw materials, components and

nished goods will be available when required

on terms that are acceptable to NX Filtration,

or at all, or that any supplier would allocate

sucient supplies to NX Filtration in order

to meet its requirements or ll 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 oer 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 ll customers’ orders on a timely and cost-

eective 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 eect on NX

Filtration’s business, nancial 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.

Signicant increases in the cost of raw

materials, components and nished goods

may materially adversely aect our

business.

NX Filtration uses various raw materials,

components and nished goods in its

operations, including polymers such as

polyethersulfone, polyvinyl chloride (PVC)

and epoxy. The prices for these raw materials,

components and nished goods uctuate

depending on market conditions and global

demand for these materials and could adversely

aect NX Filtration’s business and operating

results. In recent years, PVC in particular

experienced a signicant price increase,

largely attributable to persistent supply-

side issues globally. NX Filtration’s ability to

achieve protability 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 nished goods

historically has represented a signicant

portion of NX Filtration’s cost of raw materials

and consumables used. As a consequence,

sudden and signicant 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 nished goods used in the assembly of

NX Filtration’s products. NX Filtration is also

indirectly exposed to uctuations 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

nished goods may therefore have a material

adverse eect on NX Filtration’s business,

nancial condition, results of operations and

prospects, particularly because it is generally

not able to pass on such price increases

or reduce other costs to oset 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.

63NX Filtration - Annual Report62 Risks and Uncertainties

We depend on the ability to hire and retain

management, key employees and other

qualied 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 signicant 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 specic term. In

addition, NX Filtration does not have “key

person” life insurance policies covering any of

its ocers 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 eect on NX

Filtration’s business, nancial condition, results

of operations and prospects.

NX Filtration’s success also depends on its

continuing ability to attract, retain and develop

qualied and skilled personnel, including

nancial 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 signicant competition

for talented individuals with the specialised

knowledge of water ltration and membrane

technology. This is particularly relevant in the

Netherlands, as the country where NX Filtration

has its headquarters, signicant business

operations and research and development

activities. NX Filtration’s eorts to retain and

motivate management and key employees

or attract and retain other highly qualied

personnel in the future may not be successful.

A failure to attract and retain key personnel

may have a material adverse eect on NX

Filtration’s business, nancial condition, results

of operations and prospects.

To mitigate this risk, NX Filtration seeks to

leverage on its public prole that has increased

after the IPO 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

eect on our business.

NX Filtration depends on its information

technology (IT) systems to, among other things,

conduct operations, to interface with customers,

to maintain nancial records and accuracy.

All of NX Filtration’s internal data is stored

at Microsoft cloud services. NX Filtration’s

production process specically 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 nancial 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 res, earthquakes, oods and/or

errors by NX Filtration’s employees. Disruptions,

security breaches or failures of NX Filtration’s

IT systems could impair its ability to eectively

and timely produce and provide products,

which could damage NX Filtration’s reputation

and could have a material adverse eect on

its business, nancial condition, results of

operations and prospects.

To mitigate this risk, NX Filtration uses cloud

based solutions for its own IT systems from

suppliers that oer 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 sucient

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 diculties we encounter while we

expand or transition our manufacturing

operations in-house, now or in the future,

could materially and adversely aect our

ability to manufacture and deliver our

products.

Because of the signicant 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 signicant 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 diculties in executing this expansion.

Any diculties NX Filtration encounters while

it expands or transitions its manufacturing

operations in-house, now or in the future, could

materially and adversely aect 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

eect on NX Filtration’s business, nancial

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 identication and debottlenecking

reviews. We are also centralizing our quality

organization to report directly to the CEO to

bolster cross functional focus.

65NX Filtration - Annual Report64 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.

NX Filtration is continuing to adapt to and develop strategies to

address international markets, but there can be no guarantee that

such eorts will have the desired eect. 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 signicant

dedication of management attention and nancial 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) diculty controlling the application of NX Filtration’s solutions

and the installation of pilot systems in distant or remote jurisdictions;

(iii) changes in a specic country’s or region’s political, economic, or

legal and regulatory environment, including pandemics, taris, trade

wars or long-term environmental risks; (iv) the need to adapt and

localise NX Filtration’s products and service oerings for specic

countries; (v) greater diculty collecting accounts receivable and

longer payment cycles; (vi) challenges relating to underdeveloped

infrastructure or lack of qualied management or adequately trained

customers and personnel in certain jurisdictions; (vi) challenges

inherent in eciently managing, and the increased costs associated

with, an increased number of employees over large geographic

distances, including the need to implement appropriate systems,

policies, benets, and compliance programs that are specic to each

jurisdiction; and (vii) currency exchange rate uctuations and the

resulting eect 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 eect on NX Filtration’s business, nancial condition, results

of operations and prospects.

67NX Filtration - Annual Report66 Risks and Uncertainties

To mitigate this risk, NX Filtration’s processes

are set up to quickly understand, adapt to, and

eectively apply international cultural and

legal norms for doing business. We have actual

presence of dedicated sta 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 dicult, 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, condentiality

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 condential 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 sucient 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 le 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

ling date of the respective patent application

with the relevant patent oce. Any of the

above, individually or in aggregate, could have

a material adverse eect on NX Filtration’s

business, nancial 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 benets 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 signicant 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

condentiality agreements with suppliers and

customers, noncompete clauses in contracts

with employees and technical precautions to

protect its technology, know-how and other

proprietary information. Furthermore, dierent

suppliers are used for dierent 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 sucient

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,

know-how, and other proprietary information

may result in lengthy and costly litigation or

administrative proceedings and may cause

signicant disruption to the business and

operations of NX Filtration. If NX Filtration

is unable to protect or eectively enforce its

proprietary technology and information, this

could have a material adverse eect on NX

Filtration’s business, nancial 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 aect our business

and our ability to gain market share.

69NX Filtration - Annual Report68 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 signicant 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

eectively 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, nancial

condition, results of operations and prospects

could be materially adversely aected.

To mitigate this risk, NX Filtration continues

to signicantly 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

lings, 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 ltration characteristics

and performance; (ii) sustainability benets

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 specications 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 nes imposed by government or regulatory

authorities in relation to its products and its

operations. Any such lawsuits, proceedings

and other claims could result in signicant

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

signicant 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 eect

on NX Filtration’s business, nancial 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 insucient 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

eect 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

71NX Filtration - Annual Report70 Risks and Uncertainties

lead to nes, penalties or claims, injunctions

which may lead to disruptions of NX Filtration’s

business, or harm its reputation, which may

have a material adverse eect on NX Filtration’s

business, nancial 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 certicates 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, sta and

relevant regulatory parties. NX Filtration has

furthermore obtained a management system

complying 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 eect on our business,

nancial condition or results of operations.

We have implemented a set of internal

control measures and compliance policies,

including amongst others, an authorization

policy, sucient 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 aecting

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 eectively 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 eective. Any fraud incident or dishonest

activity aecting NX Filtration, whether as a

result of the activities of employees, partners,

suppliers or other third parties, may result in

nancial losses, a loss of customer trust and

condence, as well as litigation or nancial or

other regulatory penalties being imposed, any

of which could have a material adverse eect

on NX Filtration’s business, nancial 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 eect 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, especially

because it has transformed from a private

company to a public company with much

more scrutiny. 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, fraud and non-compliance with laws and

regulations.

During the nancial year 2021, NX Filtration

continued to support its corporate culture and

other foundations of its risk management and

control systems with its Code of Conduct,

Whistle-blower Policy, Insider Trading Policy,

safety and quality certications, periodic

reports and meetings. In addition, further

consolidation and professionalization has

been achieved in the nancial year 2021. In the

years to come, NX Filtration will continue to

professionalize and strengthen its organisation

and control environment. NX Filtration has

implemented a further segregation of duties,

such as hiring a CFO, Tactical Buyer and a

QHSE-manager, not only to properly divide

responsibility and accountability, improve

the quality of the sta, but also to create a

system of checks and balances. To support

this further, NX Filtration introduced and

implemented a data warehouse and reporting

system in which our business processes as

well as our day-to-day working procedures are

formally documented in one central system.

The Management Board, to the best of its

knowledge, is not aware of any signicant

deciencies 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 principles and

best practices established in the Code of

Conduct reect the corporate culture that

the Management Board wants to embed in

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

core values included in the Code of Conduct

are related to professional conduct, exibility,

reliability, 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. No violations

of either Code of Conduct were reported in the

nancial year 2021.

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 Code of Conduct

and Supplier Code of Conduct, which it applies

vis-à-vis its 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 (in

particular ILO Conventions 138 and 182) and

the UN Guiding Principles on Business and

Human Rights (UNGPs).

NX Filtration carries out human rights due

diligence processes and has not come across

any issues in this respect in 2021. 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. NX

Filtration is on a journey to further implement

robust procedures to identify, manage, and

prevent adverse human rights impacts that

are material for its business and to provide

meaningful disclosures on these practices and

to account for the eectiveness of the human

rights management and mitigation strategy.

73NX Filtration - Annual Report72 Risks and Uncertainties

Whistle-blower Policy

NX Filtration employees are oered 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. No violations

or irregularities were reported under the Whistle-blower Policy in

nancial year 2021.

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 nancial

year 2021.

Safety and quality certications

NX Filtration has been awarded with several ISO certications

and possesses other relevant safety and quality certicates. The

quality of NX Filtration’s products and compliance to the relevant

safety and quality certicates is strictly monitored by the QHSE-

department.

75NX Filtration - Annual Report74 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 oce 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 Identier

(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 as well as NX Filtration’s articles of

association, which are publicly available on the

Investor Relations section of its website www.

nxltration.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 two

senior managers 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

nancial risks, and the risk management and

control systems. Two Managing Directors are

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 t. No long term 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. 50 CEO 2019 AGM of

(Michiel) and COO 2025

Staatsen

Mr H.D.W. 69 CTO 2016 AGM of

(Erik) Roesink 2025

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, including those of strategy consultant

and investment manager. He held the position

of chief operating ocer at Pré Pain, a leading

manufacturer of frozen bake o bread in

North-West Europe. 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

& technology at the University of Twente in

Enschede, the Netherlands since 2013. Prior

to joining NX Filtration, Erik Roesink worked

77NX Filtration - Annual Report76 Corporate Governance

in various director roles in research and

development, strategic innovation and business

development at Pentair and Norit X-Flow.

It is expected that Mr M. (Marc) Luttikhuis

(born 1975, Dutch) will be added to the

Management Board. Marc has joined NX

Filtration as Chief Financial Ocer (CFO) as

of 1 January 2022. The Supervisory Board will

nominate Marc for appointment as member of

the Management Board at the regular general

meeting of shareholders in 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 nance, IT, HR and

procurement functions. He has a broad

nancial background with a strong track

record of performance improvements and

will play a key role in achieving NX Filtration’s

ambitions. Marc is a Dutch national and 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 members:

Name Age Position Member

since

Mr J.J.G. 37 Finance 2016

(Joris) Kooiker Manager

Mr A.M. 45 Chief 2021

(Alejandro) Commercial

Roman Fernandez Ocer

Mr J.J.G. (Joris) Kooiker (born 1985, Dutch)

is NX Filtration’s nancial manager since

2016. Prior to joining NX Filtration, he held the

position of controller at Webprint (2011-2016),

an online photo service. Before Joris Kooiker

joined Webprint, he worked at Van der Arend

Markslag & Partners (2009-2011), a provider

of nancial, transactional and administrative

services. He holds a master’s degree in business

administration from University of Groningen in

Groningen, the Netherlands.

