5. Financial risk management

Financial risks

NORMA Group’s business activities expose it to a range of financial risks, including market, default and liquidity risks. NORMA Group’s financial risk management focuses on the unpredictability of the financial markets and is designed to minimize potential adverse effects on the Group’s earnings position. To this end, the Group uses derivative financial instruments to hedge certain risk positions.

Financial risk management is carried out by the Group Treasury department & Insurance (Group Treasury). The areas of responsibility and necessary controls in connection with risk management are defined by NORMA Group’s management. Group Treasury is responsible for identifying and assessing financial risks in close consultation with the Group’s operating units. Group Treasury also acts as the first point of contact for the subsidiaries. In a close dialogue, Group Treasury informs and trains the companies and technically handles the internal and external hedging processes. The principles established by NORMA Group’s management apply to the use of derivative and non-derivative financial instruments and to the investment of excess liquidity.

(a) Market risk

Foreign exchange risk

As a Company that operates internationally, NORMA Group is active in 100 different countries and is exposed to the currency risk resulting from various foreign currency positions with regard to the most important currencies, the US dollar, British pound, Chinese renminbi, Indian rupee, Polish złoty, Swedish krona, Czech koruna, Serbian dinar, Singapore dollar and Mexican peso.

Taking into account the respective risk-bearing capacity of the subsidiaries, Treasury Risk Management seeks to achieve a prudent hedging level of net foreign currency risks (as a result of taking foreign currency inflows and outflows into account). Highly volatile net foreign currency risks are thus hedged with increased hedging ratios.

The Group uses currency forwards to hedge the foreign currency risk arising from operating activities. The risk arises from a possible change in future cash flows from an expected and highly probable transaction in a non-functional currency, whereby the change is based on a change or fluctuation in the exchange rate. The hedging relationship is designated as a cash flow hedge. NORMA Group only designates the spot component as a hedging element. Gains or losses from the effective portion of the change in the spot component of the forward transaction are recognized in the hedging reserve as a component of equity. The changes in the forward component of the hedging instrument that relate to the hedged item (“aligned forward element”) are recognized in other comprehensive income in the reserve for hedging costs as a component of equity.

In addition, currency forwards are used to hedge intragroup financing transactions in which exchange rate risks arise from loans between Group companies in non-functional currencies. The Group designates such loans and hedging instruments as fair value hedges in order to achieve the offsetting effects of underlying and hedging transactions in the same income statement item. The Group only designates the spot component as a hedging element. Gains or losses from the effective portion of the change in the spot component of the forward transaction are recognized in the financial result in the same way as those of the hedged item. The changes in the forward component of the hedging instrument that relate to the hedged item (“aligned forward element”) are also recognized in this item.

In connection with the sale of the Water Management business unit, an economic currency risk arises between signing and closing, as the expected purchase price payment is agreed in US dollars, while NORMA Group SE has its functional currency in euros. Fluctuations in the EUR/USD exchange rate can therefore influence the equivalent value that can be realized in euros.

FX zero-cost collar transactions were concluded to limit this risk. These instruments serve to economically hedge a large portion of the expected USD cash flows; the total sales price was not fully hedged. The hedge is carried out without hedge accounting designation in accordance with IFRS 9. The derivatives are recognized at fair value, with changes in value recognized in profit or loss.

For further information on the instruments used by the Group to hedge foreign currency risk, please refer to NOTE 21 (F) – DERIVATIVE FINANCIAL INSTRUMENTS.

In accordance with the Group guideline, the main contractual conditions of the forward transactions for all hedging relationships must correspond to the hedged items.

The effects of changes in the exchange rates of financial assets and financial liabilities denominated in foreign currencies are presented below.

Interest rate risk

NORMA Group’s interest rate risk arises from borrowings with variable interest rates. These expose the Group to a cash flow-related interest rate risk, which is partially limited by hedging transactions (interest rate swaps). Due to the current sideways trend on the interest rate market in the eurozone, NORMA Group classifies the risk of further interest rate increases for the euro as “possible” in the short term. In the medium and longer term, the risk of interest rate hikes is also assessed as “possible”. In view of the current interest rate level in the eurozone, the opportunities that could arise from falling interest rates are assessed as “unlikely”.

Interest rate cuts are considered “possible” in the USD area, which would lead to corresponding opportunities for NORMA Group. In light of the measures already implemented to optimize financing, the financial impact associated with these opportunities is assessed as “low”.

Current swaps cover around 22% (2024: 24%) of the outstanding variable-rate loans. The comparable hedging ratio for floating-rate USD loans is 57% (2024: 57%). Further information on the instruments used by the Group to hedge the interest rate risk can be found in NOTE 21 (F) – DERIVATIVE FINANCIAL INSTRUMENTS.

The effects of interest rate changes on liabilities to banks with variable interest rates and on interest rate swaps used in hedge accounting are explained in more detail below. Borrowings with fixed interest rates are not included in this analysis.

If the interest rates of euro- and US dollar-denominated borrowings in fiscal year 2025 had been 100 basis points lower (ceteris paribus), NORMA Group’s profit before tax for fiscal year 2025 would have been EUR 2,128 thousand lower (2024: lower by EUR 2,632 thousand) and the fair value of the freestanding payer interest rate swaps would have been higher by EUR 352 thousand (2024: other comprehensive income higher by EUR 980 thousand).