Mr A.M. (Alejandro) Roman Fernandez

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

Commercial Ocer. 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

aairs of the Company, its subsidiaries and the

business aliated 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 eectiveness of the NX

Filtration’s internal risk management and

control systems and the integrity and quality of

the nancial reporting. The Supervisory Board

assists the Management Board with advice

on general policies related to the activities of

NX Filtration. In the fullment of its duty, the

Supervisory Board focuses 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. 51 Member AGM of 2025

(Carolina) Wielinga (chair)

Mr B.A.M. 57 Member AGM of 2025

(Benno) van Dongen

Mr J.T.P. 48 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 p. 92 and p. 93 of 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 eect. 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 qualied

individuals and reward them with a market

competitive remuneration package that focuses

on achieving sustainable nancial 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 Managing Directors

consists of the following components:

• annual base pay; and

• pension and other benets.

A summary of the remuneration of the

Management Board is set out in the

Remuneration Report of the Supervisory Board

below.

Short-term incentive

The remuneration policy enables the

Supervisory Board to determine at its sole

discretion that new 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 protability,

and ESG-criteria.

Long-Term Incentive Plan

The Company intends to implement 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 new 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 nancial and non-nancial

(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 dierent holding period as the

79NX Filtration - Annual Report78 Corporate Governance

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 signicantly inuenced are

considered to be a related party. Also, entities

which can control, jointly control or signicantly

inuence 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

• 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.

• Management fee to Infestos Management

B.V. in the period pre-IPO.

• Repayment of preference shares held by

Infestos Holding E B.V.

All these transactions are made on terms

equivalent to those that prevail in arm’s length

transactions.

General Meeting

According to the Articles of Association,

General Meetings can be held in Amsterdam,

in the Netherlands, or any other place in the

Netherlands, at the choice of those who call the

meeting.

The annual General Meeting must be held at

least once a year, within six months after the

close of each nancial 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 specic 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 prots, 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 nancial 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 “identication 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

15 June 2021, 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 15 June 2021, 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 15 June

2021, 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 eect 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).

81NX Filtration - Annual Report80 Corporate Governance

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 dierences 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 dierent way, to

respond dierently to challenges and to take

more robust decisions. All these dierent skills

and backgrounds reect the diverse nature of

the environment in which the Company and

its stakeholders operate, and improve the

eectiveness through diversity of approach

and thought. Diversity furthermore drives

innovation, and accelerates growth. It enables

the Company to attract and retain the best

talented people.

The Management Board and the Supervisory

Board collectively are considered diverse and

balanced from an educational background

and work experience. The Management Board

and the Supervisory Board consist of people

with a good mix of sector knowledge, nancial

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 dierent backgrounds, cultures

and religions.

Dutch Corporate Governance

Code

The Dutch Corporate Governance Code, as

amended, entered into force on, and applies

to any nancial year starting on or after, 1

January 2017, and nds 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

following expiration of applicable lock-ups.

Takeover Directive (Article 10)

In the context of the EU Takeover Directive

(Article 10) Decree, the following notications

must be given insofar as they are not included

in this Annual Report.

Capital Structure

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, each with a nominal value of €0.01.

The dierence 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. In its IPO,

the Company issued 15,000,000 Ordinary

Shares, each with a nominal value of €0.01. As

of 15 June 2021 and at 31 December 2021, 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

As of 15 June 2021, there are 50,000,000

Ordinary Shares outstanding in the market.

Pursuant to the Dutch Financial Supervision Act

(Wet op het nancieel 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 2021, the following shareholders were

known to hold interests of at least 3% directly

in the Company (as per AFM disclosure on 31

December 2021):

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)

Teslin 2.932.954 5.87%

Participaties

Coöperatief U.A.

B.V. 2.725.000 5.45%

Beleggingsfonds

Hoogh Blarick

M&G Plc 2.473.317 4.95%

Notes:

(1)

Through Infestos Holding E B.V. and Stichting

Administratiekantoor NX Filtration Holding.

Infestos Holding E B.V. is ultimately controlled by

Mr B.H.F. ten Doeschot.

Material Subsidiaries

NX Filtration B.V., incorporated in the

Netherlands, is the only (material) subsidiary of

the Company. The Company holds 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

83NX Filtration - Annual Report82 Corporate Governance

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. These DRs will

be subject to lock-up restrictions. The DRs

will be released from the lock-up restrictions

as follows: one-third of the DRs held by such

member at that time (the Shareholding

Reference Date) will be unconditionally released

from the lock-up restrictions on 11 June 2022,

one-third of the DRs held by such 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 such member

on the Shareholding Reference Date will be

unconditionally released from the lock-up

restrictions on 11 June 2024, in each case on

the condition that the relevant member of the

Senior Management or relevant key manager of

the Company continues to be employed by the

Company on these dates.

Appointment and dismissal of

Management Board members and

Supervisory Directors and amendment of

the Articles of Association

The General Meeting appoints the Managing

Directors. The Supervisory Board will nominate

one or more candidates for each vacant seat.

A resolution of the General Meeting to appoint

a Managing Director other than in accordance

with a nomination by the Supervisory Board

can be adopted by a majority of the votes

cast representing at least one third of the

Company’s issued capital. If such quorum is

not met, the Company is entitled to convene a

second meeting where no quorum shall apply.

The Articles of Association provide that a

Managing Director may be suspended or

dismissed by the General Meeting at any time.

A resolution of the General Meeting to suspend

or dismiss a Managing Director other than

pursuant to a proposal by the Supervisory

Board can be adopted by a majority of the

votes cast, representing at least one third of

the Company’s issued capital. If such quorum is

not met, the Company is entitled to convene a

second meeting where no quorum shall apply.

The Articles of Association provide that the

number of Managing Directors is determined by

the Supervisory Board after consultation with

the Management Board, but there will be at

least two Managing Directors. The Supervisory

Board appoints one of the Managing Directors

as CEO. In addition, the Supervisory Board may

appoint one of the Managing Directors as CFO

(chief nancial ocer) to specically oversee

the Company’s nancial aairs.

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

consists of three members today. Only natural

persons may be appointed as Supervisory

Directors.

In accordance with the Articles of Association,

the Supervisory Board has prepared a prole

(proelschets) 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 oce,

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 eect of reducing the rights attributable to

holders of shares 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 15 June 2021, 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 15 June 2021, and to

exclude pre-emptive rights in relation thereto.

Signicant 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 prots (if

85NX Filtration - Annual Report84 Corporate Governance

any) until the policy is revised. NX Filtration

does not pay dividends to its shareholders at

this moment in time.

Financial calendar

Date Event

11 February 2022 Publication full year results 2021

5 April 2022 Annual General Meeting

30 August 2022 Publication half-year results 2022

NX Filtration applied the following closed

periods for transactions directly or indirectly,

relating, to shares and other nancial

instruments in NX Filtration:

• 1 July 2021 until 31 August 2021

• 1 November 2021 until 11 February 2022

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 sucient insight into any

shortcomings in the eectiveness of the

internal risk management and control

systems;

• those systems provide reasonable

assurance that the nancial report does

not contain any material misstatements;

• in the current situation, it is appropriate

for the nancial report to be prepared on a

going concern basis; and

• the report states those material risks

and uncertainties that are relevant to the

expectation of the Company’s continuity

for the period of twelve months after the

preparation of the report.

As required by the relevant statutory provisions,

the Management Board hereby declares that to

the best of its knowledge:

• the report of the Management Board

provides a true and fair view of the position

of NX Filtration and its subsidiaries

included in the consolidation on the

reporting date and of the course of their

aairs during the nancial 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

2021, give a true and fair view of the

assets, liabilities, nancial position and

result of the nancial year of NX Filtration

and its subsidiaries included in the

consolidation as a whole.

Enschede, 10 February 2022

Management Board

Michiel Staatsen Erik Roesink

CEO and COO CTO

87NX Filtration - Annual Report86 Corporate Governance

Report of the

Supervisory

Board

89NX Filtration - Annual Report88 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

eectiveness of the Company’s internal risk

management and control systems and the

integrity and quality of the nancial reporting.

For NX Filtration, 2021 was a very exciting year

with a number of special events. Particularly

the IPO in June 2021 and the consequential

change from a privately owned to a publicly

traded company required signicant

attention from the Management Board

as well as the Supervisory Board. Overall

NX Filtration made signicant steps in line

with its strategy, amongst which further

broadening its international customer base,

the further roll-out of its pilot program,

growing and strengthening its organization,

making signicant steps in the ramp-up of its

production capacity and progressing on various

innovations. With its IPO, NX Filtration also

further diversied its shareholder base.

Activities and priorities 2021

The Supervisory Board was installed on 11

June 2021 concurrently with the listing of NX

Filtration on Euronext Amsterdam. One of the

most important roles was to guide NX Filtration

and its management through the corporate

governance requirements of a publicly listed

company. A top priority was the monitoring of

the strong growth plan both commercially and

operationally. Key attention points were the

recruitment of personnel and strengthening

the organisation in skills and management

to facilitate the growth. The Supervisory

Board closely advised the Management Board

in hiring a CFO. Part of the monitoring and

sounding board role was the dialogue with key

management in various Supervisory Board

meetings.

91NX Filtration - Annual Report90 Report of the Supervisory Board

Composition and diversity

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

is the chief nancial ocer 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 nance 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 nancial restructuring

and recovery at Rabobank Group (2016-2018),

chief nancial risk ocer/chief operating

ocer at FGH Bank (2015-2016) and chief

nancial risk ocer at Rabo Real Estate

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

she was senior director nance 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 oce

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 manager.

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 ocer 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.

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 fullled.

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.

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, nancial

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.

Where searches for appointment to any of

the Boards or to senior management are

conducted by NX Filtration or by search rms,

they will identify and present a long list of

candidates who are considered to meet the

essential criteria for the relevant vacancy,

including qualied females and people of colour.

The Boards will consider suitably qualied

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 ve meetings

in 2021, which were all regular scheduled

meetings, except for the meeting specically

held to discuss the potential appointment of

a CFO. Four of such meetings were attended

by the members of the Management Board.

The meeting where the Supervisory Board

discussed its own functioning was held without

the members of the Management Board. All

members of the Supervisory Board attended all

the meetings, as such the absenteeism rate is

zero.

The Supervisory Board consists of the following

three members:

Name Age Position Initial appointment End of current term

Ms C. (Carolina) Wielinga 51 Member and Chair 11 June 2021 AGM 2025

Mr B.A.M. (Benno) van Dongen 57 Member 11 June 2021 AGM 2025

Mr J.T.P. (John) Glorie 48 Member 11 June 2021 AGM 2025

NX Filtration - Annual Report92 Report of the Supervisory Board

Other than the Audit 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 nancials, risk management, audit plan

of the external auditor, nancing structure,

Long Term Incentive Plan for key management,

HR overviews, development and diversity, and

budget 2022.

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 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 nancial

reporting and how the Audit Committee

has fullled this process;

• monitoring the nancial reporting process

and making proposals to safeguard the

integrity of the process;

• monitoring the eectiveness of the internal

control systems, the internal audit system

and the risk management system with

respect to nancial reporting;

• monitoring the statutory audit of the

annual accounts, and in particular the

process of such audit

• monitoring the independence of the

external auditor; and

• adopting procedures with respect to the

selection of the external auditor.

Remuneration report

The remuneration policy of NX Filtration

(the Remuneration Policy) applicable to the

Management Board was determined by the

General Meeting in June 2021 at the time of

the IPO and has been taking into account when

the members of the Management Board signed

a new service agreement prior to the IPO. Any

subsequent amendments to the Remuneration

Policy are subject to adoption by the General

Meeting. 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.

The Remuneration Policy is designed taking

into account the Company’s vision (“pure

and aordable water across the globe’’),

mission (“to be a leading global provider of

breakthrough nano-ltration technology

that enables customers to, amongst others,

produce pure and aordable water, treat

wastewater and reduce their water footprint,

and achieve strong sustainability benets’’)

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 (for future members of

the Management Board) 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 new

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 qualied individuals

and reward them with a market competitive

remuneration package that focuses on

achieving sustainable nancial 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 of the following

components: annual base pay and pension and

other benets.

Annual base pay

This represents a xed 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 benets

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 the current

Managing Directors), an expense allowance

reective of the position of the Managing

Director and a collective health insurance. NX

Filtration has arranged and paid for a directors

and ocers liability insurance for the members

of the Management Board.

Notice period

The management agreements for the

Managing Directors are entered into for an

indenite term. The notice period for the

Managing Directors is three months and for NX

Filtration six months.

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 Erik Roesink does not

contain any provisions providing for benets

upon termination of employment.

None of the Supervisory Directors does enjoy

contractual severance provisions.

Variable remuneration

None of the Managing Directors was entitled to

variable remuneration in 2021.

Management Board remuneration over

2020

The total amount of remuneration of the

Managing Directors for the nancial year

2020 comprised €215,397. For the nancial

year 2020, the gross annual base salary of

Mr Michiel Staatsen comprised €116,562

(including holiday allowance and social charges)

and the total gross annual base salary of Mr

Erik Roesink comprised €98,835 (including

holiday allowance and social charges). NX

Filtration paid €5,000 as pension contribution

for Mr Michiel Staatsen. In addition, Infestos

Nederland (which is an aliate of Infestos)

paid a bonus of €60,000 (gross) to Mr Michiel

Staatsen in the nancial year 2020.

95NX Filtration - Annual Report94 Report of the Supervisory Board

Management Board remuneration over

2021

The total amount of remuneration of the

Managing Directors for the nancial year

2021 comprised €302,971. For the nancial

year 2021, the gross annual base salary of Mr

Michiel Staatsen comprised €153,023 (including

holiday allowance and social charges) and

the total gross annual base salary of Mr Erik

Roesink comprised €143,253 (including holiday

allowance and social charges). In the nancial

year 2021, the Company paid €6,695 as pension

contribution for Mr Michiel Staatsen.

Shareholdings of the Managing Directors

The Managing Directors indirectly participate

in the share capital of the Company. These

indirect investments are held through the STAK,

which has issued depositary receipts of shares

(certicaten van aandelen) in the capital of

the Company for Ordinary Shares (the DRs) to

the Managing Directors. In this manner, 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 DRs are subject to

lock-up restrictions. The DRs will be released

from the lock-up restrictions as follows: one-

third of the DRs held by such member at that

time (the Shareholding Reference Date) will

be unconditionally released from the lock-

up restrictions on the day that is one year

after 11 June 2021 (the First Trading Date),

one-third of the DRs held by such member

on the Shareholding Reference Date will be

unconditionally released from the lock-up

restrictions on the day that is two years after

the First Trading Date, and the remaining

one-third of the DRs held by such member

on the Shareholding Reference Date will be

unconditionally released from the lock-up

restrictions on the day that is three years after

the First Trading Date, in each case on the

condition that the Managing Director continues

to be employed by the Company on these

dates.

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. NX

Filtration has arranged and paid for a directors

and ocers 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 nancial year 2022, 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 2021

Management Board compensation

Salaries and wages 282,342

Short-term incentive plan -

Social security distributions 13,933

Pension contributions (DC) 6,695

Share-based payments -

Total 302,971

Average number of FTEs 2

Average compensation 151,485

Employee compensation

Salaries and wages 2,235,729

Short-term incentive plan 168,410

Social security distributions 341,650

Pension contributions (DC) 97,100

Share-based payments -

Total 2,842,890

Average number of FTEs 47

Average compensation 60,487

Internal Pay Ratio 2.50

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 (dened 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 Note 9, Note

12 and Note 16 of the Consolidated Financial

Statements). This is the rst time NX Filtration

reports on the internal pay ratio.

5-year comparison

As NX Filtration was listed on Euronext

Amsterdam on 11 June 2021 the 5-year

comparison of average compensation and

business performance starts as of 2021.

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 nance and control department with

accounting and audit knowledge, are presently

covering the requirements suciently.

External 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 eectiveness and eciency 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 lled in a questionnaire and

addressed items such as: team eectiveness,

interaction, transparency, composition and

prole, competences, eectiveness 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

97NX Filtration - Annual Report96 Report of the Supervisory Board

of the evaluation is positive. Despite its

relatively new composition, it was found that

the Supervisory Board has rapidly organized

itself in an eective and ecient 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 Supervisory Board evaluation

delivered areas for improvement and key topics

for 2022: (i) the Supervisory Board intends to

spend more time on discussing the longer term

strategy of the Company, (ii) the Supervisory

Board intends to hold challenge sessions

with the Management Board on commercial

tactics and, if possible, visit customers in

various regions, (iii) the Supervisory Board

intends to seek some possibilities to 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 oce. For all members

in the Supervisory Board this centers around

business dynamics, competitive arena, and

innovations in the water ltration industry.

We shared our reections 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 2022.

Financial statements and

auditor’s opinion

The nancial statements 2021 included in this

Annual Report have been audited and PWC

has issued an unqualied opinion on them. The

nancial statements were extensively discussed

with the Supervisory Board, in the presence

of the external auditor, and the Management

Board. The Supervisory Board is of the

opinion that the nancial statements meet all

requirements for transparency and correctness.

Therefore, the Supervisory Board recommends

that the General Meeting of Shareholders to

be held on 5 April 2022 adopts the nancial

statements and the appropriation of the result.

Result appropriation

NX Filtration realised a loss

of €11.4 million.

The proposal to the General Meeting is to

recognise this loss in retained earnings. The

members of the Supervisory Board have signed

the nancial statements to comply with their

statutory obligation pursuant to article 2:101,

paragraph 2, of the Dutch Civil Code.

In summary & looking ahead

First and foremost, we want to thank NX

Filtration’s partners and customers for

their condence and loyalty, NX Filtration’s

shareholders for their trust and our employees

for their involvement and dedication in this

stage of rapid growth. 2021 was a very exciting

year for NX Filtration, especially because it

listed on Euronext Amsterdam by means of

its IPO and experienced a growth of 281% in

gross income. Amongst the many important

hires during 2021, key milestones included the

appointment of Alejandro Roman Fernandez

as CCO, who joined NX Filtration in September

2021, and the appointment of Marc Luttikhuis

as CFO, who joined NX Filtration in January

2022. We are convinced that each of them

will be of valuable contribution to the future

success of NX Filtration. The proceeds that

were raised in the IPO will be used to advance

the Company’s commercial roll-out, capacity

expansion, fast-track innovation and M&A in

the next years.

Enschede, 10 February 2022

The Supervisory Board

Carolina Wielinga (Chair),

Benno van Dongen

John Glorie

99NX Filtration - Annual Report98 Report of the Supervisory Board

Financial

statements

101NX Filtration - Annual Report100 Financial statements

Consolidated

nancial statements

for the year ended

31 December 2021

Consolidated statement of comprehensive income

In EUR ‘000 Notes 31 December 2021 31 December 2020

Revenue from sale of goods 7 3,173 671

Other income 8 896 398

Gross income 4,069 1,069

Operating expenses

Costs of raw materials and consumables (1,428) (289)

Changes in inventories of nished goods

and work in progress 218 357

Personnel expenses 9 (3,833) (1,781)

Amortization on intangible assets 17 (315) (211)

Depreciation on property, plant and equipment 18,19 (1,076) (592)

Operating costs 10 (12,102) (967)

External research & development costs 11 (247) (361)

Operating expenses (18,783) (3,844)

Operating loss (14,714) (2,775)

Finance expenses 13 (427) (208)

Loss before income tax (15,141) (2,983)

Income tax benet 14 3,787 891

Net loss for the period (11,354) (2,092)

Other comprehensive result for the period - -

Total comprehensive loss for the period (11,354) (2,092)

Total comprehensive loss for the period

(attributable to the owners of the Company) (11,354) (2,092)

Earnings per share

Basic earnings per share (EUR) 15 (0,26) (0,26)

Diluted earnings per share (EUR) 15 (0,26) (0,26)

103NX Filtration - Annual Report102 Consolidated nancial statements

Consolidated statement of nancial position Consolidated statements of changes in equity

In EUR ‘000 Notes 31 December 2021 31 December 2020

Assets

Non-current assets

Intangible assets 17 1,829 1,300

Property, plant and equipment 18 9,150 2,246

Right-of-use assets 19 1,356 1,164

Deferred tax assets 20 5,708 1,921

Total non-current assets 18,043 6,631

Current assets

Inventories 21 3,212 2,077

Trade and other receivables 22 2,804 626

Cash and cash equivalents 23 133,433 6,599

Total current assets 139,449 9,302

Total assets 157,492 15,933

Group equity

Share capital 24 500 5,997

Share premium 24 170,450 13,378

Retained earnings 24 (19,806) (6,031)

Total equity 151,144 13,344

Liabilities

Non-current liabilities

Lease liabilities 25 1,076 979

Total non-current liabilities 1,076 979

Current liabilities

Trade and other payables 26 4,954 1,403

Lease liabilities 25 318 207

Current tax payables - -

Total current liabilities 5,272 1,610

Total liabilities 6,348 2,589

Total equity and liabilities 157,492 15,933

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

Share Share Retained Total

capital premium earnings equity

Balance - 1 January 2020 997 7,478 (3,939) 4,536

Loss for the period - - (2,092) (2,092)

Other comprehensive result - - - -

Total comprehensive loss for the period - - (2,092) (2,092)

Transactions with owners in their capacity as owners

Issuance of ordinary shares 24 5,000 - - 5,000

Share premium contribution on preference shares 24 - 6,000 - 6,000

Share premium repayment 24 - (100) - (100)

Share-based payment transactions - - - -

Dividend - - - -

Balance - 31 December 2020 5,997 13,378 (6,031) 13,344

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

Other comprehensive income (loss) - - - -

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

105

NX Filtration - Annual Report104 Consolidated nancial statements

Consolidated statement of cash ows

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 nanoltration membrane technology for

producing pure and aordable 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. At the date of the IPO the Company’s

name was changed from NX Filtration Holding

B.V. to NX Filtration N.V. NX Filtration is

the holding company of the Group, which

consists of NX Filtration and one wholly owned

subsidiary, NX Filtration B.V., with its registered

oce in Enschede, the Netherlands, which has

been fully consolidated for purposes of these

consolidated nancial statements.