If the interest rates of euro- and US dollar-denominated borrowings in fiscal year 2025 had been 100 basis points lower (ceteris paribus), NORMA Group’s profit before tax for fiscal year 2025 would have been EUR 2,128 thousand higher (2024: EUR 2,632 thousand higher). The fair value of the freestanding payer interest rate swaps would have been EUR 397 thousand lower (2024: other comprehensive income EUR 1,007 thousand lower).

Other price risks

NORMA Group is exposed to other economic price risks. For further information, please refer to the RISK AND OPPORTUNITY REPORT.

(b) Credit risk

The Group’s exposure to credit risk arises from the possibility that counterparties will fail to meet their obligations arising from their operating and financing activities. Credit risk arises from cash and cash equivalents, from deposits with banks and financial institutions and from customer default risk, including outstanding receivables and committed transactions.

Credit risk is monitored at Group level. To minimize credit risk from business activities and financial transactions, each contractual partner is assigned a credit line, the use of which is monitored on a regular basis.

To reduce the credit risk arising from investment activities and derivative financial assets, the Company’s internal policy is to enter into all transactions only with recognized, large financial institutions and issuers, each with high external credit ratings.

In the operating business, default risks are monitored continuously.

The aggregate carrying amounts of financial assets represent the maximum default risk. Due to the Group’s heterogeneous customer structure, there is no concentration of risk.

As of December 31, 2025 the credit risk position for the gross carrying amounts of cash and cash equivalents and other financial assets was as follows:

Further details on the credit risk positions for trade receivables can be found at NOTE 21 (A) – TRADE AND OTHER RECEIVABLES.

(c) Liquidity risk

Prudent liquidity risk management requires the holding of sufficient cash and cash equivalents and marketable securities, the availability of financing via committed credit lines in an appropriate amount and the ability to close out market positions. Due to the dynamic nature of the underlying business, Group Treasury endeavors to maintain flexibility in financing by maintaining the availability of committed credit lines.

The remaining promissory note loans from 2016 and 2023 (outstanding volume as at December 31, 2025: EUR 161.5 million) were issued in three-, five-, seven- and ten-year EUR tranches. Scheduled repayments of the promissory note loans from 2013 and 2014 in the amount of EUR 18 million were made in fiscal year 2024. Promissory note loan tranches from 2014 in the amount of EUR 27 million were also repaid as scheduled. In addition, further repayments of promissory note loan tranches in the amount of EUR 96 million (fixed and variable) were made in fiscal 2026 due to terminations made by NORMA and the closing of the sale of the Water Management business unit. These repayments were made entirely from the Company’s own free cash and cash equivalents from the proceeds of the sale of the Water Management business unit.

In 2021, an additional revolving committed credit line of a further EUR 50.0 million was established via the accordion facility. This has a maturity similar to the existing syndicated bank loan, which was extended by one additional year, through the end of 2026, as part of the expansion of the credit line. Both committed revolving credit lines in the current total amount EUR 100.0 million were not drawn down as of December 31, 2025.

In addition, the syndicated bank loan and the promissory bill from 2023 contain a sustainability component. This links the financing conditions to NORMA Group’s commitment to corporate responsibility. This commitment is measured using a rating from an external service provider. In 2025, NORMA Group achieved a corresponding sustainability rating – as in the previous year – which enabled savings to be realized in the external credit margin of the syndicated bank loan. The agreed interest margin of the syndicated bank loan was therefore also kept at a lower level in the current year. Failure to meet the sustainability targets would have increased the future interest burden.

In fiscal year 2026, the outstanding tranches of the syndicated bank loan in the amount of EUR 91 million and USD 122 million (EUR 103.8 million) will be repaid in full due to the sale of the Water Management business unit. These

repayments will also be made in full from the Company’s own free cash and cash equivalents from the proceeds of the sale of the Water Management business unit.

The commercial paper program launched in fiscal year 2019 with a total volume of up to EUR 300 million consists of short-term (1-52 weeks) bearer bonds. By issuing such short-term bonds on a revolving basis, the Group can manage and optimize its short-term financing requirements even more flexibly via the money and capital markets in addition to the existing credit lines with various banks. As at the December 31, 2025 reporting date, the commercial paper program had not been used (Dec 31, 2024: EUR 0 million).

In addition, NORMA Group participates in a reverse factoring program. For further general information and the effects of this agreement on the Group’s liquidity risk, please refer to the following notes:

•Note 6 – Accounting estimates and judgments

•Note 21 e) i) – Trade And other payables

The liquidity situation is constantly monitored with regard to business development, investments planned and the repayment of loans.

The following table contains the contractually agreed, undiscounted future payments. Financial liabilities in foreign currencies are translated at the closing rate in the Consolidated Statement of Financial Position. Interest payments on financial instruments with variable interest rates are calculated on the basis of the interest rates on the reporting date.

The maturity structure of the derivative financial instruments based on cash flows is as follows:

The figures shown in the table for “Liabilities from derivatives – gross settlement” do not include any cash flows for the liabilities of EUR 1,385 thousand from five zero-cost collars recognized as at the reporting date, as these options are out of the money as at the reporting date.

Capital risk management

NORMA Group’s objectives in managing its capital are to continue to be able to service its debt and to remain financially stable.

As at the end of fiscal year 2025, the Group’s financing agreements do not contain a financial covenant that is customary in the market and requires compliance with the total net debt cover (“debt in relation to adjusted Group

EBITDA”). However, due to a link to the level of financing costs, this standard market ratio is still part of the financing agreements and is monitored continuously. In fiscal year 2025, the ratio was 2.5.