NX Filtration is registered with the Chamber of

Commerce under number 64951030 and has its

registered oce at Josink Esweg 44, 7545 PN,

Enschede, the Netherlands.

The Company’s nancial year covers the rst

day of January and ends on the last day of

December of each year.

On 10 February 2022, the management board

authorized the nancial statements for issue.

The nancial statements as presented in this

report are subject to adoption by the Annual

General Meeting of shareholders on 5 April

2022.

Summary of signicant

accounting policies

The principal accounting policies applied in the

preparation of these consolidated nancial

statements are set out below. These policies

have been consistently applied to all the years

presented, unless otherwise stated.

Basis of preparation

These consolidated nancial statements

have been prepared in accordance, and

comply with International Financial Reporting

Standards (IFRS) and interpretations adopted

by the European Union, where eective, for

nancial years beginning 1 January 2021

and also comply with the nancial reporting

requirements included in Part 9 of Book 2 of the

Dutch Civil Code.

The preparation of these consolidated nancial

statements in conformity with IFRS requires

the use of certain critical accounting estimates.

It also requires management to exercise its

judgement in the process of applying the

Company’s accounting policies. The areas

involving a higher degree of judgement or

complexity, or areas where assumptions and

estimates are signicant to the nancial

statements are disclosed in note 6 ‘Critical

accounting estimates and judgements’.

These consolidated nancial statements have

been prepared on a going concern basis.

Basis of measurement

These consolidated nancial statements have

been prepared on a historical cost convention,

In EUR ‘000 Notes 2021 2020

Cash ows from operating activities

Operating loss (14,714) (2,775)

Adjustments to reconcile prot before taxation to net cash ows:

Depreciation, amortisation and impairment expenses 17,18,19 1,391 803

Non cash items in operating loss 30 -

Increase/(decrease) provisions - -

Income taxes (paid)/received - -

Share-based payment expenses - -

Increase in working capital:

- Increase inventories (1,135) (1,019)

- Increase trade and other receivables (2,178) (279)

- Increase trade and other payables 3,391 650

Net cash outow from operating activities (13,215) (2,620)

Cash ows from investing activities

Payment for property, plant and equipment 18 (7,772) (930)

Payment for intangible assets 17 (844) (524)

Net cash outow from investing activities (8,616) (1,454)

Cash ows from nancing activities

Proceeds from share premium contribution and issuance of shares 24 165,000 11,000

Repayment and cancellation of preference shares 24 (15,846) (100)

Principal elements of lease payments (268) (123)

Interest paid (221) (181)

Net cash inow from nancing activities 148,665 10,595

Net increase in cash and cash equivalents 126,834 6,521

Cash and cash equivalents at the beginning of the nancial year 6,599 78

Eects of exchange rate changes on cash and cash equivalents - -

Cash and cash equivalents at the end of the nancial year 133,433 6,599

Notes

107NX Filtration - Annual Report106 Consolidated nancial statements

unless stated otherwise. These consolidated

nancial 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 2021 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:

• Onerous contracts – Cost of Fullling a

Contract (Amendments to IAS 37)

• Deferred Tax related to Assets and

Liabilities arising from a Single Transaction

(Amendments to IAS 12)

• COVID-19-Related Rent Concessions

beyond 30 June 2021 (Amendment to IFRS

16)

• Annual Improvements to IFRS Standards

2018–2020

• Property, Plant and Equipment: Proceeds

before Intended Use (Amendments to IAS

16)

• Reference to Conceptual Framework

(Amendments to IFRS 3)

• Classication of Liabilities as Current or

Non-current (Amendments to IAS 1)

• IFRS 17 Insurance Contracts and

amendments to IFRS 17 Insurance

Contracts

• Disclosure of Accounting Policies

(Amendments to IAS 1 and IFRS Practice

Statement 2)

• Denition of Accounting Estimates

(Amendments to IAS 8)

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 aect

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

prot or loss.

Revenue

The Company manufactures and sells a range

of water ltration 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 unfullled obligation that could

aect the customer’s acceptance of the

products. Delivery occurs when the products

have been shipped to the specic 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 satised.

Revenue is measured based on the consideration

specied in a contract with a customer. The

Company has no specic obligations for returns,

refund clauses nor any other similar obligations

specied 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 benets

Short-term obligations

Liabilities for wages and salaries, including

non-monetary benets, 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 benet

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 dened 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

benet 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 benets are expensed at the earlier

of when the Company can no longer withdraw

the oer of those benets and when the

Company recognizes costs for a restructuring.

Shared-based payments

Eligible and selected employees and directors

have been invited to invest indirectly in

the share capital of the Company. These

investments are accounted for as equity-

settled share-based payment transactions

since the Company has no obligation to

repurchase the equity instruments or to make

any cash payments to the participants.

For accounting purposes, the fair value of

an award is equal to the fair value of the

underlying ordinary shares less the acquisition

price paid by a participant. The impact of any

market conditions or non-vesting conditions

are incorporated in the fair value of the share-

based payment awards. The grant date fair

value, if any, is recognized as an expense over

the 6 year vesting period with a corresponding

increase of equity. The amount recognized as an

expense during the vesting period reects the

number of awards for which the related service

conditions are expected to be met.

109NX Filtration - Annual Report108 Consolidated nancial statements

Expenses

Expenses arising from the Company’s business

operations are accounted for in the year

incurred.

Finance expenses

Finance expenses include interest incurred on

nancial instruments measured at amortized

cost using the eective 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 dierences 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 dierences

arising between the tax bases of assets and

liabilities and their carrying amounts in the

consolidated nancial 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 dierences and losses.

Current and deferred tax is recognized in prot

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

identiable 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 benets;

• adequate technical, nancial 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 shown at historical cost. They

have a nite useful life and are subsequently

carried at cost less accumulated amortization

and impairment losses. These assets are

amortized over a period of 10 years.

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 benets associated with

the item will ow 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 prot or loss during the reporting

period in which they are incurred.

Depreciation on assets is calculated by

recognizing the dierence between historical

cost and the estimated residual values using

the straight-line method over their estimated

useful life in prot 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 identied asset for a period of time in

exchange for consideration. To assess whether

a contract conveys the right to control the use

of an identied asset, the Company uses the

denition 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.

111NX Filtration - Annual Report110 Consolidated nancial statements

The Company elected to apply the recognition

exemption for both short-term and low

value leases – e.g. oce 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 reects 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:

• xed payments, including in-substance

xed 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 eective 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 prot 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 classied 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-nancial assets

Non-nancial assets with a denite 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 identiable cash inows which

are largely independent of the cash inows

from other assets or groups of assets (cash-

generating units). Non-nancial assets that

suered 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 nished 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 xed

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 rst in rst 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 – Classication and

measurement

The Company classies its nancial assets in

the following measurement categories:

• those to be measured subsequently at fair

value (either through other comprehensive

income (OCI) or through prot or loss), and

• those to be measured at amortized cost.

The classication depends on the entity’s

business model for managing the nancial

assets and the contractual terms of the cash

ows.

Financial assets - Recognition and derecognition

Regular purchases and sales of nancial 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 ows from

the nancial 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 nancial asset at its fair value. Except

for cash and cash equivalents, the initial

measurement of a nancial asset is adjusted

for directly attributable transaction cost.

Transaction costs of nancial assets carried at

fair value through prot or loss (cash and cash

equivalents) are expensed in prot or loss.

Financial assets – Subsequent Measurements

Subsequent measurement depends on the

Company’s business model for managing

the asset and the cash ow characteristics

of the asset. There are three measurement

categories into which the Company classies its

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

value through prot or loss; and (iii) Fair value

through other comprehensive income.

113NX Filtration - Annual Report112 Consolidated nancial statements

The Company makes no use of derivative

nancial instruments. Besides cash and

cash equivalents that are measured at fair

value through prot and loss, the Company’s

receivables are measured at amortized costs.

Interest income (if any) from these nancial

assets is included in nance income using the

eective interest rate method. Any gain or loss

arising on derecognition is recognised directly in

prot or loss.

Financial assets – Impairment

The Company assesses on a forward-looking

basis the expected credit losses associated

with its nancial instruments carried at

amortized cost. The impairment methodology

applied depends on whether there has been a

signicant increase in credit risk. The Company

has no trade receivables nor amounts due

from customers for contract work including a

signicant nance component and is therefore

allowed to apply the simplied 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 nancial instrument. The

Company only has nancial liabilities at

amortized cost and makes no use of derivative

nancial 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 eective interest method. Trade

and other payables are classied 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 classied

as non-current liabilities.

Financial liabilities – Derecognition

The Company derecognizes a nancial liability

when its contractual obligations are discharged

or cancelled or expired. On derecognition of

a nancial liability, the dierence 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 nancial

liability when its terms are modied and

the cash ows of the modied liability are

substantially dierent, in which case a new

nancial liability based on the modied terms

is recognized at fair value. However, when

the cash ows of the modied liability are

not substantially dierent, the Company (i)

recalculates the amortized cost of the modied

nancial liability by discounting the modied

contractual cash ows using the original

eective interest rate and (ii) recognizes any

adjustment in the consolidated statement of

comprehensive income.

Osetting nancial instruments

Financial assets and liabilities are oset and

the net amount is reported in the balance sheet

when there is a legally enforceable right to

oset 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 oset 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 classied as current assets. If not,

they are presented as non-current assets. Trade

receivables are generally due for settlement

immediately and therefore all classied as

current assets.

Trade receivables are recognized initially

at their transaction price, the amount of

consideration that is unconditional, unless

they contain signicant nancing components

when they are recognized at fair value. They

are subsequently measured at amortized cost

using the eective interest method, less loss

allowance.

Cash and cash equivalents

For the purpose of presentation in the

statement of cash ows, cash and cash

equivalents includes cash on hand, deposits held

at call with nancial 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 insignicant 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 nancial

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

eective interest method.

Cash ow statement

The cash ow statement has been prepared

using the indirect method, whereby prot or

loss is adjusted for the eects 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 nancing cash ows.

Segment reporting

The Company is engaged in the business

of developing, producing and selling hollow

ber membrane modules. There is a strong

interrelationship between the Company’s

dierent activities, hence Management reviews

the overall business based on the Group’s

protability.

Financial instruments and

risk management

Financial instrument classication

As result of regular business practices, the

Company holds positions in a variety of

nancial instruments. The nancial 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 nancial derivatives.

On each balance date, nancial instruments

are reviewed to see whether or not an objective

indication exists for the impairment of a

nancial asset or a group of nancial assets.

If an objective indication for impairment

exists, the Company determines the amount of

impairment losses and charges this amount to

the consolidated statement of comprehensive

income. As a result of the use of nancial

instruments, the Company incurs credit risks,

liquidity risks and market risks.

115NX Filtration - Annual Report114 Consolidated nancial statements

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 reect

changes in market conditions.

Credit risk

Credit risk is the risk of a nancial 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 nancial year 2021, one customer

accounted for approximately 19% (2020: 29%)

of the revenue of the sale of goods.

Expected credit losses

The Company has the following types of

nancial assets that are subject to the

expected credit loss model:

• Trade and other receivables

The Company applies the IFRS 9 simplied

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

2021 and 31 December 2020 are based on

the payment proles of sales over a period

of 12 months of the preceding nancial

year and the corresponding historical credit

losses experienced related to these sales. The

historical loss rates are adjusted to reect

current and forward-looking information based

on macro-economic factors aecting 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 2021 and 31 December 2020 was

determined as follows for both trade and other

receivables:

Trade and other receivables are written o

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 o are credited

against the same line item.

Liquidity risk

Liquidity risk is the risk that the Company will

not be able to meet its nancial obligations.

The Company’s approach to managing liquidity

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

always have sucient 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 2021, the Company has €133.4

million cash available.

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 - - - - -

31 December 2020

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 618 7 1

Loss allowance - - - - -

117

NX Filtration - Annual Report116 Consolidated nancial statements

The tables below analyses the Company’s

nancial liabilities on their contractual

maturities for all non-derivative nancial

liabilities for which the contractual maturities

are essential for an understanding of the

timing of the cash ows. Note that the interest

component of the lease liabilities in the table

below reects 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 signicant 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 dierence 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

prot before tax is €29 thousand.

Interest risk

The Company is exposed to interest rate risk

and cash ow risk on its current accounts. If

negative interest rates on its cash and cash

equivalent balances would increase by 0.5%, the

impact on prot before tax is €667 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 eective interest Accretion on

lease liabilities.

Fair value estimation

At 31 December 2021 and 31 December 2020,

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 dened 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 nancial statements

requires management to make judgements,

estimates and assumptions that aect 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

dier from these estimates.

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 31 December 2020

Less than 3 months Between 1 Over

3 months to 1 year and 5 years 5 years Total

Trade and other payables 1,369 34 - - 1,403

Lease liabilities 50 157 818 161 1,186

Lease liabilities - Interest component 12 33 97 7 149

Total non-derivatives 1,431 224 915 168 2,738

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

At 1 January 2020: 78 (588) (510)

Cash ows 6,521 - 6,521

New leases - (680) (680)

Other changes - 82 82

Net debt - 31 December 2020 6,599 (1,186) 5,413

Cash ows 126,834 - 126,834

New leases - (430) (430)

Other changes - 222 222

Net debt - 31 December 2021 133,433 (1,394) 132,039

5 6

119NX Filtration - Annual Report118 Consolidated nancial 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,

nancial and other resources to complete

the development.

In determining the development costs to

be capitalized, the Company estimates the

expected future economic benets 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 dierences between the nancial

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 sucient

taxable prot will be available against which

those unused tax losses, unused tax credits

or deductible temporary dierences can be

utilised. This assessment requires signicant

management judgements and assumptions

and are inherently uncertain. The Management

Board considered both negative and positive

evidence in its evaluation of the probability that

sucient taxable prots will be available in the

medium-term. Under IAS 12 – Income taxes,

the existence of unused tax losses is strong

evidence that future taxable prot may not be

available. In addition to that the Management

Board also considered the fact that the Group

does not expect to be protable 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 2021 2020

Type of markets

Sustainable Industrial Water 2,072 365

Clean Municipal Water 1,101 306

Total revenues from sale of goods 3,173 671

Revenue from sale of goods by region based

on the destination of products and location of

projects:

In EUR ‘000 2021 2020

Geographical split

Netherlands 189 118

Europe (excluding Netherlands) 893 393

North America 575 89

Asia 1,325 52

Rest of World 191 19

Total revenues from sale of goods 3,173 671

Other income

Set out below is the disaggregation of the

Company’s other income:

In EUR ‘000 2021 2020

Government grants 616 332

Pilot income 192 66

Other 88 -

Total other income 896 398

Government grants comprises of the several

government grants received for the Company’s

research & development activities in the eld

of water ltration. NX Filtration has fullled

all conditions relating to government grants at

time of recognition.

Pilot income relates to rental income from pilot

equipment.

Personnel expenses

In EUR ‘000 2021 2020

Salaries and wages 3,023 1,874

Social security contributions 116 58

Pension contributions 104 51

External personnel cost 821 188

Capitalised personnel expenses (231) (390)

Total personnel expenses 3,833 1,781

The number of FTEs per year-end are:

2021 2020

Direct employees 31 15

Indirect employees 38 19

Total FTE 69 34

Pensions

The Company has a dened 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 dened 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 2021 is 4.3% (2020: 10.2%). The pension

contributions are paid on a monthly basis to

the pension fund. The net contribution for

2021 amounts to €97 thousand (€61 thousand

in 2020). The premium payable during the

nancial year is charged to the consolidated

statement of comprehensive income and is

classied 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 2021 2020

Housing expenses 500 313

Other personnel expenses 347 59

Administrative expenses 10,177 291

Selling expenses 747 130

Operating expenses 331 174

Total operating costs 12,102 967

Administrative expenses include €9,558

thousand IPO related transaction costs.

121NX Filtration - Annual Report120 Consolidated nancial statements

External research &

development costs

In EUR ‘000 2021 2020

Gross external R&D costs 740 443

Capitalized external R&D costs (493) (82)

Total external research & development

costs (net) 247 361

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 2021 amounted to €1.7 million (2020: €1.3

million). Development costs that are directly

attributable to the design and testing of

identiable 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

dierent applications and markets, which may

require additional product development costs in

future periods.

Share based payments

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:

2021 2020

Outstanding at 1 January 644,656 272,155

Granted (purchased) during

the year - 382,001

Ordinary share split per

26 May 2021 3,147,438 -

Forfeited (repurchased)

during the year - (9,500)

Outstanding shares at

31 December 3,792,094 644,656

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.

For participants being classied as key

management personnel based on the denition

in IAS 24, Related-party transactions, any

expense recognized related to the share

investments will have to be disclosed as “share-

based payment expense” in the disclosure of

key management personnel compensation.

Finance expenses

In EUR ‘000 2021 2020

Interest expenses related to

lease liabilities 46 26

Other interest expenses 381 182

Finance expenses 427 208

Interest expense related to lease liabilities is the

result of application of IFRS 16.

Income tax benet

This note provides an analysis of the Company’s

income tax expense, showing how the tax

expense is aected by non-deductible items.

In EUR ‘000 2021 2020

Current tax

Current tax on prots for the year - -

Adjustments for previous years - -

Total current tax (expense) benet - -

Deferred income tax

Income tax on operations 3,708 891

Change in tax rates 79 -

Total deferred tax (expense) benet 3,787 891

Total income tax (expense) benet 3,787 891

The tax on the Company’s loss before tax

diers from the statutory amount that would

arise using the tax rate applicable to losses of

the entity. The reconciliation of the eective

tax rate is as follows:

In EUR ‘000 2021 2020

Result from operations (11,354) (2,092)

Total income tax 3,787 891

Loss before income tax (15,141) (2,983)

Tax calculated based on

Dutch tax rate 25.0% 25.0%

Tax eect of:

Adjustments for previous years -0.1% 0.0%

Eect of tax rates in other countries 0.0% 0.0%

Non-taxable expenses -0.4% 0.0%

Change in tax rates 0.5% 4.9%

Other dierences 0.0% 0.0%

Eective tax rate 25.0% 29.9%

The change in tax rates is driven by change in

the enacted Dutch tax rates for the scal years

2022 and further.

123NX Filtration - Annual Report122 Consolidated nancial statements

Earnings per share

Note that the 2021 opening balance and prior

year number of outstanding shares have been

adjusted to reect 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 nancial year

2021 comprised €302,971 (2020: €215,397).

For the nancial year 2021, the gross annual

base salary of Mr Michiel Staatsen comprised

€153,023 (2020: €116,562) including holiday

allowance and social charges. For the nancial

year 2021, the total gross annual base salary

of Mr Erik Roesink comprised €143,253 (2020:

€98,835) including holiday allowance and

social charges. In 2021, the Company paid

€6,695 (2020: €5,000) as pension contribution

for Mr Michiel Staatsen. In addition, Infestos

Nederland (which is an aliate of Infestos)

paid a bonus of €60,000 (gross) to Mr Michiel

Staatsen in the nancial year 2020.

The Management Board collectively hold

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, 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.

Intangible assets

The movement in intangible assets during the

years was as follows:

Development costs

Additions to intangible xed 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 oce for the ling process of the

Company’s patents and intellectual property

rights.

2021 2020

Net loss attributable to equity holders (in EUR ‘000) (11,354) (2,092)

Outstanding number of shares for the basic earnings per share as at 1 January 35,000,000 5,588,235

Eect of issued ordineray shares in 2021 8,095,890 2,450,980

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

per share 43,095,890 8,039,216

Incremental shares for assumed conversion - -

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

per share 43,095,890 8,039,216

Concessions and rights

In EUR ‘000 Development costs of intellectual property Software Total

At 1 January 2020

Cost 926 209 - 1,135

Accumulated impairments

and amortisation (106) (42) - (148)

Net book value 820 167 - 987

Year ended 31 December 2020

Opening net book value 820 167 - 987

Additions 500 24 - 524

Amortisation for the year (189) (22) - (211)

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

At 1 January 2021

Cost 1,426 233 - 1,659

Accumulated impairments

and depreciation (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

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

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

At 31 December 2021

Cost 2,167 264 72 2,503

Accumulated impairments and depreciation (585) (89) - (674)

Net book value 1,582 175 72 1,829

15 17

125NX Filtration - Annual Report124 Consolidated nancial statements

Property, plant and

equipment

The movement in property, plant and

equipment during the years was as follows:

The Company’s additions to machinery and

equipment mainly relate to expansion of

the Company’s production capacity. The

depreciation accounting policies for property,

plant and equipment are included in the section

accounting policies of the Company.

Right-of-use assets

The movement in the right-of-use assets during

the years was as follows:

In EUR ‘000 2021 2020

At 1 January

Cost 1,352 657

Accumulated depreciation (188) (81)

Net book value 1,164 576

Additions 430 695

Depreciation for the year (238) (107)

Net book value at 31 December 1,356 1,164

Total gross right-of-use assets:

31 December 31 December

In EUR ‘000 2021 2020

Buildings 1,320 1,161

Vehicles 448 179

Fork-lift truck 14 13

Total gross right-of-use assets 1,782 1,353

Total depreciation charge right-of-use-assets:

31 December 31 December

In EUR ‘000 2021 2020

Buildings 176 69

Vehicles 57 33

Fork-lift truck 4 5

Total depreciation charge 238 107

Interest expense

(included in nance cost) 46 26

The total cash outow for leases in 2021 was

€268 thousand (2020: €123 thousand).

Deferred tax assets

31 December 31 December

In EUR ‘000 2021 2020

Deferred tax assets

Timing dierences 9 18

Carry forward losses 5,699 1,903

Total 5,708 1,921

Of which:

Current (<1 year) - 18

Non-current (>1 year) 5,708 1,903

As of December 31, 2021, the amount of

tax losses that can be oset in the future

amounts to €22.8 million. 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% (being the estimated

blended rate as from 2022).

Inventories

31 December 31 December

In EUR ‘000 2021 2020

Raw materials 1,503 857

Semi nished goods 738 538

Finished goods 898 623

Work in progress 73 59

Total 3,212 2,077

During 2021 no inventories were written down

to net realizable value (31 December 2020: €

nil).

Machinery and Pilot Assets under

In EUR ‘000 Land & buildings equipment equipment construction Total

At 1 January 2020

Cost - 2,624 - - 2,624

Accumulated impairments and

depreciation - (823) - - (823)

Net book value - 1,801 - - 1,801

Year ended 31 December 2020

Opening net book value - 1,801 - - 1,801

Additions - 687 243 - 930

Disposal - (39) - - (39)

Depreciation for the year - (426) (43) - (469)

Depreciation of disposal - 22 - - 22

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

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

201918

127NX Filtration - Annual Report126 Consolidated nancial statements

Trade and other

receivables

31 December 31 December

In EUR ‘000 2021 2020

Trade receivables 833 63

Less: loss allowance - -

Trade receivables - net 833 63

Prepaid expenses 318 236

Other taxes 1,080 214

Other receivables 573 112

2,804 625

Less non-current portion - -

Current portion 2,804 625

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 dierences between

the carrying amounts and the fair values are

insignicant.

As at 31 December 2021 and 31 December

2020 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 2021 2020

Cash and cash equivalents 133,433 6,599

Total 133,433 6,599

The cash and cash equivalents are freely

disposable to the Company.

Equity

Ordinary shares

The movement of the ordinary shares in 2021

and 2020 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 dierence 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 2021

and 2020 is outlined in the tables below.

2322

Number of Par value Share premium Total

ordinary shares EUR ‘000 EUR ‘000 EUR ‘000

Opening balance 1 January 2020 950,000 950 - 950

Share issuance 5,000,000 5,000 - 5,000

Balance 31 December 2020 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

Number of Par value Share premium Total

preference shares EUR ‘000 EUR ‘000 EUR ‘000

Opening balance 1 January 2020 47,468 47 7,478 7,525

Share premium contribution - - 6,000 6,000

Shares buy back (566) - (100) (100)

Balance 31 December 2020 46,902 47 13,378 13,425

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

Balance 31 December 2021 - - - -

129NX Filtration - Annual Report128 Consolidated nancial statements

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 xed 7% dividend per annum for

Preference Shares A and a xed 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 rst 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 €1.6 million (31 December 2020: €1.1 million)

which is not available for distribution.

Loss for the period

The proposal to the General Meeting is that the

2021 loss for the period will be recognized in

retained earnings.

Lease liabilities

The Company leases several assets, which can

be combined into the asset classes: (i) Buildings

and (ii) 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 2021 2020

Buildings 1,042 1,043

Vehicles 352 143

Total 1,394 1,186

The maturity of the lease liabilities can be

specied as follows:

Right-of-use assets

Right-of-use assets related to leases that

do not meet the denition of investment

property are presented as property, plant and

equipment. The Company has no right-of-use

assets that meet the denition of investment

property.

Amounts recognized in the statement of

comprehensive income and cash ows

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 2021

within the statement of comprehensive income

€11 thousand (2020: €7 thousand) relating to

low value leases.

Extension and termination options

The Company has contracts within the

building asset class that include renewal

and termination options or a combination of

both. At 31 December 2021 and 31 December

2020 the renewal options are included in

the measurement of the lease liabilities, no

termination options are included.

Repayment Remaining term Remaining

obligation in >1 year term

In EUR ‘000 31 December 2021 2022 and <5 year >5 years

Buildings 1,042 219 740 83

Vehicles 352 98 254 -

Total 1,394 317 994 83

131NX Filtration - Annual Report130 Consolidated nancial statements

Trade and other payables

31 December 31 December

In EUR ‘000 2021 2020

Trade payables 3,677 603

Tax payables 125 63

Employee benets 203 150

Payments received in advance 162 425

Other liabilities 787 162

Total 4,954 1,403

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 2021 and 31 December 2020

all payables are denominated in euro currency.

Contingencies and

commitments

Option agreement to purchase a plot

of land for a new production and oce

facility

NX Filtration entered into an option agreement

to purchase a 24,000 square meters plot of

land at the High-Tech Systems Park in Hengelo,

the Netherlands, for the amount of €3.8 million

(excluding taxes).

Capital Expenditure Commitments

NX Filtration B.V. has signed a number of

purchase contracts related to machinery and

equipment capital expenditures, amounting to

€1.7 million (2020: €1 million).

Related party transactions

All legal entities that can be controlled, jointly

controlled or signicantly inuenced are

considered to be a related party. Also, entities

which can control, jointly control or signicantly

inuence 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 €84 thousand;

• Management fee to Infestos Management

B.V. in the period pre-IPO, in the amount of

€2 thousand;

• Repayment of preference shares held by

Infestos Holding E B.V., as further disclosed

in note 24 above.

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.

133NX Filtration - Annual Report132 Consolidated nancial statements

Company nancial

statements

Company balance sheet as at 31 December 2021

Before prot allocation

In EUR ‘000 Notes 31 December 2021 31 December 2020

Assets

Non-current assets

Intangible assets 3 1,757 1,300

Financial xed assets 4 516 3,956

Deferred tax assets 5 5,699 1,903

Total non-current assets 7,972 7,159

Current assets

Receivable from group companies 32,065 -

Receivables 35 7

Cash and Cash Equivalents 6 111,617 6,329

Total current assets 143,717 6,336

Total assets 151,689 13,495

Equity and liabilities

Shareholders’ equity

Issued share capital 500 5,997

Share premium 170,450 13,378

Legal and statutory reserves 7 1,582 1,132

Other reserves 7 (10,034) (1,132)

Result for the period (11,354) (6,031)

Total equity 151,144 13,344

Current liabilities

Trade and other payables 320 12

Debt to group companies - 101

Other payables 225 38

Total current liabilities 545 151

Total equity and liabilities 151,689 13,495

135NX Filtration - Annual Report134 Company nancial statements

Company income statement 2021

General information

The company nancial statements are part of

the consolidated nancial statements of NX

Filtration N.V. (the Company)

Basis of preparation

The Company nancial 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 nancial statements are prepared

based on the accounting principles of

recognition, measurement and determination

of prot, as applied in the consolidated

nancial statements. These principles also

include the classication and presentation of

nancial instruments, being equity instruments

or nancial liabilities.

In case no other policies are mentioned, refer

to the accounting policies as described in

the accounting policies in the consolidated

nancial statements of this Annual report.

For an appropriate interpretation, the

company nancial statements of NX Filtration

N.V. should be read in conjunction with the

consolidated nancial 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 nancial year covers the period

1 January 2021 until 31 December 2021. The

previous nancial year covers the period 1

January 2020 until 31 December 2020.

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 aect 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 prot based

on the principles applied in the consolidated

nancial 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 2021 2020

Revenue 8 53 33

Amortization of intangible assets 3 (315) (211)

Personnel expenses (236) -

General expenses 10 (9,841) (140)

Operating loss (10,339) (318)

Finance income 11 124 136

Finance expenses 12 (352) (181)

Finance expenses (net) (228) (45)

Loss before income tax (10,567) (363)

Income tax benet 5 2.653 263

Share of net loss of investments in subsidiaries 4 (3,440) (1,992)

Loss for the period after income tax (11,354) (2,092)

Notes

137NX Filtration - Annual Report136 Company nancial 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 xed assets

The movement in the nancial xed 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.

The loan receivable relates to a loan issued

to NX Filtration B.V. The loan is redeemable

per 31 December 2022. Earlier repayment is

allowed under the loan agreement. The loan

receivable accrues interest which is calculated

based the interest percentage payable on a

10 year maturity Dutch government bond plus

1.75%. The interest is payable at the end of

each year. The fair value of the loan receivable

approximates the book value of the loan

receivable.

Concessions and rights of

In EUR ‘000 Development costs intellectual property Total

At 1 January 2020:

Cost 926 209 1,135

Accumulated impairments and amortisation (105) (43) (148)

Net book value 821 166 987

Movements in 2020:

Opening net book value 821 166 987

Additions 500 24 524

Amortisation for the year (189) (22) (211)

Closing net book value 1,132 168 1,300

At 1 January 2021:

Cost 1,426 233 1,659

Accumulated impairment and amortisation (295) (65) (359)

Net book value 1,132 168 1,300

Movements in 2021

Opening net book value 1,132 168 1,300

Additions 741 32 772

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

Closing net book value 1,582 175 1,757

At 31 December 2021

Cost 2,167 264 2,431

Accumulated impairments and depreciation (585) (90) (674)

Net book value 1,582 175 1,757

In EUR ‘000 Investment in subsidiaries Loans receivable Total

At 1 January 2020 (3,802) 6,300 2,498

Investment/ changes - 3,450 3,450

Share of net loss (1,992) - (1,992)

(5,794) 9,750 3,956

Provision 5,794 (5,794) -

At 31 December 2020 - 3,956 3,956

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

Investment/ changes - - -

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

Other movements - - -

(9,234) 9,750 516

Provision 9,234 (9,234) -

At 31 December 2021 - 516 516

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

31 December 2021 31 December 2020

NX Filtration B.V. 100% 100%

3 4

139NX Filtration - Annual Report138 Company nancial statements

Deferred tax assets

In EUR ‘000 2021 2020

At 1 January 1,903 1,088

Tax benet subsidiaries

through scal unit 1,143 552

Tax benet NX Filtration N.V. 2,653 263

At 31 December 5,699 1,903

The deferred tax assets can be specied as

follows:

31 December 31 December

In EUR ‘000 2021 2020

Deferred tax assets

Timing dierences - -

Carry forward losses 5,699 1,903

Total 5,699 1,903

Of which:

Current (<1 year) - -

Non-current (>1 year) 5,699 1,903

As of December 31, 2020, the total amount of

recognized tax losses amounts to €22.8 million.

A deferred tax asset has been recognized at the

nominal tax rate of 25% (being the estimated

blended rate as from 2022).

Cash and cash equivalents

31 December 31 December

In EUR ‘000 2021 2020

ABN AMRO bank 45,992 0

Van Lanschot bank 25,000 0

Rabobank 40,625 6,329

Total 111,617 6,329

The cash and cash equivalents are freely

disposable to the Company.

Shareholders’ equity

Reference is made to note 24 of the

consolidated nancial 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 2021 2020

At 1 January 1,132 821

Movement in legal reserve 451 311

At 31 December 1,582 1,132

Other reserves

The other reserves can be specied as follows:

In EUR ‘000 2021 2020

At 1 January (5,071) (3,171)

Allocation of previous

year loss (2,092) (1,589)

Interest on repayment

and cancellation of

preference share capital (2,421) -

Movement in legal reserve (450) (311)

At 31 December (10,034) (5,071)

Revenue

In EUR ‘000 2021 2020

Charged patent rights 48 28

Management fee 5 5

Total 53 33

Average numbers of

employees

In 2021, the Company had 2 employees (2020:

no employees). None of these employees works

abroad.

General expenses

In EUR ‘000 2021 2020

Audit fees 150 85

Legal fees 35 17

Consultancy fee

Infestos Holding E B.V. 84 -

Patent renewal fees 47 28

Management fee

lnfestos Holding E B.V. - 5

Management fee

lnfestos Management B.V. 2 5

Listing costs 9,465 -

Other general costs 58 -

Total 9,841 140

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 rms

and external independent auditors as referred

to in Section 1(a) of the Dutch Accounting

Firms Oversight Act (Wta).

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

2021 2020 2021 2020 2021 2020

Audit of the nancial statements 150 85 - - 150 85

Other audit procedures 213 - - - 213 -

Tax services - - - - - -

Other non-audit services - - - - - -

Total 363 85 - - 363 85

141NX Filtration - Annual Report140 Company nancial statements

Finance income

In EUR ‘000 2021 2020

Interest on receivables from

group companies 124 136

Total 124 136

Finance expense

In EUR ‘000 2021 2020

Interest on shareholder loan

and current account - (181)

Interest on cash balances

(negative interest) (352) -

Total (352) (181)

Contingencies and

commitments

Fiscal unity

The Company is the head of the scal 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 nancial statements

Enschede, 10 February 2022

Board of Directors

Michiel Staatsen Erik Roesink

CEO and COO CTO

143NX Filtration - Annual Report142 Company nancial statements

Other information

Provision in the Articles of

Association relating to prot

appropriation

Article 31. Prots and Distributions.

31.1 The Management Board, with the

approval of the Supervisory Board, may

decide that the prots realised during

a nancial year fully or partially be

appropriated to increase and/or form

reserves.

31.2 The prots 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 fullled,

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 prot 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

ve 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.

145NX Filtration - Annual Report144 Other information

Independent

auditor’s report

Report on the nancial

statements 2021

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

Our opinion

In our opinion:

• the consolidated nancial statements

of NX Filtration N.V. together with its

subsidiaries (‘the Group’) give a true and

fair view of the nancial position of the

Group as at 31 December 2021 and of its

result and cash ows 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 nancial statements of NX

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

and fair view of the nancial position of

the Company as at 31 December 2021

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 nancial

statements 2021 of NX Filtration N.V.,

Amsterdam. The nancial statements include

the consolidated nancial statements of the

Group and the company nancial statements.

The consolidated nancial statements

comprise:

• the consolidated statement of nancial

position as at 31 December 2021;

• the following statements for 2021: the

consolidated statements of comprehensive

income, changes in equity and cash ows;

and

• the notes, comprising signicant

accounting policies and other explanatory

information.

The company nancial statements comprise:

• the company balance sheet as at 31

December 2021;

• the company income statement for the

year then ended;

• the notes, comprising the accounting

policies applied and other explanatory

information.

The nancial reporting framework applied in

the preparation of the nancial statements is

EU-IFRS and the relevant provisions of Part

9 of Book 2 of the Dutch Civil Code for the

consolidated nancial statements and Part 9 of

Book 2 of the Dutch Civil Code for the company

nancial 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

nancial statements’ of our report.

We believe that the audit evidence we have

obtained is sucient 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 specic requirements regarding

statutory audit of public-interest entities, the

‘Wet toezicht accountantsorganisaties’ (Wta,

Audit rms supervision act), the ‘Verordening

inzake de onafhankelijkheid van accountants

147NX Filtration - Annual Report146 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 nancial

statements as a whole and in forming our

opinion thereon. The information in support of

our opinion, like our ndings 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 specialized in the

production of advanced hollow ber membrane

modules for nanoltration, ultraltration and

microltration applications. NX Filtration N.V.

forms a group together with NX Filtration B.V.,

where NX Filtration N.V. is the holding company

and NX Filtration B.V. the operating company.

The initial public oering (herafter: “IPO”)

on 11 June 2021 characterised the nancial

year 2021. This aected the determination

of materiality and our audit procedures as

described in the sections ‘Materiality’ and ‘Key

audit matters’.

As part of designing our audit, we determined

materiality and assessed the risks of material

misstatement in the nancial statements.

In particular, we considered where the

management board made important

judgements, for example, in respect of

signicant accounting estimates that involved

making assumptions and considering future

events that are inherently uncertain. In note 6

of the consolidated nancial statements, the

Company describes the areas of judgement

in applying accounting policies and the key

sources of estimation uncertainty. Given the

judgement involved in determining whether

development costs can be capitalised, we

considered this matter as key audit matter

as set out in the section ‘Key audit matters’

of this report. Furthermore, we identied the

accuracy of the outgoing payments as key audit

matter given the large amounts received from

the IPO and the limitations we noted in the

segregations of duties in the payment process.

Finally, we identied the tax deductibility of the

listing costs as key audit matter because of the

signicance of these incidental costs.

Given the early stage growth phase of the

Company, the control environment can be

described as informal and therefore we

performed a primarily substantive audit.

NX ltration assessed the possible eects of

climate change and its plan to meet the net

zero commitments on their nancial position,

refer to the section “sustainability report”

of the report of the management board. We

discussed NX Filtration’s assessment and

governance thereof with the management

board and evaluated the potential impact

on the nancial position including underlying

assumptions and estimates. The eect of

climate change is not considered to impact the

key audit matters.

We ensured that the audit team included the

appropriate skills and competences which are

needed for the audit of NX Filtration N.V. We

therefore included auditor’s experts in the area

of taxes in our team.

The outline of our audit approach was as

follows:

Materiality

The scope of our audit was inuenced by the

application of materiality, which is further

explained in the section ‘Our responsibilities for

the audit of the nancial statements’.

Based on our professional judgement we

determined certain quantitative thresholds for

materiality, including the overall materiality

for the nancial 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 nancial

statement line items and disclosures and to

evaluate the eect of identied misstatements,

both individually and in aggregate, on the

nancial statements as a whole and on our

opinion.

Materiality

Audit scope

Key audit

matters

Overall group materiality €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 benchmark ‘Total assets – 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 nancial

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

important metric for the nancial performance of the Company, as this

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

Materiality

• Overall materiality: €241,000

Audit scope

• We performed a full scope audit on both

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

Key audit matters

• Capitalisation of development costs

• Accuracy of outgoing payments

• Tax deductibility of the listing costs

149NX Filtration - Annual Report148 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 misstatements identied

during our audit above €24,100 as well as

misstatements below that amount that, in

our view, warranted reporting for qualitative

reasons.

Audit approach fraud risks

We identied and assessed the risks of material

misstatements of the nancial statements

due to fraud. During our audit we obtained an

understanding of the entity and its environment

and the components of the system of internal

control, including the risk assessment process

and management’s process for responding to

the risks of fraud and monitoring the system of

internal controls and how the supervisory board

exercises oversight, as well as the outcomes.

We refer to section “risk and uncertainties”

of the report of the management board for

management’s board fraud risk assessment.

We note that, although management made

a (fraud) risk assessment, no formalised

monitoring procedures are in place.

We evaluated the design and relevant aspects

of the system of internal controls and in

particular the fraud risk assessment, as well as

among others the code of conduct and whistle

blower procedures. We evaluated the design

and the implementation of internal controls

designed to mitigate fraud risks and reported

our observations to the management board

and those charged with governance.

As part of our process of identifying fraud risks,

we evaluated fraud risk factors with respect

to nancial 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 identied the following fraud risks and

performed the following specic procedures:

Identied fraud risk Audit procedures and observations

The risk of management override of controls

As in all of our audits, we addressed the risk

of management override of controls, including

evaluating whether there was evidence of bias by

management that may represent a risk of mate-

rial misstatement due to fraud. In this context,

we paid particular attention to the judgement

applied in the capitalization of development

costs.

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

eectiveness of those measures in the processes

of generating and processing journal entries and

making estimates. We also paid specic attention

to the access safeguards in the IT system and

the possibility of functional segregation as a

result and reported our observations to the

management board and those charged with

governance.

We performed data analysis of high-risk journal

entries. Where we identied instances of

unexpected journal entries or other risks through

our data analytics, we performed additional audit

procedures to address each identied risk.

We evaluated key judgements for bias by NX

Filtration N.V. in the capitalization of development

costs. For further details on the procedures

performed we refer to our “key audit matter

capitalisation of development costs”.

Our procedures did not reveal any material

misstatement of the information provided by

management in the nancial statements and the

management report compared with the nancial

statements.

Our work did not reveal any specic 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

commercialization of its hollow ber nano ltra-

tion membrane technology and to realise increase

in turnover and protability in the future in order

to increase shareholder value. In general, this may

cause pressure on management to show growth

in both sales and protability.

Where relevant to our audit, we evaluated the

design and eectiveness of the internal control

measures related to revenue recognition and

reported our observations to the management

board and those charged with governance.

We selected journal entries based on risk criteria

and performed specic audit activities for these

entries, as part of which we also paid attention to

signicant transactions outside the normal course

of busines. No such transactions were identied.

We selected a sample of revenues and reconciled

the transactions to the contracts or orders, the

sales invoice, the shipping documents and the

payments.

151NX Filtration - Annual Report150 Independent auditor’s report

We incorporated elements of unpredictability

in our audit. We also considered the outcome

of our other audit procedures and evaluated

whether any ndings were indicative of fraud or

noncompliance.

We considered available information and made

enquiries of the management board and the

supervisory board.

This did not lead to indications for fraud

potentially resulting in material misstatements.

Audit approach going concern

As disclosed in section “summary of

signicant accounting policies” of the nancial

statements, the management board prepared

the nancial statements on the assumption

that the entity is a going concern and that it

will continue its operations for the foreseeable

future.

Our procedures to evaluate management’s

board going concern assessment include,

amongst others:

• Considering whether management’s

board going concern assessment includes

all relevant information like the nancial

position per balance sheet date and the

developments in the membrane industry

of which we are aware as a result of our

audit, inquiring with the management

board regarding their most important

assumptions underlying their going concern

assessment and considering whether

management board identied events or

conditions that may cast signicant doubt

on the entity’s ability to continue as a going

(hereafter: going concern risks);

• Analysing the nancial position per balance

sheet date to assess whether events or

circumstances exist that may lead to a

going concern risk, including considering

the cash balance per 31 December 2021 of

€ 133.4 million as a result of the proceeds

obtained from the IPO and evaluating the

Company’s existing on-balance and o-

balance obligations;

• Evaluating the Company’s existing on-

balance and o-balance obligations;

• Evaluating the management board’s

budget for 2022 and 2023, taking into

account current developments in the

membrane industry and all relevant

information of which we are aware as a

result of our audit; and

• Performing inquiries with the management

board as to their 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

signicance in the audit of the nancial

statements. We have communicated the key

audit matters to the supervisory board. The

key audit matters are not a comprehensive

reection of all matters identied 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.

We addressed the key audit matters in the

context of our audit of the nancial statements

as a whole, and in forming our opinion thereon.

We do not provide separate opinions on these

matters or on specic elements of the nancial

statements. Any comment or observation we

made on the results of our procedures should

be read in this context.

Identied fraud risk Audit procedures and observations

In addition, we tested whether NX ltration

met the requirements as included in the grant

decisions and conditions. Subsequently we tested

a sample of the hours of employees and expenses

accounted for on these subsidy projects.

Our procedures did not identify any material

misstatement in the information provided by the

management board in the nancial statements

and the report of the management board

compared with the nancial statements.

Our procedures did not lead to specic indications

of fraud or suspicions of fraud with respect to the

existence of the revenue or the accuracy of the

subsidies accounted for.

Accuracy of outgoing payments

In our audit we identied the risk for unautho-

rised payments made from the Company’s cash

balances, given the large amount of cash received

from the IPO and limitations in the segregation

of duties in the payment process.

For our audit procedures, performed with respect

to the accuracy of the outgoing payments, we

refer to our key audit matters.

Our procedures did not lead to specic indications

of fraud or suspicions of fraud with respect to the

accuracy of outgoing payments.

Key audit matter Our audit procedures and observations

Capitalisation of development costs

Refer to note 17 to the consolidated nancial

statements

The intangible assets of NX Filtration N.V.

amount to € 1.8 million of which € 1.6 million re-

lates to capitalised development costs mainly re-

lating to projects in which the Company’s hollow

bre nanoltration technology has been devel-

oped. During 2021, NX Filtration N.V. capitalised

€ 0.7 million of development cost for new and fur-

ther developments in the Company’s hollow bre

nanoltration and microltration technologies

and related projects.

The management board applies signicant judge-

ment regarding the determination on whether to

capitalise development costs. This determination

is highly dependent on:

• whether it is technically feasible to complete

the product or system so that it will be avail-

able for use;

• the management board’s intention to com-

plete the product or system and use or sell it;

• the ability to use or sell the product or sys-

tem;

We gained an understanding of and evaluated

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

capitalisation of development costs and reported

our observations to the management board and

those charged with governance. We primarily

relied on substantive testing procedures, based on

eciency considerations.

As part of our risk assessment procedures, we

performed look-back procedures. We veried that

the projects capitalised in prior years, resulted in

revenues in 2021.

We obtained a listing of all projects for which

development costs were capitalised during the

period. We selected several projects based on

the amount of capitalised development costs

and obtained explanations and documentation

from the management board and the R&D

director on how these projects met the criteria for

capitalisation of development costs.

153NX Filtration - Annual Report152 Independent auditor’s report

Key audit matter Our audit procedures and observations

• the probability that the product or system

will generate probable future economic bene-

ts;

• the availability of adequate technical, -

nancial and other resources to complete the

development; and

• the reliability of the measurement of expen-

ditures attributable to the product or system

during its development.

Given the level of judgement required from the

management board to determine whether or not

the capitalization criteria are met, we considered

this area to be a key audit matter.

We obtained the technical business plans for the

projects and discussed and evaluated them with

the R&D director. The technical business plans

indicate that the projects are technically feasible

to be completed and the products and systems

will be available for use in the near future.

We evaluated reasonableness of future economic

benets and the management board’s intention

to sell the products by obtaining evidence such

as new contracts with customers. The future

economic benets and the management boards

intention were supported with available evidence.

We discussed the ability of the Company to sell

the products and systems with the R&D director

and determined that the new products are

strongly related to the products and systems

currently produced by the Company.

We performed procedures to conrm that the

R&D department employees are engaged in the

projects. We performed procedures to conrm

that the Company has sucient funds, resulting

in sucient nancial and technical resources to

complete the development.

We tested the accuracy of directly attributable

costs that are capitalised by tracing a sample of

external costs back to the invoices received. In

addition, we assessed the hourly rate used for the

calculation of costs of development employees

and traced the capitalised hours back to the time

registration. No dierences were noted in these

procedures.

Based on the procedures performed we found the

capitalised development costs to be supported

with available evidence. Our procedures did not

lead to specic indications of fraud or suspicions

of fraud with respect to the capitalisation of

development costs.

Accuracy of outgoing payments

Refer to the consolidated statement of cash ows

of the nancial statements

During 2021, NX Filtration realised a net cash

outow from operations of €13.2 million, a net

cash outow from investing activities of 8.6

million and a net cash inow from nancing activ-

ities of € 148.7 million.

We gained an understanding of and evaluated

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

authorisation of outgoing payments and reported

our observations to the management board and

those charged with governance.

Key audit matter Our audit procedures and observations

Given the large amount of cash received from the

IPO and the lack of segregation of duties identi-

ed in the payment process, we considered this

area to be a key audit matter.

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 as set out above, we did

not note any material exceptions. Our procedures

did not lead to specic indications of fraud or

suspicions of fraud with respect to the outgoing

payments.

Tax deductibility of the listing costs

Refer to note 17 to the consolidated nancial

statements

The loss before tax for NX ltration N.V. amounts

€ 15,1 million. Included in the loss before tax are

the IPO transaction costs of €9.6 million.

Only 0.4% of the expenses included in the result

are classied as non-taxable, implying that the

majority of the IPO transaction costs were in-

cluded in the calculation of the corporate income

tax benet.

Management applied judgement in determining

whether the costs should be classied as costs

for the Company, resulting in tax deductibility,

or cost for the shareholders, resulting in no tax

deductibility. Management engaged a manage-

ment expert to assess the possibilities relating to

the tax deductibility based on Dutch Corporate

Income Tax Law and concluded that € 9.3 million

of the IPO transaction costs would be tax de-

ductible.

Given the judgement applied in determining

whether the IPO transaction costs are tax de-

ductible and given the incidental nature of these

costs, we considered this are to be a key audit

matter.

We gained an understanding of and evaluated

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

corporate income tax declarations and reported

our observations to the management board and

those charged with governance. We primarily

relied on substantive testing procedures, based on

eciency considerations.

We obtained the report of the management’s

expert and performed the following procedures:

- evaluated the competency, capabilities and

objectivity of the management’s expert;

- together with an auditor’s expert, assessed

the reasonability of the conclusions reached

by the management’s expert;

- traced the amounts included in the report

of the management’s expert to the nal

corporate income tax declaration; and

- veried the income tax declaration for

mathematical accuracy.

Based on the procedures as set out above, we did

not note any material exceptions.

155NX Filtration - Annual Report154 Independent auditor’s report

In addition to the nancial statements and

our auditor’s report thereon, the annual report

contains other information that consists of:

• 2021 at a glance;

• About NX Filtration;

• Report of the management board;

• Business review;

• Sustainability report;

• 2021 month-by-month;

• Financial performance;

• Risks and uncertainties;

• Corporate governance;

• Report of the supervisory board; and

• the other information pursuant to Part 9 of

Book 2 of the Dutch Civil Code;

Based on the procedures performed as set out

below, we conclude that the other information:

• is consistent with the nancial

statements and does not contain material

misstatements;

• 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 nancial 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 nancial 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.

Our appointment

We were appointed as auditors of NX Filtration

N.V. on 22 April 2021 by the management

board. Our appointment has been renewed

annually by the management board and now

represents a total period of uninterrupted

engagement of 2 years.

European Single Electronic

Format (ESEF)

NX Filtration N.V. has prepared the annual

report, including the nancial 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 specication 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 tagged

consolidated nancial statements as included

in the reporting package by NX Filtration N.V.,

has been prepared in all material respects in

accordance with the RTS on ESEF.

The management board is responsible for

preparing the annual report, including the

nancial statements, in accordance with the

RTS on ESEF, whereby the management board

combines the various components into a single

reporting package. Our responsibility is to

obtain reasonable assurance for our opinion

whether the annual report in this reporting

package, is in accordance with the RTS on ESEF.

Our procedures, taking into account Alert 43

of the NBA (Royal Netherlands Institute of

Chartered Accountants), included amongst

others:

• Obtaining an understanding of the entity’s

nancial reporting process, including the

preparation of the reporting package.

• Obtaining the reporting package and

performing validations to determine

whether the reporting package, containing

the Inline XBRL instance document and

the XBRL extension taxonomy les, has

been prepared, in all material respects, in

accordance with the technical specications

as included in the RTS on ESEF.

• Examining the information related to the

consolidated nancial statements in the

reporting package to determine whether

all required taggings 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 specic 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 nancial statements.

Report on the other information

included in the annual report

Report on other legal and

regulatory requirements and

ESEF

157NX Filtration - Annual Report156 Independent auditor’s report

Responsibilities of the

management board and the

supervisory board for the

nancial statements

The management board is responsible for:

• the preparation and fair presentation of

the nancial 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 nancial statements

that are free from material misstatement,

whether due to fraud or error.

As part of the preparation of the nancial

statements, the management board is

responsible for assessing the Company’s ability

to continue as a going-concern. Based on the

nancial reporting frameworks mentioned,

the management board should prepare the

nancial 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 nancial

statements any event and circumstances that

may cast signicant doubt on the Company’s

ability to continue as a going concern.

The supervisory board is responsible for

overseeing the Company’s nancial reporting

process.

Our responsibilities for the audit

of the nancial statements

Our responsibility is to plan and perform an

audit engagement in a manner that allows

us to obtain sucient and appropriate audit

evidence to provide a basis for our opinion. Our

objectives are to obtain reasonable assurance

about whether the nancial 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 inuence the economic decisions

of users taken on the basis of the nancial

statements.

Materiality aects the nature, timing

and extent of our audit procedures and

the evaluation of the eect of identied

misstatements on our opinion.

A more detailed description of our

responsibilities is set out in the appendix to our

report.

Zwolle, 10 February 2022

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 nancial

statements and explained what an audit

involves.

The auditor’s responsibilities

for the audit of the nancial

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 nancial

statements, whether due to fraud or

error, designing and performing audit

procedures responsive to those risks, and

obtaining audit evidence that is sucient

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 eectiveness 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 signicant 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 nancial

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 nancial 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 nancial

statements, including the disclosures,

and evaluating whether the nancial

statements represent the underlying

transactions and events in a manner that

achieves fair presentation.

Responsibilities for the nancial

statements and the audit

Appendix to our auditor’s report

on the nancial statements

2021 of NX Filtration N.V.

159NX Filtration - Annual Report158 Independent auditor’s report

Considering our ultimate responsibility for

the opinion on the consolidated nancial

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 nancial

statements as a whole. Determining factors

are the geographic structure of the Group, the

signicance and/or risk prole 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 nancial

information or specic balances was considered

necessary.

We communicate with the supervisory board

regarding, among other matters, the planned

scope and timing of the audit and signicant

audit ndings, including any signicant

deciencies 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 specic 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 signicance in

the audit of the nancial 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.

161NX Filtration - Annual Report160 Independent auditor’s report